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City Manager Fialho introduced the item, stating the matter before the Council is a Tentative Agreement with Urban Habitat Public Advocates and the California Attorney General's office on a recent court decision regarding the City's housing cap and the adequacy of recently rezoned properties within the Hacienda Business Park. The Tentative Agreement also resolves three pending claims or lawsuits against the City regarding its housing policies, as well as the adequacy of the recently approved General Plan. To fully inform the public regarding this issue the Council hosted two meetings on the topic, during which potential responses to the court ruling were discussed. Several members of the public expressed an interest in resolving all legal matters as quickly as possible while also maintaining local land use control as it relates to housing policies. In addition, many members of the public stated their concern over the continued legal appeals and challenges and the expenses stemming from that. In response to that and in view of the information that staff and outside counsel provided, the Council decided to pursue a settlement of the entire lawsuit as well as all pending lawsuits against the City on this topic. In order to accomplish that, the Council appointed Mayor Hosterman and Councilmember McGovem to serve on a negotiating team with him, City Attomey Lowell, outside Counsel Tom Brown, and planning staff. Numerous negotiations have occurred on the topic since April and have resulted in the Tentative Agreement before the Council tonight. The negotiating team and City staff has determined that the Tentative Agreement meets the Council's settlement goals and as a result, is recommended for approval tonight with subsequent ratification and adoption of a settlement document on August 17, 2010. Mr. Fialho discussed the five primary objectives pursued by the negotiating team: 1) The Tentative Agreement retain as much local control and flexibility to the maximum extent possible as it relates to the Hacienda rezonings and the development process, including retention of a meaningful role for the Hacienda Task Force. 2) Restore, as quickly as possible, the City's non - residential permitting authority. 3) Retain local control over the City's Housing Element update process and to ensure that it reflects not only state law but the interests of this community. 4) Reach a global settlement that addresses the court's entire March 12, 2010 ruling as well as all of the outstanding litigation that is pending. 5) Minimize all financial impacts associated with the litigation. Tom Brown reviewed the history of associated litigation, which began in the summer of 2006 when housing advocates acting on behalf of Urban Habitat visited with the former City Attorney and the City Manager to assert certain claims against the City. Those discussions did not lead to a resolution and in November of 2006 a lawsuit with eight claims was filed against the City. The first four claims asserted that the housing cap and Growth Management Ordinance (GMO) were inconsistent with and preempted by a variety of state laws, including regional obligations under the Housing Element law. The claim was also made that in the 2003 Housing Element, the Council adopted and committed to carrying out a set of programs, one of which was Program 19.1, and that the Council failed to fulfill that obligation. Program 19.1 was adopted to enable the City to meet what is known as the adequate sites obligation under the state Housing Element Law, and committed the City to accomplishing a rezoning of thirty to forty acres to high - density residential by June 2004. For a variety of reasons, mainly because the City was in the process of planning for the General Plan update, that was deferred for several years to allow for completion of the Housing Element update. Claims asserted that the implementation and recognition of the housing cap and GMO, and the failure to accomplish the rezonings, culminated to make the Housing Element inadequate under state law and separately violated the Least Cost Zoning Law. Additional claims were made that these actions, along with how the City Council Minutes Page 5 of 12 July 20, 2010