The Simpleminded Mockingbird Reports On Hercules misGovernance

Note:    the report below, based on research conducted between late May 2012 and June 10, 2012, was sent on June 10 to initial subscribers to my distribution list.    With one modification (Item 2), there is nothing new here, except to people who haven't yet read it.

Safeway: Why the Romero Council Did Not Do "The Best They Could‏"

From:

Glenn Abraham (glennabraham@hotmail.com)

Sent:

Sun 6/10/12 11:12 PM

To:

glennabraham, hotmail (glennabraham@hotmail.com)

 I wrote the article below in order to gather in one place the objections to the Council's Safeway deal. This project may well be indicative of the general quality of the work of the council since last December. I am copying this to everyone whom I know to have an interest in Hercules affairs. This list will include a number of people who have absolutely no interest in this article, and to them, I apologize for the intrusion; for those who find this essay interesting and/or useful, I would appreciate any sort of feedback, whether positive or negative. If anyone is aware of important facts which I have omitted, I'd appreciate hearing about that, too.

The council may be about to step off another cliff on Tuesday, with Parcel C.

Thank you.

Glenn Abraham
glennabraham@hotmail.com

#1 in a series of occasional reports
Safeway: Why the Romero Council Did Not Do "The Best They Could"

The Safeway deal was initiated and pursued (to the point of virtual no return) in secret. From the time that the city manager sought authority to negotiate, on November 22, 2011, to the open vote taken on January 24, 2012, there was no mention to the public of what was going on (or if there was, I have been unable to find any evidence of it). The city manager presented the already-negotiated PSA (purchase and sale agreement) to the city council in closed session on January 24, they voted (in open session) to approve it on January 24, and that was the end of it. The decisionmaking process intentionally excluded the wisdom and wishes of the community. The process was antidemocratic and exclusionary.

Mussolini got the trains to run on time (più o meno), Franco got a reliable electricity supply to the big cities (mas o meno, and always excepting bad Barcelona), but the good results were corrupted by an unacceptable process. With the Safeway scheme, we lost our democracy to the corruption of an unacceptable process, and we didn't even get good results. The unacceptable process, executed by Steve Duran and approved by the Romero Council, inflicted on Hercules some very bad results:

1. We're giving Safeway a housewarming gift, and we will spend up to $4million to buy them that gift. Under §15(a) of the PSA, the city undertook to reimburse Safeway (actually, its wholly-owned subsidiary, PDC) up to $4million for "Removal and Relocation Work", to include removal of and disposal of excess soil at the site, and relocation underground and off the site of existing electric and water utilities. The New Council failed to learn the Red Barn Lesson which was taught by the failure of the Old Council: you don't give huge gifts to the folks on the other side of the negotiating table;

2. The price we received is approximately $9.27million (It's actually based on an amount per square foot, so gross numbers are approximate, and conditional.), but with Seller assuming an obligation to reimburse Buyer up to $4million for Removal and Relocation, our net could be as low as ~$5million. (The other $200,000 is explained below.) Since neither the city manager nor the council sought an independent appraisal (and they absolutely should have), we have no way to precisely measure how much we lost by accepting just a $5M net. The city should have also put the property out to bid, to see what interest was out there amongst potential buyers, and to get a sense of what competing bidders would pay. To my knowledge, this was never done, and we talked to Safeway and Safeway alone. Clearly, the property was worth $5M to Safeway, but that says little about what the property was really worth on the market.     Addendum 7/29/12:    since this report was first distributed last June 10, I have received additional information from a reliable source, which indicates that there was at least one other potential purchaser.    That entity approached Steve Duran regarding purchasing Sycamore Crossings (the lot sold to Safeway/PDC), but was rebuffed by Steve Duran, who said that the property was going to Safeway.    By all appearances, Steve wanted to sell to Safeway, and only Safeway;

