Developer Sues State, County and Hercules; Top Official Says City is Off the Hook

Andrew Sabey was quoted in a May 24, 2012 Contra Costa Times article about a developer suing the city of Hercules, the state Department of Finance and the Contra Costa County Auditor-Controller over a $53.3 million debt owed by the dissolved Hercules Redevelopment Agency.

The suit, filed in Sacramento County Superior Court on behalf of Cox, Castle & Nicholson client Hercules LLC, seeks to undo a finding that cities are no longer liable for redevelopment agencies' debts because of legislation that dissolved the agencies as of February  1. The debt sprang from a dispute over a development agreement between the city, the redevelopment agency and Hercules LLC that resulted in Victoria by the Bay, a subdivision built on the site of a former petroleum refinery. The matter settled in 2007 with the redevelopment agency agreeing to pay Hercules more than $50 million through property tax increments over a more than 40-year period.

In an email to the newspaper, Sabey wrote that Hercules was named as a co-defendant "to prevent the state Department of Finance from ordering the city or county to deliver to it tax revenues that are due to Hercules LLC." Sabey added that the development agreement "has priority over any rights the state is asserting to those funds."