Yee announces bill to get HMB $10 million in parks money for Beachwood

Breaking news

By on Fri, March 27, 2009

State Senator Leland Yee has announced that he plans to introduce a bill, SB 650, to allocate $10 million in Proposition 84 Park Bond funds to Half Moon Bay so the city can acquire Beachwood for a public park.

Under the bill, there would be no houses built on the the property.  According to Half Moon Bay mayor John Muller, with the addition of the $5 million in settlement money set aside from the Association of Bay Area Governments settlement, "the city would only have to raise at most $4 to $5 million".  Muller told me that it might be possible to borrow that much without issuing a bond.

The city must pay Beachwood owner Chop Keenan $18 million by August 29 under the settlement, according to Muller.

The bill will be presented at the city council meeting on Tuesday, April 7.

SB 650 will be considered by a Senate policy committee in the coming weeks.  Assemblyman Jerry Hill will amend an identical bill (AB 650) in the Assembly.

Because SB 650 is an "urgency" measure, it must receive a 2/3 vote in order to pass. Muller noted that all segments of the community must support the bill if it is to receive the necessary votes in both houses.

While the city will receive an option to buy the adjacent Glencree property as part of the settlement, Muller declined to say what would be done with it, saying that he was focused on resolving the Beachwood issue right now.

... then acreage in Half Moon Bay is listed at a higher price point than anywhere else along the California coast:

Palo Corona Ranch (Monterey County) sold for:

Rancho Cojo/Jalama (Santa Barbara County) sold recently for:

A coastal property in Mendocino County is currently listed for:

The nearest-to-the-ocean acreage (within 10 miles) in San Diego County is currently listed at:

Beachwood would sell for:

Just sayin’.

Yeah, the Beachwood decision put the value at the maximum profit Keenan could have made had he been able to put the maximum number of houses on the site at the historic high of Coastside real estate prices.

Walker’s damage calculations would have been the easiest part of the decision to overturn on appeal. Less than two months after the April Fool’s Settlement the City of Pacifica won an appeal in the 9th Circuit Court of Appeals in which the Court held “There can be no compensatory damages attributable to the provision in any event, because the developer still has not obtained the requisite approval from the Coastal Commission.”

There are plenty of other reasons why the Appeals Court would have shredded yet another decision by the most overturned judge on the 9th Circuit - Walker - but the one above would have sufficed.

Senator Yee and Assemblyman Hill propose legislation: SB 650 and AB 650, that “would allocate $10 million to the [Half Moon Bay] from a pool of $5.4 billion in Proposition 84 funds that state residents approved in 2006 to protect the quality of California’s water supply. That money would pay for more than half of the $18 million lawsuit settlement the city owes to developer Charles “Chop” Keenan and lay the groundwork for the creation of a community park.”  There is no Chop Keenan “water supply” to protect!  That bond money (our state taxpayer’s money) was not meant to bail out Half Moon Bay for their bad decisions.  What are they thinking?  This is more convoluted than Congressional thinking that using taxpayer payer to bail AIG and their ilk.  In fact, Half Moon Bay should go the way of bankruptcy as should the Big 3 automakers and its suppliers…! 

Our taxpayers need their income more now than they need more bonded indebtedness or wasted TARP funds, budgetary earmarks or trillion dollar deficits that are here or forthcoming at the national level.  Yee and Hill need to stop circumventing and reinterpreting our laws and proportions and parsing the language (assuming they read their own bills unlike congress); nothing in the Proposition 84 was meant to bail out or prevent city bankruptcy for destructive political decisions.

The politicians also need to know that this is not the “perfect vehicle to bail out Half Moon Bay and create a new local park that could benefit residents of the coastal city and its steady influx of tourists” as Yee and Hill say.  In fact, the parcel is on the east side of a highly traveled and dangerous Highway 1 and a considerable distant to the ocean!  Tourist rare use these isolated parks when there are park reserves and grounds at the ocean front!

“...bail out Half Moon Bay for their bad decisions.”

I don’t think many can disagree with the idea that the Old Guard City Council has made some really bad decisions. First and foremost being their failure to appeal Walker’s unfair legal judgement, followed closely by their decision to waste scarce funds (and time) on the AB 1991 fiasco.

Bankruptcy is something that should be on the table. But the Old Guard City Council refuses to even consider it. They want to hand over $18 million in cash to Keenan and then worry about bankruptcy—which will likely happen down the road anyway.

