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HomeMy WebLinkAboutAgenda Report - July 6, 1983 (34)ot Ci n 6j CITY COUNCIL MEETING (► JULY 6, 1983 LE'= RDC' D Following receipt of a letter f.-cin Attorney Brenton Bleier FROM ATMFNEY regarding a proposed Redevelopment Agency in the City of BRETT M BLEIER Lodi, Dn motion of Mayor Pro `I'esV)re Snider, Murphy secone , RE PROPOSED the matter was referred to staff for review and RIDLVELOPMENr recmnenda t ion . AGENCY IN IOD I nw r L t t ps y T v� a ill o- r. !� YaA• ., �# '^�?�•'��- ,tip � ,¢"'.> (_1 i COUNCIL EVErYN M OESON. Mayor JOHN R (Randy) SNIDER Mayor Pru Tempore ROBERT G MURPHY JAMES W PINKERTON. ►r IRED M REID HENRY A. GV.✓ES. Ir City CITY O i �I O fI ALICE M. R.EIMC Edna�er City Clerk CITY HALL. 221 WEST PINE STREET POST OFFICE BOX 320 RONALD M STEIN LODI. CALIFORNIA 95241 City Attorney (209) 334-5634 July 11, 1983 Mr. Brenton A. Bleier Attorney At Law 404 West Pine Street Suite Two Lodi, CA 95240 Dear Mr. Bleier: Your June 24, 1983 letter regarding a proposed Redevelopment Agency of the City of Lodi pursuant to the Community Redevelopment Law of the Sate of California was presented to the Lodi City Council at its regular meeting of July 6, 1983. Council referred the matter to Staff for review and recommendation. I am sure you will be hearing, shortly, from a representative of Staff concerning this matter. Should you have any questions, please do not hesitate to call this office. Very truly yours, Aloe M. Re mche City Clerk AMR: ji LAW OFFICES OF BRENTON A. BLEJER 404 WEST PINE STREET. SUITE TWO 1001. CALIFORNIA 95240 (2091 333-2146 June 24, 1983 11 ALICE V1. CITY CORA The Honorable City Council G' T Y G;. LOB, City Clerk, City of Lodi 221 W. Pine Street: Lodi, California 95240 Re: A Proposed Redevelopment Agency of the City of Lodi Honorable Members in Session: Introduction The purpose of this letter is to formally propose to you that the City of Lodi establish a Redevelopment Agency of the City of Lodi pursuant to the Community Redevelopment Law of the State of California (Sections 33000 et seq. of the California Health and Safety Code). In this: letter, I will address what a redevelopment agency is, what it can do for Lodi and what you as a Council need to do to begin the process. I. WHAT A REDVELOPMENT AGENCY IS A redevelopment agency is a separate and distinct legal entity created by the city council of a city pursuant to a set of statutes known collectively as the Community Redevelopment Law. While it is possible that the Agency could have a separate gov- erning board, it is permissible, and I would recommend, that you establish yourselves as the governing board of the Redevel- opment Agency. The Agency would not need any staff apart from the present City staff, at least in its early years. The Redevelopment Agency defines an area within the boundaries of the City which is in need of capital assistance beyond that available from the general fund In Lodi's case, I would suggest an area including approximately one-third of the assessed valua- tion of the City and including the downtown area, the East Side residential areas, the major commercial areas and areas of present and future industrial development. A "redevelopment plan" is established for such an area and such an area is generally known as a "redevelopment project area" or simply "redevelopment area". The plan will basically set forth your priorities for implementing improvementz within the area based upon the availability of funds to the Agency. It heed not be, and in fact should not be, an extremely detailed docu- ment. It should deal with general plans and priorities to The Honorable City Council Page Two allow maximum flexibility to later Agency and Council members. The plan will have a term of thirty to fifty years and may be extended frc:n time to time. The most important feature of the Agency however is its source of income. Upon the establishment of a redevelopment area, the County Assessor will survey the total assessments levied within the area upon the date of the initiation of the plan. There- allfter, the County Tax Collector is instructed by law to rebate to the City one hundred percent (100%) of all tax collections on assessments within that area above the level of the assess- ments upon the date of the plan. These payments are called variously "tax increments" or "tai: allocation payments". It is these payments that form the source of income for the Agency with which it can undertake its projects. As you know, assessments incr=ase in California from three causes: (1) A two percent (28) per year increase in assess- mei:}s allowed ender Proposition 13; (2) Adjustments to fair market value as a result of sales or transfers of real property; and (3-) Increases in valuation due to improvements to real property such as new construction and devel- opment. evel- opment. From a pragmatic standpoint, because the Redevelopment Agency's income is therefore geared to growth of the assessments base, it is most important that the project area be defined to include areas of prospective growth. I have prepared and attached as Exhibit "A" a pro forma analysis of the levels of payments which could be achieved by a Redevelopment Agency in Lodi which included approximately one-third of the assessed valuation of the City within its boundaries. As you can