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State slams San Bernardino in redevelopment assets review

The State Controller's Office slammed the struggling city of San Bernardino in a review of assets formerly belonging to its redevelopment agency, saying the city inappropriately transferred or withheld more than $500 million in assets, including land, buildings and money.

The city filed for bankruptcy protection last summer, citing a $46-million general fund deficit.

The state's more than 400 redevelopment agencies, which used tax increment revenues for economic development and affordable housing projects, were dissolved in February 2012 and successor agencies were charged with disposing of their assets.

The state controller's review argued that San Bernardino's redevelopment agency "inappropriately" transferred $108 million to the San Bernardino Economic Development Corp., a nonprofit whose six-member governing board includes three members appointed by the City Council.

"The purpose of the asset transfer was to protect the RDA resources from elimination," the controller's report said.

The controller's office also said the city held onto another $420.5 million in assets that should have been handed over to the successor agency.

The city objected to the findings, arguing the transfer of assets to the nonprofit was legal and binding and that "the city of San Bernardino does not control the SBEDC. Therefore, [the controller's office] does not have the authority to direct the city to require SBEDC to return these assets to the Successor Agency ... or for that matter to do anything."

The city also argued that some of the assets still held by the city were "non-tangible" and could not be transferred, and other assets were automatically transferred under state law when the redevelopment agency was dissolved.

The controller disagreed, saying some of the assets in question had ownership documents still in the name of the former redevelopment agency.

Controller's spokesman Jacob Roper said the review of San Bernardino redevelopment agency assets was one of the largest conducted so far as part of the winding down of redevelopment, but that about 380 other reviews remain to be completed.

The winding down of redevelopment has been contentious, with dozens of cities suing the state over various aspects of the process.

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-- Abby Sewell

 
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