Tuesday, October 27, 2009

Happenings: City Buys a Block

Mayor Frank Ferry was not present for tonight’s meeting, so Mayor Pro-Tem Laurene Weste took the center seat at the dais. As is usually the case, the manner in which the city (mis)spends its residents' money was the primary topic for this evening’s speakers[1].

As most of Santa Clarita is unaware, there’s an election coming next week. Voters inhabiting the various unincorporated areas around the City proper (I call these people “others” or "hostiles", à la Lost) will have a chance to admit on a ballot that annexing into the City of Santa Clarita is their dearest ambition. Having these others annex into the City of Santa Clarita also appears to be the hope of Councilmember Laurie Ender. Indeed, during her invocation, Ender extolled the many virtues of self-governance. In light of a recent event honoring our City’s first leaders, she said of Santa Clarita “I couldn’t think of a better example of a government of the people, by the people, and for the people.” Though she couldn’t (and didn’t) officially advocate for the annexation option, her message was clear: hooray for local governance.

After the flag salute, the dreaded Awards/Recognition/Presentations part of the agenda arrived. In the long-held tradition of giving minor causes minor recognition in hopes of eliciting major participation, Councilmember Marsha McLean announced support for Heal the Bay’s “Day without a Bag” coming in December. As an alternative to plastic bags, she suggested going to one of our local markets to purchase reusable grocery bags which are “really nice looking cute little bags, and they’re only 99 cents!” Next, Laurene Weste recognized City employees for their excellent work in marketing and communications. The City-County Communications & Marketing Association gave many awards to Santa Clarita for achievements like “Guide to Opening a Small Business in Santa Clarita” and the Extreme Neighborhood Makeover program. Apparently, Santa Clarita won more awards than any other city in the country. Gail Ortiz, Jason Crawford and their teeming minions came forward for a photo and applause.

Next came a series of perhaps over-reactionary announcements from City Manager Ken Pulskamp. He described a meeting that was held with the residents of the Bonelli Tract in Saugus; you may recall that these were the people who were very upset about aggressive code enforcement in their older community. Skampy said that the City would “terminate proactive enforcement for the Bonelli area," put a hold on demands set forth in recent citations, and continue to communicate with residents until some resolution was reached. I think the City could have just gotten a nicer code enforcement officer and given people more time to comply, but oh well.

In an apparent attempt to wash away any impression that the City was bullying homeowners to comply with code, he then showed a clip that aired recently on KCAL-9[2]. It was a complete puff piece about Santa Clarita’s Extreme Neighborhood Makeover program which tries to “work with those who want to get their homes cleaned up.” In an example that would be hilarious if it wasn’t so shockingly absurd, the news reporter visited Barbara Post, a Santa Clarita woman who was cited by the City for having a brown lawn. She asked the City for help fixing the problem and was referred to Pastor Gary Parker of Desert Springs Church. He and his flock helped repair Post’s sprinklers and replant her lawn. That’s right, the faithful assembled not to feed the hungry or comfort the sick but to improve curb appeal. This is what charity looks like in Santa Clarita: helping a woman increase her landscape’s aesthetic value.

Is it wise to exahust community social capital on lawns? Click on the picture to be taken to the video.

From individual councilmembers came announcements and updates of little of interest.

Then the redevelopment agency convened. Up for discussion was the purchase of a whole block on Lyons Avenue, the neighbor of the block that will host Old Town Newhall’s much-hyped library. The cost was a mere $6.2 million.

First to address the planned purchase was TimBen Boydston who found it “somewhat disturbing” that there were six million dollars available to acquire property but not enough money to complete that streetscaping in Old Town Newhall. Cam Noltemeyer came forward to continue with the criticism, focusing in particular on the fact that the City would be paying some half-a-million dollars more than the property’s appraised value. She noted that the present owners were in a considerable amount of debt on the property and asked, “Why don’t you pick it up in foreclosure?”, adding that the commercial real estate collapse is just now picking up steam. Finally, Mimi Hiller, the owner of Cookbooks Plus, came forward to express support for more streetscaping as a priority and drew attention to the troubles (and hopes) of the local businesses.
City Staff responded to the first concern raised by saying that the money to be spent on acquiring the property came from a different source than money that could be used for streetscaping. Councilmember Bob Kellar re-emphasized this point, noting neighborhood stabilization funding from the State of California and other sources was to be used to get the property. As for why the City was over-paying for it by half a mil, a satisfactory answer was not really given. The City defended its actions in the Agenda with the argument that “the note holders on the property are not motivated sellers” and with the following: “Given the block’s proximity to the future Newhall Public Library site and its location in relation to the overall revitalization of Old Town Newhall, staff is of the opinion that the acquisition of this block can provide the Agency with a variety of opportunities to potentially seek quality development of this area.” In short, the City will pay far more than what the property is worth because it really, really wants it. Indeed, we heard that the chance to buy and control the fate of a whole block was a rare and wonderful opportunity. Even Ken Pulskamp seemed very moderately excited, which is exceptional. The purchase was “yessed” through with Laurene Weste recusing herself from the vote.

