Federation of Connecticut Taxpayer Organizations

The Rancho Cordova Redevelopment Agency's decision to acquire 9.6 acres north of Folsom Boulevard through eminent domain in 2009 has turned out to be a costly one for the city.

The goal was to ease blight and make way for a satellite college campus. But the plan didn't work out, and today the city is on the hook for more than $2 million.

The landowner, Sacramento-based Lily Co., is in line to receive $900,000 of that money to recover its litigation expenses, a judge decided last month.

Lily also is to receive $200,000 for a settlement in a contract dispute with the Los Rios Community College District. Rancho Cordova has paid another $60,000 to Lily as part of its settlement in that dispute.

Finally, Rancho Cordova has incurred $1.2 million in litigation costs for outside counsel tied to the abandoned condemnation effort.

There still is no project on the Lily site northeast of La Loma Drive and Folsom Boulevard. Now Lily general partner Samuel Fong is among those left to ponder what should happen next.

"It was a very long process," Fong said. "I'm glad it's over. We did prevail against the city, and they took some huge losses.

"In hindsight, I wish there was a better way it could have been handled."

Rancho Cordova Mayor David Sander doesn't disagree.

"I think anytime you have a result that's painful, regardless of what the activity is, you probably wish there was some way you could have avoided it," Sander said.

What went wrong?

In 2007, the Los Rios district had agreed to buy the Lily acreage for a satellite campus.

Two years later the Rancho Cordova Redevelopment Agency, seeking to revitalize Folsom Boulevard, filed suit to acquire the Lily land through eminent domain.

The agency proposed to pay Lily just $387,000, far less than the $8.6 million Los Rios had offered the landowner.

The agency figured the land was worth $2.2 million, less about $1.8 million for toxic cleanup of a former dry cleaning business at the site.

Ultimately, Los Rios backed out of its deal to buy the land directly from Lily. The college would still be built, but the agency would be the project's driver.

After Lily was sued for eminent domain, the company, in turn, filed in court against the city and Los Rios alleging that the college district had breached its purchase contract and that the city had induced it to do so.

As the dispute wore on, the city continued its pursuit of redevelopment in the area.

In August 2011, the agency bought two smaller parcels east of the Lily site for $3.1 million.

Two months later, a jury put a crimp on the redevelopment agency's plans. If the condemnation were to go forward, jurors decided, the agency would have to spend far more than the $387,000 it had proposed.

A fair price, jurors decided, would be $7.9 million.

The redevelopment agency then abandoned the condemnation effort.

Soon afterward, California lawmakers dissolved redevelopment agencies outright, a move upheld by the state Supreme Court.

The Rancho Cordova City Council now is the successor to the redevelopment agency.

That Supreme Court decision "caught us in the middle of the deal," Sander said. "The timing was truly bad."

Lily, meanwhile, still owns the 9.6 acres.

City officials say the prospect of a Los Rios satellite campus at the location is still on the radar.

And Fong, Lily's general partner, said he wants to change the dynamic of the relationship between the company and the city.

"Ultimately, we still have to deal with them" on future projects at the site, he said.

http://www.modbee.com/2012/09/10/2366291/city-a-big-loser-in-land-fight.html

Call The Bee's Loretta Kalb, (916) 321-1073.