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‘As painful as possible’: How the state’s taking $48 million out of Downtown’s pocket

August 18, 2009 - 5:54 pm

As reported yesterday, California has opted to balance its budget in part by demanding $2.05 billion from the state’s redevelopment agencies. For many redevelopment areas the expense may be painful in the near term, but they have plenty of time to make it up. That’s because redevelopment law places two caps on most redevelopment areas: They get a maximum of 40 years to do their work, and they have a cap on how much money they can earn from tax increment. For most of San Diego’s redevelopment areas, the work of redeveloping blighted areas has gone so slowly that they’re far more concerned with running out of time than with hitting the maximum earnings. Thus, whatever the state takes now, the redevelopment agency for these areas can hope to earn again going forward.

But San Diego’s Downtown redevelopment, as managed by the Centre City Development Corporation (CCDC), has been remarkably successful. As I wrote last year, CCDC expects to hit the cap of $2.8 billion in about 11 years, some 12 years before they hit their time limit. CCDC Vice President Frank Alessi told me that after debts and other obligations are calculated, the agency projects about $550 million to spend on all remaining projects from realigning trolley tracks on C Street to building new parks, and most of that money has been allocated.

Now the state has demanded that CCDC cough up $48 million—about nine percent of its remaining income.  Alessi told CityBeat that money will count against the cap, which means there’s no way for CCDC to recoup the loss. In the past, he said, the state legislature has included language that says the money doesn’t count against the cap, but he couldn’t find words to that effect anywhere in the law.

John Shirey, president of the California Redevelopment Association, confirmed Alessi’s understanding that the state had taken the money, and there’s no getting it back.

“We went through it several times looking for this very provision, and it’s not there,” Shirey told CityBeat. “The legislature is trying to make this as painful as possible.”

As a result, in the years ahead, CCDC’s board will have to choose between projects they’d already planned to approve.

One Comment leave one →
  1. August 22, 2009 - 2:38 pm 2:38 pm

    Eric: do you happen to know what parks Alessi was referring to in “…. building new parks, and most of that money has been allocated”?

    Is Alessi saying that the state’s $48 million grab will come out of parks?

    Your “As a result, in the years ahead, CCDC’s board will have to choose between projects they’d already planned to approve” sounds very ominous for parks. Was that Alessi’s message: that the CCDC board will choose to cut parks over private projects?

    Sounds like we need to re-double our vigilance. We all know the projects the CCDC board would love to cut. We just don’t want them using the state as an excuse.

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