$3.5 Million In Income, $8.9 Million In City Projects, Imperiled By Redevelopment Shift

Over the last year or so a series of state actions have led to the abolition of local redevelopment agencies. San Leandro and other cities have wondered what would happen as they lost control of the revenues that they used to harvest from higher property tax collections inside redevelopment zones.

City officials recently got an inkling of this on April 11 when the Department of Finance in Sacramento objected to $11 million that San Leandro thinks should be covered by future redevelopment-related taxes that will now be apportioned by higher levels of state government.

The finance department's objections aren't final, but since this process is new it isn't clear exactly who will make the final decision and when.

But here's what's at stake, according to Jeff Kay, a business development analyst with the city.

The state's first objection is to the repayment of $2 million that is the remaining balance on a loan that the city made to its the redevelopment agency several years ago to develop the Downtown Plaza, the San Leandro Automall on Marina Boulevard and other projects.

The city thinks the loan balance should be paid back to its general fund over the next 20 years at the rate of $173,000 a year. Should the obligation be denied, it would be a $3.5 million hit to the city's general fund over the next two decades.

The other $8.9 million in state objections involve some projects that the city would like to get done and paid for using future redevelopment-related taxes: paving Eden Road and making improvements to parts of MacArthur Boulevard, Hays Street and Doolittle Drive.

Here, the potential loss to city is that the projects might not get done, rather than an out-of-pocket hit to the general fund, Kay said.

The state's letter to the city and the city's preliminary analysis of it are contained in the PDFs attached to this story.

Another question mark hanging over the city as a result of the demise of the local redevelopment authority is the fate of the proposed Village Marketplace project on East 14th Street in the downtown district.

That project hinges on the city essentially selling the property site, now owned by the city, at a loss of something in the neighborhood of $3 million.

The state's recent letter to the city had no bearing on that issue, Kay said, but at some point San Leandro will need approval through these new review processes for whatever deal it proposes to strike with Village Marketplace developer David Irmer.

San Leandro Unified School District member Mike Katz has provided many additional details of the projects affected by the state action in a story on his San Leandro Bytes blog.

One effect of the new redevelopment situation is that any future tax income taken away from cities can be channeled into schools, transit districts and other eligible public entities, including the state.

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