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August 17, 2014

DHS City Council - August 7, 2014

Grid Alternatives Solarthon

The City Council approved contributing $5,500 to the Solarthon by a vote of 4-1, Councilmember Matas voting no. Mr. Matas suggested that rather than using city funds each Council member should raise $1,000 in donations.

The Solarthon will be early in 2015. $5,500 is roughly the cost of the solar panels for one home. A couple of DHS residents who have benefited from solar installations by Grid Alternatives already got up to comment. The first one bragged of electric bills that are nothing but taxes (less than $2/month). The second one showed her Edison bill which displayed negative power use for the months since her solar installation. She said Edison sent her a refund check for $31.

Grid Alternatives is using a grant from California Public Utilities Commission ($4.8 million, statewide, 4 years, expires in 2016) to pay for these installations statewide. The CPUC has already committed to a grant of $218 million after 2016. There are 89 Grid Alternatives installations in DHS already.

The item was already budgeted, so it will not be coming out of this week's General Fund reserve of $10,000.

ResCare Workforce Services Lease

ResCare Workforce will lease a portion of the Lozano Community Center in Tedesco Park for two years at $100/month. Approved 5-0. The program will begin in September with 20 to 25 young adults.

Tahiti Partners - Pierson Professional Plaza

The original conditions of approval for this project included a requirement to pay for undergrounding the power lines that run along the property. But by great good fortune, that area was selected to be undergrounded by Edison (the selection was made by the City Council) using ratepayer funds. The developer requested that the requirement for him to pay for it be waived. The City Council agreed to that earlier this, but imposed a requirement that he begin construction within 120 days. The 120 days ran out on July 18 and construction had not begun. Tahiti Partners came back to the city to ask to be permanently forgiven that cost, which would be in the range of $300,000. He is also going to negotiate with Riverside County for an extension of their deadline. A Riverside County office building with more than a hundred employees will be the biggest building in the project at 38,000 s.f. The City Council agreed to the request from Tahiti Partners with a 5-0 vote.

Geoffrey Payne from Tahiti Partners said they have not yet been able to attract the interest of any retailers to occupy any of the commercial buildings (42,000 s.f.) that are also planned for the project, which is on a 10 acre site. But he is sure that when the county building is open there will be considerable interest by retailers. He estimates it will take 14 months to build the county building. He is requesting a November 2015 deadline from the county.

Mr. Payne said the project already is not pencilling out. All the required government fees have come to more than $22/s.f. He said a "typical project" is about $14/s.f. He sid he is working on a 10 acre site in Rancho Mirage where their total site costs are $1.1 million. But at the Pierson Plaza site (also 10 acres) the site costs are $3.4 million. He attributed that primarily to the need to build a lot of infrastructure. As an example, he said the project was putting in new waterlines up and down Cholla, even though they won't serve his project. That's over $300,000.

The staff recommendation to allow Tahiti Partners not to pay for undergrounding and to waive the deadline for start of construction was approved 5-0.

Pun Group For Auditing Services

This is a month to month deal at no more than $75,600/month. The proposal from staff is to make this a 3-year contract. They have completed the audit of fiscal year 2013-14. Approved 5-0.

Hill International For Engineering Services

In June 2013 the Council approved a one-year agreement with Hill International for $214,800. This proposal is to extend the agreement to June 2016. Mayor Pro Tem Betts said he thought it should go out for bid. City Manager Magaña said that the current contract will run out of money in a month or month and a half. He explained that the full RFP process from City Council authorization through a 90-day waiting period and a roughly 6 week evaluation process is 5 months long before the new contract can be presented to the City Council for a vote. When that happens the city will have no engineering services. Councilmember Pye said that Hill International has institutional knowledge of the city. Councilmember Matas said the Council knows that staff is overworked and doesn't have time for annual RFPs. Mr. Magaña said the reduction of code enforcement services from a staff of four to a staff of six released some money that can go to pay for this engineering contract.

Approved 3-2 with Mr. McKee and Mr. Betts voting against.

Go Live

This is a contract with Go Live Technology for programming, report development and report writing. It would extend the contract for one year for $37,440. This contract was subject to an RFP in April 2013. Council approved the current contract in June 2013. Mr. Betts moved to deny the proposal, but that died for lack of a second. Mr. McKee moved to cut the amount to $15,000 and this was approved 5-0.

Landscape, Drainage, and Community Facilities District Maintenance Contract

The previous 3-year contract with United GLI, having reach the end of its life, the city put this out to bid. The lowest bid came from Conserve Landcare Inc. at $15,930/month which is 8% less than we paid United GLI. The money for this comes out of designated funds, all of which have enough money to cover this for this fiscal year. Mr. Betts recused himself from this item. Approved 4-0.

Knorr Systems For Furbee Pool Maintenance

Knorr Systems has had the contract for pool maintenance at the Furbee Aquatic Center since November 2012. The city put this out for bid in June 2014. The deadline for bids was August 6, just two days before the day when this item was originally scheduled. This item is to extend the contract with Knorr Systems through October 31, 2014, at no additional cost. Approved 5-0.

Traffic Signals & Lighting at I-10 and Indian

Before DHS annexed the northeast corner of I-10 and Indian, there was a deal between Caltrans and Riverside County whereby the county would pay two-thirds of the expense of maintenance of signals and lights for that quarter of the interchange, and Caltrans would pay the other third. This item is to transfer the county's responsibility to the city. The expense is estimated at $1,250/month. Approved 5-0.

Fixing The Paint Job On An NRP House

Readers may recall the event held at 66146 6th Street in March 2010. It was the first completed Neighborhood Renewal Program house. Turns out one of the subcontractors did a bad job on the exterior paint and it's already peeling. This item is to approve the expenditure of $6,550 from RDA funds to fix the paint job. This has already been approved by the California Department of Finance. All the covenants and other paperwork will have to be updated to reflect this additional amount. Approved 5-0. The city performs annual inspections of the NRP houses.

Green, de Bortnowsky, LLP

This is to revise the agreement with the city's former law firm (formerly called Green, de Bortnowsky & Quintanilla, LLP) so that it can continue to work on and wrap up matters that they started before Mr. Quintanilla left their firm and formed his own firm. The firm is handling two cases of litigation. Mr. Betts said that he recuses himself from discussions of those two cases, so he asked if he also had to recuse himself from voting on this matter. Mr. Quintanilla said he did not. This item was approved 5-0.

Mexican Independence Day

This item was to approve a Mexican Independence Day celebration on either September 13 or 20 as a city-sponsored event. The event will be used as a fundraiser to pay for the Holiday Parade in December. As a city-sponsored event, the $1,500 permit fee would be waived. Otherwise, this event will cost the city nothing.

Adrienne came up to speak. She said that on July 4 people shoot guns into the air. She expects that to happen again on Mexican Independence Day. "You know the culture; they love to shoot up." She went on to say "It's wonderful. Cops are going to have their hands full on that day too." Bullets hit her house on July 4.

Mr. Matas wondered how many more events would enjoy a waiver of permit fees. Our permit fees are high, but they are supposed to cover the cost of what the city provides (Police, Fire, etc.) He is also concerned with city liability. He said he would be happy to help fundraise, if that's needed. Mayor Sanchez asked Mr. Magaña if the only two city events were July 4 and the Holiday parade. Mr. Magaña reminded him of Veterans and Memorial Day. There is also the tree lighting ceremony in December. Ms. Pye was concerned that this was an event for one ethnic group, while the city has many. What if someone asked to do something for Juneteenth, she asked. Mayor Sanchez said "Say yes, it's a community." Ms. Pye said she would prefer a diversity festival that covers everyone. [IMO, you get a lot more celebrations if you do something for every group - if, for example, we never have a Greek-American day, then we are never going to have a baclava festival, and every city needs one of those]. Ms. Pye explained, "I have always lived in Desert Hot Springs living Martin Luther King's dream. And I think we ought to act like that." Mr. McKee said we have the highest event fee in the valley. He said it was $1,600. The fee for non-profits is $25. Mr. Magaña said that even so, there have been several events paying that $1,600 fee over the last few years. [But no one can seem to recall anything except the Coachella Fest event at the Dillon Roadhouse a couple years ago.] The most expensive city in the valley after Desert Hot Springs is Rancho Mirage with a fee of $450. Indio and Coachella charge nothing for the permit. Mr. Betts said the Mexican Independence Day event will really cost the city nothing because the Police will be on duty anyway. He said he would be happy to join Ms. Pye in putting together an event for Martin Luther King Day. [Ms. Pye had not stated any interest in doing that.]

Dean Gray came to the podium and said he only pays attention to those members of the Council with whom he agrees and doesn't pay attention to the others. He listens to those who have an enthusiasm for making things happen and change this city for the better.

Michael Burke suggested that the Council agendize the matter of our event fees at some future meeting. He said someone at Carl's Jr. told him they enjoyed a 300% increase in their business on the day of the holiday parade. [And that's NOT counting the people who just used their restrooms.]

Mr. Matas said he did not say the fee should be kept high. He said Mr. Gray stands at the podium and makes up stories. "You're a disgrace to this city to begin with as a Planning Commissioner." Mayor Sanchez interrupted and said the members of the Council should be professional and courteous. Mr. Matas addressed Mr. Gray again saying "If you want to make a spectacle of yourself, please feel free to, the Mayor's not watching or stopping you, because he doesn't want to." There were several cries of "Inappropriate" from the audience. Mr. Matas said the expense of city staff time needs to be recovered with fees.

