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Saturday, May 1, 2010

Budget Shenanigans

Budget Spiral: Stealing From Peter To Pay Paul

The City of Emeryville is robbing the piggy bank again, and it's the 'Low to Moderate Income' housing fund that's taking the hit this time. After years of lavish gifts in the form of massive multi-million dollar subsidies to wealthy developers all over town, it appears our budget is in dire straights now.

The Redevelopment Agency is required to make a payment to a state mandated school fund called the Supplemental Educational Revenue Augmentation Fund (SERAF). Proposition 98, passed by California voters in 2008 mandates the Emeryville Redevelopment Agency meet its SERAF obligation of $11,291,592 in Fiscal Year 2009-10. The first payment is due on May 10.

Since the Redevelopment Agency has no unencumbered funds left to make the first required payment, Helen Bean, Emeryville's Directer of Economic Development and Housing has recommended taking the money from the housing fund.

In a May 4th dated memo to the city council, Ms Bean acknowledged "The appropriation of $11.3 million from the Low and Moderate Income Housing Fund will significantly deplete the ability of the Redevelopment Agency to pursue and fund affordable housing projects".

Three impending housing projects are now endangered according to the memo:
  • The Avalon project, called by city officials a "family friendly" housing development at the Golden Gate Key site on San Pablo.
  • 3900 Adeline, a controversial condo proposal the council recently approved for Madison Park Corporation that involved the demolition of an "architecturally significant" and "historically significant" brick building.
  • The recently completed Oak Walk project at San Pablo Avenue and 40th Street, slated to be converted to low and moderate housing after the developer, BayRock Development pulled the plug on their initial condo development agreement with the city. After the market tanked, BayRock convinced the city to pony up $3 million for the conversion from market rate housing to low and moderate. This developer stated the project would become "blight" if the city didn't pay $3 million for the conversion.
The city council will decide this issue on Tuesday May 4th at 7:15 PM at City Hall.

14 comments:

  1. Jeeze, this does not inspire a lot of confidence. Seems like some bad, wasteful decisions were made when we were flush. Maybe all that money given to those few connected developers now in retrospect wasn't everything they said it would be. Think any heads will roll?

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  2. The secret government: the redevelopment agency. Monies for developers, bankers, bond issuers, and those that have.

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  3. It seems like we're between a rock and a hard place; these spending requirements (education and housing) are required of redevelopment agencies and the amounts are based on percentages. Since we've been taking in an amount of money from businesses we have to spend what we have to spend. Too bad the redevelopment Agency funneled back so much money it received into sweet deals for other developers. It would seem the Redevelopment Agency has been continually been 'doubling down' and now the cards have to be shown. Emeryville sure was flying high there for a while. Now, we're just screwed.

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  4. I like the way we are always hearing about public officials making policy blunders but rarely do we know who did what in this town and never is there any accountability for blunders made by them. The only time I can think of is when the council voted to censure Ken Bukowski but look how bad it had to get before they finally did censure. No one will pay for this blunder and no one (except you guys) is putting two and two together.

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  5. i urge all readers to read the staff reported written by city attorney michael biddle in his request for proposals for (outside) legal services presented to the city council at its april 20, 2010 meeting. between june, 2007 and august, 2009 the city of emeryville has paid $1,393,170 in outside legal fees and the redevelopment agency has paid $3,043,618 for a total of $4,436,788. this does not include expenses for fiscal year 2009-2010. as of june 1,2008 school fees to be paid to the school district by new projects were:
    residential: $2.97 per sq. ft.
    commercial: $.47 per sq. ft.
    live work: $1.72 per sq. ft.
    self storage projects $.07 per sq. ft.

    obviously an audit needs to be performed to make sure that all developers paid the proper amounts to the school district.

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  6. You can't get a building permit without paying school fees. So yes, all the appropriate school fees have been paid. It is almost impossible to avoid these fees.

