SAFETY HARBOR — It was extortion, residents shouted. It was cowardly. It was unfair.
It was, the City Commission countered in a vote Wednesday night, the best thing to do.
To abide by the federal Fair Housing Act, the city agreed to a settlement that allows a new group home for six mentally disabled men to open in Harbor Woods Village.
The decision reverses last year's commission vote against the group home, which needed special approval to operate because of its proximity to another assisted-living facility.
"I think one thing that people are misunderstanding: This type of home and the people that would be living there have protections under federal statute," said City Attorney Alan Zimmet. "And the federal government has taken the position that a city like Safety Harbor is not in a position to be able to deny a group home with disabled people in a neighborhood based on their being too close to another home that has disabled people in it."
Because of that, the federal government appears to believe that the commissioners' 2011 decision was discriminatory and violated federal law, Zimmet said. The Fair Housing Act prohibits housing discrimination based on race, nationality, religion, gender, family status or handicap.
The settlement also called for the city's insurance company, Public Risk Management, to pay $400,000 to the group home's owner, Pinellas Park resident Bonnie Jo Hill. In return, Hill agreed not to pursue any legal claims against the city.
The $400,000 comes completely from the city's insurance company, Zimmet said. It does not draw from city coffers.
The settlement assuaged city officials' fears of potentially more expensive legal consequences. In September 2011, Hill filed a federal housing discrimination complaint against the city. The complaint could lead to a federal investigation and possibly a federal lawsuit.
Even with Wednesday's settlement, the U.S. Department of Justice could still take action against Safety Harbor, though city officials indicated that seems unlikely.
"It was a choice between two not-great situations," Vice Mayor Joe Ayoub said, "and this was the lesser of the two."
City officials framed their decision in terms of legal risk and compliance with the law. None publicly defended it on moral grounds or said they were making it to not discriminate or to protect the rights of the mentally disabled.
Hill bought a house at 59 Harbor Woods Circle to turn into a group home for young men with mental disabilities, most of them autistic. She renovated it before realizing another assisted-living facility, Melody Place, sat less than 300 feet away.
State law recognizes the group home as a single-family residence and dictates that such group homes cannot operate within 1,000 feet of each other without special permission.
City officials said it doesn't matter when Hill found out about Melody Place. She applied for a local exemption from the 1,000-foot rule, called conditional use approval. That's what commissioners refused in 2011.
Wednesday's settlement grants the conditional use, with federal laws against housing discrimination trumping the previous decision.
But in tense and impassioned two-minute speeches, some residents complained that in upholding federal law, commissioners failed their local responsibilities to Safety Harbor residents.
"The city let us down, the citizens and property owners in Harbor Woods Village," resident David Conkle said.
He added, "Is the city going to reimburse us? Is the city's insurance company going to come and make us whole for the loss in the property values?"
Neighbors worried the city's approval in this case will set a precedent of allowances, and they threatened to similarly petition and sue the city. They claimed that letting group homes "cluster" goes against the goal of integrating people with disabilities into neighborhoods instead of institutionalizing them.
Allowing the group home, they said, was unfair to residents of Harbor Woods Village because it could hurt their property values.
Several residents recalled Mayor Andy Steingold's warning at the 2011 hearing that the commission would not acquiesce to threats of lawsuits.
"I'm just astounded," said resident Dale Caldwell, "that the city and its insurer would roll over to what I consider just a blatant extortion attempt."
Steingold later clarified to a reporter that he meant threats would not affect the commission's decision at that night's hearing.
Beyond Zimmet addressing some of the residents' misinterpretations, city officials did not discuss the settlement at Wednesday's meeting. They held closed-door sessions this summer to talk about their legal strategy, which is permitted under Florida's Government-in-the-Sunshine law.
Approaching a vote, commissioners kept their eyes downcast. Ayoub moved to approve the settlement, and the mayor looked for a commissioner to second it.
There was a pause before he found one, Nancy Besore.
Commissioners voted 4-1 to approve the settlement, with Cliff Merz voting against it.
Group home owner Hill and her attorney, Richard Heiden, did not speak at the meeting. Later, Heiden said he was disappointed by the residents' reactions.
"It's sad," he said, "that there's that much prejudice and discrimination in this modern age against people that have disabilities and have special needs."
Despite neighbors' hostility toward the group home, he said Hill plans to open it within the next three months.
Stephanie Wang can be reached at (727) 445-4155 or [email protected] To write a letter to the editor, go to tampabay.com/letters.