Officials in Burbank and Glendale are scrambling to assess the recent California Supreme Court decision upholding the elimination of their redevelopment agencies and the nearly 80 city jobs they fund.
Since the court ruled last week that the state Legislature was within its rights to eliminate nearly 400 community redevelopment agencies statewide to help close a multi-billion dollar budget gap — and that a compromise allowing cities to pay hefty fees in exchange for retaining the agencies was unlawful — local officials have been taking hurried stock.
In Glendale, nearly 40 jobs are fully or partly paid for by the redevelopment agency, which is funded by the higher property tax revenues generated by removing blight within designated redevelopment zones — a revenue source known as tax increment.
In Burbank, roughly 36 city jobs are at least partially funded by the redevelopment agency, said Ruth Davidson-Guerra, the city’s assistant community development director.
“It’s on the forefront of everyone’s mind right now,” she said.
It’s not just the potential job losses — the court ruling also has thrown a flurry of recent moves to protect redevelopment assets into doubt.
City officials say the redevelopment agencies have been a vital tool for building hundreds of affordable housing units and attracting major doses of private investment, ala the Americana at Brand or Disney’s massive creative campus in the San Fernando Road corridor.
Critics argue the siphoning off of property tax revenues have amounted to a huge taxpayer subsidy for private developers instead of going to education and public services.
The law upheld by the state Supreme Court calls for the sale of local redevelopment agency property. After paying for debts and residual administrative costs, the rest of the money is to be funneled to schools and other programs.
But officials are still trying to determine what that means for local assets.
In Glendale alone, officials last year transferred most agency-owned property, such as the Alex Theatre, to the city, issued $50 million in bonds and gave the city $30 million to partially pay back an nearly $70-million loan.
But the state could try to unwind some of Glendale’s defensive moves and block the city from getting the rest of its loan money, officials said.
“They are going to want those assets, or else what was this whole thing for?” Glendale City Manager Scott Ochoa said.
Funding for future projects in Glendale, such as the Museum of Neon Art, improvements to the historic Alex Theatre and Central Avenue corridor and the Laemmle Theater project, also could be compromised by the ruling.
Some money for those projects may be saved by enforceable contracts, but that depends on when those contracts were signed. Glendale officials believe they had until June to make agreements, but the state may stick to a January 2011 cutoff, said Philip Lanzafame, the city’s assistant director of community development.
“To have [redevelopment] completely go away would be bad, and then to take with it what are legally the city’s assets would be really bad,” he said.
Local officials are coalescing around a last-ditch legal strategy that could lead to dozens of lawsuits filed by cities across the state in an effort to block the liquidation of redevelopment agencies before the end of February.
At the same time, lobbying in Sacramento to strike a legislative compromise is expected to reach a fever pitch.
“There are a whole lot of unknown variables at this point in time,” Davidson-Guerra said. “If it does play out to the fullest extent of the current law, there will be significant shifts all the way around.”
Note: This is the first in an occasional series tracking the potential impacts of the loss of redevelopment agencies in Burbank and Glendale.