CITY HALL — The City Council on Tuesday gave an initial OK to forking over nearly $12 million in redevelopment funds to Sacramento in exchange for the state allowing Glendale to retain its own agency.
The legislation, adopted last month as part of a plan to fill a massive state budget deficit, calls for the dissolution of local redevelopment agencies as of Oct. 1 unless they agree to reroute billions of dollars to Sacramento.
In order to remain operational, redevelopment agencies must agree to give back a combined $1.7 billion in revenue for the current 2011-12 budget year and $400 million every year thereafter. Cities that agree to the deal will keep control of some of the tax revenue they receive, while those who don't will be ordered not to launch any new projects, spending or borrowing.
In Glendale, officials estimate that translates to a check to Sacramento of $11.9 million this year and $2.8 million next.
The California Redevelopment Assn. is expected to soon file a legal challenge to the legislation, which representatives argue violates the state constitution, including an amendment barring state raids on local funds.
On Tuesday, the City Council introduced an emergency ordinance — to be voted on next week — that would authorize the payment, due in January.
City officials said agreeing to the deal was better than the alternative of losing redevelopment funding in its entirety as city officials await the result of the legal challenge.
“We have to do this, hope for the best,” said Councilman Frank Quintero.
While the action would significantly curtail the agency’s ability to take on new projects, city officials said remaining in operation would at least preserve committed projects, ranging from the relocation of Neon Art Museum from Los Angeles to a planned affordable housing development for veterans.
Earlier this year, in anticipation of the state action, city officials hurried to approve projects, including 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.
If the city does not agree to make the payment, the ability to financially support those deals would be extinct, officials said.
“We just don’t believe that’s in the best interest of Glendale,” said City Manager Jim Starbird.