A recent court ruling against the city of Tracy and Surland Communities, LLC, will force the city to reconsider how it proceeds on the proposed aquatics center in the Ellis development.
San Joaquin County Superior Court Judge George Abdallah ruled in February that a May 2018, amendment to the 2013 development agreement between the city and Surland was invalid.
As of August the city was prepared to move forward on the project, with the city putting up most of the expected $65 million cost. While the city was putting up most of the cost, one of the provisions of the amended development agreement was that Surland would take the lead on design and construction of the aquatics center.
At issue is a lawsuit that former Tracy City Councilwoman Mary Mitracos filed right after the council approved the amendment, with local attorney Mark Connolly representing Mitracos in the lawsuit. Abdallah signed an order on Sept. 30 supporting Mitracos’ contention that the 2018 amendment to the agreement violated state law. The city was served with that judgement on Oct. 8.
The development agreement from 2013 gave Surland priority for 2,250 residential growth allotments (RGAs), and the developer was required to contribute 16 acres of land and $10 million toward a new aquatics center.
The 2018 amendment applied primarily to how Surland would be allowed to use its 2,250 RGAs, which serve as a step toward taking out building permits for new homes. The amendment gave the developer flexibility on how it could apply RGAs issued in excess of what Surland would need to complete the Ellis development.
Under the 2018 amendment, Surland could apply those excess RGAs to other properties outside of Ellis, as long as the city and Surland could come up with a subsequent amendment specifically naming those properties where those RGAs would be applied.
Connolly said Monday that the provision calling for a subsequent amendment was the fundamental problem with the 2018 amendment. In his ruling, Abdallah noted that two sections of the California Government Code were violated. Those sections, 65865(b) and 65865.2, require that the development agreement include a timeline under which property would be annexed and developed, as well as descriptions of the permitted uses that apply to the property and the type of development that would be planned.
“The flaw is you can’t have a development agreement that allow RGAs to flow to property that isn’t specifically identified in the development agreement,” Connolly said. “It’s very simple. It’s not meant to allow a city to come along two years, five years or 10 years later, and say, ‘Oh by the way, we want this development agreement to apply to this property, which the developer has now acquired some time later.’ That’s just contrary to law.”
In addition to affecting Surland’s use of RGAs, the amendment also allowed Surland to design and build the aquatics center, with the developer’s pledge of $10 million to be applied toward the total cost of the center and the city to pick up the balance of the cost.
City Parks and Recreation Director Brian MacDonald on Tuesday described the progress made on the aquatics center so far. On Aug. 18 the Tracy City Council agreed to cap the cost of the aquatics center at $65 million, using money from the 2016 Measure V half-cent sales tax, and build it in phases.
The city has $16 million in-hand now, with another $5 million to $7 million expected to come in this year from Measure V. There’s also Surland’s contribution of $8 million, with the developer having already contributed $2 million toward design of the center.
“We estimate at the end of this fiscal year we will have about $30 million, by June 30 of next year,” MacDonald told the council.
The 2018 amendment is commonly referred to in city documents as the “second amendment” because it was the second time that the city council had approved changes to the 2013 development agreement.
On Tuesday Tracy City Attorney Leticia Ramirez told the city council that while the city and developer still must enter into a design, funding and construction agreement, the city is required to put the project out to bid in order to select a contractor and determine the actual cost.
“Upon further review by our office, we realized that because this is a public improvement, funded by taxpayer dollars -- it’s a $65 million budget, $55 million of which are taxpayer dollars -- the project has to be competitively bid,” Ramirez said.
“There was perhaps a misunderstanding or mistaken belief that the developer could actually construct it,” she said, adding that the Public Contract Code would prohibit that. “The state law requires that the city, or any public agency, competitively bid the construction of any public improvement that’s in excess of $5,000.”
Ramirez added that details on how to proceed are the topic of ongoing discussion between the city and Surland. She advised the council to not make any further decisions regarding the aquatics center pending the city’s official response to Judge Abdallah’s ruling.
“In short, our office is advising the city council to not take any action that would be construed as implementing the second amendment, and the second amendment to the Surland DA states that the developer will be facilitating design and construction.”
It’s the latest episode in the ongoing discussion over whether the city will ever get the aquatics center that was supposed to be built along with the Ellis project. Citizens who have followed the matter called in to express their frustration.
Todd Lieberg, who has been active with the Tracy Tritons Swim Club and Tracy High’s aquatics programs, said the city’s objective should be to move the aquatics center project forward as quickly as possible.
“The timeline that was put up earlier showed 2017 as the start of this project. This project has been going on in some form for 10, 15 years prior to that,” Lieberg said.
“The question I’m posing to the city is, at what point does the city say this is taking too long? The council must set a date when construction must actually begin. There’s been so much talk for so many years but really no progress has actually been made.”
Council members agreed that it’s time for them to take control over the project. Mayor Pro Tem Nancy Young said citizens affirmed their desire for this kind of project when they approved Measure V four years ago.
“When callers call in and say we need to just take the land and we need to just take the money, this was land and money that was offered to provide an amenity. Our public has spoken out to say, ‘Yes, we will invest in ourselves, so now we have this public money to help buffer and to be able to give our community a much better project.”
• Contact Bob Brownne at email@example.com, or call 209-830-4227.