Millbrae Preserves its Redevelopment Agency

City council members on Monday unanimously decided to save Millbrae’s redevelopment agency from disbandment. 

In an effort to reduce the budget deficit, the State of California passed two assembly bills in June that force cities to either pay the state to save redevelopment agencies or terminate them.

The first option, Assembly Bill X1 26, would dismantle the agency by Oct. 1. It would still be liable for any incurred debt, but it would not be able to enter into any new development contracts.

On the other hand, saving the redevelopment agency, under Assembly Bill X1 27, forces cities to make substantial payments to the state. Millbrae will pay the state $1.84 million in 2012 and $435,849 in 2013.

“The options are either bad or worse, and I would go with the bad option,” said council woman Nadia Holober, referring to the state payment choice.

A redevelopment agency is funded through tax increments in property values, typically when a neglected neighborhood is renovated. Millbrae’s agency currently has $7.56 million in cash assets.

“This is an issue that continues to evolve,” said City Manager Marcia Raines. “Dollar amounts continue to change.”

In addition to combatting blight, the Millbrae Redevelopment Agency funds affordable housing projects, such as the . 

The state expects a total of about $1.7 billion in payments from all cities that chose to maintain their redevelopment agencies. 

Millbrae, like many other cities in the Peninsula, has the financial means to pay the state. But some municipalities will be forced to dissolve their redevelopment agencies because of declining property values.

The reason the state is pursing elimination of redevelopment agencies stems from some cities' misuse of agency funds, according to a March report issued by Calfifornia State Controller John Chiang.

For example, the Palm Desert redevelopment agency allocated $16.7 million to renovate a golf resort. And, the City of Hercules allocated $9,600 of its low and moderate income funds to lobbyists.

The report estimates that school districts were shortchanged by about $33.6 million last year.

“For a government activity which consumes more than $5.5 billion of public resources annually, we should be troubled that there are no objective performance measures demonstrating that taxpayers are receiving optimal return for each invested dollar,” State Controller John Chiang said in a statement. 

However, the dismantling of redevelopment agency may be postponed or overturned because of legal action against the state.

The League of California Cities, the California Redevelopment Association, the City of San Jose and the City of Union City have sued the state finance director and other state officials, asking the court to stay implementation of the law by Aug. 15.