Council to Confront Dissolution of Redevelopment Commission

The Pasadena City Council is scheduled to vote Monday night on two resolutions which would  in effect complete the dissolution of the Pasadena Community Development Commission, which oversaw redevelopment activities in the city for decades.

The city council’s action is pursuant to the December 29, 2011 California Supreme Court ruling upholding as constitutional AB 26, which freezes redevelopment activities and dissolves community redevelopment agencies throughout the State.

In the same ruling, the California Supreme Court struck down as unconstitutional AB 27, which allowed cities and counties to continue to operate redevelopment agencies by making voluntary payments to the State, counties, school districts and other local government bodies.

Pasadena Assistant City Manager Steve Mermell says in a report submitted to the Council that “The Court’s decision effectively eliminates redevelopment in California which for the past 60 years enabled local governments to address blight, produce affordable housing and facilitate economic development.”

If the Council approves the resolutions, Pasadena will become the successor agency as soon as the abolition of the commission takes effect on February 1, 2012. The city will shoulder the payment of the commission’s debt and will undertake the obligation to finish the ongoing projects.

The Pasadena redevelopment commission was established 40 years ago. Like many other redevelopment agencies, the commission was created to help the city in financing its infrastructure projects, such as road widening and subsidizing low-cost housing projects.

Under standard typical redevelopment agency arrangements, cities would borrow money from redevelopment agencies for development and improvement projects. When projects were completed the cities typically increased property taxes in those areas. Part of those taxes were used by the cities to pay the debts to redevelopment agencies.

Mermell also says in his report that among the impacts of eliminating redevelopment agencies will be a dramatic reduction of funds available for economic development and the lost opportunity cost in future tax allocation, which he estimated at $72 million.