When two prominent developers accused Petaluma city officials of dragging their feet—adding up to millions in lost opportunities—questions arose about what the city’s future should hold. Now both sides are hoping the November election results will point the way.
The letter arrived in mailboxes on August 24 and, within hours, had seemingly inflamed public opinion in a town already divided. It asked recipients to contribute $200 per person—the maximum allowed by city law—to elect four candidates running for office in November: Jeff Mayne for mayor and Chris Albertson, Ray Johnson and Mike Harris for city council. The co-signers were Bill White and Doyle Heaton, two well-known (if not revered) real estate developers who, over the course of three decades, had invested copious amounts of blood, sweat and tears into Petaluma.
White, the man behind Petaluma’s theater district transformation and Telecom Valley office parks, and Heaton, whose residential developments sit like compass points across the city, said in the letter that, through their home and office projects, they’ve tried to “help make Petaluma a well-rounded, vibrant community,” but the current council majority, they charged, had run the city into the ground financially.
“We have never seen a City Council leadership have more disregard for the economic well-being of the city and those who live and work here,” the letter stated. “The current majority on the council have systematically stripped the city of its financial revenues and reserves and the local economy of its ability to create new jobs. Even if not intentional, it could not have been better executed.”
The letter seemed to touch a nerve in the community, ratcheting up the intensity of the campaign. Former city councilwoman Janice Cader-Thompson, a proponent of the existing council majority, emailed city leaders suggesting White and Heaton had violated the city’s election law. In her view, the solicitation triggered the city’s campaign finance law, which requires disclosure of any committee making independent expenditures on behalf of a candidate.
“By financing these candidates, Bill White is attempting to create a puppet council for his beckoning,” she said in a Press Democrat article two weeks after the mass mailing.
White, when interviewed for the same article, said the letter was nothing more than an informal request to friends and business associates—no different than if he were to host a fund-raiser. “The intent was that it was a simple fund-raising letter,” he told the PD, adding, “We’re not a committee.”
They may not have been a committee, but their objectives were clear—as were their words: “The citizens now have a chance at the ballot box to get the city back on proper financial footing. …We need your help to do so.”
(Election update: Albertson and Harris were elected along with Teresa Barrett, while Mayne was defeated by David Glass.)
God forbid—Santa Rosa
What prompted Bill White and Doyle Heaton to write, sign and send such a letter? The answer can be traced back more than 20 years, during which Petaluma has experienced something of an identity crisis.
During the high-tech boom of the early 1990s, more than a handful of locals were eager to trade their town-and-country roots for the stylized office parks of Telecom Valley. Basin Street broke ground on the Theatre District as Delco hammered out new housing developments on the hillsides. Ambitious developers brought the outlet malls to town. Auto Row emerged. Petaluma had become a destination.
But that explosion of growth created a backlash.
Not everyone agrees that development—even in progressive, sustainable, bite-sized pieces—is a good thing. Jobs and sales tax that come from “big-box” developments can produce collateral damage, they argue. It’s a quick fix for people who are out of work or have lost their homes, but development puts pressure on water resources, traffic congestion and sacrosanct green space. It can rob a neighborhood of its character and commoditize an entire community. Bringing Lowe’s or Target or—insert the name of your least favorite retail chain here—to town would essentially transform Petaluma into, well, Rohnert Park, with all due respect, or, God forbid, Santa Rosa.
(Ironically, Santa Rosa recently rejected a Lowe’s Home Improvement project that would have brought jobs and revenue to the city, primarily because of the impact it would have had on local, home-grown businesses, the traffic sprawl it would have caused on already-crowded Santa Rosa Avenue, and how little additional tax revenue it would have generated. From the Santa Rosa City Council’s perspective, Lowe’s would have created new jobs only by undercutting existing jobs—and ultimately siphoning profits out of the community. How sustainable is that?)
Back to Petaluma: Just as the locals were taking sides, the bubble burst on the economy. Suddenly, the issue of economic development didn’t seem so philosophical; it felt more like a matter of survival. Sales and property taxes shrunk, multi-million-dollar budget reserves vanished, and commercial vacancies sprung up in the heart of shopping, entertainment and retail districts. To its credit, the city made aggressive spending cuts—including layoffs and furloughs—but there have been few signs of recovery.
One of the main reasons the election came to a showdown over economic development is that there simply aren’t any other options left for the city. Budget cuts, embargoed expenditures, tax hikes: Petaluma has been there, done that. Recruiting new businesses to the former “Chicken Capital of the World” (or “World’s Egg Basket”)—businesses that will create more spending in the community and higher sales tax revenue—is perhaps the only choice left, regardless of your agenda or timeline.
The great schism
Against this backdrop, two passionate factions have emerged in Petaluma politics. On the one side, there are those who believe smart growth is the answer, that business development should be strictly regulated to protect the heritage of the community, and that throwing open the doors—particularly to big-box retailers—would harm the local economy in the long run.
