San Bernardino Seal

Ryan Hagen, Staff Writer
Posted: 03/31/2013 07:21:07 PM PDT

SAN BERNARDINO — The city might take months to comply with the state’s order to transfer $108 million worth of property from a city-controlled nonprofit as city officials investigate potential pitfalls of the move – while unpaid taxes, interest and penalties keep adding to the millions the city already owes.

The caution is necessary to avoid accepting unknown liabilities or other expenses, said City Attorney James F. Penman.

As an example, he pointed to those tax bills – amounting to nearly $3 million – which he and other officials say they didn’t know existed until the City Council was on the brink of accepting the properties before directing Penman’s office to check for them.

The properties were exempt from taxes while they were owned by the city’s redevelopment agency, but in 2011 the council transferred them to the nonprofit Economic Development Corp. to avoid Gov. Jerry Brown’s move to force all the state’s redevelopment agencies to sell their properties and dissolve.

State Controller John Chiang said the city’s transfer of properties was invalid and ordered the properties returned to the city and, with a few exceptions, sold.

Penman said a thorough investigation is needed to avoid repeating what he considers a serious mistake. That would include a search of title records that he said will cost about $100,000, which would need to come out of redevelopment funds the city can’t get state approval to spend until September.

“This time the council’s not rubber-stamping,” Penman said.

The mayor’s office isn’t opposed to moving cautiously, but the title reports on the properties veer toward a waste of money, said Jim Morris, who is Mayor Pat Morris’ chief of staff and son.

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