The city was dealt a heavy legal blow this week after a federal judge ordered it to pay nearly $36.8 million in damages to a property owner for an 83-unit subdivision that never came to fruition, officials announced Thursday.
Joyce Yamagiwa, property owner of a 24-acre property along Highway 1 in Half Moon Bay, sought damages from the city, claiming it created delicate wetlands on the site by adding storm drain improvements.
Stringent California Coastal Commission rules on development of wetlands prevented the Beachwood Subdivision from moving forward. Yamagiwa sought reimbursement for value of the property, had it been developed.
The difficult part comes as the City Council must decide how to proceed. The board met in a special closed session Thursday afternoon, but available information on the discussion was not available by press time. The council has until Dec. 28 to decide whether they will appeal the decision in federal court.
"Our city budget is $10 million, so you can imagine what this would do to us," City Councilwoman Marina Fraser said. "This is certainly not the outcome we expected to hear."
In 1976, the original owners of the land, who have not been identified, secured city support for development. At the request of the then-property owner, the city formed a land district in 1984 to finance and construct storm drains on the property to ease significant flooding problemsin the area. But in 1996, the city became responsible for issuing coastal development permits, acting on behalf of the California Coastal Commission, which mandated such permits be required for coastal development. The required permits added another layer to the development process.
Three years prior to the city’s new development role, Yamagiwa purchased the property for $1 million in a foreclosure sale and renewed construction plans on the subdivision in 1998. She ran into a series of roadblocks because of the more stringent requirements on developing protected wetlands. In 2000, the city denied her a required coastal permit because they claimed wetlands existed on the property.
Two lawsuits and $5 million in legal fees later, according to City Manager Marcia Raines’ office, a federal court sided with Yamagiwa, saying the storm drain improvements installed on the property prevented any development.
Half Moon Bay City Attorney Adam Lindgren said the $36.8 million is the pricey resolution of years of legal drama.