State Sen. Leland Yee’s proposal to help the city of Half Moon Bay pay for Beachwood — now with a proviso that the money might also be spent to acquire fallow parkland along Highway 92 — has been referred to the Assembly Appropriations Committee. The Legislature committee is the first of a new series of approval steps that the revised bill must race through to pass before the Aug. 31 deadline for all policy bills.
The legislation is styled SB 863 and it has for all intents and purposes supplanted Assemblyman Gene Mullin’s AB 1991 as the city’s best hope to get money to pay off developer Charles Keenan. Keenan was awarded millions last year when a federal court judge ruled the city took his land in a botched drainage project along Highway 1. A settlement deal signed by the city guarantees Keenan $18 million.
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Yee’s counterproposal surfaced on Aug. 15. He pledged to push for $10 million to offset the money owed Keenan after it became apparent that AB 1991 wouldn’t make it out of the Senate Rules Committee. City Council members officially endorsed Yee’s bill during their last meeting, voting unanimously to support the new bill, and offering repeated thanks and praise for Yee’s aid.
Mayor Bonnie McClung says that the money provided by Yee’s bill, combined with Half Moon Bay’s $5 million reimbursement for legal fees from the Association of Bay Area Governments, could cut the city’s debt enough to prevent a drastic loss of services.
“If we have a $3 million debt, we think we can handle that,” McClung said. “We’re a city that has a balanced budget and isn’t in financial trouble except for this judgment, so we’re confident that we’ll be able to do OK.”
Mullin has also voiced support for the new bill, saying he will manage the bill on the Assembly floor if it gets through the Appropriations Committee. The assemblyman says that his office influenced the legislation, seeing it as a viable alternative to provide some aid to his constituents.
“We had a role to play,” Mullin said. “This bill is the result of a number of individuals talking about how it would be crafted.”
As the chair of the Housing Committee in 2006, Mullin also played a role in negotiating Proposition 1C - the state bond package that SB 863 would tap for parks funds to provide $10 million for Half Moon Bay. The $200 million in parks funds in the proposition was designed to reward communities that provide affordable housing with parklands.
Mullin says that Half Moon Bay’s plight is a justifiable expenditure for the Proposition 1C money.
“Half Moon Bay has done a good job to provide affordable housing. You could argue that Beachwood has a passive park use,” Mullin said. “But there is, of course, some opposition coming from housing groups. They wonder if this is an optimal use of this money.”
As written, the money would flow through the Coastal Conservancy, which would then award it to the city through grants. Though it was never publicly mentioned before Friday, the Senate bill allows the city to repay the Peninsula Open Space Trust for 22 acres of the Pilarcitos Creek Park property — also known as Community Park — that the city acquired in 2004. The city has owed more than $3 million on the POST land for about four years.
According to Yee’s office, having the the Pilarcitos Creek Park property in the bill helps the city secure the full $10 million, in the event that the Beachwood property is appraised to be worth less than that amount.
“The idea is give the city avenues to maximize the funding from Proposition 1C,” said Janelle Beland, chief of staff for Yee. “Beachwood is still the priority as far as the senator is concerned.”
Beland said the language of SB 863 did not mandate which debt Half Moon Bay had to pay. The city, she said, could choose to use the $10 million only to pay Keenan.
Nonetheless, Beland said the Pillarcitos Creek Park property was added at the request of environmental groups in order to ensure their approval of Yee’s bill.
“It was something that the environmental community had raised a few times in our conversations.” Beland said. “It was clear that they wanted this for their support.”
If the city ends up with the Beachwood land, it would have about 45 acres of parkland in two tracts for which it owes roughly $21 million. Presumably the $10 million from the Coastal Conservancy would help offset that collective debt.
Dick Wayman, communications director at the Coastal Conservancy, says this bill puts the conservancy in a unique role, not typical of its history of administering grant money.
“This is definitely an unusual position for us to be in, to be an intermediary for the money coming from a source like this,” Wayman said. “We have to look at it as a problem that the Coastal Conservancy could help solve.”
While a new appraisal of the Beachwood property is required under SB 863, Wayman says that the conservancy’s methodology would also require the organization to appraise Pilarcitos Creek Park.
The true worth of the parkland along Highway 92 has long been a source of controversy. When Half Moon Bay purchased the land in 2004, the city accepted appraisal conducted by Nurserymen’s Exchange, which valued the property at $4.6 million. However a separate appraisal, contracted by the city, valued the land between $1.79 million and $2.1 million. City officials at the time did not publicly release their own appraisal, instead publicizing the higher appraisal and calling a $3.1 million purchase price a good deal. The land was purchased with a loan from POST.
“I can’t imagine that an appraisal would not be required for that,” Wayman said of the current Coastal Conservancy involvement. “We have to make sure we’re not spending state money for a property in which the price was higher than its real value.”
If SB 863 passed, then the amount of money that Half Moon Bay received would rely on the appraisals conducted by the Coastal Conservancy. The city could receive less than $10 million if the two park properties are valued to be worth less than that amount. Beland said city officials are confident the two parcels are worth more than $10 million.
Beland says that because the money is coming from the parks fund of Proposition 1C, the money has to be used directly for public parks, and not just for paying off the city’s debt.
“You can’t just give away state money and not give some public benefit in return under Proposition 1C,” Beland said. “We’re in a $15 billion budget deficit, so you can’t just hand out $10 million to the general fund of a town.”
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