FREMONT -- Fremont's window for selling redevelopment bonds to pay for a new BART station may have closed just hours before the city was scheduled to issue them.
Without the bonds, the city will not have any funding in place for the station, delaying its construction indefinitely.
City leaders on Thursday postponed the issuance of as much as $140 million in redevelopment bonds, in response to the California Department of Finance posting a 27-page report late Wednesday that spells out Gov. Jerry Brown's plan to end the state's redevelopment program.
The document "Redevelopment Agency Dissolution and Succession" includes provisions giving the state as much as three years to "review the validity" and potentially nullify redevelopment projects approved by agencies since the first of the year.
Attorneys for Fremont are reviewing the state report for items that would have to be disclosed to prospective bondholders.
City leaders, who had been working to get the bonds sold before March 1 -- the date Brown had said he wanted redevelopment's termination to take effect -- now hope to issue the bonds next week and have them sold shortly thereafter.
"At this point, it's just a pause. Hopefully we can go back and do it next week, but it's still to be determined," said Harriet Commons, Fremont's finance director.
Although the city still could issue the bonds before legislation to eliminate redevelopment is passed, it's unclear how the bond market will react to the state's plan, city officials said. If the pool of willing investors shrinks, the city could find itself paying higher interest rates on the bonds, potentially making them unfeasible.
Redevelopment is a key tool for cities to fight blight and build affordable housing. However, it's also a significant expense for the state, which has backfilled property tax money that school districts lose to redevelopment agencies.
According to a Department of Finance report, redevelopment agencies take in about 12 percent of property taxes, diverting about $5 billion from other agencies.
Last year, Fremont finalized agreements with local agencies that allow it to issue as much as $400 million in bonds for redevelopment projects.
When Brown announced his plan last month to close the state budget deficit in part by doing away with state-subsidized redevelopment, the city -- like many across the state -- moved quickly to push through the bonds to secure funding for several projects, including construction of an Irvington district BART station.
Contact Matthew Artz at 510-353-7002. For more Fremont news, go to IBAbuzz.com/tricitybeat.