HomeMy WebLinkAboutRDA SOUTH/CENTRAL REDEVELOPMENT PROJECT AREA rf'^ REDEVELOPMENT AGENCY
j3 / 0 No. 5
Y''7 14' 1O f • 6-21-82
Clatt
r 'f; Inter - Com
DATE: June 16, 1982
TO: REDEVELOPMENT AGENCY A"1,3
FROM: BILL HUSTON, EXECUTIVE DIRECTOR
SUBJECT: SOUTH/CENTRAL REDEVELOPMENT PROJECT AREA
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RECOMMENDATION:
It is recommended that the Agency direct staff to defer preparation of the
South/Central Project Area Plan until the Agency's financial consultant has
completed its financial review of the proposed project area.
BACKGROUND:
The Planning Agency has prepared a preliminary plan for the redevelopment
of the South/Central Project Area. The preliminary plan has been submitted
to the Redevelopment Agency which pursuant to State redevelopment law is
responsible for preparing a draft redevelopment plan for the area to be
considered by the City Council through a public hearing process.
DISCUSSION:
Staff has been working on the redevelopment plan and in the course of
preparing the plan has determined that the benefits of establishing a
project area could be outweighed by the cost of administering a
redevelopment program in the South/Central Area.
Attached for the Agency's review is a summary of the benefits and
liabilities associated with the South/Central Project Area. This
information will be supplemented with a verbal report.
Essentially, the primary liability would be the Agency's assumption of the
obligation to provide low/moderate income housing within the project area
or other areas in the City. It appears that this obligation would be
disproportionate to the benefit derived from establishing a project area
and that any desired public improvements within that area could be financed
through other means.
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2
A~'� tb. Inter - Com
DATE: June 15,1982
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TO: BILL HUSTON, EXECUTIVE DIRECTOR RDA
FROM: KEN FLEAGLE
SUBJECT: SOUTH/CENTRAL REDEVELOPMENT PROJECT
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The following is a synopsis of the benefits and liabilities resulting from
a South/Central Redevelopment Project:
BENEFITS
1. A tax revenue increment of $18,041 per year based on a taxable value
of $73,313,106 with 2% inflationary rate of increase.
2 . Value added as a result of pending projects would equal a net revenue
to the Redevelopment Agency of $170,000 per year after 1985, and would
finance a $1 million bond.
3. The Redevelopment Agency would be empowered to acquire and consolidate
blighted properties for redevelopment.
4. Street improvements for South "B" Street, San Juan, Walnut, and the
Newport Edinger connection could be partially funded.
LIABILITIES
1 . Twenty percent (20%) of the RDA revenue ($3,608 annually to 1983 and
$34,000 per year thereafter) must be set aside in a fund for low cost
housing.
2. The Sanitation District wants a share of the tax increment equal to
their proportion of property tax revenues prior to Prop . 13.
3. Pending legislation (SB 1648 now in interim committee) would allocate
the 2% annual increase to other taxing agencies and would preclude the
RDA from expending funds for public works projects.
4. The RDA must provide replacement low income housing for each unit of
low income housing that is removed, either by a private developer or
by condemnation by the City. For example, the city would be required
to replace the South "B" Street properties or assure that low income
housing units were made available within four years of such
destruction. A replacement housing plan must be adopted before
demolition of low income housing units.
5. The Agency must assure that the replacement housing for low income
families remain available at affordable housing costs for the term of
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the project, i .e. the Agency would be required to monitor sales and
rentals to assure that the replacement units were made available to
low income households for the next 30 years.
6. A debt , equivalent to the amount of tax increment, must be
established by July 1 , 1982 and statement of debt reported to the
County Controller prior to October 1, 1982, in order to receive the
1982-83 tax increment revenue.
ALTERNATIVES
1. Terminate the project on the basis that the liabilities will exceed
the benefits and assume that the private market will upgrade the areas
to a higher standard of development than would result from RDA
participation.
2. Proceed with the project and assume the responsibilities for low
income housing.
3. Expand the Town Center Project Area to include the South/Central area
to gain the benefit of a larger scale project and feasibility of
creating a debt, but extending the responsibility for the 20% housing
set-aside to the revenues from the Town Center area.
4. Suspend any further progress on the South/Central area until receipt
of the financial feasibility report from Katz, Hollis, Goren &
Associates.
RECOMMENDED PROCEDURE
Based upon preliminary evaluation, the liabilities of the South/Central
Project in terms of housing responsibilities will exceed the benefits of
limited financial return to the Redevelopment Agency. Alternative 4 is
recommended to permit a determination of the financial feasibility of the .
project.
KF:dmt
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