Half Moon Bay settlement bill loses key co-author

Sen. Leland Yee, D-San Mateo, has dropped his co-authorship of a bill that would help finalize a controversial settlement between the city of Half Moon Bay and a developer who won a $36.8 million judgment against the city. The issue is being closely watched by cities around the state.

The ongoing dispute between the Half Moon Bay and the developer shines light on a political battle that has been going on for years in the small beachfront community 30 miles south of San Francisco. The judgement threatens the power of local city councils and planning commissions to use environmental reasons to try to slow or stop development.

The Half Moon Bay settlement agreement came out of a Nov. 28 ruling by U.S. District Judge Vaughn Walker.

Developer Charles Keenan bought the 24-acre property, located near the intersection of Highways 1 and 92, through a trustee for $1 million in a foreclosure sale in 1993. When he later tried to develop the parcel, known as Beechwood, the city told him the area was protected wetlands. Keenan sued, claiming the parcel only became "wetlands" due to faulty drainage work done by the city. In his judgment, Walker accepted the  legal argument that the city's actions–modifying the land, taxing it, and then denying the owners the right to build on it–constituted a form of unauthorized takings.

Yee said earlier that he agreed to be a co-author of AB 1991 before the settlement was finalized. But he has since witdrawn  support, citing two "surprise" clauses in the agreement. The first calls for the city to pay developer Keenan $18 million even if the bill fails, scuttling the settlement. The second is a part of the agreement that lets Keenan build 46 homes on an adjacent piece of property that wasn't part of the original lawsuit.

"It seems as if this ended up as a Christmas tree with all sorts of goodies under it," Yee said. "If it becomes a developers' paradise, I'm not interested."

The main author of AB 1991 is Assemblyman Gene Mullin, D-South San Francisco. He said that he will continue to push the bill, adding that he offered the bill to help to city avoid bankruptcy; his office did not participate in the settlement talks.

"We volunteered to them that if they engaged in settlement talks and needed a bill, I would have a spot bill available for them," Mullin said. He added: "They could have gone forward with an appeal. They chose to settle…We will fulfill our commit to carry the bill and work as hard as we can to make sure they don't have to pay $18 million."

The settlement depends on legislative action in order to get around some bureaucratic hurdles, essentially taking state agencies such as the Coastal Commission and the Department of Fish and Game out of the loop. Even if it passed, it is possible that one or more federal agencies could still block the deal.

In 1999, candidates allied with environmentalists won a majority on the five-member Half Moon Bay city council, ousting several members of a more pro-development group with long roots in the community. In 2005, former councilmember Naomi Patridge won back her seat on the council, and was joined by three new council members generally seen as more conservative.

It was this group that approved the settlement deal by a 4-1 vote in late March. Councilman Jim Grady, generally viewed as an environmentalist, was the sole "no" vote. The deal was negotiated by the law firm of Orrick Herrington, which was brought in after the city lost the lawsuit. According to postings on local community websites, some in the community viewed Judge Walker as a property rights extremist and urged Orrick at the city to file an appeal, hoping to get a more favorable judgment in a different court.

Environmentalists say Mullin has some alleged ties to the pro-development old guard, but Mullin dismisses these claims. In the early-to-mid 1970s, Mullin said, his divorced father married Dolores Mullin, a longtime Half Moon Bay city councilwoman and one-time mayor. But Mullin notes that he was already in his late 30s at the time, so Dolores Mullin was never really his stepmother or godmother, as some have stated. Mullin's father died in the 1980, and he said he had little contact with Dolores Mullin after that.

"She was a conservative Republican and I'm a liberal democrat," Mullin said. "We didn't have a lot of interaction, to say the least."

Meanwhile, Mullin declined to second-guess the city's decision to settle or their agreeing to let Keenan build on the second parcel. The initial judgment plus legal fees amounted to $41.1 million, enough to gobble up more than 10 percent of the city's annual budget for about 40 years. If they lost an appeal, he said, Half Moon Bay could be on the hook for even more.

"I think it's important to keep in mind that the developer had a $41.1 million judgment against the city," Mullin said. He added: "To think that they would have a settlement that was total to the benefit of the city is unrealistic."