Fly over the 0.6-square-mile blip of Sand City on Google Earth, and you’ll see flat warehouse roofs in red and aqua; sprawling parking lots full of cars; and Highway 1 dividing the concrete swath from the foamy shoreline.

In statistical terms, the city is an outlier. Population: about 350. City parks: 1. Work force: 3,000. Daily visitors: up to 50,000. Hotels: 0.

But numbers and maps can’t convey the creativity happening inside those warehouses, the contaminants running from those parking lots, the politics inscribed in those property lines.

If Sand City were a sculpture, it would be a mixed-medium amalgam of metal, diesel and plastic rising from a liquid base. Here we inspect its raw materials, from the steel edges of its history to its water-carved future – a collaborative work in progress.

CITY WITH A ROUGH PAST

When Sand City incorporated in 1960, the area was defined by two major sand mines along the shore and a landfill at its northern end. A 16-year-old graphic designer sealed the city’s industrial rep with a logo of dump trucks, smokestacks, sand dunes and seagulls.

Eighteen years later, that kid became the city’s figurehead. Today, with 30 years in office, Dave Pendergrass is the longest-tenured mayor in the region and a fixture on roughly a half-dozen regional agency boards. He describes his position as a 24/7 job on a $300 monthly stipend.

He figures he knows more about Sand City’s history than any other living person. With little hesitation, he rattles off the dates, names and policies that set the city’s path over the past half-century.

After the sand mines shut down in the 1980s, he says, the city’s revenue creek flowed mainly from business license fees and commercial property taxes. In search of a stronger stream, its fledgling planning department targeted the fallow fields and industrial waste at the end of Playa Avenue.

By 1990, construction had started on the Sand Dollar Center, an outdoor mall anchored by Costco. Four years later the Edgewater Center settled in across Playa, another big-box jungle, anchored by Target.

In 1993, planning director Kelly Morgan was promoted to city administrator, a post he held until 2008. Morgan oversaw an era in which the city leveraged state and redevelopment funds to shift away from increasingly hard-to-permit resource extraction industries and toward visitor-friendly redevelopment. In the early 1990s, Pendergrass designed a new city seal: puffy clouds and seagulls soaring over a pristine shoreline.

“These are smart guys. They could see the handwriting on the wall – it was going to be more and more difficult to keep mining,” Morgan says. “Over time, the properties will redevelop, and it will become an intense urban area.”

In the mid-1990s the regional park district used grant funding to clean up the closed landfill at the junction of Fremont Boulevard and Highway 1, where the Peninsula’s waste had been burned and dumped in the 1940s and ’50s.

The 1996 “Coastal Peace Accord” between Sand City and the local parks district – which had squabbled for decades over the fate of the post-industrial beach – designated all of the city’s 1.5-mile coastline as open space, except for two “building envelopes” slated for hotels.

As industry moved out of Sand City, artists moved in, drawn by cheaper rent than in neighboring cities and ample space for heavy-duty creativity. But tension with City Hall mounted when officials began to red-tag warehouses where artists were illegally residing.

Once the city corralled its big-box cash cows, however, it finally came to terms with its eccentric new demographic. A General Plan update in 2002 changed much of the city’s commercial zoning to make it legal for artists to inhabit their studios.

Now officials are focusing on more mixed-use redevelopment. One example is the modern building on Ortiz Avenue, developed by artist Greg Hawthorne and designed by architect Jerry Lomax, with commercial space on the bottom and condos on top.

The other is developer Al Saroyan’s four-story Design Center a few blocks away, where the Monterey Sand Company’s batch plant once stood. The city heavily subsidized the development, viewing it as exactly the kind of mixed-use infill Sand City needs. The bottom floors showcase construction materials; the top two feature high-end residential condos and lofts. A towering, abstract Hawthorne sculpture in the courtyard visually unites the two uses. According to the city’s spring 2008 newsletter, the building is “a beacon in the city’s West End district, signaling the potential future redevelopment of Sand City.”

Then the economy tanked. Last spring, faced with lawsuits from five unpaid contractors, the building foreclosed.

The city’s next redevelopment target is an 11-acre cluster of run-down old warehouses around south Tioga. The former site of roofing, canning, garbage hauling and wetfish-processing companies is now in the hands of The Orosco Group, the same local developers responsible for Edgewater Center and Seaside’s struggling City Center.

Partner Patrick Orosco hints the Tioga redevelopment plans are inspired by Sand City’s influx of artists. “That kind of bohemian vibe is consistent with the way Carmel was founded just after the turn of the century,” he says. “It’s a really fun opportunity to be creative ourselves.”

