The city of Oxnard appears to be changing its mind about what to do with $15.5 million in school construction funds the city manager previously said might go to a developer instead of the Oxnard School District.

"The city of Oxnard is not here to say that we are in favor of either party at this point," Mayor Tom Holden said during Tuesday's City Council meeting.

Councilman Tim Flynn said Wednesday that the city should not take sides in the dispute between the school district and developer D.R. Horton Los Angeles Holding Co. Inc. over money intended to build a school in the Seabridge development. The neighborhood is next to Channel Islands Harbor.

The district filed suit over the money June 11, listing the city of Oxnard and D.R. Horton as respondents.

Rick Miller, the district's superintendent, said Wednesday that Holden had framed the issue "appropriately, that this is an issue between the schools and the developer."

"I believe the court will give us a timely answer," he said. A hearing date has not been set.

School officials said they decided to sue after City Manager Ed Sotelo notified them in May that he intended to transfer $7 million in school construction funds for the Seabridge neighborhood to D.R. Horton and might hand over the entire $15.5 million paid in fees by homeowners in the upscale development.

The money, which is controlled by the city, is held in a community facilities district fund.

Sotelo is on vacation and could not be reached for comment.

Alan Holmberg, an assistant city attorney, said D.R. Horton's position is that it already has paid the school district $7 million under a separate impact mitigation agreement, and that the school money in the community facilities district fund should be given to the company.

D.R. Horton spokeswoman Jessica L. Hansen issued the following statement Tuesday: "We look forward to the opportunity to have the Oxnard School District lawsuit resolved by an impartial judge. In the meantime, D.R. Horton is fully committed to supporting the needs of the Oxnard School District by honoring its contractual obligations under the parties' existing agreement, which to date has included payment of over $6 million in impact fees."

Holden said Wednesday he first heard about the district's suit two weeks ago, and he did not know the basis for Sotelo's intention to hand over the money to D.R. Horton.

City Attorney Gary Gillig said he could not discuss any advice he might have given Sotelo about the matter, citing attorney-client privilege.

Councilman Tim Flynn said Wednesday that he had not been informed by Sotelo about the dispute and that this was something he and other council members should have been notified about.

Councilman John Zaragoza said he had no comment on the matter, and the two other council members did not respond to calls for comment.

If the district does not get the $15.5 million, it would be very difficult to build a school in the Seabridge area, said Yuri Calderon, the district's general counsel.

The district has an option to buy 6 acres within the development for the school, and the city has an option to buy 3 acres for sports and recreational facilities that would be shared with the district.

The current construction estimate for a school for 600 to 1,000 children at Seabridge is about $30 million, Calderon said.

Calderon contends the impact mitigation agreement has nothing to do with the community facilities district money.

Because the amounts payable by developers to school districts under impact mitigation agreements are limited by state law, it is not uncommon for community facilities districts to be created to cover the full cost of school construction, he said.