Arroyo Grande and Atascadero to pay state for redevelopment agencies

Noting they were doing so under protest, Arroyo Grande council members voted to continue the city’s redevelopment agency and agreed to pay the state about $475,000 to do so.

The Atascadero City Council also voted to continue its redevelopment agency. In doing so, the two cities join Grover Beach in deciding that paying what they have called “ransom” to the state is worth being able to continue projects intended to combat blight and provide low-income housing.

“This is not in any way, shape or form a voluntary contribution here,” Arroyo Grande Mayor Tony Ferrara said. “It is closer to extortion.”

About 400 local governments throughout California have redevelopment agencies, which use a portion of property tax revenue to pay for projects in areas deemed blighted.

Advocates say the agencies have helped job creation and economic growth in their areas. But critics have accused the agencies of acting as development slush funds and note that they take money that would otherwise go to schools and other services.

Gov. Jerry Brown had been pushing since January to eliminate the agencies as part of his budget, saying the funds should be spent on core government services.

The state Legislature approved two budget bills in June that called for eliminating these agencies by Oct. 1. But one of the bills allowed local governments to continue their agencies if they pay a share of property taxes that would be passed on to schools and special districts.

Arroyo Grande would pay about $475,000 to the state this year, and Atascadero would pay $1.5 million. Both cities have filed appeals to try to get those amounts reduced, arguing a bond figure used to calculate the amount is several years old.

Grover Beach, meanwhile, expects to owe the state $380,000. Paso Robles would have to pay about $1.7 million should that city decide to continue its agency, Paso Robles City Manager Jim App said in a previous interview. Assistant City Manager Meg Williamson said staffers are still analyzing the costs versus benefits of continuing the agency, which the council will discuss in September.

City officials are also waiting for updates about a lawsuit filed by the California Redevelopment Association, which argues the legislation is unconstitutional and violates Proposition 22, passed by statewide voters last November to protect local property tax dollars and redevelopment money from state takeaways.

The association has asked for a stay so cities don’t have to pay the state; that decision is expected this month.

Pismo Beach is the only city in San Luis Obispo County that has decided not to fight the state’s plan to dissolve the agencies.

Last summer, the council voted to consider dissolving its redevelopment agency at a future meeting — which has not been held — after a report found there was no more blight to address.

That move upset Lucia Mar Unified School District officials, who had been expecting money from Pismo Beach’s redevelopment agency to build and maintain education facilities.