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The Death of Redevelopment 

With the agency gone, what will happen now on Eureka’s waterfront?

On Jan. 10 in a dark City Hall conference room, Director of Eureka Redevelopment Cindy Trobitz-Thomas clicks through a slideshow of renovated Victorians and storefronts. Her hair is piled in a loose bun on the top of her head. On the screen, a scrubby lot in front of some dilapidated brick buildings transforms into the gazebo fountain. A condemned drug house is reborn as a classic Victorian. A row of teetering stilted shacks along the water is replaced by the boardwalk. She blinks her eyes.

"Sometimes it makes me emotional," she says.

Special Projects Coordinator Marie Liscom smiles at her in the light of the projector. The two have been working together long enough to seem like sisters. Today they showed up to work wearing matching embroidered scarves.

"Well, Old Town wouldn't look like it does now if it weren't for redevelopment going in there and making some infrastructure improvements and encouraging people to invest down there," says Liscom.

The photos don't lie. Many of the buildings are unrecognizable in their former state, boarded with splintering plywood. As the images come up on the screen, Trobitz-Thomas and Liscom reminisce as if looking at a family album. They are still reeling from the state Supreme Court's decision to uphold legislation that eliminated the 425 redevelopment agencies across California. Why are they still smiling?

"Maybe because we're crazy," sighs Trobitz-Thomas.

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As of Feb. 1, California redevelopment agencies were officially dissolved. They have until June 30 to settle their affairs and close up shop. In the short term, the end of redevelopment will mean freeing up an estimated $1 billion for the state's disastrous budget. What it will mean over time is more difficult to say. In Eureka, redevelopment has brought life and commerce back to Old Town and the waterfront area, built underground utilities and helped people buy their first homes. Redevelopment has also been a major funding source for the Eureka Main Street program, which runs community events like Arts Alive. A few projects on the waterfront still remain unfinished, and their fate lies not only with the City Council as successor agency, but also with an as-yet-unformed Oversight Committee. Now, when the need for economic stimulus is so strong, redevelopment is gone, and it's unclear what will fill the void or when.

The goal of redevelopment agencies was to bring back neighborhoods in decline by improving buildings, roads and public places. This meant restoring historic buildings, fixing or creating affordable housing, cleaning up contaminated areas, and building and maintaining parks and other open spaces. Redevelopment agencies also wanted to encourage private investment in business and downtown districts. The idea was that removing blight made for safer, more livable communities and brought jobs and growth to areas that might otherwise have been abandoned. People could live and work on Main Street again instead of sprawling further out to the edges of town.

Humboldt State University economics Professor Beth Wilson says that such improvements in business and residential areas can act as "kindling for the fire," attracting private investors who might not have taken such a substantial risk otherwise and bringing new money into the area in the form of jobs and commerce.

Since the 1960s, cities and counties have had the power to establish local redevelopment agencies. After that, the agencies functioned as separate units. Redevelopment agencies identified areas of blight as defined by California law -- neighborhoods with physically dangerous or unusable buildings, and/or serious economic problems like falling property values, struggling or nonexistent businesses, crime and overcrowding. Agencies mapped out areas for redevelopment and planned improvements. Then they went into debt.

All agency projects intentionally started out in debt as a way to finance improvements. To get going, new agencies sometimes borrowed public funds, and later they frequently issued Tax Allocation Bonds (TABs). They borrowed money to complete a project, and when the property value for the project area went up, they used the increased taxes, or tax increment, from the project area to repay the loan.

Without redevelopment, any increased property taxes in the same area would have gone to schools, community colleges, county governments, and special districts that supported everything from firefighting to libraries to sewer systems. Over time, the tax money being scooped up by redevelopment agencies grew and grew, reaching more than $5 billion annually before the state killed the redevelopment system.

Now, $1.8 billion of that money is expected to flow back annually to cities, counties, schools and special districts, according to the governor's office. Another roughly $2.4 billion annually will be used to pay off remaining redevelopment debts. The rest will go to public agencies that had worked out special pacts over the years to snag a share of the redevelopment cash. Each year, those figures will change as remaining debts dwindle.

And the state will be a big winner. Remember that $1.8 billion to schools and local agencies? Since the state used to replace what schools lost to redevelopment, the state budget at first will get a $1 billion boost annually, because it won't have to pony up the replacement money anymore. (Schools, essentially, break even -- the money just comes from a different source now.)

In Eureka, the redevelopment agency received $4.9 million in tax dollars during the last fiscal year. Almost all of that has been tentatively earmarked to pay various debts and other obligations, according to Eric Neumann, who handles accounting for the redevelopment effort. However, the state and the local oversight committee will make the final decisions about what money goes where.

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Eureka's redevelopment zone is a strip-steak shaped area spanning the waterfront and downtown area. A photo of the boardwalk area in the 1990s shows a lot at the water's edge teeming with garbage and abandoned washing machines.

