Double Agent Plays Strong Role in Driving Process Away From Alternative Locations
By a 3-2 vote, the Davis City Council approved a motion that would authorize the city staff to develop a conditional use permit that would allow for the construction and move of Davis Diamond Gymnastics to a location on the Davis Auto-Center.
The eventual vote itself reflected a unique split where the three councilmembers who faced re-election voted to support the conditional use permit rather than risk the anger of a large audience of children and their parents. And while there was the general motive of saving the facility and keeping it in Davis, information perhaps was manipulated by one agent – who was both an agent for Davis Diamonds as well as for the parcel involved.
Councilmember Stephen Souza made the original motion to direct staff to come back with conditions and findings for a Conditional Use Permit. That motion was seconded by Councilmember Dan Wolk.
As Mr. Souza correctly pointed out, the city council could not make the final decision on Tuesday night, but instead had to authorize the city to come back with conditions and findings. That leaves open some room for maneuvering.
Councilmember Wolk, with two small children of his own, has consistently prioritized programs that affect children. “With a daughter who does gymnastics and a wife who did it for many years, I have to say that gymnastics is of particular importance to me.”
Councilmember Wolk said that while he understood the importance of auto sales for the city’s revenue, at the same time, he noted that this spot and adjacent parcels had been vacant for a number of years.
“I think Davis Diamonds’ partnership with the MarkeTech Group presents a really good opportunity for Davis Diamonds and for MarkeTech to build what I think is a really good opportunity” to build an innovation hub, he said and added, “I think they’re really authentic when they talk about how they tried to find alternative sites; even staff said it was very difficult to find sites that they could potentially utilize and they’ve obviously found this.”
Councilmember Stephen Souza told city staff, “Staff, you’ve done a wonderful job. You’ve done exactly what you’re supposed to be doing – you provided us with the necessary information for us to debate and figure out what is in the best interest of the community as a whole.”
“You looked at the land uses and you followed exactly the pattern in the guidance that you’ve given us,” he continued, “You’re doing your jobs appropriately and I thank you for that. I just disagree.”
Mr. Souza would go on to argue that the model laid forward in an auto-mall model is not the model of the future and that Davis needs to diversify its revenue portfolio.
Mayor Pro Tem Rochelle Swanson said that, while she is a huge supporter of Davis Diamonds and what they bring to this community, however, she cannot support a conditional use permit “sight unseen.” She argued that we need to know what we are getting into and we do not approve projects that did not hit design review.
She noted how tight the city budget is by pointing out the need for a public-private partnership to save the community pool. “What I don’t want to see,” she said, “is out of hand let go of what is not ghost revenue.” She noted that staff has been talking to some prospective auto dealerships and that there is an offer on the table.
She believed that there was a win-win solution, but that the conditional use permit did not get us there.
“This is about long term fiscal stability and if we have an option to get to a win-win and preserve and increase revenue,” she said, “I want staff to talk about potential partnership with Davis Diamonds.”
“I want to see time for that to be discussed rather than just taking a gamble on this particular situation,” she said. “We can’t plan by exceptions.”
As a substitute motion, Mayor Pro Tem Swanson put forward a motion to direct the staff to work with the applicant to see if there was a way forward. The key question was whether the applicant was willing or whether they simply wanted the city to go forward.
Christian Renaudin, owner of the MarkeTech Group told the council, “We have tried many times and we have even been billed for staff time during these meetings…Â So what kind of partnership is it when we sit down at the table to try to find a solution and we’ve been very eager for months to do that… but we receive a bill for the staff time.”
Mayor Joe Krovoza very pointedly asked Mr. Renaudin if he understood that the rules of the appeal are that the applicant pays for the staff time.
As the night went on it became more and more clear, that Mr. Santana, who represented not only Davis Diamonds but also the owner of the parcel, was in fact playing both sides of this issue and accruing great personal advantage from doing so.
The bottom line for Mr. Santana was that they were not willing to go back and discuss more with the city staff. They wanted an up or down vote on the appeal this evening.
