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Did Paso mislead the public with the River Lodge deal? A developer is suing to find out

A hotel developer recently sued the city of Paso Robles, claiming it violated open meeting and environmental quality laws when it acquired the River Lodge Motel in a land swap with a Bay Area developer.
A hotel developer recently sued the city of Paso Robles, claiming it violated open meeting and environmental quality laws when it acquired the River Lodge Motel in a land swap with a Bay Area developer. jjohnston@thetribunenews.com

A hotel developer is suing the city of Paso Robles, claiming it violated state open meeting and environmental quality laws when officials negotiated a land swap to obtain the River Lodge Motel.

Kevin Bierl of Pacific West Development filed the lawsuit on Friday in San Luis Obispo Superior Court. The suit alleges leaders covertly negotiated a land exchange between the city and Zenique Hotels, a Bay Area development firm trying to tear down the River Lodge and build a new hotel in its place.

"The city approved the land swap and hotel project without any analysis of the land swap's significant environmental impacts; without evidence that the land swap is anything other than a substantial waste of city property ..." the lawsuit reads.

Zenique initially planned to build a Hyatt Place Hotel after razing the River Lodge, a 64-year-old motel on Theatre Drive near the Highway 101-Highway 46 West interchange.

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But a draft environmental impact report showed the motel's vintage architecture and prominent location off Highway 101 made it eligible to become a city historic landmark, making demolition more difficult.

Officials then negotiated a land swap between Zenique and the city. The developer would get a 3.2-acre city-owned site nearby, and the city would get the River Lodge property. The City Council approved that exchange at a meeting in June.

Bierl, the Scottsdale, Arizona-based developer who filed the lawsuit, owns the La Bellasera Hotel and Hampton Inn directly behind the River Lodge. He could not be reached for comment on Wednesday.

Misleading the public?

In the lawsuit, Bierl claims officials always said he would have the chance to bid on the property it exchanged with Zenique, a promise he says the city didn't keep when leaders agreed to the land swap.

The suit says the city made it appear that officials and Zenique representatives were discussing another nearby piece of property during closed-session talks, when they were actually talking about the more valuable land of interest to Bierl.

The lawsuit also suggests the city negotiated the swap to stave off threatened litigation from Zenique over the company's inability to develop the River Lodge property, which officials did not disclose to the public.

"The city's closed-session agendas between January and September 2017 were misleading to the public and did not disclose the true nature of the discussions: namely, to effectuate a pure land swap to the benefit of a private party," the lawsuit reads.

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The lawsuit also alleges Paso Robles officials violated the California Environmental Quality Act (CEQA) by not requiring an environmental impact report as a condition of the land swap.

Bierl and Pacific West request injunctive relief and ask that the city and Zenique "vacate and rest aside all approvals associated with the land swap and the hotel project."

Tom Frutchey, Paso Robles' city manager, on Wednesday said he could not comment until the city is served with the lawsuit.

But Frutchey told The Tribune in June the city doesn't want to hold onto the hotel for long and said it could be sold to a developer interested in incorporating the building's historic properties.

"We, the city, will not be in the hotel business," he said.

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Lindsey Holden: 805-781-7939, @lindseymholden

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