SAN MARCOS — At the request of Mayor Jim Desmond, San Marcos City Manager Paul Malone gave a presentation he lightly termed “Redevelopment 101,” highlighting the successes, limitations and potential vulnerabilities of the city’s redevelopment areas to an audience of city employees, staffers and council members Aug. 6.

The main purpose of a redevelopment area, or RDA, is to keep property taxes in local treasuries to facilitate development and eliminate blight, according to Malone. He said San Marcos normally only gets 7 percent of the property taxes generated in the city, the rest going on to the county and other local agencies. Inside San Marcos’ three RDAs, covering almost two-thirds of the city, the redevelopment agency gets to keep 69 percent of any increase in taxes resulting from improved property values.

That revenue is used to secure bonds to build infrastructure, construct improvements and rehabilitate existing structures within the RDAs. Redevelopment funds make ambitious plans like the Creek District and Palomar Station projects possible, to say nothing of the city’s extensive new shopping centers, by allowing the city to help finance projects that private enterprise might otherwise be unable or unwilling to undertake. In addition, the city spends a third of the funds it receives from RDAs on low- to moderate-income housing.

“Since the mid-‘80s, this city has spent somewhere between $750 and $800 million on infrastructure, and the lion’s share of that has been funded through redevelopment,” Malone said. “Were it not for the redevelopment agency, this town would look nothing like it does today.”

Malone touted the mixed-use Paseo del Oro project as a signature example of successful redevelopment. The award-winning, 5-acre project was one of the nation’s first to use low-income housing as its anchor. Planning commission chair Steve Kildoo said Paseo del Oro was important in winning residents over to the idea of redevelopment.

“When the city was bringing this out to the public .. this was really getting beat up,” Kildoo said. “A lot of people were having hard time wrapping their hands around this concept.”

A model of success, Paseo del Oro doubled the previously existing retail space while adding 120 apartments. The project also reduced crime — law enforcement calls went down 38 percent in the area after construction, and according to Malone, the crime has stayed out of San Marcos.

The city manager also pointed out that no structures were condemned to make Paseo del Oro. Eminent domain, the power of a public entity to force the purchase of private property, is rarely used in San Marcos for commercial developments. While this means it may take longer for a project to be fully realized, Malone said this was a fair trade for the city residents’ peace of mind.

“It’s better if you don’t have all the discord and the upset in the community you get from the government walking in and taking things from people,” he said. “It just means our planning horizon is stretched out a little further.”

RDAs also make for a stable city economy, Malone said. Using projected revenue from redevelopment areas to secure debt financing means the city has a steady flow of money. As a result, the booming housing market of the early 2000s allowed the city to secure $300 million in bond credit, which will sustain redevelopment despite the economic downturn.

“This is cyclical,” Malone said. “There’s peaks and there’s troughs. We’re in a trough right now. We’re having to bridge to the next peak. Having bond funds in hand allows you to bridge that gap.”

But even if the current trough doesn’t affect the city directly, it might indirectly. Malone ended his presentation with ominous news stemming from the state’s budget crunch.

“A couple of days ago, one of the stalwarts up at the legislature floated a proposal for a permanent take of redevelopment revenue,” he said. This garnish would tentatively amount to 5 percent of the redevelopment area’s revenue or around $2.6 million annually. Malone said he thought such a move was unconstitutional and hoped that it wouldn’t hold up in court if the state goes ahead with it. The mayor has written to State Sen. Mark Wyland and State Assemblyman Martin Garrick urging the representatives to fight the proposal.

“If the state starts pulling the rug out from everybody, we’re going to be in deep kimchi really fast,” Budget Commissioner Glen Winn said.

For more information on redevelopment and San Marcos’ RDAs, call (760) 744-1050, ext. 3116.