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April 10, 2012
City Council, Mayor Sanders, City Attorney Goldsmith
City of San Diego
202 C Street
San Diego, California 92101
Subject: Revise the City’s (former RDA) EOPS and ROPS to include the missing
$144 million in Federal HUD Debt, and the accrual of interest on the full
$228 million Debt since July 1, 2009 at an annual rate of 7 percent (%).
Item S502. City Council Hearing of April 10, 2012. Initial Draft Recognized
Obligation Payment Schedule (“Initial Draft ROPS"), Second Recognized
Obligation Payment Schedule (“Second ROPS”), and Third Amended and
Restated Enforceable Obligations Payment Schedule (“Third EOPS”).
References: 1. Federal HUD Inspector General Audit Report 2009-LA-1005 dated December 30, 2008.
http://www.hud.gov/offices/oig/reports/files/ig0991005.pdf
2. Item-203 Community Development Block Grant (CDBG) Repayment Agreement,
San Diego City Council Hearing, dated June 21, 2010. www.tinyurl.com/20100621
Dear City of San Diego:
The City of San Diego is under the false impression that $228 million in Federal Department of
Housing and Urban Development (HUD) debt to the poor and homeless, plus the accumulation of
interest of the Federal HUD debt, is included in the City’s official EOPS and ROPS to the State of
California. As Subitem A, on June 21, 2010 the City of San Diego Redevelopment Agency
(RDA) approved a self-serving Repayment Agreement with HUD Los Angeles for $78,787,000 of
the $228,432,499 misappropriated Federal funds as documented in the above referenced report.
Attached as Figure 1 please find the January 11, 2011 response to our public records request, where
Janice Weinrick of the City of San Diego’s Redevelopment Agency acknowledge the outstanding $144
million in Principle plus Interest is still considered RDA Debt that has to be repaid to the poor and
homeless. “The Debt Forgiveness matter ($144,214,499), however, was not acted on by the Council or
Agency Board at the hearing and in fact the referenced [Federal HUD] debt has not been forgiven.”
Subitem B, the forgiving of $144 million in Federal Debt, plus the ongoing accumulation of interest
was continued to future RDA meetings, and was never finalized by the City Council/RDA.
On June 21, 2010, before the January 1, 2011 deadline for accumulation of new RDA debt, the City of
San Diego and its Redevelopment Agency (RDA) acknowledged a Federal Debt for misappropriated
Community Development Block Grants (CDBG) and Section 108 Loans totaling $228,432,499. As of
June 30, 2009 the $228 million in Federal HUD Debt consisted of $ 98,431,640 in Principle Debt, and
$130,000,858 in Interest Debt. It is axiomatic that debts earn interest. In California, a debt owed a
governmental entity, automatically earns interest at 7%. (Government Code § 970.1(b) and Cal.
Const. art. XV, § 1.). As a rough calculation the additional interest earn totals approximately $48 million
($228 million x 3 years x 0.07), for a total increase to the EOPS and ROPS of approximately $192 million
($48 million + $144 million = $192 million.) At the same hearing the City Council/RDA kept open its
option for the accumulation of additional interest on the Federal debt from June 30, 2009 to the present.
Regards,
Katheryn Rhodes and Conrad Hartsell MD
371 San Fernando Street, San Diego, California 92106, 619-523-4350 rhodes@laplayaheritage.com