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2011020707 - Adoption of resolution in opposition to the State administration's proposal to abolish Redevelopment Agencies in CaliforniaIoW N 0 MEETING DATE: 02/07/11 ITEM NO: cos cao5 COUNCIL /AGENCY AGENDA REPORT DATE: FEBRUARY 2, 2011 TO: MAYOR AND TOWN COUNCIL/ CHAIR AND MEMBERS OF THE REDEVELOPMENT AGENCY FROM: GREG LARSON, TOWN MANAGER/EXECUTIVE DIRECTOR =_ SUBJECT: ADOPTION OF RESOLUTION IN OPPOSITION TO THE STATE ADMINISTRATION'S PROPOSAL TO ABOLISH REDEVELOPMENT AGENCIES IN CALIFORNIA RECOMMENDATION Adopt resolution in opposition to the State Administration's Proposal to abolish Redevelopment Agencies in California. BACKGROUND The Central Los Gatos Redevelopment Plan was adopted by the Los Gatos Town Council in November 1991 to provide a financing tool to assist the community. Since its establishment, the Redevelopment Agency has made significant contributions to improve the Town's physical and economic conditions. The Governor and State Legislature recently announced intentions to eliminate redevelopment funding for local jurisdictions, except as required to retire existing debt and obligations, possibly including the prohibition on any further use of redevelopment funds. The legality of the State's proposed actions is questionable on a number of fronts, including pursuant to the recent passage of Proposition 22, which specifically protected redevelopment agencies from State takes. DISCUSSION: A broad coalition of mayors and council members, local govermnents, business and labor, environmental leaders and affordable housing advocates oppose the State's attempt to shut down redevelopment agencies. Staff is recommending that the Town of Los Gatos join this coalition in opposing this State action by adopting the attached resolution.. 1, PREPARED BY : PAMELA JACOBS >� !lift,�� /� ASSISTANT TOWN MANAGER ............................ Reviewed by: Assistant Town Manager /Deputy Director Town Attorney /General Counsel Clerk Administrator /Secretary Finance Community Development PAGE 2 MAYOR AND TOWN COUNCIL /CHAIR AND MEMBERS OF THE REDEVELOPMENT AGENCY SUBJECT: ADOPTION OF RESOLUTION IN OPPOSITION TO THE STATE ADMINISTRATION'S PROPOSAL TO ABOLISH REDEVELOPMENT AGENCIES IN CALIFORNIA FEBRUARY 2, 2011 Like many other cities with redevelopment agencies, the Town of Los Gatos has utilized the redevelopment financing tool to make significant improvements in the Central Project Area. These improvements have benefitted the community as a whole, in terms of jobs, affordable housing, economic growth, infrastructure improvements, public safety, and the new library now under construction. The economic growth has generated increased revenue that funds local services. In addition, throughout the life of the Redevelopment Agency, Los Gatos schools have received pass- throughs of increased property tax generated in the redevelopment project area. The Los Gatos Town Council and Los Gatos Redevelopment Agency Board of Directors have long planned and committed the use of current Redevelopment Agency funds and reserves, as well as anticipated Redevelopment Agency revenues and resources, for a variety of public improvements needed to fulfill the Agency Plan to eliminate blight and achieve other benefits for the Central Los Gatos Redevelopment Project Area. The abolishment of redevelopment agencies would eliminate the key - iinancing tool needed to accomplish these projects. CONCLUSION The Los Gatos Redevelopment Agency has contributed greatly to the economic health of the community and represents an important funding source for planned projects benefitting the project area and the broader community. The State proposal to abolish redevelopment agencies threatens these future projects. Staff recommends that Council adopt the attached resolution opposing the _State's proposal. ENVIRONMENTAL ASSESSMENT Is not a project defined under CEQA, and no further action is required. FISCAL IMPACT The adoption of the resolution does not have a direct fiscal impact; however, if the State's proposal to abolish redevelopment agencies succeeds, the Los Gatos'Redevelopment Agency may lose significant funds for critical public improvements. Attachments: Resolution in Opposition to the State Administration's Proposal to Abolish Redevelopment Agencies in California RESOLUTION RESOLUTION OF THE TOWN COUNCIL /REDEVELOPMENT AGENCY OF THE TOWN OF LOS GATOS IN OPPOSITION TO THE ADMINISTRATION'S PROPOSAL TOABOLISH REDEVELOPMENT AGENCIES IN CALIFORNIA WHEREAS, as part of its 2011 -12 budget proposal, the Governor has proposed permanently abolishing California's more than 400 local redevelopment agencies; and WHEREAS, this proposal represents more of the same misguided and illegal State budget raids of local government funds that voters have repeatedly sought to end, most recently in November 2010 when an overwhelming 61% of voters elected to stop State raids of local government funds, including redevelopment funds; and WHEREAS, this proposal will bring very little financial benefit to the State. According to the State Controller's Office, redevelopment agencies have more than $87 billion in bond and other contractual obligations that legally must be repaid before revenues are available to any other purpose. In fact, according to the State Department of Finance's own budget documents, there will be zero State savings in out years from shutting down redevelopment; and WHEREAS, this proposal will destroy local economic development, including hundreds of thousands of jobs and billions of dollars in local economic activity throughout California; and WHEREAS, in Los Gatos, abolishing redevelopment will severely limit the Town's ability to make critical street and other public infrastructure improvements and to assist local businesses in the Downtown Project Area. The Downtown business district generates one - fifth of the Town's sales tax revenue, which funds local services including public safety, libraries and parks; and WHEREAS, throughout California, redevelopment activities support 304,000 jobs annually, including 170,600 construction jobs, contribute over $40 billion annually to California's economy in the generation of goods and services, and generate more than $2 billion in state and local taxes in a typical year; and WHEREAS, eliminating redevelopment will take away one of the few tools local governments have to comply with state requirements to plan for more compact urban development supported by transit - oriented development, housing, jobs and infrastructure; and WHEREAS, eliminating redevelopment will destroy the development of affordable housing in California. Redevelopment agencies are the second largest funder of affordable housing, behind only the federal government, responsible for over 98,000 units of affordable housing since 1993. In Los Gatos, redevelopment is the largest source of funds for building affordable housing; and WHEREAS, shutting down redevelopment agencies is a violation of multiple State and Federal constitutional provisions. THEREFORE, BE IT RESOLVED THAT the Town Council /Redevelopment Agency hereby formally opposes the Administration's proposal to abolish redevelopment in California. THEREFORE, BE IT FURTHER RESOLVED, that Los Gatos authorizes the Council and Town staff to communicate its opposition to this proposal to the Governor, the Legislature, business groups, and citizens. PASSED AND ADOPTED at a regular meeting of the Town Council /Redevelopment Agency of the Town of Los Gatos held on the day of 2011 by the following vote: AYES: NAYS: ABSENT: ABSTAIN: SIGNED: MAYOR/CHAIR OF THE TOWN OF LOS GATOS LOS GATOS, CALIFORNIA ATTEST:. CLERK ADMINISTRATOR/SECRETARY OF THE REDEVELOPMENT AGENCY OF THE TOWN OF LOS GATOS LOS GATOS, CALIFORNIA N:\MGR\AdminWorkFiles\2011 Council Reports\2 -7 -11 TC Report.RESO.RDA.doc