City will get redevelopment agency loan back

Costa Mesa city coffers will be getting $10.3 million back because of a recent agreement reached with the state Department of Finance, according to a city news release Thursday.

The funds were part of a loan the city had made to its redevelopment agency, which, along with others across the state, was dissolved through an austerity measure from Gov. Jerry Brown in 2012.

The state had ruled that Costa Mesa’s loan was invalid and took the money with the intent to then redistribute it to other local agencies, including the Newport-Mesa Unified School District and county libraries.

The city is now scheduled to receive the first chunk of the $10.3 million — $782,983 — in early June. The payment schedule for the rest is still being worked out with the state, according to the release.

“We are pleased that the state made the right decision,” city CEO Tom Hatch said in the release. “Our staff worked incredibly hard to assemble 40 years’ worth of documents to establish for the state the validity of the loan.”

In May, City Hall announced its intent to fight back after the state demanded that a $2.5-million Costa Mesa Redevelopment Agency loan be returned.

“It’s a theft of our money,” Hatch said at the time

In July, the City Council voted unanimously to go forward with litigation, when nearly $12.5 million was at stake. By October, Costa Mesa filed a lawsuit to get the money back, providing “extensive documentation” on the history of the loan and why it was valid, city officials said Thursday.

The $12.5-million figure was eventually changed to $10.3 million, after the state asked Costa Mesa to recalculate the loan at a lower interest rate, as well as eliminate late fees and penalties, said city spokesman Bill Lobdell.

Before dissolving, the agency’s mission was to improve a nearly 200-acre portion of Costa Mesa’s downtown. The coverage area for the agency, which was formed in 1972, included Lions Park, the Costa Mesa Courtyards shopping center and The Triangle.