By Tim Reid
LOS ANGELES, March 6 The bankrupt California
city of San Bernardino improperly transferred nearly $110
million in cash and other assets from its redevelopment agency
to an entity run in part by the city's mayor and some council
members, the state controller said on Wednesday.
The city, located about 65 miles (100 km) east of Los
Angeles, has also improperly held onto another $420.5 million in
former Redevelopment Agency (RDA) assets, according to a review
by the controller, John Chiang.
San Bernardino's RDA was one of about 400 eliminated last
year across California as a result of legislation spearheaded by
Governor Jerry Brown. The goal was to free up property tax
revenues controlled by the RDAs for use in funding schools and
Chiang said that San Bernardino, which declared bankruptcy
on Aug. 1, should not have transferred $108.4 million in assets
from its RDA to the non-profit San Bernardino Economic
Development Corporation (EDC) when the city's RDA was dissolved.
Chiang, in his report, said the transfer was illegal because
the city controls the EDC. According to the EDC's website, its
seven-member board of directors includes San Bernardino's mayor,
and a current and former council member.
Under the law dissolving the RDAs, their assets and debt
obligations were to be transferred to "successor agencies,"
which in most cases were cities, and overseen by an independent
board charged with settling debt and dispersing excess cash.
San Bernardino, in a response in November to Chiang's
initial assertions, said its transfer of assets was legal.
Andrea Travis-Miller, who quit her post as city manager in
January, had said in a letter dated Nov. 21 that Chiang's
assertions were factually wrong and the transfer of
redevelopment assets was legal. She also said the city cannot
force the EDC to return the funds, and she denied that the EDC
was controlled by the city.
An official from San Bernardino's city manager's office said
the newly appointed city manager had nothing to add to the
response given by Travis-Miller in November.
Calls to other city officials were not immediately returned
Chiang also said another $420.5 million in RDA assets in San
Bernardino still had not been transferred to the RDA's successor
"I'm working to make sure redevelopment assets go where they
belong: to retiring RDA debt and paying for critical services at
the local level," Chiang said.
San Bernardino, a city of 210,000, in its bankruptcy
declaration cited a $46 million deficit for the current fiscal
year and little leeway to pay its day-to-day expenses, such as
the city payroll.
Travis-Miller's resignation and the resignation of the
city's finance chief were not linked to issues involving the
RDA, city government sources said, but rather to the stress and
frustrations involved in overseeing the city's bankruptcy