City Hall Loan Deal With Mall Developer "Illegal" Says Oversight Board Attorney

The Secret News covers the developing story of City Hall's give-a-way of public funds, over $6.5 million, to Bay Street Mall developer Madison Marquette Corporation.   The story emerged last May as City Council members considered the deal wherein the City would receive $2.5 million now from Madison Marquette but leave more than $6 million on the table that would be netted over the life of the loan, negating an original $18 million loan to the corporation from the former Emeryville Redevelopment Agency.  It has been called a deal a desperate-for-cash city would broker.  The Council directed Staff in May and covered by the Tattler, to look into Madison Marquette's economic prospects before they decided on the deal.  They wanted to check the credit worthiness of the multi-billion dollar development corporation.  Apparently, the City Council thinks Washington DC based Madison Marquette is not a sure thing since last Tuesday, they voted on the deal with the mall developer, taking the $2.5 million now and forgiving Madison Marquette the remainder of the loan.  But the former Emeryville Redevelopment Agency's own Oversight Board attorney says the city is not free to renegotiate the loan.  

Re-posted from The Secret News:

It is illegal for the City Council to allow Bay Street Mall developer Madison Marquette to pay back just $12 million on an $18 million dollar loan, according to the attorney for Emeryville’s Oversight Board. The county-level board is charged with monitoring the city’s transition after the elimination of state redevelopment funds.

The City Council last week voted 3-2 to allow Washington DC-based Madison Marquette to repay just $12 million on a promissory note owed to the city’s former Redevelopment Agency for $18.345 million. The City Council majority (Ruth Atkin, Nora Davis, and Kurt Brinkman) supported the loan discount, while Council members Jac Asher and Jennifer West voted against it.

“Payoff of the promissory note for the discounted amount of $12 million is prohibited … The former redevelopment agency has no authority to modify any existing agreements with any entity, including forgiving all or part of any balance owed on a loan, or changing any term of a loan,” wrote Oversight Board Attorney Paula Crow, in a memo included in the Board agenda packet for its Tuesday, July 9, meeting.

The City Council thought it could forgive Madision Marquette $6.5 million of the loan based on information provided by Helen Bean, Emeryville’s Director of Economic Development and Housing...

Read the rest of the story HERE.