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Future of redevelopment still uncertain

Posted: March 13, 2012 1:55 a.m.
Updated: March 13, 2012 1:55 a.m.
 


More than a year after plans were put into motion to eliminate redevelopment agencies throughout the state, questions still remain about Santa Clarita’s redevelopment area in Newhall as the city of Santa Clarita goes through the complex process of winding the agency down.

Because the future of the agencies are still so uncertain — including the chance that certain properties transferred over to the city
will be liquidated — city officials don’t know what will happen to some of the projects that have been planned in downtown Newhall.

State legislators voted to eliminate redevelopment agencies as a means of balancing the state budget by reclaiming property taxes earmarked for the agencies.

The state Supreme Court recently upheld the Legislature’s power to take that action, leaving cities and counties that have redevelopment agencies scrambling to deal with the sudden change.

Santa Clarita’s redevelopment agency — which only affects Newhall — is one of 425 redevelopment agencies within the state currently being dissolved.

Many of the agencies are carrying a large amount of debt, including Santa Clarita’s agency that has been working on projects to renovate downtown Newhall for several years.

Some of the biggest concerns for city officials in the Newhall redevelopment area are vacant properties that were once owned by the redevelopment agency. The properties were transferred to the city of Santa Clarita in March 2011, but there’s a possibility that the state could liquidate them in order to pay down the redevelopment agency’s debt, said Redevelopment Manager Armine Chaparyan.

“We won’t know for several months what will happen with those properties,” Chaparyan said.

The state controller will be determining whether asset transfers — such as the one that transferred property and cash from Santa Clarita’s redevelopment area to the city of Santa Clarita — occurred after Jan. 1, 2011, according to the redevelopment dissolution legislation.

If the agency that received the money and property has not contracted with a third party for spending or encumbering the assets, then that money and property is supposed to be returned to the successor agency — which is now the city of Santa Clarita.

A number of cities throughout the state transferred assets from their redevelopment agencies to themselves after the legislation was proposed early last year, said Jim Kennedy, executive director with the California Redevelopment Association.

“The department of finance will be looking at those transfers as well as the enforceable obligations and the required obligations,” Kennedy said.

Although Kennedy does not know the specifics of Santa Clarita’s redevelopment agency, he said “there’s a chance” that the state could require the city of Santa Clarita to liquidate assets not contracted with a third party in order to pay down the redevelopment agency’s debt.

Some of the properties formerly owned by Santa Clarita’s redevelopment agency include the new Newhall library, the vacant city block across from the library and the property that would be used for a Newhall roundabout in front of Hart Park at the intersection of Newhall Avenue and Main Street.

City officials aren’t worried about the library property being liquidated because the effort to obtain the property for the library was very specific to building a public library facility, as were the funding efforts for the library, Chaparyan said.

The library is scheduled to open this fall and is being funded through money and bonds transferred from the redevelopment agency last March as well as public library funds.

The design for the roundabout will continue because the city already has an agreement with a design firm, but the construction of the roundabout has not been budgeted and it is unknown when it will be completed, Chaparyan said.

Part of the redevelopment elimination legislation allows projects that already have contracts to be completed.

The incomplete project that has the most chance of moving forward at this point is the construction of affordable housing in Newhall, Chaparyan said.

The agency had finalized its development disposition agreement for the Newhall Avenue property when the state eliminated redevelopment, and it appears that bills concerning housing are the ones most likely to pass at this point.

The city is working on finding alternate funding for the roundabout and housing project, Chaparyan said.
Redevelopment debt

Although the redevelopment agency has about $93 million in debt, city officials want to make it clear that money from the city’s general fund is not going toward paying down its debt.

Instead, the portion of property tax money that used to go toward funding redevelopment projects will go toward paying down the agency’s debt.

The former Newhall redevelopment area’s property tax portion for fiscal year 2012-13 is estimated to be about $3.9 million, Chaparyan said.

Chaparyan compared the redevelopment agency’s debt to a mortgage on a house.

Most people cannot afford to pay cash for a house and have to finance it over a 30-year period. The remnants of the redevelopment agency will be paid off in a similar amount of time that a home would be, she said.

In comparison to Santa Clarita’s redevelopment debt of $93 million, the city of Pasadena has about $450 million in debt for its redevelopment projects in Old Town Pasadena, Chaparyan said.

Next steps

The next step in dissolving the redevelopment agency will be the formation of a seven-member oversight board, which will consist of two members appointed by the city, three appointed by the county, one appointed by the chancellor of the California Community Colleges, and one appointed by the Los Angeles County Fire District — the largest special district in the redevelopment area.

The oversight board consists of members appointed by the county, the fire district and local education because they are areas that would be eligible to receive the portion of property tax that the redevelopment agency used to use for projects, Chaparyan said.

The oversight board must be formed by May 1, and the city plans to vote on its two members this month, Chaparyan said.

For more information on redevelopment, visit bit.ly/AC6Z81

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