City Not to Pay for Delays, Judge Rules

By Jorge Casuso

May 8 -- A Superior Court judge on Wednesday ruled that the City does not have to pay the more than $2 million in damages sought by a developer who charged that the Planning Department dragged its feet on a large mixed-use project on Main Street.

The lawsuit filed by Main Street LLC -- which bought the block and a half site for $5 million and is seeking to sell it for $27 million -- claimed that planning staff took 20 months to process the Environmental Impact Report, exceeding the 12-month deadline called for by State law.

In her decision, Judge Patricia Collins ruled that the City was not obligated to pay damages to the developer because the delay did not constitute a taking.

“The court need not reach whether the delay deprived (the) plaintiff of all economically feasible use as it concludes that there has been no taking at all,” Collins wrote in her ruling. “Delays in the permit process itself are not actionable.”

"Such delays are an incident of ownership that may be imposed on the developer rather than the general taxpayer without violating the United States Constitution," Collins ruled.

City officials lauded the decision in the case, which was filed in August 2000, and added that the Court also ruled that the developer failed to produce any admissible evidence to show that the City fabricated delays."This ruling affirms a bedrock principle of land use law that a City is not liable for permit delays,” said Deputy City Attorney Cara E. Silver, who argued the case for the City. “The City has an obligation to the community at large to comply with environmental laws and should not be forced by a developer to take shortcuts in this area."

But land use attorney Chris Harding, who filed the lawsuit on behalf the company formed by developer Howard Jacobs, disagreed

“The court ruled that damages are not available when a city delays a project,” Harding said. “It did not rule the City caused the delay. We think it (the ruling) is of questionable legality, and I assume the plaintiff will seriously consider appealing.”

Harding downplayed the impact of the decision, noting that a ruling by a trial court “doesn’t have any precedent-setting effect.”The lawsuit, Harding said, succeeded in pushing forward a project that was stalled in the City bureaucracy. Had the developer not filed the lawsuit, the project would have taken longer to reach the Planning Commission, which denied the project in December 2001, nearly two years after a permit was granted, Harding said.

“The principal purpose of the lawsuit was about securing a hearing on the project, which we believe would have taken longer without the lawsuit,” Harding said.

The Planning Commission would approve the project in December 2001, after numerous public hearings and plenty of design advice -- much of it contradictory -- from three different government bodies.

The project, which is going through plan check, will be the largest housing development on Main Street, with a four-story structure with 107 market-rate units on the west side of the street and a three-story building with 26 units on the east side. Both structures include retail space on the ground floor facing the street.