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24 Mar 2017

Questions That Need to Be Answered: A Chat With Lawyer Judy Deertrack Regarding the Downtown Palm Springs Redevelopment Mess

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Judy Deertrack: “The city over time absolutely bastardized the development restrictions on this project.” Judy Deertrack: “The city over time absolutely bastardized the development restrictions on this project.” Brane Jevric

John Wessman was a mighty developer, known for his lucrative deals across the Coachella Valley—and his significant influence at Palm Springs City Hall.

The high point of his career was supposed to be the Palm Springs downtown revitalization project, currently estimated by experts at $350 million in value.

Today, however, Wessman is better known for being indicted on numerous counts of alleged bribery involving former Mayor Steve Pougnet—and involving that downtown development project.

Wessman effectively retired upon the indictment and is not talking to the media. So, in an attempt to find out the latest news regarding the downtown development project—which has benefitted from millions of dollars from Palm Springs taxpayers via Measure J—we reached out to city officials, all of whom still publically support the downtown project. We started by trying to talk to Mayor Robert Moon.

We received this response from Amy Blaisdell, the city’s communications director: “Mayor Moon asked me to reach out to you regarding your request for an interview. He and the other councilmembers along with the city manager will not be granting interviews at this time regarding the investigation and recent indictments.”

This was a lie: Three weeks later, Robert Moon, City Manager David Ready and City Councilman J.R. Roberts sat down for a chat with KMIR.

In any case, we reached out to Judy Deertrack, a local urban lawyer and activist. She is a land and government-affairs consultant, and a legal specialist in land-use law. She is a Palm Springs resident and has lived and worked in the Coachella Valley since 2004. Here’s an edited version of our chat.

Let’s dig in from scratch: When did the trouble start brewing with the Palm Springs downtown project?

The problem with the downtown plan is that it was processed as … a relatively modest redevelopment project for the Desert Fashion Plaza that involved demolition and renovation.

How was Measure J entangled with the downtown project?

In early 2012, the state of California (ended cities’) redevelopment powers and financing, but the city went on to enlarge this project anyway, and financed it with a municipal bond issuance for $47 million that is paid back through Measure J funds at $3.3 million per year for about 25 years.

What was Wessman’s cut in the whole deal?

Since the original release of $47 million in 2012, change orders, (the) purchase of the event center lot, and its proposed approvals have added about another $20 million. Wessman has also gotten an additional $150 million in hotel subsidies coming to him through a bed-tax rebate. This project originally did not anticipate hotels. That is inching toward a quarter-billion in subsidies.

Has the $47 million been spent by Wessman, and has it been spent solely on capital improvements?

No one knows, but $32 million went into a private escrow account owned by Wessman for this project, and the city claims it has no access to know the status of that account currently.

How did the city of Palm Springs end up in such a mess?

I can’t in a few words give an exact story of what happened. Suffice to say, the permits started going through as project finance agreements rather than engineered diagrams. The city and Wessman kept the conceptual plans fairly private and vague enough that the dimensions could be changed at will, and there was no clear planning process in sight. A lot of this bypassed public hearings, except for the hotels.

So Wessman was also given a lot of freedom?

There appeared to be no upper limits … because the city used and abused the planned development permit (PDD). The specific plan set limits on height… and setbacks, and bulk, and floor-area ratio. Then the PDD took those limits away.

Is it possible the city violated any significant regulations and laws?

California’s environmental-review laws say that when cities set limits in their general plan and specific plan, it creates an environmental threshold for impacts, and when they build in excess of those limits, violating the threshold is a “significant environmental effect” that creates the need for further data, evaluation, public hearings and mitigation of project impacts.

How exactly did the city get away with such inconsistencies?

Palm Springs exceeded the limits of its plan on downtown, and then concluded there was no significant environmental effect of doing so—and made what I consider to be false findings that the project “was consistent and in conformity” with the general plan and specific plan, when, in fact, using the PDD and the project finance agreements to set the project development standards and requirements was a violation of those mechanisms.

The resulting “inconsistency” between the project and the specific plan is why in January 2016, the new City Council went back in and re-did about 50 percent of the wording of the specific plan to eliminate all of the outstanding inconsistencies. It was a major cleanup—but is not allowed in the state of California. A plan cannot be later amended to conform to illegal approvals that violate the plan.

It appears that the whole downtown affair is far from over.

Well, the original specific plan is lost to time and many, many changes. All of this occurred during an alleged racketeering scheme between the mayor (Pougnet) and the developer where the mayor, in the words of District Attorney (Michael) Hestrin, was paid to influence the vote of a majority of the sitting City Council. And no matter what was happening, and how illegal the permit processing became, there was always a majority vote—and tremendous pressure put on the architectural and planning commission boards to pass this project up and along, not on evidence, but on influence.

There were some attempts by the city to clean up the mess, correct?

That awful specific plan cleanup … in January 2016 was the tail wagging the dog! … The city over time absolutely bastardized the development restrictions on this project, and now City Hall is bragging they have cut the size by 49 percent. How unique! This sounds like a retail fire sale where the prices are increased 100 percent, and then cut back 50 percent, and we are told we just got a bargain.

What can be done to remedy this downtown quagmire?

This city and its citizens should be demanding change—a lot of change—and a lot of explanation for what has happened. Instead, we are allowing ourselves to be bullied and hoodwinked. The citizens of Palm Springs have been far too compliant with this outrage. Part of the problem is that no one is demanding information. Virtually no one is challenging the inconsistencies and untruths that abound on the public record. Just a few have stood up—too few!

If you were on the City Council, what would you do?

It is an obligation of the sitting City Council to first order a full accounting of expenditures and funds from Wessman on the project to date. Then, audit all accounts, and confer with the state of California on compromised public funds, such as municipal bonds or subsidies. Identify notification responsibilities to the bond-holders. The city has not acknowledged these obligations to date.

1 comment

  • Comment Link JC Monday, 10 April 2017 16:13 posted by JC

    Thanks for the more aggressive reporting. The KMIR interview was more of a marketing piece, with a bunch of softball questions lobbed at the Wessman representative and City Council representatives.

    My question would have been: Why didn't the payments from Wessman to Pougnet that were reported on disclosure forms raise any red flags to the people that are in charge, like David Ready? Do these politicians file a form, and then the responsible bureaucrat just checks off a box?

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