ROSEMEAD - The state Legislature had no clue of the potential fiscal impact when it voted to abolish redevelopment agencies at California cities and counties, Rosemead city council members said in expressing their frustration at Tuesday night's council meeting.

The result will be that thousands of people throughout the state face loss of jobs, loss of low income housing and programs and services to community seniors, council members said.
After a brief discussion, the council voted to designate the city as the successor agency of the redevelopment agency to handle the shutting down of the redevelopment agency.

When the state budget was adopted last year, the legislature approved two Assembly bills
as a way of diverting redevelopment funds to resolve the state's budget deficit. The cities joined in a lawsuit to have the two actions overturned by the state Supreme Court.

In its decision on Dec. 29, the court said the legislature could take control of the redevelopment funds but could not require cities to make payments to keep their agencies operating.Rosemead City Manager Jeff Allred said his city will lose about $7 million in tax increment funds for both economic development and affordable housing. The funds result from the designation of redevelopment areas.

As a result, 25 percent, or $1.72 million, will not be returned to various taxing agencies as "pass-through" payments. This includes school districts, counties and other jurisdictions that collect property taxes.

Another 35 percent, or $2.4 million, that was used for bond debt service payments for city projects may be lost.

Of the remaining $2.83 million, $1.4 million was allocated to the low and moderate income housing and $1.43 million for local redevelopment and economic development.

Allred said the commission must cease all expenditures related to the remaining $2.83 million unless they are approved by a state Oversight Committee that won't be formed until May 2012.

Until then, if approved, all the salaries, benefits and operational costs currently funded by redevelopment revenues must be absorbed by the city's general fund until reductions in costs can be made.

Rosemead Mayor Steven Ly and Council Member Sandra Armenta traveled to Sacramento early in the week and talked to Assemblyman Mike Eng (D-Monterey Park) and state Sen. Ed Hernandez (D-El Monte). Both state lawmakers pledged to seek extension of the Feb. 1 deadline so that the cities and legislature could work out a plan to relieve the impact of the abolishment of redevelopment agencies.

The proposed extension would give cities until April 15 to find a solution.

At a legislative forum, Armenta said state legislators had no answer to questions about solving the impact of the cancellation of redevelopment agencies.