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San Fernando
Monday, Sep 25, 2023

Unfinished Business

The end of redevelopment has left Camarillo in a jam. The city now owns several acres of land downtown, earmarked for affordable housing for its growing working class. But, for now, those lots remain empty as the city waits to hear whether it will receive the last remaining bit of redevelopment funding the state is doling out. It’s better in Glendale, but even there disappointment lingers. The Museum of Neon Art will open in its new location in the city by the end of this year, but without the parking garage that some felt was needed to accommodate the visitors. The stories are similar throughout the greater San Fernando Valley region, where dozens of projects remain up in the air as redevelopment winds down in a bureaucratic process which involves so-called “successor agencies” – appointed city commissions – haggling with the state Department of Finance about which projects can move forward. Cities are also taking a look at what to do with properties previously owned by redevelopment agencies and how to maintain the economic growth the agencies cultivated. “There aren’t a lot of places for cities to turn to now,” said development expert Larry Kosmont, chief executive of L.A. consultancy Kosmont Cos. “Without the ability to restore that tax increment, it leaves California cities fundamentally behind. We had a power tool, and now we’re down to hand tools.” Redevelopment ended when the legislature abolished it in 2011 as part of a package of bills sought by Gov. Jerry Brown to help plug the state’s $25.4 billion budget deficit. The law survived a legal challenge by cities, which under redevelopment were allowed to keep property taxes that normally would go to schools and other government entities into improving blighted neighborhoods. But ending a decades-old program that by 2011 was funneling $1.7 billion in extra tax money to cities wasn’t so easy. Many of California’s more than 400 redevelopment agencies were in various stages of working with developers on projects ranging from housing to office buildings to cultural amenities. And stopping a project dead in its tracks could potentially open up cities to lawsuits from landlords, developers and other interested parties with whom contracts had already been signed. The bill that ended redevelopment recognized this and stated that any project for which a city had signed a contract before June 2011 could receive previously allocated property taxes. That required the state to develop a process by which successor agencies could petition the finance department and show that specific projects met that and other criteria. “We have to look at the submissions and really try to determine if the project is legally an enforceable obligation. We have to review these (payment) schedules and then the state can allocate accordingly,” said H.D. Palmer, the finance department’s deputy director for external affairs. Winding down But it hasn’t necessarily been that simple. The 80 people in Palmer’s agency spent much of last year sifting through petitions. Last month, most agencies were given decisions on housing projects that fell under redevelopment jurisdiction. Twice annually, the successor agencies are able to submit a petition to the state for funding related to existing projects. The finance department then combs through the proposals, evaluating each project and funding request. It then returns determination letters to the agencies, indicating approvals and denials and the reasoning behind the decisions. Cities that disagree with decisions to withhold funding can ask for sit-down meetings, called a “meet-and-confer” session, to try to change the agency’s mind. The department has already been through this process several times. “In the last round before this one, 240 of the agencies requested a meet and confer,” said Palmer. “But as we’ve moved through several cycles of this, there is a better understanding on most sides.” If a project fails to receive approval, it can be submitted again in hopes of securing funding if additional documentation is available. The goal is to move projects with contracts already in place along to completion, dispose of agency assets and get to a point where no more projects are in the works. But even for cities with relatively few obligations, the process might take years. In Simi Valley, only a few projects remain outstanding, but no one can estimate when they will be completed. They include several housing projects. One of its largest projects, the Tapo Street Facade Renovation Program, which funds improvements for shops along a major commercial corridor, has been ended, though. “We didn’t have a lot of projects hanging out there. Some were still on the drawing board. We saw the writing on the wall and our goal now is just to get out of the business,” said Assistant City Manager Brian Gabler. “But it will still take a while.” The results of the successor agencies have varied widely. Some have dedicated staffs, such as in Glendale where the city has navigated the bureaucratic channels and is moving forward on projects many thought would be cut, including building a new home for the Museum of Neon Art. With city backing for consultants and land-use experts, the North Hollywood redevelopment district, part of the Community Redevelopment Agency of Los Angeles, also has been able to move forward with many of its projects. Others, such as Camarillo, have foundered even with small-scale projects such as storage drains and low-income housing, as they debate with the state on whether projects qualify for more funding. Now cities are looking forward to April, when the state finance department will announce its decision on how much funding it will release from July through December. Even more, officials say they are looking forward to being done with the entire process and its piles of paperwork. “It’s really a time cost for us,” said Gabler in Simi Valley. “We’re just trying to get to the point of completion.” Without redevelopment That leaves the larger question of what cities will do to stimulate their local economies without redevelopment. “It was totally short-sighted and exceptionally unfair. All of the things that people love coming to California for – the Gaslamp District in San Diego, areas of San Francisco, L.A. Live, all of that was a redevelopment project,” said Lancaster City Manager Mark Bozigian, who is nevertheless resigned to its end. “Redevelopment is done and we still have to deal with our own city. So we will.” Indeed, the city already is moving ahead with innovative initiatives to attract business, including forming public utilities to attract solar power companies to the high-desert city. Kosmont, the land use expert, said that while some cities will find new ways to build projects, the pace of development will certainly slow. “Are there other tools? There could be sales taxes, hotel taxes, utility bonds, but not to support what they did,” he said. “Projects are going to be fewer and far between.” Additionally, many redevelopment agencies owned property within their districts, and while most of the housing projects were transferred to city housing agencies, the question of what will happen to the other properties is unclear. The finance department is requiring successor agencies this spring to come up with property management plans. Only if the properties are found to have a public purpose, such as fire stations or public parks, will they be allowed to remain on the city’s books. Otherwise they must be sold. Kosmont predicted that the question of who gets the sales proceeds will cause the next series of battles between cities and the state. “Next year is going to be really interesting,” Kosmont said. “There are going to be thousands of properties that have to be disposed of. It’s going to be a redevelopment property fire sale.”

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