LIVERMORE -- A judge has rejected the Livermore Valley Performing Arts Center's (LVPAC) request to hold onto more than $120 million in redevelopment funds intended to pay for a 2,000-seat regional theater, putting the project in jeopardy.

In a ruling issued Tuesday, Sacramento Superior Court Judge Eugene Balonon determined the Department of Finance was within the law when it decided financial agreements made between LVPAC and the former Livermore Redevelopment Agency were not enforceable obligations, denying $122 million in future tax increments for the nonprofit's proposed theater in downtown Livermore.

"We are disappointed by the court's ruling, of course, and we will be studying it very carefully with our lawyers," said new LVPAC executive director Ted Giatas.

Munchkins wait on stage at the Livermore Performing Arts Center in Livermore, Calif. for stage direction before a dress rehearsal of the Wizard of Oz
Munchkins wait on stage at the Livermore Performing Arts Center in Livermore, Calif. for stage direction before a dress rehearsal of the Wizard of Oz Monday, January 14, 2008. (Jay Solmonson/STAFF FILE)

The state dissolved redevelopment agencies in 2012. The Livermore successor agency submitted a list of financial obligations that May, including the money for the regional theater project, but the Finance Department denied the payments.

"We're pleased the court found the department acted in accordance with the law in making the decision," said Finance Department Deputy Director of External Affairs H.D. Palmer.

In his decision, Balonon ruled that LVPAC had not issued any of the $98 million in bonds as part of a 2011 amended development agreement with the successor agency "in a timely manner," and did not have a valid contract before the state's Dissolution Law (affecting redevelopment agencies), therefore no breach of contract had occurred.

"The Court finds that the Dissolution Law furthered a substantial and legitimate state interest," Balonon's ruling states. "LVPAC has not shown an unconstitutional impairment of its contractual rights under the amended (development agreement)."

LVPAC can appeal or ask for a stay of the decision which, if it stands, eliminates the primary source of funding for the regional theater, and could have an even more immediate impact on the existing 500-seat Bankhead Theater, according to Livermore city attorney Jason Alcala.

"The Bankhead was intended to operate in tandem with a regional theater," Alcala said, adding the result "may be more problematic" for the Bankhead.

Alcala said he didn't consider the ruling "a formal rejection" of the regional theater. The city will work with LVPAC to find other funding sources, he said, cautioning the options available under state law are slim.

"We saw the handwriting on the wall, but it's additionally disappointing in what the state has done here (with regard to) impacts to the community," Alcala said. "No stone will remain unturned."

Contact Jeremy Thomas at 925-847-2184. Follow him at Twitter.com/jet_bang.