MORGAN HILL -- Santa Clara County and Morgan Hill officials this week announced they have settled a lawsuit over the transfer of some Morgan Hill redevelopment agency assets to the city's economic development corporation in March 2011.

State Controller John Chiang in August 2012 ordered the return of $108.4 million in assets from the economic development corporation to the city's successor agency, which is overseeing the end of Morgan Hill's redevelopment agency.

But that order was held up after the city sued the county seeking $19.8 million of those assets -- including cash, properties and lease revenues.

Now, the $19.8 million will be returned to the city's successor agency, which will send $10.1 million to the Morgan Hill Unified School District, Santa Clara County, the city of Morgan Hill, and 10 other public and educational entities.

The rest of the $19.8 million in assets is property that will be sold, with the proceeds going to the same entities, said county staff.



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