Coastal Commission legislative director Sarah Christie has taken on what she calls "misinformation and inaccuracies" in Half Moon Bay’s response to her initial letter on the deficiencies in AB1991. In a sharply-worded letter to Assembly Speaker Fabian Nunez and Senate President Protempore Don Perata [pdf], Christie rather contemptuously takes apart the city’s counterattack, making the following points:

• The city "ignores the obvious fact" that the process of AB1991 creates a precedent for future legislation.

 

• The city makes the "insinuation ... that it is somehow the Commission’s fault that the City finds itself in its current predicament",  because it consulted the Commission before it denied the 85-parcel subdivision of Beachwood and the denial was upheld by the state appeals court.

 

• The city’s assertion that the Commission’s approval of 19 parcels on Beachwood was illegal because the Commission lacked juridiction is "incomplete and therefore misleading".

 

• The city "derisively dismissed" the Commission’s offer of assistance, because the Commission didn’t offer to pay its bond or legal fees—which it does not have the authority to do. However, says Christie, the Commission offered an amicus brief represented by the Attorney General’s office.

 

• The city said that the inclusion of Glencree in the settlement was not arbitrary, "because… most importantly, the plaintiff, ‘Chop’ Keenan, demanded it. We think the City’s response speaks for itself and makes our original point quite well."

 

• The city’s claim that the property would be built out by now, but for the city’s sewer moratorium, is not only "unlikely, it is irrelevant. The City might as well point to all the development that would already be built out today if the Coastal Act had never been passed, or CEQA, the Endangered Species Act, or any General Plan law".

The Commission’s legislative director concludes by saying that the legislature should "let the bill die, so that the City can pursue the escape clause it agreed to in the settlement…and…work with the community and interested stakeholders".

Click below to see the letter embedded in the page, or click here for the pdf.

How much money will Half Moon Bay lose if AB1991 fails to pass? If you answered $18 million, you’re way off. Let’s see if we can estimate the city’s net cost of paying $18 million, taking possession of Beachwood, and developing the land within the law. This analysis is based on public information as well as private conversations with people familiar with local development.

How many many buildable lots are there?

The last time they looked at it, the Coastal Commission approved 19 houses on Beachwood. This month, Coastal Commission executive director Peter Douglas said "It may be possible that a higher number of homes could be approved there,"—suggesting that more homes could be built on site if some sort of mitigation were to take place. So, at least 19 homes could be built, and the Coastal Commission has suggested elsewhere that with mitigation it could be 30.

What is each lot worth?

In his decision, Judge Walker used a 2006 value of $443,000 per lot ($36.8 million divided by 83 lots).  That’s for a relatively large development in 2006 and the judge was clearly in mood to favor the plaintiff, so let’s call that the crazy top end of the range.

However, this would be a smaller development that is likely have to a view of open space and hills, and not part of some maxed-out development that is looked down upon by a reconfigured Pacific Ridge. That is likely to increase the value of the homes.

More realistically perhaps, residential lots in this part of Half Moon Bay can sell for about $375,000. You’d need to subtract about $60,000 for building streets and sewers. But, if the city packaged the deal nicely and the buyer knew they’d get some special consideration from the city and maybe even the Coastal Commission, which could easily be worth $50,000 to a risk-averse buyer.  With a 20% margin of error either way, the value of the lots is $292,000 to $438,000.

Hang on, that’s a lot of assumptions!

Yes it is. The city of Half Moon Bay probably has a better estimate. It makes no sense that the city would negotiate this settlement without some idea of the value of the land. They’re not talking, so we have to guess.  This is my guess.

So, what’s the bottom line?

The city should be able to gross at least 19 x $292,000, or about $5.5 million, and at most 30 x $438,000, or about $13 million. That means that the net cost to the city could be in the neighborhood of $5 to $12.5 million, and not $18 million.

That’s still a lot of money!

Yes, but we’ve now cut the city’s liability in half. The big question is: What does the city believe the value of the land to be and why aren’t they telling Sacramento?

The County Times has a good summary of the points made by Half Moon Bay’s attorneys attacking the Coastal Commission’s letter on AB1991 at Thursday’s press conference. It’s still mostly hand-waving, but it is clear that the Commission’s executive director Peter Douglas is not backing down from the Commission’s letter to the state assembly.

