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Politics & Government

Court Date Set for Lawsuit Over Redevelopment Areas

Almost a year after the lawsuit is filed, the city of Milpitas and Santa Clara County have set a hearing date for Sept. 23.

A nearly year-long lawsuit that Santa Clara County filed against the city of Milpitas and its Redevelopment Agency is showing no signs of cooling off anytime soon.

A court date has been set for Sept 23 over the Redevelopment Agency's latest redevelopment project plans in the Great Mall, Midtown, Town Center and southwest portions of the city.

No settlement conferences have been scheduled between the two parties, according to Marcy Berkman, deputy counsel for Santa Clara County.

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Bryan Otake, assistant city attorney, without commenting on specifics, said that "Milpitas would listen to reasonable settlement proposals from the county."

The parties have been in case management conferences with Judge Marie Weiner of the San Mateo County Superior Court. She will preside over the trial using lawyers' arguments and a set of previously agreed upon documents.

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"Though the hearing is sometimes called a 'trial,' it is not the type of trial where there are witnesses on the stand being cross-examined," said Berkman. "The lawyers address their various points in oral argument, and, primarily, the judge asks them a lot of questions that they answer."

The beef between the city and county is that the Milpitas Redevelopment Agency (RDA) wants to add amendments to the plans that would bring more properties under the redevelopment umbrella. By defining them as blighted or underutilized, the city can qualify for RDA funding and help the city minimize state takeaways of local tax dollars.

But the county argues that those properties, and others cited for inclusion in the RDA proposal don’t meet the legal requirements set forth in the California’s Community Redevelopment Law (CRL).

To meet the CRL definition of blight, a property must meet one or more of these conditions:

  • Unsafe or unhealthy buildings that may result from code violations;
  • Dilapidation and deterioration, defective design or physical condition;
  • Inadequate parking, adjacent or nearby uses that are incompatible with each other;
  • Stagnant property values, abnormally high business vacancies, abandoned buildings;
  • Lack of commercial facilities found in neighborhoods (grocery stores, banks, drug stores);
  • High crime rate constituting a serious threat to public safety; and
  • Improper drainage or flood control issues.

In this case, the RDA, in a 2010 report, listed several properties in the amendment areas that it felt met the definition.  Notable among them were two mid-size retail centers:  Beresford Square Shopping Center at North Milpitas and  E. Calaveras boulevards and Foothill Square Shopping Center on Jacklin Road.

In its complaint, Santa Clara County noted that Beresford Square “is in good physical condition and almost entirely occupied by food and retail tenants including McDonald’s, CVS and Orchard Supply Hardware.” They also noted few business vacancies at Foothill Square anchored by the Nob Hill Foods grocery store, which they described as a “boutique” retailer.

The idea behind redevelopment is to increase property values and stimulate business in targeted areas. When that happens, cities can benefit from higher property and sales tax revenues which help fund city services, projects and operations.

"Redevelopment has played an important role in the economic development of the Milpitas community," said Assistant City Attorney Bryan Otake, adding that  "redevelopment has been a 'win win' for the entire region."

This type of RDA lawsuit is not unusual. Los Angeles County filed suit against the City of Glendora over a redevelopment plan that city adopted in 2006. As in the Milpitas case, Los Angeles County officials claimed the Glendora RDA plan didn’t meet CRL requirements. The county prevailed in 2008, but Glendora appealed. The case was closed in 2010 when the California Court of Appeals published a decision supporting Los Angeles County’s position.

The original Milpitas RDA project area was adopted in 1976 and included 577 acres. In recent years more areas have been added to the project. Today the city’s merged redevelopment area consists of two redevelopment project areas: Project Area No. 1 and the Great Mall Project Area.

Project Area No. 1 covers about 2,230 acres and includes the Town Center, Midtown Milpitas, Oak Creek and Milpitas Business Parks. The Great Mall Project includes the Great Mall and several housing developments. Numerous businesses also have located in the area, including Cisco Systems, LSI Logic and KLA Tencor.

Retail centers include The Great Mall, Milpitas Square, Milpitas Town Center, Serra Center and smaller neighborhood shopping centers.

In May 2010, the Milpitas City Council adopted ordinances which gave final approval to redevelopment plan amendments. RDA proposed adding two swaths of land totaling about 600 acres to the city’s Redevelopment Project Area No. 1. The county filed its lawsuit a month later. Last October, the case was moved to San Mateo County Superior Court at the request of the city.

Redevelopment projects are nothing new in Milpitas. Over the years the city’s RDA has completed numerous successful projects including the new community library and the DeVries Senior Housing complex. Its most ambitious project was helping to renovate the old Ford auto assembly plant into the Great Mall. The new senior center, renovated from the old library next to city hall, was a project overseen by the RDA. Future projects include a revitalized Main Street.

“I'm passionate about redevelopment,” City Manager Tom Williams said at a in February.  “Without it, Milpitas would be in significant decline. If the RDA goes away, Main Street will never be developed.” 

Meanwhile, Milpitas is urging its residents to write to their elected state officials to support RDA programs.

However, the economic downturn has affected city coffers throughout the state. And, in an effort to help close a $25 billion state budget deficit, Gov. Jerry Brown has proposed eliminating RDAs in cities across the state and redirecting the money in them to the state.  That has prompted some cities, , to try and put RDA projects on a fast-track before the state can take the money away.

But Brown hasn’t yet won that battle. Under the recently voter-approved Proposition 22, state confiscation of local funds may be illegal, according to the State Legislative Council. The proposal is continuing to wind itself through legislative channels.

If Brown's proposal ultimately is successful, how might the county's lawsuit against the Milpitas RDA be affected? 

According to Otake, it might work in Milpitas' favor: "The governor's proposal to dissolve redevelopment agencies and redirect the flow of redevelopment tax increment funds, if enacted into law, would have the potential to render moot much of the county's lawsuit against Milpitas," he said.

In the event that a decision goes against Milpitas, would the city appeal? Otake didn't rule that out. "The City Council and the Redevelopment Board would consider all legal options available to it in the event of an adverse decision."

But for now, the lawsuit over the Milpitas RDA amendments is headed to trial.

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