Merced Development Rodeo: Merced taxpayers, beware of your city council

A cabal of Merced City Council members, city staff and developers ripped off the citizens of Merced for a bundle two weeks ago. Just in case we couldn't put a face on the usual suspects, developer and almond grower Greg Hostetler showed up at Monday's council meeting to berate retiring Mayor Stan Thurston for speaking truth to the city's development staff.
The issue was whether Merced would quit paying fees it collects from developers to pay for mitigation of the traffic impacts caused by their business. The city council decided to quit paying the fees for two years. This puts the public in the position of either suffering the results in traffic congestion or being forced to pay for it themselves.
The city ordinance to repeal regional transportation impact fees for two years, approved on July 18, is a first-class example of how development does not pay for itself despite the pious speeches of councilmen who say it does while voting to insure it does not.
Arguing against the Developers' Boys in the Merced City Council last month, Thurston quoted taxpayer constituents who had concerns about the council's decision. Their concerns focused on a proposed ballot measure for the General Election in November, called the Transportation Expenditure Plan, which would raise the sales tax in the county by a half percent to fund transportation projects. The taxpayers' question was:
Why, should they vote to raise their sales taxes to help fund regional transportation projects if the local governments are not going to collect those funds from those developments that actually contribute to the traffic impacts?
The response from the Developers' Boys on the council did not rise to the level of argument. However, Councilman Mike Murphy, the developers' choice for mayor in the coming election, expressed compassion for developers, "who pay hundreds of thousands of dollars in other fees."
Mayor Stan Thurston calculated that projects anticipated in the next two years that would pay no RTIF would include:
an 86 unit hotel;
several hundred new permits for residential homes;
a huge retail development near mission;
1,000 student housing plus other development on Bellevue Road.
Given this incomplete information, we can still make some calculations about the amount of money for traffic mitigation that developers will not have to pay thanks to the council's decision:
86 hotel units @ $1,892 per unit = $162,712;
estimated 300 new homes @ $3,115 per unit  = $934,500;
estimated 1-million square foot retail development near Mission Interchange @ $7,161 per 1,000 square feet = $7,161,000;
1,000-unit student housing @ $1,892 per unit = $1,892,000;
estimated 200,000 square feet of retail commercial space @ $4,416 per 1,000 square feet = $883,200;
however, depending on the level of turnover among different projects within the roughly estimated 200,000, the rate can vary between $7,161 and $2,780 per 1,000 square feet;
finally, considering the proximity of the Bellevue Corridor to UC Merced, the "high-tech/bio-tech engine for growth," let us estimate 500,000 square feet of commercial office space @ $3,337 per 1,000 square feet = $1,668,500.
Roughly, the total that the Merced City Council might contribute to developers in the next two years could be around $13 million. We also concur with Thurston that once this two-year "repeal" is in place, it will be duck soup for developers to compel extensions from here to eternity. Once local government blinks before developers' threats, they will do it again and deny they are doing it again and again.
However, for many reasons, this can only be a very rough calculation because the RTIF is -- or was -- shared among all the jurisdictions within the Merced County Association of Governments. MCAG exists to share and prioritize transportation funds in the county. Its primary function is to coordinate with the state Department of Transportation, which in turn establishes priorities for federal highway funds for California.
Los Banos began the pullout of MCAG two years ago, first refusing to pay RTIF for six months, then in perpetuity. Steve Carrigan, former economic development director of Stockton (until it went bankrupt), was city manager of Los Banos at the time. Now he is city manager of Merced.
Other jurisdictions followed, leaving Merced, Atwater and the county alone paying RTIF. Thurston and MCAG Executive Director Margie Kern informed the council that the state Transportation Commission negotiates only with county associations of governments, not with individual jurisdictions (either municipalities or counties).
Thurston was also critical of the language of the ordinance, challenging this clause:

WHEREAS the City of Merced has lost projects based upon the City continuing to charge the RTIF, despite the City having lowered its Public Facilities Impact Fees by more than 55 percent in 2012 ...

