June 25, 2004

Back to the table of Contents Page

Classifieds

Palo Alto Online

Elephant in the living room?

by Jocelyn Dong

When City Council members deliberated Monday night about the proposed Hyatt development on El Camino Real, they appeared to consider the usual information -- from effects on Palo Alto's quality of life to potential economic consequences.

But in the back of some minds, and not spoken of in council chambers, another issue lurked -- a possible lawsuit the Hyatt threatened to file against the city should the council keep the 185-home project from moving forward.

Council members this week denied the threat of litigation influenced their unanimous approval Monday of a crucial environmental-impact report. Some council members said they had not been aware of the issue.

The fact remains, though, that the council's consideration of the report was somewhat unusual, given that a detailed plan of the development -- usually a first step -- hasn't even been submitted to the city for official review.

The legal saber-rattling is the latest chapter in the saga of the Hyatt development. More than five years ago, the company made plans to tear down its Hyatt Rickey's hotel and build a new 320-room hotel and 302 condominiums. Neighborhood protests over the size of the project, plus a declining economy, eventually led Hyatt to drop the hotel and propose a 185-home development instead.

Hyatt had raised the possibility of a lawsuit a year ago in a document called a "tolling agreement," made with Palo Alto. In it, Hyatt asserted it had "certain legal rights and claims which it may seek against the City," including a right to have its final environmental report certified within one year.

In the agreement, Hyatt consented to put on hold any potential litigation, while the city considered what to do about traffic along the Charleston/Arastradero corridor. But the agreement was set to expire July 1.

In the same document, the City denied Hyatt had any basis for a lawsuit.

The issue was apparently resurrected last week, prior to the council's session Monday, at meetings held between Hyatt developer Mark Solit, Hyatt's attorney Robin Kennedy, individual council members and leaders of the neighborhood next to the proposed development. Kennedy allegedly said that "they had a lawsuit in hand and were prepared to deliver it to the city," according to one person present.

In an interview this week, Kennedy would not confirm whether she was actively considering litigation, but said "you would have had unhappy campers on our side" if the report had not been approved.

"The Hyatt folks felt they had been beating their heads against the wall for an extraordinarily long period of time," Kennedy said.

"It's not a secret" Hyatt was considering legal action, said Councilwoman LaDoris Cordell, who attended one of the meetings.

Although she said she took the threat seriously, it did not sway her deliberations.

"Litigation doesn't scare me at all," said Cordell, a former judge. "I understand it's part of what one does when one negotiates. I would not have just said, 'Oh let's just certify the EIR (environmental impact report),' when legally it was inadequate. I would not have done that. It would have been improper to do that."

Likewise, other council members who knew of the legal ramifications said they took it in stride. Mayor Bern Beecham called litigation "an expectation of doing business."

"My first thought was to ensure the EIR was adequate. That's as far as I went," he said.

Still, some in the community wonder if the issue, like an elephant in the living room, shouldn't have merited at least a mention Monday night.

Peter Scheer, executive director of the California First Amendment Coalition, acknowledged that there was no legal requirement to disclose a simple threat of litigation. But, he said, "that context (for the threat) needs to be known." The important question is whether fear of exposing the city to a lawsuit altered official behavior or policy.

Councilwoman Hillary Freeman was one member who said this week she was unaware of any threat of litigation. Nonetheless, she vigorously questioned why the council was certifying the report Monday night when a fully detailed plan for Hyatt's development has not been submitted.

"My big issue is I felt uncomfortable approving a legal document for a nebulous project," Freeman said.

Council member Jim Burch said he heard Hyatt might sue, but believed the city would have easily defended itself.

At the council meeting, he took the Hyatt to task for implying the city had any responsibility for how long it took -- five years -- to approve the report.

"If this project had come forward the way it's construed now when I was running (for council) in 1999, people would be living in those homes today, rather than still here talking about it," he said.

In the end, however, the council members said they approved the report on its merits, not on the basis of threats.

Cordell even sees an upside in the threat of a lawsuit.

"The benefit of saying, 'We're going to sue,' is that it's brought people quickly to the table," she said. "I'm not talking about the City Council. I'm talking about the Hyatt and the neighborhood. ... I applaud that it was done."

Monday night, neighbors supported the report's approval, pending the council's assurance the final development wouldn't exceed the proposed 185 homes and that council would consider traffic impacts along Wilkie Way. Senior staff writer Jocelyn Dong can be reached at jdong@paweekly.com.

E-mail a friend a link to this story.