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  7. A note to readers:

    Again, Brian is not giving you all the relevant information on a particular issue. The budget shortfall mentioned is the result of $1.7 billion the State of California took away from redevelopment agencies statewide to balance the fiscal year 2009-10 budget. This raid of redevelopment money is beling challenged by the California Redevelopment Association, which successfully challenged a similar take in FY 2008-09. If the challenge is successful the Emeryville Redevelopment Agency will get a big chunk of its funding back and will be able to repay the affordable housing fund.

    Also, the Redevelopment Agency can only borrow from the housing monies and is legally required to pay back the borrowed money to the affordable housing fund with interest within 5 years.

    Almost every Redevelopment Agency across the state is in a similar situation as Emeryville right now.

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  8. The May 4, 11:37 commenter is not referring to the SERAF, so the point is not germain.

    The May 4, 11:53 commenter is referring to a pending lawsuit which may or may not be successful. Anytime there is a redistribution of funds between the state and local municipalities there is contention. Suits are common and in this case, the story will evolve in the case the City of Emeryville is able to recoup anything.

    In the meantime, the story is that the City is stealing from the housing fund to pay the SERAF to the state. What flows from this is the inconvenient fact that the Redevelopment Agency has engaged in what some have called fiscally irresponsible behavior by all the massive give-a-ways to developers as part of it's "doubling down" on public policy strategy.

    I'm sure the 'power elite' is not comfortable that this is being reported, that's to be expected.

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  9. A Superior Court decision just out today suggests that the RDAs have lost round 1: http://www.google.com/hostednews/ap/article/ALeqM5jjiTR2ZqYOCNMZGPlV3Tr4Y3e1EwD9FG7KDO1

    RDAs will have to appeal to stop this and so it looks even more questionable that the RDAs will ever get this money back.

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  10. If the state had not taken away billions from redevelopment agencies, Emeryville would not have had to dip into the housing fund. Many, many agenies across the state are having to do things like that this year.

    Waht you call "massive give-a-ways to developers" most people would call "redevelopment." That's how agencies function. Using redevelopment funds to build projects creates new revenue in the form of tax increment which is in turn reinvested in the redevelopment area. Redevelopment is one of the most powerful tools that cities have to invest in the built environment.

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  11. Yes, some people will call this redevelopment. Some people will call this "empty rows of condos" subsidized by the City. If the "elegant engine" of redevelopment can keep extending itself in this manner, leaving shells of buildings in its wake and raiding other City funds, well, those election year slogans will just write themselves.

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  12. What the city calls "redevelopment", some have called give-a-ways to (favored) developers. The give-a-way charge has been earned since it can be argued the redevelopment creed has been subverted. The idea of redevelopment was supposed to be to make a more livable town for the residents, not to squander that opportunity by making regional shopping malls to make more money for the redevelopment agency through tax increments only to give it away to attract more regional shopping malls.

    The end is not ever increasing the built environment, there is nothing inherently good in that, instead the idea is to create a livable town for the residents. Every development brought by the Redevelopment Agency should be with an eye towards that end.

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  13. shirley enomotoMay 5, 2010 at 9:19 AM

    you pays the money but where does it go? when the city council proudly and benevolently announced that pixar was contributing $2 million to the new art and cultural center, then councilman fricke made the correction that that $2 million was to pay for the parcel directly behind ihop to expand their campus. and if the city paid dutro $5 million to take that property by eminent domain and build the park, which we all enjoy and love, why did pixar get off just paying $2 million for their lot which is almost double the size of the new park? finally i wish all you anonymousers would sign your names. if you have any questions about who's doing what at city call, just call them up and ask. that is what the brown act is for.

    finally, agendas of the redevelopment agency (although most issues are in closed session,) the city council and planning commission along with minutes are available online. more important is attendance at meetings or watching it live on chananel 27. body language speaks 10,000 words.

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  14. I think most of the people who post anonymously are city employees who fear reprisals for our opinions.
    They know all too well how crooked, connected, and vengeful the power elite in this town are.

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