Requiem for Redevelopment The Life and Death of Redevelopment Agencies

Conclusions 13

• CL1
  Buellton: over the past 11 years spent $7.4 million; received $5.2 million in Tax Increment; has $1.8 million in outstanding long-term debt and obligations.
• CL2
  Goleta: over the past 11 years spent $21.7 million; received $19.4 million in Tax Increment; has $33.6 million in outstanding long-term debt and obligations.
• CL3
  Guadalupe: over the past 11 years spent $10.9 million; received $11.5 million in Tax Increment; has $19.9 million in outstanding long-term debt and obligations.
• CL4
  Lompoc: over the past 11 years spent $24 million; received $18.6 million in Tax Increment; has $43.8 million in outstanding long-term debt and obligations. 2011-12 Santa Barbara County Grand Jury 9 REQUIEM FOR REDEVELOPMENT
• CL5
  City of Santa Barbara: over the past 11 years spent $210.4 million; received $162.7 million in Tax Increment; has $167.2 million in outstanding long-term debt and obligations.
• CL6
  City of Santa Maria: over the past 11 years spent $34.7 million; received $12.0 million in Tax Increment; has $29.3 million in outstanding long-term debt and obligations.
• CL7
  County of Santa Barbara (Isla Vista): over the past 11 years spent $44.1 million; received $39.0 million in Tax Increment; has $17 million in outstanding long-term debt and obligations.
• CL8
  Detailed data are not available on the amount of money spent on individual projects, the recipients of this money, or how these projects have contributed to eliminating blight.
• CL9
  list of all projects funded (completed or not) and the designated blight they eliminated
• CL10
  the amounts spent (or to be spent) on each individual project
• CL11
  the names and locations of recipients of over $25,000 associated with each project
• CL12
  administrative costs and professional services associated with each project
• CL13
  amounts of principal and interest payments associated with each project

