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Current Cerritos Redevelopment Litigation Fees Total $480,000

City Council Has Approved Further Litigation Fees Despite Controller Chiang Saying It Is A ‘Done Deal.’

By Brian Hews and Randy Economy

Hews Media Group-Community News has obtained documents via a public records request under the California Public Records act, that show the city of  Cerritos spending almost $500,000 in fees to litigate AB1x 26, the bill that provided for the dissolution of redevelopment agencies that became effective October 1, 2011.

The invoices, from Ruttan and Tucker based out of Costa Mesa, started in September of 2011 and ended October 2013 with a bulk of the fees, over $373,000 incurred in the first eight months, averaging $47,000 per month.

HMG-CN asked for all billing related to litigation and AB1x 26/27 and according to documents obtained from the Cerritos City Clerk, the city has exclusively used Ruttan and Tucker for all its litigation.

HMG-CN published all of the payment invoices at www.hewsmediagroup.com and www.loscerritosnews.net.

In October, Hews Media Group-Community News obtained exclusively the California State Controller’s Office (SCO) review confirming that transfers recorded by the Cerritos City Council and the Cerritos Redevelopment Agency were unallowable under ABX1 26, and that the city must return over $170 million in property and cash to the Successor Agency.

The Asset Transfer Review Report was issued by Controller John Chiang and received by Cerritos City Manager Art Gallucci via Certified Mail October 8. The review covered January 2011 to January 2012.

In the report, Jeffrey V. Brownfield, Chief Division of Audits for the State Controller’s officer, informed Cerritos officials that the Cerritos Redevelopment Agency transferred $210,774,198 in assets after January 1, 2011 including unallowable transfers of assets totaling $170,836,440 or 81.05% of the transferred assets. “Those assets must be returned at the Successor Agency to be disposed of as expeditiously as possible and in a manner aimed at maximizing value,” Brownfield said.

According to sources, the review team for the SCO spent almost a year in Cerritos performing interviews with Successor Agency personnel; reviewing meetings, minutes, resolutions, and ordinances of the Council, the RDA and the Cerritos Housing Authority; reviewing accounting records; and reviewing financial reports.

The report goes on in great detail describing the unallowable transfers via financial records obtained during the review.

The most egregious transfers occurred during the Mar. 24, 2011 Cerritos City Council meeting where the Council and the RDA approved the sale and transfer of properties to the City amounting to over $120 million.

The City Council at the time consisted of Mayor Carol Chen, Mayor pro tem Bruce Barrows, Mark Pulido, Joseph Cho, and Jim Edwards.

The first sale of properties within the RDA had a book value of over $75 million with the Council approving purchase by the city of $11 million, eliminating over $64 million because of a “decline in value.”

The City argued the value of the land dropped a staggering 85%.

In response to the ruling, Barrows blasted Chiang in a tersely worded prepared statement saying: “The City paid the Redevelopment Agency consideration for the transfers and the transfers were legal and permissible under state law at the time they were made.”

In a stunning omission, Cerritos Mayor Bruce Barrows told a daily newspaper in an interview that the once fiscally successful municipality could be heading toward bankruptcy after the ruling

“The worst that could happen is that we go bankrupt,” Barrows said in an interview to a major daily newspaper.

Sources told HMG-CN that the Cerritos City Council voted to approve further litigation on the matter.

See invoices click here.