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Hotel project is confusing mess

Until last week, I did not realize the extent to which it’s possible to tell the truth while at the same time mislead the public and the press. However, as a Pacific Grove resident following the city’s handling of Project Bella issues, I got a good lesson in omitting material facts during the hearing in which the City Council decided not to pursue reimbursement of costs from Project Bella’s developer.

Project Bella is the upscale hotel proposed to replace the current American Tin Cannery and parking lot — ATC for short —  a block from the aquarium. The 4.88-acre parcel was to become a 160-suite “world-class destination and innovative leader in conservation and sustainability,” with “state-of-the art design recycling vast amounts of water and energy,” including a “museum celebrating Pacific Grove’s extraordinary culture,” and providing “three hundred permanent high quality hotel jobs.” At least, that’s what the official Voter Guide said last spring in its “Argument In Favor of Measure X,” signed by two past mayors and the current PG mayor. Along with others who voted for Measure X, I was enthusiastic about this project and the revenue it would generate.

On April 19, 2016, PG residents voted 3,016 to 2,111 for Measure X, thereby rezoning the ATC property to allow hotel use. A city-commissioned fiscal report estimates an additional $3 million to $4 million revenue annually to city coffers. The ATC site is owned by an entity related to the Cannery Row Co. and is under an option to be leased for 99 years to a limited liability company with “Domaine” as part of its name.

The obfuscation begins with three limited liability companies (LLC), each with “Domaine” as part of their name.

  1. Domaine Hospitality Partners, LLC, is the Delaware company that proposed Project Bella and which sponsors the fancy Project Bella website. Domaine Hospitality Partners enchanted me, others, and the City Council with its promises for an upscale hotel. On February 17, 2016, the City Council voted unanimously to authorize the city manager to negotiate a master reimbursement agreement with Domaine Hospitality Partners, LLC to cover the city’s cost for more consultants, to accelerate completion of the city’s Local Coastal Plan (hereafter “the February agreement”). The February agreement was authorized but never signed.
  2. Domaine Pacific Grove, LLC, is also a Delaware company, reportedly owned by Domaine Hospitality Partners, LLC. Domaine Pacific Grove, LLC signed a reimbursement agreement with the city in June (hereafter “the June agreement”) but the City Council never authorized it and the only way to get a copy is to make a public records request. The June agreement differs from the February agreement in two material ways: [a] it does not require Domaine to pay for LCP acceleration costs, and [b] it is an agreement with Domaine Pacific Grove, LLC, instead of Domaine Hospitality Partners, LLC.
  3. Domaine Hospitality Partners, LLC is a recently formed California company. Except for having the same name, it appears unrelated to the Delaware Domaine Hospitality Partners, LLC and irrelevant to ongoing Project Bella issues.

Now let’s look at “omitting material facts.” The City Council agenda report for Feb. 1, 2017 states: “While City staff twice amended its agreement with EMC Planning [a private land use planning consulting business] to reflect the additional professional services required for the LCP effort, a reimbursement agreement for LCP costs was never reached with Domaine Hospitality.” That’s completely true. What the agenda report doesn’t disclose is that PG’s mayor signed the June agreement instead of the February agreement, although the City Council never authorized him to do so. The February agreement was authorized by the City Council, was with Domaine Hospitality Partners, LLC, and would have required Domaine to reimburse the city for LCP acceleration costs.

The June agreement was not authorized by the City Council, does not require reimbursement of LCP acceleration costs, and is with Domaine Pacific Grove, LLC. Because only the June agreement got signed, the agenda report can accurately state, “a reimbursement agreement for LCP costs was never reached with Domaine Hospitality.” Accurate, but omitting significant material facts.

The Feb. 1 agenda report recommends the council “direct staff not to pursue reimbursement from Domaine Hospitality for costs associated with the Local Coastal Plan.” Four reasons are given:

