Chico may lose redevelopment funding

If the state Legislature passes the governor’s severely tightened budget as proposed, redevelopment agencies, those sleight-of-hand funding sources that came in so handy following the passage of Prop. 13, could be history.

If that happens, it will jeopardize, among other significant projects, the Butte County Nitrate Plan, the state-ordered solution to the Chico area’s significant septic tank problems. It would also spell a loss to the city of $2 million to $3 million per year for the next 20 to 30 years.

Redevelopment agencies (RDA) allow a local government to declare an area “blighted” and then develop and improve it, keeping the additional property tax that comes from the increased property value. Since 1980, a vast majority of the state’s cities and counties have formed RDAs because 1978’s Prop. 13 so severely restricted increases in property taxes, which were the major of source of local-government funding.

Under the system here, the property tax dollar breaks down so that 16 cents goes to the city, 23 cents goes to the county, 3 cents goes to the Chico Area Recreation District, 1.5 cents to the Mosquito Abatement District and the rest was for the schools—both the Chico Unified School District and Butte Community College. But under the RDA, the city kept that money as the state backfilled those funds to the schools.

Chico has used RDA funding to help build the 20th Street bridge over Highway 99, effectively creating the shopping district that lies to the southeast of Chico. It also widened Park Avenue, purchased park lands and paid for many of the traffic improvements along Whitman Avenue.

Under Gov. Gray Davis’ budget, the money raised by RDAs will go directly to the schools, instead of being backfilled by the state, said City Manager Tom Lando.

“This is much more significant for the county than the city,” said Lando, who added that the city had already realized the lion’s share of its RDA monies over the years.

“We are in fine shape on our capital projects,” he said.

Lando did say that he had some doubts that the Legislature would pass that part of Davis’ budget.

“About a third of the new legislators are from local government,” he said, noting they understand the importance of RDA funding. “There is going to be a real push not to do this.”

Cliff Wagner, a spokesperson for 3rd District Assemblyman Rick Keene, R-Chico, said Keene indeed recognizes the importance of RDA funding to local governments.

“Rick is supportive of RDAs, that they are an important tool for cities,” Wagner said. “And he is committed to looking for every possible solution to the problems.”

Wagner said based on a legislative analyst’s calculations, the state budget may not be bleeding as badly as the governor suggests and therefore some cuts may not be warranted.

Lando said he suspected the governor’s proposal to grab the state vehicle license fees from local governments, which would cost Chico $3.6 million over the next 18 months, may have been a political ploy that may not happen.