An appeals court this week said the city council was wrong in attempting to rezone a property in north Morgan Hill—where a developer planned to build a new hotel—without sending the question to the voters.
A group of local hotel owners who filed the initial lawsuit more than a year ago—after submitting and qualifying a voter referendum on the issue that was subsequently challenged by the city council—is “ecstatic” about the May 30 decision by the California Sixth Appellate District Court.
“We’re ecstatic the court affirmed the notion that the voters should be able to decide,” said Asit Panwala, attorney for the Morgan Hill Hotel Coalition. “We believe in a democracy. What bothered us is the city was trying to go around the Constitution.”
The issue goes back to March 2015, when the city council rezoned a 3.39-acre parcel on the southeast corner of Madrone Parkway and Lightpost Way from Industrial to General Commercial. Riverpark Hospitality requested the rezoning, and planned to build a 149-room hotel on the site.
Then the Morgan Hill Hotel Coalition circulated a petition asking the council to repeal the rezoning or put the question to the voters. The coalition gathered signatures from more than 4,000 voters.
When presented with the petition in July 2015, the council declined to repeal the zoning or place it on a ballot. Then in January 2016, the MHHC sued the city for violating the state elections code by rejecting the certified, voter-initiated petition.
In February 2016, then Interim City Attorney Gary Baum revisited the council’s original rejection of the petition. He recommended the council approve a ballot measure asking the voters if they wanted the Riverpark property to retain its original Industrial zoning, but at the same time challenge the measure in court.
The city’s challenge was heard in Santa Clara County Superior Court, which sided with the city in a March 2016 ruling that rejected the MHHC’s voter referendum.
But on May 30, the Sixth District panel of three judges overturned the Superior Court’s decision.
The rezoning has not applied to the property due to the litigation, and the site remains Light Industrial.
The city had argued that if the voters rejected the rezoning, that outcome could create an inconsistency between the city’s zoning code and the general plan, which is a violation of state law. In November 2014, the council changed the property’s general plan land use from Industrial to Commercial.
However, the Sixth District judges said that’s an invalid argument because “the electorate may not utilize the initiative power to enact a zoning inconsistent with a general plan.” However, the referendum outcome could have permitted “the maintenance of inconsistent zoning” while the council determined how to clear up the conflict—a transition period that state law allows—the judges’ ruling states.
“Since it is undisputed that (the) city could have selected any of a number of consistent zoning districts to replace the parcel’s inconsistent zoning, (state law) did not preclude (the) city or the electorate from rejecting the one selected by (the) city,” the May 30 ruling adds.
Morgan Hill City Attorney Don Larkin said May 31 that it is up to the five-member city council to decide what to do next. Options include changing the zoning to a consistent classification through the normal council approval process, placing the question on an upcoming election ballot as a city referendum or appealing the Sixth District’s ruling to the California Supreme Court.
The item will be agendized for an upcoming closed council session, Larkin said.
“We’re going to weigh our options,” he added.
The city has so far spent $71,507 on legal fees for outside counsel to address the MHHC lawsuit, Larkin said. The city council hired the firm Leone & Alberts to deal with the lawsuit.
The Sixth District ruling also says the city must pay the MHHC’s legal costs. Panwala said this week he did not know how much that was.
Placing the original referendum submitted by the MHHC, which was certified by the city clerk, on a ballot would have cost the city about $75,000.
The MHHC has also argued that a new hotel at the site would create a glut of hotel rooms in Morgan Hill, causing existing lodging facilities to suffer financially.