Coastal Commission Executive Director Pete Douglas said he was sticking with his facts. He said the Coastal Commission voted to oppose the bill based on the public settlement between the parties, and called AB1991 a "sweetheart deal" that would "carve a hole" in the Coastal Act.

As for helping Half Moon Bay with a Beachwood appeal, Douglas said the city never took his lawyers up on their offer.

"It was clear to us that they didn’t want to appeal this at all. They were just looking to structure a deal," he said.

Kevin J. Lansing is former Chair and member of Half Moon Bay Planning Commission

Editor’s note: I was on the city’s conference call today. I’ll post some more information on the call later tonight.

Earlier today, Half Moon Bay City officials held a conference call to dispense some spin about AB 1991, a bill sponsored by Assemblyman Gene Mullin.

This poorly-conceived bill seeks to abrogate several widely-supported state environmental laws for the purpose of facilitating a sweetheart deal that will make millions for wealthy developer Charles "Chop" Keenan.

The California Coastal Commission has unanimously expressed opposition to AB 1991, as have numerous statewide environmental organizations, including the Sierra Club, the League of Conservation Voters, the Natural Resources Defense Council, Defenders of Wildlife, and the California Audubon Society.

During the conference call, the City’ s hired lawyer/lobbyist Lanny Davis kept saying that AB 1991 would "set no precedent" and is a "one-off bill." That is, of course, until the next opportunistic Assemblymember decides to sponsor his own pet bill to exempt his or her own pet locality from statewide environmental laws. Note to Mr. Davis: We’re not that naive.

Below are some questions that City officials should have been required to answer but unfortunately they were not. Only representatives of the media were allowed to ask questions.

1. The City’s press release describes AB 1991 as a "Rescue Bill." Is the City Council claiming that the City will essentially "die" (i.e., go bankrupt) if AB 1991 is not passed?

2. The settlement agreement provides for a payment of $18 million to the developer if AB 1991 does not pass. Due diligence would have required the City Council to analyze the City’s financial ability to pay $18 million (say, via a bond) before agreeing to that figure. Is the City Council now claiming that the $18 million payment, if triggered, would send the City into bankruptcy?

3. Can the City Council release the financial analysis that shows it fulfilled its duty of due diligence before agreeing to the $18 million figure?

4. The announcement of the press conference states "City officials will also discuss why AB 1991 is crucial to public safety in Half Moon Bay."  The City currently spends about $5 million per year on Police Services out of a total annual budget of about $10 million. Spending on Police Services has doubled over the last five years or so. Is the City Council attempting to exploit AB 1991 in an effort to compensate for poor fiscal management, i.e., excessive growth of public safety salaries and benefits along the lines of the City of Vallejo ?

5. Given that the recent LAFCo municipal service review stated that significant cost savings could be obtained by contracting out a portion of City Police Services to the County, is the City Council being truthful when it claims that AB 1991 is crucial for public safety?

6.  How much has the City spent up to this point in lobbying efforts to get AB 1991 passed (including payments to consultants)? How much has the City budgeted for future lobbying efforts? Will the City Council agree to release a full accounting of these lobbying expenses to the public?

7. AB 1991 would facilitate a Beachwood/Glencree development of 129 houses. The traffic impacts would combine with those from the nearby 63 houses previously approved via the Ailanto settlement. The cumulative traffic impacts from these developments has never been studied. How is the public’s interest being served by exempting a project of this size from the standard environmental review that is required by the California Environmental Quality Act and the California Coastal Act?

In a strongly-worded letter[pdf], the California Coastal Commission’s legislative director outlined the reasons why the Commission would oppose AB1991. The letter is addressed to Assembly member Gene Mullin, and copied to the chairs of the Assembly Local Government, Natural Resources, and Rules Committee.  Legislative Director Sarah Christie laid down five major areas where AB1991 fails:

 
• The level of development is excessive: The Beachwood subdivision was approved before the city had a local coastal program, it will cause serious traffic problems, and AB1991 would exempt the developer from modern sewer practices designed to reduce polluted runoff into Pilarcitos Creek and the ocean.