3. The process was rushed. A reason given for the rush to judgment was that RDAs would be dissolved on February 1, a week after the council's vote on January 24, and that encumbering the land would make it more difficult for the state to claw it back. I assume this is technically legal, since I assume that Patrick Tang was consulted. (He did sign the PSA.) Whether this is ethical, I leave to the individual reader to decide. Whether this was a good reason to jump quickly into a bad deal is debatable, since there has been no evidence that the state was prepared to pounce on municipal properties on February 1st. It's June now, and I'm unaware of any attempt by the state to claw back properties. But the PSA was executed three days after the council's vote, and we're stuck with this thing;

4. We're paying up to $200,000 to remove the American Stores deed restriction, which is Safeway's problem (It is they, not we, who want to open a business that violates the restriction.), to be resolved at our expense. PSA §6(a). The city/seller filed a complaint in Superior Court for declaratory relief and to quiet title, against the beneficiaries of the deed restriction. Seller shall, at its sole cost and expense, cause the deed restriction to be removed. This is another failure of the New Council to learn from the mistakes of the Old Council in the Red Barn débâcle: the city shouldn't have to assume responsibility, financial (another gift) and otherwise, for Buyer's problems;

5. Our assumption of responsibility for removal of the deed restriction injects a major element of uncertainty into the whole process. Buyer has the right to terminate or assign the agreement if we haven't removed the deed restriction within 365 days. We could lose all of our expenses up to that point. §6(a)(iii) adds more complexity, including the possibility of a cost-sharing agreement whereby we would exceed the $200,000 cap;

6. Because we've made a deal with a buyer which wants to install a business which cannot operate until we get the deed restriction removed for them, the entire deal is in suspension, and could remain in suspension for a long period of negotiation and litigation (litigation which we could lose). During that period of suspension, the sale of our most valuable property will contribute little to our little treasury, but will contribute mightily to our expenses (legal, soil and utilities relocation). We could have looked for a buyer whose intended business was not prohibited by an existing restriction, who could have just gone in and built the bloody thing;

7. Because the store cannot be built until the deed restriction is removed, what could have been the bustling commercial center of a New Hercules will likely remain a ratty vacant lot for the forseeable future;

8. Safeway will create a huge surface parking lot, which nobody wanted, and will place it at the geographic heart of our city. What is, in effect, our Place de la Concorde, will be filled, not with the Obelisk de Luxor and the Fontaines de la Concorde, but with a sea of parked cars and trucks and vans;

9. The additional moving (very slowly) traffic generated by the presence of the Safeway store will, unto eternity, choke our already-overcrowded intersection at Sycamore and San Pablo into gridlock, slowing it into a second sea of parked cars and trucks and vans;

10. The gas station which Safeway insists on will abut a residential neighborhood, creating all kinds of grief with required permits and EIRs, and dramatically changing the neighborhood for those who live in those residences;

11. The Safeway complex, complete with parking lot and gas pumps and nearby apartments, will, in combination with the Romero Council's plans for Parcel C and Sycamore North, put an end to any dreams of enacting the Master Plan with its principles of New Urbanism (and that plan was crafted democratically, while the Safeway plan was crafted autocratically);

12. The products sold by a Safeway store, whenever and if ever it is built, will, for the most part, be exempt from sales tax. Sales of Froot Loops and bananas are not taxed. Our current low level of revenue from sales tax will be but gently elevated;

13. Safeway's wholly-owned subsidiary, PDC, "...is committed to residential uses of at least two stories along and facing Sycamore, across the street from the Sycamore North project": sounds like more apartments, on top of those envisioned for Sycamore North and Parcel C. An awfully large population of transient renters in what was once a community of homeowners;

14. The council vote to authorize execution was 5-0. Only one of the five councilmembers raised the issue of the Master Plan and what we were about to lose: Myrna de Vera; the other four briskly fell in line behind the deal; and,

15. At the January 24 council session, the session at which the council voted to authorize Steve Duran's execution of the PSA, the CEO of PDC acknowledged that he will not pursue the "original vision" for Hercules; so, say Goodbye to all the plans made in community meetings since 2000. There was very little discussion before the council jumped into the abyss of this major change. Total discussion time was under 17 minutes...hardly time to properly say Goodbye to the Hercules we had thought we were building.

Even a simpleminded mockingbird can see that, if this is the best that the Romero Council can do, we need a better council.