HUNTINGTON PARK — County and city officials have reached a financial agreement to bail out the Huntington Park Redevelopment Agency, which has accumulated more debt than it can currently repay.
The agreement enables the agency to borrow money to pay off more than $11 million in immediate debts, but the county will receive millions of dollars in additional property tax revenue over the 40-year life of the agreement, city and county officials said.
The Board of Supervisors approved the agreement Tuesday. The City Council approved it last week. There was no opposition.
"We got our feet underneath us again," Huntington Park Mayor William P. Cunningham said.
Huntington Park officials say the agency is in a financial bind because the redevelopment projects that it has financed were not built as quickly as planned, and have not generated as much tax revenue as expected. City officials blame project delays on the recession and high interest rates of the early- and mid-1980s.
Critics argue that the agency, which is governed by the City Council members, overextended itself.
In recent years, the agency has been forced to borrow more than $14 million from the city's general coffers to make payments on about $63 million in outstanding bonds. Those loans contributed to the city's financial problems, which resulted in 25 layoffs last October.
In addition, the agency owes developers more than $11 million in short-term loans, most of which have been made since 1986 and are now due, said Jack Wong, director of community development.
The agreement, among other things, allows the agency to issue $15 million in bonds to raise money to pay off the short-term loans. The bonds are expected to be offered in about two months, Cunningham said.
The City Council also plans to combine three of the city's four redevelopment zones and extend their collective life to the year 2030 to provide the city with millions of dollars in additional redevelopment revenue. Those redevelopment zones were scheduled to expire in the years 2012, 2016 and 2020.
The 170-acre Santa Fe redevelopment zone was not merged with the others because it is relatively new and does not generate enough revenue to support a larger bond issue, Cunningham said.
As part of the new agreement, Huntington Park has to give the county a larger percentage of its redevelopment revenue.
The county will receive 48.9% of the property tax revenue generated by all the redevelopment areas, while the agency will receive 35.6%, according to the agreements. The remainder will go to the area firefighting district.
Under the old agreements, the county share varied from nothing in one redevelopment area to 48.9% in another.
Although precise figures were not immediately available, the county's additional share is expected to amount to millions of dollars by the time its agreement with Huntington Park expires in 2030.
For its part, the county has agreed to loan its share back to the agency to finance the new bond issue. The city will pay 7% interest.
The redevelopment areas are expected to generate enough money to repay all the agency's debt by the time the redevelopment zones elapse, according to projections by financial analyst Katz, Hollis, Coren & Associates of Los Angeles.
"The projections show that there's adequate funding to support the bonds and repay all of the (loans) that the county will be making," said Delta Uyenoyama, principal administrative analyst for the office of the county's chief administrative officer.
The city's four redevelopment zones cover more than 800 acres surrounding Pacific Boulevard, the city's main commercial corridor. The first zone was formed in 1971 and the last was established in 1984.
More than 70 redevelopment projects, which include more than 1,000 housing units, have been completed in Huntington Park.
BACKGROUND The financial problems of the Huntington Park Redevelopment Agency first came to light in 1987, when city officials cut 13 municipal jobs. The city's general fund had been drained, in part, by loans to the Redevelopment Agency, officials said. Developers had backed out of projects in the early and mid-1980s, when the country was in a recession and interest rates were high, city officials said. That meant less property tax revenue to pay off millions of dollars in outstanding bonds.