|City of Orange|
Business & Public Affairs Manager
230 East Chapman Ave.
Orange, CA 92866
Phone: (714) 288-2590
|FOR IMMEDIATE RELEASE||PRESS RELEASE #06032014|
|Subject :||Court Agrees With Orange in $7.1 Million Dollar Case|
|Contact :||Paul Sitkoff, Public Affairs and Information Manager, Community Services (714) 288-2590|
ORANGE, Ca. – A final ruling was issued in Sacramento last week on the Serrano Woods case in favor of the City. The case involved the City of Orange being forced to sue the State over a 2011 contract in the amount of $7.1 million dollars, which the State Department of Finance claimed was invalid.
As part of the statewide dissolution of Redevelopment, the California Department of Finance was given the authority to approve payments by the newly formed Successor Agencies on existing obligations. The Department of Finance had rejected the City's claim that an existing Loan Commitment Letter to fund the construction of the Serrano Woods affordable housing project was an enforceable obligation.. Although the Serrano Woods project was completed in August of 2012, the State was threatening to withhold $7.1 million in funds to the City.
Several attempts by City officials to negotiate with the Department of Finance were met with rejection, leading to the lawsuit by the City in 2012. After hearing the arguments, the Court determined that the contract was valid, and should be recognized by the State as part of the City dissolving its former Orange Redevelopment Agency.
The Mayor and City Council of Orange were extremely pleased with the outcome, which affirmed their belief that funds meant for local projects should remain under local control.
The $7.1 million dollars was originally obligated by the Orange Redevelopment Agency, and part of an overall funding package meant to encourage the development of affordable housing. The contract for the construction of 64-unit project was between the City, the Orange Housing Development Corporation, and C & C Development.