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City officials upset at loss of tax district

by Daniel DeBolt

A state-ordered shutdown of Mountain View's Downtown Revitalization Authority took effect Wednesday, and city officials are not happy.

"Midnight tonight is the execution, no more redevelopment authorities tomorrow," said Mayor Mike Kasperzak on Tuesday. "I am infuriated by what the Legislature has done," he said, questioning the benefits.

Like 400 other redevelopment agencies in the state, the City Council-controlled downtown Authority will stop receiving property taxes Wednesday, some $4.4 million a year from a 16-block area of downtown. The 1969 tax district is credited with transforming Castro from a nearly deserted street to a popular, vibrant destination. City officials had hoped to do more with the money, such as improve broadband access downtown, assemble more properties for redevelopment and fund the facade improvement of Ava's Downtown Market, which is struggling to transform itself into the popular downtown grocery store residents have demanded for years.

As was Gov. Jerry Brown's intent, the Authority's money will now be distributed to local schools and government agencies, and used to pay off the Authority's $36 million in debt until 2019. But it remains unclear whether there will be a benefit for schools. Kasperzak, also president of the League of California Cities, claims there won't be.

"Many of the schools think they are going to be getting a windfall, but all this means is the state is no longer is going to be back-filling" school budgets, Kasperzak said. "They'll be getting the same money, from a different source. It's going to be a big surprise to people. People will say, 'Where is the money?'"

Lost funds, lost property

The law disbanding redevelopment agencies also nullifies the last-minute transfers of downtown property (an acre estimated to be worth $5 million) and funds ($5.5 million) from the Authority to the city last March, not long after Brown proposed to shut redevelopment agencies down. The move was part of a wave of last-ditch efforts by cities before Brown's proposal was approved by the state Legislature.

The oversight committee could uphold the transfer, but the possibility of losing the property, now pieces of parking lots on Bryant and Franklin streets, in a state-ordered "fire sale," is frustrating to city officials.

"Investors are going to get a steal and taxpayers are going to get the short end of the stick," Kasperzak said. "It's nuts."

The Authority had been assembling the six parcels downtown for redevelopment since 1989. The properties include half of the parking lot at California and Bryant streets (.67 acre), and a piece of a parking lot on Franklin Street between Dana and Villa streets (.27 acre). The downtown property is worth about $5 million an acre, according to one real estate broker.

The Authority bought the properties using loans from the city. In a staff report, city officials said one reason for the transfer was that "the value of the six parcels is at least equal to the debt amount." The city was still owed $2 million, half of which was interest.

As for the redevelopment funds transferred to the city in March, the council transferred the $5.5 million to the city's capital improvement budget to allow the city to continue its strategic property acquisitions downtown.

New committee usurps city

By May 1, the city hands control of the Authority's funds and obligations to an oversight committee of school, county and city officials who will have the final word on how to pay off the Authority's debts, liquidate any assets, and disburse as much as $10 million in unspent funds. It will have seven representatives: two from the County Board of Supervisors, one from the County Office of Education, one from the Chancellor of California Community Colleges, a former employee of the Authority appointed by the mayor, another mayor appointee and a representative of the largest special district in the area.

"We're still having some discussion about who the largest district is," said Mountain View's economic development director, Ellis Berns, who added that it could be the Santa Clara Valley Water District or the city's downtown parking district.

Despite the loss of funds and potential loss of property, city officials say the loss of its redevelopment agency is a smaller loss for Mountain View than other cities. The Authority had been set to sunset in 2011, and was granted a two-year extension to "wind down in an orderly fashion." The city's general fund is expected to take a hit of only $580,000 in taking on the ongoing expenses of the Authority, mostly in administrative expenses in order to retain Berns and his assistant Tiffany Chu.

"We had really strived towards sun-setting the agency in an organized fashion," Berns said of the city's previous plans, which would have paid off the city's debts a few years earlier, by 2016. "What this legislation has done is create some confusion and lack of clarity in what exactly are the steps. And it takes control away from our local community."

Posted by Tired of these silly and dangerous councilpeople, a resident of the Waverly Park neighborhood, on Feb 2, 2012 at 1:21 pm

"Many of the schools think they are going to be getting a windfall, but all this means is the state is no longer is going to be back-filling" school budgets, Kasperzak said. "They'll be getting the same money, from a different source. It's going to be a big surprise to people. People will say, 'Where is the money?'"

You know, somehow, I'm pretty sure that the elected officials running the school district are roughly as intelligent and well informed as the city council members, if not substantially more so. If Superintendent Craig Goldman is going to be shocked by any of this, then it seems to me we have to ask ourselves two things. First, why has our city council made a point of not working with the school district on issues that effect the finances of both bureaucracies and all of the city's residents? Specifically, why has Mike Kasperzak not taken a moment out of his busy schedule to warn the school district of the eminent danger to all of our children? That seems obnoxiously petty and childish, even for a bureaucrat. Mike Kasperzak and Craig Goldman's offices are literally blocks away from each other. Second, why are we paying the exorbitant cost of the office of the school superintendent, if they are too slow and ill informed to understand their own budget process? If nothing else, does anyone who works at MVUSD possibly read the Voice, where they might find this belligerent, informal notification? And if the purpose of this tantrum was to inform the MVUSD, do you think it could be done with a little class?

I also remain somewhat unconvinced that Mike Kasperzak's crystal ball is up to the task of accurately predicting the budget moves of the state legislature. Maybe the legislature will decrease funding for schools. Maybe they will increase it. I just don't know, and I'm pretty sure the Mountain View city council doesn't either. So let's not start threatening children, just yet anyway.

The absurd scenario that Kasperzak insists on projecting is just fearmongering for personal political gain. I would really prefer the city council focus on doing the best they can with what they have (which is far from meager), rather than spending time complaining in the media. The redevelopment agency issue is dead and has been for a long time. There is absolutely no potential for gain, and lots of potential for loss, in our city council spending time complaining about the governors policies. All of us need to toe the line to get our state financially healthy. Sorry if that screws up your evening, Mike.

Posted by Observer, a resident of the Old Mountain View neighborhood, on Feb 2, 2012 at 2:38 pm

Well said.

However, they are probably all worried about how bad they will all look when the city goes bankrupt in 10-15 years once more and more city employees start retiring and reaping their absurdly generous retirement pay and benefits.

Mark my words, I said it here today. It's basic math.

Posted by Change for MV, a resident of the Old Mountain View neighborhood, on Feb 3, 2012 at 9:34 am

It's time to change up our local city council leaders. It's clear from these quotes that our local leaders are ineffective even though they have inside knowledge long before us ordinary residents.

We need pragmantic thinkers to run and get elected to our city council.