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Glendale to argue $20.2M tab

State consultant takes issue with amount officials think is owed.

April 11, 2013|By Brittany Levine, brittany.levine@latimes.com

Glendale’s top redevelopment official said this week that the city plans to negotiate with the state Department of Finance to lower an unexpected $20.2 million bill.

“I am shocked,” Phil Lanzafame, Glendale’s officer for economic development and asset management, said of the tab, which was about eight times higher than the city expected.

As part of the dissolution of redevelopment last year, the roughly 400 redevelopment agencies throughout the state had to hire accountants to review how much redevelopment money they have on hand to be transferred to other taxing entities, such as school districts and community colleges.

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For Glendale, that includes Glendale Unified and Los Angeles County.

Glendale has used property tax dollars from redevelopment for decades to help develop such projects as the Americana at Brand and the Disney Creative Campus. Redevelopment money also covered city salaries and supported much of Glendale’s General Fund budget.

Glendale faced a $15.4 million budget gap last year, more than half of which was attributable to the end of redevelopment.

City officials submitted a report to Sacramento months ago that outlined $2.5 million available to be distributed to other agencies. Two weeks ago, however, the Department of Finance sent a letter to the city calling for the release of $20.2 million.

Steve Szalay, a local government consultant at the finance department, rejected several Glendale calculations, such as asset transfers and restricting some cash balances. He also wrote that because the city received some payments from the county to cover redevelopment obligations, more money is available for other agencies.

Lanzafame said city officials plan to negotiate a lower payment amount with the Department of Finance. How much they were aiming for, though, he wouldn’t say.

“The goal is to get it to the number that it should be,” Lanzafame said.

This isn’t the first time the city has had to negotiate its bills with Sacramento officials. Last year, the negotiations involved affordable housing projects.

Redevelopment agencies have two funds — one for affordable housing projects and one for other development work. The latest $20.2 million bill is connected to the latter.

But several months ago, a city-sponsored review indicated there was no money to distribute from the affordable housing fund; in fact, Glendale claimed it had an $8.9 million deficit.

After reviewing the report, state officials sent Glendale a bill for $3.8 million in November. A month later, both sides met and the Department of Finance later sent a letter requesting about $281,000.

Glendale must conduct the financial reviews in order to complete the redevelopment wind-down process. Only after all the required steps are taken will the city be eligible for reimbursement of the tens of millions of dollars it loaned over the years to its redevelopment arm.

Glendale needs at least some of that money back in order to maintain a balanced budget, officials have said.

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Follow Brittany Levine on Google+ and on Twitter: @brittanylevine.

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