PITTSBURG -- The city took a step Thursday to get out of a master lease agreement signed for a property in Old Town back when redevelopment was around.

The board that oversees the successor agency unanimously voted to end the lease almost two years early, which would mean it would not have to make more than $400,000 in payments provided the state Department of Finance approves its action.

Since October 2012, the successor agency, which is in charge of winding down redevelopment, has fallen behind in payments owed to the property owner, despite collecting monthly payments of about $13,000 from subleasing to two tenants: Mechanics Bank and Pacific Plaza Imports, which is better known as the store that sells caviar.

"It's a mutual split," assistant city manager Garrett Evans, who sits on the oversight board, said before the meeting. The terms of the master lease agreement, which was signed by the then-Redevelopment Agency in March 2005, requires the successor agency to make monthly payments of about $24,000 to the Biss Family Trust and deKat Family Revocable Trust, which owns the property at 675-695 Railroad Ave.

"The current lease rate that we pay is a little over $24,000 and what we receive in payments from both our subtenants are a little over $13,000. So we carry a monthly deficit," said Maria Aliotti, the city's redevelopment manager, in remarks to the seven-member oversight board. The property owner would continue to receive payments from the two tenants under the terms of ending the lease.

The successor agency has not been able to make up the estimated $11,000 monthly shortfall since October as a result of a decline in tax-increment revenues, which are linked to falling property values, according to Aliotti.

The master lease with Biss Family Trust and deKat Family Revocable Trust runs through February 2015. By terminating the master lease agreement effective May 31, the city would not have to make $432,000 in payments. A staff report said that available funds from ending the lease will be used to pay off redevelopment debt and other financial obligations of the successor agency.

City officials are confident that the Department of Finance will support ending the master lease agreement.

"There is a section in the legislation that says you can terminate a lease," said Aliotti, referring to the state law that did away with redevelopment last year. "This would be one of them. It would free our liability."

The monthly rent amount owed by Mechanics Bank to the property owner will remain the same through February 2014, the expiration date for the existing sublease with the successor agency. The same is true for Pacific Plaza Imports, which has a sublease through February 2015.

State legislation that shut down redevelopment agencies in February 2012 set up successor agencies to distribute tax-increment revenues, which are derived from increased property taxes that have resulted from redevelopment projects. The legislation also requires that redevelopment bonds get paid off first, then pass-through payments made to school districts and other local government agencies, followed by lease payments.

In November 2012, the city sent a letter to the property owners that read: "Because of the reduced tax increment revenue received by the Successor Agency, the increase in debt service payments, and the order of repayments allowed by the Legislature, the Successor Agency is unable to make its lease payments for the above-mentioned property."

Contact Eve Mitchell at 925-779-7189. Follow her on Twitter.com/eastcounty_girl.