 

• The Glencree parcel is "an inappropriate and opportunistic overreach": Glencree is known to contain sensitive natural wetlands, no coastal development permit has ever been approved for Glencree, and Glencree was not subject to the original lawsuit.

 

• Previously approved Coastal Act mitigations on Beachwood are not included: In 2001, the Commission set down conditions to protect wetlands and sensitive habitat, reduce runoff, protect water quality, protect scenic public views, and mitigate severe traffic impacts.

 

• The environmental review is out of date: AB1991 is based on a 20 year old environmental review. "This makes a mockery of contemporary land use planning and environmental protection principles."

 

• Excluding property from the Coastal Zone is inappropriate and risky: "It is wholly inappropriate for private parties to enact coastal zone boundary changes in the context of private litigation settlement agreements. In addition, by exempting the property from the Coastal Act, this developer or a subsequent developer could change the project and still avoid Coastal Act review for a completely different project."

The letter also reveals for the first time that the Commission and and Attorney General’s office offered to assist the city in its appeal of the Beachwood decision.

If a cynic is someone who knows the price of everything and the value of nothing, how cynical do you have to be to think Half Moon Bay’s settlement is a good deal for the community? How cynical do you have to be to think it’s a good deal for California?

You can’t put a price on creating the precedent of bypassing environmental laws in exchange for cash.

You can’t put a price on ignoring decades of state protection of the coast, environmental quality, wetlands, and endangered species habitat.

You can’t put a price on turning the clock back 20 years for one developer, to a time before Half Moon Bay’s citizens overwhelmingly approved growth limits, and before the developer himself allowed wetlands to develop in holes and clogged drains on his own property.

You can’t put a price on simply ignoring your own laws, after they were vindicated by the state supreme court, just to negotiate a cheaper deal.

The Half Moon Bay City Council is willing to do all that and more for about fifty cents on the dollar.

And they’re also willing to put Senator Leland Yee in an untenable position. Why else would they try to get him to commit to their secret settlement one day before he got a look at it? Why would they threaten him with a city bankruptcy that they knew was already off the table when they asked him to put his name on the bill?  Yee made a mistake signing on to this deal before he knew what it was, but at least he had the courage to take his name off it until he understood the stakes.

Once the legislature gets this thing out into the open air, we may discover that the city has committed to developing state- and federally-protected land. And that the city’s ultimate exposure—if it were to take ownership of Beachwood and develop it to the standard mandated by the city’s own laws—is a lot less than $18 million. And far short of bankruptcy. Especially if, as suggested by the Coastal Commission’s executive director, there is is a way to mitigate development of some of the wetlands.

Half Moon Bay’s City Council structured this settlement so that they would have no choice but to pay up if the state chooses to enforce its own laws. And now they’re telling us "Now is not the time to ask what might have been".  Citizens who don’t want to put a price on the protection of the law shouldn’t have to pay for Half Moon Bay’s cynical settlement.

There’s a nice use of quotes in Julia Scott’s lead for today’s story about AB1991 in the County Times.

Lawyers for the city unleashed a public relations campaign Tuesday aimed at "educating" environmental groups about the merits of the Beachwood settlement legislation, attempting to dispel their "misconceptions" about how the bill might set legal precedent for future developments in California.

The story also quoted Coastal Commission Executive Direct Peter Douglas as offering some creative suggestions for compromise.  However, it’s not clear that this is possible any longer, now that the city has give up their right to appeal and guaranteed Chop Keenan $18 million if he doesn’t get everything they promised.

No one from the Coastal Commission was available for comment Tuesday afternoon. On Monday, however, Coastal Commission Executive Director Peter Douglas said his staff hoped that some compromise could be achieved if the parties were willing to rewrite the bill without setting aside the possibility of any environmental review.

The Coastal Commission approved 19 homes on the Beachwood property in 2001, whittling the original project down considerably because of the presence of coastal wetlands.

"It may be possible that a higher number of homes could be approved there," Douglas said, suggesting a hypothetical situation where the developer could offer to create a series of wetlands elsewhere in Half Moon Bay to account for the ones he would fill in during construction. "That’s a matter of compromise. But that’s not what they’re asking for. They’re asking for a complete exemption."

