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A powerful tool when properly used

Redevelopment helps finance infrastructure needs

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Redevelopment has been both cussed and discussed over the many years it has been in existence. It has been the subject of ridicule, yet praised in numerous situations for its ability to revitalize a community. From our Board’s point of view, redevelopment is simply another financing tool to assist communities with infrastructure needs that are becoming more costly with less funding to go around.

A redevelopment agency uses borrowed funds to invest in public improvements and participate in public/private partnerships to stimulate private business. The financial power of redevelopment comes from a portion of future property taxes set aside for repayment of debt incurred by the redevelopment agency. This is called the “tax increment” because it is a portion of the increase in property tax revenues collected as assessed property values gradually rise. Tax rates are not increased, but tax revenues increase when new development occurs or when properties are sold. The redevelopment agency borrows against the stream of future tax increment available over 45 years.

One of the major concerns expressed is the big “E” word: eminent domain. One of the solutions to this fear is to limit the eminent domain powers when establishing a redevelopment agency. Laws have also been established to limit the use of eminent domain to public projects, prohibiting its use for the purpose of subsequent transfer (sale) of the property to another private party, such as a shopping-center developer. Since it was established in 1987, Paso Robles has never used eminent domain in its redevelopment area.  Many incorporated cities have established redevelopment areas and with much success.

 As the former mayor of Paso Robles, I saw the benefit of redevelopment time and time again. The most recent experience was after the San Simeon earthquake of 2003. FEMA provided funds to seismically retrofit and rehabilitate the accessibility of the Carnegie Library Building in the City Park. In order to complete the necessary work, the Redevelopment Agency supplemented the project with $400,000. Without that participation, the project would have taken longer and funding from some other source would have had to be identified.

From a historical perspective, back in the 1970s, I used to own the corner of 11th and Pine Street. When I tried to get a project at that site, I was told a major drainage project would be required before anything could be built there.  So, due to the large expense to build the necessary drainage system, I sold the property. Consequently, the land changed hands many more times with the same challenge regarding the cost to address the drainage problem. Then in 1987, along came redevelopment. The redevelopment agency funded the drainage improvements that amounted to around $200,000. This allowed the proposed project on 11th and 12th Street to move forward. That project is the Park Cinemas. In my opinion, that was the catalyst to revitalizing Paso’s downtown.

In addition to infrastructure projects, there is a Low and Moderate Income Housing Set-Aside used to support affordable housing. Under state law, 20 percent of the tax increment must be set aside and used to support affordable housing. This, too, was successfully utilized in Paso Robles for senior and low and moderate housing projects.

The county undertook a redevelopment feasibility report in 2004. Arguably, since that time there have been significant physical and economic changes. Although there has been a significant reduction in new development applications since then, many residential subdivisions and commercial projects approved during the development boom of the early 2000s were completed in the years since 2004. This new development has resulted in substantial increases in assessed property valuations, and has included new infrastructure improvements that were not in place during the surveys conducted for the 2004 redevelopment report. Additionally, given the recent recession, the county faces a less robust economic outlook compared to the aggressive growth the county was accustomed to in prior years.

This is not to suggest that redevelopment is a growth-inducing tool. By establishing the appropriate guidelines and following the laws of redevelopment, a community can recognize the means by which it can improve its infrastructure, give aesthetic attention to areas in need, and provide the partnership to allow for these projects to make financial sense.

Over the next couple of months, our staff will prepare a timeline, budget, and schedule where we will engage with each of the communities that may have an interest in this tool. It may not be for everyone, but there are certain areas that may find this beneficial. We, as a collective Board, are seeking any alternative methods to help our communities in these challenging and changing times. We will be providing the pros and cons about redevelopment and take the time necessary to address all concerns and questions. Our decisions will be based on the desires of our communities, so we look forward to hearing from you. ∆

San Luis Obispo County Supervisor Frank R. Mecham represents the 1st District. Send comments via the opinion editor at econnolly@newtimesslo.com.

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