On Wednesday, Sept. 21, the Williams City Council (at the recommendation of city staff) voted to give $16,666 to Sutter Retail Development Corp., a private company that has been working to develop the former AM/PM location at 455 E St. for the past three years, where it plans to bring in a Starbucks.
If the action and parties involved sound familiar, they are: On April 20, 2016, the Williams City Council voted in a 3-2 decision to give the same company $17,500. Council members Santos Jauregui, Alfred Sellers, and Chuck Bergson voted to approve that expenditure. At that time, Sutter Retail Development Corp. said that there were contamination issues at the property, and that the state was requesting the removal of underground gas tanks before development could occur. The company requested that the city cover one-quarter of the $70,000 it would cost to remove the tanks, and the city obliged.
According to the agenda report prepared for the council, Sutter Retail Development Corp. recently learned that the fuel tanks do not need to be removed, so the city is off the hook for the $17,500 it promised to Sutter Retail Development for that purpose.
The company came back before the council to request more funding for property development last week, but this time, it was for a different purpose. Sutter Retail Development was requesting that the city pay for one-third of the cost for removing a deed restriction attached to the property.
As per the agenda report submitted by city staff, “One of the major blocks to this project is that the previous business, British Petroleum (BP) has a deed restriction on the property that does not allow any quick serve restaurants or convenience food stores other that (sic) a convenience food store operated under a franchise with BP. Sutter Retail has negotiated a settlement to remove the deed restriction for $50,000.”
Again, the council voted to give the company the requested funds in a 3-2 vote. Again, it was Jauregui, Sellers, and Bergson who voted to do so, citing the need to clean up a highly visible property in the city’s entryway, and the potential for greater costs should the city take the current property owner to court. Mayor John Troughton and council member Kent Boes (again) voted no. Boes and Troughton reiterated their concerns with handing out public funds to a private entity, and this time questioned the company’s need for the funds.
Boes asked why the company didn’t come to the council for $34,166 dollars in April (rather than the $17,500): Sutter Retail Devleopment said in its letter to the city that it had known about the deed restriction for three years.
“We’re giving public money to a private company to make profit, and they don’t have to pay it back. If it was a loan, I would have zero problems, but I firmly believe this is just a money grab, because they knew we were willing to give them $17,500, so they come up with a lower number, (and say) ‘Oh, they’ll approve it because now they’re saving money,’ when in actuality, they had it budgeted the whole time,” Boes said.
Troughton admitted that the property was an eyesore and that he would like to see it renovated, but added that he didn’t believe the city should be in the business of supplementing real estate deals.
“With (the problem of the tanks) eliminated, they should have been able to carry this themselves,” Troughton said.
City previously agreed to give company $16,666 in public funds behind closed doors, in violation of Brown Act
As it turns out, this wasn’t the first time the city agreed to give Sutter Retail Development Corp. $16,666 for the removal of the deed restriction: The agenda report submitted last week indicated that in July 2015, “The City Council approved assisting with the removal of the deed restriction by agreeing to pay one-third of the cost to remove the deed restriction, $16,666.00. At the time the City Council placed at (sic) 50-day limit on this offer which has expired.”
When city planner Monica Stegall said that council had previously voted to help with the removal of the restriction in the amount of $16,666, it caused some confusion on the council.
“That was for a different situation then, too, wasn’t it? It was for the removal of the tanks, wasn’t it?” Troughton asked.
“No, there were two separate issues: There was the tank, which the city agreed to participate $17,500 for removal of the tanks, and there was also the removal of the deed restriction, which they agreed to as well,” Stegall explained.
Three council members indicated that they had no recollection of voting to pay the $16,666 for the deed restriction, including Jauregui, Troughton, and Boes.
“As far as I’m concerned, we didn’t vote on this,” Troughton said.
Boes reiterated Troughton’s sentiments.
“I don’t remember that. Is it in the minutes anywhere?” Boes asked.
Bergson, the only council member to comment that he remembered the vote, indicated it wouldn’t be found in any minutes. He said that it had been agreed upon in closed session.
“During closed session?” Boes asked, raising his eyebrows in surprise. “That shouldn’t be happening.”
“Well, we’re doing it here,” Bergson said, after he was informed that such an action taken in closed session was in violation of the Ralph M. Brown Act.
Looking back at the city council meetings in June and July of last year, the council did indeed discuss the property at 455 E St. in closed session, under the Brown Act exemption for real property negotiations. City Administrator Frank Kennedy was listed as the agency negotiator, and the City of Williams and ARCO were listed as the negotiating parties. The price and terms of payment were listed as the items under negotiation. However, the letter from Sutter Retail Development to Kennedy, dated September 8, 2016, indicates that it was the entity that negotiated a settlement in the amount of $50,000 with British Petroleum to remove the deed restriction, and that the city agreed to split the cost with the buyer (Sutter Retail) and the seller (a Mr. Bindall) in July 2015. (For clarification, BP acquired ARCO in 2000 and sold the brand in 2012, but retained AM/PM and exclusively licensed the ARCO retail brand rights in Northern California: In other words, BP is the party that holds the keys to removing the deed restriction in Williams.)
“Since that time, Mr. Bindall (Seller) has decided not to contribute. The City of Williams agreed to contribute in July 2015, but there was a 60-day time limit on that commitment. We now need a commitment from the City of Williams in writing that they are still willing to contribute the share that they originally agreed to,” Kristen Longwell of Sutter Retail Development wrote in the letter.
If, as Bergson recalled (and both the agenda report from city staff and the letter from Sutter Retail Development Corp. state), the council voted to give Sutter Retail Development $16,666 in closed session at their July 2015 meeting, it did so in violation of the Brown Act by improperly invoking the real property negotiations exemption, said Nikki Moore, California Newspaper Publishers Association legal counsel. In revisiting the item in open session last week, however, the council effectively remedied their previous Brown Act gaffe.
“I don’t necessarily think their current actions, if remedying their previous actions, create new problems — but they have shown that they have engaged in improper closed session activities before. The interesting thing here is that the council has done what an official remedy would have precipitated if someone would have sued back then… it seems that the council has cured and corrected its own behavior,” Moore said.
It’s an action that — if it was actually made during closed session in July 2015 — every council member except for Boes should recall: According a scanned copy of the minutes from the council’s July 2015 meeting posted online, Troughton, Jauregui, Sellers, and Bergson were all present on July 29, 2015, which was the only meeting that month. Boes was absent from that meeting. It is, perhaps, worth noting that scanned copy of the minutes posted online for July 2015 were one of two left unsigned by the Mayor (Troughton) and the city clerk (Mariana Pineda), with the other being from the meeting in August 2015.■