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Thursday, January 20, 2011 | No Orange County asset would be hit harder than Irvine’s Great Park if Gov. Jerry Brown’s proposal to eliminate the state’s redevelopment agencies is pushed through.
The death of the city’s redevelopment agency could wipe out $1.4 billion — and possibly much more — in property tax increment revenue for the city, putting in doubt the main revenue source for the park in future years, according to a memo released Thursday by Irvine officials.
The money would be taken to supplement, among other things, the state’s general fund budget. And the takeaway could start as early as next fiscal year. The property tax increment revenue stream comes from the increased property taxes that will come as thousands of homes are built in the Great Part neighborhoods.
City officials and counsel are now scrambling to assemble the options they have should Brown’s proposal be pushed through, including possible legal defenses to retain property tax increment dollars, the memo shows.
“We are taking the matter seriously,” said City Manager and Redevelopment Agency Executive Director Sean Joyce. “We are working on our response to that proposal nearly around the clock.”
Great Park Board Chairman Larry Agran cautioned against jumping to conclusions after hearing the announcement, saying that Brown’s proposal is still in its infant stages and could end up meaning little to the park’s future.
“I’m not unduly concerned about this,” Agran, also a councilman, said.
Mayor and Great Park Board Director Sukhee Kang said the council is still trying to grasp the details of Brown’s proposal and understand its implications for the park. He also would not go so far as to say that Brown’s plan would kill the park.
“Number one, we need to understand what the governor wants to do,” Kang said.
Brown’s proposal to kill the state’s redevelopment agencies, which collect tax increment revenue, calls for the city turn over all property tax increment revenue, except the portion allocated for debt service. That amounts to nearly two-thirds of tax increment revenue expected, according to the memo.
The memo also cautions that the state could adopt legislation to take even the revenue already obligated toward debt, placing at risk the city’s entire $2.2 billion projected property tax increment revenue stream for the next 40 years.
The city’s current plan, as the memo affirms, is to stop Brown from going through with his plan. Lobbyists working for the city are already looking for “legislative relief,” the memo said.
Among legal options currently being researched by the city’s legal counsel include whether Brown’s proposal violates Proposition 22, which was a voter-approved mandate that prohibits the state from taking funds meant for transportation, redevelopment and local projects.
To replace redevelopment money, Brown has suggested placing “new financial mechanisms” before voters to raise funds for development projects and that the voter threshold to pass such measures would be reduced to 55 percent, the memo states.
The memo declares, however, that such options are not feasible for the park because it would “violate a commitment to the voters not to tax its residents to build the park.”