Glendale Acts to Protect Renewal Taxing Authority

Glendale officials have drafted an ordinance that they say is designed to blunt the effect of a state law which would wrest tax dollars from the city’s Redevelopment Agency and give them to the county.

The ordinance would “shortcut” a new state law that attempts to limit the amount of money redevelopment agencies can spend on future development and the period in which it can be spent, according to Susan Shick, Glendale’s deputy redevelopment director. That state law was adopted last year at the urging of Los Angeles County officials, who complained they were losing millions of tax dollars annually to redevelopment agencies.

The intent of the state law was to require the redevelopment agencies to complete their projects within a reasonable time so that the redeveloped properties could be returned to the county tax rolls.

In the ordinance, expected to be adopted by the council on Tuesday, Glendale plans to shift the financing for downtown redevelopment from the current method--primarily pay-as-you-go--to one of issuing bonds. Because a redevelopment agency is allowed to collect taxes as long as it has indebtedness, that would postpone by as much as 30 years the time when the county could acquire the funds from Glendale’s project.

Glendale’s redevelopment, according to the proposed ordinance, would be finished in the year 2019. However, payments on bonds could last decades after that. The ordinance, expected to be adopted by the Glendale City Council next week, would also set the spending limit on redevelopment at $2.2 billion. That figure is much higher than the actual cost of construction because it includes more than $1.5 billion for interest on the debt.

Shick said the ordinance “will provide maximum flexibility for the agency” to complete the redevelopment project while blocking the county’s attempts to recover tax revenues.

Shick also said it is unlikely that the city will ever reach the $2.2-billion limit, but said it is important to have the leeway.

Councilman Jerold Milner said he is “terribly incensed” that county supervisors are attempting to wrench taxes away from redevelopment projects. He said Glendale’s downtown project “has been the salvation for the city” and he accused county officials of being greedy.

17 Projects Finished

Prior to the new state law, authored by Sen. Dan McCorquodale (D-San Jose), Glendale and many other cities could have extended their redevelopment projects indefinitely. Los Angeles County officials complained that out of hundreds of redevelopment projects in the state, only 17 have actually been completed. At the point the projects are declared complete, the county can again collect property taxes on the properties involved.

Typically, under a redevelopment plan, property values within a project area are frozen at the time the project is formed. As new construction takes place and values increase, the agency is eligible to receive the increased property taxes, termed “increment financing.” The agency, in turn, spends that money to purchase land for more development.

In Glendale, for instance, the value of the entire downtown redevelopment area, including land and buildings, was appraised at less than $25 million when the 227-acre project was formed in 1972. The project focuses on Brand Boulevard, with Central and Maryland avenues as the general east-west boundaries, Glenoaks Boulevard as the north boundary and Colorado Street as the south boundary.

Land Worth $505 Million

Land and buildings in the same downtown area today, including the Galleria shopping malls and new office towers, are worth $505 million. By 2007--35 years after the project began--Glendale expects to receive $54 million annually in increment taxes alone, city officials said. The county now gets no revenues from the boost in those property values.

In the first such announcement of ultimate costs in the project’s history, the Glendale Redevelopment Agency this week proposed to spend a total of $520 million to acquire land and subsidize new developments. So far, the agency has spent $39.1 million and has agreements with developers to spend another $64.2 million.

Under state law, the council is required to pledge to quit using the power of eminent domain to purchase property for its redevelopment agency after 1998. The pledge, required of all cities with redevelopment agencies, is designed to relieve concerns of property owners whose land is under threat of acquisition.

However, Glendale officials indicated they may later seek an extension of the right to use eminent domain.