The request was approved 4-1 with Ms. Pye voting against.

Marijuana Tax Ballot Question Consolidation

The city will pay $10,000 [I don't if that's a precise fee, but it's the one everybody tosses around] for each item it puts on the ballot this November. By reducing the number of marijuana tax questions from four to two, the city saves $20,000. City Clerk Soriano was given credit for this brainstorm after Tuesday night's approval of the tax questions. This proposal is to have one ballot item for a tax on marijuana sales (10%) and another ballot item for a tax on marijuana cultivation ($25/s.f. up to 3,000 s.f. and $10/s.f. above 3,000 s.f.). Approved 5-0.

Before the vote Ted Mayerhofen came to the podium to say that marijuana is illegal. If it was legal you'd be able to go get it at a pharmacy or liquor store. "The Department of Agriculture is the one agency that this comes under. It's a commodity." [The Chicago Board of Trade has yet to take it on.] Mr. Mayerhofen said that some day the Department of Agriculture may come to the city to say that only the DOA can collect taxes on marijuana. Is it constitutional to tax a medication prescribed by a doctor, he asked. Where will the city be if the DOA takes our taxes? The City Council has gone into this too fast without enough thought.

Stephanie Bogie spoke next and asked if the wording of the tax proposals could be revised to say something like "up to 10%" so there is some flexibility. Mr. Quintanilla explained that is already in the proposals. The City Council can set a tax lower than what the voters approve, but not higher.

Mr. McKee said that in the last two months the City Council has been yelled at mostly for being too slow. He concluded that since they are being yelled at from both sides, they are probably just right.

Approved 5-0.

Mission Lakes Marketplace Request For Waiver Of DIF

For those who want to try to delve into the history of the Village at Mission Lakes there is this PDF available. It seems to have been put together in July 2008 by Assistant City Manager Steven Mendoza as a report to City Manager Rick Daniels on the state of the Village at Mission Lakes. Some history:

July 2005: City Manager Jerry Hanson retired. Incidentally, former Mayor Bias maintains this unusual web page which is a sort of index (although generally an index is indexed on something and these don't seem to be in chronological, alphabetical or subject order) of news articles about Jerry Hanson that he has saved as PDFs.

August 2005: page 85 is a Building Permit for a retaining wall dated 8/2/2005...two days after Jerry Hanson's employment officially terminated. On page 102 is the application for the Building Permit which is dated Aug 1, 2005.

September 2005: Ann Marie Gallant became City Manager and held that position until August 2007.

April 2006: Page 61 is a Building Permit dated 4/21/2006 for building #1 only that shows total fees due of $503,543.50. It lists DIF of $208,486.22 and TUMF of $248,982.70 along with some other smaller charges. At the bottom there is a handwritten note: "See notes other side re impact fees needed." I don't think a copy of the other side of the page is included in this PDF.

June 2006: page 110 is the report back to the developer on the first plan check, dated June 2, 2006.

September - November 2006: page 74 is a receipt for $4,370 payment for a grading permit. A developer can grade before paying DIF, right? I mean in a normal situation, not a crazy one. Pages 76-78 are slab inspection reports dated from 11-8-06 through 11-15-06. Normally, the DIF would have to be paid before something like pouring slabs was done, right or not?? Pages 83 and 84 are inspection reports on underground plumbing dated 10-2-06 and 9-18-06. Notice that on these reports the permit number is blank, "pending," or a question mark. So this was all proceeding without a building permit??

October 2006: page 117 is a Stop Work order dated 10/31/06. "Combustibles on site without fire suppression or release from Riverside County fire dept." Page 115 is the letter from Assistant Fire Marshal Dale Evanson effectively releasing the Stop Work order on Nov 2, 2006.

March 2007: page 6 is a memo from Steven Mendoza stating that the city had accepted a Letter Of Credit in lieu of DIF on one commercial building in the project that is 7,800 s.f. and has two patios. It does not say when the agreement was made, but it does say it is "an agreement with the City Manager." Following that memo is a copy of a Letter Of Credit that was issued in February 2007. The value of this Letter Of Credit was $51,026.17 for "Bldg No. 2" (which is the smaller building closer to the intersection). Following that is one with a value of $208,486.22 for "Bldg No. 1" which is the bigger building in which the gym is housed now. The sum of those two numbers is $259,512.39 - the full amount of DIF being discussed today.

Page 62 is a Job Card with a note handwritten at the bottom: "DO NOT FINAL until Impact Fees are paid - see Mike Williams 3/20/07 - if paid."

May 2007: on page 49 there is a site plan, but I don't think it shows lights. I was hoping to find a plan that either shows just two lights (as Dr. Shah said the original plans showed) or all eight lights that the city required.

August 2007: Ann Marie Gallant left the City Manager position.

September 2007: Rick Daniels became City Manager.

2008: Estate Financial, which had issued the Letters Of Credit, had declared bankruptcy. Mr. Mendoza had contacted Dan Patneaude (who was no longer with the city) in 2008 to try to find out why there were no bonds. Mr. Patneaude wrote:

The Village at Mission Lakes was originally part of a large parcel map for Ashford Communities. It was Tract 31540. When they separated the owners and sold that particular parcel, new agreements were not made. These agreements were never executed, except for the grading. Then they stopped building, period. At this point, I left the City and do not know what else occurred in late 2006. I know that the building department issued permits before water and sewer plans and other street plans were not even approved yet, so this may have been how these bonds got missed. -Dan Patneaude.

I would assume the "agreements" referred to by Mr. Patneaude are development agreements.

I had hoped I could somehow pin this on Jerry Hanson, but it looks like Ann Marie Gallant is where the buck stops, if you are wondering why Letters Of Credit were accepted in lieu of payment of DIF. I think this must have been one of the "bags of shit" that Rick Daniels referred to sometimes in his first year or so in office; as in, "I opened a file drawer and there was another bag of shit."

That's some history, now the meeting:

The Mission Lakes shopping center project failed due to more than the usual economic circumstances. Dr. Suresh Shah bought the remains of the partly developed site in 2010. In February 2011 Dr. Shah requested to be permitted to finish the shopping center while deferring payment of the DIF until one year after issuance of the Certificate Of Occupancy. Then he would pay it in three annual installments. The City Council denied that request 5-0. At that time the City Council was Yvonne Parks, Karl Baker, Russell Betts, Jan Pye and Scott Matas. Here is my report on that meeting in 2011 when Dr. Shah assured the Council he would complete the project in 120 days. Read it and you will see not much has changed.

What isn't explained is how he was permitted to finish the marketplace anyway. Maybe it was a handshake deal with former City Manager Daniels. In October 2013 Dr. Shah contacted city staff, saying that his 2011 request had been approved! Ha. Even in Desert Hot Springs our record keeping isn't bad enough to fool us that easily. However it transpired, here we are today with the shopping center finished, the DIF still unpaid and no Certificate Of Occupancy permit. Dr. Shah is planning an official opening on Monday, August 7.

In July 2014 Dr. Shah wrote to the city laying out his view of the history of the shopping center and requesting a waiver of the entire DIF - $259,512.39.

Please consider this letter as a request for the City Council to recognize the extraordinary expense our company incurred to bring this shopping center from mess to beauty and to give consideration to our request that we be credited for the extra ordinary effort and expense through the waving of remaining development impact fees. This consideration will allow our company to perform that last remaining task to create hundreds of jobs and bring much needed retail sales tax to the city that will over time amount to many hundreds of thousands of dollars.

City Manager Magaña said that when city staff analyzed the project at its current state, they found that the city had had Dr. Shah do some things above and beyond what was required. The value of those things is $17,852. Staff proposed to credit Dr. Shah the $17,852, bringing his outstanding DIF down to $241,660.39.

Larry Buchanan came up to speak. He said he was bothered that the City Council is constantly being asked by developers to give them a break. He understands that, but once DIF fees are established, giving someone a break becomes a slippery slope. He said that if DIF fees are waived, every other developer will request the same. He supported the staff recommendation.

Ted Mayerhofen spoke next. He said the developer of the residential development catty-corner from the shopping center should have put in traffic signals. He appreciated the fireworks show, but he doesn't appreciate it when a developer threatens to pull his project out and close it down because he has to pay the same fees that other developers pay. He said Dr. Shah had claimed the project would bring in $1 million annually in tax revenue. Mr. Mayerhofen calculated that meant the shopping center would have to be doing $5 million to $10 million in taxable sales annually. [My calculation is that $1 million is 1% of $100 million and the likelihood of $100 million in sales at that small shopping center is slim to none.] Mr. Mayerhofen said that with such an income [$10 million] he should be easily able to afford the DIF.

Michael Picardi said that he believed Dr. Shah would not bring new tax revenue to the city, but will only move it from Palm Drive to his shopping center. On Tuesday night Dr. Shah had said that his shopping center would allow those who live in that area to avoid having to drive all the way to Palm to do their shopping. Mr. Picardi said it was beyond him why Dr. Shah has not paid those fees in the last three years. Dr. Shah is supposed to be a big real estate developer, but the saying in real estate is "buyer beware."

