New Report Finds Some Hercules RDA Actions Improper

State review finds real estate transfers legally “unallowable”

A state review of asset transfers made by the former Hercules Redevelopment Agency prior to its abolishment last February has found that $35.4 million in property and tax revenues were made improperly and that an additional $15.6 million in affordable housing funds have yet to be transferred.

The review was released Thursday by State Controller John Chiang. According to Chiang, during the 12 months before the Hercules RDA was abolished on Feb. 1, the agency transferred $124.1 million in assets directly to the city. The state law abolishing the state’s 425 RDAs required redevelopment assets to be transferred to successor agencies and their Oversight Boards, established to wind down RDA affairs and insure all debts were paid. 

In January, the city designated itself as the RDAs successor agency and a few months later an Oversight Board was appointed. 

Chiang’s office is required to examine assets transfers by all former RDAs, a task that will take months. Hercules is one of four RDAs examined so far.

See all of Patch's coverage on the financial problems in Hercules

Of the total transfers made, Chiang said $31.4 million in property – including and the former Yellow Freight property – were improper. In addition, the Controller said $4 million in property tax increment revenue received last December was improperly diverted to pay other bills.

That diversion forced a default on RDA bond payments, forcing Ambac AssuranceCorp., the agency’s bond insurer, to make the debt service payments on $116 million in bonds. Ambac subsequently sued to get its money back, litigation that was resolved earlier this year.

In addition, the Controller said his review found that some $15.6 million in assets held in former RDAs Low and Moderate Income Housing Fund were never transferred and must be handed over to the successor agency for disposition by the Oversight Board.

willie November 09, 2012 at 06:03 PM
can anyone tell me if there is a more screwed up city in the bay area than Hercules (or half moon bay perhaps with their $40mil lawsuit loss) I regret buying a home here 3 years ago at this point.
Selina Williams November 09, 2012 at 07:34 PM
I want to know what the additional $15.6 million in low income housing assets are and why they were not transferred. First I have heard of that. Must be a secret. Another secret or maybe a $15.6 million oversight. Those are big numbers for our balance sheet, a balance sheet we havent seen for years. We have no idea where we stand do we?
Toni Leance November 09, 2012 at 09:00 PM
Selina I agree this city hasn't done anything about the affordable housing program since NEO left city hall. They have not done an audit or sent reports to Sacramento they abanded those who own affordable units and are underwater. I spoke out when they were transferring the affordable program to the county and said they should keep the program In Hercules and now they have to keep it as neither the county or the state will take it. when will the city accept its responsibility in this fiasco you can't blame Olivia forever! They don't even know what they have in affordable units or if the people even still qualify which is required by the state to verify yearly.
Selina Williams November 09, 2012 at 10:05 PM
What, exactly, has our city manager, managed? The arrogant retorts that were made to the State controller when they should have been begging for help, set up back. Our city officials need to start developing strategies that are cogent and can win support from our legislators. We can not go it alone. Bayside families were thrown under the bus with so much negligence. Where was the outreach to the community? Where was the outreach to those home owners with the RDA loans? How many more families will be struggling to salvage their homes and health while our city officials have not done their job, protecting the citizens! We don't know where we stand, how can we know where we are going?
LINDA GUNNETT December 04, 2012 at 02:44 PM
Yes, I can tell yu that the City of La Quinta is as screwed up. Watch the news, we will be next. Our City Manager is handing out no-bid contracts to his employees at his private corp. RSG and as #15 in the receipt of RDA funds, we are indebted to the tune of $437,592,660 over the next 25 years, and counting...Or bobble head council and the sheeple of this city sit by idly while Rome burns.


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