The Waterfront Revitalization Project carried out over the past decade includes the new boardwalk, the Bayfront 1 building, the new C Street dock, the rebuilt boat basin, and the new Fishermen's Terminal.

"Our waterfront was historically industrial, so people turned their backs on it because it wasn't pretty," says Trobitz-Thomas, "And so you had some soil contamination issues to deal with, you had dumping. ... One of our goals was to allow people back to their water and to encourage people to face the water instead of turning their back on it."

Now the boardwalk is a place to stroll, and there is even talk of outdoor concerts and the farmer's market being held in the open square in front of the terminal. The transformation is remarkable, and it didn't come cheap. City Manager David Tyson estimates the cost of the Waterfront Revitalization Project at about $60 million, not including private investment.

Once upon a time, downtown Eureka was a little rough. The fishing and lumber industries kept bars and brothels busy up until about the 1950's. In a photo of what is now Oberon Grill, Liscom and Trobitz-Thomas point out the narrowly spaced upstairs windows -- for rooms that only needed to fit a single bed. By the 1970s, when the City Council established the Redevelopment Agency, the brothels were gone, but Old Town was run down and seedy, with vacant lots and vacant storefronts. It was the very picture of blight.

"When we were kids, that was a scary part of town," says Trobitz-Thomas.

It's a little hard to believe, strolling past the corner of Second and F streets with a latte on a Sunday morning, that the gazebo was designed partly to cover up what was once an eyesore of a building which is now home to a chocolatier. Liscom and Trobitz-Thomas describe a kind of domino-effect in the area as buildings and streets were improved and businesses moved back in. In April of 1992, when Trobitz-Thomas and Judy Harrison spent a Saturday writing an application for the Eureka Main Street program and riding out the 7.2 quake, the vacancy rate on the bottom floors of the 49-block zone was 14 percent. Now it's less than 4 percent, Trobitz-Thomas says.

Looks, it turns out, are important. The Façade Program, which was run by the redevelopment-funded Eureka Main Street, provided relatively small loans of about $15,000 each for historical preservation, exterior lighting and storefront signs. The loans were more like grants, as they were forgiven after five years so long as the building owner did not sell the property. This was meant to discourage "flipping" properties and to encourage stability in the area.

According to Executive Director of Eureka Main Street Charlotte McDonald, "It was a small investment that the city had to make, and it really generated a lot of private investment." Some buildings were simply cleaned, scraped and painted, while others involved "slip-cover removal," the peeling away of layers of stucco that covered the original facades. Some 64 building facades have been restored since 1992. So if you stop to admire a building while walking downtown, chances are it's had a little work done.

Other buildings needed more than a nip and tuck. Liscom and Trobitz-Thomas wince as they recount a heap of a house they visited before it was rehabilitated and sold to a first-time buyer. The vacant house had been taken over by squatters and nearly destroyed.

Liscom waves her hand at the photo of the house. "There were fires that burned the siding because people were trying to live there," she recalls.

"You'd go in and there was garbage and bottles filled with pee. ... I felt so dirty," adds Trobitz-Thomas with a shiver. The entire structure was cleaned out, gutted and repaired into a safe, comfortable home. Unlike agencies in other cities, Eureka Redevelopment didn't have to use the controversial eminent domain laws to condemn and seize property against the owner's will. Instead, it was able to work out agreements and pay market value for properties. Homeowners, too, were able to make improvements through the Low and Moderate Income Housing Fund, which paid for painting and repairing 71 run-down homes in redevelopment zones for $1.5 million. The same fund made 165 first-time homebuyer loans, totaling approximately $9.5 million. The agency even helped place first-time buyers in condos built by supervised Eureka High construction students. The idea behind all these loans was to foster communities where people owned their homes and were invested in caring for their property and their neighborhoods.

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Gov. Jerry Brown and other critics of redevelopment saw it as a drain on the state's budget. The Legislative Analyst's Office in its report titled "Should California End Redevelopment Agencies?" states that while redevelopment has the potential to improve designated zones and increase affordable housing, those benefits don't necessarily carry over to the rest of the state. The report also points to the tax money that redevelopment pulls away from schools, special districts and other agencies. California redevelopment has also been criticized for abuses, favoring connected businesses and contract bidders, as well as for stretching the definition of "blight" and not providing enough low-income housing. The Legislative Analyst's Office also notes a lack of oversight as a serious problem. Professor Wilson of HSU points out that in any government endeavor, "there is always waste, but what they are trying to do is laudable." Still, she says, "there really are no good solutions" in a budget crisis this severe, and cutting funding for education or social programs would be just as difficult, "with hugely detrimental effects across the board."

In Sacramento, Interim Executive Director of the California Redevelopment Association Jim Kennedy says his organization is working to "unfold a train wreck." While the agencies are allowed and in fact obligated to repay their debts, or "enforceable obligations," it's somewhat unclear how that is to be carried out. The statute that's meant to delineate the process is "inconsistent," says Kennedy, and he and a crew of lawyers and staffers are struggling to make it work with existing regulations. The Legislative Analyst's Office has since recommended changes to the Byzantine legislation. Agencies across California are winding down, finishing up what projects they can and preparing to close up shop by June 30. Kennedy estimates that somewhere between 2,500 and 3,000 people who work for redevelopment agencies around the state will lose their jobs, a figure that doesn't include the workers who carry out all the renovation and construction in redevelopment areas. The California Redevelopment Association itself is trying to determine if it will continue.