IT’S THE WATER, STUPID

Sand City Councilman Todd Kruper fondles the rough, ropey rolls of sediment filters in the city’s brand-new desalination plant. “For artists, that’s beautiful stuff,” he gushes.

The rest of the plant is pretty, too, the way Legos and Play-Doh tubes are pretty: Shiny new pipes in blue, white and gray snake through the 68-by-58-foot warehouse in a maze of water magic. The system draws brackish water from beach wells, runs it through a series of filters and pumps, separates out the salt, and produces clean liquid gold. The last step of the process involves injecting the pure water with carbon dioxide, caustic, chlorine and calcite so it matches the rest of Cal Am’s tap water.

Plant operators have been testing the system for more than a month now and are almost ready to run it continuously, according to the city’s consulting engineer, Richard Simonitch. It’ll produce 300 acre-feet of water per year, three times what the city currently uses. For now, the surplus will flow back into Cal Am’s regional system. But eventually, the city plans to tap the new water for its own redevelopment.

“The only new [water] permits that can be pulled in the Monterey Peninsula are gonna be from Sand City,” Simonitch says.

“This area is governed by water. That’s how the politicians have managed to curtail growth,” Kruper adds. “This puts Sand City into a prime development position.”

The Seaside Basin adjudication of 2006 gave Sand City the rights to all of the basin’s brackish water. The city financed most of the $14 million construction with bonds and reserves, and brokered a private-public partnership allowing Cal Am to operate the city-owned plant. The project encountered suprisingly few permitting roadbumps, thanks to its small scale and environmentally sound vertical beach wells.

A turbidity alarm goes off, a sound Simonitch describes as “kickin’ donkeys,” and the system shuts down. He says that’s normal for the testing phase. But the hiccup typifies a trial-and-error approach to redevelopment that doesn’t always work out in the city’s favor.

REDEVELOPMENT ROULETTE

The city’s gamble on big-box shopping is paying off in sales tax revenue: The bounty from Costco, Target, Marshall’s and the like enriches city’s $6 million general fund to the tune of almost $1.6 million per year.

That breaks down to more than $5,000 per resident. Carmel-by-the-Sea, by contrast, pulls in less than $600 in sales tax per capita; Pacific Grove trails at $100.

But a 20-year-old settlement with Seaside means Sand City has to share. When the Sand Dollar shopping center was nearing construction in 1989, a dispute arose between the two cities over the right-of-way in Sand City’s redevelopment area.

Pendergrass wanted to go to court over it – a tiff that led to his temporary recall, demoting him from mayor to city councilman for six months. The result was a revenue-sharing agreement that gives Seaside roughly 20 percent of Sand City’s sales tax receipts from the shopping center. In exchange, Seaside agrees not to challenge Sand City’s redevelopment projects: a quid pro quo that amounts to the little city paying the bigger city to be an ally.

Meanwhile, officials are hoping to milk two other cash cows that forage along the shoreline.

SNG’s Monterey Bay Shores “eco-resort” and a King Ventures inn, each planned at roughly 340 rooms, are proposed for Sand City’s remediated dunes. Despite the steep permitting hurdles both face, Pendergrass is pulling all the strings he can for the luxury hotels, which promise steady waves of transient occupancy tax revenue.

While big boxes and flashy hotels cater to Sand City’s coffers, small businesses add soul. The city got a major dose of cool in spring 2007 with its first official late-night hangout, Ol’ Factory Café, a bar/eatery/coffee shop/art gallery on Contra Costa Street. Once a “rusting hulk of corrugated crap held together by bird poop,” as restaurant owner Morgan Christopher describes it, the building is now a light-filled, eco-chic center serving up crunchy fresh fare and one of the Peninsula’s best beer selections.

“I think the area, primarily the West End, has more potential than anywhere else on the Peninsula,” Christopher explains. “There are many like-minded individuals around town who think this could be an incredibly hip destination. But that requires hip people who look outward for inspiration.”

Christopher says Sand City’s small businesses need more street parking, more signage to draw cars and pedestrians, and a City Hall less focused on big-box development.

“There is a staleness to their approach that probably stems from too much time in office for too few people,” he writes in a pensive e-mail. “Sand City is quite friendly towards the types of businesses that have been here for years. And while they have tried to be helpful towards the new type of business model that we represent, some folks here are quite unable to recognize what the needs of small retailers are – our needs and Costco’s have very little overlap.”

