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Santa Barbara to Fight State’s Challenge Over Transfer of City Parking Lots

With the dissolution of RDAs, successor agencies have to sell off real property assets not considered housing or governmental assets

The City of Santa Barbara will be fighting the California Department of Finance to keep its downtown parking lots and the railroad depot, since the state has challenged Santa Barbara’s move to transfer some property owned by the Redevelopment Agency.

With the dissolution of RDAs, successor agencies — like the city — have to sell off all real property assets that aren’t considered housing or governmental assets.

This issue first came up over the summer, and many California cities wrote to the state Legislature and were able to remove language that separated parking structures from governmental assets.

However, the Department of Finance sent a letter to Santa Barbara on Nov. 17 telling the city to hold off on transferring the parking assets from the RDA to the city, Community Development Director Paul Casey told the City Council last Tuesday.

Since Santa Barbara “raised a big red flag, caused a stink” over the summer, united with many other cities, everyone thought the matter was resolved because the threatening language was removed, Casey said.

The state doesn’t object to transferring housing assets — since the city handed over about $2 million in housing cash it had at the time RDAs were dissolved — or Chase Palm Park and the Ortega Water Treatment Facility, so those actions were made by the City Council last week.

The assets in question — already approved for transfer by a local oversight board — include the Cota and Carrillo streets commuter lots, the 217 Helena St. parking lot, the Garden Street public parking lot, Parking Structure Nos. 2, 6, 10, 11 and 12, the entire railroad depot and parking lot, and the land near the railroad depot where a children’s museum is planned.

Parking structures aren’t considered governmental assets if they’re mixed-use and open to those other than public employees, according to the letter.

Casey, the City Council and City Attorney Steve Wiley argue otherwise, and say the lots are used for public benefit. The city operates the lots in partnership with downtown businesses, and some of the structures were built on city land, and with tax-exempt bonds.

The state is also targeting the city’s railroad depot, parking lot and land earmarked for a children’s museum. Wiley said the city will challenge this in court if the state doesn’t change its mind.

Many of the assets in question were funded by voter-approved grant moneys, tax-exempt bonds or placed on city land, so they’re not purely RDA projects, he added.

“We’ll litigate this before we sell these assets,” Wiley said.

He is putting together a “meet and confer request,” so city leaders can argue their case in Sacramento.

“We’ll argue our case and really encourage (Department of Finance staff) to change their minds, especially when they told the Legislature back in the summer they’d back off on that proposal to require RDAs to sell off their parking lots,” Casey said.

Mayor Helene Schneider said she has been reaching out to other cities to let them know what happened, and has been working with Assemblyman Das Williams’ office in Sacramento.

It’s most likely a statewide policy decision, and Santa Barbara could just be one of the first cities to submit their asset transfer paperwork, Casey said.

While Schneider speculated that the state was trying to “recoup assets” by forcing cities to sell parking lots, City Councilman Grant House called it “grand theft” and “extortion.”

The state does has leverage, Casey noted — many tax revenues filter through the Department of Finance, which “they could hold onto until we comply,” he said.

“Don’t underestimate the creativity of the state to try and get what they want,” Casey said. “Don’t underestimate their shrewdness to try and put the screws to us.”

However, the city will fight back with just as much creativity, he added.

“We’re not going to go easily,” Casey said.

Noozhawk staff writer Giana Magnoli can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.

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