The Galt City Council took its first steps towards retaining its redevelopment agency Wednesday following months of discussion about whether the city could make necessary payments to the state to keep it open.
Galt’s redevelopment agency is a vital aspect of the city’s Old Town Relocation Project, which has been at a standstill for nearly three months because the agency currently is out of compliance with state law.
In June, lawmakers passed two trailer bills with the state budget that inherently shut down state redevelopment agencies or, should cities wish to keep their redevelopment agencies open, would require the city to pay a specified amount to the state.
The city of Galt would have to pay an initial amount of slightly more than $1 million just to keep their agency open.
Once the city makes the payment, it would have to continue to make payments of $240,000 each year to maintain its redevelopment agency.
But city officials said the redevelopment agency is needed to help move the Old Town project forward, particularly since a majority of the funds for the project are from the agency.
City manager Jason Behrmann said while “the state pretty much killed redevelopment agencies,” the payment is necessary to be able to utilize some $9 million in redevelopment bonds that had been flagged to be used to help renovate and revitalize Old Town.
But Behrmann said making the $1 million payment to the state will not be easy.
In order to make the payment, Behrmann said a variety of options are under consideration to make the process “as painless as possible.”
A combination of delayed payments, increased tax revenue from property taxes and reimbursements from the redevelopment agency will help the city pay the $1 million.
However, litigation filed by the League of California Cities and the California Redevelopment Association with the California Superior Court may stop the need to pay the state, Galt city attorney Steve Rudolph said.
According to the lawsuit, the state is in violation of Proposition 22, which prohibits states from taking money from local government, public safety and transportation.
Should the court find the state to be unconstitutionally charging cities to keep their redevelopment agencies open, Galt would not have to make the $1 million payment.
While Rudolph assured council members that the city would not be dipping into its general fund revenue or city assets to make the payment, he did say the city does not have very many discretionary funds to work with.
“Our hope is that we are never going to have to make that payment,” he said. “But right now money starts winding down, and then if we don’t make this payment we’re dead in the water.”
Galt Mayor Barbara Payne said that while the state may not be legally allowed to require cities to pay to keep their agencies open, and while the payment may cause some budgetary concerns now, the outcome would be worth it.
“This is about investing in our community’s future, and the returns we are going to get from this investment are worth what we are giving up so far in the short-term,” she said.
Contact reporter Katie Nelson at email@example.com.