The Future of Redevelopment in Folsom: Opportunities and the Governor’s Budget A Presentation to the City Council of the City of Folsom February 1, 2011

Overview of Presentation Governor’s Proposal and Rumors What’s At Stake Potential Project Opportunities Available Alternatives Cost of Alternatives Benefit of Alternatives Recommendations

Aerial View of Central Folsom

Governor’s Proposal and Rumors

Governor’s Proposal Eliminate all redevelopment in California effective July 1, 2011 “Successor agency” takes over all administrative functions of California’s 400 redevelopment agencies, including administration of bonds, DDA’s and OPA’s. All assets of agencies seized by State and sold off, with sale proceeds going to State Cities may issue voter approved debt with a 55% majority, secured by an increase in property taxes, to fund economic development

Rumors Draft legislation will eliminate the ability of redevelopment agencies to incur new debt or other obligations at the time it is signed (March 4th) Any unspent bond proceeds as of date of enactment must be used to call bonds State will not recognize debt obligations between “related entities” Probably means that State will not recognize a loan from a City’s general fund to its redevelopment agency, for example

What’s At Stake

Recent Agency Projects 25,000 square foot mixed use project in Folsom Historic District Ongoing revitalization of historic downtown Folsom 315-space public parking garage in the Historic District 138 unit Mercy senior low-income rental housing project 80 unit Mercy Village Folsom low and very low income rental housing project New library and adjacent recreational facilities Down payment assistance program Two light rail stations

Outstanding Agency Obligations Agency has three outstanding bond issues: $10,190,000 2005 bonds (maturing in 2033) $16,945,000 2006 bonds (maturing in 2036) $17,580,000 2009 bonds (maturing in 2036) Agency has two outstanding OPAs: Kikkoman, Inc. – Approximately $200,000 per year, final payment in FY 2030-31 Parkshore Properties - $221,000 per year, final payment in FY 2014-15

How much money the Agency might lose Updated per mark’s email aug. 4

Immediate Impacts on 2011-12 Budget Tax increment currently supports 5 staff positions at a cost of about $650,000 per year In addition, another $800,000 will be lost from the 2011-12 budget as transfers to the general fund for support and development.

Potential Project Opportunities Historic Dist Revitalization - 2 $ 5 million Historic Folsom Station - 2 $ 700,000 CBD Revitalization $10 million CorpYard Development $10 million Riley Street Improvements $ 4 million Natoma/Coloma Intersection $ 2 million Rodeo Arena Improvements $ 1 million

Potential Project Opportunities continued Wye Property Improvements $ 1 million Historic Dist Road Improvements$ 1 million Parking Structure $10 million Affordable Housing $ 5 million Housing Rehab $ 2 million

Available Alternatives

Four Alternatives for the City Alternative 1 – Borrow money through a direct loan, secured by surplus tax increment ASAP Alternative 2 – Sell bonds secured by surplus tax increment in the public debt market ASAP Alternative 3 – City general fund buys Agency bonds secured by surplus tax increment ASAP Alternative 4 – Do nothing

Cost of Alternatives for Surplus Tax Increment (tax exempt debt) Updated per mark’s email aug. 4

Cost of Alternatives for Surplus Tax Increment (taxable debt) Updated per mark’s email aug. 4

Cost of Alternatives for Housing Set Aside (taxable debt) Updated per mark’s email aug. 4

Benefits for the City Retain between $7.6 and $14.5 million in surplus tax increment for planned projects Retain between $7.8 million and $10.8 million for planned affordable housing projects Cost of unwinding the debt obligations is best considered as an “insurance premium” Question: Is the cost of the insurance premium worth the benefits of the insurance policy?

Recommendations Proceed with bonding the Redevelopment Agency’s remaining tax increment for non-housing and direct loan for Housing Set Aside funds. Prepare the bonds and direct loan as taxable. Include provisions to unwind the bond sale. Further study the issue of asset protection from State seizure and report back.

Opportunities Are there any projects you want added or subtracted from the project list?

Next Steps

Appendix

Folsom’s Redevelopment Project Area Comprises central part of City Historic Gold Rush era downtown Commercial and industrial areas Mature single family residential areas 1,050 acres in project area Formed in 1983 Project area has good access to the American River Project area is well served by light rail New library and adjacent recreational facilities

Synopsis of Redevelopment Plan Central Folsom Redevelopment Project Area Acres 1,050 Plan Adoption Date November 1983 Base Assessed Value $65,222,286 Time Limits Incurring Debt No Time Limit Eminent Domain April 2015 Project Activities November 2026 Tax Increment Receipt November 2036 Financing Limits Tax Increment Collection $350,000,000 Maximum Bonded Indebtedness $120,000,000 Verified with most recent FCR 8/4/09 Source: City of Folsom Redevelopment Agency, Murphy & Associates PC