BILL ANALYSIS
AB 650
Page 1
Date of Hearing: May 28, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
AB 650 (Hill) - As Amended: April 30, 2009
Policy Committee: Local
GovernmentVote:5-2
Urgency: Yes State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill directs the Infrastructure and Economic Development
Bank (I-Bank) to loan
$10 million to the City of Half Moon Bay to assist in the
purchase of the Beachwood property. Specifically, this bill:
1)Directs the I-Bank to loan the City of Half Moon Bay $10
million to enable the City to purchase the Beachwood property.
2)Specifies that this loan is made to assist the City of Half
Moon Bay relating to its settlement agreement in the case of
Yamagiwa v. City of Half Moon Bay.
3)Requires the City of Half Moon Bay, prior to the disbursement
of any funds, to obtain an independent appraisal of the
Beachwood property that conforms to the Uniform Standards of
Professional Appraisal Practice.
FISCAL EFFECT
Loan of $10 million dollars from the I-Bank to the City of Half
Moon Bay. The bill specifies neither a fund source nor loan
terms.
COMMENTS
1)Rationale. The sponsor of this bill, the City of Half Moon
Bay, contends the funding provided by the bill will allow the
city to meet the terms of a recently agreed to court
settlement and to avoid bankruptcy.
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2)Background-timeline of Beachwood property dispute . This bill
is related to a long and complex series of regulatory and
legal actions surrounding the Beachwood property. Following
are key developments:
a) In anticipation of development in the Beachwood area,
the city installed drainage systems and undertook initial
grading for future roadway construction in the 1980s.
b) In 1990, the city approved a vesting tentative tract map
for subdivision of the Beachwood property into 85 lots.
(Near that time, the city also approved a tentative map for
a neighboring development called Glencree).
c) In 1991 the city adopted a moratorium on building
permits for structures that needed sewer, which remained in
effect until 2000.
d) In 1993, the property was sold to a new developer, due
to financial hardship.
e) In 1996, the California Coastal Commission approved the
Local Coastal Program for the city. An LCP allows the city
to approve developments in the state coastal zone.
f) In 1998, the developer applied to the city for a
coastal development permit (CDP) in anticipation of the end
of the moratorium.
g) In 2000 the city denied the CDP based on the finding
that the project would fill wetlands.
h) The developer challenged the city's ruling in superior
court, arguing that (i) since the city had approved the
tentative map, it had a duty to issue the CDP, and ii) the
areas found to be wetlands by the city were manmade, and
thus were not wetlands under the Local Coastal Program.
i) In 2001 a trial court ruled in the developer's favor,
stating that the tentative map created a vested right and
that the city's finding related to wetlands was not
reasonable. The court ordered the City to issue a CPD. When
this occurred, the CDP was appealed to the Coastal
Commission.
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j) After hearing the appeal, the Commission approved a CDP
that reduced the number of residential lots from 77 to 19.
The Commission found, among other things, that the
proposed development would adversely impact wetlands as
defined in the local coastal program, adversely impact
public access by worsening already bad traffic on Highways
1 and 92, and threaten the habitat for certain threatened
and endangered species.
aa) In 2003, following a trial court ruling that the CCC had
no jurisdiction to reduce the number of lots approved, the
city withdrew its approval of the CDP.
bb) In 2005, the state Court of Appeals issued an
unpublished opinion that found (i) the tentative map did
not give the developer a vested right to a CDP, and (ii)
city's interpretation and application of the wetlands
provisions was appropriate. Thus, the court upheld the
city's denial of the CDP.
cc) The developer filed suit in federal court, claiming that
the city had created the wetlands on its property, thereby
"taking" the developer's property without compensation. In
2007, the federal district court held that the city created
the wetlands on the Beachwood property and that the
developer was entitled to $36.8 million in damages plus
attorney's fees and costs.
dd) In early 2008, the city decided to settle the litigation
and drop further appeals.
ee) In early 2008, the city and developer reached a
settlement. Under the settlement, the city either receives
state exemptions from all environmental review and the
tentative maps approved for Beachwood and Glencree in 1990
remain in full force, or the city purchases the Beachwood
property for $18 million. If this bill passes, the
developer would also pay the city $2.5 million upon
completion of the developments.
3)The I-Bank was created in 1994 to promote economic
revitalization, enable future development, and encourage a
healthy climate for jobs in California. The I-Bank has broad
authority to issue tax-exempt and taxable revenue bonds,
provide financing to public agencies, provide credit
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enhancements, acquire or lease facilities, and leverage State
and Federal funds.
4)Related Legislation. AB 1991 (Mullin, 2008) sought relief for
the city by authorizing development on the Beachwood Property
consistent with a tentative subdivision map previously
approved by the City in 1990. The bill exempted the proposed
development from obtaining additional permits or approvals
under the California Coastal Act, California Environmental
Quality Act (CEQA), California Endangered Species Act, the
California Fish and Game code, the Porter Cologne Water
Quality Act, and certain state highway encroachment permits.
AB 1991 passed the Assembly 46-18 and was held in the Senate
Rules Committee.
Analysis Prepared by : Jay Dickenson / APPR. / (916) 319-2081