Will Half Moon Bay Survive?

Will HMB Survive?

That is the question that many are asking around town with yet another judgment against HMB; an adverse decision on cleaning the Kehoe Ditch in a lawsuit filed by former HMB Planning Commissioner and local resident Jimmy Benjamin. 

In 2007, HMB had an annual budget of roughly $10 million and spent $2.5 million of that on legal fees for one case, originally filed in May 2000: Beachwood (Yamigawa), a 22 acre residentially zoned parcel located below the High School and abutting Highway 1. HMB lost ($42 million) in federal court and in the end sold bonds to pay an $18 million settlement, costing the City (US dollars) $35 million. The loan obligation calls for an annual payment of $1.126 million per/year for 30 years. The first payment was made in August 2009. Coincidentally, the Ritz had paid the City $2.5 million in transient occupancy taxes that year. Meyers Nave, HMB’s contracted legal firm, got it all. 

Once the city signed off on the settlement agreement (04/08) they first spent over $1 million in legal and lobbying fees to try to get legislative help from Sacramento. When that failed, the City cut staff by over 35 percent, and each year since the 11/28/07 “takings” judgment HMB has seen more cuts in staff and services. Multiple Administrative raises, the creation of Executive Staff, revolving management and poor decisions since then has put HMB on the fiscal precipice. An attempt by the City to failed just last year. Desperate for revenues, HMB is ; but what about expenditures and missed opportunities? 

HMB’s devastating litigation trail has its roots with the 2000-2005 Council. Starting in 2000, HMB saw multiple suits against it regarding land use. We have Beachwood, Ailanto (Pacific Ridge) 3 times, Wavecrest and more totaling well over $10 Million in legal fees from HMB to Meyers Nave until Meyers Nave lost the Beachwood case in November 2007 and was fired in June 2008. 

Since the change in leadership in November 2005, from a no-growth majority, we have seen subsequent elected officials try to clean up the mess. Some say they haven’t done a very good job of it. HMB is now on their fourth City Manager (Aucker, Raines, Dolder, ) since then.  

A timeline of driving events might be helpful. Here is a reasonable starting framework:

• 2000 - Multiple land use law suits are filed against HMB, including Beachwood (Yamigawa), Ailanto (Pacific Ridge) and Wavecrest are the largest ones. In a settlement, Ailanto agrees to reduce their units from 228 to 63 (5,000 sq. ft. units) and move the units south, to sit right on Foothill Blvd, blocking a bypass in our General Plan and Local Coastal Program forever. Mike Ferreira and Toni Taylor led city negotiations. 

• 2004 - HMB buys 22 acres abutting Highway 92 for $3.1 Million from Nurseryman's Exchange, with POST ‘lending’ the money. The ‘purchase’ was made with no Appraisal and no means to repay the ‘loan’ by POST violating the California Constitution. Mike Ferreira and Toni Taylor led city negotiations.

• 11/05 - The City placed a Conservation Easement on a 9600+ sq’ beachfront parcel that it purchased for $500,000, protecting the then mayor’s (Jim Grady) panoramic view from the Ritz to Pillar Point in perpetuity (144 Kelly); that was the final action of the no growth Council (3-1).

• In November 2005, Naomi Patridge (largest vote getter by far), Bonnie McClung and Jim Grady (incumbent) won the three seats for City Council - with Marina Fraser and David Gorn awaited their new colleagues. Incumbent Toni Taylor chose not to run again and incumbent Mike Ferreira lost his bid.

• In December 2005, Marina Fraser is picked by the new council as Mayor (one year term - to 12/06)

• 2006 David Gorn resigns his council seat. He had been picked by the 2005 Council to replace Sid McCausland who also resigned. John Muller was chosen by the 4 Council members to replace Gorn (4-0).

• 2006 - HMB hires Marcia Raines as City Manager, replacing Aucker. Neither Aucker nor Raines had prior City Manager experience.

• 2006 - The City spends over $500,000 on ‘studies’ of the POST financed Highway 92 ‘park’, knowing they could not afford the purchase price. HMB ended up giving the property back to POST.

• In December 2006, Naomi Patridge is picked by the Council as Mayor (one year selection - to 12/07)

• 2007 - (11/28/07) Federal Judge Walker delivers a scathing statement and judgment against HMB, penalizing HMB with a $42 million penalty

• In December 2007, just one week after the Federal Judgment against HMB, Bonnie McClung is chosen Mayor for the next year term (to 12/08).

• 2008 - Meyers Nave, HMB’s contracted legal firm since the late 1990s, is fired. Condotti, attorney for Coastside County Water District is hired to provide legal services. Meanwhile, HMB additionally spends over $1 Million in legal fees and lobbying fees on Beachwood.