A good example of how Prop. 84 funds have been spent: Assemblyman de Léon tapped Prop. 84 funds to restore urban parks and help low-income communities purchase land so that they may also enjoy open space.  This is a statewide benefit for communities “most in need” of parklands, not just communities within de Léon’s district.

Since many grassroots and environmental groups had endorsed Proposition 84, once these groups hear about Yee’s proposed use of the funds, (to bail out a city to pay off a developer), perhaps they’ll get involved by making clear that this doesn’t meet the proposition’s intentions: 

“Proposition 84 would allocate unspecified funds for land acquisition by the state for conservation and water supply uses. It also provides for independent audits to insure that proposition funds are spent correctly.”

What are the pros and cons of a municipal bankruptcy?

Would it mean the disincorporation of HMB?  Certainly the County could not fill in the holes left by the disincorporation of HMB.


You may be interested in this article on disincorporation and its features:

Of course, no one wins and going insolvent may add to the potential insolvency of SMC who would have to pick up the slack.  However, I am willing to take that chance since this predicament was foreshadowed by a rank bunch of HMB politicians and commissioners that were in over their head in the 1990’s and failed to honor their commitment. 

They are lucky the city doesn’t have to fork over $41 million that I feel Keenan deserves for his investment that was protracted by HMB politicians instead of settled cheaply!

Sounds like you’ve been listening to the PLF propagandists on Talkabout. Try reading the decision, instead.  Walker “found” that the City created - in 1984 - the conditions leading to wetland formation. That’s 1984 - nineteen eighty four - a number which is inconvenient to the propagandists because their bunch was in control then.
The 41 million dollar judgement was the product of an ill-tempered judge who distorted the facts to get there. He would have been overturned - as he so often has been overturned - had the decision been appealed.

This site in the CA Gov’t Code may be useful on disincorporation that applies:

This site also is interesting and apparently applies to all CA counties, despite the Madera in its name:

At least it is not Washington State, but I thought that article gave an idea.  At least you have two California laws and an organization charged by regarding disincorporation.

Well, HMB did get a break from $41 million and negotiated to $18 million.  Ill tempered judge or not, the next judge may have cut $41 million in half and you would have had to go to the supreme court.

It is not nice to fool around with mother nature or ill tempered judges!

Returning it to the trial court is not a big thing happens ofter ubless it is a negotiated plea or settlement…; HMB should have kept it in stse court.  More bad legal advice and decisions by ill-tempered politicians.

No, it would have gone to zero damages at the Appeals Court for the same reasons the Pacifica case went to zero. And the probability that an appeal from that result would have gone to the Supreme Court was/is very low. Of all of the Appeals Court decisions that are appealed to the Supreme Court every year less than 1% are accepted for review. We’re not supposed to quiver like jello when the odds are 100 to 1 in our favor.

Kathryn, municipal bankruptcy not only forestalls a change in structure, but also allows the City to continue to deliver uninterrupted services to the public, protect ownership of public property AND brings the developer back to the bargaining table. All settled law.

Municipality Bankruptcy, Chapter 9:

“The purpose of chapter 9 is to provide a financially-distressed municipality protection from its creditors while it develops and negotiates a plan for adjusting its debts.”

“Section 904 limits the power of the bankruptcy court to “interfere with - (1) any of the political or governmental powers of the debtor; (2) any of the property or revenues of the debtor; or (3) the debtor’s use or enjoyment of any income-producing property” unless the debtor consents or the plan so provides. The provision makes it clear that the debtor’s day-to-day activities are not subject to court approval and that the debtor may borrow money without court authority.”

“The court also cannot interfere with the operations of the debtor or with the debtor’s use of its property and revenues.”

“The municipal debtor has broad powers to use its property, raise taxes, and make expenditures as it sees fit. “

“There is no provision in chapter 9 allowing creditors or other parties in interest to file a plan. This limitation is required by the Supreme Court’s pronouncements in Ashton, 298 U.S. at 528, and Bekins, 304 U.S. at 51, which interpreted the Tenth Amendment as requiring that a municipality be left in control of its governmental affairs during a chapter 9 case. “

Ken Johnson

Ken,  thanks for a clear answer.  As I read it bankruptcy is not equivalent to disincorporation.

I have been impressed with HMB/s very low level of debt.  For the financial qurus out there:  Would a muni-bankruptcy create future credit problems for the city?