Observations 1

• OB1
  The RDAs of Santa Barbara County With the implementation of AB 26, Santa Barbara County loses seven RDAs. Six cities had RDAs: Buellton, Goleta, Guadalupe, Lompoc, Santa Barbara, and Santa Maria. Santa Barbara County created an RDA in unincorporated Isla Vista. The six city RDAs were governed by their respective City Councils; the Isla Vista RDA was governed by the County Board of Supervisors. The Buellton RDA was established in 1993. It encompassed 180 acres, approximately 17 percent of the incorporated city's total land area. The Goleta Old Town Redevelopment Project Area was adopted in 1998 by the County of Santa Barbara Redevelopment Agency when Goleta was an unincorporated part of the County. When the City of Goleta incorporated in 2002, it established the Redevelopment Agency for the City of Goleta to take over the Old Town Project Area. The Project Area encompassed 595 acres, about 3.5 percent of the incorporated city. The Guadalupe Community Redevelopment Agency, established in 1985 and amended in 2009, encompassed 581 acres, about 70 percent of the incorporated city. In 1984, Lompoc approved the Old Town Redevelopment Project area to encompass 80 acres in downtown. The Project Area Redevelopment Plan was amended to add 920 acres surrounding downtown in 1998 and again to add 80 acres on the eastern portion of the City in 2002 totaling 1,080 acres, about 14 percent of the city. The City of Santa Barbara Redevelopment Agency was created in 1968 and the Central City Redevelopment Project area was established in 1972 encompassing 850 acres, about 7 percent of the city. 4 2011-12 Santa Barbara County Grand Jury REQUIEM FOR REDEVELOPMENT The Santa Maria Redevelopment Agency was established in 1959. The Town Center Project Area was created in 1972 and amended in 1994 encompassing 13 acres, less than 0.1 percent of the city. Santa Barbara County established the Isla Vista project area in 1990 to include 429 acres adjacent to the University of California Santa Barbara. RDAs IN SANTA BARBARA COUNTY Buellton Goleta Guadalupe Lompoc SB SM SBC-IV Year Plan 1993 1998 1985 1984 1972 1972 1990 established Year - 2002 2009 1998, 2002 - 1994 - amended Number of 1.8 595 581 1,080 850 13 429 acres % of City in 17% 4% 70% 14% 7% <0.1% - RDA Source: California State Controller's Office, Community Redevelopment Agencies Annual Reports Expenditures The California State Controller's Office has published detailed reports of RDAs' financial activities for the years FY 2000 – FY 2010. These are compiled and presented below. RDA TOTAL EXPENDITURES FY 2000 – FY 2010 Buellton Goleta Guadalupe Lompoc SB SM SBC-IV Total 11 Yr Total $7.4 mil $21.7 mil $10.9 mil $24.0 mil $210.4 mil $34.7 mil $44.1 mil $353.2 mil Calculated from: California State Controller's Office, Community Redevelopment Agencies Annual Reports RDA EXPENDITURES FY 2000 – FY 2010 Percentages Spent in Each Category* Buellton Goleta Guadalupe Lompoc SB SM SBC-IV Admin & Prof 78% 21% 21% 14% 10% 2% 13% Services Debt Interest 4% 2% 23% 12% 15% 34% 8% Debt 3% 21% 8% 9% 25% 51% 8% Principal Real Estate 9% 31% 36% 46% 48% 0% 36% Dev Property 0% 0% 4% 0% 3% 4% 0% Acquisition Housing 0% 0% 0% 0% 0% 0% 1% Subsidies 2011-12 Santa Barbara County Grand Jury 5 REQUIEM FOR REDEVELOPMENT Other 6% 26% 8% 19% 0% 9% 34% Calculated from: California State Controller's Office, Community Redevelopment Agencies Annual Reports * For the list of line items grouped in each category and data source, see Appendix 1. A comparison of percentages of each RDA's expenditures reveals several differences. Buellton spent the largest percentage on administration and professional services. Santa Maria spent virtually its entire RDA budget on paying debt service (principal and interest) incurred for the earlier construction of parking structures and lots. Santa Maria had no real estate development expenditures during the 11 years examined and Buellton had minimal. Real estate development accounted for almost half of expenditures in Santa Barbara and Lompoc and about a third of those in Goleta, Guadalupe, and Isla Vista. While the data offer a breakdown into various aspects of real estate development (see Appendix 1 for categories), they do not disclose the details of individual projects such as payments to developers, non-profits, and consultants. Goleta and Isla Vista report a quarter and a third respectively of expenditures as “other,” precluding a detailed analysis of this spending. Revenue RDAs had several sources of revenue: Tax Increment, interest income, rental and lease income, grants from other agencies, and “other.” The main revenue source was Tax Increment: property tax on the increase in assessed value of the parcels in a project area since the RDA was established. As presented in the table below, Tax Increment typically represented about 85 percent of RDAs’ revenue. RDA REVENUE FY 2000 – FY 2010 Buellton Goleta Guadalupe Lompoc SB SM SBC-IV Total 11 Yr Total $5.2 mil $19.4 mil $11.5 mil $18.6 mil $162.7 mil $12.0 mil $39.0 mil $268.5 mil Property Tax Increment 11 Yr total $1.0 mil $2.7 mil $2.7 mil $2.0 mil $30.1 mil $2.8mil $7.0 mil $48.3 mil Other Revenue 11 Yr Total $6.2 mil $22.1 mil $14.2 mil $20.6 mil $192.8 mil $14.8 