The City of Gilroy and three developers, including the Filice family-owned Glen Loma Corporation comprised of longtime Gilroy residents, have settled a lawsuit filed by the company in 2012 involving a request to relief from more than $500,000 in “unjustified and excessive development fees,” according to court documents.
In late December, the lawsuit went to mediation and both parties signed off on a settlement, which transfers approximately $295,000 from City coffers to the developers, according to Mayor Don Gage.
“This goes back to prior projects where (the developers) fronted money for something and felt that they should be paid back,” Gage said. “The City felt that they shouldn’t be. The developers went in and took some stuff to a judge and we could have gone to trial. The settlement was agreed upon by both parties, which saved everybody a lot of money.”
The dispute between the developers and the City originated in 2009, when the developers requested the City lower the public facilities impact fees associated with their projects. That same year, the City acknowledged those fees were inaccurate and based on outdated research – but it took two years for those fees to be lowered.
Hit hard by the housing, development and construction crash in January 2012, the City reduced the public facilities impact fees from roughly $21,586 to $16,200 per home to better adjust to the depressed market.
But the City refused to retroactively reduce those fees for any developers, including the Glen Loma Corporation and the two other plaintiffs in the lawsuit – the San Jose-based Arcadia Development Corporation and the Ronan Avenue Investors of Gilroy.
But by signing off on the settlement, the City quelled any future lawsuits from the developers related to this disagreement, Gage added. And if the lawsuit had gone to court – and if the City had lost – Gilroy would have been on the hook for paying all legal fees.
“The City maintains that the fee since 2004 was a legal fee, and that even though the City did not need to lower the fee, it chose to do so after careful study,” City Administrator Tom Haglund previously told the Dispatch. “Any fees that were required before were legal.”
Disagreeing with that assertion in 2012, the developers then took their case to San Francisco-based land use and real estate attorney David Lanferman. He did not return calls requesting comment on the settlement.
“It was a dispute that started several years ago and we’re finally just getting it resolved,” Gage said. “That’s generally what happens and it takes a while to get to that point. I think everybody was satisfied, as far as I know, with the settlement and that it was fair. Yes, the City would have liked to pay less and the developer would have liked to have more, but it’s all compromise.”
Tim Filice of the Glen Loma Corporation did not return requests for comment by deadline, but said in a previous statement that the other developers involved in the case regret “having to take this action (filing a lawsuit)” as he “has always had a great working relationship with the City.”
The Glen Loma Corporation has plans to build 1,643 new homes in the proposed Glen Loma Ranch, the largest single-family development Gilroy has ever seen, between Santa Teresa Boulevard and the Uvas Creek Corridor. The City approved the final maps for the Glen Loma Ranch project last year.
“They are going forward with their future development and I think that both the City and the developers are professional enough to know that they’re going to have disagreements at times – that’s just part of the business,” Gage said.
