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The third home has been redesigned several times. 

“For over 18 months, the city has led [Pace Brothers Construction] down the garden path with promises that ‘re-designs’ will satisfy concerns, only to pull the rug out from development plans,� the suit states.
City councilmembers who voted to deny the project stated that the house was too large and “out of balance with the size and scale� of the surrounding neighborhood of single-story 1,100- to 2,000-square-foot homes.
According to the lawsuit, that attitude is “arbitrary and capricious� and imposes the councilmembers’ “own social engineering views on the project, in disregard for the economic impact to [Pace Brothers].�
The court documents argue that the developers have a constitutionally protected “investment-back expectation� for economic return from the property.
Arroyo Grande City Manager Steve Adams said that the city will defend the individually named planning commissioners and city councilmembers.
“We don’t believe the use of the property has been denied,� he said. “We don’t feel there are any grounds for the lawsuit because the city council has allowed the applicant to come back, and has put forward conditions to be met for approval.�
According to the city attorney, Tim Carmel, the individuals weren’t properly named in the lawsuit, consistent with California law.

“The standards for naming individuals and actually establishing liability are insanely high in California,� he said. “There’s nothing even close to it in this case. You have to violate a well-established rule of law and get actually to the specific intent of the individuals, and that’s not the case pled here.�
Whatever the outcome, the case is already shaking up other planning commissioners around the county.
“It’s intimidating. It makes you fearful. Will that tactic be used against you merely for exercising your discretion? Am I going to have to hire my own lawyer just because of a decision I make?� said San Luis Obispo city planning commissioner John Ashbaugh.
“This is bold-faced intimidation,� noted county planning commissioner Sarah Christie. “It’s not incumbent on government bodies to assure real estate speculators a profitable return on their investment. If a profit can be made within general plan guidelines, that’s reasonable. But it’s not reasonable to expect the general plan to be undone in order to maximize a developer’s profit expectation.
“The reason we have creek setbacks is so the public is not saddled with the costs of bailing out homeowners whose house falls into the creek,� she added.
Under the claims filed in court, individual city councilmembers Jim Dickens, Joe Costello, Ed Arnold, and Mayor Tony Ferrera, and planning commissioners Caren Ray, Nancy Parker, Doug Tait, and Chuck Fellows could be personally liable for damages, including attorney fees. A press release issued by Pace Brothers Construction’s attorney John Belsher states that city councilmember Jim Guthrie was not named because he voted in favor of the project at the last hearing. However, Guthrie’s name appears as a defendant on page three of the lawsuit.
The court case is expected to take years to settle, since “takings� cases involve a controversial area of law with no black-and-white answers.

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