Redevelopment Shutdown a 'Terrible Thing' For Lake Forest

Lake Forest's City Council will shut down the city's redevelopment agency, meaning the city will lose large swaths of revenue, the exact amount of which remains unclear.

The state seized redevelopment money from cities to fill holes in its budget last year. A Dec. 29  upheld the state Legislature's decision to abolish California's 400-odd redevelopment agencies.

Redevelopment agencies collect tax money from designated blighted areas within cities, which they use to improve those areas, usually by selling bonds against the future revenue improvement brings.

Through a complex legal process, the city council will act as the "successor agency" required by the state to wind down the agency's activities.

Requirements of the "complicated system" cities must go through to close the agencies by the Feb. 1 deadline include the formation of such successor agencies, said Elizabeth Hull, legal counsel to the city's redevelopment agency, Tuesday evening.

Council members said they would rather maintain the maximum amount of local control possible during the agency's closure, instead of having another body fill in as the successor agency, as was an alternative option.

Hull told the visibly aggrieved council members that the assets belonging to the Lake Forest Redevelopment Agency would be liquidated, and its money sent to the state's coffers.

The five members of the council did not mince words as they shared their thoughts concerning the agency's closure.

Newly-minted Mayor Kathryn McCullough called the analysis brought before the council a "presentation of doom and gloom"; however, "it is what it is," she added.

Councilman Peter Herzog warned that the agency's closure meant a loss of local control for Lake Forest.

"Make no mistake about it ... the only purpose of this legislation is for the state government to take money from the local agencies," he said.

Councilman Mark Tettemer called the agency's closure "a terrible thing" for the community, while Councilwoman Marcia Rudolph said the action was a "power grab" and a "money grab" by the state government.

Also earning rancor from council members was the requirement that the successor agency must be overseen by a review board, which will send its bills for adminstrative expenses to the city. That board, in turn, will answer to the state's Department of Finance, Hull said.

Transactions undertaken by many California cities, in which redevelopment agency assets were transfered to city ownership, will be reversed, she added.

"It's a long process," Hull said.

Only existing redevelopment projects "protected by a third-party agreement" are likely to be allowed to continue, said David Belmer, the city's deputy executive redevelopment director.

It was unclear which projects funded by redevelopment money would continue and which would be shut down under the state's policy.