Mayor Krovoza put the question to the Davis Diamond folks, who felt that they were being taken advantage of in their current situation, and that the owner of the DISC was not willing to drop his price and is essentially willing to sit on a vacant building rather than lower the asking price.
“I feel that you are putting us in a difficult position,” one of the owners of Davis Diamonds said, “We feel that we have gone out of our way to be open…. I think you need to give us a chance, the partners together and talk about it. This was kind of just thrown in our face. We need to take some time to talk to our broker, our partners before we come up with that answer.”
They feel that DISC is not a possible option for them as an alternative site.
They did suggest they could take five minutes and try to get together on something.
After their caucus, they indicated the willingness to work with the city. “We’re definitely very interested in pursuing that and we’ll do it diligently,” one of the owners said. “On the other issue as to whether we are willing to delay the conditional use permit, we respectfully decline.”
City Attorney Harriet Steiner, however, indicated that the council could with three votes continue the item to a date certain and it would not need the consent of the applicants.
Councilmember Sue Greenwald told the public that she was awake all night worrying about this, and called it “one of the difficult decisions I’ve had to deal with.”
“My whole twelve years on the council, my goals have always been to put the community first, put the neighborhoods first, the citizens needs first, above fiscally-driven planning,” she said.
“One of the problems that we face as a city is that really nothing brings us any net revenue except auto malls, auto dealerships, and hotels,” she continued. “We’re in terrible financial shape.”
She said she hates this kind of planning and “yet the legislature has given us no other choice.” She added, “We don’t get any revenue for zoning for businesses that create new jobs. None. They probably cost more in service than they bring in.”
Mayor Krovoza was pointed, “It actually bothers me that the choice here is between sending a great institution like Davis Diamonds out into the auto mall areas in a dilapidated building because it’s cheap, and putting [it] on the edge of town.”
“I’m bothered that we’re going through this choice where we’re choosing Davis Diamonds or auto malls,” he continued. “Because I think that’s a false choice.”
He argued that so long as this deal is before Davis Diamonds, that blocks us from getting to a better solution for the community, which is a more central facility.
The mayor then made a crucial fundamental point, which is that the zoning of this land is actually what makes it affordable.
“There is a real fairness issue here, and that is that the reason that this land is affordable is because it’s zoned the way it’s zoned,” he said. “If we took this zoning off of this land, there would be many other people that would love to put a commercial office space down there because now cheap land would be available.”
So, he argues this deal is therefore fundamentally unfair.
He said, “I can’t listen to the people who are directly involved in this deal advise us that there’s no future for auto sales in Davis. And if we don’t generate revenue off auto sales, everyone in this room has to ask themselves what we’re going to generate revenue for this community from.”
He argued that another option might be big box and he suggested that this is one of the tough decisions that this council had made over the years.
It is city-based recreation that is what falls off our budget when revenue drops. “We didn’t have $100,000 and the community pool is now closed,” the mayor pointed out. “We have 1700 swimmers in this community that have one less pool because we didn’t have $100,000. If we make this recreational choice, there may be another recreational choice that falls off the budget. That’s part of the decisions that this council is having to make.”
However, the substitute motion would fail, with only the mayor and mayor pro tem supporting it.
Councilmember Greenwald went against her fiscally conservative tendencies on this issue and stated, “I hope I’m not making a huge mistake for the city at large. I’m going to vote for it because it’s such a popular and important institution, as a one-time exception and hope that the auto mall can thrive.”
“I hope people understand we need your support on supplementary taxes. We don’t have the revenue to run this city,” she said.
While I initially supported the concept of keeping Davis Diamonds in town, after watching both how the vote went down, and how Davis Diamonds was really put into a no-win situation by huge monied interests in the community, the deal looked worse and worse.
The worst part of this deal is that Xavier Santana, who played both sides of this deal, really drove a lot of this process and he stood to make a financial windfall off this. Some sources estimate he may make as much as a quarter million off this deal alone.
If the city is trying to engage Davis Diamonds about looking into multiple options around town – which they did at this council meeting as well as before – and the person who is representing them in real estate (Mr. Santana) is also representing the seller in this case, Gene Simon, then Mr. Santana has a conflict of interest in this process.
