The Santa Clara City Council approved a plan that would allow the city to keep its redevelopment agency alive by making an $11.2 million payment to the state, a move that would lock in necessary funds for the 49ers stadium project.
The action comes as Santa Clara and other cities all over California are awaiting a state Supreme Court decision on a lawsuit filed by the League of California Cities and the California Redevelopment Association.
The lawsuit is challenging the state's plan to eliminate redevelopment agencies unless cities and counties take part in an "opt-in" program in which they would divert some funds back to the state.
The program would allow redevelopment agencies that want to continue operating to do so by making payments to the state totaling $1.7 billion this year and $400 million every year thereafter, said Pam Morrison, administrative analyst to the Santa Clara city manager.
According to the state's formula, Santa Clara's share of that total is $11.2 million this year and $2.7 million next year, she said.
Although the law is still on hold pending the state Supreme Court decision, the City Council passed the opt-in ordinance Tuesday night "just in case."
If the state's plan is allowed to take effect, Santa Clara's participation in the opt-in program would allow it to reimburse the 49ers for a $40 million advance from the team for its stadium project, albeit at a slower pace than it had planned to.
"We're opting in because it would at least give us the opportunity to make the attempt to repay the 49ers and to continue to do some affordable housing projects," Morrison said. "It's better than not having a redevelopment agency at all."
The agency has committed to paying $40 million toward the $987 million stadium, but because it does not currently have those funds, the 49ers have agreed to advance the agency's portion with the understanding that the team would be reimbursed.
Morrison said, however, that even if the city opts in, the redevelopment agency's ability to repay that advance is reduced because of the amount of money that would have to go to the state.
"It's going to be more difficult and will take us longer to pay the advance," she said.
But, she said, the opt-in program is still a better option than the possibility of losing nearly $15 million annually in property lease revenues if the redevelopment agency is dissolved, which Morrison said would be "devastating" to the city.
Until the court makes a ruling in the case -- which could take until January -- redevelopment agencies are barred from disposing of any assets or taking on new projects.
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