Jones Lang LaSalle report analyzes situation, offers real solutions for navigating through the new and complex legislation.
LOS ANGELES, April 24, 2012 – With the California Assembly’s recent decision to dissolve redevelopment agencies (RDA) in the state, more than 400 RDAs are sorting through the complicated process of determining ongoing debt obligations, understanding cash flows and eventually selling properties all while thinking through new ways to finance and achieve economic development priorities. Pulling from its deep experience in redevelopment, finance, affordable housing, asset management, real estate strategy and disposition, Jones Lang LaSalle, with Keyser Marston, is helping Successor Agencies and county administrators prepare for and navigate through these new and uncharted waters.
“Whether this new law is seen as an attempt to untangle an abused funding problem or an opportunity to improve the system, there is one certainty – California cities and counties, of all sizes, must make some tough decisions and do it soon,” said Renata Simril, Managing Director, Jones Lang LaSalle.
A copy of a white paper on this topic created by Jones Lang LaSalle and Keyser Marston Associates can be found here: ”Navigating the challenges of redevelopment agency dissolution.”
According to Simril, municipalities must in short order do the following:
· Financial management: Municipal entities must ensure they are in compliance with all of the legislative requirements and develop a process to manage financial obligations. This includes preparing an annual administrative budget for consideration by the Oversight Board and identifying project management related costs that can be funded outside of the administrative cap.
· Affordable housing: The new law allows municipalities and local housing authorities to create a framework to assume responsibility for affordable housing assets formerly controlled by an RDA. If creating a housing successor to take over the RDA’s affordable housing assets, officials will need to create a strategy for fulfilling any outstanding affordable housing obligations and prepare detailed cash flow projections, as well as set up systems to monitor compliance and affordability covenants.
· Strategic asset management, development and disposition: In evaluating the disposition of assets, it is important to avoid the ‘fire sale’ mentality and be proactive. Successor Agencies will need to make an inventory and prioritize relevant land and other real estate assets and prepare timing and market strategies for disposing of these properties. The approach needs to balance the immediate revenue needs of local taxing entitles with market realities in local communities.
· Get help if you need it: For many municipalities, this ‘new normal’ means adopting a longer term perspective on economic development and staying informed about the needs of the private sector in investment decisions. This could require innovative public-private partnerships that reintroduce quality projects without relying on tradition financial assistance.
Jones Lang LaSalle’s public sector real estate practice is a premier provider of strategic real estate advisory and transaction services for local, state, national and international public institutions, covering the spectrum of the real estate cycle.
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About Jones Lang LaSalle
Jones Lang LaSalle (NYSE:JLL) is a financial and professional services firm specializing in real estate. The firm offers integrated services delivered by expert teams worldwide to clients seeking increased value by owning, occupying or investing in real estate. With 2011 global revenue of $3.6 billion, Jones Lang LaSalle serves clients in 70 countries from more than 1,000 locations worldwide, including 200 corporate offices. The firm is an industry leader in property and corporate facility management services, with a portfolio of approximately 2.1 billion square feet worldwide. LaSalle Investment Management, the company’s investment management business, is one of the world’s largest and most diverse in real estate with $47.7 billion of assets under management. For further information, please visit our website, www.joneslanglasalle.com.
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