He does not have the incentive to look at other options.
Now the Diamond people claim that the owner of DISC was completely unreasonable and maybe that is true. Maybe DISC is not the option for Davis Diamonds. But I at least have to wonder how much of that process is being driven by the interests of their own broker, and whether or not they are even getting an honest read on the situation.
Frankly, I am not sure how this arrangement is even legal where Mr. Santana represents both Davis Diamonds and Mr. Simon.
I fully support Davis Diamonds. In fact, I initially agreed with the conditional use permit. However, as I watched the night unfold, I think Mayor Krovoza and Mayor Pro Tem Rochelle Swanson were correct that this is not how the planning process should be unfolding in a community that attempts to plan well.
It was very telling on Tuesday night that the first people to speak at the meeting in public comment were those with the financial interests, and then the young people spoke next giving them cover – and cover for Mr. Santana who was an agent representing both sides of the deal.
Playing a huge role in this is the fact that Davis Diamonds is so popular in the community, it is obviously an election year, and I think some of the councilmembers who normally would be giving the city’s finances much stronger consideration tilted toward other considerations.
But I want to emphasize this point again – the real problem that went down here is that we really do not know to what extent Mr. Santana poisoned any alternative location discussions due to his own financial interests. Here is a clear-cut case where problems with the process undercut my confidence in a decision where I agreed with the ultimate outcome.
—David M. Greenwald reporting
“She noted that staff has been talking to some prospective auto dealerships and that there is an offer on the table.”
Has it gone too far to reverse the decision?
“Has it gone too far to reverse the decision?”
No. There are a few options. First, they only directed staff to draft the C.U.P., which means they have not approved it yet. And second, they can always vote to re-consider.
I once sold a house where I found out my real estate agent was also representing the buyer on both sides (buying my home and selling their home). So she comes over to present their bid and as I’m reviewing it I asked her at what point in time was she going to divulge that she was also representing them. She looked shocked that I knew this and just replied “Oh, I was going to tell you”.
[quote]If the city is trying to engage Davis Diamonds about looking into multiple options around town – which they did in at this council meeting as well as before and after – and the person who is representing them in real estate (Mr. Santana) is also representing the seller in this case, Gene Simon, then Mr. Santana has a conflict of interest in this process. He does not have the incentive to look at other options.[/quote]
This is the problem in a nutshell. I am surprised City Council members did not seem particularly bothered by this issue. I was floored when I heard this. The three City Council members that voted for this made a huge mistake and need to rectify it; and City Staff and the Planning Commission got this one exactly right. I suspect the situation can be corrected; Davis Diamonds can work with City Staff and find a much better solution; and this questionable broker will not gain from a clear conflict of interest.
[quote]Here is a clear cut case where problems with the process undercut my confidence in a decision where I agreed with the ultimate outcome.[/quote]
What problems with process are you referring to? From where I sit, the city staff did all the right things; appropriate city commissions weighed in as required; and the matter went before the City Council in the appropriate way. I’m not seeing where “process” was the problem. The problem was three City Council members up for reelection pandered to a large crowd of parents with children, and didn’t fully think through the issue. However, there is an opportunity for these three, through the proper exercise of proper process, to undo their mistake.
IMO, Mayor Krovoza and Council member Swanson had this exactly right. The current decision sets a terrible precedent and does no service to Davis Diamonds, that appears to have been manipulated by a broker who had a clear conflict of interest. Why not step back and at least explore the possibility of a better solution for Davis Diamonds, if the city (at the behest of the City Council) is willing to do all it can to facilitate such an endeavor?
I don’t have any problem with the city here, however, the basic problem is that the council majority on this issue made their decision based on what was going on in the room rather than what was going on outside of the room. That is a problem. The fact that is legal for the broker to be an agent for the buyer and seller and probably to act as a gatekeeper to other potential buyers is a huge problem. That’s what I mean when I say process issues.
How did you get that $250,000 estimate?
