Council works around loss of redevelopment agency

As the result of an action Tuesday, Glendale now has the legal framework to establish an economic development organization. But it won’t be able to issue bonds or condemn property — attributes commonly associated with redevelopment agencies.

Bonding and imminent domain powers could still return if the state legislature creates a new program to replace now-defunct local redevelopment agencies, which were axed by a state mandate.

On Tuesday, with Mayor Laura Friedman absent, the City Council approved giving the city the ability to jump start economic activity using a variety of other tools, such as purchasing property and offering grants to businesses, that were once tied to its powerful redevelopment agency.

When state law put an end to redevelopment activities, the city had no other mechanism governing economic development on its books. The former redevelopment agency is partially responsible for Americana at Brand and Disney’s Creative Campus.

In February, a state mandate redirecting millions in incremental property taxes from city coffers to the state forced the closure of local redevelopment agencies across California.

City officials suggested the new economic development organization have the power to issue bonds and condemn property, but the council wouldn’t have it.

“I think we have to get going tomorrow in terms of economic development,” said Councilman Frank Quintero, “but these two provisions I think are a bit much.”

Councilman Ara Najarian agreed, noting that giving the city the ability to issue bonds didn’t sit well with him.

“I don’t want to create an expectation that this new ordinance will invite us to issue new bonds for debts,” Najarian said.

Despite cutting out the two sticking points, the newly approved economic development rules let the city do much of what the redevelopment agency once did, including buying and selling property, as well as disposing of property for fair-market or less than fair-market value, so long as it spurs economic development.

It could also offer grants, loans, tax rebates and other assistance to attract and retain businesses.

Residents critical of redevelopment have long complained about the millions of dollars in bonds issued to pay for redevelopment projects. Council members have also been leery of bonds in general, with some opposed to issuing the debt to bring more money to Glendale Water & Power. The utility recently has been hinting at its need for tens of millions in bonds to pay for infrastructure improvements.

City officials are working their way through murky waters as they try to fully understand the effects of the redevelopment wind-down. The agency paid for salaries in planning, redevelopment, building and safety and other departments, and was to pay the city back millions in loans.

But officials now are uncertain if that will happen. They’re also unsure what will happen to the millions in bonds they issued the summer before redevelopment died.

Although the new organization would lack the bite of a redevelopment agency, City Manager Scott Ochoa said legislation in Sacramento is in the works to create a replacement for redevelopment that could give a new city agency the power to issue the bonds and condemn property.

The city can currently condemn property, but only for public benefit, not economic development.

“What we’re hoping the state will say is, ‘We realize redevelopment is gone, so we’ll give you some other ordinance,’” Ochoa said.