Paso Robles sues Gateway project developer, halts application review

Correction: An earlier version of this story incorrectly said Quorum Funds was based in Aspen, Colo. It's actually based in San Francisco.

The city of Paso Robles has sued the developer of a major annexation project proposing hotels and vineyards near the Target shopping center on the south end of town, saying the applicant hasn’t reimbursed the city the $110,046 it spent to evaluate the development.

At the same time, the City Council terminated the application by Quorum Funds of San Francisco to build the project at Highway 101 and Highway 46 West.

It wasn’t clear Thursday whether the council’s action means the developers can’t reapply for the project.

The proposal — called the Paso Robles Gateway Project — would annex 270 acres from San Luis Obispo County for three separate hotels, about 62,300 square feet of retail and office space, up to 35 single-family homes on half-acre to 1-acre lots, 114 acres of vineyards and additional open space. It also proposed major roadwork to realign South Vine Street toward the west so that it would line up with Gahan Place across Highway 46 West.

The project was first proposed in November 2011 when Alexander Furlotti of the Furlotti Family Ranch Co., a landowner in the project, submitted an application with the city. He then inked an agreement under which the city would pursue third-party consultant work associated with studying the project if the developer paid for all associated costs including city staff time, legal expenses and consultant work, according to a report that city staff prepared for the council on the issue.

An environmental study of how the development would impact the area and a water assessment study were slated to be released for public and City Council review this summer, with council consideration of whether to allow development to follow later.

The applicant initially made timely payments under the agreement, the staff report states, with the last payment made in October 2013.

But things went downhill in February when the city asked for $140,000 to cover “pending and anticipated costs for the next few months,” according to the report, and no payment was received.

The city then sent out several more notices until the applicants eventually requested a list of the city’s costs for all work performed through March 19, 2014.

After receiving the list, the applicant refused to pay the city, the report says.

Calls to Furlotti Family Ranch Co. were not returned Thursday.

So far, the city has spent $110,046 on consultant work for the project “for which the applicant has refused to reimburse the city,” the report states.

The city is suing the applicant for breach of contract in San Luis Obispo Superior Court.

Project engineer Larry Werner of Paso Robles said he is no longer involved with the project.