On Nov. 28, U.S. District Judge Vaughn Walker ruled the city effectively took land known as Beachwood from developer Charles Keenan. Walker ruled the city created wetlands conditions on portions of the land east of Highway 1 and north of Terrace Avenue and awarded the Palo Alto developer $36.7 million in compensation. Since then the tab has grown to $41.6 million as Keenan's attorneys have asked for interest and lawyer fees as well.
The city announced it would appeal the decision and hired a San Francisco attorney to lead that charge.
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She also says residents won't see any change in city services as a result of the court decision and notes a planned city workshop on the issue has been set for 7 p.m., Jan. 22 in the Ted Adcock Community/Senior Center.
The complete contents of McClung's letter follow:
To the concerned citizens of Half Moon Bay:
You are probably aware of the recent trial court judgment for nearly $40 million entered against the city in favor of real estate developer Charles Keenan. Understandably, many people are talking and writing about this important issue. Unfortunately, misinformation and rumors have been generated in this process. To cut through the rumors and falsehoods, I want you to hear directly from me, on behalf of the City Council, about what this decision does and does not mean for our community.
* The decision by Judge Walker is just that - a decision by a lower court. It has not been enforced. The city of Half Moon Bay is appealing the decision and the city's attorneys believe that it is erroneous and will be reversed on appeal.
* The city will ask the appellate court to consider what Mr. Keenan knew about Beachwood, when he knew it, and what he did between 1993 and 1999 when he owned the property and before any expert declared it to be wetlands. The city will argue that Mr. Keenan either should be prevented from obtaining any damages because he ignored known risks that the property was already wetlands or likely to become so in the foreseeable future or, alternatively, that the damages should be reduced based on the extent of his knowledge of the risks and his failure to mitigate those risks between 1993 and 1999.
* Multiple findings of fact in Judge Walker's decision demonstrate that, before Mr. Keenan bought Beachwood in 1993, wetland conditions existed on the property. These conditions included ponding, closed-loop depressions, the existence of wetlands in the Southeast corner of the property, and a finding by the California Department of Fish and Game that 15 to 20 percent of the TAAD project site was wetlands. Despite being on notice of these facts, Mr. Keenan ignored the risks and bought the property at a fire-sale price. Judge Walker did not consider this when calculating damages.
* We will also ask the appeals court to consider the fact that Mr. Keenan failed to mitigate the wetland conditions that existed on Beachwood when he purchased it and failed to prevent further wetland development between 1993 and 1999. Betweeen 1993 and 1999, Mr. Keenan did nothing to drain Beachwood, despite the fact that he had every right to do so until the city first identified potential wetlands in 1999. In fact, in 1991, Mr. Keenan's partner in the project, Mr. Crowell, was issued a permit by the city to fill any depressions on Beachwood with 32,000 cubic yards of material. He never acted on this permit. Additionally, Mr. Keenan never cleaned, or even requested that the city clean, the TAAD drainage system on his property, nor did he take any other action to prevent or mitigate damage on his property until after the city's consultants identified protected wetlands in 1999.
* The city will make additional legal arguments on appeal, that Judge Walker failed to properly take into account the statute of limitations, confused the regulatory takings issue with the physical takings issue, ignored problems with his jurisdiction to decide the case, and incorrectly measured damages to Mr. Keenan.
* The city is open to settlement discussions with Mr. Keenan while the appeal is ongoing and expects those discussions to start soon. The city decided to appeal before entering settlement discussions because a failure to timely appeal would have prevented the city from appealing the decision at all, causing the damages award to become due immediately.
* While this decision is being fought on appeal, there should be no impact on any of the city services we enjoy in our community, nor should there be adverse effects on property values, selling and financing property, nor on vendor services.
We are committed to keeping you apprised of important developments, primarily at our regular City Council meetings. A workshop is scheduled for 7 p.m. on Jan. 22, 2008, at the community center for the purposes of providing information and answering questions on the case, and listening to suggestions and opinions from the community.
Thank you for your continued support of our community.
Sincerely,
Bonnie McClung
Mayor
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