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For the Record / In Depth

Transcript: Salient Statements During Long Beach City Council's Jan. 17, 2012 Agenda Item re Redevelopment

(Feb. 4, 2012) -- LBReport.com provides below a transcript (unofficial, produced by us using the City Clerk's video webcast) of salient portions of the Jan. 17, 2012 City Council agenda item regarding Redevelopment. We've numbered individual segments for clarity. Bracketed indicate material added by us for clarification. For the underlying video webcast, click here.

1. City Manager Pat West: ...We picked up around January 3 or 4 the possibility that there would need to be a successor agency to assume the Redevelopment Agency's roles. In addition to that, Friday was the last day for the Redevelopment Agency; they held their last meeting. And as of Friday, February 1 the Redevelopment Agency has been dissolved, the Board at least...

2. Amy Bodek [using Power Point presentation]: ...[a] lawsuit was filed by the California Redevelopment Association, on behalf of all Redevelopment Associations [sic] against the state, challenging the constitutionality of both of the budget trailer bills...
3. ...As it stands now, under the [CA Supreme] Court's decision, they did extend the deadlines that were within the original AB26 but they extended a key deadline of February 1 where all Redevelopment Agencies across the state are dissolved. And that is in effect now so we are in fact preparing for dissolution.
The law under AB26 provides that a successor agency can be appointed and that successor agencies, typically the sponsoring community, i.e. the City Council within the jurisdiction that the Redevelopment Agency is in, if the local jurisdiction does not want to be the successor agency, there is the opportunity for another local agency, such as the County or another city, to also ask to be the successor agency. What happens on February 1 is that all of the agencies assets, including cash, land, equipment, all those obligations, also transfer to the successor agency.

The role of the successor agency is fairly straightforward; it is actually a simple role and that is to dissolve the assets of the former Redevelopment Agency. We are required to provide and submit to the County and the State a recognized obligation payment schedule that lists in detail all of the obligations of the Redevelopment Agency that are under contracts that we make monetary payments on, any third party agreements that we have, any OPAs or DDAs or any type of land transactions that we are already under obligation for and list those obligations.

We have listed those obligations and our obligations totals $1.28 billion. This includes bond proceeds, this includes third party contracts, this includes debt that the Redevelopment Agency has to the City of Long Beach. It includes the value of the land transactions as well and that is what we are calling our Recognized Obligations Payment Schedule...

4. The successor agency also is required to provide staffing to an Oversight Board, which I will get into in a moment as to what the Oversight Board's role is. We are still frankly struggling with a lot of the vagueness that is contained within AB26, so we know that we can have an administrative budget that supports administrative functions for up to 5% of the property taxes allocated to the successor agency in this fiscal year, and then it is reduced to 3% thereafter. We are struggling with the calculation because it could be as much as $4.5 million as an admin budget or as little as $1.9 million as an admin budget, depending on how that is actually calculated based on interpretation of AB26...
5. ...We also have various land that is held for resale that was not transferred [from RDA] to the City...We also have the courthouse which is under an existing lease with the State of California but it still remains in the Redevelopment Agency's name...The value of those properties [collectively] is about $33.9 million.
6. ...We also have remaining bond proceeds of unspent bond proceeds in an account that are waiting for their projects to proceed of about $15.2 million and then we also have cash on hand as well, so these are examples of the assets that would be transferred to the City of Long Beach from the Redevelopment Agency.

As part of the requirements of AB26, there is something called an Oversight Board that is mandated to be established. This is established at the level of the County, not the local jurisdiction. It is a seven member Board where we have limited ability to influence the decisionmaking because most of these are appointed Boardmemberships from either the County or special taxing districts or education interests as well. This Oversight Board is supposed to be established by May 1 and their role is to oversee decisions of the successor agency and to also direct the dissolution of the Redevelopment Agency's assets if they do not think the successor agency is doing it fast enough...

7. ...The Oversight Board also has the ability to reach down and determine whether decisions by the successor agency should or should not have been made, whether we should have terminated a contract or whether we should be removing obligations that are in our obligations list. The Oversigh Board also is overseen directly by the [state] Department of Finance so it is setting up a mechanism where any local decisions that we make could be challenged at the County level and could also be challenged at the state level as well.

AB26 allows the city to also become the successor agency for housing assets. Those would be any assets that are due to [pause] the Housing Development Company non-profit. So the successor agency can play a role for both the housing assets and the Redevelopment Agency.

