One of Gov. Jerry Brown’s 142 vetoes this legislative session leaves West Hollywood wondering how it will fund a proposed redevelopment of Plummer Park.
Yesterday Brown vetoed Assembly Bill 2493, introduced by Assembly member Richard Bloom, whose district includes West Hollywood. Bloom’s bill would have allowed city redevelopment agencies across the state to use the proceeds of bond sales in 2011 if they met certain criteria.
West Hollywood had hoped to use $26.5 million in money raised through the sale of bonds to redevelop Plummer Park. The city had anticipated using another $3.5 million for the Courtyard at La Brea low-income housing project.
In March 2011, the city issued $30 million in bonds at an eight percent interest rate to help finance the Plummer Park redevelopment. $3 million of that bond money was set aside for the cost of issuing the bonds and for repayment of the debt.
But in June 2011 the state mandated that all cities must dissolve their redevelopment agencies and give the money held by those agencies to the state, a move designed to alleviate California’s budget problems. Cities with projects already underway, like West Hollywood, formed state-approved “successor agencies” to wind down the work.
The state Department of Finance (DOF) reviewed the financial obligations inherited by those successor agencies to determine which ones could be met with revenue from the bonds issue. The DOF decided the renovations to Plummer Park renovations weren’t eligible for funding from the proceeds of the 2011 bond sales because there were no contracts for that work in place by June 27, 2011, the final date that the state was required to honor the financial obligations.
“We are disappointed with the Governor’s decision to veto AB 2493 since the affected funds were critical to the city’s capital improvement program,” said West Hollywood Mayor John D’Amico. “The West Hollywood City Council will work with staff to explore our options for funding these improvements, in light of the Governor’s decision.”
Bloom and other municipal advocates of AB 2493 have argued that it would have had a positive impact on the local and state economies. Advocates projected that statewide the bill would have created 11,000 jobs and generated $1.6 billion in economic activity, resulting in more than $76 million in new state and local tax revenues.
The cities of Culver City, Glendale, Lynwood, Santa Monica, Signal Hill, and West Hollywood all stood to benefit from AB 2493.
Based on the current law, the City of West Hollywood will continue to hold its bond proceeds until 2021. At that time the city will be required to use the proceeds to pay off the remaining principal on the bonds, thus ending the bonds. Until that point, the County of Los Angeles will continue to allocate former redevelopment agency funds (property tax) to pay debt service on the bonds.
AB 2493 gained wide support in the legislature. The bill was approved by the state Senate by a vote of 21-8 and by the Assembly by a vote of 52-23 before it was forwarded to the Brown for his consideration.