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Santa Clara RDA Shut Down Underway – County Auditor Rejects 30% of Agency Debt

On March 23 the Santa Clara Redevelopment Agency (RDA) Successor Agency convened its first meeting. And if it accomplished nothing else, it offered an important civics lesson: It takes as much time, effort and tedium – even more of the latter – to bury a public agency as to give birth to it. And it will also cost the City $2.1 million to do it, per the accounting presented at the April 5 meeting of the Successor Agency.

Established by the 2011 state law shuttering California’s RDAs (AB 26), the successor agency’s job is overseeing the dissolution of Santa Clara’s now-defunct RDA. That includes winding down RDA operations, making payments for RDA obligations, liquidating RDA assets and properties, and overseeing existing projects to completion.

One of the agency’s first orders of business is preparing a county-certified RDA obligation and payment schedule (ROPS) by Apr. 15. If the audit of Santa Clara’s RDA by the county auditor-controller’s office is any indication of how the dissolution law is going to play out, legitimate obligations are being narrowly defined as those owed to bond holders – not those owed to other city agencies or for administrative services.

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Santa Clara’s RDA presented the county auditor with $349 million of debt and obligations outstanding. Of that, the auditor excluded $132 million as “unenforceable obligations.” These included:

  • 1983 reimbursement agreement obligating the RDA for $4.1 million in administrative services from the city in FY2012.
  • The 2000 sale of the Gateway Project by the city to the RDA for $101 million. This is the property currently leased to the Irvine Company. The RDA is claiming that $88 million remains owed. In 2011 the RDA transferred ownership of the property back to the city in anticipation of the state law shuttering the RDAs, crediting the RDA with $137 million. (The auditor isn’t disputing the city’s ownership of the property, just whether or not it’s owed money on it.)
  • 2002 debt owed to the Santa Clara Sports and Open Space Authority for a total of $1.01 million ($345,000 in 2012).
  • Loans from the City for $6.6 million in 1998 ($100,000 due in 2012) for the downtown revitalization project.
  • 2011 commitment for $30 million to the Santa Clara Stadium Authority (SCSA).
  • Legal and consulting contracts, including $127,000 for “future” consulting services from the city, although no purchase order was opened; a contract for $370,000 between Hatheway Consulting, and the SCSA, deemed by the auditor to be an SCSA expense; and almost $2 million budgeted by the RDA for unspecified legal services from three firms – GoldFarb & Lipman; Meyers, Nave, Riback, Silvei & Wilson; and Kane,Ballmer & Berkman.

What the auditor did consider enforceable RDA obligations was about $210 million in tax allocation bonds issued by the agency between 1999 and 2011, and purchased by the Bank of New York.

Details of the audit can be found in the 4/5/2012 Oversight Board Meeting agenda report at santaclaraca.gov/index.aspx?page=1504. Meetings are public and the next one is scheduled Friday April 20, from 2:00-5:00 pm in the City Hall Council Chambers. As of press time, no recording or action summary of the April 5 meeting was available on the city’s website.

In addition to Santa Clara City staff, agency members include City Mayor Jamie Matthews, City Finance Director Gary Ameling, County Finance Director Vinod Sharma, County Fire Department Deputy Chief Don Jarvis, Valley Water District Board Member Don Gage, SCUSD Superintendent Bobbie Plough, and West Valley-Mission Community College District Vice Chancellor Edralin Maduli. Santa Clara City Manager Jennifer Sparacino is the agency’s Executive Officer.

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