Letter to Editor: RDA Bonds - Will money ever need to be given back?

I will not be able to attend tonight's City Council Meeting in order to provide my public comment in person. I am emailing with the hope that my question can be answered and my concern be considered in any upcoming discussion/decisions regarding the City Office project. I have cc'd representatives from the IJ and the Patch so that if in their coverage of tonight's meeting they mention anything about public comment on the City Office agenda item, they will also be aware of the following comments.         

At the January Citizens Finance Committee meeting that the Asst City Manager noted that the $6M cash that was transferred from the RDA to the City could possibly need to be given back based on how the court ruling around the closing of the RDA gets interpreted. The Asst City Manager also noted that $14.6M of bond money is secure as it involves third party investors and there could be considerable fallout on the municipal bond market if the State undid the bond. All of the above makes sense to me, but I do have a follow up question that I hope you can help me with.     

While the State is unlikely to undo the bond, why don't we think there is a possibility that the bond money will need to be given back? If they might take the $6M cash, isn't it just as likely that they might take the $14.6M of proceeds from the bond sale?     

The risk of being required to give back the bond proceeds given to the City from the RDA was noted during the March 22 hearing to decide to sell the bonds. Specifically, the concern was that if the legislation to close the RDA passed, it was likely the promissory notes from Feb.2011 would not be honored and the City would be required to give the bond money back to the RDA. The risk was considered low because of a lawsuit at the time to overturn the legislation and because of a second piece of pending (at the time) legislation that would have allowed a form of RDA to continue if a remittance fee were paid.     

Today we know that the lawsuit failed, the RDAs have been closed, and there is no option to pay remittance fees to keep the RDA open. We also know that the County Auditor Controller is responsible for paying for the former RDA's enforceable obligations including the debt associated with the 2011 bonds. Given all of the above and that the point of the of the State closing the RDA's in the first place was to raise money, not to take on other agencies' debt, please tell us why we should have confidence that the bond money will not need to be paid back.     

Until we know, not just think or have confidence, but know that the State is not going to take the bond proceeds, it is far too risky to push forward on a $12M-$15M construction project that is 100% reliant on these bond proceeds.     

Please do the responsible thing and do not approve any more contracts on this project until we know the money is ours. This is not about, "the train has left the station" or "we've been talking about this for 30 years so now is the time to do it". This is a new and seemingly very real risk to the finances of our City that needs to be discussed openly and tended to before proceeding on any form of City Office project.

Sincerely,

Dennis Cooper
Novato