Attorney for Redevelopment Agency Resigns in Flap With City Council

An attorney representing the Hawaiian Gardens Redevelopment Agency has dropped his client over the City Council’s plan to repay the agency more than $4 million, contending that the building the city offered as collateral would not cover the debt.

Graham Ritchie, who worked under contract with the agency, submitted his letter of resignation Tuesday, just hours before the council voted to mortgage the city’s recreation center.

Ritchie said he was frustrated that the borrowing continues despite his demands that it stop. He also expressed concern that the collateral for the deal--even when it was supposed to include City Hall and another building the city owns--would be insufficient to guarantee repayment of the debt.

“The buildings are more or less single-purpose buildings and there is not a ready market for them,” he said.

But City Atty. Julia Sylva responded to his allegations by pointing to an independent assessment that valued the C. Robert Lee Recreation Center at $4.2 million--exactly the sum the city will owe by the end of the month. Sylva said that when she originally drew up the deal she was unaware of the size of the city’s debt and the value of the three buildings. She has since determined that the center alone covers the collateral.

Ritchie also suggested that since the council and the agency consist of the same members, the repayment plan could present a conflict of interest. Also, he had been out of the country recently and was unable to review the deal on behalf of the agency.

Sylva acknowledged that she alone provided counsel on the deal, but that “as long as I dot all the Is and cross all the T’s, then it’s perfectly legal.”

Included in Ritchie’s letter were questions about whether the city would be able to meet its obligations to the agency over the 30-year payment plan.

City Council members concede that solvency is the most urgent issue facing the city. Deep budget cuts must be made, they say, perhaps forcing them to repeal recent pay increases granted to all city employees, as well as a 19% raise given to the city’s new police force.