The City Council will decide Monday whether to enter into a settlement agreement that would compel the city to pay Samuelson & Fetter $610,000 and and essentially give the developer land for free.
The council will consider the terms in a special meeting after they were agreed to by attorneys for both parties. The council must still vote to approve the agreement, which must then be approved by a judge.
The agreement calls on the city to pay Samuelson & Fetter $2.78 million and then sell a lot of land east of Magnolia Avenue and south of Pomona Avenue to the developer for the exact same amount--$2.78 million, according to Councilman Tom Adams.
"The city ... is paying Samuelson & Fetter $2.78 million to terminate the lawsuit," Adams explained. "And then we sell the land to Samuelson & Fetter for $2.78 million. Basically we're giving them the land for free."
Additionally, the city must pay $510,000 to the developer and up to $100,000 for environmental insurance premiums on the land, according to the settlement agreement.
The payments were agreed upon in the city's original development agreement with Samuelson & Fetter, according to City Manager Laurie Lile.
"The development agreement had some provisions for reimbursement ... for some of their costs for development of the Station Square Design Plans," Lile said. "There is no reason not to do the reimbursement."
The money comes from the budget of the successor agency to the city's redevelopment agency, which was eliminated by the state last year. If the council approves the settlement, it must then be approved on Wednesday by an oversight committee set up to handle the agency's finances. The state Department of Finance must also sign off on the agreement.
Lile said the city decided to settle because it did not want to continue to spend money fighting the lawsuit.
"I think, from our perspective, challenging the lawsuit in court and litigation--it is not very productive," she said. "It is very expensive and time consuming."
The settlement agreement stems from a $106 million lawsuit filed by the developer against the city in August alleging the city breached a development contract. The land specified in the agreement will be developed as part of the Station Square Transit Village project and will house a Gold Line parking facility.
Blaine Fetter, a principal at Samuelson & Fetter, could not be reached for comment on this story.
Clarification: A previous version of this story stated that Samuelson & Fetter would pay $2.78 million for the land but did not mention that the city would give the developer the same amount of money. We regret the misunderstanding.