Ruling against Half Moon Bay adds to financial woes

A yearslong legal battle that culminated last week in a $36 million federal ruling against the city had already dealt heavy blows to the city’s budget over the last two years.

Last week, U.S. District Court Judge Vaughn Walker ordered Half Moon Bay to pay $36.8 million in damages to Joyce Yamagiwa, owner of a 24-acre parcel east of state Route 1. In the lawsuit, she claimed the land could not be developed because of various storm-drainage improvements the city implemented on her land.

City Finance Director Jud Norrell said the legal fees in battling the case have been a consistent specter in the last two city budgets. In fiscal year 2006, the city budgeted some $400,000 in legal fees. The actual figure, due to the continuing litigation, came in at more than $2.1 million.

In the current fiscal year, the city projected a smaller budget deficit at approximately $445,700 come June, but that was before the ruling was handed down, Norrell said.

The city has a $10 million operating budget and must keep 20 percent of it for fiscal emergencies, but as Norrell pointed out, “It doesn’t take a math genius to see that’s nowhere near $37 million.”

Since the 1970s, the land at the center of the ruling, known as Beachwood, was set to become an 83-unit subdivision. But after environmental experts determined wetlands existed on the property, the project never came to fruition. State law prohibits development on protected wetland in coastal zones, which includes Half Moon Bay.

Walker ruled that the city’s drainage work led to the creation of wetlands and made the property unable to be developed. The ruling also found the city liable for the value of the land had it been developed as planned.

Councilwoman Marina Fraser said the ruling was clearly not the outcome the city had hoped for. The council has until Dec. 28 to appeal the ruling to the 9th U.S. Circuit Court of Appeals.

The city has met in two closed sessions since Thursday to discuss the federal judge’s ruling, but little has been released from those meetings. City Manager Marcia Raines, in response to a bevy of questions from concerned citizens, said it remains up in the air whether city services will be able to continue.

tramroop@examiner.com

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