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County wins Hwy. 12 suit

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Sonoma County has won an apparent victory in court after a Sacramento County judge tentatively ruled that the county could re-enter into contracts for the Highway 12 project in the Springs and the Roseland shopping plaza in Santa Rosa.

The state’s Department of Finance had disallowed the new contracts for the two projects on numerous occasions. The original contracts were voided when the state Supreme Court ruled in favor of the state in December 2011 and dissolved the estimated 400 redevelopment agencies statewide. The county’s Successor Agency re-entered into the contracts according to the letter of the law, but the state thought otherwise so the county sued.

Judge Eugene Balonon issued the tentative ruling late Thursday and didn’t even bring the matter up during a hearing on another part of the suit Friday morning.

Juliet Cox, an outside counsel for the county, said after the hearing she’d be surprised if the judge reversed himself in his final
ruling.

But the state could appeal the ruling – and in two similar suits that the state lost against the cities of Emeryville and Riverside, the state did just that and those appeals are still pending.

Sonoma County has a second suit pending against the state for the money involved in the two projects – somewhere in the neighborhood of $6.8 million. The state wants the money, the county wants the court to decide, and Thursday’s tentative ruling on the enforceable obligations remaining after dissolution of redevelopment agencies adds to the county’s case for keeping the money.

“If the judge had ruled the agreements weren’t enforceable, the county would have to hand over the cash,” Cox said.

Kathleen Kane, the executive director of the county’s Community Development Commission, called the judge’s ruling “a big hurdle.”

“We’re going to be moving forward with the projects,” Kane said.
Kane said the enforceable obligation matter was the most important part of the county’s suit. “We of course, are very happy with this ruling,” she added.

Despite the suit, the Sonoma County Board of Supervisors in June decided to use the funds that would have gone to the redevelopment agencies to finish the two projects. And if it won the suit against the state, it would then use the cash on hand to pay back the county’s general fund.

In his tentative ruling, Balonon said, “The Court concludes the DOF (the Department of Finance) abused its discretion when it determined that payments pursuant to the Roseland Village and Highway 12 Agreements were not enforceable obligations. Because the Court reaches this conclusion, it does not reach the Petitioner’s argument that DOF waived its objections to the Oversight Board action by failing to timely object.”

Friday’s hearing was about a $2.2 million payment the state made to the county prior to the redevelopment agency being dissolved.

The state maintained it was merely an advance while the county maintained it was a regular payment. The state threatened to withhold all of the county’s property taxes if it didn’t get the money back, so the county sent it back.
First District Supervisor Susan Gorin was excited to hear that the county has apparently won the enforceable obligation part of the suit. “But I’m holding fire for the next shoe to drop – the state’s appeal,” she said. “I want to read the final decision.”
Gorin said the county will be moving ahead with construction of the Highway 12 project between Boyes boulevard and Agua Caliente Road.

Former 1st District Supervisor Valerie Brown too was pleased with the decision.

“There’s nothing that makes me happier than to know we prevailed when everyone connected with the highway project knew we should,” Brown said. “Kudos to all the believers … it worked.”

Balonon’s final ruling is expected sometime this week or next.