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Tuesday, March 15, 2011

Redvelopment Rush Job: Supervisors Consider $70 Million Borrowing Plan

Posted By on Tue, Mar 15, 2011 at 11:35 AM

Pulling a fast one?
  • Pulling a fast one?

The San Francisco Redevelopment Agency is pushing through last-minute legislation today that would let the city borrow $70 million for housing and public infrastructure South of Market.

And that's one way to end-run Gov. Jerry Brown's plan to strip cities of  redevelopment agencies.

The money would be used to help build out the Mission Bay redevelopment project in SOMA. Part of the money would help pay for a 150-unit low and moderate-income apartment building at Fourth and Mission Rock streets.

The remaining money would be used to help pay for already-built public infrastructure, including roads, traffic signals, utilities, and parks in the new Mission Bay neighborhood.

The Board of Supervisors has taken extraordinary measures to rush the new borrowing proposal through the legislative process; they scheduled a special Budget and Finance Committee meeting today to propose the measure, which will then be followed by another abbreviated meeting so that it can get the borrowing legislation before the full Board of Supervisors later this afternoon.

Judson True, an aid to Board of Supervisors president David Chui, said the rush job was necessary so that San Francisco's redevelopment agency could pay outstanding debt incurred building out Mission Bay.

"We need to authorize this bond issuance as soon as possible to avoid the uncertainty that coudl come with the end of redevelopment in California," True said.

Mayor Ed Lee has been quoted recently saying that San Francisco's "biggest problem" is tied to Brown's efforts to eliminate redevelopment borrowing, which would be a job-killer for the city.

If approved, Tuesday's legislation would give the Board of Supervisors the $70 million in bonds. After expenses, the city would have $64 million to fund SOMA redevelopment projects.

According to the City's legislative analyst, San Francisco would repay the bonds --  with interest -- out of the city's general fund, which would result in a $100 million tab. The debt would be paid back in installments of $3.6 million annually for the first 20 years. After that, the payments would decrease to $2.8 million annually.

Calls to Mayor Lee and the Board President David Chiu were not immediately returned.

Aaron Peskin, chair of the Democratic County Central Committee, had something to say about this bold plan. In an interview on Tuesday, he criticized the move, saying it commits the city to decades of debt service without allowing time for public input.

Update, 3/15, 3:30 p.m.:

Amy Lee, deputy executive director of the San Francisco Redevelopment Agency, called to tell us that the Legislative Analyst report accompanying today's legislation -- which was our source for financial data used in this story -- erred in saying the bonds would be repaid from the city's general fund. In San Francisco, county redevelopment bonds are accounted for separately from the general city & county budget, and "there will be no impact on the general fund," Amy Lee said.

Additionally, Lee said that Brown's plan to axe California's redevelopment agencies wasn't the only reason to hurry the bond placement. She explained that market timing is very important when borrowing money from investors. She said that, during the coming days San Francisco has an opportunity to sell around $100 million in bonds at once, at a relatively good interest rate of between seven and nine percent.

"We would rush this anyway," she said.

Also, Lee pointed out that the Mission Bay infrastructure improvements have already been paid for by the developer. So San Francisco is essentially taking on new debt to pay off old debt, something that would have to be done whether or not Brown dissolves California's redevelopment agencies.


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