PINOLE -- The City Council improperly transferred $24.5 million in redevelopment assets to the city and must turn them over to the redevelopment successor agency, according to a state review.

In February 2011, the council transferred virtually the entire portfolio of real estate properties of the now-defunct Pinole Redevelopment Agency to the city in a move that anticipated the abolition of redevelopment agencies by the state. The assets included Pinole's stake in the Pinole Valley and Pinole Vista Crossing shopping properties that it sold in December 2011 for about $13.1 million to The Kivelstadt Group, which had been operating them under a ground lease with the former redevelopment agency.

The proceeds from that transaction, which include an approximately $2.35 million gain, are part of the $24.5 million in assets that must go to the successor agency, according to an Asset Transfer Review published this week by the office of state Controller John Chiang. Redevelopment successor agencies are supposed to use former redevelopment assets to satisfy bond debt and other obligations of their predecessor agencies; any remaining funds can then go to local services, and remaining property can be returned to the city if it serves a clear governmental purpose, according to state guidelines.

Another property that was part of the February 2011 transfer, a mixed-use building at 2401 San Pablo Ave., was sold by the city in July 2011 at a loss of $271,597; the controller's office recognizes that loss, deducting it from the amount of the assets to be transferred back to the successor agency.

The $24.5 million in transfers deemed unallowable by the state are part of a total of $68.3 million in assets transferred by the Pinole Redevelopment Agency between Jan. 1, 2011, and Jan. 31, 2012, according to the state review.

The state's abolition of redevelopment agencies was approved by the Legislature and signed by Gov. Jerry Brown in June 2011 and ratified by the state Supreme Court in December 2011; it went into effect Feb. 1.

The state legislation retroactively invalidates asset transfers that occurred between Jan. 1, 2011 and the demise of the redevelopment agency. Any such assets that were not committed to a third party before June 28, 2011, must be turned over to the successor agency.

Pinole Finance Director Richard Loomis deferred comment to City Manager Belinda Espinosa, who did not immediately respond to an email Thursday. City Attorney Ben Reyes deferred comment pending direction from the City Council at the next council meeting.

Besides the two shopping centers and the San Pablo Avenue mixed-use building, properties transferred by the Pinole Redevelopment Agency to the city in February 2011 included the Gateway West and Gateway East tracts on Pinole Valley Road north of Interstate 80; Pinole Shores Business Park; the historic Bank Of Pinole building; 651 Pinole Shores Drive; Pinole Youth Center and Memorial Hall; Fernandez Park Patio; public parking areas across Tennent Avenue from the youth center, behind Pear Street at Fernandez Avenue, adjacent to King Valley restaurant, and adjacent to St. Joseph School; land holding a sign near John Street; some land with public infrastructure on Fitzgerald Drive; and 10 properties from the former redevelopment agency's housing portfolio, including the Pinole Senior Village, the historic Faria House, the Collins House; a remainder parcel from the Pinole Grove senior housing; and small properties on San Pablo Avenue, Tennent Avenue and Buena Vista Drive.

Contact Tom Lochner at 510-262-2760. Follow him at twitter.com/tomlochner.