CITY OF HEALDSBURG
CITY COUNCIL
SPECIAL MEETING AGENDA
City Hall Conference Room One
401 Grove Street
Healdsburg, CA 95448
707-431-3317
Meeting Date:
Time:
Date Posted:
February 5, 2024
5:00 P.M.
February 1, 2024
1. CALL TO ORDER/ROLL CALL
A. Approval of February 5, 2024 Special Meeting Agenda
2. PUBLIC COMMENTS
Members of the public will have an opportunity to address the City Council concerning any items listed on this Special Meeting Agenda at the time that the item is considered.
No other items may be discussed at this Special Meeting. (Government Code Section 54954.3). For Closed Session Items, public comments may be made at this time.
3. CLOSED SESSION
A. Conference with Legal Counsel – Existing Litigation
Conference with Legal Counsel – Existing Litigation (§54956.9)(d)(1) 891 Grove Street, LLC v. City of Healdsburg, Case No. 23CV01315, Sonoma County Superior Court
B. Conference with Legal Counsel – Anticipated Litigation Conference with Legal Counsel regarding significant exposure to litigation pursuant to Government Code Section 54956.9(d)(2): One (1) case
4. ADJOURN SPECIAL CITY COUNCIL MEETING
1(415) 856-7080
[email protected]
December 18, 2023
VIA E-MAIL & CERTIFIED MAIL
Burke, Williams & Sorensen, LLP
Attn: Samantha Zutler
1 California Street, Suite 3050
San Francisco, CA 94111-5432
[email protected]
Re: Response to City Notice of Violation (Case # 23-1365) Dear Counsel:
We are legal counsel to 891 Grove Street LLC (the “Grove”). Grove is the owner and operator of a boutique inn known as The Ruse Healdsburg (the “Inn”), as well as a private swim and recreation club (the “Club”).
For convenience, we refer to the Inn and Club together as the “Facility.” The Facility is located at 891, 893- 895 Grove Street, Healdsburg, CA (the “Site”).
We write in response to the Notice of Violation (“NOV”) issued on October 4, 2023, by the City of Healdsburg (“City”) to Grove regarding alleged violations of the Healdsburg Municipal Code (“Code”). As explained below, the alleged violations set forth in the NOV are meritless. The Club is an authorized use “by right” under the Code because it constitutes a “private recreational park and swim club,” or a “Private Recreational Club” for short. Further, the Club operates in a manner that follows guidance from the City’s own zoning official, Mr. Duiven, which further undermines the allegations in the NOV. We invite you to the tour the Site.
The NOV appears to be the City’s latest attempt to frustrate Grove’s lawful business practices. This improper conduct must stop. From all that appears, Mayor Ariel Kelley, who lives literally next door to the Site, has prompted the City’s surprising hostility to the Facility. While Ms. Kelley is free to oppose any project she wants in her personal capacity, it is highly improper for her to use the powers of her official office, directly or indirectly, to interfere with our client’s lawful activities. In this connection, we note that a Public Record Acts request was sent to the City and a lawsuit is pending for the release of public records, including correspondence involving Mayor Kelley.
Next Step: Mindful of the holidays, we ask that the City rescind the NOV by no later than January 12, 2024.
In addition, we remain open to discussing an amicable path forward with the City Attorney. To aid those discussions, a brief factual background and legal analysis follow.
BACKGROUND
A. The Site
The Site is 2.98 acres and consists of two separate legal parcels.
Rear Parcel (893 Grove St., APN 089-120-070-000). The rear parcel of the Site largely consists of recreational amenities. For example, it includes a putting green, pickle ball courts, bocce ball courts, and lawn and patio areas. As the City knows, Grove invested significant funds renovating this rear parcel after
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Attachment: 2023-12-18 Grove NOV Response Letter to City of Healdsburg (4333 : Closed Session - Anticipated Litigation)
acquiring the Site, including many improvements requested by the City in connection with Grove’s development of the Site. Grove spent more than $7,000,000 improving and renovating the rear parcel.
