By Jason Islas
Lookout Staff

February 23, 2012 -- As Santa Monica and cities around California wind down the work of their dissolved Redevelopment Agencies, a major questions remains: What will happen to all that money? The answer is a complicated one.

Once RDAs ended earlier this month, many cities – including Santa Monica – appointed successor agencies to handle and wrap up the affairs of the RDAs. By March 1, successor agencies are required to submit enforceable obligation schedules to their county controller-auditors.

The enforceable obligation schedules are lists of RDA money that has already been committed, by contract to such projects as Santa Monica's new Palisades Garden Walk and Town Square.

Santa Monica's enforceable obligation schedule – available on the City's website – totals $116,729,002 for the 2011-2012 financial year.

That's about half of the $267,667,608 that the City transferred from the RDA to the General Fund as part of the RDA's five-year plan.

Of that money, the City had planned to spend approximately $111 million on affordable housing projects or acquisition throughout the City.

The City also slated $48 million of RDA money for the Palisades Garden Walk and Town Square projects, as well as $47 million for Civic Center improvements. Another $11 million was set aside for the Pico Branch library.

In the past, the City has spent RDA money on other projects, including $53 million to purchase 13 acres from the RAND Corporation that is the current site of The Village, a $350-million complex that broke ground last week and includes 158 condominiums and 160 affordable housing units.

With the turn of events that led to the end of RDAs, not all of these projects will get RDA funding, including the proposed Colorado Esplanade, a redesigned, pedestrian-friendly street that would run along Colorado Avenue from Fifth Street to Ocean Avenue.

Of the $116 million the City hopes to designate as enforceable, approximately $5.4 million is designated for “varies public uses, including affordable housing,” according to the City's enforceable obligation schedule.

Another $76.5 million will go to “development of various public improvements and affordable housing,” and approximately $860,000 to affordable housing acquisition, according to the schedule.

The rest of the money is slated either for administrative costs, “property acquisition and improvements” or the Civic Center Joint Use project.

But hard times call for hard decisions, State Assembly member Julia Brownley said. The decision to end redevelopment in California was to assure that the State wouldn't have to make deeper cuts.

She said that because a lot of RDA money – especially in a city like Santa Monica – goes to affordable housing, “in better times, I would've never have supported elimination of RDAs.”

Now that RDAs have ended, “local property tax can go back to local schools,” Brownley said.

But does the end of redevelopment in California mean more money for schools?

No, said Los Angeles County Controller-Auditor Wendy Watanabe. She said that more money from the county tax pool would be available for schools, but that would only mean that the State would have to commit less money in order to make up the difference in operating costs paid by the counties through property taxes from the cities.

Watanabe explained using a generic example.

Let's say the operating costs for a school total $1 million, she said. The property taxes from the city in which that school operates go to pay $400,000. The State then comes in and makes up the extra $600,000 necessary to keep the school open.

Watanabe explained that newly available RDA funds would go back into the operating costs of schools and other services that are currently being subsidized by the state, freeing up millions of dollars for State use.

But that is only if there is any residual money after successor agencies pay for their redevelopment agencies' enforceable obligations.

According to Arlene Barrera, the chief of Los Angeles County's Auditor-Controller's Property Tax Division, Santa Monica gets about $74 million a year from their redevelopment districts.

In the case of Santa Monica, if all the enforceable obligations are accepted by the County oversight committee, “Not only will there not be enough, there will be no residual,” said Barrera.

And, she said, it could be years before Santa Monica's former RDA meets its obligations and therefore starts putting money back into the County coffers, freeing up money for the State.

The end of RDAs may be good news for the State budget, but it leaves some worrying about the fate of affordable housing.

One of the major policy decisions facing Sacramento is whether to introduce legislation that could, at least partially, save some aspects of RDAs.

Former State Assembly member and State Senator Sheila Kuehl, who runs Santa Monica College's Public Policy Institute, said that legislators are considering alternatives to the current model of redistributing all non-committed RDA money.

“It's all very up in the air right now,” she said, a sentiment echoed by Brownley.

One thing is certain, however. No matter what the final decision regarding RDAs is, it will take a long time to implement.

On February 23, Santa Monica College's Public Policy Institute will tackle that question during a panel and audience discussion on "The End of Redevelopment?" The event will take place from 7 to 9 p.m. at the college's Bundy Campus, 3171 S. Bundy Drive, Room 123.

The event is free but seating is limited and reservations are required. To RSVP, email ppi.rsvp@smc.edu. For questions, call (310) 434-3429.