Adrienne returned to the podium to say she met Dr. Shah the previous Tuesday night. The original developers were given a break. A lot of breaks are being given in this town. Dr. Shah told her that he had spent $294,302 outside of his project. She asked if anyone could enlighten her on how that could be possible.

Laurie Luzier spoke as a staff member of Dr. Shah's gym in Yucca Valley. She said the opening is important to all the employees.

Brian Bogle is the sales manager at the Yucca Valley gym. He said the quality of the gym is beyond any other gym. It will be landmark in DHS. He said it would be "a very big mistake" if the City Council did not approve Dr. Shah's request.

Kerry Lobayan [I'm just making up spellings] is the General Manager of the Yucca Valley gym. She will be working in the DHS gym. She cited a newspaper article about La Quinta inviting a shopping center developer to do a project there. La Quinta promised the developer half of the sales tax revenue from the shopping center for five years. She said one or two reasons that DHS is not developing like surrounding cities are "very bold and obvious." First, "the mindset of maybe one or two of the Councilmembers who seem more interested in taking this development down than building it up as it did its predecessor. Hasn't the City of Desert Hot Springs embarrassed itself enough in the last ten years? Is the mindset that has brought Desert Hot Springs from being a thriving and beautiful city it should be? Beggars should not be choosers. The city should be grateful for any developer who would invest money in this crime-infested and drug..." Here she was interrupted by a member of the audience who said she was insulting the people who lived here. Ms. Lobayan said she lives here too. She continued, "There is a lot of crime and there are a lot of drugs in this city. So anyone that is going to risk their money and their livelihood and open a business in this area should be thanked. What I'm asking is anyone to bring back and breathe life into this area. I've lived in this area for 15 years. It is beautiful and it needs something new and fresh and good. Give us a break here. Allow a good thing to happen in Desert Hot Springs. Let the center open. Let the lights shine. And be the heroes for once. And I just wanted to address the gentleman who was saying 'buyer beware.' Well, I know if you were asked to put $2,000 into sewers or something for your house that happened, that's common. But if you have already put in $350,000 of your own money that had to do with plumbing and Edison and sewers and reservoirs and things like that, that might be when you might pause. So, before you think, weigh all the options that are considerate or detailed in this case. This case is different than just asking toput $2,000 in sewer." She said that if Dr. Shah had the money, we wouldn't be having this conversation.

Corinne Rogers said she has worked for Dr. Shah for three years. There have been three years of delays. The owner has gone above and beyond.

The next speaker said he questioned why there were so many employees from Yucca Valley when Dr. Shah had said he would hire from Desert Hot Springs. He asked why, after being told No in 2011, Dr. Shah made contributions to some Council members and then came back to ask the same question. "Why didn't he pay those fees three years ago, and why didn't you enforce those fees?" Why was he not told to stop building? Fire and police equipment will be required and they are to be paid for with impact fees. Otherwise the taxpayers have to pay for it. Also, the vote on Tuesday night was to postpone this for one week, not two days. The City Council cannot vote on it tonight, he said.

Attorney Quintanilla explained that the Tuesday night meeting was adjourned until this night, Thursday. Therefore, this was merely a continuation of Tuesday's meeting and, theoretically, anything on Tuesday's agenda could have been brought up again this night.

Rebecca Rasmussen lives in DHS and works for Dr. Shah's gym. She said DHS seems to have no growth potential. The city is going no where. She's not sure that many residents love DHS. There are crime and drugs in the city.

The next commenter said the DIF should be waived because it would give the city funding. He will work at the gym in DHS and lives here.

Andrew Leo said he has lived in DHS almost all his life. He will work at the gym.

David Franklin lives in DHS and will work at the gym.

The next speaker has lived in DHS for 20 years and has had a job with Dr. Shah for two months. She has four kids.

Michael Burke said he thinks the number one thing people want is to have this shopping center open. Anything to bring jobs will help.

Dean Gray said he works for the people of this city. "If that's a disgraceful thing, I'm pleased to be a disgraceful Planning Commissioner." He said this not about jobs. It's about what happened with the DIF. He said that in Palm Springs developers are required to do offsite improvements first. "That's what Development Impact Fees pay for." He said this is all messed up and the City Council has to fix it. He said Dr. Shah had done offsite improvements "that are part of what those impact fees are supposed to pay for."

Al Schmidt, developer of the project before it went under, spoke next. He said it sounds like the only person who is confused is Dean Gray. He said if the fees are not waived, the employees of Dr. Shah will still have a job. He said Dr. Shah would not walk away from the project. "What we're talking about here is whose money do we use." Dr. Shah is a developer who knows about impact fees and has known about these specific fees for years. He hears nothing from the city but how little money they have. And here the City Council is considering giving a quarter-million dollar break to a man who has a substantial amount of money.

Dr. Shah came to the podium and said the previous council put "lots and lots of roadblocks" in his way. "They want me to do everything what impact fees supposed to do. And I put the money and they say that don't worry we'll give you credit for impact fees." The guy who made the promises to him is no longer here, he said. He said it was Al Schmidt who first delayed paying the fees, and "He have nerve to come here and ask me to pay." He said Al Schmidt built the building with no water there, no working fire hydrants. Dr. Shah said "I have spent $295,000 to do the impact work on my property. Outside of my property I spent $295,000. Inside the property $3.25 million." "I was asked to do drain the whole Mission Lakes Boulevard in my property." The person who Dr. Shah refers to only by pronouns is former City Manager Daniels. Dr. Shah said that he showed him his list of expenses (that totaled $295,000) which is the same as the invoices he presented to the Council this night. He was reassured he would get credit. He was also promised that if the expenses were greater than the DIF, then the excess would be transferred to the future gas station and mini-mart that Dr. Shah plans to construct. "All these promises are gone with the City Manager who left." [Well, I think we can all agree with that, so why not pay up, Dr. Shah?]

Mayor Sanchez asked City Manager Magaña to explain the drainage issue. Mr. Magaña said that the original plans for this project were to drain to the next property south of the site where the project sits. That property is not owned by Dr. Shah. The project went into receivership before any work could be done on that. Staff provided Dr. Shah with a copy of all of the original conditions of approval. Drainage was addressed in those conditions. Since the original planned location for the drainage was not available to Dr. Shah, he had to provide retention basins on his own property. Those are to address runoff from his parking lot and runoff from the street. [The law requires that all developers have to capture any increased runoff that occurs due to their construction project.]

Mayor Sanchez asked "Whose responsibility was it at that time that that major error could take place?" He did not specify the "major error." The only error in the drainage matter that I'm aware of is that Dr. Shah didn't realize the original drainage wasn't on his property. Mr. Magaña said he didn't know, because he wasn't on staff when that happened. "Who caught it then and what time did he catch this?" Mayor Sanchez asked. Mr. Magaña said it was caught when Dr. Shah bought the project. When Dr. Shah submitted his plans to the city for review, the city notified him that he would need to have retention on his property. Mr. Magaña explained that the proposed Pierson Professional Plaza also has onsite retention in the designs, but they chose to put it underground. Finally, Mayor Sanchez asked "If the city didn't know, how do we expect Dr. Shah to know that?"

[Well, first off, there's no indication the city didn't know. Dr. Shah was notified when he submitted his plans. His plans were different from the earlier plans. Second ("Second off?") that's one of the reasons for plan check. City staff looks for mistakes like this one and then tells the developer.]

Mr. Magaña explained it's a standard condition of approval on every project. It's the developer's responsibility to conform to the law.

Mayor Sanchez asked how much it cost Dr. Shah to put in the retention basins. Mr. Magaña said he didn't know, but when Mayor Sanchez pressed him for a guess, he said "Eighty to a hundred-thousand dollars."

Mayor Pro Tem Betts asked Mr. Magaña if he had ever seen another project where the retention basin was on someone else's property. Al Schmidt in the audience called out "We had an agreement." Mr. Magaña said he had never seen it before. Mr. Betts said he thought the City Council was in unanimous agreement that no exceptions of any kind will be granted to any developer ever again. [My prediction is that this commitment will last unti the next developer comes before the Council.] He turned to his fellow Council members and asked "Agreed everybody?" and was met by silence, except by one member of the audience who agreed. Mr. Betts suggested issuing a temporary use permit good for six months. "Then I would like staff and the applicant to get together to sort this out. We have a difference of opinion on the DIF fees. Staff is at 17,000; the developer the applicant is at 259 or whatever it is."

That, IMO, is a City Council member trying to shirk his responsibility. It's clear in the law that only the City Council can waive, credit or reduce DIFs. Staff has been in direct contact with the applicant all along, and now it's down to this point. The applicant was present; the full City Council was present. It was the City Council's responsibility to negotiate with the applicant, if any negotiating was to be done at this point. How Mr. Betts could possibly imagine that the severely overworked staff would somehow be able to psyche out what the magic point is at which a majority of the City Council and Dr. Shah could agree when even the City Council itself can't figure out where that magic point is, is beyond me. If Mr. Betts just didn't want to sit there negotiating until dawn the next day, too bad for him.

