By Jason Islas
Staff Writer

June 25, 2012 -- Santa Monica could lose nearly three acres of prime Downtown real estate it hopes to develop as the battle continues over assets once held by the City’s former Redevelopment Agency (RDA).

Under a State law that dissolved some 400 RDAs across the state in February, Santa Monica may be forced to sell the land between Fourth and Fifth streets along Arizona Avenue purchased with former RDA money.

The parcels at 1301 and 1333 Fourth Street are currently home to two banks, several retail stores and a parking lot that doubles as a skating rink for ICE at Santa Monica each holiday season.

AB1x26 requires that assets of former RDAs be sold off “expeditiously and in a manner aimed at maximizing value” and that whatever money not used to wind down RDA projects be handed over to the County and State.

A forced sale, said Nia Tang, the City's acting administrative services officer, “would break up this prime three-acre location. It’s a win-win if we let this project go forward,” she added.

Still in its preliminary stage, the project -- which City officials have called a once-in-a- lifetime chance to develop in the Downtown -- has been the subject of three community visioning meetings. ("Santa Monica Embarks on Once-in-a-Lifetime Development Downtown," April 13, 2012)

The City -- which controls all of the former RDA’s assets -- recently put out a request for proposal (RFP), the first concrete step toward developing the 127,000-square foot site.

Tang said that stopping the project now would be “costly” for the City.

“It’s still very early in the process,” said Robert Moran who is one of the seven people on the oversight board which reviews the financial obligations and assets of the former RDA.

“We don’t know if Santa Monica would have to sell” the properties, he said.

The City owns 30 separate properties bought by the RDA, but can’t be forced to sell most of them, according to the redevelopment dissolution law.

According to the law, “those assets that were constructed and used for a governmental purpose, such as roads, school buildings, parks, police and fire stations, libraries, and local agency administrative buildings” won’t be sold off.

Getting rid of the RDAs’ assets is the second step in the dissolution process, which, Tang said, has been anything but smooth.
 
“It’s a mess,” she said.

Santa Monica was required to submit a list of the former of RDA’s financial obligations to the State Department of Finance and the oversight committee.

After going through many draft lists, the City finally submitted a list of obligations totaling more than $60 million for 2012.

The Department of Finance rejected more than $6 million of those obligations, including $4 million that the RDA owed to the Santa Monica-Malibu Unified School District.

“There’s no appeals process,” said Tang, though the City did write a formal letter protesting the Department of Finance’s decision.

“We wouldn’t be putting these obligations on our schedule if we didn’t think they were legitimate,” she said.

But it’s unclear if the Department of Finance will listen.

Tang added that although the other $54 million had been approved, the Department of Finance reserves the right to change its ruling.

“It’s going to be a saga,” she said.