California Sixth District Court of Appeal Decides That the City Morgan Hill Must Let the Voters Vote On A Controversial Referendum Measure on May 31, 2017

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Two thousand five hundred registered voters signed a petition for referendum requiring the City of Morgan Hill to repeal an a controversial zoning ordinance or place it on the ballot for voter approval. In City of Morgan Hill vs. Shannon Bushey, Registrar of Voters, et al., H043426, Appellant Morgan Hill Hotel Coalition represented by the Law Office of Asit Panwala persuaded the Sixth District Court of Appeal to reverse the trial court's ruling that the measure should be removed from the ballot.

The parcel at 850 Lightpost Way and at the center of this controversy

When voters sign a petition for referendum, it should mean something.

Two thousand five hundred registered voters signed a petition for referendum on a zoning ordinance that would provide a $2 million windfall to an out-of-town hotel developer. The petition stated that the City must either repeal the ordinance or place it on the ballot for voter approval. The City did neither. The California Sixth District Court of Appeal declared that the City's actions violated the Constitutional right of voters to exercise the power of referendum in City of Morgan Hill v. Shannon Bushey, Registrar of Voters, et al., H043426.

According to court documents, on November 19, 2014, the City of Morgan Hill had amended the general plan for a three acre parcel at 850 Lightpost Way from industrial to commercial without changing the zoning because of a request by an out-of-town developer.

City Council records show that when the City considered changing the zoning to "general commercial" from "ML-light industrial," the Hotel Coalition opposed it because it would provide an unfair competitive advantage, would increase the supply of hotel rooms by 60% in two years, and would fail to bring jobs to the city. Industrial land is half of the price of commercial land in Morgan Hill, and commercial land is readily available, whereas industrial land is scarce. The Coalition argued that most people in Morgan Hill commute north for their job.

Nevertheless, River Park Hospitality bought industrial land with plans of building a hotel according to an application submitted to the City. Morgan Hill's City Council records show the Council took the position that re-zoning the parcel "general commercial" would bring it into conformity with the general plan, remedying the inconsistency created by the City. However, the Hotel Coalition argued that another commercial zoning district such as "office administrative" should be chosen because it would bring career opportunities without adding another hotel in a crowded market.

Court records show that on April 1, 2015, a divided City Council voted 3 to 2 in favor of the zoning ordinance, Ordinance No. 2131, changing the parcel from "ML-light industrial" to "general commercial." However, a petition for referendum was filed within thirty days preventing the ordinance from becoming effective.

On July 15, 2015, the City terminated the petition and River Park Hospitality shortly afterwards listed the property for sale for twice as much it paid a year earlier as it believed it was now commercial land according to court records.

On January 13, 2016, the Hotel Coalition sued Morgan Hill to place the measure on the ballot in San K. Panwala and the Morgan Hill Hotel Coalition v. City of Morgan Hill, CV-290057 in Santa Clara County Superior Court according to court documents.

The City then acquiesced and placed the measure on the ballot, but sued Shannon Bushey, the Registrar of Voters, to remove it in City of Morgan Hill v. Shannon Bushey, Registrar of Voters et al., CV-292595 in Santa Clara County Superior Court. On March 29, 2016, the trial court granted the City's petition, and ordered the city clerk to remove the ballot measure and certify Ordinance No. 2131 according to court records.

With the deadline to be included on the ballot looming, Asit Panwala, attorney for the Morgan Hill Hotel Coalition, filed a petition for a stay, writ of supersedeas, with California's Sixth District Court of Appeal. He wrote the brief in one night after he was returning home from the hospital because of the birth of his daughter. It was filed the following day.

On April 19, 2016, the Court of Appeal granted a temporary stay preventing the ordinance from becoming effective. The stay became permanent pending appeal. The parties briefed the case in the fall of 2016, and oral arguments were heard on May 23, 2017, in San Jose, California.

The Hotel Coaltion argued that a rule preventing voters from rejecting one of many choices would render the right to referendum meaningless. They pointed out that there were eleven other zoning districts that would conform with the general plan according to their briefs.

The City argued that the voters could not maintain inconsistent zoning by rejecting their choice of zoning. They relied heavily on Debottari vs. City of Norco (1985) 171 Cal.App.3d 1204. They argued that maintaining "light industrial" zoning was the same as enacting invalid zoning according to court records.

On May 31, 2017, the Court concluded that Debottari's reasoning was flawed and the referendum does not "enact" zoning unless the voters approve of the city's choice of zoning. They found that the voters have a Constitutional right to vote on the measure and that the City must have their approval before the ordinance may become effective.

The appellant, real party in interest, the Morgan Hill Hotel Coalition, is represented by Asit Panwala, Law Office of Asit Panwala, and Randy Toch, Law Office of Randall Toch.

Asit Panwala and Randy Toch are ecstatic that the voters will finally have the right to vote on the measure. Asit Panwala further added that "When voters sign a petition for referendum, it should mean something."

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