NorthBay biz takes a look at three developments—one in planning, one in limbo and one looking to expand—that shed some light on the politics of development in the North Bay.
Now, calling North Bay city planners “political socialists” is a stretch, but according to some local real estate developers, the power these planners wield can lead to delays and, in some cases, set up total roadblocks to project completions—even though the proposed developments may meet the guidelines of the General Plan.
Getting a project up and running in the North Bay is no easy accomplishment. It demands strong negotiation skills, deep pockets to pay for impact studies and other required reports, and a healthy dose of patience to wade through the paperwork and the general give-and-take that evolves over the lifetime of a project.
NorthBay biz took a look at three developments—one still a gleam in the eye of its beholder, another stalled in its tracks and a third that’s been completed and is now looking to expand. We interviewed both the developers and city planners involved with the intent of finding out what makes a project successful…or not.
All I have to do is dream…
Our first profile looks at the Sausalito Shipyard and Marina, a project that’s still on the drawing board. It’s the dream of Joseph Lemon, Jr. and his father, Joseph Sr. For 15 years now, the duo has had a running battle with the City of Sausalito over the zoning rules that govern the development of the historic Marinship area that fronts Richardson Bay, which the Lemon family owns. The property is in a prime location, but the Lemons thus far have elected not to file a formal permit request to develop it, mainly because of political forces. It’s a classic saga of preservationists versus developers.
Back in 1989, Sausalito adopted the Marinship Specific Plan, which limits the waterfront principally to businesses and trades related to the maritime industry and artist studios.
“It’s a detailed, long, Byzantine zoning plan that’s one of the most restrictive zoning measures in the entire country,” says Lemon Jr. “It offers absolutely no flexibility for property owners in the area.
“At first blush, preservation is good,” he continues, “but time and decay are now working against the original, noble mission because everything is falling apart. My property is completely unimproved, and I’m literally losing tenants by attrition when their facilities are blown away by the latest storm. There’s no economic value to replacing it for the same uses, because the industry is dying. I can’t generate enough rent to make a go of it. If you want maritime uses in Sausalito, that’s fine—but landowners must have the hope of economic return or we can’t afford the investment.”
Lemon would like to see the zoning restrictions eased to allow for mixed-use, and he’s particularly interested in providing facilities for those engaged in environmental technology. “Marin County has a brain trust of thinkers who want to do things for the environment and generate profits at the same time,” Lemon says. “But they’re not contemplated in the Marinship Plan, because such fields scarcely existed when the plan was implemented. Yeah, it’s great to encourage maritime and artist uses, but they’re going away. And there’s a macro issue with maritime anyway. If you want a boat repaired, you go to a facility in Richmond or even Mexico, where prices are cheaper than they are in Sausalito.”
Lemon says he and his father approached the city about a decade ago to discuss problems with the Marinship plan, but their ideas fell on deaf ears.
“We then approached the city administration in the fall of 2007, and they said they’d be unable to talk with us about it for a year because it was an election year. They’ve been so passive when it comes to vision,” he remembers. “Sausalito is facing an impending deficit. An improvement in our property would add an annuity to the city in property tax alone, not to mention the trickle-down economic effect from new tenants. But [the city] just isn’t willing to take one baby step forward to make it happen.”
Lemon has worked with cities in Illinois and Iowa on historic renovation projects, with what he refers to as “considerable success”: A 100-year-old former train depot in Rock Island, Ill., was converted into a banquet facility; and a turn-of-the-century Catholic monastery in Bettendorf, Iowa, was renovated into a luxury hotel and later was converted into an alcohol and drug treatment facility.
“We have excellent relationships with the upper management of the city staffs in other communities,” he says. “They’re much bigger towns [than Sausalito], but they were more than willing to take my calls—and to call me back! They had a vision and they worked to execute it. Here in Sausalito, it’s lose-lose and everyone seems paralyzed by fear. The Marinship Specific Plan was enacted 20 years ago. Marine workers used to make their own rope by hand; now, most of those supplies are manufactured overseas. Should we return to handmade rope again and convert the Sausalito waterfront to some sort of Colonial Williamsburg-by-the-Bay? We need to ask what maritime businesses are truly viable, and what other mixed uses can complement them so we have a balanced plan for the future. There’s just no vision and no interest from city leadership.”
Lemon is part of a Waterfront and Marinship Steering Committee—consisting of 20 varied stakeholders, including property owners, tenants and even anchor-outs [boats floating in the bay not moored to a dock]—that meets regularly to review land uses and provide vision for the development of the waterfront. The committee is expected to submit its report to the Sausalito City Council this month or next, according to Jeremy Graves, Sausalito’s community development director.
