Union City's passed two key resolutions last week designed to work around the governor’s proposal to across the state.
City Council members voted unanimously last Tuesday to authorize the redevelopment agency to issue a bond of up to $40 million and to transfer agency properties into the possession of the city for future development.
“We’re doing everything that we think we can to protect ourselves,” said Redevelopment Agency Management Analyst Steve Sprotte. “At the same time, we are conscious of the situation that the state is in. There just needs to be some sort of solution, if it’s possible, that isn’t win-lose.“
The transferred properties include the former PG&E site and parcels off Mission Boulevard. These properties would be developed as called for in the city’s redevelopment plan, according to Sprotte.
Though not obligated to do so, the agency can now issue a bond of up to $40 million at an interest rate not to exceed 9 percent. The agency expects a lower interest cost, but because of the uncertain market, the bond’s underwriters, De le Rosa & Co., requested the agency approve the rate, according to a staff report.
“It’s very preliminary,” Sprotte said. “Rates are higher than they are typically, but rates do fluctuate.”
By issuing bonds, however, the agency would in effect reduce the amount of excess money that would be redistributed to the state, Sprotte said.
According to officials, the agency originally planned to issue a bond in 2013.
“Unfortunately, we have this axe hanging over our heads. We may not get another opportunity to do it,” said City Manager Larry Cheeves at last week’s council meeting.
The bond would continue efforts already under way.
According to the staff report, the maximum bond would net $24 million for the agency’s project fund and $6 million for its housing fund. Project dollars would be used to advance the design and construction of a public building in the Station District and to construct a pedestrian walkway.
The housing portion of the bond would go toward the construction of affordable housing units in the Mid-Peninsula development in the Station District.
However, it’s likely the agency would issue a lower bond, Sprotte said.
The city’s actions are a defense strategy against Gov. Jerry Brown’s budget proposal, which calls for all redevelopment agencies in the state to be eliminated by July, officials said. The action would divert $1.7 billion to cities, counties and schools, according to a report by the Legislative Analyst's Office.
“[The state Legislature has] come up with a plan that unfortunately requires agencies to shut down completely,” Sprotte said. “This is do or die.”