El Cerrito’s $2.3M Taxpayer Loss

On the agenda for the February 17, 2026 City Council Meeting — Agenda Item 8.A, tomorrow Tuesday

Most people will never notice this item on the City Council agenda. It sounds routine.

A technical “true-up.”
An “accounting adjustment.”
A request to close out old accounts.

It doesn’t sound controversial.
It doesn’t sound urgent.
It doesn’t sound expensive.

But buried in more than five pages of dense financial and legal explanation is a simple, uncomfortable reality:

Over time, local taxpayers absorbed more than $1.3 million in losses. And this latest accounting entry will further reduce the City’s unrestricted reserves.

This is not about ancient history.
This is about decisions made years ago that continue to affect El Cerrito today.

Where This Story Begins

To understand how we got here, you have to go back more than a decade.

In 2011 and 2012, California shut down redevelopment agencies across the state. El Cerrito’s Redevelopment Agency was dissolved, and the City became a “Successor Agency.”

That meant the City was responsible for winding down redevelopment activities, paying outstanding obligations, and seeking reimbursement from the State.

At the time, staff did what they were supposed to do.

They paid bond debt.
They paid contractual obligations.
They used redevelopment funds as authorized.
They submitted documentation for approval.

Then the rules changed.
And then they changed again.

When the Ground Started Shifting

After dissolution, the Department of Finance and County Auditor began reinterpreting what redevelopment expenses were “allowable.”

Costs that had been legal when they were incurred were later questioned.

Payments that had already been made were challenged.
Transfers were disallowed.

Reimbursements were denied.

What followed was more than a decade of uncertainty.

The City was stuck in the middle.

To avoid default and penalties, El Cerrito kept paying.

The State kept saying no.

How a Paper Problem Became a Real One

By 2015, unresolved disputes were piling up.

By 2017 and 2018, the Successor Agency was operating in deficit.

So the General Fund stepped in.

Nearly $900,000 in 2017.
Another $447,000 in 2018.

More than $1.3 million and they continued to operate at a deficit

After years of unsuccessful appeals, the loans were written off in 2021.

That money was gone. Local taxpayers absorbed the loss.

This Was Not a Surprise

City leadership has known about this unresolved, seven-figure liability for many years but failed to discuss it until now. In doing so, they buried one page of facts in a 5+ page memo to the Council.

They knew when:

• The City spent about $1.6 million in General Fund reserves to purchase the church property adjacent to the fire department.
• Then created a structural imbalance with
  • Significant salary increases for administrative staff, along with a generous benefit package, and a $450 monthly car allowance for the City Manager were approved.
  • Major staffing and budget decisions were made.

All while this exposure remained unresolved.

Why This Is Back Now

Staff now requests another $1.045 million transfer from the General Fund.

This is the final cleanup.

But cleanup is not free.

The staff memo runs more than five pages. When stripped of jargon, the message is simple:

Taxpayers have already absorbed more than $1.3 million and reserves will shrink $1.045 million further.

Why This Matters

Unrestricted reserves are not extra money.

They protect against emergencies, downturns, and service cuts.

When reserves shrink, residents feel it through higher taxes, fewer services, or deferred maintenance.

More Than One Bad Decision

This was shaped by state policy changes and local choices.

Choices to spend reserves.
Choices to expand staffing.
Choices to approve significant compensation increases.
Choices to delay resolution.

The Lesson

Complex funding programs carry risk.

When rules change, cities are exposed. When cities spend money and reimbursements fail, residents end up paying.

Final Thought

This is not routine.

It is the end of a 15-year financial story that cost El Cerrito taxpayers more than $2.3 million.