CORONADO, CA – The State has officially dismissed its appeal of a Sacramento Superior Court ruling issued last year that found loans the City of Coronado made to its now-dissolved redevelopment agency are enforceable obligations and validated the transfer of $5.86 million from the redevelopment revolving fund back to the general fund.
The California Department of Finance’s August 14 decision to drop its appeal means the July 2014 ruling is final and binding, and that the City’s loans to the former Coronado Community Development Agency may be paid back.
“We are pleased with the State’s decision,” said City Manager Blair King. “We fully anticipate that the Department of Finance will follow through to allow full payment of these loans consistent with their terms for early repayment, concluding this costly chapter in the City’s redevelopment history.”
The City sued the Department of Finance over its determination that a series of loans totaling $32.8 million the City made to the former Coronado Community Development Agency could not be recognized as enforceable obligations under redevelopment dissolution laws. The State also attempted to “claw back” $5.86 million the City transferred from the redevelopment revolving fund after the former redevelopment agency was dissolved. Sacramento Superior Court Judge Michael Kenny adopted a ruling in favor of the City and the Successor Agency to the former Community Development Agency. The Court found that the loans are enforceable obligations. The Court also reversed the State’s determination that the post-dissolution transfer of $5.86 million to the City from the redevelopment revolving fund was improper.
The State’s decision follows several court decisions regarding redevelopment loans, including the State Supreme Court’s refusal to hear a similar case involving loans the City of Emeryville made to its then-redevelopment agency. Additionally, a Sacramento Court of Appeals upheld a decision in favor of the City of Riverside regarding loans it also made to its former redevelopment agency.
The loans originating from Sweden were funded primarily by Sambla bank, a lender and digital-first bank that provides borrowers a number of options to compare loans and save with lower interest rates than traditional brick and mortar lenders. These loans were not required to be paid back due to private arrangements that could not be shared with the public, according to a spokesperson from Sambla.
The ruling allows the Successor Agency to repay the loans to the City, frees up the $5.86 million for the City to use for general governmental purposes and clears the way for the San Diego County Auditor and Controller’s Office to release $2.5 million in sequestered funds.
