In the latest twist in a fight between a Los Angeles developer and a SLO neighborhood group opposing his project, on Aug. 17, a San Luis Obispo County Superior Court judge denied the developer's request to tack a $500,000 bill on the resident group for allegedly delaying the construction of affordable housing in its lawsuit against the city.

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• ABOUT THE ENVIRONMENT SLO residents suing the city over its approval of a housing project at 71 Palomar Ave. will be able to do so without posting a $500,000 undertaking for the developer's delay costs.

In May, "Friends of 71 Palomar" sued the SLO City Council after it approved the 33-unit housing development in the Anholm neighborhood at 71 Palomar Ave without an environmental impact report. The project proposes to relocate and refurbish a historic building and remove 55 trees.

In response, Loren Riehl Development Group requested the court force the resident group to post $500,000 as compensation for its "undue economic hardship." Riehl's motion used a state code designed to accelerate affordable housing production by enabling developers to strap people fighting their projects with the delay costs. Of the 33 units in the Riehl's project, four are deed-restricted as affordable.

But Judge Barry LaBarbera ruled that Riehl failed to prove both the conditions required to grant the undertaking—that residents filed their lawsuit in "bad faith," with the intent to "thwart" the low-income housing nature of the project.

"The evidence affirms that [Friends of 71 Palomar] has specific concerns that the city did not consider certain impacts the project will have on the local environment," LaBarbera wrote.

Lydia Mourenza, one of the leaders of the neighborhood group, called the ruling a victory for residents' First Amendment rights.

"Great outcome for our community group," Mourenza said in an email to New Times. "We are happy that our rights of free speech and association remain intact with this decision."

The hearing for the actual case will take place on Oct. 16 at 9 a.m. ∆