California Cities Unable to Recoup Millions in Loans to Redevelopment Agencies

May 26, 2012 Full story: www.whittierdailynews.com 47

In the last few weeks, cities have received notices from the state that they will not be able to collect hundreds of millions of dollars they loaned to their redevelopment agencies.

El Monte likely won't get paid back the $76 million it lent to its redevelopment agency over the last three decades. The city's annual general fund budget is about $50million. La Mirada is owed $29 million from its redevelopment agency, which is nearly as much as that city's entire $35 million yearly general fund budget. Duarte has $9.5million in outstanding loans from the city to its redevelopment agency, which adds up to about 80 percent of that city's annual general fund.

Ed. Note: Phone calls to Montebello City Hall were not returned in time for publication.

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“Hilltop Park Above All”

Since: Sep 08

Montebello, CA

#1 May 26, 2012
The note about the city not returning calls was in the printed version, but not the online story.

I don't think that Mtb will be very adversely affected by this. The city usually used the CRA as a source of funds, and didn't really give it anything. Accounting-wise, however, there may be 'loans' on the books from back-and-forth transfers between the city and CRA. The net will be greatly in the city's favor, in my opinion, when all the transfers are worked out.
No place to hide

United States

#2 May 26, 2012
42 yr North Mtb resident wrote:
The note about the city not returning calls was in the printed version, but not the online story.
I don't think that Mtb will be very adversely affected by this. The city usually used the CRA as a source of funds, and didn't really give it anything. Accounting-wise, however, there may be 'loans' on the books from back-and-forth transfers between the city and CRA. The net will be greatly in the city's favor, in my opinion, when all the transfers are worked out.
You could not be more wrong. California Department of Finance turned what looks like more than $20 million in recognized obligation payment requests from the Montebello successor agency. That means the city will be on the hook for the 20 million. Where do you suppose they'll get that?

http://www.dof.ca.gov/assembly_bills_26-27/Re...

“Hilltop Park Above All”

Since: Sep 08

Montebello, CA

#3 May 26, 2012
No place to hide wrote:
<quoted text>
You could not be more wrong. California Department of Finance turned what looks like more than $20 million in recognized obligation payment requests from the Montebello successor agency. That means the city will be on the hook for the 20 million. Where do you suppose they'll get that?
http://www.dof.ca.gov/assembly_bills_26-27/Re...
I assume you mean turned down the ROPS. I was not wrong as I was referring to the story here, which is about loans between the city and CRA, not about requests for payment.

However, this is very good information, and I thank you for bringing it up, even in a forum not referring to it specifically. I wonder if that will be brought up in upcoming city council meetings?

Feel free to bring up objectively verifiable information about Montebello anytime and anywhere and thanks again.
Theolona Ranger

United States

#4 May 28, 2012
Thanks for posting the letter.
All City's are getting similar
Huntely did not prepare the document the State board is questioning.
Finance will clean it up, provide documenttion. and resubmit.
Then there will be long negotiations and lawsuits.

It does not help that over $10,000,000 was embezzeled from the CRA (a Million dollars a month) first half of the009-2010 fiscal year after they had illegaly draind the "restricted funds".
There is no adequate documentation for these transactions (a lot of transactions including the source of payments for the extra overtime).
Recall that the auditors were paid extra to try and document these transactions.
Scam was uncovered in December 2009 when Randy Narramore came on board.
Evidently he could immediatly smell a rat wheras Rosie, Kathy and Pacheco (Mr.municipal finance budget expert) could not.
In MOntebello's case the City may owe the CRA more thn the CRA owes the City.
Does the City have to pay it back?:):)
Time to leave

Montebello, CA

#5 May 28, 2012
Because Molinari and the council from 1999-2009 drained the city coffers of over $13 million (and Bill still gets "goodies" from friends he gives contracts to) the CRA had to be used to pay employees (police, fire, other) or the city would have went belly up. Now, the CADF is coming down on many cities saying, sorry, time to pay up NOW, and cities can't. What's going to happen to cities like Mtb, other? Cut, cut, cut! Unfortunately, in Mtb, Bill, the little drummer boy (art) and Christina are blind in both eyes and would rather see the city file bankruptcy soon when the money runs out. Time to leave...
Theolona Ranger

