Cancellation of 2009-2010 Loan Interest Also Up for Review

The San Diego City Council will later this week take up a resolution to “extinguish” $288 million in loans and interest that the City Council earlier made to the Redevelopment Agency of San Diego. A recent federal government inspector general's audit determined that the mega-loans were made against community development block grants awarded to San Diego by Housing and Urban Development, then the relatively-undocumented HUD loans accrued multi-millions in unauthorized interest.

The staffer-proposed resolution also calls for stopping any assessment of interest on the outstanding loan balance from mid-2009 onward. The agenda for this week's City Council meetings advises the public that the resolution may be returned to city staffers as not yet approved by the City Council members while not actually meeting as the Redevelopment Agency directors.

While the City Council may be preparing to write off over a quarter of a billion dollars in receivables, Mayor Jerry Sanders continues his promotion of a new leaner city hall project and a new city library at a time when city service departments from routine maintenance to public safety must fend for themselves to fight back substantial budget cutbacks. Funds for the Mayor's new civic construction projects are now so lean that the main library project cannot proceed without tens of millions in private donations and further financial support from the San Diego Unified School District. It is unknown at this time if building plans for an included high school atop the proposed library have been approved by the State of California for fitness as a seismically-acceptable school site.

A recent City Council action restored some public safety funding to discontinue a policy of rotating fire engine brownouts that appear to have been a factor in increased firefighting response times around the city. Questions regarding the city engine brownout policy arose after at least one resident was killed in a residential fire when a slow incident response to the fire hazard was noted by neighboring residents after the blaze.

The original request for the mega-million loan forgiveness originated from City Redevelopment staffers after the HUD Office of the Inspector General audited the City's questionable usage of HUD community development block grants as undocumented loans to the Redevelopment Agency. In the OIG audit, HUD demanded that the City of San Diego at least take measures to make sure that the loans to the Redevelopment Agency were repaid. The Redevelopment Agency in turn loaned or otherwise dispersed large sums to San Diego's redevelopment corporations such as Centre City Development Corporation (CCDC) and Southeastern Economic Development Corporation (SEDC). CCDC and SEDC have had recent numerous problems concerning the questionable ethics of their respective corporate leadership, ties to bidding developers on major projects, and in the case of SEDC, the improper diversion of accountant hiring funds that were instead used as sizable staff bonuses before the Crash of 2008. The HUD OIG audit was itself the result of a citizen's complaint regarding suspected City misuse of community development block grants or other HUD federal funding.

On June 9, the City Attorney's office lost its motion for a mayoral protective order to effectively squash a plaintiff's requested deposition in the matter of Scott Kessler v. City of San Diego, now set for trial before and possibly during the mid-term November elections. Kessler's lawsuit for wrongful termination alleges that Mayor Jerry Sanders was somehow involved in Kessler's firing from city employment, after Kessler allegedly angered Sanders by cooperating with FBI, San Diego Police Department, and the above-mentioned HUD OIG investigations.

There is no word from the District Attorney regarding this whistle-blower matter despite the incumbent's current re-election plans.


Founder July 12, 2010 @ 9:18 a.m.

It's INTERESTING that during this period when the City of San Diego is really hurting for money, you don't hear more about this topic "IN THE NEWS"!

Since the local news outlets are not interested in this HUGE story, it seems that the Reader's Blog has now taken over (from the UT, SD's TV stations and others) as the source of What's Happening in $an Diego!


a2zresource July 12, 2010 @ 11:37 a.m.

RE #1:

As a blogger, I seem to have more liberty than a paid journalist to write what I write. As an unemployed disabled veteran, I have the time to look at documents that most people with lives don't have time for. I also don't have to worry about a deadline.

Matthew T. Hall at the U-T has written some about this, mostly things you could have found earlier here at Mr. Bauder's CITY LIGHTS and SCAM DIEGO postings. I personally was emailed about the $288 million agenda item by a concerned Reader reader several weeks ago and now find it all too juicy to let go, especially with all of the implications from tangential items such as the up-coming Kessler deposition of Hiz Honor.


a2zresource July 19, 2010 @ 4:02 p.m.

BREAKING NEWS FOR 19 JULY 2010: City Council to put $293 million City Hall on Ballot?

See "Tonight, San Diego City Council to Place City Hall Vote on Ballot?" at


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