City Redevelopment Agency Funds Currently Not Affected by State Laws

In spite of two new state laws crippling the work of city redevelopment agencies, the next step in the process to develop the property at 9300 Culver Boulevard (aka Parcel B) will happen as planned at Monday night's joint City Council and Redevelopment Agency meeting.

"We're not frozen in place," said Deputy Mayor D. Scott Malsin, who as deputy mayor also serves as chair of the Redevelopment Agency Board.

Redevelopment agencies use tax funds specially set aside for cities to rebuild blighted areas and create affordable housing, thus attracting businesses and residents. While the state legislature was wrangling over how to balance the state budget last spring, Governor Jerry Brown decided that the monies going to each municipality for redevelopment projects, totaling an estimated $1.7 billion, would be better used toward the state budget. Here in Culver City, the local redevelopment agency was spurred into action, passing project after project to ensure that the work could get done before the Governor axed the agencies.

So when the budget was passed, two laws—AB 26 and 27 were passed with it. Assembly Bill 26 said that as of Oct.1, cities could no longer have redevelopment agencies and that the state would get the money that would typically go to the agencies. Assembly Bill 27 softened the blow somewhat by essentially saying that a city could keep its redevelopment agency if it paid the state a certain percentage of the money it got in a continuation fee, both as an up-front one-time payment, then a smaller amount on a annual basis. For Culver City, the one-time payment was $12.1 million, with half due in January 2012 and the other half due in May 2012, plus another $3 million annually.

"The only positive thing I can say about those bills, they do permit us to keep operating," Malsin said. "We are able to move forward with what we are able to afford."

"Very few people agree with it," Todd Tipton, redevelopment administrator for the Culver City Community Development department said about the state's dissolving of the redevelopment agencies and the continuation fee. "The agency members basically agreed to this under protest. They feel that [the continuation fee is] extortion."

Culver City voted July 11 to opt for the continuation fee option. However, the California Redevelopment Agency—which represents redevelopment agencies throughout the state, including Culver City's—sued the state government, alleging that AB 26 and 27 were unconstitutional. The state Supreme Court issued a partial stay on both laws, stopping the state from disbanding the agencies and collecting the continuation fees, but leaving some of the reporting requirements in place.

So in the meantime, the Culver City Redevelopment Agency can continue to operate, but it still must comply with those parts of the law not covered by the stay. The Culver City Redevelopment Agency recently passed a resolution that both allows the entity to utilize its funds for projects, inlcuding but still comply with those parts of the new laws that are still in effect while the State Supreme Court works out whether the laws are constitutional in the first place.

The resolution provides a report for the state on all the contracts and  memos of understanding with various contractors that the city is legally obligated to honor, but does so noting that the city is complying under protest.

In summary: "What it says," said Tipton, "is that we'll do what you're requiring, but we don't agree and we're going to let the courts figure this out."

Malsin also noted that there are not any redevelopment projects currently in limbo, but that funds are more limited than they were before.

Coming soon: Learn what happened at the Monday night council meeting.