United States

#6 May 28, 2012
Bill was opposed to BK and fired Cosentini for even looking in to it.
Of course it should be considered
everything shouold be on the table
BTW
Bill was not part of a council majority till End of Nov 2009 when he defeated Rosie Vasquez thus costing the gang of three their Majority.
The gang of three gave Bill the mushroom treatment.
As soon as Bill became Mayor he reversed several really bad deals, hired Randy and uncovered the frauds and embezelment.
What's not to like?
BTW it way way over $13,000,000
Time to leave

Montebello, CA

#7 May 28, 2012
TR, Molinari has been part of the council since the early 80s. The gang of three you speak about was only in power for a small part of Bill's time on the council. During the other 20+ years he was able to work deals with Payan, Glasman, Saucedo, (Ed) Vasquez and others on the council not to mention those outside the council like Atina who made a lot of money at taxpayer expense. Bill needs to take ownership for Montebello still looking like it did 25 years ago. Besides the mall, much of the city is still like it was in 1985. Now Art is following in his footsteps; add-in Christina, they are the brainless three stooges.
ex montebello firefighter

Moreno Valley, CA

#9 May 29, 2012
Time to leave wrote:
TR, Molinari has been part of the council since the early 80s. The gang of three you speak about was only in power for a small part of Bill's time on the council. During the other 20+ years he was able to work deals with Payan, Glasman, Saucedo,(Ed) Vasquez and others on the council not to mention those outside the council like Atina who made a lot of money at taxpayer expense. Bill needs to take ownership for Montebello still looking like it did 25 years ago. Besides the mall, much of the city is still like it was in 1985. Now Art is following in his footsteps; add-in Christina, they are the brainless three stooges.
Very true! The DISCIPLES have been brainwashed to "forget" the items that you have brought forward. As far as the mall is concerned, that is more like an indoor swap meet now. There is no incentive for businesses to establish in a city that is marred by political chaos.

“Hilltop Park Above All”

Since: Sep 08

Montebello, CA

#10 May 29, 2012
Time to leave wrote:
TR, Molinari has been part of the council since the early 80s. The gang of three you speak about was only in power for a small part of Bill's time on the council. During the other 20+ years he was able to work deals with Payan, Glasman, Saucedo,(Ed) Vasquez and others on the council not to mention those outside the council like Atina who made a lot of money at taxpayer expense. Bill needs to take ownership for Montebello still looking like it did 25 years ago. Besides the mall, much of the city is still like it was in 1985. Now Art is following in his footsteps; add-in Christina, they are the brainless three stooges.
According to every audit, so far, the gang of three was responsible for more deficit spending than all the previous and current council majorities of this millennium. They reportedly drained or obligated the city to pay somewhere between $30 and $60 million, with the largest individual costs being the Sevacharian and Athens' debacles.
What a waste

Los Angeles, CA

#12 May 29, 2012
42 yr...needs to rename the new gang of three: Billie boy, the little drummer boy (Art), and the crazy girl (Christina). They are going to bring the city down. Now they have their puppet in there as city admin. to do their dirty work. We are looking like Vallejo more and more. What a waste.
Trash Talk

United States

#14 May 31, 2012
Time to leave- being on the council is not being in a majority and able to take any action
That did not happen till he became Mayor NOv 2009 and brought in Narramore

42 year is correct 30-60 million
Over 100 Million in unfunded pension liabilities
This one goes back to the dot-com fiasco
12 million in unfunded employee health care -the gang of three quit funding
$30 million for the Ostrom chevrolet fiasco
All gang of three
The HUD - Danny Ku (and Christina) problem
who know how many millions
Sevacherians property deal- way over 4 million
The Hilton, golf course, Quiet cannon obscene long tearm sweethear deals- pre gang of three but they ran up millions in unpaid bills.
Embezeling from the RDA way over 10 million
who knows how that hand will play out
money's gone- where? overtime?
Put it all together Montebello has liabilities of around $200,000,000
What a waste
Dane Thorsen

Los Alamitos, CA

#15 May 31, 2012
No one expected these "loans' to be repaid.
RDA is a tactic to assure political contributions to politicians. Period.

