In its late December decision, the court ruled in favor of Gov. Jerry Brown's contention that redevelopment agencies (RDAs) were created by the Legislature and could be disbanded by the same process. It means that the share of property taxes funneled into such districts will now go to schools and cities, and in the process take away some of the burden of funding education from the state. Since the downtown district was already scheduled to go out of business at the end of this year, the $5 million loss to the city will knock projects planned this year, but many other cities will definitely feel a more severe pinch.
Mountain View's Shoreline District is similar to an RDA, but luckily for the city, it was chartered by its own specific piece of legislation and will not be affected by the court decision. The Shoreline district produced nearly $27 million in 2011, although the city agreed to share its largesse with local school districts, deciding to divert $13.6 million to the Mountain View Whisman ($8.2 million) and the Mountain View Los Altos High ($5.4 million) school districts over the next three years. Prior to the deal, the districts did not receive a share of these funds, which the city has used to maintain the former landfill and spruce up the Shoreline area, including the new fire station which just opened about a month ago.
Loss of the downtown district funds means that street improvements and other amenities must compete in the normal budgeting process and that the affordable housing fund will not be receiving annual installments from this source of revenue.
The League of California Cities and the California Redevelopment Association are challenging the measure passed by the Legislature and signed by the Governor and Legislature that will take away the $5 billion annually in RDA funds. Passage of AB-26 eliminated the agencies, but the decision was not a complete victory for the Governor. A companion bill, AB-27, allows the agencies to continue if they make significant annual payments to the state. But the court ruled against this as well, and the $2 million "ransom" recently paid by the city won't keep the city from losing all of its RDA funds.
Back in April, the City Council approved a $625,000 package of studies that will measure the impact of alternative ways to make up for the funds lost in the RDA, including a look at charging for parking downtown and charging businesses a fee to pay for some improvements. Results are not yet available from these studies.
As a fixture in Mountain View for more than 40 years, the district is credited with revitalizing the downtown core, including its current focus on restaurants, many of which feature outdoor dining made possible by the redesign of Castro Street. It is a success story that city leaders have long been proud to recount. The area continues to be popular with residents and the thousands of workers who flood downtown eateries for lunch and dinner on weekdays and attracts tourists on the weekends. Loss of this downtown agency will hurt, but its impact will be spread over a long period of time. And while the money will be lost by the downtown district, $1.5 million of it will be transferred to local schools, which will benefit local families and students.