Arcadia Development Company alleges millions of dollars in lost
opportunity due to zoning clause
Morgan Hill – Arguing it’s the one and only unlucky victim of an meaningless zoning law, Arcadia Development Company wants the City of Morgan Hill to pay damages that could top $50 million for lost development opportunities over the last 15 years.
The housing developer alleges Morgan Hill’s current residential growth control system, Measure C, has arbitrarily squashed its right to compete for the small number of housing allocations awarded each year by the city.
The lawsuit, brought in 2004, concerns Arcadia’s roughly 80 acres of property located near Hill Road and Barrett Avenue. In 1990, it was annexed by the city during a singular window of time when Measure C’s predecessor, Measure P, was being circulated for signatures. Drafted by citizens, Measure P adopted amendments to the slow-growth system, strengthening its requirements and limiting the ability to add land to the city for residential development.
Measure P also included a clause providing that lands added to the city during the time the measure was circulating for signatures and the time it was ultimately adopted by residents – between March and December 1990 – would be limited to the density permitted under Santa Clara County’s general plan. Arcadia’s property was added to the city during the time Measure P was circulating and therefore is limited to the amount of development permitted by the county – or one unit per 20 acres.
Attorney Bart Hechtman, who is representing the developer, said Arcadia was an accidental victim of that clause. Citizens who drafted the ordinance, he said, were ignorant of how long it takes to have annexation requests approved.
“There was no way someone could have had time to apply and annex their property” between March and December 1990, he said.
Instead of catching a blitz of would-be developers in that window, the clause only snagged one property owner: Arcadia Development Company, Hechtman said, which had applied for annexation way back in 1987. The process had taken about three years, he said, because the Local Agency Formation Commission for Santa Clara County had requested more time to examine the proposed annexation.
Hechtman described the legal issue as “equal protection under the law.”
“When you have a law that only applies to only one piece of property, you have to have a really good reason as to why that property is different than all the other properties in town,” he said.
But the city feels it is squarely within its rights. When voters adopted Measure C in 2004, they simply extended the term of many of the provisions in Measure P, said attorney Ellison Folk, who is representing the city through the law firm Shute, Mihaly & Weinberger. When a city task force drafted Measure C, it decided not to make a special exception to an extention of Measure P regarding lands on the edge of the city that must be developed at a density that “makes more sense in terms of a transition from city-type densities to the lower densities and agricultural development on county lands,” Folk said.
Furthermore, Folk said the city is still trying to verify Arcadia’s claim that its property was the only one added to the city during the time Measure P was circulating for signatures. Unfortunately, she said, the records are not so easy to dig up, but she’s working on it with help from the city.
Now, both sides are working out a schedule to bring the case to trial within the next six months.
If proven in court, Hechtman said the financial damages alleged by Arcadia would be “substantial.”
“Arcadia is not seeking to force the city to allow development,” Hechtman said. “All they are trying to do is get the right to compete.”
Folk said the developer may seek more than $50 million in financial losses, which she believes would be impossible to prove.
Some of Arcadia’s 80 acres have already been developed. Because it applied for approval of a tentative subdivision map before Measure P was adopted, Arcadia was permitted to build 21 units on roughly 11 acres under city zoning laws.
The developer has owned the property since 1973.
Tony Burchyns covers Morgan Hill for The Times. Reach him at (408) 779-4106 ext. 201 or tb*******@mo*************.com.