Why is it Davis Diamonds problem that the so called good planning of Davis has made the city dependent on car sales taxes? That Davis has, over the years, failed to diversify its funding stream can’t be called good planning. Another unintended consequence of the opposition to growth. How much revenue was lost to Woodland when Ross was opposed? Just one example
[quote]I don’t have any problem with the city here, however, the basic problem is that the council majority on this issue made their decision based on what was going on in the room rather than what was going on outside of the room. That is a problem. The fact that is legal for the broker to be an agent for the buyer and seller and probably to act as a gatekeeper to other potential buyers is a huge problem. That’s what I mean when I say process issues.[/quote]
Thanks for the clarification, and I totally agree with you. Nice article, by the way!
“She noted that staff has been talking to some prospective auto dealerships and that there is an offer on the table.”
If this is indeed true, the Council should hit reverse and pursue the agreement with the auto dealership. We need the revenue. There are alternatives for the Davis Diamonds. They just don’t want to pay for these alternatives and want a city “subsidy” to get a cheaper location. It is cheaper, because of how it is zoned. (The “subsidy” is the potential loss in revenue to allow the conditional use.)
This isn’t the first time a youth oriented business has lobbied for special treatment. The Davis Musical Theater group still owes the City money (and tried to default on the loan) after the City determined that it was losing money (and essentially subsidizing the group) through its lease of the Varsity Theater. Not only did that group get a Conditional Use permit for its new location, but the City had to loan the group a substantial amount. The scenario was the same – little cute kids and their parents at the Council meetings and Council members not wanting to look like ogres.
Mr. Toad: named sources
To answer your question: It’s not Davis Diamonds problem, they are innocent (largely) victims in this along with the kids.
Davis Musical Theatre is a sad story because in addition their failure to being willing to share the Varsity with The Palms drove the Palm out of town. Losing the Palms was a huge cultural loss for Davis. Also densification made the Palms old site more valuable as housing. Another loss before the alter of no growth.
But is it that they are too cheap or is it that their business model isn’t viable with higher rent?
[quote]”Some sources estimate he may make as much as a quarter million off this deal alone.” [/quote] Sez who? If you manufactured this figure, you should take responsibility and describe whether it’s just the standard Realtor’s fee. If others made it up, you should tell who they are and whether they have any bases for their “[s]estimates[/s]” guesses.[quote]”…the real problem that went down here is that we really do not know to what extend Mr. Santana poisoned any alternative location discussions due to his own financial interests.”[/quote]So, you know whether he did it or, if he did, for what reasons? Odd that this story–and the language used–is based on this contention being true even though you “really do not know” whether it is. Is it possible your language is overblown and your conclusion premature? [quote]”…it became clear that the children and families that utilize the Davis Diamond Gymnastics facility were being used in order to line the pockets of several key monied interests.”[/quote]Other than the seller (the building owner whose property has kept below “market value” by a city’s unrelenting effort to suck in auto sales tax) and the Realtor, what “pockets” are being lined? Why are these other unnamed people labeled “several key monied interests”? This is nothing but a business transaction that benefits the parties involved, primarily Davis Diamonds, as well as our community.
JustSaying:
I’ve reported what I can report right now, when I know more, you will see it in a follow up piece.
“This is nothing but a business transaction that benefits the parties involved, primarily Davis Diamonds, as well as our community.”
You are sorely mistaken if you believe that.
Mr. Toad: Tell us about the lost revenue to the city. What other than Ross?
[quote]That Davis has, over the years, failed to diversify its funding stream can’t be called good planning. Another unintended consequence of the opposition to growth. How much revenue was lost to Woodland when Ross was opposed? Just one example–[b]Toad[/b][/quote]Ross had nothing to do with growth. Ross was an issue a group of neighbors organizing to preserve their neighborhood grocery store, and they succeeded. Most cities that have grown a lot are in far worse financial shape then we are.
[quote]Davis Musical Theatre is a sad story because in addition their failure to being willing to share the Varsity with The Palms drove the Palm out of town.–Toad[/quote]This is completely false. Council tried to get the Palms into the Varsity long before we the current use was proposed. It is a long story, but the Palms preferred the physical layout of the site in Winters.
