Saturday, August 9, 2014 – 11:00 p.m.
Last Modified: Sunday, August 10, 2014 – 10:15 a.m.
A shady agreement from San Bernardino County’s past reared its ugly head this week.
On Tuesday, county supervisors, under agenda item 28, approved an amendment to a Letter of Credit, with AIG, related to a 1997 Lease/Leaseback Agreement deal.
The agreement essentially encumbered seven key government office buildings located in Downtown San Bernardino, in exchange the minimal benefit of a few million dollars in actual value to the county. The benefit to the investors was millions in transferable tax credits. A huge windfall that continues even today.
Among the properties included in the deal are the County Government Center, Hall of Records and Civic Center Building.
In other words the county handed over legal control of its buildings to investors and, in-turn, the investors leased the buildings back to the county.
Yes, I know, only in San Bernardino County. The Internal Revenue Service really doesn’t allow this type of transaction any longer.
The transaction is also irrevocable.
Interestingly, the county makes lease payments to the investors through a Cayman Islands bank account. At least that was the case in 2009.
Two of the buildings are no longer held in trust, and thus no longer collateral. Five others will remain locked-up until the year 2012.
The deal even affected past discussions over razing some of the old buildings in order to replace them. The ultimate legal conclusion was the in-place deal prohibited any such idea, without unwinding the entire original agreement.
To read the board item, click the following link: Amendment to AIG Letter of Credit