  1. “A reimbursement agreement for LCP costs was never reached with Domaine Hospitality.” As discussed above, this reason for not pursuing costs is misleading because the unauthorized June agreement was substituted for the authorized February agreement. The June agreement omitted the reimbursement requirement, and it was an agreement with Domaine Pacific Grove instead of Domaine Hospitality.
  2. Public policy: “Consideration should be given to the prudence of accepting 3rd-party contributions, particularly those from project applicants, to fund City efforts that create regulatory review policies/procedures such as the LCP.” This public policy reason for not pursuing reimbursement is contradicted by the February 17, 2016, agenda report, which states: “The proposed agreement is structured to ensure City independence throughout the effort, as the City alone decides on the scope of activities to be undertaken and the discretion to be exercised. The City shall be reimbursed for its effort, but has not delegated or impaired its judgment.” Last week’s agenda report does not explain why pursuing reimbursement from the project applicant didn’t pose a public policy issue in February 2016, but now it does.
  3. Consultant EMC did not accelerate the LCP and therefore should not be compensated for acceleration. The agenda report itself seems to contradict that rationale by stating the work EMC did in 2016 “would have occurred over a longer period of time spreading the expense over two fiscal years.” Consultant work that would otherwise take two years is clearly “accelerated” if completed in a few months. Moreover, the city paid EMC $163,000 for acceleration costs. This rationale for not seeking reimbursement is illogical.
  4. “A project application for Project Bella has not been submitted to the City.” That statement is true only if it refers to a “complete” project application. An incomplete project application was submitted in 2015. The city sent Domaine Pacific Grove, LLC a notice of incomplete application dated November 9, 2015. It informs Domaine that if the city “does not receive revised plans within 180 days from the date of this letter, the project will be considered withdrawn.” The language used, “will be considered withdrawn,” is mandatory language under legal construction theories. No revised plans were submitted, so the city deemed the project withdrawn in May 2016 (180 days after November 9). Therefore, it appears the June agreement was moot when signed.

Next, let’s look at implications for the city of Pacific Grove. Domaine Hospitality, Partners, LLC, the Delaware company, is said to hold the option for a 99-year lease on the ATC site. However, because it is not registered to do business in California, the city needs legal review to determine whether Domaine’s option for the 99-year lease is valid. If it’s not, Cannery Row or whoever owns the site and granted the lease, by virtue of Measure X passing, now enjoys a great increase in its commercial value. It can be leased to any hotel developer. We have no guarantee at all of a LEED Platinum hotel or even one in good taste.

There is also the matter of fairness to PG voters. City leaders signed the Voter Guide argument for Measure X describing a “world-class destination and innovative leader in conservation and sustainability.” It’s not the city leaders’ fault that such a project now seems unlikely, but I think voters should be given a second chance to vote now that the rezoning could result in a very different type of hotel. The voters could force a new election by gathering a sufficient number of signatures. Measure X was put on the ballot with 1,326 signatures. A subsequent ballot measure will require a similar number of signatures.

Last week’s 7-0 vote by the Pacific Grove City Council to accept the city manager’s recommendation “not to pursue reimbursement from Domaine Hospitality for costs associated with the Local Coastal Plan” makes no sense to me. It eliminates any possibility the city might recover those costs through future negotiation, even though it can’t recover the costs through the June agreement. More basically, the motion was not to pursue reimbursement from “Domaine Hospitality.” The costs were incurred for Domaine Pacific Grove, LLC, which is the applicant for Project Bella, not Domaine Hospitality

I believe all seven Pacific Grove City Council members are honest and none expects to benefit financially from the city paying $163,000 of public funds for expenses the public was told would be reimbursed by Domaine. However, it appears to me that city leaders are not getting accurate direction and advice from the city attorney. With the confusion over which entity the city has been dealing with, the altered and unauthorized June agreement that the mayor signed (with the city attorney’s approval for form), and the circumstances that have changed since the voters approved the rezoning, I recommend the city retain independent legal counsel. We need to sort out the various Domaine entities, the status of the lease on the now rezoned ATC parcel, the city’s obligation to voters who were misled, and ways to remedy the situation the city now finds itself in.

Jane Haines is a retired lawyer who lives in Pacific Grove.

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Back in the 1940s, when I was in seventh grade, I took a class in home economics. Once a week, my classmates and I would divide into groups of about five. Each group would cook something. Then we’d eat it.

Every student would have a specific group task. One day my group was making spoonbread. My task was to stir the batter. Suddenly, the gum I’d been chewing fell out of my mouth and into the batter. Since I was decorous back then, I was too embarrassed to tell anyone what had happened. So I just kept quiet and passed the bowl containing the batter (and the gum) to the next student. S/he didn’t notice the gum when pouring the batter into the baking pan and placing it in the oven.

After the spoonbread was baked, another student removed it from the oven and dished up some for each of us. Our group was the only group that had marbled spoonbread.

This created a stir. The teacher came to our group to see why we were not eating our spoonbread. She marveled, saying she’d never seen such a thing before. By now, there was no way in the world I was going to tell anyone what had happened, so I just kept quiet.

