A letter sent this month from the state controller's office has some city staff feeling uneasy about its demands regarding the Police Annex.
The redevelopment agency transferred the J Street Police Annex to the city in March of 2011. After a November audit, the state controller's office has requested the annex be transferred back to the Designated Local Authority, or DLA, which is charged with dismantling the defunct Los Banos Redevelopment Agency, or RDA.
Los Banos' redevelopment agency is one of 400 eliminated across the state, because legislators passed a law last year, which ended the agencies on Feb. 1. The DLA met Monday in Los Banos.
City Attorney William Vaughn said the redevelopment agency was involved only as a financing mechanism, and the $800,000 annex was purchased in 1999 with developer fees.
"I'm a little concerned about the city being put in the position of transferring back a piece of property that the city has paid for with all city funds," Vaughn said.
The transactional documents are unclear, Vaughn said, but the paper trail shows the annex was a purchase by the city.
Vaughn said the annex was transferred in March because that was when it was scheduled to be paid off. He said all of the payments were made through the city.
"I think the city's going to take the position that it's the city's property at this point," Vaughn said. "So, I don't know how we fix that."
In Los Banos, the City Council was also the Los Banos Redevelopment Agency, which could have led to some of the confusion.
The DLA hired Los Angeles-based Kosmont Cos. as legal consultant through the process.
Mark Persico, senior consultant for Kosmont, said any assets transferred after January 2011 are subject to the same regulations. He said since the annex is a public service building, there is no need to worry.
"I think, in the end, we're probably going to wind up just transferring it back to the city," Persico said. "I hate to say it's a paperwork exercise, but that's certainly what it seems like."
He said the letter from the state controller was a "hard and fast rule."
Michael Amabile, the chairman of the DLA, said he understands the city attorney's reluctance to fork over the annex. He said it's unclear, assuming DLA acquires the annex, how long it would be tied up before being returned to the city.
"The state just doesn't really have a clear answer on these type of situations," Amabile said. "They pretty much just put that January date, and that's all they're going by."
Regardless of what happens, Amabile said, the city will continue to use the annex and the DLA won't charge rent.
Vaughn and Persico will continue to hash the issue out, they said Monday, and no decisions have been made.
Enterprise reporter Thaddeus Miller can be reached at (209) 388-6562 or by email at email@example.com.