The rear parcel is located in the R-1-6,000 zoning district. The Code expressly provides that Private Recreational Clubs constitute “by right” uses in all R-1 districts.1 Front Parcel (891 Grove St., APN 189-120-069-000). The front parcel of the Site faces Grove Street. It includes a main structure with seven guest rooms, a lobby, sitting rooms, as well as guest parking. It also has a swimming pool. Grove performed extensive upgrades to preserve and modernize the historic Inn to be enjoyed by guests and the Healdsburg community alike. Grove incurred more than $7,500,000 renovating the front parcel. And just like the rear parcel, the City asked for many of the installed improvements.
The front parcel is located in the Grove Street Mixed Use (“GMU”) zoning district, which also authorizes Private Recreational Clubs to operate by right.2
B. Permitting and Operational History
The Facility has a long and complicated permitting history and only a high-level overview is presented here.
The Inn has been in operation for many decades, long before the Site was annexed into the City’s jurisdiction in 2002. The Inn holds a Type 67 license from the California Department of Alcohol Beverage Control (“ABC”), a license specifically designed for a “Bed and Breakfast Inn.” On May 30, 2019, the City confirmed that the Inn holds a legal non-conforming status and stated if the “owner wishes to expand the use, (e.g., add more rooms) or change the scope of the operation, such action would trigger the requirement for a conditional use permit.”3
In or around June 2021, Grove initiated discussions with the City regarding a proposed renovation of the Site. In those discussions, Grove conveyed it wished to renovate and reopen the Inn, as well as establish a separate private club. At that time, Grove contemplated this club would serve beer, wine and spirits pursuant to a Type 57 license issued by the ABC. The City expressed support for the plan but claimed myriad improvements and renovations were needed. For example, based on feedback from the City Chief Building Inspector, the rear parcel was completely redone to meet Americans with Disabilities Act (ADA) access requirements for recreational use. 4 And pursuant to guidance from the City Public Works Department, Grove established a parking lot on the Rear Parcel for 30 vehicles.5 In September 2021, Grove submitted a memorandum to the City detailing Grove’s proposed operations and explaining how they were consistent with the City’s zoning requirements. The City officials who reviewed that memorandum—Mr. Duiven, the City’s zoning official, and Mr. Galbraith, a Senior Planner— 1 Healdsburg Municipal Code (Code) § 20.08.025. 2 Code § 20.08.0150 3 Letter from City dated May 30, 2019, re: “Legal Non-Conforming Status of the Honor Mansion Residential Visitor Lodging at 891 Grove Street”, at pg. 1.
4 This included creating numerous spots to enter the putting green as well as openings in the bocce ball and pickle ball courts. All pathways in the recreation area had to meet the ADA requirement according to the building official.
5 The Inn has a total of 9 guest rooms. The City officials asked for 30 parking spaces because they understood the Site could accommodate a Private Recreational Club.
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Attachment: 2023-12-18 Grove NOV Response Letter to City of Healdsburg (4333 : Closed Session - Anticipated Litigation)
never once raised the possibility that significant land use changes may be necessary to undertake those operations. Instead, Mssrs. Duiven and Galbraith provided brief comments and requested further information, which Grove provided. In March 2022, Mr. Duiven directed Grove to submit a CUP application without legal justification. To move things along, Grove nevertheless submitted that application on April 1, 2022. Mssrs. Duiven and Galbraith then asked for more information, and Grove promptly responded as before. And yet again, City officials never once raised the possibility that any land use changes were needed.
Grove’s CUP application was initially set for a hearing in April 2022. Yet for some reason the City delayed acting on the application—first to May 2022, then to June, then July, and finally to September 2022. No explanation was ever provided for that delay.
On September 16, 2022, the City announced a sudden change. Specifically, Mr. Duiven asserted that before the City could process a CUP for the Club, Grove must first apply for a General Plan Amendment, Specific Plan Amendment, and Rezoning of the Rear Parcel.
Mr. Duiven’s conclusion was based on two related assertions. First, Mr. Duiven claimed he was exercising his discretion to determine that the proposed Club was properly considered a “private club, fraternal lodge and meeting hall” (“Fraternal Lodge”), not a Private Recreational Club. Mr. Duiven purportedly based his view on the following: (i) the club would include a pavilion with a full kitchen, bar area and lounge; (ii) the club would host daily breakfast, lunch, afternoon hors d’oeuvres and after-hours food and beverage services; (iii) the club would operate under a Type 57 license allowing for service of beer, wine and spirits on Site, and sale of beer and wine to members for offsite consumption; and (iv) club members would have access to overnight accommodations at the Inn. Second, Mr. Duiven asserted the proposed club was inconsistent with applicable zoning requirements because a Fraternal Lodge “is not allowed in the Residential (R-1-6,000) zoning district.”
