Lowball Watch – California

Loansafe.org reports that Rancho Cordova has just had a rude awakening. Back in 2007 the Los Rios Community College District agreed to buy a 9.6-acre parcel from the Lilly Co. for a satellite campus for $8.6 million.  But then the Rancho Cordova redevelopment agency filed an eminent domain action, seeking to take the subject parcel for $387,000 (i.e., $2.2 million, less $1.8 million in cleanup costs). That caused Los Rios to back out of the deal, and later  resulted in a settlement for breach of contract in favor of Lilly in the amount of $60,000.

But when the eminent domain case went to trial, the jury disagreed with the agency and awarded $7.9 million. Faced with that verdict, the Rancho Cordova redevelopment agency abandoned the condemnation, but under California law, it had to pay Lilly $900,000 in litigation expenses (including attorneys and appraisers’ fees). The city also incurred legal expenses of its own in the amount of $1.2 million.

Then came the unexpected. The California legislature abolished redevelopment, and the state supreme court upheld that law as constitutional. Since the redevelopment agency thus ceased to exist, its assets and liabilities shifted to the city of Rancho Codova which is now on the hook in favor of Lilly to the tune of over $2 million, and Lilly still owns the 9.6-acre subject property.

For the story go to http://www.loansafe.org/city-a-big-loser-in-land-fight