A few blocks from Ol’Factory, Elena Salsedo runs the only other independent Sand City hangout: Sweet Elena’s Bakery & Cafe, tucked on Olympia Avenue among irrigation supply and auto repair shops. After 16 years in the city, Salsedo estimates one-third of her customers are Sand City locals.

“The city has always been very cooperative and nice about the needs of businesses,” she says, seated at a cheery outdoor table just cleared of a decadent torta caprese.

But she also sees room for improvement, starting with a stronger Chamber of Commerce and citywide charm makeover. “I need a two-way street,” she says. “We need trees. We need a park. We need the city to be a city.”

ARTS MEET POLITICS

A three-legged bull commandeers the yard fronting Councilman Todd Kruper’s trailer. He says the rusty steel creature, surrounded by desert flora across from Ol’ Factory Cafe, is loosely inspired by the black bear that wandered through Sand City and into Fort Ord in the late 1990s, but with a bovine twist.

The councilman’s little black Schipperke, Slipknot, bounces beside him like a walking toupee on a short stroll through the West End. Kruper dresses conventionally in a collared shirt tucked into belted khakis, but everything else about him – the sandpaper glued to the back of his business cards, the propensity to call me “girlfriend,” the primary-colored chaos of his Ortiz Avenue art galllery – says eccentric.

Kruper moved to town when he started as a studio tech at CSU-Monterey Bay. Wanting nothing to do with the stuffy university neighborhoods, he felt inspired by the raw space in Sand City. Ten years later, he says he knows about one-fifth of Sand City’s residents by name, and probably the rest by face.

He points out examples of the West End’s industrial-kitch aesthetic, from the modern mixed-use building on Ortiz to the sculpture in front of the Design Center. It’s also embodied in his “Sand City Angel,” a found-art winged creature with an upside-down safety lamp for a head and a jumble of O-rings and telephone wires for brains.

A councilman from 2000-2004 who was re-seated last November, Kruper has advocated friendly policies toward the city’s right-brained residents. “We started seeing arts as an economic opportunity,” he says. “Instead of getting rid of all these people, let’s incorporate them.”

His own living arrangement is a testament to that meshing. To the south of his trailer is the pink house of his landlord and fellow councilman, Jerry Blackwelder. His northern neighbor is former city administrator Kelly Morgan, whose home is guarded by flamingoes and a high-flying pegasus.

Unlike its prissier neighbors, Sand City takes a hands-off approach to regulating yard art, Kruper says: “It’s a small town. We don’t want to be messing with people.”

The town is so tiny, in fact, that the five-person council has a hard time with the conflict-of-interest rule directing members who live within 500 feet of a property to recuse themselves from related votes. Not only are Kruper and Blackwelder neighbors; Councilman Craig Hubler is a block away, by the Design Center. Mayor Pendergrass lives on the hill above City Hall, across the street from Councilwoman Mary Ann Carbone.

In order to maintain a three-person quorum on certain agenda items, councilmembers pull straws to determine who stays.

Meetings are generally free of controversy, Kruper adds, and rarely stretch beyond two hours. Asked to name the council’s most recent debate, he stares blankly into the distance for about 10 seconds.

“I got fussed up because the cops wanted to change the color of the police cars,” he finally says. “We had this beautiful blue!”

To the artist’s dismay, the cops won out with black and white.

A FUTURE DRAWN IN SAND

Like everywhere else, the recession has hit Sand City – a reality most deeply felt at the Design Center. But Pendergrass says the tiny town is better insulated than most.

Retail sales are down, he says, but “nothing like anywhere else.” There were no furloughs at City Hall, and only one part-time employee (among six administrators and nine full-time police officers) was let go.

The promise of new water keeps redevelopment at the top of the agenda. Costco might build a new gas station, he says, and “major retailers” are looking to fill vacancies in Edgewater. City Hall is slated for a makeover, and the city recently bought a large property to create more parking in the West End. In a decade or two, Pendergrass says, the city might even expand the desal plant.

Orosco, who’s the board president of the Seaside-Sand City Chamber of Commerce, envisions Seaside becoming the Peninsula’s music hub, and Sand City’s West End its visual arts district. “We’re hoping the city will continue to attract creative spirits, from architects to restaurateurs to gallerists,” he says. “We want Seaside-Sand City to eventually be the place where you let your hair down and have a little fun.”

It takes more than business plans, however, to transform a town. Sand City can have its new gas station and hotels, its entrenched leaders and its big-box sales taxes. But the real power to turn an industrial wasteland into a thriving arts district lies with the independent businesses that weld culture to corrugated metal, with the underground artists who create beauty from polluted sand.