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Santa Barbara Officials Concerned About Fate of Saved Funds for Projects as RDA Dissolves

Once formed, an oversight committee will approve all spending related to the city's former redevelopment agency

All redevelopment agencies in California are gone as of Wednesday, and the City of Santa Barbara is left wondering what will happen to its ongoing projects.

The city is the “successor agency” for the RDA and will handle business left behind by the agency, such as paying back bond debt and finishing constructions projects already in progress. However, it’s uncertain what will happen to projects the city has saved for but for which it hasn’t yet broken ground, Community Development Director Paul Casey said at Tuesday’s City Council meeting.

Local officials are openly frustrated that the “Dissolution Act” was upheld by the state Supreme Court and that no clarifying legislation has been passed to help implement it in such a short time.

“We’re not assuming any help from Sacramento in trying to go through this process,” Casey said.

The Supreme Court shot down the accompanying bill, which would have let RDAs continue if they paid millions of dollars to the state. A judge found the former to violate Proposition 22, which “prohibits the state from borrowing or taking funds used for transportation, redevelopment or local government projects or services.”

Santa Barbara is only losing the agency’s last three years of existence, but it amounts to $36 million in tax revenues and possibly up to $40 million in savings the RDA has put away for future capital projects, according to city staff.

An oversight committee, which doesn’t have to be formed until May, has to approve all spending related to the former redevelopment agency, so the city will have to make its case for every ongoing project, Casey said. Until then, even projects they’re confident will be approved have been halted, because if not, the city’s General Fund would be on the hook for the money.

One of the largest is a new police station, for which $8 million has been saved and some design work already done. The city will eventually ask voters for the rest of the construction costs but fears the oversight committee could say the millions of dollars in savings for the project just goes away.

Even more so than the lost revenue, the concern is losing the millions in savings from prior years, Casey said.

City Attorney Steve Wiley expects many lawsuits on a state level dealing with this issue, especially since the Supreme Court upheld Proposition 22 in its ruling.

Mayor Helene Schneider and other council members bemoaned the loss of the RDA, calling it exemplary in its use of the property tax increment for community projects.

The Paseo Nuevo shopping center, downtown parking structures, affordable housing grants and construction, lighting and sidewalk improvements, and restorations of the Granada and Lobero theaters are a handful of projects the RDA has paid for over the years.

“People can look to Santa Barbara’s RDA as a shining light of what works,” Schneider said.

The tax increment from all seven RDAs in Santa Barbara County will be redistributed to the county, cities, school districts and special districts after debt payments and other obligations are completed.

As the county’s Auditor-Controller Office explained at a Board of Supervisors meeting, there is a priority list for redistributing the money with schools at the top, but payouts most likely won’t happen for a few years.

Buellton, Goleta, Guadalupe, Lompoc and Santa Maria have become successor agencies for their RDAs, and the county has taken over for Isla Vista’s agency.

Noozhawk staff writer Giana Magnoli can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.

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