Image via wikipedia user Amanda Paul

The City of Hanford has settled a lawsuit filed by an ag chemical company over a 2014 land deal, with the city paying out $12.5 million over five years.

The Hanford City Council held a special meeting Tuesday afternoon where it approved the settlement agreement with Helena Agri-Enterprises, LLC. Helena was seeking $38 million in damages plus interest and attorney fees for total of more than $50 million, according to a City of Hanford news release.

Back in 2014, the City and Helena entered into a memorandum of understanding (MOU) for a property swap — Helena’s current Lacey Boulevard location just north of a new Costco location with City-owned land in the Kings Industrial Park. The deal was slated to include payment of relocation costs — determined by Helena at around $14.6 million. The MOU envisioned the signing of a definitive agreement, but terms could not be met.

Fast forward to 2016 when Helena and the City have a purchase and sale agreement for the same industrial park property. After being in escrow several months, Helena was ultimately unable to close, with Hanford terminating escrow, according to the City news release.

Helena launched a complaint in 2017, amending it a year later to include breach of the 2016 purchase agreement, which included an attorney’s fees provision. A trial was set for Feb. 6, but the parties were able to come to a settlement agreement upon approval of the City Council.

As part of the settlement, the City will pay $7.5 million within 30 days of execution, with an additional payment of $1.25 million each year for the next four years starting March 1, 2024.

After that, the City will pay Helena $1.25 million dollars each year for the next four years beginning March 1, 20204.

The payment will come from the general fund — which carries an unrestricted balance of about $11 million, according to a City staff report. A General Fund reserve has $5.5 million in cash to pay, with the remainder being made available through internal borrowing within City departments at a recommended 2.5% interest rate.

“It’s important for the public to know that this settlement will not impact the City’s ability to continue to provide essential services to our residents, such as police and fire services,” said Mayor Travis Paden. “The fact that this lawsuit has been pending for so long has had an impact on the City’s ability to budget for future services for many years now and although unfortunate, it’s a relief to bring closure to this matter.”

The loan may hinder the City’s ability to fund major projects while the loan is outstanding for a term up to 10 years, according to the report.