SANTA ANA : Redevelopment Plan Expected to Survive

An ambitious city redevelopment plan aimed at generating $1.5 billion over 30 years for new school classrooms, athletic fields and computer labs will not be jeopardized by recent changes in state redevelopment law, city officials said this week.

The city, faced with a growing student population, conceived the plan to fund a massive expansion of local schools. Although justification for the redevelopment project was partially based on the city’s lack of sufficient school facilities, state law no longer recognizes that rationale as valid.

“We don’t believe that will measurably affect us. It shouldn’t be a negative for Santa Ana,” City Manager David N. Ream said Wednesday.

Santa Ana’s other justifications for the project will include its lack of sufficient open space and its large number of residents living below the poverty line, said Bob Hoffman, city redevelopment and real estate officer.

Senate Bill 617, approved by Gov. Pete Wilson in September, prohibits cities from using “inadequate school facilities” as a reason to define an area as “blighted,” a finding required before a redevelopment project can proceed.

State officials have opposed redevelopment plans similar to those made by Santa Ana and other cities, such as Hemet and Coronado, because they threaten the state treasury. Local redevelopment agencies get to keep tax money for their projects that would normally go to the state to fund schools, and the state must make up that loss to assure that schools are properly funded.

Several months ago, some Santa Ana officials said they were counting on the “inadequate school facilities” rationale to meet the legal requirements for blight. However, Ream said that although that issue was discussed, it was never a make-or-break consideration. Now, the city will simply drop it from its justification for the project.

“Our findings of blight are based on economic reasons--other findings of blight that aren’t affected by this legislation,” he said.

Ream expects the state to approve the city’s proposal after the environmental impact studies are completed and says the project could begin within two years.

“I don’t anticipate state resistance, quite frankly,” he said. “I know that they expressed opposition on the Hemet plan, but our situation is different from Hemet and other cities they objected to.”

Under the Santa Ana proposal, the two-thirds of the city not currently covered by the redevelopment area would be included in a new redevelopment plan. Capital improvements may be paid for all at once through the sale of bonds, or incrementally as the project proceeds, Hoffman said.

Bond debt would be paid through additional tax revenues that are created when the property changes hands and the total assessed valuation increases, Hoffman said. He added that the bulk of the new funds generated--an estimated $1.5 billion over 30 years--would be split between Santa Ana Unified School District, the city and Rancho Santiago Community College District, although the county and other taxing districts that overlap the city’s boundaries will also receive a portion of it.