I think a similar thing happened in Pacific Grove during 2016 in connection with the April election regarding whether to rezone the American Tin Cannery site to allow hotel use. Voters were told by the mayor and others that if the 4.88-acre site was rezoned to allow hotel use, the purportedly prestigious development group Domaine Hospitality Partners LLC, of which Gen. Wesley Clark was a partner, would construct a world-class, LEED-platinum certified hotel there. An economic analysis projected that such a hotel would increase Pacific Grove city revenue by $3 million to $4 million annually, and the classy Domaine website showed world class hotels that Domaine Hospitality Partners purportedly had developed. The vote on April 19 was 3,016 yes and 2,111 no.

One of the selling points for voting yes was that venture, Project Bella, would not financially burden Pacific Grove since Domaine was going to pay the processing costs. Two months before the election, on Feb. 17, the City Council had approved a reimbursement agreement with Domaine Hospitality Partners LLC. However, that agreement didn’t get signed until June. In the meantime, the city incurred substantial Bella-related expenses on Domaine’s behalf. But the City would be reimbursed for everything, right?

Here’s where the chewing gum analogy applies. The February reimbursement agreement is for Domaine to cover the city’s “additional costs associated with the acceleration of City’s Local Coastal Program entitlement process,” whereas the June agreement omits any mention of Coastal Program acceleration costs. In May, the Council approved paying a consultant $101,056 for such costs, but in September the city manager said the city has no agreement with Domaine to cover such costs. Domaine will reimburse the City for everything, right?

Another example is that the February version of the reimbursement agreement was with Domaine Hospitality Partners LLC, whereas the June agreement is with Domaine Pacific Grove LLC. That switch hasn’t been explained either.

There is a discomforting Bloomberg News article  about Gen. Clark lending his name to some sketchy companies. Additionally, Domaine’s classy website has been edited to delete some of its earlier claims, and a former representative of Domaine alleges Domaine is more than six months overdue paying $150,000 to its contractors.

Now, here’s where the keeping-a-secret analogy applies. As far as I can tell from listening to videos of council discussions about Project Bella and reading accompanying agenda reports, neither staff nor the council has disclosed the discrepancies between the reimbursement agreement approved in February and the reimbursement agreement executed in June.

And here’s the culprit analogy. Just as I never confessed to how the spoonbread became marbled, Domaine may be silently preparing to drop its gum into the batter. By this I mean that Domaine now has a much more valuable lease on the American Tin Cannery site than the lease before the site became zoned for hotel use. The lease is with the Cannery Row Co., owner of the American Tin Cannery, and is for a term of 99 years.

Suppose Domaine transfers that lease to a less desirable hotel developer, pockets the increase in value, and waves goodbye to Pacific Grove? The city would be obligated to approve any hotel meeting applicable standards. Thus, Pacific Grove could wind up with a low-revenue-producing, ordinary hotel on the site of the former cannery, which is not what city officials and Domaine said would result from passing Measure X.

Am I concerned? You bet. I love Pacific Grove. I think the city staff needs to look into these matters, tell the public what’s going on and guard against that lease being transferred. Then, if facts so warrant, city officials should say, “Dear Voters, we goofed. Let’s have another election to eliminate hotel uses from the American Tin Cannery site.”

Jane Haines is a land-use activist and retired lawyer.

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No Vacancy sign hanging on yellow painted cedar siding.Wake up and smell the new economy. It’s here. It’s global at 2.25 million homes in 191 countries and it persists regardless of bans, restrictive ordinances, or claims of eroded neighborhood character. It is the capitalist-defying act of peers renting to peers. It is the demolition of the vertical landlord/renter relationship and the construction of a horizontal economy; it is a trust-dependent transaction shattering an economy based on fear. It is the close look at existing structures and a turning of our eyes away from new construction. It is the celebration of the middle class and the eventual burial of the 1%. It is Home Sharing on Airbnb.

There are 1,900 vacant homes in Pacific Grove and 210 short-term rentals. Carmel suffers 46% of its housing stock standing empty and yet they ban home shares because they would change neighborhood character. A neighborhood of ghosts? Carmel’s infamous Supreme Court ruling (Ewing vs Carmel-By-The-Sea) cites that ”Short-term tenants have little interest in public agencies or in the welfare of the citizenry. They do not participate in local government, coach little league, or join the hospital guild. They do not lead a scout troop, volunteer at the library, or keep an eye on an elderly neighbor. Literally, they are here today and gone tomorrow-without engaging in the sort of activities that weld and strengthen a community.”

The ruling even mentions that they do not utilize day cares. In fact, there are no Carmel Boy Scout troops or day care centers while in contrast, my short-term renters have been physicians here to train your doctors on how to better save your character-rich life; Girl Scouts here for their 50th annual reunion who have inspired more character in young girls than you can throw a badge at; judges and lawyers here for special cases brought on by the bad behavior of your character-building neighbors; eco-conference and eco-farm save-your-world heroes while you watch your neighbors spray Round-Up; and a handyman or two who have helped my neighbors with do-it-yourself projects that your neighbor didn’t-avail-himself-to-do-yourself.

