Monterey may share tax revenue on Hotel Pacific property.

The Hotel Pacific in Monterey sits on the last property to be transferred from the former redevelopment agency to the city. Unlike past transfers, the $2.5 million property at 300 Pacific St. is also subject to an agreement with the U.S. Department of Housing and Urban Development that the city claims precedes any commitment with the state. Or so the city hopes.

In 2011, the state scrapped its redevelopment agencies, leaving cities scrambling to absorb properties, projects and debt. Under the Redevelopment Dissolution Act, once a property is sold or transferred, the revenue generated must be shared with local taxing entities.

In the case of the Hotel Pacific, which nets the city more than $300,000 a year, city Housing and Property Manager Rick Marvin says that property, excluding the building, was purchased in the 1960s using HUD funds. A contractual agreement mandates that future revenues from the sale or transfer of the property should go to city Community Development Block Grants.

The state approved the city’s plan for the property in December, after it threatened to reject previous drafts for Monterey’s reluctance to share revenue.

The Monterey City Council will likely transfer the ground lease for the Hotel Pacific to the city at its Feb. 2 meeting. Before the city can officially transfer the property deed to the city, it must agree with other public bodies on how to share the tax revenue.

The city must negotiate with 10 local entities, including Monterey County, the Monterey Peninsula Unified School District, Monterey Peninsula College and the Regional Park District.

Representatives of those agencies did not return calls requesting comment.

Marvin would like to see that all the revenue stays with the city to fund projects for low-income residents, but concedes the city might be forced to share. The amount that might be split remains under negotiation.