Morgan Hill -- A long-standing rift between Arcadia Development Company and the city will be heard by a Santa Clara County judge this year.
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's lawyers, primarily Michael Burke of Ellman Burke Hoffman & Johnson, said the update created new cause for harm to Arcadia, 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 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.
"We're delighted that the court of appeal agreed with us that the re-enactment and extension of a land use restriction creates new cause of action," Burke said. "Otherwise, local governments could re-enact and extend forever and property owners would have no recourse."
Burke said he didn't know why Arcadia didn't fight Measure P in 1990, and said he'd rather focus on the present - rather, on 2004.
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.
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.
But, Arcadia didn't complain in 1990. The first legal complaint was filed in 2004 - following the passage of Measure C.
City Manager Ed Tewes said the city has spent about $100,000 fighting the court case, contracting with San Francisco-based land use law firm Shute, Mihaly and Weinberger. Tewes noted that if the city loses, it could be forced pay damages and court costs to Arcadia. Ellison Folk of Shute, Mihaly and Weinberger has said that these costs could total more than $50 million.
Tewes declined to say whether the city would pursue a compromise with Arcadia, allowing the developers to compete for more allotments, saying it was beyond his purview.
The city and Arcadia are waiting for a trial date to be set. Burke said he expected a resolution by the end of the year at the latest.
Natalie Everett Natalie Everett is the education and city reporter for The Times. Reach her at (408) 779-4106, ext. 201, or neverett@morganhilltimes.com.
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