The Burbank Redevelopment Agency is preparing for a courtroom battle over the potential loss of millions of dollars after state lawmakers approved a state budget that could eliminate local redevelopment agencies.
State lawmakers voted Tuesday to kill all 400-plus redevelopment agencies in California as of Oct. 1 unless they agree to reroute funds to schools and local governments. The legislation was a trailer bill to the budget Gov. Jerry Brown signed Thursday.
If redevelopment agencies agree to the alternative, they would be required to give back a combined $1.7 billion in revenue for the 2011-12 budget year that started 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 that don’t will be ordered not to launch any new projects, spending or borrowing.
Ruth Davidson-Guerra, assistant community development director for Burbank, said she would recommend that the city accept the alternative and pay its share to the state, because the other alternative is worse.
“Do we want to pay this extortion payment or be shut down?” Davidson-Guerra said. “It’s a choice to live or die.”
Meanwhile, Burbank, Glendale and a host of other cities plan to sue Brown, arguing that eliminating redevelopment agencies violates the state constitution, including an amendment barring state raids on local government funds.
Earlier this year, the Burbank Redevelopment Agency set aside $10,000 to help pay for the lawsuit, which is being coordinated by the League of California Cities and the California Redevelopment Assn.
“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. The California Redevelopment Assn. estimated Burbank’s maximum tab at $18.6 million in the coming year, according to Davidson-Guerra.
The agency anticipates receiving roughly $50 million in tax revenue next year, though much of that money is earmarked for paying off existing debts and making progress on projects including construction of a new police and fire station and planning for new affordable housing units in the Golden State Redevelopment Area along Interstate 5 between downtown and Bob Hope Airport.