The Morning Report
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Perhaps no city has been as aggressive as San Diego in combating Gov. Jerry Brown’s proposal to eliminate redevelopment. Monday night, the push went too far for now.
City Council rejected a proposal from Mayor Jerry Sanders’ office to transfer nearly all 135 properties from the city’s redevelopment agency to the city itself, with council members saying the transaction was too risky. The city’s real estate assets director estimated the properties were worth more than $250 million.
The council relied on an opinion from City Attorney Jan Goldsmith that moving so fast could put the city at risk for potential environmental hazards or other liabilities on the properties.
“We’ve been pretty aggressive,” Goldsmith said. “I want to be aggressive. This is one where we cannot unilaterally rescind later on.”
Council requested a revised proposal that would divide redevelopment properties into those that are finished, make money and are worth more than they cost to maintain, and those that don’t meet the three criteria. Council members indicated they would transfer the first set of properties to the city and hold the second as security for loans and other debts the agency owes the day-to-day operating budget, or general fund. The council also wanted more information about the affordable housing properties on the list.
Some of the properties that would be transferred include the Balboa and Lyceum theaters downtown and a police station in City Heights. The revised proposal is expected to return to council next week.
Sanders request is the city’s latest attempt to tie up redevelopment property taxes and properties to evade the governor’s grasp. Two weeks ago, the council approved pledging more than $4 billion in property taxes over the next four decades for redevelopment projects — likely four times what any other city has done.
The move of transferring redevelopment properties would keep them under the city’s control rather than a board chosen primarily by representatives of San Diego County and local education agencies. Under the governor’s plan, this board would be required to dispose of former redevelopment assets quickly in most cases.
Redevelopment siphons property taxes from cities, counties, schools and, indirectly, the state, to improve rundown neighborhoods. As part of his budget package, Brown wants to eliminate redevelopment and send the money back to those governments and, for one year, to the state.
Locking up future redevelopment dollars and assets, as Sanders wants, could mean there isn’t much money left to spread around. Still, the proposed legislation allows the state to extend a review of any redevelopment actions taken after Jan. 1 and these decisions all could be nullified.
The state estimates redevelopment agencies received $5 billion in property taxes this year.
State budget talks continue to move in fits and starts, and no firm date has been set for a vote in the legislature. City Chief Operating Officer Jay Goldstone said he hoped the state wouldn’t act before the council did.
“We’re very concerned about the timing,” Goldstone said. “It may not have any impact or it may. We know the state’s trying to move as quickly as possible.”
The council voted 7-1 to push the issue to next week. Council President Tony Young voted no, saying he wanted to move faster. The state, he said, has put the city in this position.
“It’s a bad decision one way or the other,” Young said. “It’d be bad if we snatched $250 million of property that we don’t know what type of impact it would have on our general fund. It would be a bad decision not to do it.”
Please contact Liam Dillon directly at email@example.com or 619.550.5663 and follow him on Twitter: twitter.com/dillonliam.