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Solimar Research

City, County, State Play Hot Potato with Los Angeles RDA

Josh Stephens on
Jan 13, 2012

While cities around the state have been, reluctantly, agreeing to serve as undertakers for their respective redevelopment agencies, the Los Angeles City Council indicated this week that the city will not do so. 

The 9-3 vote against serving as the "successor agency" that would liquidate the Los Angeles Community Redevelopment Agency's assets and oversee its existing contracts means that some other governmental entity will have to take over. The City Council vote took place after City Administrative Officer Miguel Santana released a report estimating that serving as successor agency could have cost the city up to $109 million. Some council members disputed this figure, saying that it was likely to be a high estimate. 

CRA/LA, the largest redevelopment agency in the state, is distinctive among the state's redevelopment agencies for being an entirely separate entity from the city itself. It has its own, separate board of commissioners and, importantly, has its own labor agreements with its employees. CRA/LA employees are paid, on average, $109,000 annually—more than city employees are on average—and their contacts call for a 120-day notice of termination. This requirement conflicts with the Feb. 1 dissolution deadline imposed by Assembly Bill 1x 26. Therefore, a successor agency would have to pay CRA/LA employees even after the entity has been disbanded and its funds disbursed elsewhere. 

The County of Los Angeles could step in, but it seems highly unlikely that county supervisors will want to assume those costs or the burden of overseeing hundreds of millions of dollars worth of obligations. 

Gerry Hertzberg, policy and political director for Sup. Gloria Molina, said that no vote is planned and that if there was one, the supervisors would likely not be inclined to accept the burden.  

"They don't have to take a formal vote, and I can't imagine that they would," said Hertzberg. "I don't know of anybody that's proposed it."  

Hertzberg said that the relationship between the county and municipal redevelopment agencies was, as elsewhere throughout the state, a complex one. On the one hand, redevelopment agencies are accused of diverting property tax revenue that could go into county coffers. On the other hand, Hertzberg noted that CRA/LA was involved with major projects under Molina's purview, such as the Grand Avenue Project, a collection of high rises in downtown Los Angeles. 

The county's demurral is would not necessarily a statement about redevelopment itself. "The county just has other priorities," said Hertzberg. 

This means that responsibility for CRA/LA now falls to the state. However, the entity or department in state government that would take over has yet to be named. Critics of the dismantling of redevelopment say that it is taking place too quickly. 

"What Los Angeles did is simply and indicator of the mass chaos and the problem that's associated with the dissolution date of Feb 1," said Jim Kennedy, interim executive director of the California Redevelopment Association. "Without really any ability to orderly plan for the implementation of a dissolution action and, frankly, an opportunity clean up some of the ambiguities and misstates that are in AB 1x 26." 

If hundreds of cities statewide similarly passed off their former redevelopment agencies on to the state, the administrative burden could be enormous. However, signs indicate that few, if any, other cities have followed Los Angeles' lead. 

"The circumstances associated with CRA/LA appear to be fairly unique," said Kennedy. Kennedy said he was aware of "only a handful of cities" that are opting not to serve as successor agencies. 

Today is the deadline for cities to decide whether to serve as successor agencies or not. AB 659, sponsored by Sen. Alex Padilla, would extend the deadline for dissolution until April. That bill is pending in Sacramento. 

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