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Solimar Research

Controller Warns Cities Against RDA Funny Business

CP&DR Staff on
Apr 26, 2012

State Controller John Chiang sent what many cities consider to be an ominous letter, advising them to hand over assets that they may have acquired from redevelopment agencies. The letter, dated April 20, instructs cities, counties, and other agencies to cast a wide net to identify assets that may have been improperly transfered following the January 1, 2011 effective date of AB 1X 26, the bill that calls for the dissolution of redevelopment agencies and liquidation of their assets. 

Cities and other entities are ordered to "reverse the transfer" and return all applicable assets to successor agencies, which are charged with liquidating such assets. The order refers to assets transfered both "directly and indirectly" between RDAs and parent jurisdictions. Many agencies had reportedly formed hasty loan agreements and put real assets on the books of their host jurisdictions presumably in order to shield those assets from liquidation. 

The order "applies to all assets including, but not limited to, real and personal property, cash funds, accounts receivable, deeds of trust and mortgages, contract rights, and rights to any payment of any kind." The only exemption is if such assets were involved in a contract with a third party, such as a developer, as of June 28, 2011. 

The letter warns that cities and counties can expect audits "in the coming weeks." The League of California Cities has announced that its Post-Redevelopment Working Group is working on a response to the letter and will advise cities how to proceed. 

For the full text of the letter, please click here.