"Somehow they have to come back to us with a solution and an agreement on that. Put that together and that maybe needs to be mediated, I don't know." But somehow he imagined an agreed upon number would come back to the City Council. "But part of the reason this is on the agenda now is because the solution wasn't brought to this Council and so finally somebody said 'Bring it here, let's work this out.' Well, that idea didn't work either because we haven't got it worked out yet. But staff has got to look at this, go over these numbers and if they have to bring in somebody else to make that work, fine."

Staff had already gone over the numbers an that's where the $17,000 came from. The item is on the agenda not because some imaginary solution wasn't worked out to save the Council effort. It's before the Council because Dr. Shah wanted to see if he could BS the Council into giving him a break. Bringing in somebody else to make some imaginary solution work, means, of course, paying somebody else, even though the five decision makers who could make it work were all sitting there at the dais and could resolve it without having to pay some third party to do their work for them.

Mr. Betts said he was willing to work out a schedule of one-third payments of the DIF with one-third being paid "at each stage of occupancy." "So the first thing is get it open with a temporary conditional use permit. Then get the amount settled, whatever it is, I don't want to dig into all these numbers. I'm not going to go looking through all these invoices. I can't do it up here in front of everybody and just try and sort this out. Staff's got the expertise on that and something's got to be sorted out." Then either the amount can be paid in full or if Dr. Shah needs more time "then we go back to an idea that was floated a while back was one-third of it opens, you pay one-third the DIF; one-third of it opens...I do not want to just totally relax the DIF fees."

My question is why doesn't he want to dig into all those numbers? Or why should we care if he doesn't want to. Everybody was all together, the necessary information was in front of every member of the Council. Everybody's got pencil, paper and a calculator. The law says the City Council is the last resort on this, but Mr. Betts doesn't want to make an effort to come up with a figure based on evidence because...why? Too hard? Too embarrassing? The Brown Act does not prevent the City Council from doing hard arithmetic at the dais. If I was on the Council and stated from the dais that I didn't want to do my job at the very moment when that job was critically necessary, I'd expect to get a lot of shit for it.

Using an estimate made by Geoffrey Payne, Mr. Betts estimated $200,000 annually in tax receipts to the city from the Tahiti Partners' project. In the time that the Village project has been delayed the city has, therefore, lost $400,000. Mr. Betts assumed the two projects would generate the same amount of sales tax. He asked Attorney Quintanilla to explain something.

Mr. Quintanilla said the idea is to issue a temporary certificate of occupancy (not CUP) for 6 months which would allow the gym to open and to market real estate. During that time staff is to meet with Dr. Shah.

Mr. Betts interrupted the attorney to say "I can't work out the difference the 17 and the 259." He said he was willing to accept that Dr. Shah has put in $259,000 and he accepts the $17,000 figure from staff. "Those two guys have got to come back with a solution."

Why? If staff and an applicant disagree over the DIF calculation and the applicant requests a hearing before the City Council, then it's up to the City Council to come up with the solution. If I were the applicant who had paid for this public hearing I'd be demanding that the City Council give me my money's worth by making a decision.

Mr. Betts said that if staff and the applicant can't work it out [this has already been established, thus the public hearing] then the city will "hire somebody else" to get it worked out.

Mr. Quintanilla started again, saying that the amount of DIF needs to be re-evaluated. Mr. Betts interrupted again to say "That's what we don't know. That's the unknown and something I can't work out here. I don't want to get into that detail. Come back to us with that number. If you've got to get some independent third party and everybody agrees to it, fine."

But whatever you do, don't make Mr. Betts get his hands dirty.

Mr. Quintanilla tried to clarify that if staff and Dr. Shah agreed on a number, then it could be paid in full, or if Dr. Shah needs to pay in installments, then opening up parts of the shopping center would be tied to each payment.

Mr. Betts said he wanted the solution to be based on actual numbers. "But what we've got is a disagreement."

What you had was actual numbers provided by staff and Dr. Shah trying to bamboozle the Council, and at this point in the meeting it looked like the bamboozler had a slight lead.

Dr. Shah said, "The answer to that, if you are a businessman running a restaurant, would you sign a lease for a place where there's a temporary permit of occupancy for six months only?" Mr. Betts tried to say he understood, but Dr. Shah interrupted saying "You can't do that. You can't keep coming back here. I showed you that I paid $298,000 for doing impact work. There is no impact work that is necessary for that project. But you guys are greedy! And you want me to pay again. And that's not going to happen."

Mr. Betts said Dr. Shah had done a tremendous favor to the city. "You've done everything that we expected." He said he thinks this city is very difficult to do business in." "I cannot get any tenant to move in a building where there is only temporary occupancy for six months. You guys are not in business. I'm a developer. I own 14 buildings and I know what happens when you have a dream or when you have a city giving you six months occupancy permit. Nobody wants to come there. You're not going to get any sales tax for six months. So don't think that you can make up something new here, and it comes out of your...your...brain and you can tell me that you have a Certificate Of Occupancy temporary for six months. So after six months what? All these people are not going to sign the lease with me."

Mr. Betts responded "It's simple. You don't like the idea, doesn't work for you, we don't do it, but in case you hadn't noticed we spent two hours up here and couldn't come to a solution to this and I'm not sure we've got a solution to this. If the votes change, fine. Maybe the vote changed tonight and take a vote and find out and you open Monday, but maybe you don't. I don't know. But I haven't got the votes up here to do what I think is justified."

Dr. Shah answered "That's why I worked all day yesterday and this morning and I put together all the invoices and I had help from the General Contractor Doug Wall. And we made sure that every invoice I gave you is for the outside world, outside my property."

I think it's odd, if Dr. Shah thinks these expenses are the key to reducing his DIF to zero, why he didn't have this information on Tuesday night. It seems central to his position.

Dr. Shah continued "The simple solution is you waive the fee and move on. It will be a win-win situation for the city and you have a very good reason to waive it because I already did the work."

Mr. Betts said he believes it would be a win-win, but Dr. Shah had just now given them the packet of invoices. Mr. Betts had asked for information from staff a few days ago. He didn't get that information until 4:51 PM today. Or at least that's when he checked his email. "I don't have the information that I can do all these calculations and get out a calculator. It just can't happen here."

Again, why not?

Dr. Shah: "There is nothing to calculate. I calculate it for you and I put it on the top letter. That I put each and every invoice which was related to the impact work only and that ten pages of impact work doesn't take a rocket scientist, so I think you can see it that I spent and if you have any problem, even with the one invoice, I will pay the whole fee because I'm not going to cheat here. I'm not going to make up something."

There was the opening for the City Council. One can easily find a problem with his invoices because none of them are for what he calls "impact work." The developer doesn't do "impact work." The developer develops his property and the public right of way it abuts. He pays impact fees so the city can do roadwork anywhere, so it can buy police vehicles, so it can build a fire station, so it can build storm runoff channels. Dr. Shah bought no police cars, built no fire station, did not build any bridges, did not build a flood control channel. He built sidewalks, widened the road and put in street lights. The same things that are required of every other developer of every other project. And all those other developers pay their DIF.

But Dr. Shah said he would refuse to pay his DIF again.

Councilmember Matas asked how many square feet is the project. Dr. Shah said it is 67,000 s.f. Mr. Matas asked if he had a business license for the gym. Dr. Shah said he has one. Mr. Matas said he appreciates that because he did cheat the city for a few months on that, because he was signing up new members. Dr. Shah said business licenses are given only when they are ready to open for business. Mr. Matas agreed, and said that he could not be doing business by signing up members without a business license. Dr. Shah said he has had the license for 8 months. Mr. Matas said it was 3 months and that he was selling memberships before that. One member of the gym told Mr. Matas that he has been paying for his membership since February. Mr. Matas said that since the time when he mistakenly accepted a donation from Walter Luce, he has researched developers carefully.

Mr. Matas asked if Dr. Shah knew one of his contractors cut the lock on the electrical boxes and illegally turned on the electricity? Dr. Shah answered "I don't know, because there were seven different contractors working." Mr. Matas said this was done in the last few days and the City Council was notified at the previous Tuesday night meeting. He asked if Dr. Shah was investigating this. Dr. Shah said he can imagine who would do that. In the aerobics room, he said, the wood has to mature at the proper temperature for three days. He thinks that contractor is the one who did it, but he can't prove it.

Then Councilmember Matas began an explanation of development impact fees that should have been delivered hours earlier by the attorney or the city manager or even the Mayor, so we wouldn't have to hear Dr. Shah repeatedly claim he did "impact work."

"Developer impact fees are not what the developer does," Mr. Matas said. There are four DIF accounts applicable to this development. The city's fees were raised in 2009. The city is only asking Dr. Shah to pay the older, lower DIF rates. The Pierson Professional Plaza will be paying close to $600,000 in impact fees. One DIF goes to police and law enforcement; $31,449.89 for the Mission Lakes project, according to Mr. Matas. The fire DIF will get $6,142.97. The stormwater runoff DIF: Mr. Matas said maybe this could be reduced because of the capacity of his retention basins, but it's $25,099.50. Finally, traffic signaling: $191,639.60 is his one-quarter share for that intersection.

Mr. Matas said every development is responsible for the roadwork out to the center line. All developers are responsible for new striping, new lights, a new road if necessary. It's part of the cost of developing. He said that if the Council waives the impact fees for Dr. Shah, that money will never be recouped anywhere. Sales tax and property tax go into the general fund. DIF goes into designated funds that can only be used for their specific purposes. If Dr. Shah doesn't pay, then the general fund will pay someday. Mr. Matas said he didn't know what roadblocks the city put in his way. But he knew about these impact fees three years ago, if not sooner.