mil $46.0 mil $316.8 mil Revenue Calculated from: California State Controller's Office, Community Redevelopment Agencies Annual Reports Debt In addition to Tax Increment, RDAs were able to use a variety of other funding sources including long-term bonds, refinancing debt, selling assets, and borrowing from their city or county. Loans, bonds, and interest were usually secured by and repayable from the RDA's property Tax Increment. AB 26 required all RDAs to adopt and post an “Enforceable Obligation Payment Schedule.” While there was variation in the way different RDAs report, the data 6 2011-12 Santa Barbara County Grand Jury REQUIEM FOR REDEVELOPMENT permitted identifying long-term obligations that will not be paid off within one year as presented below. ENFORCEABLE OBLIGATION PAYMENT SCHEDULES (2011) Long-term Outstanding Debt or Obligation Buellton Goleta Guadalupe Lompoc SB SM SBC-IV $1.8 mil $33.6 mil $19.9 mil $43.8 mil $167.2 mil $29.3 mil $17.0 mil Calculated from Enforceable Obligation Payment Schedules; includes debt service on loans and bonds, and money owed to funds and accounts that will not be paid within one year. RDA Accomplishments What did tax payers get for these expenditures of property Tax Increment and accumulated debt? An accounting of accomplishments is provided by the State Controller's Office. Each RDA was required to list the activities it completed in its annual Financial Transactions Report. These activities are listed in Appendix 2. They do not include projects in progress such as the Dick DeWees Community and Senior Center in Lompoc nor projects completed prior to 1999-2000, such as the Paseo Nuevo project in Santa Barbara or the parking structures and lots at Town Center Malls East and West in Santa Maria. Nevertheless, they are the official enumeration. Effects of Dissolution AB 26, the act dissolving RDAs, ruled constitutional by the California Supreme Court, authorizes successor agencies, typically the cities or counties creating RDAs, to receive property Tax Increment the RDAs would have received in order to make payments on legally enforceable obligations. In addition, AB 26 authorized establishment of an Oversight Board for each successor agency to approve actions of successor agencies including the Enforceable Obligations Schedule. The table below shows each RDA's report of anticipated expenditures for the coming fiscal year listed in each RDA's Enforceable Obligation Payment Schedule and expected Tax Increment that the successor agency will use to pay off obligations. Successor agencies and Oversight Boards may not approve all of the projected expenses. Per AB 26, when the Tax Increment exceeds the amount needed to pay debt obligations and “pass-throughs,” the excess will go to a fund established by the county auditor-controller to distribute to schools and special districts in the proportion they would have received property taxes had there been no RDAs. 2011-12 Santa Barbara County Grand Jury 7 REQUIEM FOR REDEVELOPMENT ENFORCEABLE OBLIGATION PAYMENT SCHEDULES Projected expenses and Tax Increment Buellton Goleta Guadalupe Lompoc SB SM SBC-IV Projected $0.1 mil $4.5 mil $1.1 mil $1.7 mil $11.8 mil $2.7 mil na debt service 2012 Projected $1.5 mil $0.7 mil $0.7 mil $2.7 mil $3.6 mil $0.00 na expenses 2012 * Total $1.6 mil $5.2 mil $1.8 mil $4.5 mil $15.5 mil $2.7 mil na projected cash outflow 2012 Current year $0.8 mil $3.9 mil $1.5 mil $2.6 mil $19.9 mil $1.1 mil $6.6 mil Tax Increment Calculated from Enforceable Obligation Payment Schedules and Source; California Department of Finance, “Estimated AB27 Payment” * Short-term liabilities, operating expenses, and one-time ”pass-throughs.” na = Not available from Enforceable Obligation Payment Schedule As RDA liabilities are paid off, schools and special districts as well as cities, and the County will receive additional revenue from property taxes. Existing bond proceeds will continue to be spent on the purposes for which they were borrowed. Any project already fully funded will continue to be pursued by the successor agency. Bond indebtedness will be paid off by the successor agency with Tax Increment dollars. Since RDAs employed people to administer them, there may be job losses. RDAs had full-time employees as well as employees shared with their respective cities or the county. These employees could remain if the successor agency accepts them. Among the casualties from the termination of RDAs is low-income and moderate-income housing and the elimination of blight. Each city or county will now be forced to examine how to address these needs without having an RDA as a funding source. Cities, counties, schools, and special districts will receive more funds as RDA debts are repaid. The biggest beneficiary of the dissolution of RDAs is the State of California. Since the State General Fund made up for losses of property tax to schools caused by RDAs receiving those property taxes, when the dissolved RDAs’ debts are paid off, schools will get more property tax revenues. 8 2011-12 Santa Barbara County Grand Jury REQUIEM FOR REDEVELOPMENT

Agency Responses 6

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No Responses Found 2

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