The Pismo Beach Redevelopment Agency — an entity formed to address blight in certain areas of the city — unanimously requested this week that the City Council consider dissolving it.
Several factors prompted Tuesday’s discussion, City Manager Kevin Rice said, including a report that found there is no more blight in the Redevelopment Agency area.
The request came as the agency is expected to operate in the red by next fiscal year. The state has taken money from redevelopment agencies throughout California, even as the Pismo Beach agency must start paying the Lucia Mar Unified School District, creating intense financial challenges for the agency.
The council, whose members also serve as the Redevelopment Agency board, will discuss deactivation in early July or early August.
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However, the board faces opposition from Lucia Mar school district administrators, who signed an agreement with the Redevelopment Agency upon its formation in 1988 to not take its share of property tax increases for 20 years.
The payments to the school district started this fiscal year; the district received $445,601. District officials expected the payments to continue for several decades, giving the district millions of dollars it could use to build and maintain educational facilities.
If the agency is dissolved, money that would otherwise have gone to the district would benefit the state, said Dante Gumucio, CEO of Public Economics Inc. and the district’s redevelopment consultant.
When a redevelopment agency is formed, it caps property tax revenue that counties, schools and other entities receive from the project area. As property tax revenue grows through the years, most of that added money is directed instead to the redevelopment agency.
The agency is required to set aside 20 percent of its redevelopment funds for low- and moderate-income housing, but it cannot be used to pay the school district. This fiscal year, the Redevelopment Agency has $250,000 in its housing fund and a little more than $9,200 in its redevelopment fund.
Next fiscal year, the agency is expected to end the fiscal year with $433,000 in its housing fund but would be nearly $37,000 in the red. State law only allows redevelopment agencies to use their housing-fund money for low- to moderate-incoming housing projects.
In addition to its housing obligation, the Redevelopment Agency also had to give $316,000 to the county this year to fulfill local education obligations and mustsend $65,000 next year.
While the agency’s allocation has gone or will go to Lucia Mar, “it will cause a dollar-for-dollar reduction in the amount of state funding that Lucia Mar would otherwise get,” Gumucio said.
The district has hired an attorney to discuss options with the Redevelopment Agency. Superintendent Jim Hogeboom said he and board President Colleen Martin have met with Rice and Mayor Mary Ann Reiss twice over the past few months and indicated the district would be willing to take 80 percent of what it is owed.
Hogeboom said he is meeting with Rice this morning.
Reach Cynthia Lambert at 781-7929. Stay updated by following @SouthCountyBeat on Twitter.