Even airheaded Californians can't be stupid enough to expect any reasonable repayment. We didn't be come so pitiful over night. We voted to be less than every chance we got.
Didn't you hear thatGov Moonbeam is over $16 Billion OVER Budget for the current year.

He didn't elect himself. PAY UP SUCKERS has replaced EUREKA as our State's motto.
El Guapo

Montebello, CA

#17 Jun 6, 2012
You all really thought for a minute Art & Christina would understand how to run a City? That's why Bill initially supported them cause he knew they would be his flunkies. Dirty Bill thinks he'll keep brushing the City's problems under the rug for more years to come.
Trash Talk

United States

#18 Jun 7, 2012
Jerry was, in reality, way over budget for all of his budgets.
The $16 billion is no surprise, perhaps it's even larger.
Underestimating expenses and overestimating income.
Does anyone think the current "budget ballancing" tax hike will pass?
It's just designed to continue the un-sustainable levels of State employees salaries and benefits.
Don't feed the animals.
Voters are wise to the "protect the unions" while crying about cuts to education and public services.
Time to enact Jerry's week attmept at pension reform now.
ex montebello firefighter

Phoenix, AZ

#19 Jun 7, 2012
Trash Talk wrote:
Jerry was, in reality, way over budget for all of his budgets.
The $16 billion is no surprise, perhaps it's even larger.
Underestimating expenses and overestimating income.
Does anyone think the current "budget ballancing" tax hike will pass?
It's just designed to continue the un-sustainable levels of State employees salaries and benefits.
Don't feed the animals.
Voters are wise to the "protect the unions" while crying about cuts to education and public services.
Time to enact Jerry's week attmept at pension reform now.
Week as a week day? Or weak as your character?
trash talk

United States

#21 Jun 19, 2012
http://www.sgvtribune.com/news/ci_20887323/lo...

Loss of redevelopment agencies leaves projects in limboBy Kevin Smith, SGVN

Twitter.com/sgvnbizpasadenastarnews.com

Posted: 06/18/2012 09:43:32 PM PDT

To understand why redevelopment agencies were vital to California,
you first need to understand how they work.

Redevelopment was a process authorized under California law that enabled local government entities to identify deteriorated and blighted areas in need of revitalization.

A redevelopment agency - formed by a local city or county - could then develop a plan and provide the initial funding to launch the revitalization of those areas.

Redevelopment agencies are funded through a process called "tax increment."
They receive a portion of the property tax revenues generated when property values rise as a result of new investment.

California redevelopment projects have addressed everything from the building and upgrading of roads to revitalizing downtown areas and building community centers, parks and libraries.

So how will cities kick-start these kinds of projects now?

Cynthia Kurtz, president and CEO of the San Gabriel Valley Economic Partnership, said that question has everyone scratching his head.

"When I talk to our membership, the private sector is concerned about what the future holds for cities," she said. "
Redevelopment was a great tool to use to make sure there was infrastructure improvement.
It's been critical in the San Gabriel Valley because we have land that's been abused and needed to be rebuilt."

One option, according to Lee, would be for cities to form infrastructure finance districts.

In that scenario, a group of property owners or residents in a specified area vote to allow a portion of property taxes that would ordinarily go to the city's general fund be diverted to pay for construction and improvements to public property.

"It's like tax increment financing,
but the mechanism to do it is very different," he said.
"And it would require two-thirds voter approval."

Kurtz said that option would likely face an uphill battle.