To those who argue that we are doing business in a residential district, I will assert this — the only business-as-usual transaction in my home is between me and Wells Fargo. I agree to buy a home for $700,000 with 20% down and an interest rate of 5% for 30 years. What does Wells Fargo get? $1,220,160. That’s business. When I rent my house out for a third less than a hotel or Bed and Breakfast, complete with a fenced-in yard, a kitchen and bedrooms for all, it’s a bigger bang for your buck and it is practice in fair trade.

It’s the economy of the future, a future wherein it’s our civic responsibility to use existing resources. My houses are 110 years old. The lumber has been felled, the water-loving cement cured, the furniture built. They were retreat houses 110 years ago and thus remain historically accurate as home shares. What I want to ask those of you who are in love with outdated zoning ordinances and you historic-preservation devotees – who the hell let permanent residents set up camp and ruin the character of our Retreat Area?

Joy Colangelo is a physical therapist and environmental activist who lives in Pacific Grove

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On Wednesday the Pacific Grove City Council approved a special election, scheduled for April 19, asking the townsfolk to change the zoning of the American Tin Cannery site to allow for a new hotel on the property. The hotel, code-named “Project Bella,” is being billed as an economic necessity for PG, and a much better use of the site than the existing indoor retail mall that never lived up to expectations.

Project Bella may indeed be the best thing to happen to Pacific Grove since Holman’s department store, but why is a special election necessary when a regularly scheduled election will come just eight weeks later? The answer is simple. A special election favors the developer.

Special elections tend to attract fewer voters, those most interested in the subject, so the results may not reflect the town as a whole. Also, it gives voters less time to scrutinize and discuss the project, giving the developers more control over the information presented to voters. It therefore comes as no surprise that the developer, Domaine Hospitality Partners, is perfectly happy to pay the full cost of the election, about $40,000, according to KSBW News.

So far Domaine has had complete control over the messages to the community, and they’ve painted an awfully rosy picture of their hotel plan. They boast that Bella “will be designed, built, and furnished to the highest standards shared by only a very few of the world’s best hotels,” a tall claim considering even the local competition, much less the world. And, strangely enough, they expect to fulfill their promise of unparalleled luxury with an architectural design reminiscent of the industrial history of the cannery building that currently occupies the site.

Which brings me to my biggest concern. Both the developer and civic leaders who are supporting Project Bella have been pretty vague about the fate of the historic American Tin Cannery building, which turns 89 this year. It was the only Cannery Row cannery built in Pacific Grove, and arguably has the most attractive facade of any cannery on the row.

After the local sardine industry shriveled, the building was occupied by NAFI (National Automotive Fibers. Inc.), a division of Chris-Craft Industries. NAFI (pronounced “naffy”) manufactured carpeting for automobiles in the facility for many years. When I was third-grader at Carmel River School, locally made NAFI carpeting was installed in our classrooms. After NAFI went the way of the sardines, the American Tin Cannery entered its retail phase, first as a big box type store called Ardan and later the outlet mall we all know but rarely patronize.

I know this little bit of history because my dad was an accountant at NAFI in the 1960s. His office was  near the base of the smokestack a few steps from Eardley Avenue. One day he gave me and my mother a tour of the plant. I think it was just after quittin’ time because there were very few people there. I remember the cavernous space with north-facing windows built into the angled roof that provided a source of light. On the floor I saw rows and rows of industrial strength sewing machines, the kind you see today only in documentaries about Chinese textile mills. It made a strong impression on my 7-year old mind.

Descriptions of the proposed hotel in the local press have been hazy as to how much, if any, of the existing building would be incorporated into the new. Most reports ambiguously say the hotel will be built “at” the American Tin Cannery. Nowhere have I seen it stated explicitly that the American Tin Cannery will be demolished, but neither has it been said the building will be spared. One recent report suggested that the hotel will be an “homage” to the cannery. An artist’s rendering of the interior displayed on the developer’s website shows features that look similar to the existing structure, but the aerial site plan shows the hotel with a very different footprint, most of it set well back from the street. Curiously missing from the website are any street-views of Project Bella.

Put it all together and it becomes evident that the American Tin Cannery will be no more. Yet for some reason PG preservationists don’t seem to have picked up the signals yet. If the demolition of an old pump house could attract their attention, the destruction of the American Tin Cannery should raise alarms like mad, yet they haven’t said a word.

