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Megaplex $540,000 Lawsuit Settlement Paid by Taxpayers, Not Insurance

Previously, we reported that the City of Alameda settled a lawsuit with the owners of Video Maniacs over the former video store at the corner of Oak and Central, which the City took by eminent domain to build the Parking Garage and multiplex. The City has confirmed to us that property tax dollars, and not insurance, will pay the settlement.

The money for the settlement came out of the budget of the Community Improvement Commission (CIC) of the City of Alameda, which is the City’s redevelopment agency, and which is funded by property tax diversions from the City’s various redevelopment project areas, which include Alameda Point, and the Business and Waterfront Improvement Project area, where the multiplex is located. The property taxes that are diverted to the redevelopment agency are known as “tax increment.” (We estimate that for the last fiscal year, $3.78 million of property taxes were diverted from the General Fund to the redevelopment agency.) Here is the City’s response to our public records request:

The Altes settlement costs were paid for from the CIC’s existing tax increment 2008/2009 operating budget which carries anticipated costs for relocation and legal expenses as well as a fund balance that anticipates additional unknown expenses during the program year. The settlement was not paid from the City’s General Fund or from Redevelopment bonds. The settlement includes resolution of a claim as well as legal fees. This was not an insurance claim.

The City clearly indicates that property tax dollars, and not “insurance,” was used to settle the claim. The point is important, because there are tens of millions dollars of lawsuits outstanding over the death of Dr. Attari and Alameda Power & Telecom’s failed telecom division, and it remains to be seen how much, if any, insurance money, versus taxpayer money, may be used to settle those lawsuits. It’s not enough to state that the City has insurance – there’s the question of whether or not the claims made are eligible under the insurance policy.

2 comments to Megaplex $540,000 Lawsuit Settlement Paid by Taxpayers, Not Insurance

  • eyes open and watching

    And the question of what kinds of claims are eligible…claims from the FISC fire for example?

    Any insight into why the Altes claim was not eligble?

  • The City provided no explanation why the Altes claim was not eligible, but we can guess that the City’s insurance covers things like injuries through accidents, but not, perhaps errors and omissions, or suits resulting from deliberate decisions.

    We dread the thought, but it will probably come down to making public records requests for the policy documents and declarations to established just what is covered by the insurance policies the City has, and wading through it all.

    The point is that it’s not enough to say “The City has insurance…” – there are different types of policies covering different types of events. I’m not yet convinced, for example, that AP&T’s/AMPs insurance will cover the Nuveen and Vectran lawsuits, but short of pulling the policy declarations, we can’t prove or demonstrate it. (But that’s a closer analogy than the Dr. Attari death to the Altes lawsuit…)