Specifically, the Mayor asked Development Services Director David Goncalves to name any projects lost because the city had continued to charge the RTIF. Goncalves' sententious, increasingly desperate and hostile reply reminded us of a spirited Steelhead fighting the hook with all its strength. He said a number of things but could not or would not come up with the names of any projects that had been lost due to RTIF. We think it was this interchange that provoked developer Hostetler to come to the defense of his boy on staff at the following meeting (referenced above). In Merced County, developers have more power than officials elected by the public.
Councilman Pedrozo concluded another dialogue with himself by saying that he didn't think that suspending RTIF for two years was giving in to developers but was "striking while the iron was hot." We interpret this to mean that his policy is to suspend RTIF -- and who knows what other development fees? -- when developers are actually developing and the city can assess these fees on their projects. It will be time enough to reestablish the RTIF when developers are not asking for project permits.
Echoing his political nemesis, Councilman Murphy, Pedrozo also mentioned a sum around $5 million. Murphy said that the state had backfilled MCAG's loss of RTIF with $5 million. Pedrozo mentioned $5.7 in Merced RTIF funds collected since MCAG began collection around 2003. Given our calculations for the possible losses of RTIF in just two years, this figure confused us until we caught a vague reference to projects somehow exempted from paying RTIF. Apparently there is quite a slip between cup and lip when you're talking RTIF.
Thurston even had a proposal to deal with the situation. He proposed that jurisdictions that pay their RTIF should move to the top of the pile of projects recommended by MCAG ("first tier projects") while the projects of jurisdictions that did not pay their RTIF should drop to where the sun never shines ("second tier projects").  But the council majority, the Developers' Boys, wanted none of that.
UC Merced's first chancellor, Carol Tomlinson-Keasey, was fond to telling adoring Merced citizens that proximity to a UC campus is destiny, more kids go to college, the campus is a "high-tech/bio-tech engine of growth," and local people will just be elevated out of their dull, narrow, small-town rural ways.
Every developer who proposed a project to the city or the county and other nearby cities during the construction boom that occurred simultaneously with the UC Merced campus construction mentioned that his or her project was needed because of the new university. Countless people from California and beyond, even if they didn't know it yet, were going to move to Merced County because of UC Merced. And, of course, development was going to pay for itself.
Merced's streets are crumbling except the new ones north of Olive Ave. The traffic congestion on main north-south thoroughfares, G, M, and R streets and SR 59, gets worse by the month. There is still no supermarket south of SR 99, flooding is worse there in the winter, and the Developers' Boys are fighting repaving M Street between Childs and 8th Street, with contains a busy medical/dental clinic and two schools, because they want to straighten out a new boulevard on the north side of town.
Merced City and County got the Golden Goose, the UC campus in the San Joaquin Valley. They had all the power local government could ask for to make intelligent land-use decisions. This was one of the hottest real estate markets in the nation during the boom.
But local government was small minded, easily intimidated and at times corrupt. (1) The results lie all around the outskirts of town -- dirt streets with curbs and bundles of wires sticking up like the tree on the set of "Waiting for Godot."  Although some neighborhoods in central Merced have held their own against the tidal wave of foreclosures and Section 8 rentals, many have not, and the town is not a good place to walk anymore. Suspicion has replaced friendliness as strangers have replaced neighbors.
Bad land-use decisions, and this RTIF decision is one, have real consequences. But it's business as usual, here in another round of the Merced Development Rodeo.
Merced County Development Rodeo: Ranchwood Event
Submitted: Mar 10, 2006
San Joaquin Raptor/Wildlife Rescue Center and other members of the concerned public always wondered how developers in Merced County rode roughshod over local, state and federal environmental laws, regulations, agencies and its own public. But, rarely have they been granted the insight provided by this telephone message, recorded on Feb. 3, 2006.
Badlands has blocked out the last two numbers of the telephones the developer left for return calls from the supervisor he thought he'd called as a courtesy to the developer.
