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Today's News: San Diego City Council to Forgive $$$,$$$$,$$$ in Redevelopment Loans & Interest after 2009?
Who Says We Have a City Budget Shortfall?
Item 203 on today's San Diego City Council agenda includes a provision that the City Council no longer charges interest on tens of millions of loans to its subordinate redevelopment agencies. The loans, originally made on HUD block grant funds, were the subject of a blistering HUD inspector general report that required the City to properly document plans for repaying the massive redevelopment loans (see HUD OIG Audit below).
City staffers recommend that the City Council adopt Item 203 "Declaring that, commencing on July 1, 2009 and continuing thereafter, no interest shall accrue on behalf of the City on any outstanding Long-Term Debt of the [Redevelopment] Agency to the City."
See Don Bauder's Scam Diego series on the Scott Kessler wrongful termination lawsuit against the City of San Diego, mentioning the HUD OIG audit in the filed civil action.
Forgive $288 Million Loan Balance Today?
City staffers further recommend the City Council's adoption of the rule "Declaring that the Agency shall extinguish all outstanding CDBG and HUD Section 108 Debt owed to the City totaling approximately $228,432,499, as follows: (a) the Agency's scheduled repayments of CDBG Debt to the City in the total amount of $78,787,000; (b) the Agency's continued payments to the City according to the established debt repayment schedule for the Naval Training Center CDBG HUD Section 108 Loan with an outstanding approximate balance of $5,431,000 as of June 30, 2009, payable from the Naval Training Center Redevelopment Project Area; and (c) the City's forgiveness of the remaining CDBG and HUD Section 108 Debt, including all principal and interest accrued through June 30, 2009, totaling approximately $144,214,499 upon the expiration of the ten-year period on June 30, 2019, set forth in the Repayment Agreement, provided the Agency makes the required payments pursuant to the Repayment Agreement" (see City Council agenda below).
There is a recommendation that $77 million in loans be repaid by the redevelopment agencies, where such payments would be used to settle financial obligations such as those incurred at the Southeastern Economic Development Corporation's Valencia Business Park project. That SEDC project was begun during the corporate presidency of Carolyn Smith, later ousted for redirecting unused accountant hiring money for lucrative staff bonuses.
It is only the opinion of this blogger, but the prompt payment of the soon-to-be forgiven $228 million would go a long way to decreasing the mayor's proposed budget shortfall for the next fiscal year.
Who says sweetheart deals for grant-funded developer lobbies are dead?
More like this:
- San Diego City Council Revisits $288 Million Loan Forgiveness to Redevelopment Agency — July 12, 2010
- Redevelopment Agency to Spend Half a Million on Blight Study — June 26, 2010
- City Council Delays Forgiving $288 Million in Loans Owed to City — June 24, 2010
- So What Happened to the $139 Million in Undocumented HUD Loans? — March 15, 2010
- Redevelopment Agency Block Grant Scandal: the Carolyn Smith Legacy — Jan. 11, 2009