"The needs have not gone away simply because the tool was eliminated," says Kennedy. As for what will come next, he expects a further economic slowdown in California without the boost from redevelopment. In his opinion, California needs economic stimulus and affordable housing more than ever. "It was the single largest local financing source for affordable housing, so it'll put a huge dent in the ability to finance those kinds of projects," he says.  Also, the state's resources for contamination cleanup are now severely limited. "In the next five to 10 years," he warns, "California will be behind the eight ball in trying to deal with some of these larger issues." Professor Wilson agrees, noting that for rural communities, the end of redevelopment could be "especially detrimental because so many of those (redevelopment) funds are going toward economic development projects to help a community get themselves onto a path of sustainable development" that could keep itself rolling without further government funding. "It's not going to happen by itself," she says, and "five years down the road, it's very likely we're not going to like what we see." 

Eureka Main Street's Charlotte McDonald says, "It's sad that the state should let something as important as redevelopment go." Eureka Main Street, which organizes the mural program, Arts Alive and other community programs, drew $90,600 of its $145,000 budget from redevelopment this fiscal year. McDonald hopes the city of Eureka will help fill that gap for the next fiscal year, which starts in July, so that Main Street can continue. The organization provides the necessary insurance for events like the Fourth of July festival, the summer concert series and Arts Alive. It's hard to quantify the importance of these kinds of events in a community like Eureka -- their value goes beyond the revenues of restaurants, bars, shops and galleries. Festivals, street fairs and public art feed the soul of a city.

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When the slideshow ends, Liscom and Trobitz-Thomas leave the lights off.

Liscom is disappointed, but not shocked, given the cuts being made throughout the state. "What's sad is that as budgets get tighter and tighter, the quality of life stuff is the stuff that goes," she says. "Because you've got the basics to provide."

Trobitz-Thomas nods in agreement. "This is also a difficult time for developers to get financing. And our involvement made it more bankable. ... This is our community and we love it. This is home. I was born and raised here ... part of it's disbelief, but part of it's just, now what? I'll probably retire -- I mean, I'm older than she is, so." The women laugh for a second. "But I wanted to retire when things were a little further along," she continues. "There's more to do, but I think what we've accomplished is phenomenal. What the community has accomplished -- I mean, we have the businesses, the historic preservation. I mean, we have preserved and enhanced a community that is very unusual. It's just not going to ... it's going to be harder to move forward."

"And harder for those things to be maintained," adds Liscom.

"But we don't know," says Trobitz-Thomas.

Over a month and a half later on Leap Day, Cindy Trobitz-Thomas's office is still full of plants and paintings instead of boxes.

"It takes a while to kill us," she jokes.

The sign on the door still says "Redevelopment," but her team isn't supposed to work under that name anymore. Likely they'll be called "Economic Development and Housing" as they wind down. Day to day, the staff of six is still running the Housing and Economic Development programs, as well as finishing up redevelopment's commitments by the June 30 deadline. The hope is that most or all of the employees will be absorbed into other departments.

Remaining projects are still up in the air, including a stable on a scrap of land by the Fisherman's Terminal to house the horse and carriage and a hotel on the lot between D and E on the waterfront. There are also grandiose plans for an aqua-park with a swimming pool by the water, the playfully named Mission Swimpossible, which would hold events and swim meets. Surrounded by water as Eureka is, there are currently few places to swim or learn how. Some of these projects might still happen. The oversight committee will have members from the fire district, College of the Redwoods, the county supervisors, the school district, and other local tax entities. That oversight committee can decide whether to complete or abandon current plans for development. The committee could also decide to sell the 10 acres of waterfront property previously owned by the redevelopment agency to the highest bidder. And if that buyer chooses to sit on it, the land could lie dormant indefinitely. "What we're hoping," Trobitz-Thomas says, "is that they will not look at the immediate gain, but what's best for the community." In the meantime, the staff members of the former Redevelopment Agency keep working, hoping they'll be able to sell the committee on their plans.

Trobitz-Thomas is chairing the upcoming California Association for Local Economic Development conference, titled "Empowering Economic Development to Embrace Opportunity," and she's excited about the interest she's seeing from the redevelopment and economic development community. "People are searching for a place where they can go and be a part of figuring out the solution." It may take a few years, but they are starting to work on finding ways to get the same kind of work done. Trobitz-Thomas is not hoping redevelopment will be resurrected, but she's hoping the Legislature will help bring back pieces of it, like some form of tax increment financing. "We're going to have to be a little bit more creative," she smiles. "People are not giving up. And that's a testament to people in this kind of profession in California. They care."

 

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