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What is Redevelopment in the State of California?

Redevelopment is a process created through State of California legislation to assist city and county governments in eliminating blight from a designated area, and to achieve desired development, reconstruction, and rehabilitation including residential, commercial, industrial, and retail land uses. It is the primary tool used by cities and counties to revitalize deteriorating and blighted areas of neighborhoods and business districts. Redevelopment is used by 2/3 of cities and 1/3 of counties in the State.

The Agency was originally formed after the great flood in December of 1955 by City Council Resolution NS-2065 on January 10, 1956. The Agency was initially largely federally funded through the now defunct Urban Renewal Administration (a predecessor to the current-day U.S. Department of Housing and Urban Development). At the time, the Agency consisted of five members appointed by the City Council and a Director. With the flood rebuilding projects completed in the mid 1970s, the Agency was merged with the City government, and the City Council became its board of directors. During the late 1970s and most of the 1980s, the Agency was essentially in an inactive status.

Santa Cruz's Redevelopment Agency was reactivated and once again staffed as a separate City department in the aftermath of the Loma Prieta Earthquake in 1989, which destroyed over 50% of the downtown area and left it in desperate and immediate need of rebuilding. One of the most common goals of Redevelopment Agencies is the revitalization of downtowns. So it was to be with the Redevelopment Agency of the City of Santa Cruz. Over the years, working with all levels of City government, the Redevelopment Agency has been an intricate part of, and a driving force behind, the rebirth and renaissance of the Downtown Santa Cruz area.

Economic Development and Redevelopment is really two departments in one. For certain City activities Redevelopment acts as an Agency, and for other activities it acts as a City Department. For example, when Redevelopment is undertaking affordable housing development, it is acting as a separate Agency under California State Law. When Economic Dedevelopment and Redevelopment is selling or purchasing property for the City, it acts as a City Department. For this reason, many Economic Development Department items are considered during regular City Council Meetings. Furthermore, for certain matters, the Redevelopment Agency and the City Council will meet in a Joint Session. Either way, our goal remains the same: to serve the citizens of the City of Santa Cruz by ensuring the long-term economic health of our community while preserving our common values.

Redevelopment Area

The Agency oversees two Redevelopment Areas: The Merged Earthquake Recovery and Reconstruction Project Area and the Eastside Business Improvement Area.

The Merged Earthquake Recovery and Reconstruction Project Area was formed by merging two project areas adopted in 1984 and 1986, and was expanded in 1990 following the 1989 Loma Prieta Earthquake to facilitate the rebuilding of downtown Santa Cruz and to assist in the improvement of other portions of the project area impacted by the earthquake. The project area encompasses the San Lorenzo River area, the Downtown, and the Beach Area including the Municipal Wharf, the Harvey West industrial area, the Mission Street commercial corridor and the Westside industrial areas.

The Eastside Business Improvement Project was adopted in 1990 and designed to assist the businesses along Soquel and Water Streets with alleviating blighted conditions.

Finances

Establishment of a redevelopment project area creates the ability of a Redevelopment Agency to utilize "tax increment funds" to assist in financing the project area improvements. When a redevelopment project area is adopted, the current assessed valuations of property and buildings within the project area are designated as the "base year." After plan adoption, all of the taxes paid to various governmental entities on this "base year" go, as they always have, to the various cities, counties, school districts and other taxing entities. Any increase in the assessed value over this "base year" of a project area, and the property taxes which result from this increased valuation, become the source of "tax increment revenue" for the Redevelopment Agency. Both the Merged Project and Eastside Project Areas receive tax increment revenue. Of the increment revenues available to the Agency, 80% is available for capital/project funding and 20% for low and moderate income housing.

The Redevelopment Agency funds the majority of its administration and planning activities through tax increment revenues. Funding pays for personnel costs, supplies, services and other needs necessary to operate the Agency.

Available tax increment revenue is a function of the difference between the total of previous pass-through agreements, mandatory commitments, annual costs, project commitments, and available tax increment funding. Tax increment revenues are influenced by a variety of factors ranging from Agency activities to the general economic conditions within the project area and the greater regional economic market. Market conditions in many respects are the major force affecting available project financing.

The City of Santa Cruz provides the Redevelopment Agency with various administrative services ranging from accounting to insurance coverage. Each year the Agency must pay the City for these particular costs.


Last updated: 6/28/2010 2:00:40 PM