Grove withdrew its CUP application in response to Mr. Duiven’s unfounded assertions and took steps to reopen the Inn.6 Grove secured various approvals and permits from state and local agencies, including a Type 67 license from the ABC, a Business License Certificate from the City, and a Retail Food Facility permit from the County of Sonoma. The Inn officially opened for business on December 1, 2022, and continues to welcome guests to this day.
In early 2023, Grove began taking steps to establish the Club in a manner that complies fully with the Code as a “Private Recreational Club.” The City improperly issued the NOV on October 4, 2023, alleging Grove was operating the Facility in violation of the Code.
The City is wrong.
DISCUSSION
The Club is a Private Recreational Club and, therefore, Grove can operate the Club “by right” on both parcels. The City’s suggestion in the NOV that operation of a permitted, by-right use (the Club) represents an “intensification” of a longstanding nonconforming use (the Inn) has no legal or factual basis. Finally, the 6 Rather than pursue an administrative appeal of an arbitrary decision and then potentially seek mandamus relief, Grove declined to proceed further with the CUP process.
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Attachment: 2023-12-18 Grove NOV Response Letter to City of Healdsburg (4333 : Closed Session - Anticipated Litigation)
alleged “violations” identified in the NOV are factually incorrect, are based on a misinterpretation of the Code, or both.
A. Grove Has the Right to Operate a Private Recreational Club.
Law and fact show the Club constitutes a Private Recreational Club. Thus, the NOV was improperly issued.
The analysis begins with the plain language of the Code.7 The Code provides that Grove can operate a Private Recreational Club by right and without prior City approval. Here, the Club is a private space that provides access to multiple recreational amenities. For example, the Club is focused on the provision of recreational facilities and features amenities such as a swimming pool, hot tub, pickle ball courts, a putting green, and bocce ball. Membership at the Club is also open to any member of the public that wishes to join, and admission is based on objective standards. It is hard to imagine how anyone can reasonably take the position the Club does not meet the commonsense meaning of a “private recreational park and swim club.” And contrary to the City’s assertion, visiting the Site certainly would not reasonably leave the impression the Club is a “Fraternal Lodge.”
But even accepting the City’s erroneous interpretation of the Code,8 the principal distinguishing feature between a Private Recreational Club and a Fraternal Lodge is the sale and service of alcohol. While Grove is free to serve or sell alcohol should it choose to do so pursuant to state law, the City issued the NOV despite the fact Grove was not selling or serving alcohol to Club members at that time. Mr. Duiven also asserted a Fraternal Lodge is likely to host food and beverage services throughout the day (i.e., breakfast, lunch, and after-hours) while a Private Recreational Club apparently does not. Mr. Duiven has no legal basis for that assertion, but regardless, the Club did not serve food and beverages throughout the day when the NOV was issued.
The Club is also fundamentally different from the types of uses defined as Fraternal Lodges, e.g., union halls, social clubs, fraternal organizations and youth centers. For example, the Club does not conduct any club-, lodge- or fraternal-like activities such as membership meetings, civic advocacy, or pursuit of common interests. Nor does it have elected representative and leaders, relationships to a broader organization, or promote shared values or missions. Again, the sole purpose is to provide members with recreational amenities.
In short, the City’s position is incorrect.
B. The City’s Theories To Support the NOV Lack Merit.
To justify issuance of the NOV, the City contends, without analysis, that operation of the Club “requires, at a minimum, a new CUP for the intensification of the legal nonconforming B&B pursuant to HLUC
20.28.020.” What that Code section actually says is that, in general, existing structures cannot be moved, 7 See, e.g., People v. Venice Suites, LLC (2021) 71 Cal.App.5th 715, 727-28 (explaining courts look to the plain and common-sense meaning of terms when resolving disputes concerning an interpretation of local ordinances).
