[This post was updated Friday at 9 a.m. See below.]
It all looks so peaceful from above, doesn’t it? That’s the view (courtesy of one Jeremy Zarodny) approaching Half Moon Bay Airport, which is lucky not to depend on the city for funding.
Half Moon Bay is in a world of financial hurt following the ruling of a federal judge last week in a dispute with Chop Keenan, the owner of a 25-acre property just east of Highway 1 and north of state Highway 92.
(To view the location, go to Google and enter “Terrace Avenue Half Moon Bay.” Results of this search are here. Then click “Satellite” and you’ll see that Beachwood is the empty green parcel between two housing clusters along Grandview Boulevard and Terrace Avenue.)
For those not inclined to slog through the 167-page decision, the Insider takes a closer look.
U.S. District Court Judge Vaughn Walker gave the city of Half Moon Bay a thorough and embarassing spanking in his $37-million ruling in favor of the owners of Beachwood, a decision that threatens to hamstring the city finacially for years and perhaps decades to come, since its annual budget is only about $10 million.
There’s a lot to digest and many interesting details in his written decision, which is available online here — we’ll focus mainly on pages 45 to 58, in which Walker analyzes how the city determined there were wetlands on the parcel.
The presence of wetlands, which the city first detected in 1999, put an end to the plans of Keenan’s development company, which aimed to build 85 homes on the rectangular lot, and prompted the company to sue the city.
Walker agreed with Keenan’s attorneys that it was the city that created the wetlands in the first place during a public works project begun in 1983 to improve storm drainage in the area and build roads for a subdivision just south of Beachwood off Terrace Avenue.
Worse, the city failed to realize that its own contractor created the mess, wrote Walker, who rebuffed the city’s argument that wetlands pre-existed the project.
In a withering section of the ruling, Walker wrote that the city’s three expert witnesses were “uninformed” and he rejected their claims of pre-existing wetlands as “baseless.” But Walker’s tone grew even sharper when he broke down the city’s decision that wetlands were present on the property.
Walker suggests that, beginning in 1999, the city went through three wetlands consultants in an effort to find an opinion that was to their liking — one that would prevent a subdivision while allowing the city to build a road at the back of the property to ease traffic congestion on Highway 1.
Walker added that, when the Army Corps of Engineers determined in 2000 that were no wetlands on the lot, the city rejected that opinion and applied its own definition of wetlands instead.
“Having exhibited a pattern of shifting consultants and shifting definitions,” Walker wrote, “the city comes to trial with impaired credibility on the key wetlands issues in the case.”
Keenan’s lead attorney, Edward Burg, convincingly illustrated for Walker, who is chief judge for the Northern District of California in San Francisco, how the patches of wetlands on property were created.
First, the contractor bungled the project, transforming Beachwood into a basin and worsening its storm drainage capacity, Burg argued.
(One reason the project made conditions worse, Walker found, was that the city never performed any of the maintenance necessary to keep the new drainage system from clogging. Indeed, there was never even a maintenance plan, Walker noted.)
Second, the contractor ran out of dirt while building the subdivision to the south. So with the approval of the city and the property owner, the contractor removed dirt from the ground on Beachwood, leaving behind about seven pits that were 50 feet wide and several feet deep, Burg said.
Over the years, the pits filled with water and wetland plants developed, Keenan’s attorneys argued. Walker agreed; and he was bemused that the city never connected the dots.
“What remains hard to fathom is why, in 1999 and 2000 when the city was in the course of documenting new wetlands on Beachwood, no one involved in the task acknowledged that it was the city itself (or, more accurately, the city’s contractor), that had dug the street depressions on Beachwood,” Walker wrote.
City Councilman John Muller, a farmer who knows the area well, testified in the trial this summer that he remembers the Beachwood property as being “wet” as far back as the 1950s.
Walker found that Muller was unable to demonstrate, however, that there was ever any long-term ponding on the property. He rejected Muller’s testimony as “insubstantial” and wrote it added “nothing of consequence to the case.”
Muller told the Insider that it isn’t easy testifying before a federal judge.
“They don’t like anecdotal information,” Muller said.
UPDATE: There were a couple things we didn’t have time to mention.
One aspect of the affair that really didn’t sit well with Keenan was how the city collected nearly $1 million from his company for sewer improvements in the 1990s and then rejected his development permit in 2000.
It amounted to a game of “gotcha,” Keenan said, whereby the city, after asking the property owner for money to finance sewer improvements that would allow for more development, denied the company the benefits of those upgrades.
Keenan viewed the move as dishonest, since the city had already issued a tentative development map for Beachwood in 1990. And the wetlands continued to develop over the course of the sewer moratorium, which was extended several times and ran from 1991 to 1999, Walker found.
By the time of Walker’s decision, Keenan’s company had paid about $1 million, or the principal of the assessment lien levied by the city, but still had 14 years of interest payments remaining, according to Burg. Part of Walker’s conclusion was to bar the city from collecting any more of those payments.
“The gotcha game is over,” Keenan said after the ruling.
The other item worth mentioning was how the city, after arguments were made this summer, requested to have the case taken back to state court.
Walker took exception to the gambit. Basically, if the Insider understands it correctly, the plaintiff, Joyce Yamagiwa (trustee of the property for Keenan), filed for damages in both state and federal court. The city then requested that the case be heard in federal court, because it had jurisdiction.
But after the case was heard, the city changed its tune, argued the feds didn’t have jurisdiction and asked for the case to be taken back down to state court. Two legal bloggers have more informed takes on the matter here and here.
The bottom line? To Walker, the city was taken by surprise by the strength of Yamagiwa’s case, realized it was in trouble, and tried to get a do-over in another court. Walker dismissed the city’s motion on legal grounds and noted that retrying the case would waste millions of dollars in past and future legal expenses.
Walker summed up his feelings by quoting a judge from a separate case: “We decline to let [defendant] take its chips off the table because it didn’t like the dealer’s hand.”
More of Walker’s baleful response: “The extreme wastefulness and hardship that remanding the case would create at this stage deserve further comment. The parties have incurred enormous time and expense litigating in federal court.”
(The judge noted the trial featured 47 depositions, 22 expert witnesses, some of whom were subpoenaed to appear, and nearly 300 exhibits entered into evidence.)
“Only now,” Walker continued on page 160 of the ruling, “having had a front-row seat to plaintiff’s presentation at trial and having the opportunity to review plaintiff’s post-trial memoranda, does the city seek to remand based on its own purportedly improper removal.”
“In sum,” Walker concluded, “the city having invoked federal jurisdiction, its effort to multiply these proceedings by a remand to state court smacks of bad faith. Fortunately, because that ploy is groundless, the court need not reach the issue of sanctions.”