DESERT HOT SPRINGS, CA – Cities all across California are wrangling with the state Department of Finance to get permission to sell public properties owned by their former redevelopment agency (RDA). Millions of dollars of real estate are hung up over an inability of cities to sell those properties. One city did something no other city has done. It went ahead and sold property without Sacramento ’s permission.
The problem for California cities started when the State Legislature voted to end redevelopment agencies across the state. Now every one of California ’s 384 cities that had redevelopment agencies are tasked with winding down their redevelopment agency by selling off public properties. To do that requires they follow specific guidelines handed down by the State’s Department of Finance and have permission to sell a property.
Months have dragged on while the State Legislature made adjustments to the rules by which Successor Agencies can sell the public properties.
The Southern California city of Desert Hot Springs located in the Coachella Valley across the railroad tracks from Palm Springs decided to forgo the rules and the wait. In December 2012 it went ahead and sold six consolidated parcels in its downtown without obtaining permission from Sacramento. The city had purchased the parcels through its redevelopment agency in 2008 for use as a community center, paying $1.4 million plus the cost to demolish an old building on the site.
The city sold the parcels at 66675 Palm Drive in December for $291,000. The land contains a 3,000 square foot building that survived the original demolition.
The sale of the Redevelopment property has now caught the eye of the California Department of Finance.
“They were not allowed,” said Justyn Howard, Department of Finance Assistant Manager, referring to the sale by the city. Howard is the program administrator of property sales by Successor Agencies that replaced redevelopment agencies. He said his department is now looking into the matter that he termed an “illicit sale.”
The city had previously received notice from the California Department of Finance that the sale was not authorized. That notice came in response to a city request made to the Department.
Shortly after that, City Manager Rick Daniels reported to The Desert Sun newspaper that the Department of Finance had approved the sale after all. It appears it was that public statement by the city manager that caught the attention of the Department of Finance. The newspaper account contradicted the notice the Department of Finance had previously sent the city and seems to also now disagree with the Department of Finance position regarding the December sale.
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