see, while the payments in the early years are small, they grow geometrically because of the growth of the base upon which they are calculated and rapid- ly become an extremely substantial base of support for capital improvements in our City. I am often anked by city officials what disadvantages or "strings" are atta::hed to such money. The orly major disadvantage of the legislative scheme is a requirement, ::hick can be substan- tially mitigated by certain factual findings by the Council, that The Honorable City Council Page= Three a portion of the money derived be devoted to "low and moderate income housing". Of course, it is clear that much government expenditure in this area has been a very negative influence upon many communities. However, in Lod's case, as outlined in the next section of this letter, I believe these expenditures can be properly handled and actually help maintain the quality of life in Lodi. Flav=.ng discussed what an agency is, and what its source of fund- ing would be, I would now turn to what it can do for Lodi. II. WHAT CAN A REDEVELOPMENT AGENCY DO FOR LOD The basic purpose of a redevelopment agency is to revitalize a city through capital expenditures. It cannot use its funds for operational expenses or the hiring of city employees. But, with careful planning and wise administration, it can use its funds for virtually any form of capital improvement within a redevel- opment area. I will discuss in some detail below three high priority areas, in my view, where such funds could be well utilized in Lodi. A. Revitalization of the Downtown Almost all Lodians see clearly the need to revitalize our down- town commercial area. City after city across this country has, at its own peril, let its downtown core rot and deteriorate. We must not let this happen in Lodi! However, it is also clear that the cost involved with even minor cosmetic improvements of the public areas is staggering. As we all know, some members of the commercial community have been discussing an assessment district approach to downtown improvements for some time. This approach has not worked on a large scale in other cities for two reasons: (1) It simply cannot generate enough funds to do more than minor cosmetic improvements which fail to deal with the heart of downtown merchants' problems; and (2) Any money that is raised becomes simply an additional taxation burden on the very merchants who are already at a competii.ive disadvantage as against ;merchants in outlying shopping centers. In short, the downtown must become a competitive "shopping center" in order to compete with newer shopping centers. The u _ ..sa+K -,.�.r .-:....�.: �.� �7??"=n.� v,�s. ��� Wit.:.. ur����;�5 .4. ti., `-'•. ,: �. �: The Honorable City Council Page Four history of merchandizing in this country for the last twenty years indicates that to be successful such a true "shopping center" in the dnwnt)wn must be anchored by a major retailer. Unfortunately, however, such retailers are usually tempted into outlying shopping center locations because of the availability of low cost parking and otner amenities. We in Lodi have seen major retailers such as Mervyns and is -Mart choose the fringes of our City rather than its heart for their locations. Accordingly, if a major retailer is to be enticed to locate in downtown Lodi, the City must make the downtown at least equally attractive to such a merchant. In vie,.,; of competition with other cities, to attract a major multi -line retailer to down- town Lodi, the City must be prepared to assemble the parcel and probably provide to the retailer, at minimal cost, a level of subterranean public parking below his store. This could cost up to a million dollars! Such a course of action world clearly revolutionize downtown Lodi. Literally, overnight, downtown Lodi would be "the place to be" for merchandizing in our City. of course, it is clear that such a dramatic approach has funding as its primary ingredient. Only a redevelopment agency can pro- vide the City with a level of funding necessary to pursue such a strategy. B. Revitalize Hutchins Street Square The community center concept has fired the imagination of many of Lodi'c citizens. Hundreds of people have devoted countless thousands of hours attempting to raise sufficient money to acquire the Hutchins Street Square site and develop it as a true community center for Lodi. Unfortunately, hard reality indicates that it will be well-nigh impossible to privately raise the sums needed to accomplish this considerable task. on the other hand, a Redevelopment Agency would allow your Council to establish matching funds to insure broad-based citizen participation in the renovation and at the same time offer a reasonable expectation that it could be accomplished. C. Revitalizing the East Side For a variety of reasons, including growth in the supply of new residential housing on the west and south sides of Lodi which A The Honorable City Council Page Five 11 was disproportionate to the growth of stable homeownership in Lodi, the resale market for housing on the East Side has been significantly undermined. This has led to a tragic deteriora- tion of Lodi's East Side and the concommitant development of a crime -infested, near -ghetto atmosphere in some areas. This is a particularly difficult situation for the many long-time elderly