In an attempt to keep the wolf outside the door, Burbank is
issuing interest-earning bonds and stashing at-risk money in an
escrow account, hoping to safeguard the cash from state seizure.
Gov. Gray Davis’ proposed cuts threaten up to $19 million of
Burbank’s budget for redevelopment projects, including affordable
housing, mortgage and home- rehabilitation programs.
But because Davis’ plan, part of his $35 billion in budget cuts,
targets funds that were not legally committed to projects by Dec. 1,
the city’s efforts might come too late. Community Development
Director Sue Georgino said the projects were being processed before
the deadline, but the state might disagree.
“We are into an agreement with the Burbank Housing Corporation to
do the Peyton-Grismer [affordable housing project],” Georgino said.
“We believe we are legally committed. Whether the state considers it
legally committed is another question.”
The city deposited $9 million in escrow for the project earlier
this month, hoping to keep revitalization efforts moving forward.
City Manager Bud Ovrom described the state’s budget crisis and its
need to buffer its deficit as “a moving target.”
“I don’t think the governor or the state Legislature will be able
to steal all of the money from housing,” Ovrom said.
Last week, the state Senate and Assembly budget committees did not
adopt Davis’ plan to take money from redevelopment agencies. The full
Assembly voted late Tuesday to leave redevelopment money alone and
instead raise vehicle-licensing fees. The Senate will vote later this
week on Davis’ proposal.
"[However,] the Legislature has failed to propose a budget that
balances,” Davis spokesman Byron Tucker said.
Another $35 million of the city’s fiscal year 2003-04 budget also
“If there is a way to protect those funds, then [issuing bonds] is
the best way to do that by state law,” Georgino said.
Bonds are certificates of debt that can be issued by governments,
and guarantee a return of the investment plus interest.
The City Council approved issuing up to $102 million in bonds
earlier this month, part of which will finance projects including
improvements to streets near the Burbank-Glendale- Pasadena Airport
and new uses for the old Buena Vista Library.
If state funding is not forthcoming, “then we have to either use
other resources to pay the bond indebtedness, or the worst scenario
is default on the bonds,” which the city has never done, Georgino
Tucker could not say if Burbank’s efforts to hold onto
redevelopment money will succeed, and it is likely to remain an
unknown until the state’s budget is finalized, which could take