City Hall Funds May Be Used to Pay for Drainage Improvements Agreed to Under Settlement Agreement.
Over the last couple of years, we have reported on the San Juan Capistrano-Scalzo Family Trust dispute, in which SJC got hit with a $9.4 million judgment inclusive of litigation expenses in a battle over a proposed 31-lot development where 121 conditions were imposed by the city (unfairly, was the claim of the Family Trust). Eventually, the parties settled, but the bad news for SJC was that it had to pay the Trust $6.35 million plus drainage improvements that may cost an additional $2.5-3.7 million. See our past posts of October 3, 2010 and February 4, 2011 for more details.
Now for an update.
As reported by Brittany Levine in the April 19, 2011 edition of The Orange County Register, SJC had paid about half of the settlement by using general fund reserves, with with the apparent current plan to soak up the remainder with “judgment obligation” bonds (that’s right, taxpayers, bonds that you can invest in if you want). Supposedly, $2.54 million is still owed to the Trust, and this obligation is not covered by insurance because land use permit disputes are exempted from coverage. (You will learn about that from prior posts.) Now, to pay for the additional drainage improvements, SJC may have to use $1.6 million in reserves set aside years ago to replace City Hall as well as supplement with about $2 million in reserves that it expects to get from the community redevelopment agency. (The latter being a whole different issue given Governor Brown’s proposal to phase them out.) A detailed report on this whole mess with be presented to SJC’s City Council in May of this year, including having City Council bless the bond issuance for the “judgment obligation” component (which is, by the way, sans any inclusion of the drainage improvements obligation).
We can only say, stay tuned for further developments. Storm watch, storm watch.
Cloud front of approaching storm from Lake Michigan. 1942. Library of Congress.