City could lose millions in unpaid redevelopment funds

As the city’s redevelopment program continues to wind down, city officials this week reported that the loss of the program could choke off $79.5 million slated for the city’s General Fund, which pays for public services such as libraries and police.

A state mandate to dissolve local redevelopment agencies could mean $40.5 million the Glendale Redevelopment Agency owes the city won’t be repaid. Additionally, it could unwind a $39-million transfer of cash and other assets from the redevelopment agency to the city, according to a report to the City Council.

But that’s the worst-case-scenario. What actually will happen is still unclear as lawmakers mull legislation aimed at modifying the law that axed about 400 redevelopment agencies in California as of Feb. 1. Money that usually went toward redevelopment and other local uses instead will be used to help fill a multi-billion dollar state budget shortfall.

“We’re working through and muddling through all the details as we move forward,” Finance Director Bob Elliot told the council Tuesday.

Glendale’s redevelopment agency is responsible for such projects as Disney’s Creative Campus, the Americana at Brand and affordable housing units. Now, the incrementally higher property taxes that went to redevelopment instead will go to schools and other public services.

A state mandate to dissolve local redevelopment agencies could mean $40.5 million the Glendale Redevelopment Agency owes the city won’t be repaid. said a proposed bill that could help cities get back what they loaned to their redevelopment agencies is making its way through the state Assembly. He said he was hopeful the bill had some traction, since it is sponsored by the assembly’s leader, Speaker John Pérez (D-Los Angeles).

Officials could offer no estimate for when the issue might be resolved, keeping the city in a state of limbo that requires officials to plan for multiple outcomes.

In addition, $4.7 million of redevelopment money was set aside to pay for about 39 full-time positions, slightly less than earlier city estimates. The General Fund will have to cover $1.9 million worth of salaries and benefits from February through June, the remainder of the fiscal year.

City officials have yet to say whether the demise of redevelopment will lead to layoffs, as it has in nearby Pasadena. Over the years, redevelopment paid for positions in planning, building, neighborhood services and other city services.

“The impact truly is organization-wide,” Ochoa said.

The potential bite out of the budget comes as Elliot announced the city’s revenues at the halfway mark in the fiscal year are down compared to the same period last year. Overall, revenue received through Dec. 31 slid 9.1%, or $5.9 million, according to a city report.

The decrease comes after the city halted a $4.2-million transfer from Glendale Water & Power’s water fund, which the city attorney’s office said could expose Glendale to litigation due to constitutional limits on tapping water revenues for general services.

Despite the revenue drop, the annual budget is expected to balance out — minus the impacts of the redevelopment cut — as auto sales, hotel occupancy and property taxes are slightly up, according to the report.