Glendale exits joint lawsuit

Glendale is withdrawing from a joint lawsuit filed against California to protect property tax revenues meant to help cover the cost of winding down redevelopment-related debt, citing signs that the state is loosening its hold on avenues for recouping the money.

After the state Legislature abolished local redevelopment agencies earlier this year, Glendale joined 11 other cities in filing a joint lawsuit claiming the state was unfairly pulling the property-tax-revenue rug out from underneath them, leaving municipalities with no way to pay down prior debt obligations.

But state officials have since eased their stance on how much money cities with existing debts related to redevelopment activities will get, prompting Glendale's decision to pull out of the lawsuit, according to a statement released Thursday.

“In dismissing this suit at this time, we are recognizing that we achieved our immediate goals; yet we are conserving our resources for a future fight in case the state decides to try again to cause further damage to local communities,” City Manager Scott Ochoa said in the statement.

Redevelopment agencies in Glendale and the other cities, such as Pasadena, had used the increases in property taxes that came as a result of redevelopment, known as incrementally higher property taxes, to support new development. But that all ended in February when the state dissolved those agencies and redirected redevelopment assets and property taxes to cover education and other public agencies left in the lurch by a multibillion-dollar budget shortfall.

City officials initially filed the lawsuit in May, claiming they were promised millions of dollars with which to pay off leftover redevelopment-related debt, but received mixed messages about the forthcoming payments.

Glendale has since received some payments, but the first one came as an I.O.U. of sorts. Last week, the City Council approved plans to ask for an additional $44 million. That request must still be approved by state finance officials.

The city has had to issue 14 layoff notices since losing redevelopment money, which paid for roughly $6.6 million worth of salaries and benefits, in addition to bringing the Americana at Brand and Disney Creative Campus to Glendale.

In 2011, the now-defunct Redevelopment Agency coordinated projects totaling $175 million, according to a city report. Now the agency has roughly $25 million in cash on hand. Also at stake is $70 million the city loaned to the Redevelopment Agency. The state initially forbade Glendale from recouping the loan as part of the program's wind-down, but new legislation offers a path to reimbursement.

If the city meets certain requirements, such as hiring a licensed accountant to review financial activities, it may be able to start using property tax revenues to recover the loan over time. The money would go to the city's General Fund, which pays for police, library and other public services.

The new legislation may also offer a way to protect the Alex Theatre from a state sell-off, a looming threat if officials in Sacramento determine the historic venue was once a redevelopment asset and therefore now belongs to the state.

“Ending redevelopment was still the wrong decision, but we are hopeful that the state will now proceed with a more intelligent way to dissolve the agencies,” Ochoa said in the statement.


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