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Condo Owners Appeal $2.15M Fine

July 3, 2008

By Kevin Howe, The Monterey County Herald, Calif.

Jul. 3–Condominium owners at Ocean Harbor House on Monterey Beach have filed an appeal of an appellate court ruling with the state Supreme Court. The ruling required them to pay more than $2.15 million in legal fees to the California Coastal Commission as compensation for a seawall bordering the property.

In May, the 6th District Court of Appeal upheld a ruling by Monterey County Superior Court Judge Robert O’Farrell in favor of the Coastal Commission’s requirement that condo owners pay a mitigation fee for the acre of beach lost when the seawall, now under construction, is built.

The appeals court found that the Coastal Commission acted reasonably and within the scope of its powers in levying the fee. It rejected homeowners’ arguments that the mitigation fee was unconstitutional, that the commission lacked authority to impose it, and that the amount wasn’t substantiated by evidence.

But Attorney Miriem Hubbard of the Pacific Legal Foundation in Sacramento, who is representing the homeowners, said the appeal contends the Coastal Commission acted beyond its constitutional powers in imposing the fee.

“The court gave a very broad interpretation of the Coastal Act,” she said, “and a pretty narrow interpretation of the homeowners’ arguments.”

The 172-unit development at 125 Surf Way was completed in the early 1970s and was converted from apartments to condominiums in the 1990s.

In 2002, condo owners began seeking a permit from the Coastal Commission to build a seawall

to protect their property from waves that were undermining the complex. The permit was granted in October 2004 on the condition that a mitigation fee be paid.

The commission granted a final permit to allow construction of the 585-foot seawall in March 2007, shortly after a $25 million lawsuit filed by the homeowners against the condominium developer, Ocean Harbor House L.P., was settled for $7 million.

That lawsuit alleged shoddy workmanship during the conversion, as well as the developers’ failure to provide for a seawall.

The Coastal Commission agreed to let the homeowners move forward with construction based on a letter of credit guaranteeing payment of the fee if it lost in court. The commission agreed the payment can be made in one “present day” sum of $2.15 million, rather than stretching it out in payments over 50 years.

Coastal planner Susan Craig of the Coastal Commission’s Central Coast Regional Office in Santa Cruz, said the letter of credit required an annual advance from the condo owners of $430,011 per year for five years. On that basis, she said, four years’ worth of payments are due immediately as well as a final payment for the fifth year in 2009, unless the state high court rules otherwise.

The money, Craig said, would be passed on to the Monterey Peninsula Regional Park District to purchase beach property to compensate for the loss of land at Monterey Beach.

The Homeowners Association has been paying the annual fees all along, Hubbard said, which is normal procedure in the state.

“You pay and challenge. If you win, you get your money back,” she said.

Kevin Howe can be reached at 646-4416 or khowe@montereyherald.com.

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Copyright (c) 2008, The Monterey County Herald, Calif.

Distributed by McClatchy-Tribune Information Services.

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