"To the best of my knowledge there is no political appetite in Sacramento that would allow it to move forward," she said.
"It feels like we took a real step backward."

" It's been used on sites where there have been pollution problems. But now that redevelopment is not available, these things will be subject to just the developer."

"They have to review the activities of successor agencies, and they have some authority in determining what obligations will be honored," she said. "It's also subject to review by an oversight board under state law."

And there are significant financial concerns.

Cities recently received notices from the state that they won't be able to collect hundreds of millions of dollars they loaned to their redevelopment agencies.

El Monte, for example, likely won't get paid back the $76 million it lent to its redevelopment agency over the last three decades.

tt comment
Montebello is the other way around-
Montebello "borrowed" money from it's RDA
(some embezeled, some illegally))

Does it have to be paid back???
Will Montebello have to honor the gift of public funds to Sevacherian?
Can the Ostrom Lease be voided?
That alone would save the City $30,000,000

Staff writer Ben Baeder contributed to this report.

kevin.smith@sgvn.com
Trash talk

Los Angeles, CA

#22 Jun 29, 2012
REDEVELOPMENT: Budget bill has hammer for former agencies
http://www.pe.com/local-news/politics/jim-mil...

Local officials and Republican lawmakers said the measure would deprive local agencies of money to pays for local police and firefighters.

They called the bill a major expansion of power by the state Department of Finance.

“I think they’re doing this because they’re desperate, and they’ve decided that funding the state budget is more important than funding police and fire,” McKenzie said of Democratic lawmakers and the governor’s office.

“The constitutionality of the offset provisions would immediately present an opportunity for a lawsuit.”

Riverside City Attorney Greg Priamos called the bill’s provision to garnish local agencies’ sales and property tax allocations “extremely draconian.”
Theolona Ranger

Los Angeles, CA

#24 Jul 8, 2012
http://www.pasadenastarnews.com/opinions/ci_2...

Redevelopment is dead in California, or so we were told last year when the Legislature and Gov. Jerry Brown erased more than 400 local agencies and seized assets for the state budget.

The dissolution is incomplete, however, as local officials attempt to shelter assets and joust with local oversight boards and state officials over what's in and what's out.

The state has collected less redevelopment money than anticipated, and the 2012-13 budget package includes even more asset-seizure power.

Meanwhile, while they dismantle local redevelopment agencies, legislators are dreaming up new entities with many of the same powers, or even more. Several would expand "infrastructure financing districts" into virtual clones of redevelopment agencies.

...

A worrisome provision of S.B. 1156 is that the new entities would not have to prove blight before creating projects, thus expanding their scope and potential for crony capitalism.

Redevelopment is dead; long live redevelopment

(proving so called blight was a sham anyway)
Richie Rich

Azusa, CA

#25 Jul 8, 2012
SB 1156 is nothing more than a cover up and stealing for the rich, again!

Steal for the rich an giving to the rich.

Isn't that righ richie rich, Willard Mitt Romney.
Trash talk

Los Angeles, CA

#26 Jul 13, 2012
BALDWIN PARK - One of the big three credit rating agencies has downgraded the city's tax allocation bonds issued as part of former redevelopment projects.

http://www.sgvtribune.com/news/ci_21061246/ba...

It's not the city's bond rating, it's basically the redevelopment agency and it was something that all the cities expected with what was going on with the legislation," said Baldwin Park Finance Director Lorena Quijano.

The governor and state legislature eliminated redevelopment agencies last year as the state works to recoup taxes and sell off assets to help balance its budget.

The elimination of redevelopment has created financial uncertainty in many cities, and it has left Baldwin Park concerned that it won't have the revenue stream to make its August and September debt service payments totaling $1.8 million.

The successor agency told Fitch it will have to tap into its reserve fund to pay debt service coming due in August and September in three of four of its tax allocation bonds.

With redevelopment across the state eliminated, how much tax increment funding cities like Baldwin Park collect is now in flux.

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