For several years, Lemon has been “rolling up my sleeves to work with my colleagues,” on that committee and other, precursor committees that have been part of a larger process known as “Imagine Sausalito,” in which the City Council invited locals to help shape a new vision for the town. He says he’d love to submit a development proposal, but is convinced the city would use him for target practice. “What they want me to do is to propose something so they can shoot it down. I may have been born at night, but it wasn’t last night,” he says. “I need interest from city leadership before I can do anything.”
When Graves was contacted by NorthBay biz about Lemon’s concerns, he noted that no permits have been applied for and expressed surprise that Lemon would be so outspoken. “Joe is a regular attendee of the steering committee meetings and is quite engaged. And if he has a plan for his property, we’d work with him and provide informal input.” But without a permit application, quite simply, their hands are tied.
Working through the committee and educating the local community is Lemon’s best chance for eventual success in changing the city’s mind. “All of us [on the committee] have come to the conclusion that [the system is] broken and something needs to change,” Lemon says. “These shipyards were built during World War II and were only supposed to be there as many months as it took to win the war. I don’t think anyone at the time meant for them to be permanent. I realize change is scary for many people and it takes courage for a stable future.”
Despite all the political pressure his ideas face, Lemon remains positive. “I think we’ll get to do something eventually,” he says. “One important question the city must answer is whether it would rather deal with someone who grew up here, lives here, is involved with the city and is fully invested financially and personally [as the Lemons are], or if it wants to deal with someone from Hong Kong or New York City who just wants to turn the fastest buck? This is a legacy project for us: We want to have something that really adds to the town.”
A rolling stone gathers no moss
Our second profile takes a look at the proposed Elnoka project in Santa Rosa.
It’s been nearly five years since Santa Rosa developer Bill Gallaher’s Oakmont Senior Living (OSL) began its torturous, twisted journey to build a medium-density residential project called Elnoka Village in Santa Rosa.
The 63-acre Elnoka property, which is located near the Oakmont Housing Community on Highway 12 in Santa Rosa (there’s no affiliation between Oakmont Senior Living and the Oakmont neighborhood), was originally bought by OSL in February 2005. Six months later, OSL purchased a neighboring property (Kou You) with a plan to develop 14-plus acres of the combined parcels into a residential village.
According to Bill Mabry, OSL partner and head of project development, OSL—which has built more than 30 senior communities throughout the state of California—did its usual homework before committing to the purchases. “We looked for property in an excellent location for what we do. We started the appropriate conversations with the city, we reviewed the general plan and the zoning ordinances and, once we determined all was in order, we moved forward with the sales agreement. All of this is necessary; we have to be sure we can build.”
And then the fun began. Part of the project designated for medium density housing was changed to low density, resulting in the removal of the Kou You acreage from the plan. Mabry blames the city planning staff, whom, he says, didn’t have up-to-date versions of the General Plan when it originally advised OSL that the parcel was zoned medium density. “Their mistake cost us about $1 million, because we paid the going rate for land that was designated medium density,” he says.
The saga continued: A rezoning was required. OSL was initially told it wouldn’t need to provide an Environmental Impact Report (EIR), then later told it would. With time, the neighbors got restless…very restless. “They were concerned about traffic and possible seismic issues—residents having problems if there were an earthquake,” Mabry says. “They didn’t like the idea of having an affordable housing project in the area [20 percent is to be devoted to low-income housing and 20 percent to medium-income] and they only wanted housing for seniors. The truth of the matter is, the neighbors have a real concern about anything being built there. They just haven’t wanted the project, no matter what changes we’ve made [to accommodate their concerns].
“All we’re doing is trying to implement the city’s General Plan and do what’s allowed within the rules and regulations—and it’s been impossible,” Mabry declares.
It’s been expensive as well. Mabry says OSL has spent almost $2 million on the Elnoka project thus far, with its biggest expenditures on supporting documentation (traffic analysis, soils reports, etc.) at more than $365,000, and more than $251,000 on an EIR “that we haven’t seen yet.” City fees for applications and submittals have amounted to more than $237,000, and the cash register is still ringing as the project continues.
“That doesn’t include the cost of the loan, management or staff fees. All in all, we’re at almost $4 million on this project,” Mabry says.
