Burbank could be stuck with a $50-million tab if Gov. Jerry Brown’s proposal to disband local redevelopment agencies goes through.
With local governments holding their breath over the budget proposal, Burbank last week joined other cities in their wholesale transfer of redevelopment agency assets in a bid to protect them from possible state raids.
The City Council narrowly authorized transferring redevelopment agency-owned property to the city, including landscaped islands, housing units and land parcels. A parking structure was transferred to the public works Parking Authority. They also authorized transferring up to $13 million in liquid debt to the city.
Even with the broad action, the city could still be left with a debt of $50 million as part of a loan the city made to the Redevelopment Agency. If Brown’s budget plan is approved, there would be no agency left to pay back the loan.
“I’m worried about it being stolen from us really quickly,” said Mayor Anja Reinke of the 3-2 vote to make the transfers.
The California Redevelopment Assn. issued an alternate proposal to help solve the state’s multi-billion dollar budget gap that would allow local agencies to extend their life expectancies through contributions to education.
Brown wants to take the property tax revenue the local redevelopment agencies generate to pay state debts and increase funding for schools and counties.
“The governor’s proposal only saves money one year and doesn’t save any money after that,” said John Shirey, executive director of the California Redevelopment Assn. “Our proposal can potentially save more money.”
Under the association’s proposal, local agencies can voluntarily suspend their housing set-aside funds for a project area for the next year in exchange for extending its life by two years. But the funds must go to local schools.
Agencies could also voluntarily contribute up to 10% of their non-housing revenue stream each year to local school districts for 10 years. Each percent would equal an additional year to the redevelopment zone’s life.
The proposal could generate anywhere between $700 million and $1 billion during the first year and $2.7 billion over its lifetime — more than the $1.7 billion the governor is asking for, Shirey said.
“This a much better alternative and doesn’t violate the state constitution,” Shirey said. “We are still providing money to schools and we still keep redevelopment.”
The state lobbying agency is shopping the proposal on Capitol Hill while the governor and state legislators go back-and-forth on his budget plan.
For cities, time is of the essence.
“Right before our meeting, the governor had inserted language that invalidated the debt between the cities and redevelopment agencies,” said Ruth Davidson-Guerra, Burbank’s assistant director of community development. “We had never seen it before, nor had we planned for that scenario.”
The City Council also agreed on a repayment schedule to the city for the remaining $50 million — if the Redevelopment Agency survives Sacramento.
The Redevelopment Agency is now scheduled to repay the debt over 10 years, when the remaining project areas, Golden State and City Centre, are slated to sunset beginning in fiscal year 2013-14.
Councilmen Gary Bric and David Gordon opposed the motion.
Gordon wanted the repayment scheduled over three years, not 10. And Bric wanted to protect tax revenue for the agency should Brown’s proposal fail.
Bill Kisliuk contributed to this report.