Don Bauder 6:30 p.m., Aug. 21
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City Council Delays Forgiving $288 Million in Loans Owed to City
By a unanimous vote on June 21, the San Diego City Council delayed until July 13 the consideration of "extinguishing" $288 million in redevelopment loans owed to the City of San Diego. The unanimous vote also delayed a retroactive halt to assessing interest on Redevelopment Agency loans owed to the City (see item 203b).
Despite a projected city budget shortfall of tens of millions, city staffers were unable to explain how forgiving $288 million in redevelopment loans would erase city worker pension deficits, restore fire fighting capabilities, fill street potholes, add open hours to existing libraries, or keep the Chargers in town with a new stadium.
Instead, Scott Mercer of City Redevelopment offered that a HUD inspector general audit had found the City had failed to properly document the mega-millions in loans to the Redevelopment Agency. HUD also found that the City had failed to ensure that the loans originating from federal Community Development Block Grant funds would ever be repaid. City Redevelopment therefore recommended that the massive loan amount be "extinguished" and made to go away. A concurrent recommendation would stop the City from collecting interest on the Redevelopment Agency loans owed to the City as of June 2009.
The HUD inspector general's audit was mentioned in the ongoing Scott Kessler wrongful termination lawsuit against the City of San Diego. In his lawsuit, Kessler alleges that he was fired after he became suspicious of financing arrangements in business improvement district activities around Little Italy (see Don Bauder's Scam Diego series on the Kessler lawsuit and the FBI investigations of Little Italy BID).
The postponement of the loan "extinguishing" to July 13 is only days after a scheduled July 9 Superior Court hearing on a City motion for protective order covering Mayor Jerry Sanders in the Kessler lawsuit.
More lawsuit-related Scam Diego items: