For Immediate Release

Media Contact:
Michael J. Garcia, City Attorney
mjgarcia@glendaleca.gov
818-548-2080

Gillian van Muyden, Chief Assistant City Attorney
GVanMuyden@glendaleca.gov
818-548-2080

City of Glendale Prevails in Lawsuit against State of California

Glendale, CA - The City of Glendale has prevailed in a lawsuit filed against the State of California for the loss of more than $30 million in interest from loans made decades ago to the now-defunct Redevelopment Agency. The March 16, 2015 final ruling was in line with the Court’s February 13, 2015 tentative ruling but provided additional beneficial clarity concerning the validity of Glendale’s reinstated loans.

Officials in Sacramento brought redevelopment to an end in 2011. In order for cities to obtain repayment of their loans to former redevelopment agencies, AB 1484 was introduced to allow for the reinstatement of some loans. The variable interest rates on those loans going back to the 1970s accumulated interest amounting to $31.9 million using the rates established by the Local Agencies Investment Fund or “LAIF.” The California Department of Finance (DOF) disagreed with Glendale’s application of the LAIF rates and determined the City of Glendale was only entitled to a fixed .28% rate or only $974,200 in interest. This would have resulted in a loss to the City of over $30 million to support the general fund and provide revenue for public safety, parks, infrastructure, and libraries.

Glendale’s local legislators, Assemblyman Mike Gatto and Senator Carol Liu, stood by Glendale and helped the City try to resolve the matter without filing a lawsuit.

“I called the Department of Finance into a meeting with Glendale staff last year to tell them their case was flawed,” stated Assemblyman Gatto. “We explained to them that an artificially low interest rate was unjust to Glendale and the taxpayers. I’m pleased the city has prevailed in this case, and I’ll continue to fight to protect the economic interests of Glendale taxpayers.”

The City of Glendale hails the trial court decision to invalidate the DOF’s interpretation of AB 1484. The City of Glendale expects the California Department of Finance to appeal which will only delay much needed revenue for the operations and the restoration of programs previously lost in a reduced economy.

Furthermore, the state of California has introduced a budget trailer bill that rewrites key provisions of AB1484 and could wipe-out the trial court’s favorable decision.

“We are pleased the Court agreed with us in interpreting the law; however, the proposed trailer bill would effectively unwind the bargain made in AB 1484 for cities to comply with timely and efficiently dissolving their redevelopment agencies in exchange for the ability to repay lawful loans to local jurisdictions. If enacted, Glendale could lose over $30 million in loan repayments after it had done its part in dissolving its Redevelopment Agency,” said Mayor Zareh Sinanyan.

Read the final ruling.

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