“Fast-tracking needs to be earned—and I believe it can be—but it’s earned by what it will give to our city, not just because the squeaky wheel needs some grease,” says Teresa Barrett, the council liaison to the Planning Commission. “My idea of caution is to pay attention to what a project is bringing to my community. I will be cautious for a project that should be moved along faster just as I will to one that offers no extraordinary advantages.”
On the other hand, there are those like White and Heaton who want to remove the obstacles they say are deterring businesses from putting Petaluma on their radar screens. They contend Petaluma is “leaking” millions of dollars of sales tax revenues to nearby communities because of missed opportunities. They accused the then-current council majority—Mayor Pam Torliatt, Barrett, David Glass and Tiffany Renée—of creating unnecessary roadblocks and delays, leading to an environment in which the planning process is long, arduous and unpredictable.
The poster child for their argument is the Regency shopping center project, which helps explain why Petaluma has acquired a reputation as a city where planning and permitting is filled with uncertainty. The project, a massive venture that promises to create more than 700 jobs, dragged on for seven excruciating years before it was approved. The city is expected to receive $10.4 million in one-time impact fees; more than $1 million annually in general fund dollars that can be used for public safety, road repair and parks; and about $470,000 in redevelopment fees that can be bonded and used for other economic revitalization projects.
“Much of the earlier part of that delay was due to getting Petaluma’s new general plan finalized, and many of those factors were essentially beyond the council’s control,” says council member Mike Healy. “But Regency did finally conclude that it needed to sue the city to get its processing completed…and ultimately that worked.”
Regency, in turn, was sued by two neighborhood activists, who claimed the environmental impact report was inadequate. Ultimately, they settled the suit for $100,000 and several small modifications to the project (Regency also agreed to pay the city’s and the plaintiff’s attorneys fees).
Healy’s point that it wouldn’t be fair to blame the current council for the Regency fiasco is accurate, but the truth is that some of his colleagues on the council who say the delays occurred on someone else’s watch aren’t taking full ownership of the situation. Several of them were either in elected office or otherwise in a position to contribute to the delay.
“Over the past five to eight years, neither of us has been much involved in the politics of City Council elections,” White and Heaton wrote in their letter. “But recently, we have come to understand the devastating changes that have taken place within the city government, and it is difficult to stand on the side any longer.”
Smart growth, less filling
Some of the current council members argue they’re taking steps to address the budget crisis and bring more revenue to town. “We’ve approved many projects since the new council majority took over,” says David Glass, a council member who was elected mayor in the November election (a post he’s held before), namedropping the Silk Mill Hotel, North River Landing, Pinnacle Ridge subdivision and the Birches subdivision. Glass also counts the Regency project—which, he says, was “reviewed, improved and approved”—a success. “The developers in each case are on their own timetable mostly because of the financial uncertainty on a global basis,” he says.
Torliatt, whose mantra is “protecting our past, working for our future,” points out that the council had secured improvements at the East Washington interchange off of Highway 101 to be on track for construction next spring—a $21 million shot in the arm to Petaluma’s aging infrastructure. “In addition, I ensured we had the financing for the design of widening Highway 101 through Petaluma,” she says. “We also approved construction of the road extension of Auto Center Drive to ensure better access to our auto mall.” (Torliatt was defeated in her bid to join the Sonoma County Board of Supervisors.)
Several, in fact, point to the Regency center as a sign of their effective project management, claiming they’ve helped shorten the process for planning rather than extend it.
“The now-abandoned planning process lost sight of its mission as it indulged its inner designer,” Barrett says. “Today, developers encounter a professional planning department motivated to work with the project proponent. When projects go to a public hearing, they do so at one body, the Planning Commission, where they get a hearing from Petaluma citizens who’ve done the reading to make decisions based on the materials in the public record. That’s resulted in shorter meetings, in general, and a more efficient process, because everyone is on the same page.”
Bill White’s son, Matt, president and CEO of Basin Street, says one of the challenges is “trying to make people aware of what’s going on in Petaluma. People tend to leave town to go to their job or shop, which is unfortunate because they don’t pay attention to why they have to leave town to work and to shop. Nobody wants Petaluma to become the next Silicon Valley, but they do want a well-rounded community where they can live, work, shop and go to the park—to have all the facets of their life in one place.
“You can’t do that today in Petaluma. You have great restaurants, but if you want to buy a new stereo, a load of lumber or appliances for your kitchen, you have to get on the freeway and drive to Rohnert Park or Santa Rosa.”
“The Petaluma Plan”
The reality is, all of this sound and fury shouldn’t be that surprising, especially if you’ve been here a generation or two. The fact is that Petaluma pioneered time-controlled growth management. After Highway 101 opened in 1969, residential development permits tripled; as a result, the city enacted the “Petaluma Plan” in 1971, which limited the number of new housing permits to 500 annually for a five-year period beginning in 1972.
