SAN LEANDRO -- The city and its redevelopment successor agency have agreed to pay $7.75 million to a private family trust to settle a dispute over a more than decade-old deal to bring a movie theater to the Bayfair Center.

The estate of Douglas M. King and members of the King family had sought $46.8 million from the redevelopment agency in a lawsuit filed in January 2012. The suit claimed that the center's former owner, Bayfair 580, LLC, had not made lease payments after 2011 for use of a 3.7-acre parcel in the center's parking lot.

The redevelopment agency was trying to bring a movie theater to the then theater-less Bayfair Center, and use at least a portion of the parcel. The redevelopment agency in 2000 signed an agreement guaranteeing that the lease payments would be made to the family, city staff said. The Century 16 Bayfair movie theater was built in 2001 on property owned by the center.

When Bayfair 580 defaulted on the lease in 2011, the Kings looked to the redevelopment agency for payment, and then to its successor agency after redevelopment agencies were dissolved by the state last February.


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The tentative $7.75 million settlement announced this week must be approved by the successor agency's oversight board, the Alameda County Superior Court and the state Department of Finance before it becomes final, a process city staff said could take 60 days. The oversight board is scheduled to consider approval of the deal Feb. 13.

The settlement will be paid over five years beginning in July with tax dollars previously collected by the city's redevelopment agency, not the city's general fund, Mayor Stephen Cassidy said.

The leftover redevelopment funds to be used are separate from the more than $6 million the city and successor agency are seeking to protect in court in a lawsuit against the state Department of Finance and county, which had ordered the funds be handed over to the state, said Jayne Williams, attorney for San Leandro. The city and successor agency will not seek funds from Bayfair 580, LLC since the company "has filed for bankruptcy and has no assets," Williams said.

Under the terms of the deal with the Kings, the family will dismiss all other claims against the city and successor agency once the settlement is finalized. The settlement also calls for the King family, the city and successor agency to make their best effort to develop the property in the future.

Hayward attorney Anthony Varni, who represented the Kings in the case, did not respond to requests for comment.

Ashly McGlone covers San Leandro, San Lorenzo and the Washington Township Health Care District. Contact her at 510-293-2463. Follow her at Twitter.com/AshlyReports.