After numerous legal disputes and what once seemed an endless financial obligation, the city of Half Moon Bay has paid off its debts over Beachwood. The Half Moon Bay City Council acknowledged the final payment of the judgment obligation bonds at its Aug. 20 meeting.
City Manager Bob Nisbet, who’s been with the city since October, said while he did not know much about the case before arriving, he’s quickly been caught up with the history surrounding Beachwood.
“I heard good and bad comments, but what struck me when this came across my desk was we should not let this go without celebrating in some way,” Nisbet said.
The issues surrounding the Beachwood property, about 24 acres between Terrace Avenue and Grandview Boulevard east of Highway 1, date back over four decades. The saga stems from a flawed city drainage project that led to the creation of wetlands on an adjacent privately owned site.
That property was slated for redevelopment. In the 1990s, the property owner proposed 83 homes on the Beachwood site. At the time, the City Council noted the resulting wetlands were now environmentally sensitive habitat and said project of the scale envisioned would not be feasible.
The decision prompted the Palo Alto owner of the property to sue the city.
Following several years of lawsuits, which included hearings in San Mateo County and state appellate courts, property owner Chop Keenan won a federal case and a $41 million judgment.
The payment order was negotiated down to $18 million, otherwise it would have caused the city to file for bankruptcy and the owner would not be able to collect. The order came near the 2008 recession, which added to the financial hardships of the city. The city made severe cutbacks that continue to be felt today. Among other painful decisions, the city desolved its parks and police departments.
Through litigation with insurance carriers, the city eventually recovered much of what it owed, but did pay about $2.4 million. As a result, the land is now owned by the city. On Aug. 1, the city made the last payment of the judgment obligation bonds.
For years, city officials talked of developing parts of the property for housing. Nisbet said the city now plans some type of passive open space or nature park on the property now.
“I could see a trail and maybe bird watching, but definitely something with low intensity use,” Nisbet said.
The Local Coastal Land Use Plan indicates the area as environmentally sensitive habitat and that it could be considered as a mitigation bank.
“This is an end of the chapter in the city’s history which took many twists and turns, and here we are now owning the land, which is a public resource,” Nisbet said. “And we are now debt-free.”
Several former council members were in attendance at the Tuesday meeting to witness the occasion.
“It was very stressful. I would not want to see any community go through what we went through,” said former Mayor John Muller.
Oct. 5, 1976: A 97-lot subdivision is approved by the city. The site is named Beachwood.
Early 1984: City contractor Bay Cities Paving and Grading works on drains on the Beachwood property, removing dirt from the land.
July 17, 1984: City authorizes borrowing 13,000 cubic yards of dirt fill from Beachwood.
Oct. 16, 1984: City consultant notes standing water in the holes dug by Bay Cities.
July 3, 1990: City approves a map allowing 83 homes to be developed on property.
March 28, 1991: City Council adopts a moratorium on building permits that require new sewer extensions, essentially halting the development of Beachwood. This moratorium, originally intended to last four months, is extended 11 times and lasts seven years.
2000: City rejects a Coastal Development Permit application to develop Beachwood, citing the presence of wetlands on property. Representing developer Charles Keenan, Joyce Yamagiwa sues Half Moon Bay and wins in San Mateo County Superior Court.
July 27, 2005: 1st District Court of Appeals overturns the first trial, ruling the city correctly stopped development on Beachwood.
Nov. 28, 2007: U.S. District Court Judge Vaughn Walker finds for Beachwood developers, awarding damages to Keenan later totaling $41 million.
April 1, 2008: City Council announces a settlement agreement with Keenan, committing the city to allow Keenan to build 129 homes or pay him $18 million.
March 17, 2009: City Council eliminates about one-third of the city workforce to make the city more appealing for bond rating agencies.
June 24, 2009: Last of three proposed Beachwood legislative relief bills fail. City approves plan to issue $18 million in bonds.
Aug. 29, 2009: City to deliver $18 million obligation to Keenan.
Aug. 27, 2010: City Council agrees to use $13 million in insurance settlements to pay off bonded indebtedness as quickly as possible.
2011: The settlement fees and the recession take a toll on the city’s finances. As a result, the city outsources public safety and recreation services.
Aug. 1, 2019: The city submits its final payment of the judgment obligation bonds on the Beachwood property.