Friday, Sep. 05, 2008
Lawsuit ended by compromise
Redding company will be reimbursed for infrastructure built during 1990s
Corey Pride / cpride@losbanosenterprise.com
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ReprintA nearly $1 million lawsuit against Los Baños has been settled for almost half the amount.
The City Council on Wednesday agreed to a settlement that will pay Redding-based Summit Development Corp. $423,796 in principle reimbursement funds and an additional $91,203 in interest dating back to 1994.
The company filed a lawsuit against the city in 2005 claiming it was owed $947,090.
In the mid 1990s Summitt Development built the Los Baños Creek Regional Shopping Center, which includes Wal-Mart, on the 1500 block of Pacheco Boulevard. The city also insisted the corporation construct storm drains and basins as well as pay for a portion of the cost to build the intersection at Badger Flat Road and Pacheco Boulevard.
In April a trial date was set. The agreement between the city and Summitt Development was made June 24, the day the trial was to begin.
The agreement did not make everyone happy.
"I'm not sure if I disagree with these improvements but I do disagree with the interest being charged to the property owners because we're outside city limits," said George Allen,who owns property near the shopping center. "When these properties are annexed into the city, then the clock can start running at that time."
The lawsuit Summitt Development filed stated that it would be paid back between 1994 and 2004 by building developers who built homes or other projects in the area. Very little development occurred in and around the shopping center during that timespan.
Now developers and other surrounding property owners who pull building permits with the city will be subject to the reimbursement fees.
Public Works Director Dwayne Chisam attempted to explain why Allen and other property owners are required to pay the interest.
"The developer has made a financial investment. The interest is in essence an attempt to maintain that initial value over time," Chisam said. "If those funds weren't expended on this project and were sitting in a bank they would be accruing a certain amount of interest. So this is an attempt to balance the scales."
City Attorney William Vaughn said the government code requires that interest be included.
"During the last 10 years of negotiations with the developer we were able to get him to waive all the interest except 1.5 percent," Vaughn said.
For years city officials refused to agree to the reimbursement amount Summitt Development was asking for because some of the infrastructure that was built a decade ago was no longer usable.
The compromise allowed for reimbursement of "facilities that are still of potential benefit to surrounding properties." Those items include the Badger Flat Road intersection and a well.
Some council members were upset that a property owner improving their home would be subject to the reimbursement in the same manner as a commercial developer.
"I understand if he wanted to put a bunch of retail stuff on his land. I think that's one thing, but to just make a slight improvement to his own property does he have to pay the full reimbursement?" Councilwoman Anna Brooks asked.
Vaughn said the reimbursement amount is based on the square feet of each lot.
Allen reiterated his concern about his property being in the county.
Vaughn said he believes Los Baños only has jurisdiction within its boundaries.
"If your improvements occur while you're still in the county, I think there's a high probability that this wouldn't be enforceable," Vaughn said. "If he pulls a city permit we would collect this fee. If he pulls a county building permit, I don't know."
Mayor Tommy Jones gave his opinion.
"Our purpose was to try to find a fair way. That's what we're trying to do, create fairness. Some times it takes moving around to get there," he said.
Enterprise staff writer Corey Pride can be reached at 826-3831 ext. 106 or cpride@losbanosenterprise.com