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For Santa Monica to Keep Vital Properties, More Obstacles Ahead

Santa Monica Real Estate Company, Roque and Mark


Rusty's Surf

Harding Larmore Kutcher & Kozal, LLP  law firm
Harding, Larmore Kutcher & Kozal, LLP

By Jason Islas
Staff Writer

August 23, 2013 -- The State Department of Finance (DOF) wants Santa Monica to jump through more hoops in order to keep some of its former redevelopment agency's (RDA) properties, including six downtown parking structures.

According to a letter from the DOF Wednesday, the City won't be able to immediately take over ownership of 11 properties -- including the Tongva Park site and six parking structures -- from the RDA's successor agency because they aren't used for “governmental purpose.”

Instead, the successor agency -- which took over the RDA's assets after the State axed redevelopment agencies throughout California in February 2012 -- will have to draft “long range” management plans for the properties, each of which will be subject to approval by the DOF, effectively dragging out an already lengthy bureaucratic process and potentially leading to the sale of those properties.

“We are reviewing the DOF’s letter to determine next steps,” said Director of Housing and Economic Development Andy Agle.

Agle said it was “uncertain, though it seems unlikely” that the DOF would require the City to sell any of the properties on the list.

The DOF's determination denied that parking structures one through six in downtown Santa Monica qualified as governmental use, as defined by the State's health code.

The case of Tongva Park, which is scheduled to open in less than two week, is less straight forward.

While the letter acknowledges that a public park -- along with roads, school buildings and fire stations -- is a “governmental purpose,” because Tongva Park isn't yet open, the successor agency can't transfer ownership to the City without going through the same process as with the parking structures.

And that promises to be a time-consuming process, requiring a lot of paper work and labor.

According to the DOF's website, each long range property management plan would have to tell a comprehensive tale, including when the RDA bought the property and for how much, the reason the RDA bought the property and how much it is currently worth.

Each plan must also include the size, address and current zoning of the parcel, an estimate of any revenue the property generates, any history of environmental contamination on the site, a description of the property's “potential for transit-oriented development” and “a brief history” of any previous developments -- planned or completed -- on the site.

That's just the first half. The second half of each plan spells out what the successor agency hopes to do with the property. For that part of the plan, the DOF only gives successor agencies four options.

They can keep it for “governmental use,” keep it for future development, sell it off or use it to pay debts belonging to their former RDAs.

Once they have been drafted, all of those property management plans have to be vetted by the DOF before the properties could be move on from their current bureaucratic limbo into municipal -- or private -- hands.

This is only one of many tangles currently being unraveled after Governor Jerry Brown killed redevelopment in California as part of his plan to balance the State's budget.

The DOF is facing dozens of lawsuits from municipalities who claim that the process has been unclear, arbitrary and overall mismanaged.

Santa Monica is one of those municipalities. City Hall is suing the DOF because Santa Monica believes the State wants more from the City's former RDA than it's legally entitled to under AB1x26, the law that dissolved redevelopment.

Originally, the DOF said Santa Monica's former RDA owed some $55 million more to L.A. County taxing entities, but agreed to cut that number down to $19 million pending a lawsuit.

City Hall maintains that is $19 million more than the former RDA actually owes. (“State Reduces Santa Monica's Former RDA Bill by $23 Million,” April 10)

City officials expect the next hearing in January.

Even if the City prevails in its battle against the DOF, the loss of RDA has already begun to have major ramifications in the bayside city.

To subsidize its affordable housing construction, Santa Monica used to look to the tens of millions of dollars that flowed into the RDA coffers annually. City officials freely admit that they will never find that amount for affordable housing again.

The end of Santa Monica's RDA also meant the City had to scrap plans to revamp its half-century old Civic Auditorium. The City shuttered the building -- and fired or relocated its staff -- at the end of June because, under current financial pressures, it couldn't afford the $2 million annual subsidy required to keep it open. (“City Council Reviews Santa Monica's Half Billion Dollar Budget,” May 30)

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