The city awaits a county judge’s ruling in Arcadia Development
Company’s lawsuit that could cost taxpayers up to $50 million. A
hearing was held Tuesday on the matter.
The city awaits a county judge’s ruling in Arcadia Development Company’s lawsuit that could cost taxpayers up to $50 million.
A hearing was held Tuesday on the matter.
Santa Clara County Superior Court Judge Thomas Cain will decide in this first legal matter on whether the city must lift a development restriction and allow Arcadia to develop. A second claim, that the city is liable for damages and has to make up for Arcadia’s lost profits from being forbidden from developing will be heard some time after the first, according to City Attorney Danny Wan.
“Before the judge awards any amount, they have to prove they’ve suffered damages. They have to show how much money they lost, the profit they lost, and given the economy I’m not sure what that would be,” Wan said. He also said the judge ordering the city to pay $50 million in damages was an unlikely scenario.
The city kept Arcadia from building a dense development on property just inside the city limits after re-adopting growth control in 2004. Arcadia officials say they’re the lone losers in this.
In December, a state appeals court sided with Arcadia that a previous court decision, siding with the city, was incorrect.
The disagreement stems from the passage of Measure C, the city’s growth control ordinance, in 2004. Measure C updated the existing growth control system and extended its 2010 expiration date to 2020, with a population cap set at 48,000.
Arcadia argued that the update created new cause for harm to them, since they were the lone property affected by a particular caveat written into Measure C’s predecessor, Measure P.
This caveat stipulated that any properties annexed from the time signatures were circulated and the effective date of the 1990 measure would only be able to develop to the amount allowed by the county, not the city, with the withholding of city services like sewer and water as the enforcer.
In 1990, the development company had plans to build on their 80 acres in east Morgan Hill, roughly bound by Trail Drive to the east, Barrett Avenue to the south, Hill Road to the west and a housing development to the north. But their plans weren’t far enough along.
But, Arcadia didn’t complain in 1990. The first legal complaint was filed in 2004 following the passage of Measure C.
In 2004, the city argued to the Santa Clara County Superior Court that Arcadia was well past the 90-day statute of limitations, using 1990 as the starting date.
But Arcadia uses the 2004 passage of Measure C as the starting date, and Arcadia’s complaint is within that statute of limitations. The superior court sided with the city, but the California Sixth District Court of Appeals sided with Arcadia, so the county trial court will have to hear the case.
Planning Manager Jim Rowe recalled at least three other properties annexed in that same time period. One of them is Hamilton Square, located off Watsonville Road.
Like Arcadia, the developers of Hamilton Square had a vesting map, which grants developers the right to proceed on a project.
But unlike Arcadia, the Hamilton Square vesting map featured 36 homes on their 14 acres, a density similar to nearby suburbs.
Arcadia’s vesting map only featured 23 homes on its 80 acres, based on housing allocations it had received thus far. So both developers were able to develop, but Arcadia was left with almost 70 undeveloped acres.
Had Arcadia held a vesting map with as many homes as would fit on the property, they may have been given them, and the subject would be moot, Rowe said.
City Manager Ed Tewes has said the city has spent about $100,000 fighting the court case.
