California State Controller John Chiang has released his review of Santa Clara’s transfer of over $373 million in redevelopment agency (RDA) assets prior to the agency’s dissolution in 2011.
Chiang’s office has determined that Santa Clara’s RDA is required by state law to reverse approximately $279 million (or 74.79% of total assets transferred) in inappropriate property and cash transfers. These assets will be used to retire the now-defunct agency’s debts and fund local programs and initiatives throughout Santa Clara County.
While Chiang’s findings strike a blow against the City of Santa Clara, an official statement from his office suggests he is at the very least sympathetic to the incredibly difficult situation that cities have faced since 2011:
“Moving away from a long-time dependence on redevelopment funds and now sharing those funds with other local programs has been a difficult transition for many cities,” Chiang stated. “My office will continue to work closely with these cities to ensure that they understand their responsibilities and successfully comply with new state laws.”
Chiang reviewed a wide array of transferred assets, including real and personal property, cash funds, accounts receivable, deeds of trust and mortgages, contract rights, and rights to various payments.
Santa Clara must transfer the aforementioned assets to the RDA’s successor agency. Successor agencies are governed by locally-appointed oversight boards and these boards in turn determine how to best utilize the assets going forward.
According to Chiang’s office, oversight boards can return assets to the city if they can prove that said assets serve a legitimate government purpose.
Some cities have managed to meet the criteria for this to occur. The oversight committee for the City of Covina determined that a $3.5 million transfer of property served a legitimate government purpose and as a result, Covina was legally permitted to retain the RDA assets in question. The City of Lincoln has had similar luck in retroactively approving transfers of RDA assets and property.
Not all cities have fared as well. Santa Clara is but one of a myriad of public agencies in California who are challenging the state in an effort to retain RDA funding.
Two recent bills—ABx1-26 and AB-1484—have mandated reviews of RDAs by the State Controller’s office. Just this month, Chiang’s office determined that over $170 million of asset transfers in the City of Oakland were done so inappropriately. Over the course of the past year, the office has completed additional RDA asset transfer reviews for the cities of Fresno, Hercules, Marysville, Palm Desert, Riverside, San Bernardino, San Jose and West Sacramento.
Controller Chiang’s entire Asset Transfer Review for the City of Santa Clara can be viewed here.