Suit Over Oxnard Tax Funds Dismissed

A Ventura County lawsuit claiming that Oxnard abused state law to grab $50 million in property taxes from other public entities has been dismissed because county lawyers failed to post a proper notice of the case in a local newspaper.

In a tentative ruling, a Santa Barbara County Superior Court judge Tuesday threw out the suit that challenged inclusion of five commercial centers in a city redevelopment zone after finding that the county had left out key parts in a public notice required by law.

That means the county’s case may never be heard, Oxnard City Atty. Gary Gillig said. He expected Judge Thomas Anderle would make the ruling final in a few days.

“Unless the county wins an appeal, the case is over,” Gillig said. “The county will not have the opportunity to argue the merits ....I would not like to be the county counsel today explaining this to the Board of Supervisors.”

Assistant County Counsel Daniel Murphy said he would discuss with the board the chances of a successful appeal, but would not comment on the legal basis for such action.

“This is a one-strike-and-you’re-out type of situation,” he said.

“It’s a severe remedy for a technical defect. Oxnard picked up on that defect so they didn’t have to deal with the merits of the case. And it’s my fault.”

Murphy notified the public of the lawsuit with a “legal summons” form that he first used in 1989. A 1998 law change required him to also notify members of the public that they could join the suit without facing retribution.

“I used a summons I had used in previous cases, and I did not pick up that it had been amended,” Murphy said.

A second flaw, the judge found, was lack of a detailed summary of the central issues of the case. Murphy said he provided a 13-line summary, which he still believes satisfied the requirement.

The county sued Oxnard in June after the City Council declared a closed Home Base store, a defunct Home Depot big box and three aging shopping centers an economic burden on the community and suitable for reconstruction in a redevelopment zone. The move would funnel new property taxes in those areas to the city to underwrite their revival.

The county maintained, however, that Oxnard’s new redevelopment projects represented an illegal tax grab that would siphon $50 million over 45 years from local schools, community colleges, special districts and the county of Ventura.

At issue was whether the five commercial centers represented urban “blight.” Oxnard lawyers said the areas were blighted because each had been abandoned by a major retailer and the empty anchor buildings were dysfunctional and obsolete.

But some urban planning experts said the Oxnard case raised questions about whether state redevelopment law -- plagued by controversy for decades -- was being used to revitalize depressed neighborhoods, as originally intended, or to divert tax money that should go to other public agencies for basic community services.

The Legislature passed the California Redevelopment Law half a century ago to help cities rebuild economically depressed, or blighted, neighborhoods.

Legislative reforms in 1984 and 1993 closed a loophole that had allowed cities to declare vacant land blighted.

Today, a blighted area has to have problems “so prevalent and so substantial” that they constitute “a serious physical and economic burden on the community which cannot reasonably be expected to be reversed or alleviated by private enterprise or governmental action, or both, without redevelopment.”

A focus of the county suit was a 100,000-square-foot former Home Base store, built in 1987, in the shopping center fronting the Ventura Freeway.

The county argued that the store did not qualify for redevelopment assistance just because of its vacant status. But the city argued that every other major tenant had threatened to leave when leases expired if a replacement for Home Base was not found.

The City Council agreed this week to lend the owner of the Home Base store, Quality Real Estate Management, $2.8 million to prepare the building for lease to Fry’s Electronics.

The loan will be forgiven if Fry’s posts $50 million in business a year and the city receives $500,000 annually in sales tax, and if the store provides 250 new jobs, Gillig said.

If those conditions aren’t met, the owner must repay the loan at $295,000 a year for 10 years, he said.