As I said earlier, there is an administrative budget that is allowed under law for the successor agency. It is up to 5% of the property taxes allocated to that successor agency for the first year. This budget is meant to support the myriad activities that are going to be necessary to dispose of the Redevelopment Agency's assets.

And I will be very clear with you that we will not know if it will cover all of our obligations in the next few months or whether or not we will have to reply on the General Fund in the interim period.

To specifically talk about the impact of this, there are an estimated 36 filled positions within the Housing and Redevelopment Bureaus within the Department of Development Services and another 23 filled positions throughout the city, also within Development Services but also in other departments for 59 full time equivalent staff positions thata are funded directly by Redevelopment or Housing. We are still working on the exact impact to the General Fund. A lot of it depends on how the order of layoffs will be occurring, what obligations are committed obligations and will withstand scrutiny by the Oversight Board, but we do know what the general impact is in terms of the staffing as well as the approximately $6 million in services that the Redevelopment Agency and Housing Services Bureau currently provide the General Fund for things like code enforcement, graffiti abatement, neighborhood improvements and particularly the CityPlace parking structure debt service repayment.

The city is also in the position as successor agency to protect to the best of its abilities the outstanding debts that the Redevelopment Agency owes the city which is approximately $119 million, which is viewed as an enforceable obligation and is included in our Enforceable Obligations Program List.

So what is being asked of you tonight is to designate the City of Long Beach as the successor agency and transfer all housing functions and redevelopment functions and assets to the successor agency.

The other part of the discussion tonight is how to move forward with the delivery of community and neighborhood development services to the City of Long Beach. I will tell you that aside from the efforts to dissolve 50 years of development activity in the city, there is a need to deliver services to the community, whether it is in the form of affordable housing, economic development or basic neighborhood improvements, the services must still continue to be provided by the City.

As it stood before the dissolution of the Redevelopment Agency, there were three entities that provided those services: the Redevelopment Agency, the LB Housing Development Co. and the Community Development Advisory Commission. It is our suggestion that these three boards and commissions and those functions be consolidated into a brand new Commission that would be a new model for the delivery of services that would also take dramatically reduced resources and allocate them on a priority basis throughout the city. As such, this new Community Improvement Commission would advise the City Council on our use of CDBG funding, on the management of the city's non-profit affordable housing corporation, also on the delivery of housing and neighborhood revitalization services...

8. Councilwoman Gerrie Schipske: Yes, Mr. Mayor. I have a couple of questions and I've already shared them with staff. I notice that this resolution designates the City as successor agency. Actually, we don't need to do that because we missed the January 13 deadline, isn't that correct, for opting out, so we by default are the successor agency? There's no affirmative vote needs to be taken on that.

Ms. Bodek: Yes, you're correct.

Councilwoman Schipske: OK. Can I ask why that was not agendized so that the City Council, like many other cities in Los Angeles County and Riverside County, were given the opportunity to decide whether to opt out?

Ms. Bodek: This is an incredibly complex subject and we have been dealing with the ramifications of this in an incredibly expedited time frame, and that's the best answer I can give you.

Councilwoman Schipske: Do we not belong to the League of California Cities?

Ms. Bodkek: We as a city organization do, yes we do.

Councilwoman Schipske: Well, they've had it up on their website since for, let's see, since the Califoria Redevelopment Ass'n v. Matosantos was decided, a timeline, and at the top of the timeline it says "January 13. If the city does not want to serve as successor agency to its Redevelopment Agency, then it must submit a resolution to that effect." So did we not know about this?

City Manager Pat West: Ms. Schipske and Councilmembers, yes we knew about this approximately January 3 or January 4. At that point in time we put together the Council letter that's before you tonight that mentions the January 13 date. In addition to that, we had a closed session last Tuesday [Jan. 10] to talk about Redevelopment where the City Attorney did point out that if any Councilmembers were interested in not being the successor agency to speak up and then we'd have to have a special meeting of the City Council prior to...[Councimember Schipske begins speaking]

Councilwoman Schipske: ...Oh, I don't think you want to go there. That would be a violation of the Brown Act because that was not agendized as taking any kind of vote or any sense of the Council and that's something that should have just automatically been put on the public agenda like it was for the City of L.A., for the City of Oakland, for the City of Auburn, for the City of Indian Wells, I could go down the list, they all got it in time.

