Chico faces possibility of fewer redevelopment projects

Gov. Schwarzenegger could sign a budget taking local money to offset state deficit

Projects like building the transit center in downtown Chico, widening Cohasset Road and fixing up Fifth Avenue and Eighth Street are all paid for by the Chico Redevelopment Agency. If Gov. Schwarzenegger has his way with the state budget, however, a portion of those funds could go to fix the state’s money problems instead.

“There will be fewer dollars to do public projects in the community related to infrastructure,” said Martha Wescoat-Andes, manager of economic development/redevelopment in Chico. “When you drive around Chico and the roads and all the things that connect the different parts of Chico, we’re constantly doing work on those to keep them functioning.”

The state of California faces the problem of a $15.2 billion deficit. So, taking a little from local governments—$675 million over three years, to be exact—could help close the gap. But what it means for those local governments is more significant.

Chico alone stands to lose $1.27 million in redevelopment funds per year if the current state budget is passed. Considering the fund rakes in nearly $30 million a year, that doesn’t sound like big bucks (it’s a 4.3 percent cut). But Wescoat-Andes explained that the numbers can be deceiving.

“We leverage dollars,” she said. “It’s more than a one-fer. We rely on other sources of funding, and the whole project gets delayed if one piece is missing.”

Jennifer Hennessy, Chico’s finance director, agreed, saying that each dollar of redevelopment money is typically matched with $14 of private money.

Redevelopment funds are generated from property-tax increases in areas that have been redeveloped. So, when a neighborhood is fixed up, the home values increase along with property taxes—and a portion of that extra feeds directly into the redevelopment fund.

In addition to public infrastructure projects, like road maintenance and parks, the redevelopment agency—the City Council wearing a different hat—also pays for low- and moderate-income housing, which is poised to take a $240,000 hit. Wescoat-Andes explained that would make the difference in about eight moderate-income families getting loans to buy a home.

This isn’t the first time the state has tapped into local redevelopment funds. In fiscal year 2004-05, the state took just less than a million from Chico, and the same amount the following year.

“In the past, we’ve basically had less RDA money to work with,” Hennessy said, adding that money would not be taken from other departments to offset the loss. “RDA money is typically used to build road projects, park projects, big infrastructure-type improvements. The fewer dollars we have for that, the fewer projects will be built.”

As for now, no contingency plans are being worked up, as the state budget could change at any time.

“They’ve got a big problem to solve, so they’re going to do what they’re going to do,” Hennessy said of the state of California. “We’re sort of in wait-and-see mode. We’re hoping they don’t do it, but I’ll be very surprised if we get away with them not taking something, based on the magnitude of their problem and the history of them taking local money.”

If it’s any consolation, the money will be added to the state’s education budget, benefiting the public schools.