Dr. Shah asked Mr. Matas to let him know when he was done. Mr. Matas assured him he would.

He said Dr. Shah should pay his fees, put his employees to work and start making money. He said Dr. Shah has the power here. The city has put up no roadblock except that he owes the city $259,000. The only way the city can guarantee payment is to withhold the Certificate Of Occupancy until he pays. Or, putting a lien against the property might work. He asked Dr. Shah to suggest ways in which the city could be assured of payment.

Then Mr. Matas apologized to everyone for his earlier outburst saying it was uncalled for.

Retention basins are mandated by state law, Mr. Matas said. State law mandates their size. He asked Dr. Shah how the city would find money in the general fund to pay for the traffic signal at that intersection when it's needed.

"Are you done?" Dr. Shah asked.

Mr. Matas replied, "Mr. Shah, when I'm done I will tell you when I'm done, okay? I promise you."

Mr. Matas said he didn't understand Dr. Shah's comments about the past City Manager, claiming he said he would sign off on anything. The 2011 deal, which is in writing, was made while Rick Daniels was City Manager.

Mr. Matas finished by asking Dr. Shah for suggestions on how the city can recoup the money he owes in DIF. "Now I'm done," he said.

Dr. Shah said he bought the place in September 2010 and looked through the plans. He said he went to the city and said he was willing to pay the newer, higher development fees because he thought the earlier owners had paid the older fees. When he offered the deal in 2011 (one-third upon issuance of the Certificate Of Occupancy, then one-third a year later, and the final third after another year) he had "no idea" he was going to do "impact work" for the city. He said developers do not have to deal with water running onto their property. The city should build a reservoir for Mission Lakes Boulevard.

Dr. Shah said he bought the place from bankruptcy and the court was in Los Angeles. After the judge signed off, he had to close in 30 days.

It seems to me that that's part of the risk and thrill of buying up bankrupt properties and that's offset by the bargain basement price he paid.

Dr. Shah said that Mr. Matas had been on the Council for eight years and he put the city in the hole for $4.5 million "and it's all gone and you knew it that is happening. But your answer to people is you didn't know anything. You are in bed with Rick Daniels and Mrs. Yvonne Parks."

Mayor Sanchez tried to interrupt Dr. Shah, but he continued. "You should have known that this city is a problem." Then he paused long enough for Mayor Sanchez to tell him to continue, but not to make any accusations. Dr. Shah continued, "I'm not done yet! I'm not done. I'm not done yet! Okay, I'm fine."

Mr. Matas said he would be happy to answer the doctor's questions.

"There's nothing to answer," Dr. Shah said.

"You asked me a pointed question."

"No, I can ask you later on." Mayor Sanchez tried to speak again, but Dr. Shah was on a roll. "Let me finish."

"What I'm trying to say," the doctor said, "to fool the city and deceive the people for your dishonesty and telling that I didn't know anything about it is a lie. And you're telling me that I should have known about impact fees. You should have known for eight years that you are putting this city in the hole and bankruptcy."

Mayor Sanchez called for a 10 minute break. "We don't want to talk about his personal matters," Mr. Matas could be heard to say.

After the break Mayor Sanchez asked Dr. Shah if he had anything additional to say before Mr. McKee spoke. "Yes sir," he said, and then repeated that "I have done all the impact work on my property." He said that Rick Daniels told him to do whatever Mr. Magaña wanted.

Mr. McKee said it's pretty simple from his point of view. He agreed with Mr. Matas that are other things besides the work around the site that impact fees pay for. Mr. McKee said that on the one hand there is the agreement on the DIF fees, while on the other hand there was an agreement on the design of the project. But the design portion has been changed. He said that what they are trying to calculate is what Dr. Shah spent that was above what was originally required in design.

Wow, I cannot see at all the link that Mr. McKee said is so simple. The DIF fees are calculated based on something objective like square footage, not "the design." It isn't like they add another $100,000 to the DIF if the project is going to look really snazzy. Every developer that comes in and picks up a failed project and finishes it will probably be required to do more than was originally required when the failed project has been sitting for years. This is because the building codes are always being updated. It's not the city's responsibility to pay for those upgrades and it certainly makes no sense to offset the DIF by the amount of those upgrades. The seismic requirements have been updated. Does that mean the city will have a reduced need for police, fire, storm runoff or traffic signals? There is no nexus there at all.

Mr. McKee said the original design had two light poles in it. The city required Dr. Shah to put in eight lights. He said the drainage issue was the same. Originally it was somewhere else, but he had to move it. And Dr. Shah agreed.

And Mr. McKee thinks we the taxpayers should pay for those things that Dr. Shah agreed to, apparently without objection.

Mr. McKee said Dr. Shah should have refused and stopped work. And if he had an agreement with Rick Daniels, he should have had it in writing. He said that when Dr. Shah says he spent more than the amount of the DIF, it means to him that the city didn't set its DIF high enough.

Another magic connection that doesn't exist. The DIF is the DIF, whether we require Dr. Shah to put in 2, 8 or 24 lights. None of his work is "impact work," so where is the connection to the amount of DIF?

Mr. McKee said he is bothered by the personal things that have been brought up. Then he went on to explain that anyone can be sued and anyone can have a dispute.

There is, I believe, a page of charges or accusations against Dr. Shah going around. I have never seen it. The one piece I linked to here on Ron's Log references only lawsuits he has lost or crimes to which he has pleaded guilty.

Mr. McKee suggested that a compromise number be found upon which all could agree.

Mayor Sanchez said the city staff has already calculated that we should credit Dr. Shah about $17,000. And we heard that the retention basin cost between $80,000 and $100,000. At the Tuesday meeting Mr. McKee offered a credit of $80,000. But, Mayor Sanchez said, add the $80,000 to $17,000 and you've got $97,000. "I say we just round it off to $100,000," and he offered that as a motion giving him that as a waiver and then give him the option to pay in two or three installments.

Dr. Shah said "I think your mathematics should be $200,000 paid." He spent $100,000 on the retention basin. He had to pay Edison for 8 lights plus he had to pay for the trenching. The contractor charged him about $15,000 for the trenching. (Later in the meeting he said it was $30,000.) He's paying electric bills that should be paid by the city because it's not on his property. [He did not clarify this last remark.] "So I think if you give me credit of $200,000 I'm willing to pay $59,000 over two years. I will pay half right now, and I'll pay half after a year and we never talk about impact fee for those buildings because I feel like I'm paying twice here."

Mayor Sanchez asked Mr. Magaña what the cost for a light is. Mr. Magaña said they are about $16,500. "$16,595," he clarified. [If that's the price for one light, six lights cost $99,570.] Mayor Sanchez asked how the requirement for different numbers of lights came about. Mr. Magaña said "The conditions of approval specifically state that the developer's to install street lights on Little Morongo Road and Mission Lakes Boulevard to the satisfaction of the city engineer." [Emphasis added.] The city standard is a street light every 300 feet. In the usual process, the city engineer goes out to inspect all the improvements at a project, then at some point those come back to the Council to accept (or not). When the city accepts them, then they become the city's responsibility. The city uses Community Facilities Districts to pay for that responsibility.

Mr. McKee said he is confused by the fact that the original drawings approved by the city showed only two lights. "Is that not true?"

Mr. Magaña said "I have yet to see those plans that approved two streetlights."

Mayor Sanchez repeated his motion to waive $100,000 and the remainder to be paid in two or three installments. Mayor Sanchez asked the City Manager to do the arithmetic for him, asking how much Dr. Shah would owe is this motion were to be approved. Mr. Magaña said "It's 259, 260, so take 100 away, he owes about 180." [This was the beginning of some strange numbers that came from everyone.] Several people in the audience offered the correct figure of 160. Mayor Sanchez clarified that "the 17 is in the 100." He repeated that he was giving him credit for the 17 and the drainage, and then rounded it to 100. So Mayor Sanchez asked again for the arithmetic.

[What can I say, the Mayor is asking the City Manager to calculate 259 minus 100 for him.]

Now Mr. Magaña responded "We're talking about 120." [What!?!?] He said "Seventeen-eight, round it up to twenty and you're saying give him 100,000, that's 120,000." [This confusion of whether the 100 included the 17 continued, even though the Mayor had clearly said it was included in the 100,000.]

Mayor Sanchez said okay to this, and asked Mr. Magaña again how much Dr. Shah would have to pay. [IOW, 260 - 120 = X, solve for X.]

Mayor Sanchez said "Make it two payments." Someone said "60,000," but it was said so softly I'm not sure if it was Mr. Magaña or somebody else.

[Sheesh. Do I need to do this? 260 - 120 = 140. Divide it in two and you've got 70,000.]

Mayor Sanchez repeated that it would be Dr. Shah's choice to pay in two or three installments.

Let me get a little ahead of the game and tell you that 140 divided by three is $46,666. If you demand to know how I magically arrived at that number, I will be forced to confess that Mrs. Swaney, my fourth grade teacher, taught me how to do division. The rules of conduct for City Council meetings would not permit someone in the audience from rising and saying "If no one at the dais can do simple arithmetic, let me volunteer to do it for you." This is where some of the tension of the audience comes from, when we can see and hear things going wrong up there and we are powerless to stop it. Sure, we could put in a comment card for the tail end of the meeting, after all the votes are taken.