residents of Lodi who have made their homers on Lodi's East Side for dozens of years. Some would argue that these trends are not properly the focus of governmental intervention and should be left to market forces. While I generally agree with this concept, in this instance the plight of our elderly citizens in their desire to maintain their homes is primarily attributable to government: (1) to the federal government's inflation of the currency thereby depriving them of their savings, and (2) to local and state government's preoccupa- tion with excessive development thereby depriving them of a viable resale market for their homes. This means that our young families gravitate to small, cramped new housing rather than larger, well-built older homes in the East Side areas where the values have been undermined. This, thus, becomes a vicious, self-fulfilling prophesy of decay. Since government caused these problems, I believe that government has an obligation to help remedy them! To stop this process and reverse the decline of our neighborhoods, we need to aid our elderly citizens to maintain and upgrade these older residences as part of a larger strategy to rebuild the value of these prop-- erties. Many communities have done this through deferred, low- interest loans and grants to elderly homeowners for rehabilita- tion of their homes. Additionally, I believe that we should consider "reverse equity loans" which would allrw the elderly homeowner to withdraw the equity from his home oN, - �n extended period of time so as to allow him to stay in the ..:..tee longer. A17. of these loans would be repaid upon sale or transfer and could constitute a long term revolving fund for improvement of the housing stock owned by our elderly citizens. It should be stressed that such programs should apply only to our elderly, fixed-income citizens and not to 3ther "fair share" groups identified by the recently-propo.:ed Housing Ele- ment. This is because the elderly constitute a stabilizing influence on our East Side neighborhoods whereas these other. "fair share" groupings would constitute a further destabilizing The Honorable City Council Page Six influence. Future generations of Lodiar.s will thank us for preserving a strong and vital East Side. All of these plans however require funding and -there is no reasonable expectation that the general fund of the City would ever be able to support such activities. If we are to under - cake these dramatic initiatives to stabilize the East Side, we must have a Redevelopment Agency to provide the funding. D. Other Uses I have also enclosed as Exhibit "B" to this letter, an article from the News -Sentinel of Thursday, May 26, 1983, des.:ribing the uses to which the City of Galt intends to put th,A r redevel- opment money in the area of economic development. With some legal limitations, this money can also be used in the directions indicated by the article. Further, it should be noted that, with certain findings by the Council, Redevelopment Agency money can be used for new public buildings, parks and facilities within the redevelopment area. In short, there are a myriad of potential uses to which such funds can be placed. The most important concept related to a Redevelopment Agency is that not a single dollar of additional taxation will be .aid by citizens of Lodi by use of this source of funding! III. WHAT MUST BE DONE TO ESTABLISH AN AGENCY In establishing a redevelopment agency or area, many communities have retained outside consultants to provide the necessary planning and legal expertise to accomplish the task. While you may wish to consider the retention of such a consultant to actually draft the plan, I have discussed the matter with your City Attorney and I am confident that he has the necessary skill and expertise to handle all of the necessary legal work related to the establishment of your Agency. In this regard, I would be pleased to work with Mr. Stein, if he should request it, in any manner or capacity that he desires, in the legal work necessary to establish the Agency and plan without fee or charge. You may expect that a consultant would charge Ten to Fifteen Thousand Dollars ($10,000.00 to x15,000.00) to assist you in the preparation of the plan itself. however, in my view, this would be money well spent. The Honorable City Council Page Seven If you wish to proceed with the matter, I Iwould en usage you to direct your City Manager and City Attorney to re ort back to you at an appropriate time with an Act on Plan W establish such an Agency and begin this process for the sake Df the future of Lodi. n //ry t ul ural IBRENTO A. BLEIER Enclosures Attorney at Law cc: Individual Council Members City Manager Glaves City Attorney Stein ;`-"IE:'9L� �e .� .,�. .. .. �.?��.V:IcA:Za:'!�e�w!.9'1'4't�F�F�..rrr,N'rr!. .. . •x'{_rsf:. .... h.x� _ .. .. ....-,.. -.: ...,.. ... ....... _.