And I think there seems to be a pattern that goes on here: things are last minute. it's priceless, we've got to make this decision now or we'll lose the opportunity, and so I'm going to go on because obviously we blew it.

But I also ask why wasn't there any detailed analysis? Again, I would point to the City of Los Angeles and many other cities. Well, let's take the City of Los Angeles. We got a four page memo. They got a 38 page detailed analysis. They got an eight page fiscal analysis of the impact of the pro and con of opting in or out. They got a letter from their Mayor. They got a letter from their Controller. They had a Housing Committee meeting. They got quite a bit of material that this City Council didn't get.

City Manager Pat West: If I could respond to that. The City of Los Angeles is different than almost every city, every Redevelopment Agency, in the state of California. Had we were to recommend to the City Council that we would opt out, you certainly would receive from us a 26 report or a 50 page report because that is, that's an outlier. Like I said, almost every, well I believe only nine Redevelopment Agencies in the state of California have decided to opt out.

Los Angeles was in such a different situation because of how their real agency employees are funded; they're funded through PERS pension program like ours. The City of Los Angeles has their own pension formula, so the Mayor wanted to point out as well as the CEO of Los Angeles that had the City of Los Angeles become the successor agency, they would have inherited all the obligations of the Redevelopment Agency employees, and that would include the unfunded PERS liability. I think it was in the neighborhood of $70-80 million there. They would also have to keep the agency employees on for a term of six months because of some union obligations that they have, so because of that situation primarily, the City of Los Angeles prepared that report to tell the City Council that this will be a bad idea to become the successor agency and assume all of the PERS unfunded liabilities...

[in colloquy between Ms. Bodek and Councilwoman Schipske; Ms. Bodek cites difference between Long Beach and L.A;, indicating LB had no RDA employees, all employees are city employees]

Councilwoman Schipske: The two other main issues that the City of Los Angeles was counseled, as was the City of Auburn, City of Oakland, City of San Jose and others, was not just that but they didn't feel that their General Fund could sustain the additional costs that may be required. They're not quite sure if the administrative fee of 5% was going to be able to cover, and in fact today [Jan. 17] was the first time I've seen this from our staff, Slide 11 and Slide 12 both say: Impact to General Fund: Exact impact unknown. It's unclear at this time if available funding will be sufficient to cover the expenses or if the General Fund resources will be required.

Ms. Bodek: That is correct. That is in our staff report.

Councilwoman Schipske: We didn't get this before today.

Ms. Bodek: It is in the written staff report as well under Fiscal Impact section as to the exact unknowns of the implications to the General Fund. [Councilwoman Schipske begins speaking, crosstalk for a moment]

Councilwoman Schipske: Ms. Bodek, this statement is the first time that we've been given this information that whether or not General Fund resources will be required.

Ms. Bodek: Well consider it the freshest information that we have available to provide you.

Councilwoman Schipske: Well it's not adequate. Also the cities also opted out because, not only because the employees, but because they have been advised that successor agencies risk the possibility of being sued for any efforts related to winding down the Agency's projects. And that is consistent. It was advised to L.A. It is consistent in every advisement that has gone out but I don't see anything in our material about that.

[No response]

So my concern is last week this Council supported Councilman DeLong's motion to kill a study on inclusionary housing because the Council felt there was no clear fiscal impact laid out, nor was there any money in the General Fund budgeted for it, and yet today we are being asked to do this, and so for that reason I am voting against this, and I would ask city management in the future: please don't treat this Council as a rubberstamp. Please stop bringing things at the last minute and saying we gotta do it now. And please, please, I would appreciate really professional detailed analysis on items, not the day of the vote but in advance so that we, we're not just the only ones looking at this. The public looks at it, and I would just say that this was not an adequate presentation and analysis before this Council could vote on this issue.

City Manager West: Ms. Schipske, I would like to point out that what you're talking about is in the report and it was released to the public last Tuesday [Jan. 10] for our eight day agenda process, and again: this was something decided by the Supreme Court during the holidays in late December. We then didn't find out about this, whether it's CRA, whether it's League of CA Cities, until January 3 or January 4 and had to determine what we thought was in the best interest and make a recommendation to the City.

