Deadline to issue bonds on City’s horizon

In the world of redevelopment bonds, you’ve got to act fast to think ahead. Because it must pay off any and all debts by 2042, the Sonoma City Council was reminded at its meeting Wednesday night, new 30-year bonds must be issued by 2012.
“I’d look at it in the next year or two,” said General Counsel Dan Slater, participating in a redevelopment workshop. “You can pay as you go, but it’s hard to get a critical mass of money to do something significant, that can address your low income housing obligations.”
Bond deals would be tougher to put together in this economy, he admitted, but the track record of the last redevelopment issuance, in 2003, is strong. According to City Manager Linda Kelley, that bond table projected $3.3 million in agency revenue for 2008–2009. The actual number is $4.7 million.
“We issued bonds and bought empty lots that aren’t on the tax rolls,” said council member Joanne Sanders. (The city council also acts as the board of directors for the Community Development Agency.) The investment “is not helping pay for itself.”
Slater said that a balanced strategy is important: investing in projects that produce property tax, and businesses that increase sales and transient occupancy tax. Investments to publicly-owned property, money that would otherwise come from the city’s general fund, is also important in the mix.
Overall, agency money not in bonds is “left on the table. If you incur the debt, you’re going to get the tax increment (revenue).”
Bonds may qualify for federal credits under the American Recovery and Reinvestment Act, as well as likely shield assets from the state of California. A state law that would have required California cities and counties to pay $350 million from their local redevelopment agency budgets, by May 10, was ruled unconstitutional on April 30. Slater predicted that the law will be reworked, and “the state will likely take redevelopment money to backfill the budget deficit. It’s a shell game.”
State redevelopment agencies may be affected by another piece of legislation, SB93. If it passes the law would add the burden of providing “substantial evidence” to the local agency, leading to costly and time-consuming findings and reports. Slater said the change could “significantly and detrimentally prevent a redevelopment agency from performing its traditional role.”