HUNTINGTON PARK — City officials are negotiating with the county to increase the amount of tax revenue the city can receive from its redevelopment areas in future years, money that Huntington Park will need to pay off bond debts.
If the negotiations fail, Huntington Park will have to use at least $500,000 a year from its general fund starting in 2001 to help pay the bond debt, Chief Administrative Officer Donald L. Jeffers said. Because the general fund pays for services such as police protection, such a drain of funds could force cutbacks in services, he said.
Mayor William P. Cunningham and Councilman Jim Roberts met with Supervisor Pete Schabarum last week to negotiate new limits on city revenues from three redevelopment districts. Another negotiating session is scheduled for Thursday, Cunningham said.
If the revenue caps remain in place, most of the property tax money above those limits will go to the county. A key revenue cap will take effect in 2001 and hundreds of thousands of dollars a year are at stake.
"There's some movement," Cunningham said. "(Thursday's meeting will) wrap the whole thing up, one way or another."
Schabarum declined to comment on the negotiations, other than to say that last week's meeting was an "interesting discussion," according to Schabarum's deputy, Judy Hammond.
Redevelopment setbacks have forced Huntington Park to use more than $14 million in general operating funds in the past several years to meet redevelopment bond debts. Those loans to the Redevelopment Agency were among the factors that prompted the City Council to lay off more than 20 employees last October.
City officials hoped the financial drain would end in the next two or three years, when new developments are completed in the redevelopment zones, property values rise and enough tax dollars are generated to meet the bond debt.
Cunningham said he did not realize that the caps would be a factor when he and other council members voted over the years to approve what is now $63.6 million in bond debt for the three redevelopment districts.
The Huntington Park City Council doubles as the board of directors of the city's Redevelopment Agency, which approved the bond issues. Cunningham blames the city's former redevelopment director, James Funk, and its bond underwriter, Chilton & O'Connor Inc. of Los Angeles, for not warning the council about the caps.
If the caps remain in place, the city will be obligated to use sales tax revenue to cover the bond payments. That revenue would otherwise pay for general city services.
"We're told that everything's going to work," Cunningham said. "We were told point blank that we'd never have to touch one dime of sales tax to pay a bond off."
Funk, who resigned in 1988 to become a redevelopment consultant, said he relied heavily on the same information provided to the council by Chilton & O'Connor. He said he anticipated no problems with the caps.
A spokesman for Chilton & O'Connor did not return calls for comment last week.
But Cunningham said Chilton & O'Connor projected the redevelopment zone would be generating a surplus leading up to 2001. That surplus would be used to retire the bonds early or to help meet bond payments once the cap was in place. Those revenue projections have not been met, primarily because the recession of the early 1980s delayed the completion of projects, city officials have said.
Two of the affected redevelopment districts were formed in the 1970s. The third was created in 1980.
State law allows redevelopment agencies to incur debt to buy land for redevelopment projects and to pay for public improvements, such as larger water mains and wider roads, in redevelopment areas. The debt usually is repaid with property tax revenue generated by the redevelopment district.
Cities generally enter into agreements with counties, limiting the amount of property tax revenue cities can receive from redevelopment districts. The county received about 65% of the 1% property tax levy before the areas were converted to Huntington Park redevelopment zones, said Delta Uyenoyama, an administrative analyst for the county's chief administrative officer.
Once the redevelopment districts were formed, Huntington Park began receiving almost all of the increased property tax revenues from the zones.
Huntington Park may bump up against some of the revenue limits in the next several years, but it will surely feel the pinch in 2001, the year the most worrisome cap takes effect, Jeffers said.
The cap affects the city's Central Business District Redevelopment Project, which is bound by Randolph Street and Florence Avenue on the north and south, and by Seville Avenue and Malabar Street on the east and west. The area encompasses the bustling Pacific Boulevard, an outdoor mall of sorts that attracts a multitude of shoppers each week.
The zone generated $977,000 last year for the Redevelopment Agency, which falls short of the $1.46 million the agency must pay each year on the area's bond debt.