Signal Hill city officials said they aren’t giving up just yet on a long-awaited project to replace the City’s small 4,234-square-foot public library with a new facility that would be more than three times the size of the old building.
The State’s decision to dissolve redevelopment nearly two years ago put a major wrench in the project since current legislation requires that proceeds from bonds issued by former redevelopment agencies (RDAs) after Dec. 31, 2010 be “defeased” and dispersed among surrounding taxing entities.
For now, that means the $8.6 million in proceeds for bonds issued by the former Signal Hill RDA in March 2011 for construction of the new library are frozen since the bonds were issued after the State’s deadline.
But, until the State officially demands the proceeds be defeased, Signal Hill city officials said they are holding on to the money in hopes that proposed legislation will resolve the situation without the City having to resort to litigation.
“What we’re talking about is continuing to invest in the city or to have the money go someplace else,” said Signal Hill Vice Mayor Ed Wilson during an Oct. 1 meeting of the Successor Agency to the former Signal Hill RDA. “I, for one, would rather see the money in Signal Hill.”
The item was brought up by City Treasurer Emerson Fersch mainly to dispel rumors from some residents that the library project was moving forward or being funded. Councilmember Tina Hansen said reports that the City is planning a groundbreaking are false. “That’s not true and has never been true,” she said.
City Manager Ken Farfsing said current law requires that proceeds from bonds issued after the State’s deadline be dispersed among taxing entities, such as Los Angeles County (50 percent), Long Beach Unified School District (20 percent) and the Los Angeles County Fire Department (18 percent). Signal Hill would only get 0.7 percent of the $8.6 million, he said.
Farfsing said, however, there are still problems with that approach since the City, acting as the Successor Agency to the former RDA, wouldn’t be able to defease the entire amount since the City is still legally required to make annual bond payments or face default. He added that the situation could create problems with the Internal Revenue Service (IRS).
“The way we look at it is the governor and the legislature put together this legislation in kind of a knee-jerk reaction, not really thinking through not only the IRS consequences, but the whole financial consequences of it,” Farfsing said. “Also the fact that it was taking money from public projects that basically employ construction workers. There are ripple effects.”
Hansen pointed out that cities had no way of knowing the State’s deadline, which was set through legislation just months after the RDA issued bonds.
“So basically cities were supposed to have a crystal ball and know that, at the time they approved it, three months later or four months later or two months later, the governor and the legislators were going to pass some bill that went back and froze those [bond proceeds],” she said.
The State’s current law has halted a number of projects in other cities, affecting about 50 to 60 issued bonds and at least $500 million in projects throughout the state, Farfsing said. A number of those projects included libraries, police stations and street repairs, he said.
One attempt to reinstitute the bonds, however, is AB 981, authored by Assemblymember Richard Bloom (D-Santa Monica). The bill would allow successor agencies and successor housing entities to use proceeds from bonds issued prior to June 28, 2011 instead of the current deadline, effectively allowing Signal Hill to expend the money needed for the new library’s construction.
Though the bill has bipartisan support from the State Senate and Assembly, it has been put on hold at the request of Gov. Jerry Brown’s office and is due for reconsideration during the next legislative session, possibly next year, Farfsing said.
“We don’t know how that bill is going to do, obviously,” he said. “It does have legislative support. Whether the governor changes his position, we just don’t know.”
In a phone interview, Sean MacNeil, chief of staff for Assemblymember Bloom, said the governor has agreed to a policy meeting on the bill starting this month, but it would still have to get out of its “house of origin” and move to the Senate by the end January 2014 to stay alive.
MacNeil said there’s still “a long ways to go” for the bill to pass the legislature and be signed by the governor, but the governor wouldn’t have committed to policy discussions if he wasn’t open to possibilities.
He said the bill is, in many ways, a “last-gasp effort” to make projects work for some cities and fix “what some people thought were unintended design of the original proposal” but the legislation “won’t work for everyone.”
MacNeil said some projects, such as freeway overpasses, have been in the works for eight years but are now halted, leaving cities to be sued by Cal Trans. “You have the State suing the city for something that the State did,” he said. “How crazy is that?”
In Signal Hill, the bond proceeds for constructing the new library may have other consequences as well, city officials said.
Deputy City Manager Charlie Honeycutt said the City is able to use proceeds from bonds issued by the former Signal Hill RDA for demolishing the existing library and the now vacated police station, since the bonds were issued in 2009. But since the library project is still in limbo, the City will likely have to demolish the buildings at different times, which would likely increase costs, he said.
“It will clearly be more expensive to do the demolition in two phases,” Honeycutt said. “I don’t know what that cost is, but we’ll have to bring in another contractor, and there will be mobilization costs and insurance costs. There’s added expense.”
Honeycutt said the current library is expected to remain open during the police station’s demolition, which will likely take place in early 2014.
City Attorney David Aleshire said costs for the library project could eventually grow as time goes on. “There’s also the related issue that the bond was structured based upon the estimates of the cost of constructing the library at that point in time,” he said. “This passage of time working this problem out eventually may erode your budget, and there may be need to come up with additional funding, eventually.”
Hansen, who has been a longtime proponent of the Signal Hill library, said she will “fight tooth and nail” to keep the bond proceeds, adding that the current library “underserves” the community and a new technologically advanced facility, expected to total 15,000 square feet, is needed.
“I know that there are people who think that we shouldn’t build this library,” Hansen said. “I know there are people who think that libraries are obsolete. All I know is that, anytime I go to any kind of family event at the library, it’s bursting at the seams.”
Other Council highlights:
During the Council meeting, Mayor Michael Noll introduced Jose Padilla, a new maintenance worker for the Signal Hill Public Works Department. Noll, along with Signal Hill Police Chief Michael Langston, also recognized graduates of the police department’s Citizens Academy, which concluded on Sept. 17.
The Council unanimously voted to enter into a contract with Fairbank, Maslin, Maullin, Metz & Associates (FM3) to conduct “resident satisfaction survey” as part of efforts to update the City’s Strategic Plan. The Council approved a budget adjustment of $27,850 for completion of the fiscal impact report.
City staff presented the Council with a “road map” for updating the Signal Hill Housing Element, which sets land uses and guidelines for development as part of the City’s General Plan and is the only element that requires State approval.
The City has already conducted two community workshops as part of the housing-element update process in which residents provided input on the City’s housing needs. According to city staff, the Regional Housing Needs Assessment (RHNA) requires that the City accommodate at least 169 new units for the next eight years, however, the City is planning for a total of 201.
For affordable housing, requirements call for 71 units, but the City is expecting 78 units. For moderate housing, the State mandates 28 units, but the City is planning for 35. And for above-moderate housing, the City is required to plan for 70 units when the City is expecting 88 units.
The State is also requiring new legal mandates, including providing accommodations for emergency homeless shelters, special housing, transitional housing and supportive housing. City Manager Farfsing said some of the new state mandates are likely to bring about “controversies” as the City moves forward with the housing-element update process and approves new ordinances.
According to a staff report, the housing-element update is due to the State by Oct. 15. However, the City still has until February 2014 to meet the State’s deadline for an eight-year cycle for future updates, or face being reverted to a four-year cycle.
Mayor Noll directed staff to look into the possibility of limiting public comments for speakers to three minutes.
The next Council meeting will be held at the Council Chamber on Tuesday, Oct. 15.