Dr. Shah said that at Tuesday's meeting Mr. McKee was willing to forego $80,000 from the DIF and at the time he didn't know about the expense of the retention basin. So he said that it would be fair to add that $80,000 (which included the $17,000) to Mayor Sanchez's $100,000 (which included the $17,000 plus $80,000 for the retention basin) and add $16,000 for eight light poles [okay, so they're $2,000 each, not $16,000 each] which comes to $196,000 [at least Dr. Shah can do arithmetic on his feet]. He went on to say that the fire DIF was $6,000 and the police DIF was $36,000. And he said that when a traffic signal is put in someday, they will come to him to ask him to pay one-fourth of that [not if he pays his one-fourth share now, like he should]. He said he would pay it when the signal is put in. So he should get a credit of $196,000, he said.

Mayor Sanchez asked if Dr. Shah would have to come back and pay more if he paid his $191,000 for the traffic signal now. Mr. Magaña said he would not. The $191,000 would cover it.

Councilmember Pye referenced a letter from 2008 written by Assistant City Manager Steven Mendoza that said permits had expired. She asked if that meant Dr. Shah had to get new building permits. Mr. Magaña confirmed that was the case and that new building codes would apply. At that time Dr.Shah was also given a copy of the 2008 letter from Mr. Mendoza that included a list of incomplete offsite improvements and the amount of DIF that was due.

Mr. Matas asked Mr. Magaña to explain how a DIF is calculated. Mr. Magaña explained that a nexus study is done and a developer is assessed the fair share of the costs of the anticipated necessary improvements. Much of it is based on square footage. In a residential development, it's based on a per unit charge. For commercial it runs "eight dollars and something a square foot," he said.

Mr. Matas began to discuss Dr. Shah's cost for traffic signalization of about $191,000. Mr. McKee interrupted saying he thought $191,000 was for the whole intersection. In the past eight years the city has had to pay to signalize only two intersections, so Mr. McKee can be forgiven for not being totally up to date on the cost. I know when I first heard the cost to signalize Hacienda and Mountain View I was totally shocked. I think if you rank expensive hardware in the world the top of the list looks something like this:

  1. Space exploration
  2. Military
  3. Traffic signals

$191,000 is about a quarter of what it will cost to put signals at the intersection of Mission Lakes and Little Morongo. Mr. Matas said that if those fees are not paid and Dr. Shah sells the shopping center and fails to tell the buyer about the money owed, then the City Council could go through this very same process with that owner. The city must have assurance that the money will be paid and a lien is the only mechanism he could think of to do that. He said that if some relief is given, he wants to know where the city will get the money in order to cover that shortfall. He said the city could see several developers in the future coming to the city asking for the same breaks that Dr. Shah is asking for.

Mr. Betts interrupted to say that any precedent would apply only to developers like Dr. Shah, who is "sorting through a situation like he is." He specified Tuscan Hills as another example of a "mess." He said eventually the city would run out of those. "We're not creating a problem."

I'm sure the future developers of Tuscan Hills have taken note that at least one member of the City Council is already inclined to reducing their DIF, just because.

Mr. Matas said he tended to agree with Mr. Betts, but that doesn't mean other developers aren't going to come and ask. "The answer will be 'no' from all of us up here if we get it."

Mr. Matas addressed Dr. Shah again saying that he had to do his due diligence whether the sale had to be closed in 2 weeks or 30 days. He said he was sure Dr. Shah had attorneys and other people who buy properties for him. He didn't do his due diligence and is asking the city for relief. Dr. Shah has been a developer for a long time and knows this.

Mr. Betts said that in addition to the impacts on police, fire, etc. the blight of the abandoned project was an impact as well. "This is getting arbitrary with these numbers," he said. He said a similar deal would be considered only for a developer who came into fix a similar mess.

Ms. Pye asked how we got from $17,000 to $100,000. Mayor Sanchez answered that the drainage basin was between 80,000 and 100,000 and then add the $17,000 credit. Then it was rounded off to an even $100,000. Ms. Pye said she had understood the basin was a requirement and asked Mr. Magaña to clarify. He said it was the original plans. Then Ms. Pye asked if the $17,000 credit was determined by staff going through Dr. Shah's invoices. Mr. Magaña said that was correct. Mr. Betts asked if the fact it is now cleaned up justifies the difference between 17 and 100. Ms. Pye said it did not, "because anybody who's going to bring in some business to the city builds something that will make it look better. That's just a given."

Mr. McKee said that he thought the city waived a $200,000 assessment for a traffic light on Skyborne on Pierson. Mr. Magaña said that was correct, but he didn't know how that was determined. [I thought the $200,000 was their share for a traffic light at Pierson and Indian and that's what Skyborne is paying in installments now.]

Mr. McKee said "money is money" and the city has given benefits to other projects, some of which never finished. The city gives people these advantages because "in this world every city in order to encourage development gives benefits." [We may expect to hear that quote being spoken by a Walmart representative before too awful long.] He said the totals of the individual DIF accounts comes to a figure "way over $259,000."

Mr. Magaña said he would provide the exact figures. The DIF is assessed separately for the two buildings in the shopping center.

 Bldg 1Bldg 2 Totals
Police$ 26,755.53$ 4,694.36 $ 31,449.89
Fire$  5,226.04$   916.93 $  6,142.96
Storm Drains$  9,112.07$15,987.48 $ 25,099.55
Traffic Signal$163,034.55$28,605.05 $191,639.60
General Facilities$  4,288.03$   752.35 $  5,040.38
The fee to calculate the fees:$     70.00$    70.00 $    140.00
TOTALS$208,486.22*$51,026.16 $259,512.38

* (Mr. Magaña said $51,026.17)

There would probably also be a fee if you asked if there would be a fee to calculate the fees, so don't ask. Just get out your checkbook.

Mayor Sanchez clarified that his pending motion meant that in order to get the Certificate Of Occupancy, Dr. Shah would have to make the first payment on his DIF. Again Mayor Sanchez asked Mr. Magaña to calculate a one-third payment. $259,512.38 - $100,000 = 159,512.38; one-third of that is $53,170.79. That's how I figure it anyway, but Mr. Magaña did this way: $259,512.38 - $17,852 = $241,660.38; $241,660.38 - $100,000 [effectively giving Dr. Shah double credit for the $17,852] = $141,660.38; "If you divide that by three, it's three equal payments of $47,333." one-third of that is [the correct arithmetic yields $47,220.13].

Dr. Shah said "poles are outside my property, it was not my job to do it, but I paid $16,500 and some dollars." And he paid $30,000 for the trench to connect them. "That is impact work." Mr. Magaña said that is not "impact work, that is what the developer is required to install himself." He went on to say it's just like he is required to build a parking lot, to install landscaping, "those are his responsibilities." Again, Dr. Shah cited some plans that he did not present that called for only two light poles. Dr. Shah said that if the city made him pay $47,000 he would not pay it. He threatened to close down everything. He demanded full credit for $259,000 because he spent $294,000. "And if you can't do it, give me half of the sales tax for five years." "It can't be mine is mine and yours is mine too." [I suppose he thought he was talking about the City Council, but he could just as well have been describing himself when he said that.] "So do that and I will be fine then." Someone with his mic turned off (possibly Mr. McKee) asked "You'll pay the development fees?" Dr. Shah responded, "I will pay whatever it...hundred-thousand paid, and there's something I'll pay." [Whatever that means.] In response to laughter from the audience Dr. Shah said "I will pay two-fifty-nine. Give me half of the sales tax for five years."

"How about my underwear too," Al Schmidt asked from his seat. "You lost that already," Dr. Shah quickly responded.

Ms. Pye asked how to secure future payments and said he should pay something up front - obviously not having heard his offer to pay the full $259,000 right now. Mayor Sanchez answered that Dr. Shah would have to pay $47,000 for his Certificate Of Occupancy - evidently also failing to hear Dr. Shah's offer.

Dr. Shah added "For five years nobody has come here. There's a reason for it. The Dollar General came here, nobody else. No other developer came to you and made houses. Open your eyes and take the wool off. Because you guys have no reality check at what a developer goes through to develop a property. Red carpet for me [unclear]. Everything what I ask they said okay do it. And here I am three years it took. I did that in 15 months. A year. Three years. And you're still counting the pennies. You need to see a bigger picture and you have to have vision of the big picture for Desert Hot Springs. So I'm willing to give $259,000 to you in full in three installments. Give me half the sales tax revenue for five years. Fair is fair. I mean you see that in newspaper, TV, everywhere. Every city is doing something. You saw $5 million they spent for parking structure in Palm Desert for down on El Paseo. They paid $5 million." Then he said the Council should "let go the $259,000." He promised to allow the city to hold concerts and public events on his property.

Ms. Pye wanted to say that the $17,852 is a credit and $82,148 is being waived.

Mr. Matas had called for the question a few times. Mayor Sanchez ignored him and Mr. Matas said "Mr. Mayor you have to call the question." Mayor Sanchez said he did not. He said Mr. Matas needed to learn to be patient.

