A bill to give Half Moon Bay a $10 million no-interest loan to pay off a court-ordered settlement was pulled from committee yesterday by Assemblyman Jerry Hill, D-San Mateo.

Assembly Bill 650 lost support in committee since Half Moon Bay moved forward with a $15 million bond purchase agreement last week to pay off a court-ordered settlement with a developer.

“I will no longer pursue the passage of AB650 this year,” Hill said in a prepared statement. “... Unfortunately, the collective actions of the City Council last week and the recent announcement that the city would not file for bankruptcy, coupled with the $20 billion state budget deficit impacted the willingness of my legislative colleagues to support AB 650.” 

The city is ordered to pay Palo Alto developer Charles Keenan $18 million by Aug. 29 or face an immediate $1.1 million penalty for a botched development on a 24-acre plot known as Beachwood.

Bonds will be issued in July and will cost the city more than $30 million over the course of 30 years.

The city had hoped AB650 money would help pay down the debt much sooner, potentially saving the city millions of dollars. The bill would have also preserved the Beachwood site as protected open space.

Half Moon Bay Interim City Manager Michael Dolder is disappointed with the decision but said the city will now take ownership of the land in September.

“Since the city will own the property it will have to investigate how to develop it or sell it. We’ll have to find the best use for the land,” Dolder said.

Half Moon Bay Mayor John Muller is also disappointed AB650 was pulled from committee but praised Hill and state Sen. Leland Yee, D-San Francisco/San Mateo, for offering support.

“It’s disappointing but we will face the situation and work together,” Muller said. “We deeply appreciate all the work Hill did.”

Hill, a freshman assemblyman, put a lot of effort into AB650 and solving Half Moon Bay’s financial crisis, Muller said.

“AB 650 has been my top legislative priority and I have spent endless hours and political capital advancing the bill. I stand in support of the efforts being made by the city of Half Moon Bay to address the Beachwood settlement and I will continue to do all I can to assist the city into the future,” Hill said.

The mayor said the decision as to what to do with the 24-acre Beachwood property will come with time.

“There’s no rush,” he said.

Bill Silverfarb can be reached by e-mail: silverfarb@smdailyjournal.com or by phone: (650) 344-5200 ext. 106.