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North County cities try to adjust to changing redevelopment picture

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Many Californians since the 1970s have come to understand “urban renewal” and “redevelopment” as synonyms.

When the state legislature, Gov. Jerry Brown and eventually the State Supreme Court abruptly broke that connection when they shuttered redevelopment agencies — which fund economically catalytic projects with tax revenue from previously completed projects — cities were left to scramble for a means of driving economic development.

But before they could conjure a new means of combating blight and spurring urban renewal, city-approved redevelopment agencies were left with uncertain funding for a portfolio of projects that had been approved but not yet completed.

The state forced cities to name successors to the agencies, and to submit schedules of all payments they felt were legally required. Then the successor agencies, in most cases the cities themselves, were left to hope their payments would be approved.

The new successor agencies would answer to an oversight board, which in turn answers to the State Department of Finance.

And, the state made clear that approval of the payment schedules didn’t preclude it from changing its mind later.

Then in early July, the legislature passed another bill, AB 1484, that not only authorizes the state or county-auditor to recover improperly spent funds, but also takes back money from local Low and Moderate Housing Funds.

It’s left cities in development limbo, and forced them to work in short-term increments while knowing the money they’re allocating for projects might not be there when they need it.

Take Carlsbad.

The city, as a successor agency, submitted its proposed payment schedule earlier this year only to see it come back with virtually no funding for physical infrastructure or construction projects.

Instead, most of its continued funding will be spent paying back bonds and redevelopment loans, staffing costs and on the legal defense and communication needs of the city’s power plant opposition.

“The state disapproved basically all of our projects,” said Debbie Fountain, director of Carlsbad’s Housing and Neighborhood Services Department. “It’s been a very difficult process.”

Fountain said the city’s plan to realign Carlsbad Boulevard, which had called for a $3 million obligation, wasn’t approved by the state, although she’s hopeful an appeal will result in the city receiving that funding. If not, it’ll need to secure the money through other means, whether a grant, from the city’s general fund, or by other means.

After passage of AB 1484, Carlsbad was forced to make a payment of $430,000 from previous Low and Moderate Housing money.

The City of Oceanside, however, declared itself the successor to its redevelopment agency in January. As of its most recent approved payment schedule, the city has more than $100 million in outstanding payments due for various projects and services within the city.

Much of that money will go to staffing costs, paying back previously issued bonds and for general business development.

But it’ll also be used on capital improvements and large-scale projects that have already been approved, as long as the state doesn’t subsequently rescind any approvals or allow the county to recover housing funds, as is allowed in the recently passed state bill AB 1484.

In terms of capital improvement projects, Oceanside will see $2.8 million in spending related to drainage improvements, $1.8 million in funding for the construction of a parking lot and rail trail at Tyson Park and Wisconsin St., waterfront restrooms are set for $563,000 in additional funding and improvements to Mission Avenue will bring $669,790.

And there’s still city funding for the construction of a new $207 million beach resort next to the Oceanside pier.

Oceanside’s current recognized obligation payment schedule (ROPS) calls for a $27 million payment on the project, but Oceanside City Manager Peter Weiss said that payment relied on a the issuance of a future bond.

The city made a $2.3 million payment for impact fees on the project and another $700,000 on infrastructure costs last year, and its total expenditure will end up at $5 million, according to Weiss.

“In the event that redevelopment money goes away, we can use rent credits,” he said.

Construction on the project is expected to commence by the end of the year, according to its developer SD Malkin Properties. It will include a 289-room Hyatt hotel and spa along with a 47-room boutique hotel with 48 timeshares and 22,000 square feet of retail and restaurant space.

Weiss said there’s little the city can do but implement the state’s directives as they come.

“The time for that debate should have happened before the decisions were made,” he said. “It’s not like the governor is sitting there waiting for Peter Weiss’ opinion.”

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