Wednesday night, City Council members admitted the city of Pacific Grove had dropped the ball over a desired reimbursement deal with the developer of the Project Bella hotel project.
Nevertheless, the council members voted unanimously to forgo pursuing reimbursement, much to the consternation of some residents.
As a result, the developer, Domaine Hospitality Partners, LLC, will not have to repay any portion of the city's costs associated with development of a Local Coastal Program.
The convoluted issue got its start a year ago, when the council voted in February 2016 to direct city staff to negotiate a reimbursement contract with Domaine. The developer had requested “fast tracking” the coastal program for an August 2016 approval by the California Coastal Commission, according to Mark Brodeur, Pacific Grove's director of community and economic development.
Coastal program approval would mean the city would take the lead on approving the hotel—which is proposed to replace the American Tin Cannery outlet mall—rather than the Coastal Commission, possibly shaving both time and money from the hotel’s approval process.
The contract was never executed, however, and a subsequent contract in June did not include wording for costs related to the coastal plan. The result: The city is footing the $163,000 bill for work done by the consultant, EMC Planning.
How much of that total would have been reimbursed by Domaine, if any, is not clear.
City Attorney David Laredo told the council Wednesday that not only does the city not have an enforceable contract with Domaine, he believes there isn’t anything to be reimbursed for, because the original intent was for EMC Planning to hire more consultants to speed up work on the plan for an early approval, but the acceleration never happened.
“I’m not sure how much was expended for that effort. There was no application, there was no fast-tracking,” Laredo said.
According to Brodeur, acceleration became impossible after the Planning Commission decided to perform a “forensic review” of the coastal plan. He reported to City Manager Ben Harvey in April or May that the plan wasn’t going to make it in time for an August approval by the Coastal Commission.
It was at that time that Harvey expressed concerns that a developer assisting the city in fast-tracking a project could be perceived as inappropriate, according to Brodeur. Harvey expressed those concerns in a written report submitted before Wednesday’s meeting.
At some point last spring the city “told EMC to stand down on accelerating work,” Brodeur said.
The consulting firm continued on with other tasks before city planners took over completion of the coastal plan, he added. (The plan was approved by the Planning Commission on Dec. 8, and is expected to come to the council on March 1.)
“There were a number of people involved in these discussions over a number of months, and from what I can tell a mistake was made,” Councilmember Bill Peake said Wednesday.
He cited city staff, the council and Domaine—which never presented a development plan to the city during that time, and still hasn’t as of this week—as each bearing responsibility:
“In any case, the mistake was not coming back [or] owning up to the fact that the agreement was not consummated.”
Saying “the buck stops at the dais,” he apologized to the community. He also said he did not believe an exact amount of what amount of money was expended on the local coastal program specifically for Project Bella could ever be calculated.
Resident and land use attorney Jane Haines told the council she wants the city to get to the bottom of the snafu.
She also urged the council to pursue reimbursement from Domaine, despite a recommendation from Harvey to move on.
“The recommendation not to pursue reimbursement is simply an attempt to legitimize an illegitimate action taken six months ago,” she said.
However, with no contract and no way to account for the monies, council members said they couldn’t vote in favor of pursuing LCP reimbursement costs from Domaine.
Noting the city does not have experience with large scale projects like Project Bella (the city’s last hotel was built in 1986), Kampe encouraged the council to learn from its mistakes.
Two main “learnings” he said: When circumstances are changing, get an update in front of the council; and, “get the money [upfront], follow the process.
"It’s just a healthier way to do business.”
In the meantime, the city is still waiting on a meeting with Domaine partners to negotiate a separate reimbursement agreement for costs related to pursing an environmental impact review.
Last year the city agreed to allow Domaine to reimburse the city after the fact for bills, but the company was slow to pay.
All EIR work stopped around September, which coincides with the period of time when a split occurred between Domaine's partners.
At the Jan. 11 council meeting, Domaine spokesman David Armanasco said the company expected to sit down with the city by the end of the month.
As of Tuesday, that never happened, Harvey says. Armanasco also indicated the company would be moving forward with Project Bella plans in the near future.