DMG [i]”I’ve reported what I can report right now, when I know more, you will see it in a follow up piece.”[/i]
Rumor and innuendo may be fun, but unless you have facts to back up your claims, you are just being dishonest.
The rents really are too high on our non-retail commercial sites because we have a shortage and a monopoly situation. hat is precisely why I took the lead to zone the Hunt-Wesson in a manner that would increase the number of lots available for neighborhood-compatible high tech industry and for non-profits such as this.
In terms of Davis musical theater, the city had been subsidizing them heavily at the Varsity and I think the city should continue to give them a bit of support now as well as part of our arts funding, because they are also a gem.
The city gets very good bang for the buck by giving a small amount of support to some key non profits. We get all of the benefits of the programs with a tiny contribution. We can often get better value to the community by leveraging our arts and recreation funds to help select private and non-profit efforts.
I don’t understand why the issue of the real estate broker is relevant, unless there were other sites available and he misinformed the owners of Davis Diamonds concerning the availability and cost of the other sites. I talked with the owners of Davis Diamonds about alternative sites, and they believe that they have explored them and that are none that are viable.
Staff is still working with them to see if other sites can be negotiated. Staff can double check the willingness of other owners to make this work.
Sue Greenwald “The rents really are too high on our non-retail commercial sites because we have a shortage and a monopoly situation.
The same is true for our retail commercial sites as well, especially downtown.
[i]”The city gets very good bang for the buck by giving a small amount of support to some key non profits. We get all of the benefits of the programs with a tiny contribution. We can often get better value to the community by leveraging our arts and recreation funds to help select private and non-profit efforts.”[/i]
Excellent point.
“I don’t understand why the issue of the real estate broker is relevant, unless there were other sites available and he misinformed the owners of Davis Diamonds concerning the availability and cost of the other sites.”
The Broker is only relevant if there is proof of malfeasance on his part.
[quote]The rents really are too high on our non-retail commercial sites because we have a shortage and a monopoly situation. hat is precisely why I took the lead to zone the Hunt-Wesson in a manner that would increase the number of lots available for neighborhood-compatible high tech industry and for non-profits such as this.
[/quote]
Perhaps it is worth looking into zoning solely for non-profit outfits in future developments. I agree many of these non-profits benefit the communioty. Also having some concentration of non-profits in one place makes a great deal of sense. (I am assuming here that Davis Diamonds is set up as a non-profit though some of these businesses are for-profit.)
My guess is that 3-4 years from now, when the economy is strong and auto sales are strong, a fair analysis will show that putting a gymnastics group in one of the only auto dealership sites ends up costing the City a lot of money.
I think David’s perception — that the vote in favor was entirely those running for office this year and those against was entirely those not running for office this year — was spot on. In other words, this deal is short-term thinking. It will hurt the coffers of the City of Davis in the long term.
To those who point out that Davis is overly dependent on auto sales for its sales tax revenues, I agree, you are right. But it does not make us better off to lose any of the auto sales sites, especially any of those on Chiles Rd.
All cities–well, check that, most cities–in California love to have auto dealers, because they impose very low costs on the city at large and they generate good tax revenues. Davis has a small number of sites for auto sales; and a small range of brands available for sale. Ideally, over the next 10 years, Davis dealers would be adding brands that we don’t have. They can’t do that when the economy is sour. But our City would be much better off over time if we had some new or expensive marks, like Tesla or BMW or Mercedes, available here. But that cannot happen if a gymnastics club is sited in one of the few places we have open for car sales.
[quote]”This is nothing but a business transaction that benefits the parties involved, primarily Davis Diamonds, as well as our community.”
“You are sorely mistaken if you believe that.”[/quote]Perhaps, but nothing you’ve reported here suggests that I am–well, other than the name-calling in which you’ve engaged. If you missed the fact that the Diamonds (and our kids) were principle beneficiaries of the permit request, I guess I can’t say anything to convince you. I saw the same council meeting you did.
