Millions at stake in Pismo Beach decision over redevelopment agency

Pismo Beach leaders tonight will discuss dissolving the city’s Redevelopment Agency — the purpose of which is to eliminate blight — because, officials say, there is none left to address.

But deactivating the agency deeply concerns Lucia Mar school district administrators, who received $445,601 from Pismo Beach this year — and expect to receive millions of dollars in the next two decades.

City Council members, acting as the Redevelopment Agency board, will decide whether to put the issue on a future council agenda.

The Redevelopment Agency’s project area was formed in 1988 to address what was considered economic and physical blight in several areas of the city. Under state redevelopment law, a city can use a portion of property taxes to finance projects in those areas.

The redevelopment zone encompasses the area north of Highway 101 including the water treatment plant and baseball fields; the Prime Outlets on Five Cities Drive; three properties on either side of Fourth Street, south of Highway 101; Chumash Park and the Mission Inn; an older retail center and vacant land to the south of James Way; and a newer medical office center north of James Way.

“Ours has been very successful over the past 21 years, and the blight is gone,” City Manager Kevin Rice said.

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.

Lucia Mar district officials had agreed in 1988 not to take its share of those revenue increases for 20 years. Now, district officials are counting on that money, which Mary Stark, the district’s deputy superintendent of business, estimated at more than $20 million through fiscal year 2038-39.

If the redevelopment agency is dissolved, she wrote, it would have a “devastating” affect on the district’s ability to provide planned facilities as well as maintain 17 school sites.

Superintendent Jim Hogeboom said the district planned to use the money to match state funds to build or upgrade facilities for its agriculture, automotive and engineering academies at Arroyo Grande High School.

“We’re counting on this money for the next 20 years,” Hogeboom said.

“We would argue that the city of Pismo (Beach) has an obligation in the original contract to make the payments whether there is blight or not,” he said. “In very tight fiscal times we need all the help we can get, and I would hope the city … would be willing to be more cooperative to come to an agreement.”

If the agency is dissolved, the money that would have gone to the school district from the agency would go to the state.

The state would not backfill the money, district administrators said, leaving it without $20 million they’d expected to receive.

Pismo Beach finance director George Edes said, partly because of the money the Redevelopment Agency has to start giving to Lucia Mar, the agency “would go forward and be operating in the red every year until it’s terminated.”

Further complicating the issue is a state requirement to set aside 20 percent of its money for low- and moderate-income housing projects, he said.

In addition, the state Legislature passed a bill, which was upheld by a Sacramento Superior Court judge in May, allowing it to take $2.05 billion through 2011 in redevelopment money statewide to put toward local educational obligations.

Pismo Beach had to send $316,000 to the state this fiscal year and will be required to pay $65,000 next year.

Meeting tonight

The Pismo Beach City Council/Redevelopment Agency meeting starts at 5:30 p.m. at 760 Mattie Road. For information, call 773-7003 or go to www.pismobeach.org.