Burbank city officials say they may sue over being forced to turn over millions of dollars to the state as a result of closing down local redevelopment operations.
Per the California Department of Finance’s request, Burbank cut a $24.3-million check to Los Angeles County on Friday as part of the dissolution of local redevelopment.
But $10.5 million of that — which includes part of the debt reimbursement to the city from the redevelopment agency — was turned over under protest, which means the city could sue in the future to get it back, officials said.
“We are keeping all our options open,” said Community Development Director Joy Forbes. “If we want to litigate in the future, that’s an option to us.”
The decision was made by the City Council in a closed session meeting Thursday. Councilman Jess Talamantes was absent.
The $24.3 million — which in addition to the debt repayment, also included former redevelopment funds that were allocated for community projects such as renovating Johnny Carson Park — will be distributed to taxing entities, which includes the city and the Burbank Unified school district. That means a portion of the money will return to city coffers.
But in losing that $10.5 million, the debt owed to the city by the former redevelopment agency has jumped to roughly $37.5 million, Forbes said.
The state was able to nab the $10.5 million because, state officials ruled, that money was not part of an “enforcable obligation.” “Enforceable obligations” do not include agreements, contracts, or arrangements between the city that created the redevelopment agency, according to a Department of Finance letter to the city.
Additionally, when the loans were made, “there was no established repayment schedule,” state officials said in the letter.
But Forbes argued that Burbank’s now-defunct redevelopment agency approved a repayment schedule in March 2011, before redevelopment agencies were dissolved.
If the city complies with the rest of the dissolution process, the $10.5 million may become an “enforceable obligation” and be returned, authorities said, but Forbes said Burbank likely won’t see the money come back for another 12 years or so.
Turning over the funds under protest, though, gives the City Council the option of going after the money sooner.
“The council just wants to make sure if there’s a way of getting that $10.5 million back in whole, and sooner, that we explore that option,” Forbes said.