City of Culver City, California
Agenda Item Report
Meeting Date: 01/09/12 Item Number: J-1
JOINT CITY COUNCIL AND AGENCY BOARD AGENDA ITEM: (1) Presentation of
Comments from the City Manager/Executive Director Related to the Impacts of
the Implementation of AB 1X 26 (the Redevelopment Agency Dissolution Bill) and
(2) City Council Adoption of a Resolution Designating the City of Culver City as
the Successor Agency to the Culver City Redevelopment Agency.
Contact Person/Dept.: John Nachbar,
City Manager
Phone Number:
(310) 253-6000
Fiscal Impact: Yes [] No [X] General Fund: Yes [] No [X]
Public Hearing: [] Action Item: [X] Attachments: [X]
Commission Action Required: Yes [] No [X] Date: _______________
Public Notification (E-Mail) Meetings and Agendas – City Council (01/06/12)
Department Approval:
John Nachbar (01/6/12)
City Attorney Approval:
Carol Schwab (by H. Baker) (01/06/12)
Chief Financial Officer Approval:
Jeff Muir (by N. Kimball) (01/06/12)
City Manager Approval:
John Nachbar (01/06/12)
RECOMMENDATION:
Staff recommends the City Council and Agency Board (1) receive the comments
from the City Manager regarding the impacts of the implementation of AB 1X 26 (the
Redevelopment Agency Dissolution Bill) and (2) the City Council adopt a proposed
resolution designating the City of Culver City as the Successor Agency to the Culver
City Redevelopment Agency (the “Agency”).
BACKGROUND:
As part of his budget proposal for Fiscal Year 2011/2012, Governor Brown proposed
the elimination of redevelopment agencies throughout the State of California to
assist the State in addressing its chronic, multi-billion dollar budget deficit. Despite
intense advocacy from the League of California Cities, the California Redevelopment
Association, and others (including the Mayor and Council Members of Culver City),
the Legislature ultimately adopted, and the Governor signed into law, AB 1X 26 (AB
26) and AB 1X 27 (AB 27). In brief summary, AB 26 provided for the dissolution of
redevelopment agencies throughout the State and AB 27 provided for an alternative
redevelopment program subject to the payment to the State and others of an opt-in
payment.
The City Council, acting as itself and as the Agency Board, took various steps to
protect the vital projects and programs supported by Agency funds here in Culver
City. These steps included, but were not limited to, the adoption of cooperation
agreements between the City and the Agency which allow the City to continue to City of Culver City, California
Agenda Item Report
pursue the goals of the Redevelopment Plan of elimination of blight through the
completion of redevelopment projects and economic development programs.
In July, 2011, the League of California Cities and the California Redevelopment
Association (Plaintiffs) filed suit in the California Supreme Court challenging the
constitutionality of AB 26 and AB 27. Additionally, the Plaintiffs requested the
California Supreme Court stay the implementation of AB 26 and AB 27 pending the
issuance of the final ruling from the Court. In August, 2011 the California Supreme
Court issued a Stay related to the implementation of AB 27 and most parts of AB 26.
On December 29, 2011, the California Supreme Court issued its ruling which
declared AB 26 constitutional and AB 27 unconstitutional. Also, using its power of
reformation, the California Supreme Court amended certain dates for compliance
with various provisions of AB 26 (see below for a list of the most pressing
deadlines).
DISCUSSION:
The ruling of the California Supreme Court was the worst outcome from the viewpoint
of California’s redevelopment agencies (including the Culver City Redevelopment
Agency). Given the state of the law as of the writing of this report, effective on
Wednesday, February 1, 2012, all redevelopment agencies in California will be
dissolved with ministerial duties of administering “enforceable obligations” of the
former redevelopment agencies and the wind down of the former agencies’ activities
being vested in “Successor Agencies.”
The result of the California Supreme Court’s ruling will have a severe impact on both
the Culver City Redevelopment Agency and the City of Culver City. As mentioned
above, the Culver City Redevelopment Agency will cease to exist on February 1,
2012. This dissolution will also have a multi-million dollar negative impact on the
finances of the City, since the Agency supports, in whole or in part, many City
projects and programs. And, with the elimination of or significant cutbacks in projects
and programs, funding for staff positions which supported those projects and
programs is also severely impacted.
Dissolution of entities as large and long tenured as California’s redevelopment
agencies is unprecedented. Also, AB 26 does not clearly address (or does not
address at all) many questions raised by staff and others. While everyone is seeking
clarity as to the path forward, experts throughout the state continue to evaluate the
provisions of AB 26, the intent of the Legislature expressed during the debate of this
measure, and the ruling of the California Supreme Court. One thing is clear – the
path forward will involve additional litigation and lower revenues to support local
redevelopment projects, economic development efforts, and cultural programming (all
of which were funded in whole or in part from the Agency). The City Manager will
provide additional comments on this important subject during the presentation of this
report. City of Culver City, California
Agenda Item Report
Successor Agency
AB 26 provides that “Successor Agencies” are designated as successor entities to
the former redevelopment agencies. The Successor Agencies possess “all authority,
rights, powers, duties, and obligations previously vested with the former
redevelopment agencies under the Community Redevelopment Law. However, this
power is severely limited with the creation of several layers of oversight of the
Successor Agency, including the creation of an “Oversight Board” and increased
powers provided to the County Auditor-Controller, the State Controller, and the State
Department of Finance.
AB 26 provides that the City may elect NOT to serve as the Successor Agency by
adopting a resolution to that effect. While the law seems to infer that the City
automatically becomes the Successor Agency absent the adoption of the resolution
mentioned in the prior sentence, City Special Counsel recommends that if the City
Council does wish to name the City of Culver City as the Successor Agency, then the
City Council adopt a resolution affirmatively stating such election and reserving all
other constitutional and legal rights under law and/or equity.
So that the City may, to the limited extent allowed by AB 26, continue to perform
certain functions of the former Agency, staff recommends the City Council adopt the
proposed resolution presented this evening.
FISCAL ANALYSIS:
AB 26 provides that “…the liability of any successor agency, acting pursuant to the
powers granted under the act adding this part, shall be limited to the extent of the
total sum of property tax revenues it receives pursuant to this part and the value of
assets transferred to it as a successor agency for a dissolved redevelopment
agency.”
While this provides some guidance, such guidance may not be definitive. There is
concern that, in some cases, the City’s General Fund could become encumbered
with costs previously borne by the Culver City Redevelopment Agency if the
Oversight Board, the County Auditor-Controller, the State Controller, or the State
Department of Finance were to disagree with or invalidate certain “enforceable
obligations.” Unfortunately, collectively, these oversight bodies may take months or
years to make such determinations. This provides significant potential risk to the
City’s General Fund. The City Manager will address this important issue in more
detail during his oral remarks.
ATTACHMENT:
Proposed Resolution. City of Culver City, California
Agenda Item Report
MOTION:
That the City Council:
1. Receive a presentation from the City Manager related to the impacts of the
dissolution of the Culver City Redevelopment Agency; and,
2. Adopt a resolution designating the City of Culver City as the “Successor
Agency” to the Culver City Redevelopment Agency.
MEETING DATE: 01.09.2012
AGENDA ITEM: Adoption of a Resolution Designating the City of Culver
City as the Successor Agency to the Culver City
Redevelopment Agency.
ATTACHMENTS
Pages
1. Draft Resolution 1-2