Council Approves 'Ransom' Payments to State

In an unexpected return from summer recess, the met for a special session Thursday night to adopt Resolution 450 that allows for the approval of an Enforceable Obligation Payment Schedule (EOPS) to be provided to the state Department of Finance by the city's Community Redevelopment Agency (CRA).

After a recent Supreme Court ruling, this action has become a necessity to save monies put aside for local redevelopment projects and other ongoing costs.

On Aug. 9, the council agreed to “opt-in” as described in AB 1X 27, which calls for regular payments to be made to the state from city funds, allowing for CRA operations to continue.

The vote to “opt-in” was reluctantly unanimous, even swaying Council Member MaryAnn MacGillivray, who has, on many occasions, voiced her opposition to the CRA’s existence.

In a whiteboard presentation during the Aug. 9 meeting, MacGillivray displayed clearly that the city would be paying more to the state if it were to jump ship on the CRA, rather than pay the approximate “ransom” of $676,000, initially, with subsequent payments of $160,000 thereafter as part of the “opt-in” plan.

Originally, by accepting AB 1X 27, the city would not be required to submit an EOPS, a detailed account of all contractual commitments, department and other agreements the CRA has in place as of July 1. Now, not only is it required by the city as stated in the Supreme Court ruling, but the council is also pressed to do so by an Aug. 29 deadline.

The discussion to adopt Resolution 450 also needed to take place in open forum prior to the EOPS being submitted to the Department of Finance for approval; hence the need for a special session.

If the EOPS is approved by the Department of Finance, they will change the EPOS to an EPOS R, a required form. If the CRA is dissolved, the EPOS R will require for the successor agency to use CRA funds for the projects listed on the original schedule.

“If we have this schedule in place tonight, … everything on the schedule will have to be funded as an existing obligation by the successor agency,” Mayor John Buchanan said. “There is no downside to us doing this.”

City Attorney Terri Highsmith referred to it as a “win-win” situation for the city.

As an alternative, the council could have voted against adopting Resolution 450, but the result would have been to incur all the cost from present projects under contract without the use of CRA monies to back them.

Some of the contracts listed in the EOPS include those for resurfacing parking lots that total $429, 225, renovations for the senior center totaling $244,300, and $750,000 for the replacement of a water main in East Sierra Madre Boulevard. The total outstanding department or obligation for the city totals $8,937,587.47. This figure is based on payments to be made over a five-year period, which would be the allotted time for the existence of the CRA.

It has been a roller-coaster ride of varying opinions across the state over the CRA. Gov. Jerry Brown called for the elimination of the CRA as part of his initial plan upon taking office. The funds were to be distributed to school districts and other “government agencies,” a term that added a bit of a gray area on how the funds would actually be used.

On June 29, the Governor signed AB 1X 26, which on Oct. 1 would have dissolved all existing redevelopment agencies and designated successor agencies with a list of requirements including “ransom” payments to the state. Soon after, a lawsuit was filed by the California Redevelopment Association and League of California Cities to the Supreme Court alleging that AB 1X 26 and 27 were unconstitutional. The Supreme Court will hear the case before January 15, 2012, but have, for now, granted a stay as requested by the CRA/League, with the exception of two parts of AB 1X 26 which deal directly with the EOPS provisions.

Here in Sierra Madre, there also has been divided opinions regarding the CRA, as some residents are on board with it, while others have voiced opposition stating that the CRA has not accomplished what it set out to do, which is to encourage economic development and redevelopment of blighted areas.

Resolution 450 passed 3-0 with Mayor Pro-Tem, Josh Moran and Council Member, Nancy Walsh being absent for the vote.