Council Members Named in $6.6-Million Action : Hotel Firm Sues Solana Beach on Building Ban

The developer of a controversial hotel whose project has been held up by a building moratorium has filed a $6.6-million lawsuit against the City of Solana Beach in an effort to have the construction ban lifted.

Phoenix-based InnSuites International, which plans to build a 171-room hotel on a bluff overlooking San Elijo Lagoon, is seeking $5.3 million from the city and an additional $275,000 in punitive damages from each of the five Solana Beach council members, City Atty. Dan Hentschke said Wednesday.

The lawsuit charges that council members exceeded their authority by adopting the yearlong, citywide building moratorium in August, Hentschke said. In addition, the suit claims that the council enacted the ban specifically to block the InnSuites development on the coastal highway at the north end of town.

Making that argument enables the developer to seek personal liability from Mayor Margaret Schlesinger and council members Jack Moore, Marion Dodson, Celine Olson and Richard Hendlin, Hentschke said.

The lawsuit asks the court to revoke the moratorium and to declare that InnSuites has acquired “vested rights” to proceed with the project. A builder acquires vested rights after obtaining the necessary permits and making a significant investment in the project based on those approvals.

Before Solana Beach became a city July 1, the builder had obtained county approval of the project and a state Coastal Commission permit. Substantial grading of the site has occurred, but InnSuites has not yet received a building permit from the city. Hentschke said most courts have found that a project is not vested until the developer has obtained a building permit.

Unless the City Council grants an exemption, such a permit would not be forthcoming until next summer, when the moratorium expires. InnSuites’ lawsuit claims that such a delay would cost the company hundreds of thousands of dollars.

Council members declined to comment on the lawsuit, which was filed in North County Superior Court. But the city attorney rejected InnSuites’ claim that the moratorium was improper and represented a veiled attempt to halt the hotel project.

“We believe that the city acted legally and properly in all the matters they have dealt with since incorporation,” Hentschke said. “The City Council has never attempted to discriminate against or single out InnSuites in the application of its laws. They’ve been treated like everybody else.”

The temporary moratorium, Hentschke said, “is a tactic frequently used by newly incorporated cities.” Solana Beach chose to enact the ban “to enable the council to develop a general plan and appropriate zoning ordinances. It’s perfectly reasonable.”

The proposed hotel is on a sloping site on the eastern side of the coast highway just south of Cardiff State Beach. As planned, it would be a three-story structure with a restaurant and meeting rooms.

Council members and other residents have spoken in opposition to the hotel’s design at numerous county and Coastal Commission hearings, arguing that it is too intensive a use for the scenic site, which abuts the southern shore of the sensitive lagoon.

InnSuites officials could not be reached for comment.