(Both Mrs. Crookham and Mrs. Kelsey were Merced County supervisors when this phone call was made. --ed)
Mrs. Crookham, this is Greg Hostetler calling. My cell number actually is 704-13** if you need to call me. I’m on a cell phone cause my other battery I’m trying to save that, preserve it you know. I’m into preserving things too from time to time, but anyway, uhm, I’m just calling you, uh, to let you know that…ah if you don’t already know… that we’ve had a lot of drama and trouble in the county ... everywhere I do business [inaudible] apparently I guess because of Mrs. uh…Mrs. Deirdre Kelsey ah… thinks staff may need some help, because she’s climbing all over them… using [inaudible] staff for her personal pit bulls…trying to bite our people, and our staff -- this is my opinion -- causing a lot of drama in Livingston, for the City of Livingston and we’re trying to uh in the progress of uh in the process of installing a sewer line over there. If you haven’t talked to Dee Tatum, he could fill you in on what’s going on over there. But uh this probably will not end any time soon. So, I just wanted to give you the update, and if you could give staff any help I’d appreciate it… Thank you!
End of message…to erase this message press 7, to save it press 9, to hear more options press 0. To replay this message press 4, to get envelope information about this message press 5. To…. Sent February 3rd, at 11:48 am from phone number 704-13** duration 1 minute 14 seconds. To erase this message press 7. To save it press 9. This message will be saved for 21 days. End of messages.
On Feb. 9, City of Livingston Mayor Brandon Friesen wrote San Joaquin Raptor/Wildlife Rescue Center and members of the public, accusing them of “conducting a documented pursuit and vendetta against Ranchwood Homes.” The mayor said public questions raised and public requests for documentation on this project have "placed our City in the middle of mud slinging and we will not stand for it.”
· The 42-inch sewer trunk line from the City of Livingston: Mr. Hostetler, who does business as Ranchwood Homes, is referring to a mile-long sewer trunk line he built from the corner of the Livingston wastewater treatment plant to a few yards away from where he plans to build a subdivision. The trunk line is built entirely outside the jurisdiction of the City of Livingston in land under county jurisdiction. On Feb. 16, when the project was still incomplete, County Counsel Ruben Castillo wrote a letter to the city attorney of Livingston instructing him in the number of laws the city had broken by "approving" this project beyond its jurisdiction. However, by Feb. 28, the project was completed and the 42-inch, mile-long sewer pipeline was covered over. The public has been granted access to neither city, county nor LAFCO files on this project, despite requests to county CEO Dee Tatum, county Counsel Ruben Castillo, county Director of Planning and Economic Development Robert Lewis, Local Agency Formation Commission Director John LeVan, and the county Board of Supervisors. A request for a meeting with CEO Tatum and department heads has also gone unanswered. The County has taken no action.
· 1,000 acres in North Merced: Ranchwood cleared approximately 1,000 acres of pasture bounded by G Street, La Paloma, Merced Country Club and Old Lake Road, north of Merced. The field crossed Fahrens Creek. Ranchwood put in field roads crossing the creek at two locations, tore out all vegetation along the creek and pushed freshly disked dirt into the stream. The land contains wetlands, is probably habitat for federal and state protected species. There are probable violations of the federal Endangered Species and the Clean Water Act. The public filed a request for code enforcement with Merced County. The County took no action.
· 300 acres near Le Grand: Ranchwood disked and deep-ripped a portion of a 300-acre field on the corner of White Rock and Le Grand roads in county jurisdiction. The land contains wetlands, is probably habitat for federal and state protected species. There are probable violations of the federal ESA and CWA. The public filed a request for code enforcement with Merced County. The County took no action.
· 1,100 acres near Le Grand: Ranchwood deep-ripped, leveled and disked approximately 1,100 acres of seasonal pasture land on the SE intersection of Buchanan Hollow and White Rock roads, also near Le Grand. The pastures contained small streams, wetlands, vernal pools and federal and state protected species. The public filed a request for code enforcement with Merced County. The County took no action.
These are significant conversions of land. Merced County should have directed Ranchwood to do proper environmental review before proceeding. Instead Merced County turned a blind eye to these significant conversions.
State and federal agencies were notified and are expected to uphold regulatory compliance on these projects.
· Franklin County Sewer District: Ranchwood excavated two additional percolation ponds in a field west of Santa Fe Road north of Highway 59 to service a subdivision Ranchwood is building in the Franklin-Beachwood area. The public has requested documentation on this project.
· Land swaps in Planada:
On April 22, 2003, J&J Family Trust sold a parcel of approximately 20 acres on Gerard Road to the Central Valley Coalition for Affordable Housing for $300,000 (approximating from the tax assessment of 1 percent).
