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Committee advances grant-funded elements but holds bonding decision on $28.7M ERAF payment
Summary
Committee members split a redevelopment agency package: they approved moving forward two grant-funded expenditures and authorized using existing funds to make a $28.7 million ERAF payment to enable a one-year Yerba Buena project-area extension, but continued the proposal to incur $28 million in new taxable bond indebtedness for later review.
The Budget and Finance Committee on Nov. 18 advanced parts of a redevelopment agency budget amendment while continuing the more politically consequential bonding proposal.
Fred Blackwell, executive director of the San Francisco Redevelopment Agency, told the committee the state budget required a shift of redevelopment funds into the Educational Revenue Augmentation Fund (ERAF), and San Francisco—s share is roughly $28.6 million. Blackwell said the agency is proposing a combination of pay-as-you-go and taxable bond proceeds to meet the obligation; but using taxable bond proceeds would crowd out affordable housing projects. "If we were to use our existing bond proceeds to pay the $28,600,000 ... we would either have to postpone or forego five of these developments," Blackwell said, which he estimated could mean roughly 500 lost affordable units and the associated leveraged funds.
Budget analyst Harvey Rose warned the committee that issuing $28 million in tax-increment bonds "would increase [general fund] cost over a 30-year period" by about $45.5 million (roughly $1.5 million a year when it would take effect). Rose also recommended that two newly requested positions funded by federal grants be explicitly terminated when grant funds expire.
After debate and public comment, the committee approved moving forward three components: (1) authorize an expenditure not to exceed $28,700,000 for the ERAF payment (to be paid from existing funds), (2) authorize $1,033,417 for additional HOPWA (Housing Opportunities for Persons With AIDS) grant reimbursement expenditures, and (3) authorize the creation of a senior development specialist position funded by a $156,000 EDA grant (with the budget analyst recommendation that the position be deleted when grant funds expire). The committee continued the section authorizing taxable bonded indebtedness up to $28,000,000 for further review.
Supervisor discussion focused on balancing the need to preserve affordable housing projects with the legal and fiscal constraints imposed by the state ERAF shift and on the desirability of additional oversight and audit information for expiring project areas such as Yerba Buena.
The committee—s action splits funding authorization (payment to state and grant-funded items) from the policy question of long-term bonded indebtedness, which will return for later committee review and a full-board decision.
