Court Throws Out Development Deal

A state appeals court has ruled unconstitutional the agreement Huntington Beach made to finance redevelopment of two blocks downtown.

The unanimous decision filed Wednesday by the 4th Appellate District Court in Santa Ana said the deal violated the state law requiring cities to have balanced budgets.

Citizens Against Redevelopment Excess, a group of Huntington Beach residents and business and property owners, filed a lawsuit challenging the arrangement. An Orange County Superior Court ruled against the group last year.

The case focused on a two-block area bounded by Pacific Coast Highway, Main Street, Walnut Avenue and 6th Street. The project was to be done by CIM Group, the firm that developed Santa Monica’s Third Street Promenade. Plans included a hotel, stores, restaurants and underground parking structure.

The appeals court ruled that Huntington Beach’s agreement to contribute sales and hotel taxes to the city’s redevelopment agency for 25 years after the project was finished was unconstitutional, said Jeffrey Oderman, an attorney for Citizens Against Redevelopment Excess.

A city cannot agree to spend money in a future year without voter approval, Oderman said. The city estimated the payments would amount to about $30 million, Oderman said, but his group projected them to be much higher.

The Huntington Beach city attorney’s office did not return calls Thursday seeking comment on the court decision.

Councilwoman Shirley Detloff said, “We’d like to make some beneficial changes to downtown. I hope this doesn’t impact that.”