In addition to that, we're faced with a potential of $119 million owed to us as debt repayment, and for us to recommend to the City Council that we should walk away from that and not pursue, not pursue that, in addition, we have lots of property that the City, that the Agency turned over the City recently, six months ago, and if we don't become the successor agency, we're not going to be at the table to protect those properties on a lawsuit by losses basis to guarantee that it just doesn't go to the highest and best bidder. So for us, we have so much at stake here financially and in the hopes and dreams of out communities with all these vacant lots that they just don't go back to the highest and best bidder, so again I apologize for the lateness of the report, but we were up against the gun with what the state legislature did and also what the Supreme Court did late during the holidays, during the holiday season.

Councilwoman Schipske: You know, but Mr. West, again, and I am as concerned as you about the assets, I do disagree with you. I'm going through the four page thing again, I read it very extensively, it is not similar to the slide presentation. It does not have the figures that you have in the slide presentation tonight, so that's a misstatement.

And secondly, I understand the urgency but I just find it puzzling how other cities are able to get things on the agenda in a timely manner, to give their legislative body the choice. We probably would choose to do it, but we don't have the choice now, and that's my concern. That's what we're supposedly here for. That's what the Charter says, that it's the City Council that's supposed to make policy decisions, and some of these policy decisions get removed from us because they're done before we even get a chance.

Mayor Bob Foster. Thank you Ms. Schipske. I would just ask, you know, it's one thing to disagree. I don't think we need pejorative comments like treating the Council as rubberstamp or questioning the professionalism of the staff. We can disagree, we can say we didn't get it in time, but I for one are not going to question the professionalism of this staff. I think that's going over the line. Mr. Garcia.

9. Councilman Robert Garcia: ...You guys have done, I think, as good a job as possible under the really difficult circumstances that we are under and so I just wanted to thank you, Miss Bodek, I wanted to thank everyone, not just members of the Redevelopment staff but also that are working under Housing, certainly under other parts of the city that Redevelopment affects...

...Just to clarify: if we were not to do or become the successor agency, I think that you mentioned it Mr. West or Miss Bodek is, we're talking about essentially $120 million that we would lose access to, or $120 million of assets that we would lose access to. Is that correct?

City Manager Pat West: Councilmember, the City Attorney would certainly try to protect us as much as possible for that. I don't mean to speak for Mr. Shannon but he made that very, very clear, but our position at the table as the successor agency would give us a much higher probability of working to save those dollars.

Councilman Garcia: Mr. Attorney, is there anything you wanted to add to that, or?

Deputy City Attorney: I have nothing to add. I think Mr. West adequately stated our position. We can't say for sure that we would lose it if we weren't the successor agency but I think we'd be better off to protect it if we were.

Councilman Garcia: That's my, in my conversations, I know with you Mr. West, and we've talked at length about this issue, that's at least what I'm understanding from your work and from the work that Miss Bodek is doing. I just want to make sure that's clear and it's your recommendation, I'll be the first to say certainly have been working on this for a long time and I think we're trying to make the wise decision here with the information that we have...

10. Councilman James Johnson: ...I will say that you know I feel like we were adequately informed. I received a call from the City Manager. We then did have a closed session and at the closed session we were told of the deadline as part of the, that was part of the litigation so any one of us could have agendized it but I am personally comfortable with the City being the successor agency, that's why I did not personally agendize it...
11. Councilman DeLong: Thank you, Mr. Mayor. I just wanted to echo the comments from most of the Councilmembers that I do appreciate the fact that you've worked so hard on this Redevelopment challenge for us. I know, City Manager, I receive regular weekly updates from you on the process as well as Director Bodek. I haven't felt this was a rubberstamp. I haven't felt in the dark. I haven't felt that you haven't provided the information. I think it's very important for the public to know that, that staff has been regularly communicating with Councilmembers exactly what's been happening on this because this is such a significant, important issue for the City. I just want to thank each of you for all the extra effort that you've put into it. Thank you, and in the closed session last week that we had that most of the members made but I think that was very informative as well, so we were apprised, we knew exactly what we're having to deal with when we came into tonight, so thank you for that.
[City Clerk minutes]

A motion was made by Councilmember DeLong, seconded by Councilwoman Gabelich, to approve recommendation and adopt Resolution No. RES-12-0009; and direct City Manager to provide recommendations on the establishment of a Community Improvement Commission. The motion carried by the following vote:

Yes: 7 - Garcia, DeLong, O'Donnell, Andrews, Johnson, Gabelich and Neal
No: 1 - Schipske
Absent: 1 - Lowenthal
Enactment No: RES-12-0009

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