The plan—meant to ensure orderly growth, limit stresses to infrastructure and protect the city’s small-town character—attracted national attention in 1975 when the city was taken to court by the Construction Industry Association of Sonoma County. The 9th Circuit Court upheld the plan, a judgment backed by the Supreme Court. This ruling still forms the foundation for most growth management ordinances in California.
That made the City Council’s decision on April 13, 2009, to eliminate the planning department and lay off the entire planning staff—ostensibly a reaction to the economic downturn—even more politically suspect. Many felt the move was a convenient way to remove those who opposed them and install their own posse. The action led to a lawsuit, delayed a number of projects, and, right or wrong, further undermined the credibility of the council among developers queued up in the planning process.
Basin Street has several projects it expects to bring to the planning commission in 2011. And while Matt White hopes for the best, he’s not exuding optimism. “Most of the builders in the region have given up on Petaluma,” he says. “Why would they come in and buy a piece of property and try to develop it when they can choose from other communities that would be thrilled to have their project?”
There are opportunities for compromise, for new perspectives. The city has put together a new strategic economic development plan with the input of consultants, community leaders and local citizens. The report, which took more than a year to create, was scheduled to be reviewed by the City Council before the November elections and put into place by January 2011. When insiders got a sneak peek at the report during a community meeting in September, most of the comments were favorable.
Despite all the bad blood, recriminations, lost opportunities and fractured vision, Petaluma might be opening its doors—even if just a bit—at the right time.
History Repeating
At a raucous council meeting that lasted into the night, Brown presented a new timeline for the project. A draft environmental impact report (EIR) could be available by October 18, he said, commencing a 45-day public review period, meaning it could land in the council’s lap by December 6. But a final EIR probably wouldn’t be seen until February—well past the November 12 deadline. Could the delay have anything to do with the election?
Brown, City Attorney Eric Danly, Mayor Pam Torliatt and others shrugged off that implication, claiming the deadline wasn’t “hard and fast.” Danly, later joined by Torliatt, said one possible response to Merlone-Geier’s “saber rattling” (their words, not ours) would be to consider the project before November 12 and simply reject it, forcing the developer to start with a new application—an astonishing suggestion considering the time and resources that have already been devoted to the proposal.
Whether you favor the project or not—346,000 square feet of retail, office, health club and restaurant space on a 36.5-acre site at Rainier Avenue and North McDowell Boulevard, projected to create 500 jobs and $1 million per year in sales and property taxes—the machinations at City Hall have only reinforced what people like Bill White and Doyle Heaton have been saying: The city’s prevailing reputation for being difficult to do business with is almost brazenly self-imposed.
Torliatt and her council supporters—Glass, Renee and Barrett—blamed Merlone-Geier for having a poor relationship with the city, describing it as “adversarial.” Other council members—Harris, Healy and Rabbitt—however, have asked for more transparency in the process—and to their credit, most council members agreed. Healy, an attorney, said in a recent Press Democrat interview, “In my view, it’s not OK to not comply with the one-year statute. I think we should make that more of a priority going forward…. And I think we have to have more proactive management policies in place.”
Spin it as you will, what we have here is a failure to communicate: Between the developer and the city, between the individual council members and, finally, between the council itself and its constituents.
“Every month this is delayed, there are tax dollars lost that cannot be captured again,” says Mike Harris, a respected two-term incumbent endorsed in the White-Heaton letter (and re-elected in November alongside Teresa Barrett and White-Heaton-endorsed Chris Albertson). “Most municipalities would be falling over themselves for opportunities like this.”
Mirror, Mirror to the North
The parallels are uncanny: A city experiencing deep and devastating budget cuts; a sharply divided city council apparently unable to compromise; a populace frustrated with the incivility; and, most important, an election that centered on economic development.
“This is a philosophical fight over the direction of a community,” said local political analyst Brian Sobel in an October article in the Press Democrat. “I think it mirrors what’s going on in a number of other races.”
In 2008, Gary Wysocky and Marsha vas Dupre joined Susan Gorin and Veronica Jacobi to form a 4:3 majority that was often at odds with John Sawyer, Jane Bender and Ernesto Olivares, all of whom were largely pro-development. Gorin and Jacobi were up for re-election, and Bender is retiring, leaving a third seat open as well. Both sides lined up endorsements and flooded the airwaves with advertising. (Election update: The available council seats went to Gorin and pro-business candidates Jake Ours and Scott Bartley.)
As in Petaluma, the existing council had been accused of being out of touch with the harsh realities of the current economy (it turned away a Lowe’s Home Improvement project that would have generated jobs and revenue) and discouraging new businesses from coming to town.
And as in Petaluma, a powerful pro-business group has been one of the leading critics of the “slow-growth” council majority. In Santa Rosa, it’s the North Coast Builders Exchange, whose 1,400 members are loud proponents that a “new majority” is needed in City Hall. “We will be more active in this election than our organization has ever been before,” the Press Democrat quoted Keith Woods, the group’s chief executive officer.
