San Bernardino Seal

Ryan Hagen, Staff Writer
Posted: 03/08/2013 04:39:11 PM PST

Related stories: San Bernardino landmarks face uncertain future under redevelopment shuffle | State says San Bernardino mishandled over $500M | State controller: San Bernardino’s transfer of funds not valid
View: City Attorney Jim Penman’s letter | San Bernardino EDA asset transfer review report
Special section: San Bernardino

SAN BERNARDINO – The city will sue if the state Controller’s Office tries to take any action to enforce its opinion that the city wasn’t allowed to transfer $108 million in assets from its defunct Economic Development Agency to a nonprofit controlled by city officials, City Attorney James F. Penman said in a letter to Controller John Chiang on Friday.

The city is protected by the automatic stay that was created when it filed for bankruptcy protection, prohibiting creditors or others from seizing city property without first obtaining approval from bankruptcy court, Penman said.

“The city must protect itself and the ongoing reorganization process from this highly damaging action,” Penman writes, asking the controller confirm in writing within five business days that the state won’t take any action against the city. “If the controller fails to provide the written assurances described above, the city will have no choice but to institute proceedings against the controller, applicable third parties and appropriate individuals in order to forestall such disruptive and high y prejudicial conduct.”

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