Council Bows to State on Redevelopment

City Hall

The City Council has agreed unanimously to create a new redevelopment agency as a precautionary step.

The ordinance can be recinded. City Manager Blair King said Tuesday the decision was “the best advice we have as of today,” which could change by Sept. 6, the next council meeting.

Not that he was happy about it, calling the situation “crazy,” and adding, “we’re asking you to apply a law we believe is unconstitutional.”

The state Supreme Court stayed implementation of the decision to abolish local development agencies until justices can consider a lawsuit filed by the Redevelopment Agency Association and the League of California Cities. 

The court could start talking legal briefs as early as Sept. 15, King said in a memorandum.

The state’s legislation regarding redevelopment offered cities the opportunity to form new agencies – for a price.

Coronado must pay $3.7 million next year and $897,000 in 2013. The fees rise annually, with the city expecting to pay a total of $18.8 million by 2026.

King appealed the first-year charge, arguing that it should be $1 million less.

“We’re basically buying our way out of this,” Councilman Al Ovrom said.

The city’s plans for a new hospital remain problematic because under the new legislation cities cannot loan money to redevelopment agencies.

When the commitment to purchase land and equipment was made three years ago, officials expected to receive general fund loans from the city to meet the obligations, director Rachel Hurst said.

Instead, the agency will have to “restructure its debt over a longer period,” Hurst explained.

If the city had chosen not to establish a new agency, it faced losing nearly $50 million in loans it made for the hospital, and also for school district capital improvements.

Still Mayor Casey Tanaka does not regret the decisions. “We knew when we made loans that we might not get the money back,” he said. “The improvements were worth the risk.”