Atherton likely to fight developer lawsuit challenging road-impact fees in court

Pacific Peninsula had lowered amount of claim to about $215,000

This is an expanded version of a previously published article.

An Aug. 22 court date is set for the lawsuit filed by the development firm Pacific Peninsula Group against the town of Atherton, now that the City Council has rejected a mediated settlement agreement.

The council discussed the proposed settlement when it met March 16 in closed session. Terms of the proposal are confidential.

The open-session council agenda that followed the closed session listed approval of a settlement, which would have allowed the council to vote on the proposed agreement in public. But the item was pulled from the agenda at the beginning of the open session, an indication that the council didn't accept the mediated terms when it met behind closed doors.

Pacific Peninsula sued the town last August to recover $298,000 in road-impact fees it claims it was charged illegally. During the discovery phase of the ongoing legal process, that amount was lowered to about $215,000, according to attorney Leah Castella, who is defending the town in the lawsuit.

Ms. Castella said no other mediation is scheduled, and the town plans to file a motion for summary judgment to have the suit dismissed before the Aug. 22 court date, she said.

The lawsuit followed the council's decision to refund a portion of road-impact fees paid by builders before the town discontinued the fee in late 2009 due to controversy about its legality. The Pacific Peninsula Group (PPG) sued to force the town to refund the fees it paid in their entirety.

At the public comment period preceding the closed session, resident Melinda Tevis urged Councilwoman Elizabeth Lewis to recuse herself from the discussion and vote because PPG was involved in the building of her home, and therefore she had a conflict of interest.

Ms. Lewis angrily rejected the claim that she has a conflict of interest. She said that PPG didn't build her home, although Jude Kirik, the president and a principal of one of the group's companies, Pacific Peninsula Architects, designed it.

Mr. Kirik is also a principal of another PPG group, the Pacific Peninsula Custom Group. PPG has four groups, all sharing a building in Menlo Park, according to its website.

The town attorney announced after the closed session that no reportable action was taken during the session, so it is unknown who participated in the discussion of the proposed settlement.

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Like this comment
Posted by Michael McPherson
a resident of Atherton: other
on Mar 21, 2011 at 6:09 pm

Having spoken in front of the Council on three separate occasions against the refund plan that was previously approved, and having helped design this one, I would like to say that I support the Council's stance on this issue. I believe the Council is on firm legal ground; there may or may not be more negotiations to come, but I am confident all five Council members have the best financial interests of the Town at the forefront of their efforts to conclude this matter.

Like this comment
Posted by John P Johns
a resident of another community
on Mar 21, 2011 at 6:35 pm

Not only did Steve Ackley's firm design Ms. Lewis' home in a way that failed to conform to Atherton's zoning ordinance, Ackley was a major contributor to Lewis.

I can see only one possibility as to why no reportable action occurred. Jerry Carlson made a motion to accept the results of the mediation, and it failed for the lack of a second because Lewis was forced to recuse herself.

If there was a vote, then it would have been a reportable action.

Perhaps the District Attorney should interview each of the members of the Atherton City Council to find out what really happened in regards to the Ackley matter.

This wouldn't be the first time the Atherton took action in closed session and refused to report out as required by law.

The road impact fee is legal by the way, no matter what Charles Marsala (one who sought out Ackley for political contributions) says.

For a legal opinion on the matter one can check with the Los Altos Hills City Attorney. Los Altos Hills hasn't rescinded its road impact fee.

Like this comment
a resident of Atherton: other
on Mar 21, 2011 at 7:25 pm

1. What were the individual votes for/against this legal settlement? According to THE LAW, Atherton must publish this vote from an action taken in closed session.

2. Why did JIM DOBBIE try to shout Melinda Tevis down in this meeting? This was just WRONG. Everyone has a right to make their comments. If Elizabeth Lewis wanted to respond, I think that's okay, but not by interrupting Ms. Tevis. She should have been given time after Tevis' comment to say her piece.

Like this comment
Posted by karma
a resident of Atherton: Lindenwood
on Mar 21, 2011 at 10:13 pm

When Ackley's looses this lawsuit, the Town will be free to adopt a new road impact fee.

The Town and not Ackley is going to be laughing all the way to the bank on this one.

Like this comment
Posted by peter carpenter
a resident of Atherton: Lindenwood
on Mar 22, 2011 at 4:46 am

peter carpenter is a registered user.

See SJ Mercury article:
"Atherton council rejects settlement of road fee lawsuit

By Bonnie Eslinger

Daily News Staff Writer
Posted: 03/17/2011 10:40:24 PM PDT

The Atherton City Council has rejected the proposed settlement of a lawsuit filed last August by a local developer who contends the town illegally charged $298,000 in road impact fees.

As a result, the town could end up fighting the suit in court. "We remain confident in the legal arguments of our case," said Leah Castella, Atherton's special litigation counsel. "The settlement was always contingent on council approval."

Castella said she couldn't discuss why the council decided in closed session not to settle."


Clearly a decision was made and the votes on that decision must be made public. Alternatively, criminal charges should be brought against Castella for disclosing what the council did in closed session (Section 54963 provides that a person may not disclose confidential information that has been acquired by attending a proper closed session to a person not entitled to receive it, unless the disclosure is authorized by the legislative body.)