Here's what Rosenberg's Rules Of Order say about calling the question:

The most common form of this motion is to say, "I move the previous question" or "I move the question" or "I call the question" or sometimes someone simply shouts out "question." As a practical matter, when a member calls out one of these phrases, the chair can expedite matters by treating it as a "request" rather than as a formal motion. The chair can simply inquire of the body, "any further discussion?" If no one wishes to have further discussion, then the chair can go right to the pending motion that is on the floor. However, if even one person wishes to discuss the pending motion further, then at that point, the chair should treat the call for the "question" as a formal motion, and proceed to it.

When a member of the body makes such a motion ("I move the previous question"), the member is really saying: "I've had enough debate. Let's get on with the vote." When such a motion is made, the chair should ask for a second, stop debate, and vote on the motion to limit debate. The motion to limit debate requires a two-thirds vote of the body.

So Mayor Sanchez should have asked for, or allowed time for a second on Mr. Matas' call for the question.

For a bit of time some of the Council members spoke quietly among themselves out of range of the microphones. Mr. Matas said he would be happy with a motion to give Dr. Shah half of the sales tax if he would pay the $259,000 before getting his Certificate Of Occupancy. Dr. Shah also said he would be happy with that. Mr. Matas repeated the scenario for clarity. Then Dr. Shah said "I don't have the money. I have no money to pay, and I have to pay $1.2 million for the improvement of all the tenants and I have to take loan from the friends and family because bank wouldn't give me loan."

Mr. Matas said the City Council should either take action on Mayor Sanchez's long-pending motion, or continue the item for another 30 days. Dr. Shah responded "There is no 30 days. I'm going to close for one year and I don't want to talk to any of you guys because you have wool on your eyes and you are not practical and you don't know how the businesses work...how developers work. If you want to give me 50% off the sales tax, then I will pay in three installments. First installment I will pay right now before I get Occupancy Permit. And then one year and second year. And you're not going to pay me the tax every year unless I pay."

Finally, the vote on the motion to reduce the $259,512.38 to $159,512.38, to be paid in three installments was voted down 1-4 with only Ms. Pye voting in favor.

Mr. McKee made a motion to accept three equal payments on the $241,660.38 with the first payment due immediately, plus give him credit for half the sales tax for five years.

Then Mr. McKee addressed the audience. "You guys don't understand this at all."

Oh, we don't do we? Then that meant no one in the room understood it.

He continued, "The Brown Act forces us to negotiate in public and what happens is exactly what happened here." "This is the process the people in this state want. It's ugly. And I am sick and tired of hearing people say 'Well, you guys have this problem with that. You can't make any decisions.' Damn it, it's not true. This is what happens in this circumstance." "Ditto that," Mayor Sanchez added.

I don't know what Mr. McKee saw behind me, as I sit on the front row. Maybe there really were people back there waving signs saying "We are offended by an ugly process." If so, then Mr. McKee said the right thing. But I didn't pick up on anyone in the audience objecting to the process. I think the various parts of the audience were concerned when they thought they saw the Council heading for a bad decision (and the opinion on what would constitute a bad decision, varied depending on which part of the room you were in.) My concern, knowing that this was the time when the negotiation had to take place, was that some members of the Council shied back from doing their job. They didn't negotiate or they wanted staff to negotiate. My opinion is that if you want to sit on the dais then pay attention, learn to do arithmetic, observe the rules of a public hearing, turn on your microphone and speak into it, and get your hands dirty when it's time to get your hands dirty.

Mr. Matas said he had a problem with some of the process. When the public hearing was closed, it was supposed to be closed to everyone. Dr. Shah should not have been at the podium negotiating with the Council after the public hearing was closed. Dr. Shah said "I hope you never become a Mayor." Mayor Sanchez told Dr. Shah to let Mr. Matas finish. Mr. Matas said he didn't think any of the 50% of sales tax should be paid to Dr. Shah until he had paid the full $241,660.38. He wanted to make a friendly amendment. Mr. McKee would not accept that as a friendly amendment, but the amendment had received a second. The amendment failed 2-3 with Mr. Matas and Ms. Pye voting in favor.

Ms. Pye pointed out that motion did not indicate that the payment of half the sales tax was contingent upon Dr. Shah sticking to the payment schedule for the DIF. That was made a friendly amendment that Mr. McKee accepted. Dr. Shah said that was common sense so "you don't have to put that in." [Yeah, another handshake deal would be good right about now.]

Attorney Quintanilla summarized the motion as $241,660.39 payable in three annual payments ($80,553 each he said) and Dr. Shah would begin immediately to receive a credit for half the sales tax and if he fails to pay his second annual payment the credit stops, otherwise it continues for a total of five years. Ms. Pye clarified "with the first payment before occupancy." Dr. Shah requested the Certificate Of Occupancy to be given by Monday - four days hence, immediately after the usual 3-day weekend for city staff.

City Manager Magaña said "the way it really works" is that different departments have to give final sign off on the job card. That includes the Fire department, Mission Springs Water District, and engineering has to go to the site and make sure they will accept all improvements. Planning has to go out and approve the landscaping. In the usual process it's the developer who requests final approval from all the departments. Dr. Shah said the water district has already cleared his bond. Mr. Magaña said the city doesn't have that on record yet. On Monday Dr. Shah would have to submit a check for $80,553. "I have to kill somebody, I guess," Dr. Shah responded, "but I will have to borrow from my friends and the family." He will have to pay them 10% interest, he said. Mr. Betts became insistent that the shopping center be permitted to open on Monday. He asked the attorney if there was a way to guarantee this. Mr. Magaña began to say that he could work with the city departments to get it done, but Mr. Betts interrupted saying he was asking the attorney. Mr. Quintanilla said a temporary Certificate Of Occupancy could be issued if there are no health and safety issues. Ms. Pye said this discussion is not relevant to the motion. Mr. Betts disagreed saying "No, no, what it is is making sure that this motion will get this place open and those people working on Monday when this place opens up. That's what the whole purpose of this has been."

IOW, Ms. Pye was right. This has nothing to do with the motion. If the "whole purpose" of this was to guarantee the place would open on Monday, then at some point that would have been mentioned in one of the motions. All references to opening the place made it contingent upon Dr. Shah paying some share of the DIF. There had been no discussion of using other mechanisms to get around the requirement to pay the DIF until this moment.

Mayor Sanchez called for the vote and Mr. Betts asked "What are we voting on," which brought the loudest laugh of the evening. He clarified "The motion or the amendment." [Since there was only a motion and no amendment, I would have thought it obvious.]

Then Mr. Betts wanted to know why the sign offs hadn't been done already. I conjecture it's because, as Mr. Magaña said, it's Dr. Shah's responsibility to request that and he hadn't asked. Mr. Magaña said he would do his best to get his staff people out there Monday, but he has no control over the water district or Edison.

Motion passed 4-1 with Mr. Matas voting against.

Finally Dr. Shah said his father used to say "A bird sitting on the tree is not afraid of the branch breaking, because she doesn't care for the branch, she cares for her wings."

Public Comments

Andrew Cirner came up and said he lives in Desert Hot Springs. His background is in law. He is a grad student in Public Administration. Prior to this he lived in Muskegon, Michigan, where he was an elected City Council member. He sat on the Police Review Board and on Finance Planning. This day, less than 200 feet from his home 6 bullets were shot at his neighbors. He has called the police almost every weekend with noise complaints. He said the city needs to look at volunteerism. There needs to be a Citizens Police Review Board and a citizens police force willing to work for the city. He spent 25 years working for the state of California as a forensic psychiatric nurse. He worked at Napa State Hospital and has been POST-certified. Rather than looking at whether we should go with the Sheriff or keep our own Police, we have a problem now, which is "we have the OK Corral going on and nobody is enforcing law." He put $60,000 into a home. But he said he cries, going "I hate living here." "I hate living here because the leadership...they're dysfunctional. Very dysfunctional leadership that I saw this evening." He has never seen such poor behavior. "I am actually sitting here embarrassed for you." ("Keep it coming," Mayor Sanchez encouraged.) Mr. McKee told him that we already have volunteer Police called COPS. He directed him to Jim Knabb.

No one thought to also tell him about our longstanding citizens police review board, better known as the Public Safety Commission. Mr. Cirner was not in attendance at their August 14 meeting. Having said he was a City Council member, I had to Google Mr. Cirner to see what could be found out. What was, for example, his voting record on giving breaks to developers? What I found was a little interesting. I can certainly find his name on documents from the Muskegon Citizens Police Review Board and documents verifying that he was on the Local Development Finance Authority of Muskegon. But I can't find anything showing he actually sat on the City Commission, which is what they call their City Council. In 2010 he traveled to Cuba with First Hand Relief. Here's a short piece he wrote about that. The Desert Sun got a quote from him when Obama's plane landed last February and identified him as teaching and studying at Cal State San Bernardino.


Mr. Betts asked Mr. Magaña about the dead and dying landscaping at Skyborne. There is a landscape and lighting district in place that should be able to pay for that. Mr. Magaña said the problem is resources. Not enough personnel.

Mr. Magaña asked the Council to consider a special meeting in September to go over the draft of the results of the user fee. The report should show the true cost of all the city's tasks for which it can get cost recovery. He knows well that some of our fees are the highest in the valley.

