Declining revenue, state raid derails Richmond redevelopment dreams

New landscaping, streetlights, benches and color-coordinated trash cans line portions of Richmond's Macdonald Avenue, but a three-quarter-mile stretch at the west end of this major corridor must wait.

So too will 23rd Street, another key commercial strip.

The economic downturn and the state raid on local funds is forcing some of the city's redevelopment plans to a standstill — and officials don't know when they can afford to move ahead.

In the neighborhoods surrounding Macdonald Avenue, once the city's bustling commercial hub, neighbors urge officials not to forget. And from her office at Richmond Main Street, Executive Director Amanda Elliott hopes the project gets back on track soon.

"We are somewhat nervous about the cuts being made," said Elliott, whose nonprofit organizes events and tries to recruit new businesses to help revitalize downtown. "We're hoping for more renovations to improve downtown and for things to turn around in the next couple of years."

Projects that secured funding before revenue fell or from other sources, such as grants, will still move forward. These include construction of a five-story parking garage at the Richmond BART station that will free up land for 100 townhouses.

The city's redevelopment agency this year is taking a beating from a 36 percent drop in property tax increment revenue, which translates into a $10 million loss. In addition, state lawmakers want $2.05 billion from local redevelopment agencies over two years to close its deficit; the hit to Richmond is $10 million.

State lawmakers say the plan is legal and necessary, but the move has infuriated cities. The California Redevelopment Association sued the state Oct. 20 to stop the raid on local coffers, and the League of California Cities is collecting signatures for a November 2010 ballot measure to prevent the state from taking or borrowing gas tax, redevelopment and other money from cities and counties in the future.

"Redevelopment agencies are in cities that need it the most," said Steve Duran, Richmond's community economic development director. "It's unconscionable what they're (the state) doing to the cities. We have enough to deal with reduced sales tax and property tax."

Other cities with redevelopment zones also have been hit. Pittsburg, for example, is losing $21 million in the state raid and will hold off on some projects. Officials are searching for other money to make those projects happen.

In Richmond, other cuts to the redevelopment budget include $5 million to acquire land for redevelopment intended for Macdonald Avenue; $1.3 million to help businesses fix storefront facades; $1 million for road reconstruction; $1 million to flight blight; and money to help tackle graffiti and enforce public nuisance laws.

The redevelopment staff has been cut by about half and will operate with 19 employees.

Still, not all projects have ground to a halt. Those continuing include:

• The $34 million parking garage at BART. City officials secured the final $10.1 million needed from the state last week and expect to start construction by spring. The work will allow developers to build about 100 townhouses on the existing BART surface parking lot. These homes combined with 132 completed in 2004 will form part of a transit village, where people live within walking distance of public transit and shops.
• The $30 million Marina Bay railroad undercrossing, which will keep traffic moving when trains block the way. The project is funded through regional and state dollars, and is expected to go out to bid for construction in the spring.
• Renovation of the historic Winters Building at Macdonald Avenue and 11th Street that houses the East Bay Center for the Performing Arts. The city is pitching in $3 million.
• Neighborhood stabilization program, which buys and rehabilitates foreclosed houses and resells them. It is funded through a $3 million federal grant.
• The 26-unit Lillie Mae Jones housing complex at Macdonald Avenue and First Street, which is slated to break ground soon. The city is working on this $12.5 million project with the Community Housing Development Corporation of North Richmond and the East Bay Asian Local Development Corporation.

Katherine Tam covers Richmond. Follow her at twitter.com/katherinetam.