Glendale’s Redevelopment Agency took an $11.4-million hit in fiscal year 2010-11, a drop that was partially driven by attempts to protect money from what local officials have decried as a raid on city coffers by the state legislature.
The agency, which uses income generated by increased tax revenues within certain zones to pay for economic development projects and affordable housing, transferred $53.1 million in assets to the city as a safeguard against Gov. Jerry Brown’s proposal to eliminate redevelopment agencies in favor of giving the so-called tax increment to schools or other public agencies.
“That was a very unique thing that the agency did. It really kind of threw an unusual cloud over the redevelopment agency,” said Finance Director Bob Elliot.
Elliot presented the year-end data, which put the Redevelopment Agency’s assets at $102.4 million, to City Council members on Tuesday.
The California Supreme Court is reviewing Brown’s law after redevelopment proponents filed a lawsuit challenging its constitutionality. The court is expected to make a decision by Jan. 15, but the city took preemptive action earlier this year by paying back $35.5 million to the city to cover debt, and by transferring millions in land and other assets.
Redevelopment agencies often get loans from their partner government agencies, as well as issue bonds, which are then paid back with tax increments from future projects. In 2011, the agency also issued a $50-million bond, which contributed to the year-to-year drop, according to a city report.
Standard & Poor’s rated the bond A-, which was unchanged from 2010, but a downgrade from the AAA ratings the city enjoyed in 2002 and 2003.
Elliot attributed the downgrade to the increased risk in investing in redevelopment bonds due to the uncertainty caused by the new state law. The downgrade means the city has to pay higher interest when it reimburses investors.
Property tax increment revenue and investment earnings also decreased during fiscal year 2010-11, a result of depressed market factors.
While the agency has been on the defense since Brown announced his plans, development activity has continued under the City Council, which serves in a dual capacity as the Redevelopment Agency.
According to a city report, Glendale has seen private investment and construction activity in three significant projects: the second phase of the Walt Disney Creative Campus, Broadway Lofts — a six-story mixed-use development at the former Circuit City building on Maryland and Broadway avenues — and ICIS Colorado, a mixed-use development on Colorado and Elk streets.
Several apartment and multi-use developments also got the green light, including Laemmle Lofts — a theater, residential and retail project at 111. E. Wilson Avenue.
Façade restoration work at the Alex Theatre also was completed, as was the first construction phase of the new Adult Recreation Center. And the Museum of Neon Art secured its final land entitlements.