Developer of Paso Robles hotel project counter-sues city

A rendering illustrates the proposed look for the so-called ‘hillside hotel’ that is planned for phase II of Paso Robles Gateway project. It would include a conference center and could be surrounded by vineyards.
A rendering illustrates the proposed look for the so-called ‘hillside hotel’ that is planned for phase II of Paso Robles Gateway project. It would include a conference center and could be surrounded by vineyards.

The developer of a proposed hotel project in Paso Robles has counter-sued the city, saying officials violated state environmental laws when they made planning decisions regarding the realignment of a major street in town.

The countersuit comes from developer Quorum Realty Funds, a San Francisco-based firm that sought to build hotels and vineyards on vacant land it hoped to annex into the city near the intersection of Highway 101 and Highway 46 West. The plan is called the Paso Robles Gateway Project.

The city sued Quorum on May 6 in San Luis Obispo Superior Court for breach of contract for allegedly not reimbursing it the $110,046 it spent to evaluate the Gateway Project.

The main point of contention between the two entities, Quorum’s Cambria-based attorney Greg Sanders told The Tribune this week, is the city produced an environmental impact report on the Gateway Project that only included one option to realign South Vine Street, which placed it entirely on Quorum’s property. It didn’t include an alternative route through a separate parcel just east of the project that Caltrans studied in 2005, Sanders said, even though in initial talks both options were discussed.

The Gateway Project’s environmental study was undertaken by Los Angeles-based consultant AECOM. Paso Robles City Manager Jim App declined to discuss the issue Thursday, saying the city doesn’t comment on active litigation.

Requests for comment from AECOM were not returned Thursday.

“We cannot imagine the consultant excluding the Caltrans realignment without being instructed to do so,” Sanders said. “We went to the city and said, ‘You really have to include the Caltrans realignment. And the city simply said ‘No.’”

That’s when Quorum declined to pay any additional fees to the city, which prompted the city’s lawsuit against the developer, Sanders said.

“We told the city, ‘All you have to do is include the Caltrans plan in the environmental impact report and we’ll pay the bill. And they wouldn’t do it,” Sanders said.

The realignment feeds into a bigger issue of how to pay for interchange improvements at Highways 101 and 46 West.

The city allowed existing businesses whose traffic feeds into the interchange — such as the Target shopping center on Theatre Drive, La Bellasera Hotel & Suites on Alexa Court and the Chevron gas station on Ramada Drive — to open on the condition that they would eventually help fund the interchange improvements.

Realigning South Vine Street toward the west so that it would line up with Gahan Place across Highway 46 West was designed to take traffic away from the interchange.

Quorum’s lawsuit claims that since the city isn’t requiring other businesses to help pay for the realignment, the city is unfairly placing the entire financial burden of the roadwork on the Gateway Project, Sanders said.

Further, at the Paso Robles City Council’s June 17 meeting, the city approved a four-story, 128-room Marriott Residence Inn adjacent to the proposed Gateway Project. Yet the city didn’t require it to pay its share of the realignment either, Sanders said.

“The California Environmental Quality Act requires that all realignment alternatives be considered, including the Caltrans designed realignment of Vine Street that would run through the Marriott Residence Inn property,” he added.

Quorum’s suit is asking that the Caltrans’ realignment option be added to the environmental study. It is also seeking attorney’s fees.

Since filing a lawsuit against Quorum, the city has halted the project’s application. The City Council could re-open the application review after the litigation is over, city officials said.

“Quorum definitely isn’t dropping the project,” Sanders added.