City of Glendale to sue state finance department

City officials plan to sue the state Department of Finance in order to get back tens of millions of dollars in loans the city made to its now-defunct redevelopment agency, the City Council announced this week.

The city loaned the redevelopment agency tens of millions of dollars since the 1970s to jump-start the program meant to reduce blight through increasingly higher property tax revenues. In 2012, however, state lawmakers dissolved redevelopment agencies throughout California to close a multibillion dollar budget gap.

As city officials understand it, Glendale was supposed to get its redevelopment loans back with interest — which, according to city calculations, would boost that number up to $72 million — after it went through the motions of shutting down its redevelopment arm, which it already has done, said City Manager Scott Ochoa.

But when Glendale staff went in search of the money, state Department of Finance officials told them, at first, they’d get back no money, and that the city actually may owe California, Ochoa said. Then negotiations followed and finance officials quoted them $14.8 million, he said.

“This was supposed to be an incentive, not a bait-and-switch,” Ochoa said of the promise to return redevelopment loans once redevelopment agencies had been dissolved.

Glendale has struggled financially since the end of redevelopment, prompting sweeping reorganizations at City Hall. About 150 positions were eliminated as a result and the city is currently working on a second round of buyouts.

In Glendale, specifically, redevelopment money — which came from property-tax revenues that increased incrementally as redevelopment areas in downtown and the San Fernando Road Corridor improved — paid for projects such as the Alex Theatre’s management and renovations as well as the development of the Americana at Brand and Disney’s Creative Campus.

Department of Finance officials did not return a request for comment by publication.