After the meeting adjourned, I asked Joe McKee to verify that whenever somebody referred to "half the sales tax" they only meant one-half of the one percentage point that comes to Desert Hot Springs. Mr. McKee said that is how the Council meant it and Attorney Quintanilla concurred.

What Dr. Shah thinks it means could well be something different.

Filed under Desert Hot Springs | permalink | August 17, 2014 at 09:35 PM


Short update on the Mission Lakes Marketplace. I learned today that despite the public improvements along Mission Lakes Boulevard and Little Morongo Road having been completed months ago the city still has not gotten this inspection done. For those not familiar with what public improvements are, they are the curbs, gutters, sidewalks, storm drains, street lights, paving, lane markings, road widening and more. All of which you can see are complete, however, the city engineer has not yet managed to get out there. The city inspection of the (completed) public improvements is one of the items on to be completed before the shopping center can open.

Posted by: Russell Betts at Sep 8, 2014 10:13:31 PM

@RB: it seems from the story that he is speaking of the September 2nd meeting..no?

Posted by: Mike Picardi at Sep 7, 2014 1:42:28 PM

The facility is absolutely fabulous. It is top shelf, just as it has been billed. It is so much more than I hoped for as I saw this project sitting vacant and a blighted eyesore for years.

Thinking about it objectively, this shopping center (now that it is completed) is the best retail project to come to our city since, well, since KMart.

We should definitely do everything in our power to keep it closed.

Posted by: Russell Betts at Sep 6, 2014 8:30:03 PM

To clarify: Michael Picardi, in his September 5 comments, is talking about the September 2 City Council meeting, not August 7.

Posted by: Ron's Log at Sep 5, 2014 6:04:53 PM


Posted by: Mike Picardi at Sep 5, 2014 2:12:25 PM

Interesting "spin" by Shah..he claims he did not know of the meeting..yet, the council received a letter from Shah's attorney the day of the council meeting. He also fails to mention that the water district along with the electric company AND the fire department has yet to sign off on this. This guy is at best, forgetful at worst a liar.

The"late" payment is also a lie: he said at the meeting on the 5th, that he could write a check that night. NOW he needs to get a loan? WTF?

A late payment to the city could mean the delay of a new gym opening in Desert Hot Springs.

Suresh Shah — owner and developer of 5-Star Fitness and the shopping center it’s going into on the corner of Mission Lakes Boulevard and Little Morongo Drive — was supposed to pay $80,553 to the city by Aug. 11.

But he missed the deadline by 10 days, and now city leaders have rescinded a deal they made to reduce his development impact fees.

Shah, who hoped to open his gym as soon as Monday, now intends to fight the city’s position.

“I tried to pay with a credit card (on Aug. 11), and was told the city doesn’t take credit cards,” Shah said of the missed deadline. “So I had to make arrangements to borrow the money.”

The City Council on Aug. 5 had agreed to reduce Shah’s development impact fees from $259,512 to $241,660, which were payable in three annual installments of $80,553.

In exchange, the city conceded 50 percent of the sales tax the marketplace generates over the next five years.

Council members had second thoughts about the deal after there was a 10-day delay in getting the required up-front payment. City leaders said they also received reports that Shah opened for business without obtaining the required certificate of occupation.

“We should not have made a deal with him,” said Councilwoman Jan Pye, who with fellow council member Joe McKee proposed rescinding the waiver.

A handful of residents attending Tuesday’s council meeting agreed.

“The problem is the developer did not adhere to the first piece of the deal and keeping the deal in place doesn’t make much sense,” Desert Hot Springs resident Larry Buchanan said.

The 3-2 council vote followed a lengthy discussion that ended with Mayor Adam Sanchez and Mayor Pro Tem Russell Betts voting against rescinding the deal.

“I just get the feeling we’re working a lot harder to keep this place closed than to get it open,” Betts said.

Shah, a Palm Desert resident, bought the 6.6-acre Mission Lakes Market Place shopping center in September 2010 after it languished unfinished for years.

The fitness center would be the first business to open, and Shah said it would be key to bringing other tenants into the complex.

Shah said 35 employees have been hired and have been undergoing training at his 5-Star Fitness gym in Yucca Valley.

But the scheduled Monday opening will likely be delayed while he comes up with $162,000 he said he needs to pay the city to get his certificate of occupancy.

McKee said he would have voted against rescinding the waiver if not for information that the center had opened before a final inspection and proper certificate from the city.

“My problem is not the (delayed) payment of money, but without a certificate of occupancy he brought customers into the building and put himself and the city at risk,” McKee said.

Shah, who said he didn’t know about Tuesday’s meeting, was adamant Wednesday that there have been no workouts or classes held.

The Chamber of Commerce held a ribbon cutting on the two-story 20,000-square-foot gym July 5, which Shah said was to open the business so people could tour the facility and begin taking out memberships.

People could try out the equipment, he said, but there were no workouts.


Posted by: Mike Picardi at Sep 5, 2014 2:11:36 PM

Wow, some of the residents of Palm Desert are just precious! Who could imagine anything so horrid as a gym next to an orthodontist! The universe would rebel.

Posted by: Ron's Log at Sep 2, 2014 6:53:53 AM

More maneuver from "Dr." Shaw, this time in Palm Desert! this guy is a one trick pony!!!


Posted by: Mike Picardi at Aug 30, 2014 5:23:27 PM

That's an email address, not a link. I did go to changewalmart.org, but I didn't find a petition there.

Posted by: Ron's Log at Aug 20, 2014 4:06:06 PM

it's at the end of the article..


Posted by: Mike Picardi at Aug 20, 2014 3:37:16 PM

Michael Picardi, if there is a petition you want people to sign, could you provide the link for that, please?

Posted by: Ron's Log at Aug 19, 2014 4:42:26 PM

I wanted to share this as one more reason to oppose the Wal-mart that may be coming to DHS

We all know that Walmart has a bad reputation when it comes to the treatment of their workers. What you may not know is that the Walton family, who owns Walmart, is also trying to spread the Walmart business model to our classrooms.

Through their family foundation, the Waltons have spent more than $1 billion to support the privatization of our public schools. They've funded an aggressive corporate education agenda that has resulted in mass school closures and moving our public education tax dollars to for-profit schools. Most troublesome, the Waltons often seek to close schools in the very same low-income communities of color where their workers reside.

Now, teachers are fighting back. Across the country, educators have started to speak out against Walton-funded school closures. One Philadelphia school teacher even launched a petition calling on his peers to shop elsewhere until the Waltons change their way.

As community members, we need to support teachers who are bravely speaking out for the future of our schools and our children. Sign this petition to call for an end to the Walmartization of education!

From dozens of school closures to fighting against universal pre-K, the Walton family is using its massive Walmart fortune to undermine our public schools. We know that poverty is one of the biggest factors affecting student achievement. As owners of the largest private employer in America, the Waltons have the opportunity to single handedly raise hundreds of thousands of moms and dads out of poverty. Instead, they not only actively work against our nation’s public education system, but continue to contribute to the economic insecurity that keeps so many kids from getting the education they need and deserve.


Posted by: Mike Picardi at Aug 19, 2014 2:13:24 PM

The city attorney MUST write a letter to Mr. Shaw confirming the contract between the city and the developer based on these two meetings and the final vote by the Council.
In that letter, it must be made perfectly clear that Mr. Shaw is to receive 50% of the 1% the city takes from the TOTAL tax revenue. DO NOT assume anything with Mr. Shaw.

Posted by: Mike Picardi at Aug 18, 2014 8:14:56 PM

I have to agree with Russ on this one. I wasn't at the meeting but given that the contract expired in June it makes sense to me that a competitive bid process would be in the best interests of DHS. Extending an expired contract is just another way of sole sourcing without the benefit of a competitive process; not a good idea and not the way things are normally done in the business world. I think the pros far outweigh the cons of putting this out to bid.

Posted by: Doug at Aug 18, 2014 12:23:18 PM

The contract was for one year and expired in June 2014. The vote was to add two years to the contract, thus extending it. If the length of anything is increased, "extension" is a correct word to describe it. There is no size restriction on the word "extend" or "extension."

The City Manager also explained (maybe not on this item, but at some point in this or Tuesday's meeting) the downside of going out to bid. A City Council member should bear that in mind after the severe staff reductions and pay cuts.

Posted by: Ron's Log at Aug 18, 2014 11:43:13 AM

Significant points - points made during the council meeting - are omitted in your brief write up of the “extension” for the city engineering contract with Hill International.

A contract extension that increases a contract from $218,800 to $640,800 is not a contract extension. It is a new contract. A contract that so significantly increases the contract amount and changes the contract scope calls for the contract to put out for competitive bid. Through the competitive bid process our city saves money.

The benefits of the competitive bid process are well documented. Existing suppliers either sharpen their pencil with a new bid that saves the city money or another qualified bidder offers a competitive winning bid and the city saves money. We saw a prime example of the savings we derive with the robust bidding that took place for the city janitorial contract.

There are qualified engineering firms ready to bid, especially on a $640,800 contract and especially in this economy. Our city denies itself the benefit of the competitive bid process when it does not go out to bid.

As always, thanks for this space to expand on this topic.

Best Regards,
Russell Betts

Posted by: Russell Betts at Aug 18, 2014 11:02:20 AM

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