-_ - .. ' EXHIBIT "A" Pro Forma Tax Increments Available to City of Lodi under Proposed Re- development Area. Presumes: One Third of Lodi's Assessed Valuation within Boundaries of Area, say, $55,000,000 10 year total $ 4,763,458 e Annual Increase Cummulative Increase in Assessed Valuation in Assessed Valuation Tax Increments $5,500,000 $5,500,000 $ 63,250 6,050,000 11,550,000 132,825 6,655,000 18,205,000 209,358 7,320,500 25,525,500 293,543 8,052,500 33,578,000 386,147 8,857,800 42,435,800 488,012 9,743,600 52,179,400 600,063 10,717,900 62,897,300 723,319 11,789,700 74,687,000 858,900 12,968,700 87,655,700 1,008,041 10 year total $ 4,763,458 e Thurs- Mal 1941— Lodi (Co.) News.Sontinvl — halt offAM icimis are optim40 istic futureindust rial growth B*• MARK (tiHSI %rus-Sentinel staff writer Gail — a hotbed of industrial growth. llwl statrment may appear to he an incorrect way to describe the quiet agricultural community known more for its dairy farms than heavy industry. .but Galt city officials are holdly betting their jobs on a rosy ci-onomic future. The reason for their optimism is the recent establishment of a city redevelopment agency aimed al bringing in new industry, more jobs and widespread physical improvements to t ;alt'ii aging central section. The major economic facelift is expected to run its course —well within 10 years." according to Galt City Manager Joe Tanner. oyer a seven year period. I'tans are also in the works for increased homebuilding in iinused sections of land east and south of the central area wing the same financing method. Does the ambitious plan n►ean that Galt city officials have derided to let loose the reins on growth and.go for broke' "H'e're not going around saying. 'Come on all of you people. move to Galt.' " Tanner replied. "We are saying. 'Come on industry. move to Galt.' We want to put our unemployed people to %%ork before we bring in of hers. The city manager said that three different companies have expressed interest in eaahlishing facilities in Galt btvair a of the new agency although the agency could remain in action for up to 30 years The City Council unanimously approved 'T'anner's idea at its regular public meeting last week and in %o doing agreed to serve as niernbers of board of directors for the project. The council agreed to oversee the project. Tanner explained. to lend "credibility" to his plan. "That means the board ;in.wers to the public." he said. Tanner, who began work on the project almost two years ago. footnoted his statement I)% stressing that the newly• loaned agency is a "separate and distinct Body" and is not connected in any way with the cit% The three companies could create 110 to 120 new ►ohs. Tanner would not name the companies involved in the prospective deal because the city of Gall is now in competition with other cities Tor the lucrative tax dollars the firms' pre-ence could bring. One public slip-up could cast the city a major employer Tanner admitted that the types of industry brought into the town is "always a touchy subject." He said the city "would strive to bring in clean industry" but did not ,pecilically point to any particular industry The growing competition among cities for new industry is an ainaxing phenomenon Tanner guards the cit%'s pitch The program is complicated but, as Tanner described it. "tail safe." SPecIIIcaIIv, the redevelopment agency will provide extra incentives for industries to establish factories in the city of roughly :._txii► which is suffering from an •'intolerable." unemployment rate of 18.3 percent, according to Tanner. The incentives come from the agency's law -guaranteed ability to arrange tax-free Wallis for those industries interested in settling in Galt. The loans will go to constructing new plants. which would in turn generale more tax dollars in proportion, tet the iricreased property Value. But rather than distributing :oil of the new tax money to the usual local and state levels. a to companies looking for a place to settle like a football coach protects his gameplkn. Tanner won't publicly reveal what benefits the city might possibly offer a company to settle in Galt for fear another city will cone up with an even more enticing offer. We're simply turning upside down for them." he said of the city's efforts to lure the companies. "You can't put out the red carpet for thein anymore — that's riot enough. We kowe to show them it's cheaper to operate in Galt than anywhere else." For Tanner, the pian represents his chance to d!-monctrate how Galt can carr% out a unique brand of creative financing in •---•rcasingly tough economic tiiiw% for California cities. about large portion will to futinelec directl% back into tht redevelopment agency for use in improving "blighted" ;ireas. The city's first priority calls for major industrial development in the north area of the city limits bordered by Pringle itoad on the south. NIacFarland Road on the w est. Live utak Road the north and Ihghw'ay 49 on the east. Tanner said that the tax money generated from this proposed industrial area would he put to work in the central section of the cite where sidewalks and curbs are needed as well as new ewer and water tines. The city staff has estimated the Hilal cost of upgrading the central section of Galt at more than Si million spread "The old ways of doing city business are over," he said in reference to Proposition 13 and a now -stingy federal government. "Things have changed more in the past five years than in the past 20a years. Governmental finance has been turned completely around..' Before the agency actually goes into action, the Galt City ('ouncil must conduct a second reading of the ordinances which were passed in establishing the new entity. TM• Galt Redevelopment Project will officially be in operation within 60 days. PODESTASI PARTY PAPFR FTf.