City to Ask Council to Extend Redevelopment Agency

Faced with losing its redevelopment funding, and with it money that pays for affordable housing projects, a slew of road projects and an ambitious redevelopment program, city staff will ask the council to keep its redevelopment agency at a special budget hearing next month.

In June, Gov. Jerry Brown signed a law eliminating redevelopment agencies, which some cities used as piggy banks, financing golf courses and expensive shopping centers instead of cleaning up blighted neighborhoods as intended.

But a clause in the legislation allows cities to pay the state to keep their redevelopment agencies, something that Petaluma plans to take full advantage of.

The cost? An estimated $5.2 million the first year, followed by $1.2 million each subsequent year, according to the city’s new redevelopment director Ingrid Alverde.

“We believe, based on the current estimates of where the agency is, what the payments are going to be and how the increment is going to flow over the coming years, that we’ll be in a position to maintain the administrative overhead associated with the agency and make the payments,” Alverde said.

Alverde's own $115,000 a year job is on the line, as is Petaluma's entire , meant to lure business to the city and was more than a year in the making. Redevelopment monies are also used to pay half the City Manager's salary and 30 percent of that of the Finance Director.

To pay the state, the city will dip into the redevelopment agency’s budget, which last year was $16 million. The agency is funded by a tax increment, the increase in the value of properties that have been redeveloped.

Keeping the agency will allow Petaluma to move forward on projects it has already spent considerable money on, such as improvements to the Washington Street freeway interchange, the Old Redwood Highway and the Rainier undercrossing, said Mayor Dave Glass.

“By doing this, we maintain our ability to move our projects forward,” Glass said. “If we don’t, it puts an end to our ability to be in the drivers seat on how we invest the money we’ve already identified and earmarked and want to move forward on.”

It will also allow the city to keep its affordable housing program and keep all of its properties instead of turning them over to the state. 

But because the city will have to make payments to the state, it will leave less funds for projects that in the past would have been used to spur economic growth.

The city council will discuss the issue at a special budget hearing August 24, a move that is being repeated in other towns throughout Sonoma County. On Tuesday, the Santa Rosa City Council approved a $2.7 million payment to the state to keep its redevelopment agency, a move some said was similar to paying ransom.