Reno City Council votes 6-1 to approve $3.5 million lawsuit settlement

RENO, Nev. (KOLO) -SEPT. 13 UPDATE: The Reno City Council voted 6-1 Wednesday to settle a lawsuit over denial of a 955-acre development near Verdi.

Reno City Attorney Karl Hall said Stan Lucas originally sought $20 million for construction delays, attorney’s fees and litigation costs for denial of the Mortensen Ranch project between Verdi and Somersett.

The Reno Planning Commission and the Reno City Council both turned down the 632-lot project citing concerns about hillside development, access and fire coverage. Reno city staff recommended approval of the project.

The developer appealed and a judge said the council had no justification to turn down the project.

The city and Lucas’ attorneys reached the $3.5 million deal after negotiations.

Council member Jenny Brekhus cast the only vote against the settlement, saying it shows that the city of Reno can be bullied into making payments.

Hall said if the council didn’t approve the settlement, he would ask for $2 million to get expert witnesses to litigate the case.

“I’m ready to litigate that and give you a $2 million budget when you give me the cost breakdown,” Brekhus said.

Council member Devon Reece, who took part in the negotiations, said a judge already decided the council was wrong for turning down the project. All that is to be decided now is what kind of damages the city should pay.

“No one has bullied this council,” Reece said. “We’re just trying to make the best economic decision for the community because I don’t want to see an $11 million judgment in five years that could have settled for $3.5 million.”

Hall said the city could not make it part of the agreement that Lucas can’t sue members of the public who opposed the project.

ORIGINAL STORY: The Reno City Council on Wednesday considers a $3.5 million settlement for wrongly rejecting a housing development near Verdi.

The Reno City Attorney’s Office recommends approval of the settlement for the 955-acre Mortensen Ranch project by developer Stan Lucas. It is proposed for north of Interstate 80 and U.S. 40 between Somersett and Verdi.

Lucas submitted a proposal to develop 676 lots in 2019. That was later amended to 632 lots.

The Reno Planning Commission denied the application in December 2019. Lucas appealed the denial and the Reno City Council voted unanimously to uphold the denial in January 2020.

Lucas petitioned for judicial review in Washoe District Court. Judge Kathleen Drakulich sent it back to the Reno City Council for reconsideration in November 2020. The Reno City Council denied the development again in March 2021.

Lucas again returned to court for relief. The judge sided with him in December 2021 and this time directed the city to approve his request. In January 2022 the city approved the court’s order but added conditions.

In April 2022, Lucas filed a new lawsuit seeking damages for construction delays, attorney’s fees and litigation costs.

Both sides attended mediation and reached the $3.5 million settlement in August.

The city lists these as key claims of the settlement:

1. Lucas will receive $3,500,000 to compromise his claims against the City;

2. The settlement payment will be paid to Lucas within ten days after Council approval;

3. The parties will execute a Settlement Agreement releasing all claims they may have against each other related to the lawsuit and providing for dismissal of the damages lawsuit with prejudice; and

4. The Settlement Agreement will contain a provision that the City does not admit liability.