Poway Ordered to Stop Misusing Housing Funds : Government: Lawyer who brought lawsuit had accused officials of creating a ‘public works slush fund.’

A Superior Court judge Thursday ordered the city of Poway to stop spending money set aside for low-income housing on other public projects.

Judge Judith L. Haller also ordered the city to pay back $235,000 spent on road improvements and other public works, which, she said, “did not increase or improve the city’s stock of affordable housing.”

However, the judge did not require Poway to transfer $17 million, which she said the city committed improperly, from the city’s coffers to reimburse its redevelopment agency.

Legal Aid Society attorney Catherine Rodman, who had sued the city, hailed the ruling as a victory, saying the judge had indicated she would monitor Poway’s use of its redevelopment funds to preclude improper spending. Rodman’s lawsuit had accused officials of creating a “public works slush fund” that misused funds set aside for low- and moderate-income housing.

“She did the equitable thing,” Rodman said of the judge’s ruling. “The main issue in this case was the misspending of housing funds, and the judge has said that there must be meaningful public input before such decisions are made.”

Attorney Don Hammond, who represented the city, said he felt that the judge’s ruling was fair and claimed “total victory” in one portion of the case in which Poway was found to have properly segregated housing funds from other redevelopment money.

However, the judge found the city used improper methods to commit the housing money as partial backing for projects such as a major park, Olympic-size swimming pool and a performing arts center.

In earlier arguments, Hammond had contended that, if the city were forced to reimburse its redevelopment agency for $10 million in loans and $7 million in expenditures on the three projects, the city would be threatened with bankruptcy.

Judge Haller ordered the city to submit a plan by Jan. 31 for management of its redevelopment agency funds, of which 20% must be set aside for providing housing for low-income families.

John Fitch, assistant city manager, said that the city “can live with the judge’s ruling,” which, he said, “involves simply moving some money from one pocket to another.”