CITY HALL — Usually, members of the City Council take a break from their bi-monthly civic duties in the month of August for some R&R.
Not this year.
The council will convene an extra meeting today to hear a first reading of an ordinance that authorizes City Hall to pay over $33 million to the state to keep the doors of the Redevelopment Agency open in the face of two laws passed in June by the state Legislature.
Council members have to make their decision tonight to slip in under the September deadline, when the state will begin determining which agencies are out of compliance with the newly-passed laws, called AB 26 and AB 27.
Redevelopment agencies across California became an endangered species in June when the Legislature passed the two bills along with the state budget that said the agencies must pay to stay open or shut down by Oct. 1.
The state plans to use the money from the agencies to close a $1.7 billion gap in the budget.
City officials, who use redevelopment dollars for many things including infrastructure projects and affordable housing, refer to the money as “ransom payments.”
Santa Monica has $276 million in redevelopment agency money committed to projects throughout the city as a result of a cooperation agreement entered into in August of 2010 between City Hall and the Redevelopment Agency.
That agreement includes the new Pico Library, an Early Childhood Education Center, improvements to fire stations and $57 million for renovations to the Santa Monica High School campus.
City officials hoped that the agreement would protect the money from the state grab, which retroactively nixed all agreements between host municipalities and their redevelopment agencies entered into after Jan. 1, 2011, when the governor announced his plan to kill the agencies.
Now, the best way to keep those and other projects viable is to commit to the payments, which constitute $26,830,703 in fiscal year 2011-12 and $6,400,000 in 2012-13.
“If we plan to stay in the redevelopment business, and we do, we need to ask the council to adopt an ordinance which commits the agency to pay the ransom, while reserving our right to contest it in court,” said City Manager Rod Gould.
The court battle for the fate of redevelopment dollars is already underway.
The California Redevelopment Association, League of California Cities and the City of San Jose filed a petition to the California Supreme Court to toss out AB 26 and AB 27, claiming that they violated Proposition 22, a measure passed in 2010 which made it illegal for the state to take local money, said John Shirey, executive director of the California Redevelopment Association.
“A lot is riding on us winning this lawsuit,” Shirey said.
The petitioners requested three things of the court: that it take the case, put a stop on the implementation of the two laws and take formal action by Dec. 20 to prevent cities from making the first “ransom” payment, which is due Jan. 15, 2012.
Attorney General Kamala Harris responded to the petition, declaring that redevelopment agencies were established by the legislature in 1945 and that the Legislature could dissolve them at any point.
Both parties requested that the court take up the case and come to a speedy conclusion.
If the court does decide to throw out the laws, then Santa Monica will either not have to make the payments, or will have the opportunity to get back the payments already made.
If it doesn’t, however, the projects committed to by City Hall will still be able to go forward, if on a longer time frame, Gould said.
“Unless an agency is willing to decide to contemplate paying the amount, it shouldn’t be operating right now,” he said. “We have good reasons to believe the legislation was misguided and unlawful. Even if it isn’t, we hope to stay in business, even if it means truncating our goals, phasing projects and losing some in a worst case scenario.”
City Hall hasn’t yet decided which projects would be affected if the payments are made, said Andy Agle, director of housing and economic development.
“We’re carefully keeping tabs of the cash we’ve got and when projects need funds,” he said. “Some projects already have bonified agreements including design-build and tax increments.”
Some projects may make it through design, but wait on new financing to start the actual construction, he added.
Getting the ordinance through its first and second readings is also important to making sure that projects that do have funding can keep rolling, uninterrupted.
The Civic Center Village, a mixed-use apartment development on Ocean Avenue, will need some technical adjustments in September, which can’t be accomplished without the ordinance, Agle said.