State hits Burbank with huge tab for redevelopment wind-down

State finance officials have ordered Burbank to hand over $42 million in former redevelopment funds for distribution to taxing entities, stunning city officials who in January had pegged a far lower tab of $11.7 million.

“We were very disappointed,” Ruth Davidson-Guerra, assistant community development director, said of the state order issued last week.

Early Friday, city officials sent the California Department of Finance — which is overseeing the statewide closure of local redevelopment operations — a memo requesting a meeting to dispute all the funding requests except the $11.7 million they originally identified.

Of the $11.7 million, $7.1 million included unused redevelopment funds allocated for infrastructure projects along North San Fernando Boulevard and the Victory Boulevard corridors. Another $3.7 million had been transferred to the Youth Endowment Fund with the vision of building a new community center.

The remaining roughly $1 million had not been allocated.

The state demanded more. As of last week, the city had five days to either pay up or protest the demands, which it did Friday.

“Obviously, we don’t agree with all their decision points,” Davidson-Guerra said.

The roughly $30 million in additional demands includes a number of cash transfers that the state disallowed, arguing that “agreements, contracts or arrangements” between the city or county and the former redevelopment agency after Dec. 31, 2010 are not “enforceable obligations.”

According to the state, that includes $9.5 million spent on reconstructing the Burbank police and fire headquarters. Burbank officials contend the transfers were valid under the sections of the law that exclude the claw-back of any funds tied up in third-party contracts.

“Everything was done in accordance with the law that was in effect at the time,” Davidson-Guerra said of the project.

Another $14.1 million includes a loan repayment from the agency to the city. But that includes a $3.6-million expenditure that the state approved in a previous request last year and a $10.5-million debt reimbursement, both of which city officials believe are valid.

The state is also attempting to seize $1.9 million the city set aside to fund renovations at Johnny Carson Park, a request the city is disputing.

“It’s not just some project we pulled out of thin air,” Davidson-Guerra said, citing the long planning process.

Even so, city officials have been pursuing grant funding for the $3.5-million park renovation, and are now roughly $1 million short, not counting the redevelopment dollars, said Judie Wilke, director of park, recreation and community services.

The two entities will meet and the state will make a final determination on the funds within 30 days, according to a Department of Finance spokesman.

Eventually, city officials will cut a check — though the exact amount has yet to be determined — and the funds will be distributed to the various taxing agencies, including the Burbank Unified School District and the city, which means some of the money could come back.

Still, the additional demands from the state were a major blow to the city.

“It’s really the community that loses out on this,” Davidson-Guerra said.

City officials completed the same process in December for the redevelopment funds earmarked for affordable housing, which resulted in the loss of $38 million the city had been saving to fund two large-scale affordable housing projects.

About 20% of those funds were returned to Burbank after the other taxing agencies got their share.

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