Redevelopment agencies face elimination

The Glendale Redevelopment Agency is preparing for war and a worst-case scenario in the wake of passage by state lawmakers of a budget that could eliminate local redevelopment agencies.

Lawmakers voted late Tuesday night to kill all 400-plus redevelopment agencies in California as of Oct. 1 unless they agree to reroute billions of dollars to schools and local governments. The measure was a trailer bill attached to the state budget.

If redevelopment agencies sign up for the alternative, they would be required to give back a combined $1.7 billion in revenue for the 2011-12 budget year, which starts Friday, and $400 million every year thereafter. Agencies that agree to the deal will retain control over some of the tax revenue they receive, while those who don’t will be ordered not to launch any new projects, spending or borrowing.

Glendale City Manager Jim Starbird said he would likely recommend that the Redevelopment Agency go for the alternative, despite losing a large chunk of money that currently funds economic development projects in the city.

“It is very likely that I will recommend we pay the extortion, under protest,” Starbird said.

Meanwhile, Glendale and a host of other cities plan to sue Brown as soon as he signs the budget, arguing that eliminating the redevelopment agencies violates the state constitution, including an amendment barring state raids on local government funds. In March, the Glendale Redevelopment Agency set aside $10,000 to help pay for the lawsuit.

“Obviously, we’re very disappointed that the Legislature ignored the will of the people and the law of the land in Proposition 22, voted for unconstitutional bills to eliminate redevelopment and then tried to put a gloss on that by claiming agencies can stay in business, but only if they agree to pay a ransom,” said John Shirey, executive director of the California Redevelopment Assn.

The legislation allowing agencies to survive set out a formula for how much each will pay based on their revenues and debt burdens. Starbird estimated Glendale’s maximum tab at $12 million in the coming year. The agency anticipates receiving more than $16 million in tax revenue next year, though some of that money is earmarked for affordable housing and other expenditures.

“We think we can make that payment,” Starbird said.

While lawmakers in Sacramento were voting to gut redevelopment agencies, the Glendale City Council, acting as the Redevelopment Agency, on Tuesday approved a $50-million redevelopment budget for 2011-12, up $16 million from a year ago.

Earlier this year, city officials hurried to launch projects in anticipation that the state might kill redevelopment authority. Among those projects are a five-screen Laemmle theater and 42 artist live-work lofts at Maryland and Wilson avenues, as well as a 173-room Courtyard by Marriott Hotel at Central and Wilson avenues.

Work on a new soccer field at Columbus Elementary School, refurbishing the Alex Theatre and relocating the Neon Art Museum from Los Angeles to a city-owned site on Brand Boulevard also is being funded by redevelopment money.

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