Half Moon Bay, developer deal hinges on passage of law

Months of hand-wringing by residents, speculation about bankruptcy and legal wrangling by both sides of a multimillion-dollar lawsuit could be over — if a bill passes the state Legislature, city officials announced Tuesday night.

A judge previously awarded Palo Alto developer Charles “Chop” Keenan $41 million, saying the city was responsible for creating delicate wetlands on property owner Joyce Yamagiwa’s land. Yamagiwa, a trustee for Keenan, purchased the property, known as Beachwood, for $1 million in 1993.

The existence of wetlands created a string of permit problems that derailed Keenan’s plan to turn the 24 acres into an 83-unit subdivision.

U.S. District Judge Vaughn Walker awarded Keenan $36.8 million, later amending the judgment to $41 million.

Tuesday night, a settlement was announced that would allow Keenan to build 129 single-family homes on the property and allow the city to avoid an appeal of the judgment against it.

The deal, however, hinges on the state Legislature passing AB 1991, which is being carried by Assemblymember Gene Mullin and state Sen. Leland Yee, according to a press release from a spokesman for Keenan.

The bill, which is a “one-of-a-kind” piece of legislation specially drafted to authorize development on the Beachwood property, would avoid further litigation, according to the press release. It would most likely also keep Half Moon Bay from declaring bankruptcy, which was feared after the judge’s ruling.

The legislation would also preserve existing state laws that protect and prohibit development on wetlands in the state.

“Of primary importance to the city and its citizens, this bill is a one-of-a-kind act that sets no precedent because, in this instance, the court found that the wetlands here were created in the course of construction that was never completed and, in addition, this property had already been approved by the City Council in 1990 for development,” Mayor Bonnie McClung said in the press release.

Tuesday night’s announcement comes five days after City Council members authorized the settlement offer.

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