Like this comment
Posted by Arvid Brownstein
a resident of Atherton: other
on Mar 22, 2011 at 8:08 am

Atherton special counsel says "We remain confident in the legal arguments of our case".

In reply to this assertion I must ask why did the City Council approve the repeal and refund of road impact fees in the first place?

I would also ask how Elizabeth Lewis voted on the matter and did her vote constitute a conflict of interest?

Something doesn't smell right here.

I agree with Mr. Carpenter. This mess should be referred to the public corruption unit of the San Mateo County Office of the District Attorney.

Like this comment
Posted by Pay attention now
a resident of Atherton: West Atherton
on Mar 22, 2011 at 8:32 am

Peter, The Almanac story says PPG lowered the amount of their payback demand, which is not in the Merc story you pasted from. You ought to be reading the Almanac more closely.

Like this comment
Posted by Disappointed
a resident of Atherton: West Atherton
on Mar 22, 2011 at 9:14 am

I am disappointed that Elizabeth Lewis has been supporting someone who has sued the Town he lives in and has done so much business in, very successfully. This is someone who should be giving back, not trying to take away. I would like to understand who voted for this settlement and who voted against it, Mr. Carpenter. That would help to illuminate whatever special interests may be at work here.

Like this comment
Posted by Something's Fishy
a resident of Atherton: other
on Mar 22, 2011 at 9:15 am

Leah Catsella used to work for the same firm as Wynn Furth, McDonough Holland and Allen.

This firm collapsed after losing a series of high profile cases in State and federal court.

The fact that Ms. Castella would express such confidence in defending the road impact fee makes the Town's decision to do away with road impact fees when she was a partner of Furth's at the old firm makes the Town's about face all the more difficult to understand.

Like this comment
Posted by Blame where it belongs
a resident of Atherton: Lindenwood
on Mar 22, 2011 at 9:23 am

As much as a problem the current city attorney has been for this Town, I do not see this issue as originating with her bad legal work.

Charles Marsala and Elizabeth Lewis were in the pockets of big development, and got rid of a perfectly legal road impact fee as payback to their political benefactors. Of course it's clearly legal since as Mr. John Johns pointed out, even neighboring Los Altos Hills has it and there have been no problems there, perhaps since that city is managed without the interference of development interests with its politicians.

Marsala and Lewis recruited Jerry Carlson to go along with the elimination of the fee and the refund, mainly because Carlson figured if McKeithen was against it, he should be for it. Furth issued a legal opinion consistent with what she perceived the majority vote was as part of job preservation, like so many other bad opinions issued since she's been here.

Now there's a new council, and my guess is that Widmer, Dobbie and McKeithen nixed this settlement over the endorsements of Lewis and Carlson.

Where the city attorney is now at fault is providing political cover for Lewis and Carlson, assuming they voted for the settlement, by not publishing the votes.

Like this comment
Posted by Westside trucker
a resident of Atherton: West Atherton
on Mar 22, 2011 at 10:24 am

Next time, the Atherton Town Council should consult with experts from the road user industry for input.

Like this comment
Posted by Johnson
a resident of Menlo Park: Central Menlo Park
on Mar 22, 2011 at 4:46 pm

I love this idea!

Like this comment
Posted by Bea Schmidt
a resident of Atherton: Lindenwood
on Mar 22, 2011 at 5:50 pm

The Road Impact Fee was instituted over a decade ago. It was thoroughly vetted by the City Attorney and the Town's auditors. The analysis used to update it throughout the years was impeccable.

The Town's problem with the Road Impact Fee started with Charles Marsala. Marsala sacrificed the quality of the Town's infrastructure to pay back his developer friends.

Marsala owed Steve Ackley for giving financial contributions to Elizabeth Lewis and other political allies of Marsala.

Marsala's behavior was corruption and cronyism at its worst.

Like this comment
Posted by Steve Sampson
a resident of Atherton: West of Alameda
on Mar 23, 2011 at 7:51 am

That guy Ackley is a real piece of work.

I remember when he and his wife were at a City Council meeting to protest the Town's action to prohibit his occupying the pool house they built.

Steve Ackley's wife got up and complained to all that they built the pool house so that their children could have a place to play.

This is a pool house that the Town issued a red tag on because it did not to conform to the Atherton's fire safety standards.

What kind of mother would allow their children to play in a structure that was unsafe?

Like this comment
Posted by Don't get it
a resident of Atherton: West Atherton
on Mar 23, 2011 at 8:39 am

I don't understand one aspect of this and perhaps someone with detailed knowledge such as Mr. McPherson can explain it.

I understood that Atherton collected a road impact fee, contended it was legal, but overcharged what could be legally assessed, and refunded this overcharged amount.

The current lawsuit contends all of it was illegal and wants the baseline portion back as well.

If the fee is legal (as it is apparently in neighboring communities), why did Atherton stop charging even the baseline amount? I thought there was a shortage of revenues and that would be an obvious revenue source. I suspect the current lawsuit is thriving on the ambiguities created by this behavior.

Like this comment
Posted by Ed
a resident of Atherton: other
on May 23, 2011 at 5:42 pm

Will Ex Councilman Charles Marsala be testifying on behalf of the Town or the Peninsula Pacific Group, when this gets to court?

Sorry, but further commenting on this topic has been closed.

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