New state law gives cities only a small fraction of assets once controlled by their redevelopment agencies

<strong>The vacant site at 2950 Walnut Ave. is one of several properties that were once owned by the Signal Hill Redevelopment Agency. According to Signal Hill Deputy City Manager Charlie Honeycutt, the agency owned approximately 25 acres of land that must now be sold, and the money from the sale must be transferred to various local and state agencies.</strong>

The vacant site at 2950 Walnut Ave. is one of several properties that were once owned by the Signal Hill Redevelopment Agency. According to Signal Hill Deputy City Manager Charlie Honeycutt, the agency owned approximately 25 acres of land that must now be sold, and the money from the sale must be transferred to various local and state agencies.

Nick Diamantides
Staff Writer

Early this year, all of California’s redevelopment agencies (RDAs) ceased to exist as per legislation signed by Governor Jerry Brown. Now it appears that several months of intense lobbying efforts by many cities have failed to persuade the Legislature and the governor to allow those cities to have control over a substantial portion of the assets that were once in the coffers of those cities’ respective RDAs.
On June 27, Brown signed Assembly Bill 1484 into law. The legislation spells out how former RDA money will be allocated to various state and local governmental agencies, with cities getting only a small piece of the pie.
In a recent interview with the Signal Tribune, Signal Hill Vice Mayor Mike Noll said he was very displeased with the language of AB 1484 and what he called the “secretive” way it was passed.
Noll sits on the League of California Cities’ Revenue/Taxation Committee, which meets four times a year.
“The League had been lobbying the governor, the Senate and the Assembly on being fair to the cities and not killing us,” he said, adding that, apparently, the governor and most of the legislators had their minds made up and nothing was going to convince them to not take away money that had been earmarked for development projects throughout the state.
Noll explained that he went up to the League meeting in Sacramento on June 14, almost two weeks before Brown signed AB 1484 into law. “We wanted to talk to legislators about extending some of the things the state was requiring, but the League was given 97 pages of proposed requirements for the reallocation of RDA funds,” he said. “We only had one day to read through those pages and process all the information, and of course one day is not enough time to do that.”
He noted that in June the Assembly had a bill called AB 1X28, which was a trailer bill to correct some of the problems that were caused by the taking of redevelopment agency money. He explained that the bill included paying back the City of Signal Hill the $10 million it had loaned to the Signal Hill RDA 10 years ago and allowing the City to use the library bond money to actually build a new library.
“The City loaned that $10 million to the RDA to enable the agency to purchase land for redevelopment projects that would eliminate blight, clean up contaminated soils, bring in new businesses and generate new revenue for the city,” Noll said. “The loan came from the City’s General Fund, and it was done in good faith, but now the State is telling us that the City will never be paid back that money.”
Noll further explained that city residents and officials have been hoping to build a new library for more than 10 years. In March 2011, the Signal Hill Redevelopment Agency issued an $8.8 million bond to finance that project, and it looked as if a new library would finally be built, but legislation passed early this year gave the library bond money to the State. “So the State took the city’s $10 million and then told us that we could not build a new library,” Noll said, adding that now the State must also pay back the bond money to investors.
The vice mayor stressed that the City and the RDA played by the rules and were able to transform Signal Hill from the dirty oil town that it used to be into what it is now. “There is more work to be done– more blighted, contaminated property that needs to be cleaned up– but now the State has taken away our ability to do that,” he said. “This is insane.”
Noll added that the Legislature did not pass AB 1X28 and now city officials are contemplating the possibility of banding together with other cities to file a lawsuit to get back all or a portion of the money the state has taken from them.
“During that League meeting in June, we were trying to convince our legislators to be fair to the cities,” Noll said. “We were trying to get our recommendations in before they adopted the budget, but we had not even seen AB 1484 before they passed it, and it became part of the budget.”
According to Noll, the Legislature’s budget deliberations were very secretive and most of the budget bills were passed at close to midnight. “The governor began signing various budget bills on June 18, and he continued doing that for a week or two,” he said. “I think AB 1484 was one of the last ones he signed.” He added that Assemblymember Bonnie Lowenthal voted for that bill, but State Senator Alan Lowenthal voted against it.
The legislation that abolished RDAs early this year also established “successor agencies” to oversee the liquidation and disbursement of RDA assets. In Signal Hill, the city council is the successor agency. “So now, according to AB 1484, we, as the successor agency, have a list of things that we must do from July 9, 2012 through May 1, 2013,” Noll said. “And if we don’t do those things by the dates specified in the law, the State will impose penalties on the City.”
Noll explained that on July 9, in compliance with AB 1484, the Los Angeles county auditor/controller notified the Signal Hill City Council of the amount of 2011 RDA revenue money it owed to about 20 local agencies, and the City had to make a payment for that amount to the auditor/controller’s office by July 12. The auditor/controller would then distribute that money to the various agencies. The law also specified that the State would suspend sales-tax payments to cities that did not make the payment by July 12.
Signal Hill Finance Director Maida Alcantara noted that, because of complexities in the law and a misunderstanding on the part of the auditor/controllers office, the City of Signal Hill was able to defer that payment to January. “We are disputing the amount the auditor/controller says that we owe, and because the California Department of Finance has not settled that issue yet, we don’t have to pay until January, and our sales-tax revenues will not be suspended,” she said. “The auditor/controller asked us to pay much more than what we actually owed, and we want to make the correct payment.” She added that she was not at liberty to disclose the amounts in dispute.
Noll, however, explained that the Signal Hill RDA would have received approximately $14,030,000 in tax-increment revenues in the 2011-2012 fiscal year. “According to AB 1484, we now have to give 46.9 percent of that revenue ($6.58 million) to Los Angeles County; 19.3 percent ($2.7 million) to the Long Beach Unified School District; 18.6 percent ($2.6 million) to the Los Angeles Consolidated Fire District; and 6.7 percent ($950,747) to the City of Signal Hill,” he said. “The remainder goes to about 16 other local agencies, but as you can see, we are only getting a small fraction of the funds that should have been invested in Signal Hill.”
He added that the other things the successor agencies are required to do by AB 1484 are complex and expensive and in some cases ambiguous. “So in order to abolish the redevelopment agencies the State has created a new, gigantic bureaucracy that no one seems to understand,” he said.
The Signal Tribune left phone and email messages for other Signal Hill and Long Beach City officials pertaining to the impacts of AB 1484, but, as of press time, none of them had replied.

