PINOLE -- The city will not appeal a court ruling ordering it to turn over $13 million in cash to the state and transfer a package of properties to the redevelopment successor agency.

The ruling, delivered in May, substantiated the state Controller's finding that the City Council unlawfully transferred $24.5 million in Pinole Redevelopment Agency assets to the city in February 2011 to shelter them in anticipation of the statewide dissolution of redevelopment agencies that took effect early the following year.

The city sued the state in Sacramento County Superior Court last year challenging the Controller's December 2012 finding.

"Despite strong language that cites to the unfair consequence of the dissolution law to the city, the court's order was not favorable to the city," City Manager Belinda Espinosa said in her June 13 weekly city manager's report, noting the ruling and the city's decision not to appeal. She also announced that the city has made a first payment of $1.8 million to the state.

"The state changed the law. That dissolved redevelopment," Espinosa said Monday. "Then it got the ability to retroactively claw back into the past."

In February 2011, the Pinole City Council transferred virtually the entire real estate portfolio of the soon-to-be-moribund Pinole Redevelopment Agency to the city, including Pinole's stake in the Pinole Valley and Pinole Vista Crossing shopping centers.


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In December 2011, the city sold its stake in the two shopping centers for about $13.1 million to The Kivelstadt Group.

The rest of the portfolio included the Gateway West and Gateway East tracts on Pinole Valley Road north of Interstate 80; Pinole Shores Business Park; the historic Bank Of Pinole building; several small properties in or near Old Town Pinole; several public parking areas; and 10 properties from the former redevelopment agency's housing portfolio, including Pinole Senior Village.

Redevelopment successor agencies are supposed to use former redevelopment assets to satisfy bond debt and other obligations of their predecessor agencies; any remaining funds can then go to local services, and remaining property can be returned to the city if it serves a clear governmental purpose, according to state guidelines.

Contact Tom Lochner at 510-262-2760. Follow him at Twitter.com/tomlochner.