A decision Wednesday from a Sacramento County Superior Court that will prevent cities from obtaining money with which to pay down redevelopment debt has left local officials disappointed and frustrated.
Glendale had joined with Pasadena, Huntington Beach and other cities in filing a lawsuit last week asking the court to block the state from distributing property tax revenues to schools and counties. The suit argued that the money belongs to them for redevelopment projects and debt commitments that were made before Gov. Jerry Brown redirected the funds to help cover the state’s multi-billion-dollar budget deficit.
But the ruling, from Judge Timothy Frawley, prevents that blockage of distribution from happening.
“Obviously, we are disappointed with this decision,” City Manager Scott Ochoa said in an email after the ruling came down.
The decision, Ochoa said, “delays and denies clear-cut and deserved protection for local communities.”
But in spite Frawley’s ruling, it doesn’t appear that the legal fight is over.
That’s because cities are still at odds with state and county officials over which projects and debt obligations, such as bonds, qualify for the wind-down money.
To make matters worse for Glendale, the state Department of Finance informed the city on Tuesday that its request for $49.5 million to cover a loan the city made to its now-defunct Redevelopment Agency would be denied.
Earlier this month, the state told Pasadena that a request for $132.9 million to cover redevelopment loans and advances made by the city also was being denied.
“We thought there should be a time out to the whole process,” Pasadena spokesman William Boyer said. “We wanted the time-out so everybody could work out a fair resolution and differences that Pasadena and other cities have with the state.”
Los Angeles County, in responding to the joint city lawsuit, pledged in a last-minute court filing to distribute funds fairly among cities, but Ochoa said all that amounted to was an IOU.
Glendale’s obligations include bonds, personnel costs and contracts for projects such as the Casa Verdugo Library renovations and agreements with the planned Museum of Neon Art. Losing redevelopment prompted about 30 layoffs and nearly doubled Glendale’s budget deficit to $15.4 million.
On the flip side, Department of Finance spokesman H.D. Palmer said if Frawley had sided with the cities, others would have lost out.
“We’re pleased with the judge’s ruling,” Palmer said in a statement. “Our legal team made it clear that the [Department of] Finance had not denied any requests to make debt service payments — a key argument of the plaintiffs — and that any financial harm would in fact be on schools and counties if the request was approved.”
At a City Hall meeting with school, city and county officials Wednesday, Elena Bolbolian, a senior executive analyst for Glendale, said legal decisions against the city were causing an unfair financial burden.
“We feel the Glendale residents and the Glendale taxpayers, who years ago fronted the [redevelopment] agency funds, have to write that off now,” Bolbolian said.
In the meantime, the two sides likely will remain locked in battle as both try to claim as much of the money as they can while lawmakers continue to adjust the state’s influence over the process.
That leaves a lot up in the air, Gillian van Muyden, general counsel for community development, said at the meeting.
“Who pays for what, and how it gets done, is still an issue,” she said.