One thought on “New state law gives cities only a small fraction of assets once controlled by their redevelopment agencies

  1. What is important for residents of Signal Hill to realize is that all of the “development” that was accomplished was with “borrowed money”.

    The hilltop development resulted from gifts of state funds to real estate developers to “guarantee profits” for the development of the hilltop homes.

    These homes do not produce “revenues” to the city. Signal Hill is a “low property tax city” because it elected to “keep sales tax”.

    The policy of the current city council was to spend the borrowed money to build non-income producing assets – houses.

    As far back as 1995, residents urged this city council to hold off on real estate development, and commit the redevelopment funds to cleaning up contaminated soil and building income producing developments, such as the retail sales tax generating businesses. But the council was enamored with the idea of houses on the hill and decided to put off “income producing” development.

    Redevelopment was created to provide the “STATE” with income by way of new property tax revenues generated from the improvement in real estate.

    The byproduct was “sales taxes” that were shared with the cities. Having committed its redevelopment money to “non-income producing” housing development resulted in a “pretty” city. But every “pretty cities” needs cash to support the infrastructure.

    Redevelopment funds are not a RIGHT. They were a sharing of State funds, and when the State, along with many other States, hit hard economic times, the sharing stopped and the State reclaimed its income so that it could dedicate it to public safety, schools, emergency rooms, aid for the aged and disabled, construction jobs along highways, fire fighting, etc.

    It does not good to point the fingers at the State. Every city believes it redevelopment is “special” and “necessary”.

    Just follow the law. The City should cut excessive legal fees (for one year that was $1.6 Million in Signal Hill), cut executive salaries and pensions (City Manager and Assistant City Manager make approximately a combined $500,000 annually), and do not build large municipal facilities that cannot be funded with current income. Share library facilities with local schools. Keep the police department adequately funded; do not build more low income housing that will require more police services. Stop financially subsidizing restaurants and trips for council members out of state. Tighten the belt until sales tax revenues recover.

    Sign the Taxpayers Right to Know and Vote so you will know when a new tax, fee or assessment is proposed BEFORE

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