HMB approves $15 million bond, but not without acrimony

By on Wed, June 17, 2009

The Half Moon Bay City Council has approved a $15 million bond issue to pay off its settlement with developer Chop Keenan. The Review has an account of the acrimony at last night’s meeting, following council member Jim Grady’s lone vote against the bond and his expressed disapproval of the city’s April, 2008 settlement with Keenan.

"We weren’t responsible for this. Jim, you want this city to go down," she said, raising her voice. "I know you don’t want to pay this guy the money, but this was a judgment against us."

"Don’t sit here and lecture me, Naomi," Grady responded, citing his disgust with the settlement negotiations.

"I will lecture you," she shot back

The mayor banged his gavel repeatedly, calling a recess to the City Council meeting.

The Mercury News describes the measure approved by the city.

The city will pay the remaining $3 million out of a one-time fund provided by the Association of Bay Area Governments. In reality, though, the $15 million bond sale is projected to cost the city $32 million to $35 million, including payments of interest at a fixed rate of approximately 6 percent over the next 30 years.

Half Moon Bay owes $18 million to Peninsula developer Charles "Chop" Keenan by the end of August if it is to avoid paying large monthly penalties specified by the terms of the settlement. Keenan won a $41 million U.S. District Court decision in December 2007 after being denied the right to build a certain number of homes on a locally infamous 24-acre piece of property known as Beachwood. The city will own the property in return for payment.

It is a tough pill to swallow for a city with an annual budget of about $10 million. The City Council already has approved cuts of more than $1.75 million this fiscal year just to stay afloat and prepare for the widely dreaded possibility that the city will have to issue the bonds without any outside help.