City official knocks state payout

Property TaxPoliticsFinanceEconomy, Business and FinancePublic OfficialsDebt MarketCredit and Debt

After maneuvering through a tangled bureaucratic mess, Burbank and Glendale have received millions to pay down redevelopment-related debt obligations, although the amounts they received fell short of what city officials say is their fair share.

In the ongoing tussle with the state over how much property tax revenue cities should get to cover the debt obligations they were left holding when the state dissolved local redevelopment agencies, the latest round of allocations did little to quell feelings among city officials that they've been forced to grovel for money to cover expenses that would normally have been taken care of.

Glendale City Manager Scott Ochoa on Friday said that while some money was better than none, the process had moved beyond questions of fairness and into the realm of “insanity.”

“We, cities and former [redevelopment agencies], are now reduced to having to beg for funding that has historically been ours,” he said in a statement. ”What if every six months you had to beg your bank to let you access your accounts? Or beg your lender to renew your mortgage? It goes beyond a question of fairness — this is insanity.”

Acting at the direction of the state Department of Finance, Los Angeles County this month dispersed roughly $12.9 million in property tax income to Glendale for the six-month period from July 1 through December, though city officials say the county had about $14.9 million available. That was after they were denied funds to cover a $6-million loan made by the city to the now-defunct Redevelopment Agency, and millions more in combined housing obligations and administrative costs.

“Of course it is good to get some of the funds we need to pay our debts and obligations, but the amount received was well short of the indicated need,” Ochoa said.

Burbank received $13 million after submitting a request for $16.5 million for the six-month period, although it was unclear if that was the city's total debt obligation or the portion officials wanted covered by property tax income.

The city was not hit nearly as hard as Glendale by the axing of local redevelopment.

“Right now, we feel as good as we can feel under the circumstances,” said Ruth Davidson-Guerra, assistant community development director. “We're grateful for the progress that has been made.”

City officials have been locked in battle with the state after Gov. Jerry Brown and the Legislature axed local redevelopment agencies, taking property tax revenues accrued by redevelopment projects to help close a multi-billion dollar budget gap. But that left cities like Burbank and Glendale without a funding source to pay off millions of dollars worth of redevelopment-related debt obligations, such as bonds, let alone to pay for dozens of employee salaries.

At the behest of state and county officials, cities have been tapping other funds — bond proceeds, unused project cash balances and reserves — to cover the cost of some of the obligations, but redevelopment project property tax revenues remain the largest source of income by far. And therein lies the discord.

Losing the property tax income has prompted layoffs in Glendale and nearly doubled the city's General Fund budget deficit to $15.4 million.

State officials, though, contend the dissolution of redevelopment was the doing of local agencies, which they say sapped money from schools in the name of economic development that rarely materialized in any justifiable way.

Officials in Glendale and Burbank have countered by pointing to the Americana at Brand, Disney's Grand Central Creative Campus and other developments that continue to draw economic investment.

Meanwhile, Glendale is preparing to lay off dozens more employees, due in large part to the loss of the property tax revenues. The city issued more lay-off notices on Thursday.

“While Sacramento tries to figure out ways to protect their interest in the revenue, local government is bleeding with obligations coming due and seemingly no recognition of the damage that is being inflicted by this process,” Ochoa said.

jason.wells@latimes.com

maria.hsin@latimes.com

Copyright © 2014, Los Angeles Times
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