The Riverbank Redevelopment Agency is in financial trouble and its revenues are plummeting, city officials informed Riverbank City Council members recently in a written memo recommending financial strategies for developing a 2010-2011 mid-year budget.
Due to reassessments within the area, the Agency is projecting tax increment revenues for the fiscal year 2010-2011 of only $508,000, representing a 7 percent decrease from the prior fiscal year. That follows a 43 percent decrease from the previous fiscal year and a 30 percent decrease from the year before that.
These decreases are significant yet not uncommon in Stanislaus County, according to city Director of Economic Development Tim Ogden and Treasurer Marisela Hernandez. Over the last fiscal year, the agencies of Oakdale and Waterford saw a 40 percent decrease in revenues, the joint Stanislaus-Ceres project saw a 31 percent drop and Newman a 22 percent decline.
Riverbank's Redevelopment Agency was formed several years ago to raise funds to finance improvements from property tax increments. The money raised to date has been largely spent on downtown improvements such as sewer, water and storm drain work on Third and Santa Fe streets, street beautification, purchase of the Del Rio Theater and construction of the Plaza del Rio.
Another financial blow to the RDA was the State's raid of redevelopment funds through the passage of AB 1389 for the Supplemental Education Revenue Augmentation Fund (SERAF). Last fiscal year's payment to the SERAF was $478,000.
The Agency has deferred paying about $107,000 of its expenses to cover its bond payment obligations. Staff has also negotiated deferred repayment of $200,000 over two years to Stanislaus County for the economic development loan for the downtown beautification.
Even with these deferments, Agency staff is concerned about the long term feasibility of meeting its debt service obligations without further intervention, said officials.
The bond obligation, the officials stress, is solely that of the Agency and not the City of Riverbank or any of its subdivisions. But default on the RDA bond could negatively affect current and future city bonds.
Ogden and Hernandez suggested several financial strategies to meet the problem.
• With the full agreement of the taxing agencies, the Agency should continue deferring pass through payments (amounting to about 20 percent of the Agency's gross revenue) in favor of covering bond payment obligations.
• Consider transferring every expenditure possible such as salaries, professional services and administrative fees, to another funding source.
• Defer or choose not to make the SERAF payment of $98,000 due next May. Not making the payment would mean the Agency could incur no other expenses, except debt service payments, until the SERAF payment was made.
This situation also would obligate the Agency to raise its set-aside of 20 percent for low and moderate income housing to 25 percent. But Richmond Redevelopment Agency has obtained legislation that allows it 30 years to make the SERAF payment; Riverbank could possibly do the same.
• Sale of the Agency-owned Del Rio Theater and adjacent land would produce a cash flow, put the property back on the tax rolls and promote new development to raise tax increments. In addition, the larger Agency area formed in July of 2009 that includes county land and the former ammunition plant will receive an estimated $31,000 in its first year. That amount will increase when the Army sells the four parcels currently being auctioned and should the rest of the site again become private property.
The Agency's bond counsel also has suggested borrowing from healthy city funds, such as system development fees and the general fund, to ensure bond payments are made.
Due to reassessments within the area, the Agency is projecting tax increment revenues for the fiscal year 2010-2011 of only $508,000, representing a 7 percent decrease from the prior fiscal year. That follows a 43 percent decrease from the previous fiscal year and a 30 percent decrease from the year before that.
These decreases are significant yet not uncommon in Stanislaus County, according to city Director of Economic Development Tim Ogden and Treasurer Marisela Hernandez. Over the last fiscal year, the agencies of Oakdale and Waterford saw a 40 percent decrease in revenues, the joint Stanislaus-Ceres project saw a 31 percent drop and Newman a 22 percent decline.
Riverbank's Redevelopment Agency was formed several years ago to raise funds to finance improvements from property tax increments. The money raised to date has been largely spent on downtown improvements such as sewer, water and storm drain work on Third and Santa Fe streets, street beautification, purchase of the Del Rio Theater and construction of the Plaza del Rio.
Another financial blow to the RDA was the State's raid of redevelopment funds through the passage of AB 1389 for the Supplemental Education Revenue Augmentation Fund (SERAF). Last fiscal year's payment to the SERAF was $478,000.
The Agency has deferred paying about $107,000 of its expenses to cover its bond payment obligations. Staff has also negotiated deferred repayment of $200,000 over two years to Stanislaus County for the economic development loan for the downtown beautification.
Even with these deferments, Agency staff is concerned about the long term feasibility of meeting its debt service obligations without further intervention, said officials.
The bond obligation, the officials stress, is solely that of the Agency and not the City of Riverbank or any of its subdivisions. But default on the RDA bond could negatively affect current and future city bonds.
Ogden and Hernandez suggested several financial strategies to meet the problem.
• With the full agreement of the taxing agencies, the Agency should continue deferring pass through payments (amounting to about 20 percent of the Agency's gross revenue) in favor of covering bond payment obligations.
• Consider transferring every expenditure possible such as salaries, professional services and administrative fees, to another funding source.
• Defer or choose not to make the SERAF payment of $98,000 due next May. Not making the payment would mean the Agency could incur no other expenses, except debt service payments, until the SERAF payment was made.
This situation also would obligate the Agency to raise its set-aside of 20 percent for low and moderate income housing to 25 percent. But Richmond Redevelopment Agency has obtained legislation that allows it 30 years to make the SERAF payment; Riverbank could possibly do the same.
• Sale of the Agency-owned Del Rio Theater and adjacent land would produce a cash flow, put the property back on the tax rolls and promote new development to raise tax increments. In addition, the larger Agency area formed in July of 2009 that includes county land and the former ammunition plant will receive an estimated $31,000 in its first year. That amount will increase when the Army sells the four parcels currently being auctioned and should the rest of the site again become private property.
The Agency's bond counsel also has suggested borrowing from healthy city funds, such as system development fees and the general fund, to ensure bond payments are made.