On the flip side, Gallaher and Mabry say they’ve had tremendously positive experiences in other parts of the state, including Moraga, Corte Madera, Napa, Danville, Pleasant Hill and Concord. “And these are tough areas as well,” said Gallaher, “but none compares to [the process] in Santa Rosa. It’s just the worst—in a league all its own.”
“We’re doing a project in Palm Desert right now, and we used the same process we used with Elnoka in Santa Rosa,” Mabry says. “We went to the city, checked the requirements, filed the initial use permit and went through design review. The process started in November 2007, the building permit was issued in December of 2008 and the project will be finished in March 2010. We have people signed up and ready to move in.”
“I could do three projects in Palm Desert in the same amount of time it takes to do one in Santa Rosa—and accomplish much more without the hassle,” Gallaher says. “We love to go down to Palm Desert; it energizes us. In Santa Rosa, it’s just an endless road.”
What’s particularly disappointing to Gallaher is the fact that he’s a third-generation Santa Rosan and his company is headquartered here, “but they won’t work with us.” He blames leadership at City Hall, which he describes as “extremely weak.”
“We’re done sugar-coating it. We’ve worked and worked and tried to do it, but it’s an endless, endless road. There’s always a new study that needs to be conducted or an application that has to be resubmitted. We keep doing it because we want to get everything approved to build. My wife says I’m out of my mind. But we won’t buy more property here. I don’t want any part of that. If anyone asks me, I warn them not to come here. And I hate to say that, because it’s my hometown,” Gallaher says. “It’s depressing; it’s all so backward.”
To its credit, the City of Santa Rosa’s Community Development Department, which is charged with oversight of all such projects, readily agrees the Elnoka Project is one of the most unusual it’s encountered, but not just because of its complexity. Instead, it points to mismanagement on the part of the developer, which it says has led to a chaotic, adversarial relationship.
According to Chuck Regalia, director of community development for the City of Santa Rosa, OSL twice withdrew the development permit applications, which halted all city staff work on the project. “Bill [Gallaher] may have five years invested in this project, however, the City began work on the current application in September 2008, which is when the current permits were filed,” Regalia says. “And between then and now, we’ve worked on a typical, if not efficient, timeframe. These longer time periods occur when applicants like OSL withdraw and resubmit applications, causing our staff to stop work and then start up again.”
Erin Morris and Bill Rose, the two planners assigned to Elnoka since the first application for development permits, both cite lack of cooperation and a tendency to dismiss legitimate planning staff concerns on the part of OSL. They say OSL has been reluctant to provide design professionals to meet with the design review board, even though the large, four-story building proposed for the site has generated concerns from the public. At one point earlier this year, when advised of key design issues that needed to be addressed for OSL’s other pending development project, the Fountaingrove Lodge, Morris says OSL not only made no changes to the plan, “but reverted to an earlier plan that had even more issues [than the current one]. It’s just incredibly unusual behavior,” she says, shaking her head. Rather than trying to resolve issues identified by planners and the public, she continues, OSL instead escalates the arguments and then has its attorneys send threatening letters, which further slows the process.
Rose notes OSL would be wise to look to a recently approved Santa Rosa project—West End Village near Railroad Square—to learn how to better work with the city. “West End Village was a challenging site, just like Elnoka. But we received cooperation from the developer [Rick Deringer], who made sure to reach out to the neighbors and advise them of his plans,” Rose says. This helped address neighborhood concerns and resulted in very little opposition to the project.
A key strategy for developers to get any project through all the hoops and over the hurdles is quite simple, according to Regalia. “They must be willing to meet us at least halfway,” he says. “Successful projects have a good idea, combined with a good staff that stays engaged in the process and is able to be there when decisions must be made. They have a healthy respect for our staff, and they’re willing to work with us and the neighbors of their project.” So far, he says, he hasn’t seen that on the part of OSL.
Getting to know you
Our final project profile is Napa’s Meritage Resort and Spa which, along with its sister property, the Vino Bello Resort (a timeshare resort owned by Shell Vacations Club LLC), was one of the largest new construction projects in the City of Napa over the last decade. The complex opened in July 2006 after 18 months of construction and a couple of years of intense permit processing, according to Sean Dempsey, assistant general manager.
While Napa Valley is one of the state’s most popular tourist destinations, the area was lacking a hotel complex that could attract larger corporate groups and accommodate larger events. With 155 guest rooms and 22,000 square feet of event space, the Meritage project was a win-win for the city, the resort’s principal owner, Tim Busch, and his investors.