We just received the following statement from Half Moon Bay’s attorneys via email. My initial reaction is in the comments. Let’s hear yours.

Statement by Half Moon Bay

The City of Half Moon Bay is faced with two options, and only two options - either AB 1991 passes or the City must pay Mr. Keenan $18 million, a cost which will seriously burden the City and its citizens.  Although people may disagree with the specific terms of the settlement, it was the best the City was able to negotiate. Now is not the time to ask what might have been.  The combination of specific facts of the Beachwood litigation are unique and, as a result, AB 1991, the legislation approving development on Beachwood and Glencree, would not set a precedent for any future exceptions to California environmental regulations because:

1.  The wetland conditions on the Beachwood property are the man-made result of a half-completed grading and drainage improvements undertaken by the City of Half Moon Bay (Exhibit I); and

2.  Development on the Beachwood property was always part of the City of Half Moon Bay’s growth plan and vesting tentative maps were approved in 1990 after an environmental review by the City that found no significant impact on the environment (development of the pre-existing natural wetlands in the southeast corner of Beachwood was prevented, as it is under this agreement), before delays caused wetland conditions to develop (Exhibit II); and

3.  The City of Half Moon Bay faced a $41.1 million judgment concerning Beachwood that could have bankrupted the city and forced cutbacks in vital city services (Exhibit III).

Regarding the inclusion of the 12-acre Glencree parcel that is adjacent to Beachwood, the developer required the inclusion of that parcel in the settlement agreement.  In addition, it should be noted that Glencree also had been previously approved for development, at approximately the same time as Beachwood with no adverse environmental impact.  From current observations, there appear to be wetland conditions on Glencree that one can reasonably assume developed after the construction activities by the City in the 1980s.  (See also Sierra Club statement that "even Judge Walker acknowledges the Glencree wetlands!")

All three facts must be present for the California Legislature to ever use this legislation as precedent for permitting development on wetlands, whether naturally-occurring or manmade.  Only having one or two of the criteria present would not be sufficient.

For example, if a wetland is manmade but the other two facts are not present, it would not meet the requirement for legislative action.  If a city has a vesting tentative map that is approved for a property and wetlands later occur on that property, that would not meet the requirement for state legislation permitting the development if the city does not also face a court judgment that would result in the city’s bankruptcy.  If a court enters a judgment for an amount that forces a city into bankruptcy because of manmade wetlands created by actions taken by a city, such a situation would not meet the requirement for legislation if a vesting tentative map for the property was never issued.

In order for this legislation to be a precedent, all three specific facts would have to be present.

Orrick, Herrington & Sutcliffe LLP
Columbia Center
1152 15th Street, N.W.
Washington, D.C. 20005-1706

Contacts: Lanny J. Davis 301-928-7532 and Josh Galper 202-744-4047

The California Coastal Commission voted unanimously at Thursday’s meeting to oppose AB1991 in concept so that commission staff could prepare for hearings next month and be able to present the commission’s opinion of the settlement.

In proposing the resolution, Commissioner Sara Wan said, "This is a very bad settlement agreement and could set terrible precedent. So, I would like this commission to oppose in concept this and to give the staff the ability to deal with it."

Commissioner Steve Blank seconded the motion, saying, "I think this is a big deal."

The whole item lasted just three minutes. Click to watch.

Capitol Weekly, which covers state goverment, has an article on AB1991 and the Beachwood settlement. It includes some interesting quotes from Leland Yee and Gene Mullin:

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."
...
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."

The County Times also has a very good story on AB1991, which includes these details:

Assemblywoman Fiona Ma, D-San Francisco, also agreed to co-sponsor the bill in response to a request Mullin’s office sent to the entire Bay Area delegation in February, according to Mullin. Her name is not attached to the "placeholder" bill Mullin submitted at the time, but will appear in the final, amended language that includes the details of the settlement.

That language is being analyzed by a slate of legislative attorneys, according to Mullin. It will be heard in the Assembly Committee on Local Government on April 30 before coming to a vote on the Assembly floor.
...
The city’s Architectural Review Committee will, in fact, consider the proposed design of Keenan’s homes — but will only be able to apply the standards in effect when the city fist approved a building permit for Beachwood back in 1990.