On October 10, 2003, CVCAH sold the parcel to the Merced County Housing Authority for $300,000 (according to what MCHA official Nick Benjamin told members of the Planada public).
On Dec. 2, 2004, a complex land swap took place in Planada.
A. MCHA sold the same parcel (APN# 053-145-024) to the Pacific Holt Corp. for $550,000 (according to the tax assessment).
B. A.K. Karmangar, a Planada farmer, sells two parcels (approximately 20 acres) to the MCHA for $550,000 (according to the tax assessment).
C. Pacific Holt sells parcel APN# 053-145-024 to Mr. And Mrs. D. Tatum (CEO Merced County) for $269,500.00 (according to the tax assessment).This is apparently a savings of $280,500.00 to the Tatums for a piece of property Pacific Holt bought the same day for approximately twice as much as they sold it to the Tatums.
On Sept. 29, 2005, Hostetler Investment, LLC filed a memorandum of right of option to Pacific Holt Corp to purchase 50 percent of any or all Wallace and Karmangar property actually acquired by Hostetler, and at the actual gross per-acre price. “For instance, if, as expected, Hostetler actually acquires the entirety of the Karmangar Property containing 410+/- gross acres, the Option would apply to 205 +/- acres. The purchase price for both the Wallace Property and the Karmangar Property shall be the actual gross per acre price paid by Hostetler to purchase the Wallace Property and the Karmangar Property which shall be payable in cash on or before the close of escrow.”
On Dec. 23, 2005, a new entity, Pacific Holt Residential Communities, filed for a county General Plan Amendment for residential construction as the owner of 1,390 acres to be added to the Planada SUDP and to be known as the Village of Geneva at Planada. The acreage is composed of Karmangar and Wallace contiguous parcels.
Pacific Holt Residential Communities consists of Hostetler Investments LLC, Pacific Holt Corp., Premiere Partners III of Illinois, Bear Creek Ranch Inc. and local land holders, Bud Wallace, Inc, Opie and Elizabeth Wallace, Partners, and Hare &Sessions Development, Seattle WA.
The County approved the 2003 Planada Community Plan Update to the Merced County General Plan. The PHR Communities property lies outside of the Planada SUDP except for a 20-acre parcel. The Planada Community Plan has been legally challenged and the case is now in state appellate court.
This is by no means all the Ranchwood Homes projects, even in Merced County alone. It’s just a few examples the public has been able to collect from the east side of the county.
Could county CEO, Dee Tatum, fill in the public (after he’s explained it to Supervisor Crookham) on leapfrog, chaotic, unplanned development – the low, cowboy standards of Merced County planning with an out-dated General Plan, speculation-driven development and a new, incompetent planning director? Why does the County routinely disregards proper public process, the protection of public resources? Why has it shown neither the political will nor the ability to plan coherently in the midst of a speculative real estate boom that began before UC Merced was a “done deal”?
Would CEO Tatum explain why he hired a planning director from Nevada who is incompetent in California environmental law or public processes like the Public Records Act?
Could Supervisor Kathleen Crookham illuminate the public on her special relationship with Ranchwood Homes? Would Supervisor Jerry O’Banion of Los Banos explain how Ranchwood Homes does business, since O’Banion knows all things that occur on the west-side turf he shares with Ranchwood?
The Merced County public should ask how county government can do anything but build a reputation as the most corrupt local land-use authority in the state when the top Democrat opponent of environmental law and regulation in the House of Representatives and one of the key fixers behind UC Merced, Rep. Dennis Cardoza, Shrimp Slayer-Merced, is welcome to sit on the third floor of the county administration building.
The University of California, aided by Cardoza, former Rep.Gary Condit, Blue Dog-Ceres, the Condit children, Gov.Gray Davis and compliant state resource agency heads, railroaded (the term “fast-tracked” was substituted) UC Merced through environmental law, regulation and took local land-use authority, set the cowboy standards for development in Merced County. UC also acquainted local land-use jurisdictions with the magic of legal indemnification against legal challenges brought to protect Merced County natural resources, air, water, agricultural land, infrastructure, public health and safety, and endangered species as well as protecting proper public process.