Huntington Beach officials expressed shock and uncertainty for the city's development future following the state Supreme Court's ruling Thursday that abolished redevelopment agencies.
Mayor Don Hansen said the ruling poses an even bigger risk for the city's general budget if the current $80 million in redevelopment debt owed to the city isn't paid.
"If we're unable to collect on the property tax or get those debts repaid, that becomes a challenge," he said.
The $80 million in redevelopment is owed to the city from prior projects, such as Bella Terra and the Strand, that were supported by the redevelopment agency. The money was expected to be paid through higher property taxes as those projects generated funds.
But now that redevelopment agencies have been abolished, it's uncertain how the city will get back its money, which amounts to about $4.9 million annually in the city's general budget, said City Manager Fred Wilson.
The budget would be gravely affected if the debt isn't repaid, and further cuts of service may have to take place, Wilson said.
"That's where we're going to have to work with the Legislature and get the governor to understand that this debt can't just disappear," Hansen said.
Redevelopment agencies allowed cities to work with developers to build and improve blighted neighborhoods, and use property taxes to pay for the developments. A component of the agencies required funding of affordable housing.
The state Legislature first voted to abolish redevelopment agencies to benefit the state budget, but gave cities the option to participate in them through a system called pay-to-play, in which cities would pay out of their budgets to keep the programs intact.
Huntington Beach would have had to pay $6.2 million the first year to keep its redevelopment agency.
When the state eliminated the agencies, cities banded together and sued the state, but the court's subsequent ruling abolished redevelopment agencies altogether and declared the pay-to-play option unconstitutional.
State legislators are now in talks to find a way to help cities keep some their redevelopment agencies' components, or at least pay the already-owed debt, Wilson said.
"Many cities are in the same predicament we're in," he said.