Cities fear redevelopment cuts

Redevelopment officials in Huntington Beach and Fountain Valley are reeling at the thought of the state budget being balanced on their backs, as both cities expect to lose millions of dollars from their coffers in the coming months.

The state budget, which was signed by Gov. Arnold Schwarzenegger on Tuesday afternoon, called for the state to seize $1.7 billion from statewide redevelopment agencies in order to close a budget deficit of more than $24 billion.

Fountain Valley expects to hand Sacramento more than $3 million of its redevelopment funds. Huntington Beach plans to relinquish $5.4 million, or 28% of its tax increment revenue.

“We’re considering it gone,� Huntington Beach city spokeswoman Laurie Payne said. “What we don’t want to do is impact services to the city. We’re going to do our best to continue our high level of service.�

The state also will borrow $5.4 million of the city’s property tax funds. The claimed property taxes, which represent about 3% of the general fund, are used for public safety, road maintenance and “all of the things that people really get touched by,� Payne said.

But Payne said the city was relieved that the legislature opted to cancel a plan to take gasoline tax revenues from local governments, following a flurry of opposition statewide to the possibility.

Redevelopment Agency funds are used to get blighted areas back to being economically viable, assisting new businesses and other companies by subsidizing infrastructure and other needs.

Such areas can be found all over the city, but take up less than 5% of the city’s total land.

Huntington Beach’s Redevelopment Agency was established in 1969, and its first five project areas were named in the early 1980s: Main-Pier, Huntington Center, Talbert-Beach, Oakview and Yorktown-Lake. Since then, the Main-Pier area expanded to more than 336 acres, and all five areas merged to create the 619-acre Huntington Beach Project Area.

The 160-acre Huntington Center area includes the area that is now Bella Terra. The downtown area includes the resorts on Pacific Coast Highway. Oakview includes a 68-acre area near the corner of Beach Boulevard and Warner Avenue, and housing rehabilitation in that area. Talbert-Beach’s 25-acre redevelopment area focuses on industrial and housing zones, and the major project in Yorktown-Lake’s 30 acres is its senior housing areas.

A second area, the 172-acre Southeast Coastal Redevelopment Project Area, was named in 2002. It includes power plants, street rehabilitations, sewer work and the future Poseidon Desalination Plant.

Payne said that recently, redevelopment funds helped pay for a public parking garage at the new Strand development and helped upgrade the new Shorebreak Hotel site.

Fountain Valley Planning Director Andy Perea said he expects his city to lose $3.3 million out of $8 million in funds that would be used for economic development, public improvements and debt payments.

One fifth of that $8-million amount is already earmarked for affordable housing, leaving $6.4 million left for all other redevelopment projects. More than half of that will be taken by the state.

Legislators and state analysts used several accounting “gimmicks,� like the seizure of property taxes and economic development funds that are supposed to be guaranteed to cities, to balance the budget. They also opted to delay one paycheck for state workers for one day into the next fiscal year. The state has paid nearly $1 billion in IOUs this month while trying to finalize the budget.

Opponents statewide say they find it ironic that funding is being pulled from the very redevelopment programs that are expected to create jobs and assist small businesses in the midst of a recession.

Los Angeles County legislators are planning to enter litigation for what they see as an unconstitutional money grab by the state, whose general obligation debt has been downgraded by two credit ratings agencies to near “junk� status.

In Orange County, about $90 million is expected to be taken by the state, not including other severe cuts made at the beginning of the year.

In cities statewide, officials are waiting with bated breath to see what their final price tag will be — and when it will come due.

Reporter CANDICE BAKER may be reached at (714) 966-4631 or at [email protected] .