Sean Belk
-Staff Writer-
Gov. Jerry Brown on Monday, Sept. 29 vetoed AB 2493, legislation that would have permitted the City of Signal Hill to use $8.6 million in bond proceeds that its former redevelopment agency issued to build a new library.
The project, which has been planned since 1998, involves using the former Signal Hill Police Station, which has already been demolished, and the current library building.
The legislation aimed to “clean up” the State’s redevelopment-dissolution law, allowing successor agencies and housing successors of former redevelopment agencies to use proceeds from bonds issued between Jan. 1, 2011 and June 28, 2011 if projects are consistent with a “sustainable communities strategy or reduces greenhouse gas emissions.” Expenditures of the bond proceeds, however, would still have been subject to the approval of the California State Department of Finance (DOF).
The bill was introduced by Assemblymember Richard Bloom (D-Santa Monica) and co-authored by Assemblymember Bonnie Lowenthal (D-Long Beach), Sen. Ricardo Lara (D-Huntington Park/Long Beach) and eight other legislators.
After passing the Assembly and Senate in late August, the bill was vetoed by the governor on Monday. Brown released a veto message, stating that approving the bill could result in a loss of $500 million to the State’s General Fund if the State had to backfill schools and other taxing entities while still recovering from the recession.
“I applaud the author’s efforts to craft legislation to target specific projects for funding from 2011 bond proceeds,” Brown stated. “Funding for this measure, however, would come at the expense of lost property tax dollars to cities and counties that chose not to incur debt during this period, as well as special districts and schools.”
Brown added that he is developing a plan to address the outstanding bond debt of former redevelopment agencies, adding that he recognizes that the cost to local governments to defease high-interest-rate bonds is “significant.”
Signal Hill was one of 37 cities in the state that had issued bonds for projects in early 2011 that were later required to be defeased (paid back to bond holders) under the State’s redevelopment-dissolution law. However, city officials have stated that cities couldn’t legally defease the bonds and would have been sued.
Signal Hill City Manager Ken Farfsing said the City is “disappointed” in the governor’s decision to not approve the bill, adding that the money is now freed up for other taxing entities and relieves the State’s obligation to provide money to schools.
A majority of the proceeds from the bonds issued by the former Signal Hill redevelopment agency would be split up among taxing entities, including the County of Los Angeles and Long Beach Unified School District. However, Farfsing said schools wouldn’t be able to see any funding until the bonds are defeased, which may be by 2021.
“We obviously thought we had a very worthwhile project,” he said. “We believe we were one of the projects that made a lot of sense for the use of these bonds.”
He added that the City plans to meet with legislators on additional cleanup bills for the next legislative session in a few months.
