By Jorge Casuso

Nov. 6 -- The City Council has agreed to pay the attorney who successfully challenged Santa Monica's "granny flat" ordinance $297,000 in legal fees, a cost that would have been avoided if the council had heeded its staff's legal warnings instead of public testimony.

Attorney James Isaacs received $180,000 last month (the first of two payments) in what likely is the largest settlement stemming from public policy litigation against the City in more than five years. Isaacs decided to accept the City's settlement offer instead of seeking a higher amount in court.

"We thought that we could get something higher, but everyone in this case said, 'If the City comes in with something reasonable, we will go along,'" said Isaacs, who represented the Coalition Advocating Legal Housing Options and former planning commissioner Lou Moench.

"We came in with an amount that we thought was reasonable, the City came in with an amount that was reasonable, and we felt that we should accept this and move on," Isaacs said.

"The City negotiated the amount and thought it was more economical to settle for a reduced amount rather than try to fight the award itself," said Cara Silver, who handled the case for the City Attorneys office.

The settlement comes after a court of appeals in March found that Santa Monica's ordinance, which restricts who can live in second units in single family residential zones, was unconstitutional.

After the State Supreme Court shot down the City's request to review the case, the City Council removed the unconstitutional provision from the law, which limited those living in a second unit to family members or care givers.

The City Attorneys office -- as well as planning staff -- had repeatedly warned the council that it was treading legally treacherous waters by restricting who could live in the units. As far back as 1988, then City Attorney Robert Myers warned the council that the findings for a ban on second units were "legally indefensible" and that such an ordinance was unlawful.

"In choosing to deliberately violate the law, the City Council made a purely political decision to placate single family homeowners," Myers said after told of the recent settlement. "That decision has cost the taxpayers a significant amount of money that could have been better spent on affordable housing and other social services in our community."

The settlement is the largest stemming from public policy litigation since Chris Harding, a prominent local land use attorney, won $620,000 in 1996 after challenging the City's Housing element on behalf of the Santa Monica Housing Council. In that case, Isaacs also won an additional $30,000 in legal fees.

More recently, the City agreed in June to pay the operators of the Jack in the Box at 2423 Wilshire Boulevard $278,700 in legal fees. The settlement ended a court battle the City had been waging since the council curbed the restaurant's drive-up window's hours six years ago at the behest of neighboring residents who complained the noise kept them up.

The granny flat ordinance was first passed in 1996, and a similar law was passed to replace it in 1998 and extended the following year.

The City's policy came after council members heard testimony from dozens of homeowners, mostly from the North of Montana neighborhood, who opposed second units. They argued that the units would result in congestion, air pollution, noise and on-street parking.

Staff attorneys had warned the council in 1996 that they did not believe the findings for an all-out ban could be made and included a copy of a 1990 state housing document "indicating that a local ordinance limiting occupancy to persons related to the owner would be susceptible to legal challenge," according to the Appeal Court decision.

The council first accepted the staff recommendation and directed them to prepare an ordinance regulating second units but then rejected the recommendation after hearing testimony from some two dozen members of the public opposing second units.

Instead, the council adopted an ordinance that banned second units unless they were occupied by a relative or caretaker if the homeowner could demonstrate substantial hardship. The ordinance was extended 18 months in November and a new interim ordinance was passed four to three in June 1998 dropping the need to show hardship.

After the Planning Commission recommended that the council revisit the interim ordinance before it expired and control the units by regulating density and concentration, the council was presented with two options: enact the existing standards permanently, or extend the interim ordinance and explore the Planning Commission recommendations. Again, heeding the cry of residents, the council adopted the permanent ordinance by a 5 to 2 vote.

Voting for the ordinance were Councilmembers Kevin McKeown, Ken Genser, Robert Holbrook, Richard Bloom and Pam O'Connor, who had previously voted against the measure. Councilmembers Michael Feinstein and Paul Rosenstein (who is no longer on the council) cast the dissenting votes.