Future of Community Development Agency in doubt

As a result of maneuvering to reach a California state budget agreement, Sacramento has handed the Sonoma Community Development Agency a tough choice: fold up shop, or pay the state nearly $1.8 million to keep operating.

It’s a “lose-lose” proposition, said Sonoma City Manager Linda Kelly. Others call it extortion.

The agency, which directs money to support business and address blight, is under threat of elimination due to the passage of two Assembly bills. AB 26 1x and AB 27 1x call for the dismantling of California’s entire network of 400 redevelopment agencies in favor of a new system.

To retain its redevelopment agency authority the Sonoma City Council must decide by Oct. 1, 2011, to “opt in or opt out” of the new system.

Kelly said that opting out dissolves the agency, with potential loss of all tax increment funding except for bond payments and other existing obligations. Opting in retains the agency with the provision that it makes significant annual payments to the state.

Until the city decides to opt in or the legislation is shot down in court, Kelly said, “the Sonoma Community Development Agency is not open for new business.”
Kelly said that at this point the city is unable to provide any economic development loans, façade improvement grants to local businesses, or enter into any contracts or agreements for new programs.

ABx1 27 allows redevelopment agencies to avoid dissolution by paying the state to be part of its “alternative voluntary redevelopment program.” Kelly said the estimate of Sonoma’s required payment for fiscal year 2011-12 is $1,793,445.
“This two-bill scheme to eliminate redevelopment agencies in exchange for so-called ‘voluntary’ payments’ is nothing short of extortion,” said Chris McKenzie, executive director of the League of California Cities.

The bills clearly violate numerous provisions of the state Constitution, he said, and will be challenged in court.

“If the Governor and Legislature won’t respect the Constitution and the will of the voters, the league will ask the courts to do so,” McKenzie said.