Menlo Park votes to pay state to keep redevelopment agency


On Tuesday night, Menlo Park joined a long list of other California cities, including Foster City, Millbrae, and Belmont, that voted to pay the state millions of dollars to keep their redevelopment agencies open.

Describing state Assembly bills 26 and 27 as "pay or perish" legislation, Menlo Park Finance Director Carol Augustine laid out in stark terms what faces the city in light of the state's desire to dissolve redevelopment agencies and redistribute the tax revenue.

"Also known as extinction or extortion," she told the council during its Sept. 13 meeting.

In short, if Menlo Park doesn't cough up $3.5 million, the state will shut down its redevelopment agency (RDA).

After that first payment, the city's ongoing obligation would be about $829,000 a year, according to Ms. Augustine. If tax increment revenue doesn't increase enough to cover the added expense plus the agency's projects, the city's general fund would bear the brunt of closing the gap, she said.

Redevelopment agencies were formed to fight blight through mechanisms such as affordable housing and code enforcement. Gov. Jerry Brown pushed for their elimination, arguing that diverting $5 billion in property tax revenue to RDAs left the state short on money needed for schools.

A seven-member board composed of representatives from the city, special districts, and the county would oversee redistributing that money to other agencies.

"It would mean significant change, and take away control from this council," Councilman Andy Cohen said during the meeting.

The League of California Cities and the California Redevelopment Association filed a lawsuit challenging the constitutionality of the bills, arguing that Proposition 22, passed in November 2010 by 60.7 percent of voters, made it illegal for the state to take money from local funds such as redevelopment revenue.

The California Supreme Court issued a stay on the legislation in August and will make a final ruling by the time the first payment comes due in January.

However, should the court decide that the legislation is legal, the deadline for choosing to pay to keep the RDA will have passed, leaving cities in a quandary.

As colleagues said they were holding their noses, Vice Mayor Kirsten Keith made a motion to pass the ordinance, and the council voted 5-0 in favor. The issue should return to the dais on Sept. 27, when council members are expected to actually authorize the payment. Menlo Park has filed an appeal of the $3.5 million fee, but the state hasn't indicated yet whether it will reduce the bill.

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Like this comment
Posted by Chuck Kinney
a resident of Menlo Park: Sharon Heights
on Sep 14, 2011 at 6:05 pm

Thank you for explainig the details concerning governor Brown's need for obtaining more revenue for the State to spend. Question: could the City of Menlo Park immediately commit the funds they have in their Re Development Account to a projects/s such as affordable housing that may be proposed in the downtown specific plan?

Like this comment
Posted by Stu Soffer
a resident of Menlo Park: Linfield Oaks
on Sep 14, 2011 at 9:48 pm

To answer Chuck's question - the downtown area is not within the City's RDA, so its funds can't be spent there. Only 20% of RDA tax revenue is allocated (must be allocated) to housing projects.

Like this comment
Posted by Racontour
a resident of Menlo Park: South of Seminary/Vintage Oaks
on Sep 15, 2011 at 9:43 am

Was there any information on what improvements the RDA is actually funding today and in the forseeable future ? The FAQ on the city site says that the plan that ended in 2009 was focused on items below.

The City of Menlo Park adopted the initial RDA, called the Las Pulgas Community Development Plan (RDA), for the Belle Haven area and nearby commercial district in 1981. Since 2001, over $31 million worth of capital projects have been completed in the area, plus roughly $1,000,000 annually of support to ongoing programs. Projects completed through the RDA funding include: the Gateway Apartments, the Belle Haven Child Development Center, Ivy Drive plaza,
Willow Corners development, Belle Haven Branch library, Onetta Harris Community Center and Senior Center, various road and streetscape improvements, Hamilton Park housing and other
area housing, and more.

Like this comment
Posted by Jack Hickey
a resident of Woodside: Emerald Hills
on Sep 19, 2011 at 7:50 am

I support Gov. Brown's effort to shut down the Redevelopment Agencies. School Districts should also support his efforts to restore property taxes diminished by actions of these ill-founded agencies.

RDA's are a blight on the political landscape.

Like this comment
Posted by annonynous
a resident of Menlo Park: South of Seminary/Vintage Oaks
on Sep 19, 2011 at 9:59 am

San Jose is the most obvious proof that RDAs are inept, other examples exist. I think it is a waste of money to keep ours open; just close it. Anything you want done in the RD district can be done better with market participants because they work harder at maximizing value.

Like this comment
Posted by Roxie Rorapaugh
a resident of Menlo Park: University Heights
on Sep 19, 2011 at 10:02 pm

I agree with the two posters above and support Governer Brown's efforts to end RDAs. They have been abused in too many instances. While the RDA we have did create much good in Belle Haven, without sustained oversight and input from the community the funds will not be used properly... after all, if the point of the RDA is to remove blight and after several decades and millions of dollars the job still needs to be done, then maybe some other approach needs to be tried. In the meantime, our schools need funds and should not be short-changed due to RDAs.

Sorry, but further commenting on this topic has been closed.

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