About a dozen government agencies in Alameda County have been ordered to fork over a total of $116.4 million in the next two years as part of a statewide raid of more than $2 billion in local redevelopment funds to balance California's budget.

The mandate, which will force some construction projects to slow and others to be scrapped, is angering city leaders who say it took years to raise the funds — and will take longer to rebuild because of sharp drops in property tax revenue. Redevelopment dollars are used to convert blighted lands into housing or business developments to spur local economies.

The California Redevelopment Association plans to appeal the decision of a Sacramento County Superior Court judge who this week authorized the transfer of funds.

"The Legislature has taken away a basic tool to create jobs, generate sales tax revenue and increase property tax base. Redevelopment is the key to economic recovery in California," said Mark Evanoff, redevelopment agency manager in Union City, which is one of the plaintiffs in the lawsuit.

"The Legislature isn't dealing with the difficult budget decisions it needs to make, and it's raiding local government to basically cover up its indecision," Evanoff added.

While the raid will take dollars away from redevelopment projects, the same money the state collects is supposed to be funneled back into local school districts.

Maret Bartlett, Hayward's redevelopment director, said the mandate is frustrating because the city already partners with the area's schools.


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"Hayward has been trying to do the right thing by the school district here," she said. "We contributed a lot of redevelopment money to build a new school, and (the school district) has been a great partner. I just think it's sad."

In Hayward, where the two-year grab will total about $5.3 million, projects will be slowed but not derailed, Bartlett said. There's less money for key projects such as the South Hayward BART redevelopment area, City Center and downtown retail attraction program.

The blow was softened because the redevelopment agency borrowed much of the lost money from its affordable housing fund, and must pay back the cash in five years. Bartlett said that's how long she expects it to take to recuperate from the loss.

The $9.3 million that Union City is slated to lose represents 71/2 years of savings, Evanoff said. The city has had to halt plans to build a pedestrian promenade, business condos and retail pavilion as part of its vision for a core downtown known as the Intermodal Station District.

Fremont's $13 million take-away won't force the city to postpone redevelopment projects, but it will wipe out most of the agency's contingency fund and could delay implementation of new ideas, Redevelopment Agency Manager Elisa Tierney said.

San Leandro, which faces a $7.6 million hit, is in a similar situation.

"It's a large sum of money that we have to come up with," said Cynthia Battenberg, the city's business development manager. "We don't have that much cash just sitting around."

Battenberg said the city will be able to continue its current projects, such as the elimination of blight in the West San Leandro-MacArthur Boulevard area. However, planning for future redevelopment projects may be put on hold.

"If this is a one-time take, we can probably still be able to function," she said. "But if it continues, then we are going to have to decide if we continue to operate or if we'll basically just be paying debt service."

Meanwhile, the unincorporated Alameda County communities of Castro Valley, San Lorenzo, Cherryland and Ashland will lose more than $9 million, Redevelopment Director Eileen Dalton said. Officials have been building up the funds the past decade.

Castro Valley will lose $1.8 million and will not see a commercial development project come to life.

In San Lorenzo, $2 million will disappear, affecting redevelopment efforts to the Bohannon Project — 19 acres along Hesperian Boulevard.

An infill retail project in Ashland will be removed from the county's to-do list after $2.5 million is taken from the community.

And $2.9 million will be snatched from Cherryland and its efforts to build a community center.

"It is disheartening to lose that much money when you are an agency aggressively implementing projects," Dalton said. "The funding is being taken at the worst possible time. Unless we get the money back, we cannot make up for it."

Staff writers Matthew Artz, Eric Kurhi, Kristofer Noceda and Jason Sweeney contributed to this story.

Raid of redevelopment funds
The state plans to take more than $2 billion in local redevelopment funds during the next two years. The $116.4 million impact to local agencies includes:
  • Alameda County Redevelopment Agency (includes Castro Valley, San Lorenzo, Cherryland and Ashland): $9.7 million
  • Fremont: $13.2 million
  • Hayward: $5.3 million
  • San Leandro: $7.6 million
  • Union City: $9.3 million
    Source: California Redevelopment Association