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The construction contractor who built the southern extension of Butterfield Boulevard filed a claim for about $2 million in damages with the City of Morgan Hill, though the parties are working on a settlement of the dispute over the project’s delays and cost overruns, according to a source from RGW Construction.

The Morgan Hill Redevelopment Oversight Board approved the City’s proposal for the development of 18 properties previously owned by the Redevelopment Agency. The document, known as the Long Range Property Management Plan, will next be forwarded to the state Department of Finance for review and approval. If and when the state approves the plan, City officials will begin implementing it by seeking proposals from developers and contracts for construction and property transactions. The Oversight Board, made up of seven members representing different agencies that have a stake in the dissolution of the RDA, approved the plan unanimously Wednesday. Most of the properties in the LRPMP are in downtown Morgan Hill. Properties slated for private development in the proposal include the Granada Theater and Downtown Mall, Royal Clothier building and the former site of Simple Beverages. The City hopes to redevelop these properties with mixed-use projects “to transform (downtown) into a community hub for retail, dining and entertainment uses,” according to a City staff report.Two of the properties are slated for public uses, including the BookSmart shopping center on Depot Street which is designated for a multi-story parking garage in the plan. However, City Council members have indicated they will attempt instead to build the parking structure on the “Sunsweet” property one block south of the BookSmart center. The Sunsweet property is privately owned by Morgan Hill developer Rocke Garcia, who has expressed his eagerness to work with the City to build a public parking facility on his downtown land. The other property designated for public use is a site on Butterfield Boulevard, between the South County Courthouse and the VTA parking lot. The City plans to one day build a new fire station on that property, which is currently leased by the Community Garden. Development of the two public use sites will be subject to an agreement with all the agencies that have a stake in RDA dissolution, including the County Office of Education, Community Colleges, the Santa Clara Valley Water District, the County and the City itself. The properties contained in the LRPMP were purchased by the Morgan Hill RDA several years before the state shut the agency down in 2012. They are now held in a “community redevelopment trust fund,” awaiting the state to sign off on their further use. The DOF does not have a designated time period to review and approve the LRPMP, City Manager Steve Rymer said. Brad Jones, co-owner of the BookSmart shopping center and president of the Morgan Hill Downtown Association, commended the Oversight Board and City Council for approving the LRPMP. Jones and other tenants among the eight businesses housed in the BookSmart center have indicated they support the parking garage on the Sunsweet property. No matter what ends up with the BookSmart property, which the RDA purchased an option on for $1.7 million in 2010, those tenants will eventually be relocated.“If we get displaced by a parking structure, there is no place for us to go in the downtown,” Jones said at the Oversight Board meeting. “The Morgan Hill Downtown Association has been a partner in the development of downtown for many years. We should look at the long-term effects of having the parking garage in the right place.”The LRPMP is a result and a requirement of the state law that shut down RDAs statewide in 2012, in order to direct their resources back to basic services. Redeveloping the properties in the LRPMP benefits the other agencies that collect revenues in the former RDA area by promoting economic development, RDA proponents have said. The only property in the LRPMP that is not downtown is just north of downtown, at the former El Capri site near the intersection of Monterey and Cochrane roads. The City plans to redevelop this site as a “gateway” to the downtown, according to the LRPMP.