As for the regular Consent Calendar, Item 11 was a point of contention. Its recommended action was for the City Council to approve a feasibility study on the need for banquet and conference facilities in Santa Clarita.

Several Claritans came forward to comment on this topic. A story of development favoritism quickly began to emerge. Several speakers pointed out that the need for more conference space (actually a proper convention center, which is quite different from a conference center, apparently) in Santa Clarita was a foregone conclusion. It was suggested that the proposed study was for the benefit of the planned Sheraton, which some had criticized a few weeks ago for not providing enough conference space to balance out the competition it would present to extant hotels. The area between the proposed Sheraton and the Hyatt would be the presumptive home of a new conference center, and it would be a boon to business for both hotels. This helped explain why the Sheraton’s developer, the Packard Companies, was going to pay half the cost of the feasibility study and why they had been party to formal, closed-door talks with the City about the idea of bringing a conference facility to Santa Clarita. Neither of the City Council challengers (Boydston and Gauny) were pleased with the idea. Cam Noltemeyer (whom I have missed) also thought the study amounted to a ridiculous favor to Packard at taxpayer expense.

When it came time for the City Council to respond, Laurie Ender and Marsha McLean tried to argue that the feasibility study was completely separate from the issue of the proposed Sheraton Hotel. They, along with City Manager Ken Pulskamp, said that the initial part of the study would just look at the need for conference space in Santa Clarita, later looking to suitable locations throughout all of Santa Clarita without any particular bias or favoritism for one location. Of course, the agenda item made the City’s intentions clear:

“…all stakeholders were in agreement that a feasibility study is the next step to obtain a third party expert analysis, examine the recommended size of the banquet/conference facility, and identify possible sites for the property.

Preliminary discussions have included the possibility of the banquet/conference facility residing on the property between the Hyatt Regency and the proposed Sheraton hotel. However, alternative locations may be considered in the Town Center/Civic Center area. Following this meeting, The Packard Companies (developers of the proposed Sheraton hotel) agreed to jointly commission the first phase of the study with the City of Santa Clarita.”

In short, Packard’s money was not being given altruistically, and the intent of the initial study (to use $10,000 in tax-payer dollars to help pave the way for a conference center that would benefit the proposed Sheraton) seemed implicit to many public speakers.

Laurie Ender wisely motioned to have staff rewrite the proposal, and her motion carried.

Next there was a very brief public hearing. The Child & Family Center will use money from the sale of bonds to help build a community mental health clinic. There was a brief round of applause for the CFC which, observed Kellar, does many fine things in Santa Clarita.

After the hearing, Mayor Pro-Tem Laurene Weste prematurely said “And we are out at five to eight”, until she was reminded of Public Participation and let out a defeated sigh-groan noise. The Public Participation comments were as follows:

1. “Old ladies” are apparently happy with the City’s proactive approach to code enforcement.
2. A homeowner was charged $655 in penalties for his malfunctioning alarm, which was triggered four times in a 24-hour period when a motion sensor went out. He wanted the fees for law enforcement response waived.
3. Boydston came forward yet again. He did a bit of self-promotion by thanking the City for responding to the Bonelli residents, people who had sought out Boydston to help them get the City’s attention. McLean politely but sternly replied that the City was already helping address the concerns of those very residents and that the City was very responsive despite a certain speaker’s implications to the contrary.

And then it all ended.

[1]Here’s the agenda.
[2]The clip


Anonymous said...

I attended this Council Meeting. You are incorrect when you state no answer was given as to why the City agreed to pay this price. It was clearly stated that the property owners owed that much on the property so would make zero profit. Also stated that they had not entered into any new leases, therefore losing rental income,anticipating the City would want this entire block, so as not to burden the City with the costs to buy out those leases. When you add appraised value plus lost rental income etc, the price is justified.

Anonymous said...

In reply to Anonymous, the new leases issue is a red herring. The property can continue to be leased on a month to month basis until the property is sold. If the owner does so (and they will)this rationale does not fly. Furthermore, the appraisal is likely only based on comparative sales. Comparative sales do not take into account income. Instead, and income approach is used and the timing of leases is may not be much of an issue in the income approach because there is always some assumed down time (i.e. the property is 90 9r 95% leased). A willing seller is another crock - If this property is foreclosed upon, you can bet your house on the fact that the note holder will be an extremely willing and aggressive seller. They won't want to pay a dime to hold a non-performing asset\loan.

A Santa Claritan said...

Anon. 1,

"I attended this Council Meeting. You are incorrect when you state no answer was given as to why the City agreed to pay this price. It was clearly stated that the property owners owed that much on the property so would make zero profit."

I still stand by what I wrote; that's no reason to over-pay by half-a-million dollars for the property. The City shouldn't consider how much money a party stands to make or lose on a sale. If that "reasoning" held, then real estate could never be sold for less than the previous purchase price, as we'd always want the owners to at least break even. The City isn't a charity. Like Cam Noltemeyer said, they could have let it go into foreclosure and picked it up then!

As for the second part of your comment, I think Anon. 2's response says it all.

The simple fact is that the City really wanted the property and didn't want to wait for it, so they spent much more money on it than it's worth.

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