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City Won't Bear Agency Burden
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Riverbank is out of the redevelopment business.

City council members chose at Monday's noon meeting not to become a successor agency to the Riverbank Redevelopment Agency (RDA) and not to assume its assets or liabilities while winding up its work.

"I don't want to jeopardize the community by taking on debt and being unable to pay," said Councilmember Dotty Nygard in expressing the general view of the council in a 4-1 vote.

The city could have taken over receipt of RDA tax increment payments to pay off its $15 million in bond debt but property tax increment payments have plummeted during the recession. Mayor Virginia Madueno commented Monday a state expert recently told her it will be another 9 to 10 years before they return to pre-2008 levels.

The state had asked for a vote by this Friday on whether the city wanted to become a successor agency. Given its refusal, any local agency such as a school or fire district can take it over or as the last resort, Stanislaus County. Some have predicted the State of California will ultimately be forced to assume the responsibilities of many RDAs.

The council's sole dissenting vote came from Vice Mayor Richard O'Brien who said the RDA had benefited the city, which had an obligation to pay its debts and the real losers were small investors who had financed the projects by buying bonds. Citizen Scott McRitchie commented he had "been on the other end of the stick" and lost a lot of money in investments and would not risk losing more.

Following the State's dissolution of all redevelopment agencies last June, the issue went to the courts. The California Supreme Court ruling in late December indicated that state legislators were within their legal rights in abolishing redevelopment agencies but left local government officials in a quandary as to how they would pay for economic development projects already under way.

The Court also rescinded a second law that current agencies could stay in business if they handed over a large part of their revenues to the state in what local government officials called a 'ransom.'

"The first thing the council must decide is do they want to be a successor agency. Do they want the city to take over or let somebody else do that," said Interim City Manager Pam Carder. "But even then it would be only under certain state rules, to keep up with its obligations and basically close it down. They could not continue investing or start new projects."

Redevelopment agencies were created as a way for cities and counties to build and reconstruct in so-called blighted areas using a portion of the increased property taxes that followed the improvements. The State reportedly has about 400 such agencies, in most cases controlled by cities and counties.

In Riverbank, the Agency incurred $15.2 million in bond debt to help finance the Riverbank Apartments on Claus and Patterson roads, infrastructure and street improvements in the downtown including construction of the Plaza Del Rio and purchase of the Del Rio Theater.

But with the recession and dwindling property taxes, the Agency's revenues have fallen far below what was expected. The downtown revitalization and the apartment complex have been completed and acclaimed a success worth the cost. But the Del Rio Theater that the Agency bought for several million to convert to a performing arts center later was found to be structurally unsound and has stood abandoned for a couple of years.

O'Brien commented Monday the city might help to pay the RDA's debts by selling off the Del Rio Theater and the adjacent former gas station for $400,000 or so, if they can find a buyer.