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Cities grapple with redevelopment decision

Court's agreement that state can end redevelopment agencies throws several local projects up in the air.

December 29, 2011

The California Supreme Court decision on Thursday that the state was within its power to abolish local redevelopment agencies could have significant repercussions for Burbank and Glendale.

The court's decision was the worst possible outcome for those who had sued to block Gov. Jerry Brown's plan to eliminate 400 local redevelopment agencies statewide and divert hundreds of millions of dollars in tax revenue back to state coffers.

The court also invalidated a second law that would have allowed redevelopment agencies to continue operating by voluntarily making annual payments to the state to help fund schools and other public services.

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For cities like Burbank and Glendale, which have entire staffs devoted to managing local redevelopment zones, the impact of the court's decision could be massive and long-lasting.

“In essence, redevelopment is eliminated,” Ruth Davidson-Guerra, Burbank's assistant community development director.

More than 1,600 affordable housing units have been created since 1976 using redevelopment funds, she said, which represents a total investment of about $93 million. In Glendale, city officials said redevelopment funding has been used to produce roughly 1,000 units.

Redevelopment agencies came under scrutiny this past year as the state grappled with how to close a multibillion dollar budget gap. Critics contend the agencies sap badly needed tax revenue from the state for education and other programs.

In a statement on Thursday, Brown said the state Supreme Court decision “validates a key component of the state budget and guarantees more than a billion dollars of ongoing funding for schools and public safety.”

But proponents argue that by allowing local agencies to use the increased tax revenue generated by improved properties within a redevelopment zone to pay for other upgrades, jobs are created and cities can attract more private investment.

In Glendale, which had planned to make a $10.1-million payment to the state in order to keep its agency, redevelopment funds have been used for the Americana at Brand, the Disney Creative Campus and the historic Alex Theatre.

“Redevelopment has contributed tremendously to the growth and prosperity of Glendale,” said Glendale City Councilman Rafi Manoukian, who serves as chairman for the Redevelopment Agency.

The changes will throw a wrench into some proposed projects in Glendale, although officials are continuing to conduct their analyses.

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