“The property is unique,” explains Dempsey. “It’s the largest convention hotel resort property in the Napa Valley. It’s brought in a new leg of corporate business. Everybody wins. Merchants get more business, restaurants fill up. It’s totally beneficial to the community. We’ve filled a special need and the cooperation [between the city and the developers] has been tremendous.”
Not that the ambitious project didn’t suffer setbacks. Original construction plans were shelved for a year after the events of 9/11, when funding went dry. When the project got new life in late 2002, “we had to jump over a lot of little hurdles along the way,” Dempsey says. The biggest delay, however, was the temporary certificate of occupancy (TCO), which was required before the property could accept guests; Dempsey explains that extensive rain in February through April 2006 delayed some inspections (and subsequent approvals), which, in turn, delayed the TCO.
The unique location of the Meritage Resort and Spa and Vino Bello Resort is one of the main reasons the project was so supported and why the approval process went as smoothly as it did, Dempsey believes. It lies at the south end of the Napa Valley Corporate Park in the southern tip of Napa, just within the city boundaries. “I’m sure it would have been a different story building in downtown Napa, had that opportunity ever existed,” Dempsey says. “But as it was, we took an empty piece of land that basically looked like the surface of the moon and enhanced it. And the city went above and beyond and really supported us.”
The experience has been so good that the resort last year announced a major expansion that would double the size of the original project, adding 165 more guest rooms and 20,000 additional square feet of event space. Ground was to have been broken in November 2008, but Busch and his investors “saw the writing on the wall and felt it would be prudent to hold off on any expansion plans until things settled economically. It was the right thing to do,” Dempsey explains. “The economy has been a little irregular, but we think we are starting to see a light at the end of the tunnel.” Dempsey expects the expansion to fully get underway by perhaps early 2011.
Dempsey points to two key factors that have helped smooth the way: savvy ownership and ongoing communication.
“This is the fourth hotel we’ve built from the ground up,” says Dempsey. “So we’re not novices at this game. Our executive team and ownership are compliant with what needs to happen, as are our investors. It streamlines the whole process.”
At the same time, ownership has been kept in communication with the Napa planning commissioner and other city officials, and all have visited the property to see the benefits first hand. “They’ve been very interested in our green program and how we support sustainability and the environment, and as the standard rule in Napa is for any new project to meet some form of green and LEED certification, that’s really helped us,” Dempsey says.
For its part, the hotel prints all its brochures on recycled paper, using soy ink. It’s also set aside preferred parking stalls for hybrid vehicles and uses reclaimed water for landscape irrigation. “We also have a linen/towel reuse program and recycle all our paper supplies. Kitchen grease is separated into barrels so it can be converted to biodiesel fuel, we have a composting program and we buy our food products from local vendors and producers so trucks and trains don’t have to deliver the goods—all important practices in support of sustainability,” Dempsey says. “Best of all, we’ve put a recycle bin in each guest room and the guests love it, even though the color in no way matches the décor,” he laughs.
Kevin Eberle, senior planner for the City of Napa, has been assigned to the Meritage project since its inception. And it’s readily apparent that admiration is mutual. “Their representatives are excellent,” Eberle says. “There’s always been a good line of communication and, when issues come up, we can talk them out and resolve them as soon as possible.”
Eberle agrees with Dempsey that the location of the project was key to its success. “This hotel was adjacent to the highway and had existing industrial on one side. It’s just a matter of fact that a small, four-lot parcel split (in town) might be more controversial than a 160-room hotel, just because of its setting in a residential neighborhood,” he says.
The city fathers and mothers were so pleased with the initial Meritage project and cooperation from hotel management, that when it came time to propose an expansion, the application process was quick and easy.
“Meritage helped the process by providing a complete and thorough application with good drawings, quality architecture and a variety of amenities to benefit the city, such as conference facilities,” Eberle says. “They even went an extra mile and provided high-quality photo simulations of the new hotel, which helped speed up the design review portion of the approval. And any time we’ve needed more information, they’ve been tremendously responsive.”
The Meritage project has been so successful that the planning commission “made a point of thanking them for providing this type of facility in the city,” Eberle says. “The city obviously has an interest in seeing these types of projects in these economic times, because transient occupancy taxes (TOT) generate a lot of money. So we did our best to expedite the process while still providing a thorough review.”
In final analysis, while each of the projects profiled here is unique and the circumstances surrounding them are diverse, in all our interviews, one central theme emerged: It’s important to be a good neighbor. If you’re not, your project is dead on arrival, Utopia be damned! Or, to quote English logician and theological writer Richard Whately, “A man is called selfish not for pursuing his own good, but for neglecting his neighbor’s.”
