Financial Impact Unclear as City Prepares for Redevelopment Agency Closure

South Gate’s City Council voted unanimously on Wednesday to affirm its role as successor to the Community Redevelopment Agency, thus taking on the responsibilities of the entity that is scheduled to be shut down in February.

The council was not happy making the decision, which members agreed to reluctantly after opposing the state's elimination of the redevelopment agency. The effect of the agency's demise on city funds is not yet known, and local officials are preparing for possible financial consequences.

“The impact of this is going to take some time [to sort out],” said Bryan Cook, finance director of the City of South Gate. “We are dealing with the aftermath of that in terms of city services being impacted.”

The city of South Gate, along with other municipalities, had sued the state for what they argued was an unconstitutional law eliminating 400 redevelopment agencies throughout California. The state Supreme Court in late December upheld the law, but struck down another measure that allowed the agencies to pay to stay in operation.

The redevelopment agencies helped communities revitalize deteriorated areas with revenues that were generated through property taxes, attracting private developers who would otherwise be difficult to draw into distressed communities. The agencies also assisted municipalities in carrying out housing programs and other economic development projects.

Beside succeeding the redevelopment agency, the City Council also agreed to take on the agency's housing authority function, said Bryan.

The financial impact on the city from the agency's closure concerns council members who are worried about the health of the general fund. The fund could be tapped to cover services previously provided by the redevelopment agency.

“We don’t know the full extent of this,” said Councilmember Gil Hurtado. “It’s horrible.”

The city is not sure as to what specific services will be immediately affected by this new economic hurdle. The cty's finance department has promised a more detailed report for the next city council meeting. 

"We are completing that assessment right now," said Cook. "We will likely present [it] to the city council on the meeting of the 24th."

The city is hoping the state will delay the redevelopment agency’s scheduled shutdown on Feb. 1.

“[The council] has asked the state to have a delay on this process so we can get acclimated to the reality we are now facing,” said Hurtado.