City's Foresight and Planning Will Overcome Challenges of RDA Closure

Several years ago, City Council established the Indian Wells Redevelopment Agency (RDA) for the purpose of implementing capital improvement projects in Indian Wells—the construction of the Miles Avenue Bridge is only one example.

In January 2011, Governor Jerry Brown announced his intent to eliminate redevelopment agencies in an attempt to balance the State budget. Assembly Bills AB 1X 26 and AB 1X 27 were enacted, signed, and subject to a constitutional challenge before the State Supreme Court issued a December 29, 2011 decision to uphold AB 1X 26. This decision essentially dissolves all redevelopment agencies throughout California effective February 1, 2012.

The State of California may have taken away City’s RDA; however, City Council possessed the acumen to take action nearly a year ago when this issue came to light.

The City’s strategy included making a series of tough $1.9 million budget cuts and staff layoffs last August to offset the $3.6 million RDA revenue loss from the City’s General Fund. The cuts balanced the budget and even produced a net operating surplus of $0.5 million. Additionally, City Council’s decision to place Measure H on the November 2011 ballot was designed to help create a robust revenue stream for the City, thus neutralizing the proposed RDA cuts. Measure H passed, increasing hotel transient occupancy tax (TOT) from 9.25% to 11.25%.

At the January 5, 2012 City Council meeting, City Council elected to become the successor agency of the Indian Wells Redevelopment Agency. What this means is that the City, along with an oversight board, will be responsible for the winding down of the Agency’s affairs.

What are the long-term consequences of the RDA dissolution? It basically means that the City will no longer have capital improvement funds through the RDA and that the City’s operating budget will need to absorb capital and infrastructure enhancement initiatives.

Rest assured that City officials and staff are actively and strategically planning for the short- and long-term to ensure Indian Wells’ continued financial stability and optimal quality of life.