The State Controller’s Office has decreed that a loan repayment of $2.1 million by the Twentynine Palms Redevelopment Agency to the City was inappropriate and must be repaid to the RDA’s Successor Agency, a move that the City says is un-Constitutional. A press release from the City states that the City loaned the RDA about $127,000 in 1999 to purchase four properties on Donnell Hill, and then in 2009, it loaned the RDA more than $2 million for the Historic Plaza renovation. The RDA repaid the City $2.1 million in 2011—as required by the loan repayment provisions—prior to the state-mandated dissolution of the RDA. After a review of the dissolution of the City’s RDA, the State Controller’s Office wrote the City a letter in May, asserting that $2,138,600 must be turned over to the Successor Agency. Under the provisions of the State’s rules for dissolving redevelopment agencies, that $2.1 million will then be returned to the County, which will distribute it to various taxing entities in the County. The City of Twentynine Palms maintains that if it is forced to return the $2.1 million, it will not be repaid the loan amount until some uncertain date in the future. Last month, the City appealed the State Controller’s Office position, and included additional documents that it believes demonstrates the loan repayments were appropriate, and that disallowing the repayments is un-Constitutional under Proposition 22. This loan repayment is a completely different matter from the Department of Finance’s position on the bonds for the City’s Project Phoenix.
