City Prepares for Elimination of Redevelopment:  In a split decision before the New Year, the California Courts ruled that the state could eliminate Redevelopment but also struck down the companion bill that let cities continue Redevelopment if they gave the State more of its redevelopment funds.  This has left over 400 cities in a tough situation; many like Oakland were planning to reduce its redevelopment funding and has continued to work on many affordable housing and economic development projects.  Oakland budgeted and set aside $40 million. 

Now under many of our Redevelopment projects are at risk and under this bill the State plans to seize all redevelopment property and sell it in a fire sale. 

We are still hopeful that there will be an extension of Redevelopment in order to work out a legislative fix to preserve the main purposes such as economic development in economically hard hit communities, affordable housing, and transit oriented development, BUT we must proceed as if everything ends on February 1st. 

On Thursday, the City Administrator announced that hundreds of city positions will be impacted by the California Supreme Court's decision regarding the elimination of Redevelopment Agencies set for February 1. In order to meet that deadline, I and the City Administrator will submit a budget-balancing proposal to City Council to be considered during a special City Council meeting on January 25 at 5:30 pm. As a result of this compressed schedule, and to comply with the timeline required to implement any layoffs and ensure a balanced budget by February 1, the City will be required to issue layoff notices by Wednesday, January 18.  Depending on what budget is finally adopted by the Council we expect at about 200 positions to be eliminated, however, many more notices will be distributed in order to provide the City Council with the broadest possible flexibility in making what will surely be a difficult decision-making process with very little time to deliberate. Not everyone getting a notice will be laid off. 

This week, several immediate cost-containment measures have been put in place to ensure prudent financial management during this critical time, including the following:

• Effective Monday, January 9, the City Administrator placed a moratorium on hiring City employees and in procuring non-essential purchases across all funds.
• Every City agency and department was asked to submit proposals to reduce their budgets by 5%, due Friday, January 13.
• The City Administrator is seeking employee input on cost-saving or revenue-generating ideas through a confidential on-line survey.
• The City Administrator sought authorization from the City Council to request every bargaining group in the City to voluntarily re-open their contracts.

Meanwhile, I've been working closely with the California League of Cities and other Mayors to encourage state legislators to move the implementation date back 60 days while Sacramento comes up with a fix to Court's decision. Although there is no certainty of passage, a group of State representatives are working on a bill to extend the effective date of the elimination of redevelopment agencies. This proposed legislation was presented this week, but it will not reach the floors of the Assembly or Senate until next week at the earliest.

Redevelopment is the only tool that Oakland-like other urban centers in California-can use to turn vacant and underutilized properties into productive, tax revenue-generating and job-producing use. It has also served as a catalyst for private investment to breathe life into areas burdened with deteriorated buildings, environmental contamination, and aging infrastructure that would otherwise lay vacant and nonproductive. As such, Redevelopment funds have been used to support staff, projects, and programs throughout the City organization. The loss of Redevelopment funding creates a potential annual budget gap ranging from $25-30 million, although the exact size of the deficit has not yet been fully determined (due to many unknown/undetermined impacts related to implementing the Court decision).    

Please check the City's website and this newsletter for additional information as it becomes available.