There are interesting take-aways from last nigh other than what you’ve observed–the avarice of “several key monied interests,” the misguided ignorance of “the children and families that utilize the Davis Diamond Gymnastics facility (who are) being used and the cowardice of “the three councilmembers who faced re-election voted to support the conditional use permit rather than risk the anger of a large audience of children and their parents.”
For example, it certainly seemed to me that the council members were ill-served by the staff members. It was apparent that councilors struggled for lack of staff preparation as the topic dragged on for hours and breaks were required to interview and negotiate with the parties, things that should have been accomplished well [u]before[/u] the council had to face the decision.
It appeared that the staff had concluded that the council wasn’t about to overrule the planning commission and the staff and, therefore, failed to provide the analyses, options and impacts councilors wanted and needed to decide the issue. This certainly isn’t the first time the council has been placed in this setting.
To demonize Xavier Santana in order to say the council was manipulated is wrong. Instead, this obviously was a difficult decision, one that doesn’t have a “right” answer and a “wrong” answer.
I particularly was moved by Sue’s agony, surprised and pleased by her decision and am sure you don’t have her support in you suggestion that she finally was motivated by re-election desires and fear of the audience. Where you saw chicken hearts, I saw profiles in courage.
I support the decision regardless of whether a “better” solution is developed in the coming weeks. It acknowledges that government financing is facing changes, that the automobile sales tax model probably isn’t sustainable as the auto buying process changes and that there are lifestyle considerations that our leaders find are at least as important as chasing sales taxes.
Furthermore, the decision has minimal impact on the overall auto mall strategy. Still, granting a conditional use permit could have been a difficult decision with any participants. I’m surprised we had to find a villain here and supply no evidence to support the charge.
[quote]”But our City would be much better off over time if we had some new or expensive marks, like Tesla or BMW or Mercedes, available here. But that cannot happen if a gymnastics club is sited in one of the few places we have open for car sales.”[/quote]How much space does the new BMW dealer need? How much space (that’s been vacant for how long?) is being taken over by Davis Diamonds? How much space still is left in the auto row acreage?
Maybe we should have targeted some of the RDA blight money to build a nice athletic center, youth center, etc., instead of parking lots. Is it too late?
If you agree, Rich, that we’ve become overly dependent on auto sales taxes* to fund our city government, why would you be spending the next 3-4 or 10 years agonizing about no longer having one (still vacant?) building that a Mercedes dealer could have awaiting its eventual arrival?
What other types of development have you found cities “love” for their low-cost, high return characteristics? Would it be promising to spend time chasing them?
____________________
*Were you surprised that a city council member up for re-election would announce that he bypassed the Davis Auto Row to buy his new car on-line from Japan? I say this is evidence that you and David are way too cynical (not spot on) in seeing re-election self-interest in these decisions.
[quote]”I don’t have any problem with the city here, however, the basic problem is that the council majority on this issue made their decision based on what was going on in the room rather than what was going on outside of the room. That is a problem.”[/quote]What is your basis for claiming this? What does it mean anyway? That they listened to public comment and it affected their decisions?
What was “going on outside the room” and why should it have had any more impact on their decisions than it did have?
[quote]”The city gets very good bang for the buck by giving a small amount of support to some key non profits. We get all of the benefits of the programs with a tiny contribution. We can often get better value to the community by leveraging our arts and recreation funds to help select private and non-profit efforts.” [/quote]The city could be more supportive by providing space in parks and working with the school district on joint programs with non-profit and for profit recreation endeavors. We have several examples of this kind of successful partnership. (But, now we’ve proposed to sell of the baseball park to housing developers.)
JustSaying: Bear with me, everything is going to come out. Everything I printed today is accurate, but it is not the full story.
In my opinion, the tide might have turned if Harriet had not possibly erred in her opinion that the applicants had to agree to issue a continuence. After the break to allow the parties to discuss whether they would allow a continuence, Joe had Harriet state what apparently they had discussed during the break, that the parties did not have to agree to continue the issue to date certain.
Any comments on that?