Santa Clara County owes the city of San Jose nearly $7 million that was wrongfully diverted to employee retirement accounts, according to a ruling handed down Friday by a Sacramento Superior Court judge.

County CFO Vinod Sharma in 2012 retained the money legally pegged for the city to pay down bond debt leftover after the state-ordered dissolution of Redevelopment Agencys (RDAs). Sharma argued that the county could keep the money because the amount represented a 1944 voter-approved levy for public employee retirement.

Hon. Allen Sumner ruled against Sharma’s decision. Sumner says the county improperly held back the tax increment proceeds from the Successor Agency to the Redevelopment Agency, an entity tasked to pay off debt legacy from the shuttered redevelopment agency. If County Executive Jeff Smith wasn’t so preoccupied with other matters, we’d insist that he send a letter explaining exactly how he feels.

RDAs were first created a half-century ago to clean up run-down neighborhoods, and they weren’t supposed to be funded by new taxes. Instead, the agencies got their funding from the increase in property values in a district they revitalized. That rise in property value is called a tax increment. When the state killed redevelopment, the county figured it could pick up that tax increment to pay into its retirement accounts.

“In rejecting the county’s actions, the court noted that ‘the county’s argument ignores a half century of construction and application of California law governing allocation of tax increment financing,’” reads a statement from the city, sent out Monday by communications director David Vossbrink.

The ruling highlights another questionable decision by Sharma. The county’s top finance manager is under investigation after he and his team were found to have covered up years of scamming by disgraced ex-Supervisor George Shirakawa Jr.

The $7 million, which should be on its way back to the city, will help shed some RDA debt, help avoid a potential default and unburden the general fund from having to cover for the debt payment.