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Council fights to save redevelopment money

Members vote to tie up $500M in future tax revenue in response to governor's plans.

January 22, 2011|By Melanie Hicken, melanie.hicken@latimes.com

CITY HALL — The City Council acted quickly Friday to protect local redevelopment revenue from being rerouted to Sacramento as part of Gov. Jerry Brown's budget proposal.

Faced with another massive state budget deficit, Brown's budget proposes to dissolve the Glendale Redevelopment Agency and nearly 400 others statewide, with most of the $5 billion they generate going to the 2011-12 state budget.

In future years, Brown would allow cities to raise funds for economic development by permitting new bond measures or tax increases with voter approval.

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Following the lead of many other cities across the state scrambling to retain local dollars, the Glendale City Council voted Friday to tie up nearly $500 million in future tax revenue generated by the city's two redevelopment zones for future projects.

Officials said the move would help protect the city's share of redevelopment money for years to come if Brown's proposal is passed by state legislators.

"If we are acting quickly, it's because we have been put in a position by Sacramento to really have to respond quickly," Councilwoman Laura Friedman said. "This has really been an all-or-nothing proposal, and I think as a city we have to protect ourselves."

Without those dollars, officials said, the city would have little ability to support future redevelopment and affordable housing projects.

Friday's action pledged an estimated $200 million in future redevelopment revenue for dozens of proposed projects in the city's central and San Fernando redevelopment zones, Lanzafame said.

Projects ranged from those already in the pipeline — like $1 million for improvements at the future home of the Museum of Neon Art — to concepts without concrete plans, such as the $23-million development of a park in the San Fernando Road corridor.

The City Council also pledged roughly $280 million to future affordable housing projects.

City officials emphasized that Friday's action did not commit the city to any of the projects, which would still have to go through the regular approval process.

"What we're doing is that each of the three agencies represented here are obligating funds for projects to be determined," Mayor Ara Najarian said.

But Robert Silverstein, an attorney representing Golden Key Hotel owner Ray Patel, spoke out against the move, which he said allowed the city to continue supporting large developers with redevelopment subsidies over small-business owners.

"What is happening here is a perpetuation of a system that has become increasingly abusive to the public," he said.

Patel and Americana at Brand developer Caruso Affiliated have been in a public stand-off in recent months over Caruso's attempts to buy the hotel.

Caruso wants to expand the 15.5-acre Americana by buying the hotel and vacant building next door, which he recently acquired. He has told the City Council he would replace the structures with new retail space that would generate an estimated $800,000 in annual tax revenue for the city.

Still, others in attendance said it was important to protect the millions in local tax revenue the city has come to rely on for economic development.

"This body must take steps to protect the projects that are on the books or are going to be coming up or are under negotiation — even if they are in their nascent stages," said local Realtor Greg Astorian.

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