Do Pacific Grove voters really know what they’ll be getting on that property? I suspect Project Bella supporters don’t want Pagrovians to know too much just yet. It appears they want to lure voters to the special election with glowing promises of economic benefits and unsurpassed luxury before the townsfolk realize they must sacrifice a unique piece of the town’s heritage – hence the need to conduct the vote two months before the scheduled June 7 election.

James Toy lives in Seaside and is a regular contributor to the Partisan. This first appeared on one of his blogsMr. Toy’s Mental Notes.

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The Partisan’s 2015 wish list, toward a better tomorrow

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christmas tree lightA review of the Partisan’s posts of 2015 reveals that we did a reasonably good job of accentuating the positive and avoiding unnecessary criticism. In that spirit, we are taking this opportunity to distribute some presents of sorts with the barest amount of advice necessary to provide context.

City of Seaside: A gift bag filled with enough wisdom to realize that this horse-racing thing is never going to happen. You need to know this before you waste more time and money. It might have come to something if the centerpiece of this proposal was something other than a horse racing track, but that’s what it is. Horse racing was a dying enterprise even before the public started recognizing how many horses actually die at the tracks. On top of that, the location is wrong, the developers’ own financial forecasts don’t support the idea and the development team seems to think it can force it down the community’s throat.

Craig Malin: For the incoming Seaside city manager, a subscription to the Weekly and the Partisan because you’ve shown yourself to be a fan of good local journalism.

Sand City: Don’t be jealous about Seaside’s present. Here’s a box of reality for you, too. That hotel on the beach? It was a bureaucratic fluke that got the proposal this far but if you think the community is going to let you build a hotel on the sand, knowing what happens when buildings go up on the shore, you need to get out more.

City of Mared christmas backgroundrina: Your gift is a back brace to help continue to build a people-friendly community rather than a conglomeration of shopping centers and parking lots. Yes, people want restaurants in their commercial districts but the City Council can and should set standards. Time will prove the council right.

The City of King City: A whole new start.

Salinas Police Department: May the big shiny box behind the tree be filled with at least a few months of peace. The way your officers stepped up to contribute money for the 9-year-old abuse victim in the recent child homicide case was truly heartwarming. They deserve something other than crime scene after crime scene.

Jane Parker: Here’s hoping Santa brings you two new colleagues this year. Imagine a board trying to work together to serve the public! Yes, it sounds crazy, but we’ve all heard of Christmas miracles, right?

Dennis DonohuBirch forest in wintere: The former Salinas mayor won’t come right out and say he will run against Parker, though he’s already collecting campaign cash. Our gift is a simple reminder that to beat Parker, he’ll have to take loads of money from people he wouldn’t to have as neighbors. It’s about governance, Dennis, not commerce.

Pacific Grove: A city engineer who can figure out how to use the new hotel tax money to get the ancient sewer system fixed.

Carmel: A few dozen barbecue grills and a mural at the Post Office depicting the good old days of beach bonfires.

Sam Farr: Some fishing tackle.

Jimmy Panetta: A challenge from the left to keep you honest.

Casey Lucius: A professional campaign manager.

Monterey County Democratic Party: Leadership.

Monterey County Republican Party: New leadership.

Cal Am: A conscience.

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PURELY OPINION: Tear the pump house down

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If Cal Am water proposed building a pump house like the one it owns on Eardley Avenue in Pacific Grove, it would be met by considerable squawking. Too big. Wrong location. What about the trees? Make  ‘em pay for an environmental impact report.

Why then is a proposal to tear it down sparking a similarly negative reaction?

Because it’s old.

Historic preservation is a grand thing. People and institutions on the Peninsula have done a rather good job of it and it enriches the lives of everyone who passes through here. The places that have ignored history in favor of “progress” are much the poorer for it.

But not everything old is intrinsically worth saving. The modest, one-story Cal Am structure, which is no longer in use, looks to be somewhat interesting. Encircled by trees, it is not entirely an eyesore even with its boarded-up doors and windows.  PG Mayor Bill Kampe has suggested putting a fence around it to keep people out while officialdom ponders its fate.

It is a good thing that some thought is going into this, but it would be a shame if the thinking is followed by a bunch of spending. We don’t need an expensive study to tell us what we already know. It’s an old pump house that isn’t used any more. And we don’t need to make Cal Am or anyone else spend a bunch of money to restore it. Cal Am customers are already paying too much for everything Cal Am-related, and most Pacific Grove taxpayers would rather pay for street repairs or a functional police department.

I say tear it down and plant some more trees.

Disagree? Tell me why. Add a comment below or send a commentary to calkinsroyal@gmail and we’ll share it.

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