City of Tulare May Seek New Development Money Stream

Worries over spending too much may keep the city of Tulare from going after a new source of economic development funding.

At its meeting April 18, the City Council decided to let staff at City Hall find out if any areas in the city qualify for a new state program that returns a portion of property taxes paid there to city coffers. But, the move was made over the objection of Mayor Carlton Jones, who worries the city just doesn’t have the upfront money to join in right now.

The Death of RDA

Until a few years ago, California cities were allowed to form redevelopment agencies (RDA) that captured up to 60% of property tax revenue and returned it to fund otherwise unaffordable community improvement projects. RDA were almost universal when they were shut down to increase the state’s revenue flow in 2011.

Now, a similar program authorized in 2015 allows cities to form Community Revitalization and Investment Authorities (CRIA) for areas within the cities that suffer from low income, high unemployment and crime rates, and have deteriorating infrastructure. While areas of Tulare almost certainly qualify, there was some hesitation among staff and the Council about whether to pursue the revenue.

Initial Investment

Jones, who was not alone in his concern that Tulare may be biting off more than it can chew, worried about how the city would pay for a study to find out if it can qualify for a CRIA.

“Here’s what I expect to know about the report is: Who’s going to do it? How are we going to pay them? That’s the appropriation,” he said. “Is this something we’re going to have to hire a consultant to tell us if we qualify, or are you going to do it?”

The Council eventually voted 4-1, with Jones objecting, to have staff prepare a brief report on Tulare’s qualifications for the program. When that report will be delivered is uncertain, as City Hall is about to undergo a reorganization.

Lacking Resources

Distracting staff and spreading already thin resources even thinner was also a topic as the Council debated.

“We don’t want to lose focus of other things we have going on,” said Councilwoman Maritsa Castellanzo. “It’s going to take expert eyes to take a look at this, and that’s something we just don’t have in our budget.”

Councilman Jose Sigala, who initiated the CRIA discussion, pushed for a minimum investigation using city staff.

“I think we have the staff and the talent to do it initially,” he said. “I don’t think it’s that difficult a task to initially do a staff report and come back. I don’t think there’s much cost beyond staff time.”

New City Department

Interim City Manager Joe Carlini said creating a CRIA in Tulare would probably require a specialist on staff if it decides to go ahead.

“There may be an additional person we need that specializes in redevelopment,” he said. “You have to think of that in the back of your mind.”

Community Development Director Rob Hunt agreed.

“This will implement basically a redevelopment agency, which we disbanded and we no longer have,” he said. “It was a fully staffed department of the city. This is a full, new direction for the city to enter in and engage business.”

And, he agrees the city’s staff can do the initial work, but they’ll need someone who’s worked with CRIA if they want more than the bare bones.

“Staff can definitely put together something like this little staff report here and give you the ballpark numbers,” Hunt said. “If we’re going to come back to you with anything of meaning, I’m going to be honest with you, we need to have somebody who has experience in setting up one of these to take a look at it.”

Currently, the city has just a single staff member working on its housing projects. CRIA regulations require 25% of funding be used to develop affordable housing projects.

Cash-Flow Problem

CRIA rely on setting aside future tax revenue to pay for improvement projects, but that, says City Finance Director Darlene Thompson, could be a matter of robbing Peter to pay Paul.

“When you say you’re taking tax-increment money, you’re going to take the money that was going to be allocated to the city for its bond, for its payment,” she said. “So, it might reduce the amount of money the general fund would be getting on its bond payment.”

Carlini warned that if CRIA go the way of RDA, Tulare could be stuck with repaying the funds it received without revenue kickbacks from the state. While tax-increment funding has been in use in California since the 1950s, only one CRIA has so far been formed under the new law, and that was also a source of worry.

“I think with the newness of any program there’s a lot of the unexpected. My concern would be I wouldn’t want to be the leader of the herd,” Councilwoman Castellanzo said. “I’d like to see another city go before us and learn from their trial and error.”

Self-Sufficient

In the end, Castellanzo voted to have staff investigate the program further, as did Councilman David Macedo, but not before sharing the voice of experience.

“I was one of those that saw the Redevelopment really work for Tulare, but I’ve seen it now be a real burden to the city of Tulare,” he said. “So, it’s not all roses out there, what RDA did to us. The city was doing RDA right, but we got punished for those cities that weren’t.”

The allure of additional money with few strings attached eventually won the Council over.

“If this program is self-sufficient and pays for itself, and we can help any area in Tulare, then I’m all for it,” said Councilman Brian Nunley. “I just don’t want to go down the same road as we did with RDA, and I hope that makes sense.”

But first, he needs more information.

“I don’t think anyone up here can tell me if this is good or bad,” he said. “I don’t want to make a blind decision.”