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HomeMy WebLinkAboutResolution 2011-06 Letter to California Governor J. Brown - State Budget ProposalCITY OF PALM DESERT OFFICE OF THE CITY MANAGER STAFF REPORT REQUEST: AUTHORIZATION TO SUBMIT A LETTER TO CALIFORNIA GOVERNOR JERRY BROWN EXPRESSING THE CITY OF PALM DESERT'S CONCERN WITH HIS CURRENT STATE BUDGET PROPOSAL. SUBMITTED BY: John M. Wohlmuth, City Manager DATE: Thursday, January 27, 2011 CONTENTS: Correspondence to California Governor Jerry Brown Recommendation By Minute Motion, authorize the Mayor to sign a letter to California Governor Jerry Brown expressing the City of Palm Desert's Concern with his current state budget proposal, with copies to our State legislators. Commission Recommendation The City's Legislative Review Committee will review this item on January 25, 2011. Staff can provide a verbal recommendation if requested, as at the time this report was prepared, the Committee had not met. Background On January 12, 2011, California Governor Jerry Brown released the Governor's proposed 2011-2012 State Budget, which attempts to eliminate a $25.4 billion deficit. Key elements of this proposal include a major state -local government realignment proposal (i.e. shifting state programs to the county/city level with potentially new or existing funds), extension of temporary tax hikes, and most disturbing to Palm Desert, elimination of redevelopment agencies. In response to this proposal, the City Council adopted resolutions approving a reimbursement agreement between the Agency and City, in an attempt to secure future redevelopment funds. The Council also directed staff to initiate an advocacy program. Staff respectfully recommends that the City send the attached correspondence, outlining Palm Desert's concern with the proposal to eliminate Redevelopment Agencies, to the Governor and copy the State legislators who represent Palm Desert Submitted By: Johy V. Wohlmuth, City Manager CITY COUNCIL ACTION APPROVED. ✓- R VEIVED OTHER_- �Q Y _'�ViI -Ot� MEFTINC DATE, - 2 9- Nncr. N.nn ABSENT: 1\1ynr? A13STAIN: _N 0If VERIFIED I3Y:_-- OrHrinad [in {i i1n —Ath f":r., �x January 28, 2011 Honorable Jerry Brown Governor State Capitol Sacramento, CA Dear Governor Brown, As an elected official, I understand the challenge of passing a budget in difficult economic times. In Palm Desert, we have made the hard choices that were necessary to balance our municipal budget, including painful cost cutting measures that have reduced City staff by 24 percent since the start of the current economic downturn. In these difficult times, the proposal to eliminate or curtail redevelopment is especially shortsighted public policy that will further damage our economy and do long-term injury to revenues that support education, public safety, economic development and a host of state, regional, and local programs. Eliminating redevelopment: • Will destroy billions of dollars in local economic activity and hundreds of thousands of jobs; • Will kill the state's leading program to provide affordable housing; and • Will harm our efforts to grow responsibly through infill development. • Will not provide expected budget relief to the State or local governments after bond issues and contractual obligations are repaid; As mentioned above, the proposal to eliminate redevelopment would have a direct and lasting negative impact on job creation, our local economy, and the California economy at the worst possible time. • In Palm Desert, redevelopment funds helped pay for a much -needed system of flood control channels that allowed for the construction of a vibrant retail sector, including the Coachella Valley's only regional mall. These businesses and the revenue they generate for the state of California, Riverside County, and Palm Desert would not exist without the aforementioned flood control infrastructure that the City could only afford through Redevelopment. • Statewide, redevelopment activities support an average of 304,000 full- and part-time private sector jobs in a typical year, including 170,600 construction jobs. • Redevelopment contributes over $40 billion annually to California's economy in the generation of goods and services, including increasing the state's construction sector output by about $19 billion. • Redevelopment construction activities generate $2 billion in state and local taxes in a typical year. The proposal to eliminate redevelopment also threatens the environment and would take away the primary tool local governments use to comply with SB 375, to grow sustainably, and to provide affordable housing. Consider the following: • Communities use redevelopment for cleaning up brownfield sites, building infill projects, and spurring local job creation. Redevelopment encourages infill development rather than greenfield development. Redevelopment agencies have the experience and tools needed to help implement the regional Sustainable Communities Strategy plans required by AB 32/SB 375, and to alter the state's growth patterns. • Redevelopment is the second largest funder of affordable homes in California after the federal government. Over 98,000 units of affordable housing have been constructed or rehabilitated since 1993 including nearly 1,800 units of affordable housing in Palm Desert alone. Twenty percent of property tax revenues generated from redevelopment activities must be spent on affordable housing. The proposal also would not provide budget savings to the State or local governments. Redevelopment agencies issue bonds to finance redevelopment activities, which must be repaid with interest. Under the federal and state constitutions, these and other contractual obligations must be met before revenues are made available to any other entities or purposes. Agencies currently hold over $20 billion in bonded indebtedness. This proposal runs completely contrary to the Governor's and Legislature's stated goals of realigning state services to provide more local responsibility and funding. It also runs counter to the will of California voters as expressed by the overwhelming support for Proposition 22 in the November 2010 election. Redevelopment funds are already locally generated property tax dollars (agencies do not receive State funding) directed toward community projects and programs directed by locally -elected officials with input from citizens. The proposal wipes out the only tool local governments have to drive economic growth, build up tax revenues, and grow sustainably. My fellow Palm Desert City Council members and I urge you to reject this misguided proposal. Sincerely, Mayor Jean M. Benson City of Palm Desert RESOLUTON NO 2011-06 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM DESERT, CALIFORNIA, OPPOSING THE GOVERNOR'S PROPOSAL TO ABOLISH 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. In fact in Palm Desert, abolishing redevelopment will eliminate the City's ability to build necessary capital improvement projects, such as two new fire stations, a 26-acre regional park, and the Portola Avenue/Interstate 10 interchange project, and will reduce our continued support of educational opportunities such as the creation of the Coachella Valley's only California State University and University of California campuses; 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, including eliminate the City's ability to: provide affordable housing, such as Carlos Ortega Villas, a planned 72-unit affordable senior housing development in Palm Desert. 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; and RESOLUTION NO. 2011-06 WHEREAS, shutting down redevelopment agencies is a violation of multiple State and Federal constitutional provisions. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PALM DESERT, CALIFORNIA, DOES HEREBY RESOLVE, DECLARE, DETERMINE, AND ORDER AS FOLLOWS: SECTION 1. That the City of Palm Desert formally oppose the Governor's proposal to abolish redevelopment agencies in California. SECTION 2. That Palm Desert authorizes its City Council and city staff to communicate its opposition to this proposal to the Governor, the Legislature, business groups, and citizens. PASSED APPROVED AND ADOPTED by the City Council of the City of Palm Desert, California, on this 27th day of January, 2011, by the following vote, AYES: NOES: ABSENT: ABSTAIN: JEAN M. BENSON, MAYOR ATTEST: RACHELLE D. KLASSEN, CITY CLERK CITY OF PALM DESERT, CALIFORNIA