• 2008 - Marcia Raines, after guiding multiple raises for the city's administration and herself, announces she’s going to Millbrae at year’s end. Meanwhile, she initiated HMB’s “Strategic Plan,” effectively shielding all City issues behind a veil.

• 2008 - POST purchases 220+ acres of Wavecrest from Ocean Colony Partners for $13.5 million.

• 2008 - In the fall of this year we saw a financial meltdown in this country that spread around the world at light speed. We are still dealing with that.

• 2008 - John Muller is chosen as HMB Mayor in December (12/08 to 12/09)

• 2009 - In January (01/14/09), Michael Dolder is hired as Interim City Manager. Dolder had no prior City Manager experience.

• 2009 - Coastside Family Medical Clinic abruptly closes sending the entire list of coastside patients into a medical abyss of uncertainty.

• 2009 - Dolder gets right to work restructuring HMB’s City government, preparing HMB for the payment of $18 million to the plaintiff. In order to do that, HMB had to borrow the money by selling bonds. In order to do that, HMB needed a favorable bond rating to achieve the lowest yield possible for repayment of the loan. Dolder cut over 35% of City staff to start, reducing our annual expenditures which got HMB a AA- rating securing low bond rates in a very turbulent bond market.

• 2009 - The City accelerates outsourcing services.

• 2009 - Dolder gets his first raise to $15,500 per month plus a City repayment of $3,500 monthly for City expenses; later this year, he gets another raise sparking anger within the community by some.

• 2009 - Dolder creates two new Administrative positions totaling over $335,000 per year in City expenditures.

• 2009 - August provided our first (of 30) $1.126 Million payment for the bonds we’d sold.

• 2009 - From August 2009, through the November 2009 election, we were repeatedly told by incumbents that HMB was in the best financial position possible; that we’d never been in as fiscally sound a position. Life was good.

• 2009 - the election yields Allan Alifano, Rick Kowalczyk and Naomi Patridge (again) as winners, joining Marina Fraser and John Muller on the Council.

• 2009 - Marina Fraser is again voted Mayor by her Council peers in December 2009 for one year (12/09 to 12/10)

• 2010 - February - the City announces a $2.1 Million “shortfall.” The Council decides to raise the sales tax by over 1% for seven years, after spending $50K on a study that they said showed it would pass. Not taking any chances, the Council unanimously votes in a “fiscal emergency”, dropping the votes needed to pass the tax from 2/3rds to 50% + 1 (simple majority). The Measure failed that November.

• 2010 - 4/23/10 Jimmy Benjamin files suit against HMB for violating the Coastal Act in the cleaning of the Kehoe Ditch. Dolder was Interim City Manager when the ditch was cleaned (02/09).

• 12/10 - is again voted Mayor for one year by HMB Council (to 12/11)

• 2011 - the City after in favor of to cut costs.

• 2011 - the Council outsources Parks and Rec to over the hill to cut costs.

• Throughout 2010 and 2011, the HMB City Council has repeatedly approved questionable expenditures on projects and consultants. Some of those expenditures might include:

• $666,000 to the Peninsula Humane Society (with no answers to their questions)

• $250,000 in redundant emergency communications fiber backbone

• $1,000,000 (approximately) to expand the Police Department building with no HMB Police

• 2011 - The City enters into an with and between the County, POST, and Coastside Land Trust (CLT) jockeying parcels within and around Wavecrest to acquire Smith Field. The City wouldn’t even ask CLT for the Conservation Easement back on 144 Kelly ($500K), yet approves POST’s request for a (CDP) lot line adjustment to clear the way for the California Conservation Conservancy $2.5 Million grant to CLT to purchase the newly carved out 50 acre parcel of Wavecrest’s already POST ‘protected’ ground. Funny, the City can issue a CDP to POST with the stroke of the Planning Director’s pen, but don’t issue themselves a CDP to clean a ditch!

• 2011 - the HMB City Council has proposed downtown parking meters to generate income. It is currently under consideration.

• 2011 - the Kehoe Ditch litigation initiated by Benjamin is decided in State Court; HMB loses. Despite HMB’s ability to issue CDPs, the City did not issue one for the Kehoe Ditch maintenance, performed in February 2009, which is a violation of the Coastal Act. The fine could exceed $1,000,000.

• 2011 - on 11/15/11, the Council listened to a CalPERS expert for over one hour tell them that they are millions of dollars behind in the funding of employee pensions.

There are many items I did not include due to space. This is already quite a lengthy read. To the best of my knowledge, although incomplete, this is an accurate, fair and reasonable timeline...at least for starters.

Will Half Moon Bay survive? Stay tuned, but some say the odds are against it.

George Muteff is a resident of Half Moon Bay.

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