Cities seek clarity on redevelopment ruling

Officials try to assess damage as 80 jobs hang in the balance.

January 07, 2012|By Jason Wells, Brittany Levine and Maria Hsin

Officials in Burbank and Glendale are scrambling to assess the recent California Supreme Court decision upholding the elimination of their redevelopment agencies and the nearly 80 city jobs they fund.

Since the court ruled last week that the state Legislature was within its rights to eliminate nearly 400 community redevelopment agencies statewide to help close a multi-billion dollar budget gap — and that a compromise allowing cities to pay hefty fees in exchange for retaining the agencies was unlawful — local officials have been taking hurried stock.

In Glendale, nearly 40 jobs are fully or partly paid for by the redevelopment agency, which is funded by the higher property tax revenues generated by removing blight within designated redevelopment zones — a revenue source known as tax increment.

In Burbank, roughly 36 city jobs are at least partially funded by the redevelopment agency, said Ruth Davidson-Guerra, the city’s assistant community development director.

“It's on the forefront of everyone's mind right now,” she said.

It’s not just the potential job losses — the court ruling also has thrown a flurry of recent moves to protect redevelopment assets into doubt.

City officials say the redevelopment agencies have been a vital tool for building hundreds of affordable housing units and attracting major doses of private investment, ala the Americana at Brand or Disney’s massive creative campus in the San Fernando Road corridor.

Critics argue the siphoning off of property tax revenues have amounted to a huge taxpayer subsidy for private developers instead of going to education and public services.

The law upheld by the state Supreme Court calls for the sale of local redevelopment agency property. After paying for debts and residual administrative costs, the rest of the money is to be funneled to schools and other programs.

But officials are still trying to determine what that means for local assets.

In Glendale alone, officials last year transferred most agency-owned property, such as the Alex Theatre, to the city, issued $50 million in bonds and gave the city $30 million to partially pay back an nearly $70-million loan.

But the state could try to unwind some of Glendale’s defensive moves and block the city from getting the rest of its loan money, officials said.

“They are going to want those assets, or else what was this whole thing for?” Glendale City Manager Scott Ochoa said.

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