8 On July 19, 2022, Mr. Patrick Wilhelm sent an e-mail to Mr. Duiven to memorialize the parties’ prior telephone discussion. As noted in that e-mail, Mr. Duiven claimed Grove could operate a Private Recreational Club without a CUP so long as Grove did not pursue a Type 57 license.
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Attachment: 2023-12-18 Grove NOV Response Letter to City of Healdsburg (4333 : Closed Session - Anticipated Litigation)
altered, enlarged, or extended, or changed from one use to another. The City does not bother to indicate which provision of Section 20.28.020 it believes is implicated, but in any event the City is mistaken.
The Club and Inn are separate operations at the Site; operation of the Club does not and cannot result in an expanded or more intense use of the Inn, and vice-versa. The Inn can accommodate just as many guests and provide access to just as many amenities regardless of whether the Club is operating.
Further, uses at the Inn have not expanded or intensified. The Inn operates on the same basic footprint as before, has the same occupancy levels as before, and continues to provide guests access to amenities on both the rear and front parcels. Indeed, Mr. Duiven’s statement in September 2022 that “[c]ontinued operation of the Bed & Breakfast would not require a permit” contradicts the City’s current position.9 The City is wrong here too.
C. The Factual Allegations in the NOV Are Meritless.
The City alleges, in conclusory fashion, that four activities have occurred at the Site in violation of the Code and the Inn’s CUP. Not so.
First, the NOV states the Facility is improperly hosting lunch and dinner events in the pavilion in violation of the CUP. That is incorrect. The Facility serves breakfast and lunch to guests of the Inn and members of the Club. The CUP does not prohibit these activities. Moreover, the CUP only governs the operation of a conditionally permitted use, i.e., the Inn. The Inn is operating in full compliance with the CUP.
Next, the NOV claims the Facility is hosting pickle ball “tournaments” with individuals other than overnight guests of the Inn. It is unclear how the City delineates a “tournament” from a standard pickle ball match, but this too is irrelevant. The Facility’s pickle ball courts are only open to members of the Club and guests of the Inn. Nothing in the Code prohibits these activities. While the City may not like it, the Code allows by right for activities associated with Private Recreational Clubs on the Site. Playing pickle ball is a recreational activity.
The NOV further claims the Facility is hosting loud parties extending beyond 11:00 p.m. for individuals other than Inn guests. The City may be referring to a private evening gathering of Grove’s owners and employees and their families to celebrate the completion of Facility upgrades. Fortunately, Grove installed two separate decibel meters on the Site before this gathering in response to prior (and unfounded) noise complaints from a next-door neighbor. There were no exceedances of applicable noise standards on that occasion or at any other time.
Last, the NOV claims the Facility is serving alcoholic beverages without the required permit from ABC. As noted above, the Inn holds a Type 67 license and lawfully serves a limited selection of alcoholic beverages 9 In addition, on May 30, 2019, Mr. Jeff Fisher, an Assistant Planner at the City, stated in a letter to the Facility’s prior owner that the Inn’s “legal non-conforming status allows the visitor lodging use to continue as long as the property owner wishes to operate. If the property owner wishes to expand the use (e.g., add more rooms), or change the scope of the operation, such action would trigger the requirement for a City issued conditional use permit.”
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Attachment: 2023-12-18 Grove NOV Response Letter to City of Healdsburg (4333 : Closed Session - Anticipated Litigation)
to Inn guests in full compliance with the law. No alcoholic beverages have been unlawfully sold or consumed on the Site and Grove has never received any notice of violations from ABC.
The facts do not support the allegations in the NOV.
CONCLUSION
Grove’s operations comply in full with the Code. We ask that the City rescind the NOV to avoid the need for a declaratory relief action. In the meantime, please confirm that an appropriate litigation hold is in place to avoid any spoliation of evidence.
Should you have any questions, please feel free to call or write.
Sincerely,
Navi S. Dhillon
of PAUL HASTINGS LLP
cc: Christopher Carr, Paul Hastings LLP
Sean Unger, Paul Hastings LLP
Lucas Grunbaum, Paul Hastings LLP
Dylan Crosby, Paul Hastings LLP
Aaron Reuben, Paul Hastings LLP
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Attachment: 2023-12-18 Grove NOV Response Letter to City of Healdsburg (4333 : Closed Session - Anticipated Litigation)