Navigate Up
Menu + Public Affairs
Home > News Releases

County of Santa Clara and City of Morgan Hill Settle Redevelopment Lawsuit

$10.1 Million to be Distributed; Agreement Marks New Spirit of Cooperation
SANTA CLARA COUNTY, CALIF.— The County of Santa Clara and City of Morgan Hill announced that they have finalized a settlement agreement in the dispute pertaining to the transfer of Morgan Hill Redevelopment Agency (RDA) assets to the newly-formed Morgan Hill Economic Development Corporation (EDC) in March 2011. The settlement results in a voluntary reversal of the asset transfers (cash, properties, and lease revenues) to the EDC. The State Controller ordered the return of these assets in August 2012. The agreement, which will result in the distribution of $10,081,098 in assets to the Morgan Hill Unified School District, the County of Santa Clara, the City of Morgan Hill, and 10 other public and educational entities, marks a new spirit of cooperation between the County and the City of Morgan Hill.
 
“I commend Mayor Tate and the oversight committee members who worked tirelessly to comply with this difficult State mandate,” said Supervisor Mike Wasserman, District 1. “The agreement immediately provides Morgan Hill Unified School District with nearly $4.3 million, and also creates a process for working cooperatively in the future.”
 
”We are proud of the cooperative spirit demonstrated by all parties and look forward to investing our resources to further improve the Morgan Hill community,” said Steve Tate, Mayor of the City of Morgan Hill.
 
The lawsuit involved the City of Morgan Hill, the Morgan Hill Economic Development Corporation, the Morgan Hill Successor Agency, the County of Santa Clara, the Santa Clara County Office of Education, the State Department of Finance, and the State Controller.  All are parties to the overall settlement agreement.
 
The estimated account balance distribution is outlined below:
 
COUNTY OF SANTA CLARA
 
IMPLEMENTATION OF ABx1 26 & AB 1484
 
CITY OF MORGAN HILL SUCCESSOR AGENCY
OTHER FUNDS & ACCOUNT BALANCE DISTRIBUTION - ESTIMATE
 
AFFECTED TAXING ENTITIES
AMOUNT($)
Morgan Hill Unified School District
4,291,511
 
Educational Revenue Augmentation Fund (ERAF)
1,521,280
 
Santa Clara County
1,375,920
 
Morgan Hill City
972,704
 
Gavilan Community College
545,505
 
County Retirement Levy
367,014
 
County Office of Education
328,838
 
Santa Clara Valley Water District
314,733
 
Santa Clara County Library
251,165
 
State Water Project
68,168
 
County Library Retirement Levy
22,702
 
Bay Area Air Quality Management District
18,196
 
Loma Prieta Resource Conservation District
3,362
 
Estimated Total
10,081,098
 
 
In a separate agreement between the County and City, the entities have agreed to jointly resolve the other outstanding issues related to the wind-down of the former RDA, including working together on a long-range property management plan for improving downtown Morgan Hill. Furthermore, the agreement will ensure that the City can use approximately $19 million remaining from unspent RDA bond proceeds to improve its downtown, $10 million for wastewater treatment plant improvements and expansion, and the ability to recover previous project related expenses.
The agreement calls for the Successor Agency to develop a Long-Range Property Management Plan for the transferred properties with the advice and guidance of the City and County. Assuming the County, City and Successor Agency are able to agree on the Plan, it will be presented collaboratively to the Oversight Board for approval.
In addition, the agreement involves a groundbreaking joint effort to refinance the RDA’s 2008 bonds by including the County Auditor-Controller as part of the refinancing structure. It is anticipated that this partnership will result in significant savings for all the affected taxing entities.
 
Media Contact: Gwen Mitchell/Laurel Anderson, Office of Public Affairs 408-299-5119; Steve Rymer, City Manager, City of Morgan Hill 408-310-4625.
Posted: May 23, 2013