1. 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

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

3. Aerial View of Central Folsom

4. Governor’s Proposal and Rumors

5. 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

6. 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

7. What’s At Stake

8. 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

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

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

11. 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 budget as transfers to the general fund for support and development.

12. 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

13. 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

14. Available Alternatives

15. 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

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

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

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

19. 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?

20. 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.

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

22. Next Steps

23. Appendix

24. 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

25. 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