Builder Files First Lawsuit in Challenge to Growth Lid

In the first legal challenge to San Diego’s controversial Interim Development Ordinance, a Rancho Bernardo developer filed suit in federal court Tuesday asking that the slow-growth measure be declared unconstitutional.

A limited partnership called Camino Bernardo Associates, arguing that it has already established its constitutional right to build a 242-acre development, also asked the U.S. District Court for an injunction to force City Manager John Lockwood to issue building permits for the majority of its residential project, situated west of Interstate 15 in the southwestern corner of Rancho Bernardo.

Council Set to Iron Out Plan

The lawsuit comes just days before the City Council is scheduled to wrestle with amendments and exemptions to the Interim Development Ordinance, which seeks to slow development by limiting the number of residential units that can be built over the next year.

Council members have agreed that developers should be limited to building 8,000 residential units citywide during the next year--about half of what was built over the previous 12 months during a local construction boom.

But the crucial issues of how to parcel out the 8,000 units among different communities, which developers would be allowed to build first, and what projects should be exempted from the ordinance have yet to be decided. The council is supposed to meet in a special hearing Friday to hash out those details.

Mayor Maureen O’Connor and City Atty. John Witt said Tuesday that the lawsuit may be premature because many of its legal questions could be settled during Friday’s council hearing.

“I think they’re just protecting their own little project,” O’Connor said.

“I think when there’s change, and especially when you have the community fighting against developers, the developers are going to do everything they can do to maintain their position,” she said.

Suit Considered Inevitable

Councilman Ed Struiksma called the suit “inevitable, given the volatility of the action the council has taken and that people have their livelihoods on the table.”

The lawsuit attacks as a “political compromise” the way council members have decided so far which communities should be exempted from the ordinance and preliminary on how to allocate the 8,000 units among the remaining neighborhoods.

Council members have already excluded Tierrasanta, Otay Mesa, downtown, portions of the midcity area, and all trolley corridors from the ordinance.

The suit also asks that the Rancho Bernardo development be exempted through court injunction from the ordinance.

In seeking relief, the lawsuit asks the court to find that the council’s adoption of the IDO “was contrary to the United States Constitution” and to issue an order “directing the City Council to set aside and annul its decision adopting the IDO.”

The lawsuit asks the court to issue an injunction against the city to keep it from enforcing the IDO against Camino Bernardo Associates, as well as ordering the city to pay unspecified damages to the company for delaying its development.

A Legal Right to Project

David Mulliken, the attorney from the firm of Latham & Watkins who filed the suit, said he based his request for special consideration on the claim that Camino Bernardo Associates has a legal vested right to proceed with its project. That right, he said, was granted when the City Council unanimously approved a subdivision map called a “vesting tentative map” Aug. 12 for the project, which would include 1,215 residential units, a convalescent home, a day-care center and recreational facilities.

Since then, the developer has spent $16.3 million on the project, including $3.1 million in school fees paid to the Poway Unified School District. The developer also donated land for a highway interchange and has built a sewer pump station and two miles of sewer lines, Mulliken said.

Mulliken said the developer received 56 building permits for the first phase of the project without a hitch.

But securing the rest of the permits became a problem once the idea of an IDO was made public, he said.

The notion of enacting some kind of emergency slow-growth ordinance grabbed headlines when O’Connor and Struiksma held rival press conferences April 29 and each called for a cap on building because of overburdened streets, overcrowded schools and inadequate sewers in many of the city’s neighborhoods.

After the announcements, there was a rush by developers to stake their claims to projects by applying for building permits, city officials have said. Camino Bernardo Associates was among the group when it filed for building permits for 205 units in other phases of its Rancho Bernardo project May 5 and May 18.

Before the developer was able to receive those permits, the council met June 23 in an all-night session and approved the IDO. Council members couldn’t muster the necessary votes to enact the measure as an emergency ordinance, and it was approved as a regular law, which becomes effective in 60 days.

‘Pipeline’ Hopes Snuffed

That waiting period seemed at the time to give Camino Bernardo Associates and other builders in the so-called “pipeline” enough time to obtain their building permits. However, Lockwood dashed that hope when, exercising an administrative prerogative, he ordered the Building Department not to issue any more building permits before the ordinance would go into effect Aug. 23.

Despite that move, which was widely reported in the press, Camino Bernardo Associates made a deal July 25 to sell a portion of its Rancho Bernardo project for $8.2 million, the lawsuit said. The sales agreement included a clause that gave the buyer 30 days to make sure the IDO didn’t apply to the project.

“Absent an exemption from the IDO for projects possessing a vested right to proceed with development, Camino Bernardo Associates stands to lose the revenue it could have received on the sale,” the lawsuit says.

“We know it took us a snap of the fingers to get the first 56 building permits, and if not for the IDO, we would have gotten the 205 permits just as well,” Mulliken said Tuesday.

He acknowledges that the lawsuit asks the court to strike down the IDO as unconstitutional, but emphasizes that suit is not intended as a class action. He said it is his client’s intent to secure an exemption from the IDO.

“We don’t have any philosophical ax to grind,” Mulliken said. “We just have a lot of money at stake here.”

City officials Tuesday said they couldn’t anticipate how the suit would affect developers that find themselves in similar situations to Camino Bernardo Associates.

A Planning Department report issued Monday shows that the city has issued vesting tentative maps for 8,187 units since Jan. 1. Of those, 1,140 units have been built.