Concerns about city practices continue

After losing two years, hundreds of thousands of dollars, Warrens walk away from development

Rebecca Neipp

News Review Staff Writer

Concerns about city practices continueAfter spending upwards of $750,000 developing their China Lake Boulevard property, the Warrens ran out of money to complete it. — Photo by Rebecca Neipp

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Prominent leaders in economic development and property rights voiced their concerns during last week’s Ridgecrest City Council meeting about city practices that inhibit growth.

IWV Economic Development Corp. Executive Director Scott O’Neil implored the city to develop clear policies that would guide staff, and instruct prospective developers on projects to enhance the community.

He expressed that he was largely disappointed by the city’s general failure to acknowledge — let alone address — the apparent deficiencies.

In a follow-up interview with the News Review, O’Neil noted that he got involved with the Son Land apartment development several months ago in the interest of providing adequate housing to support recruitment and retention of high-quality professionals — a risk outlined by China Lake’s top civilian leader at last year’s IWV Economic Outlook Conference.

Along the way, his experience reflected the frustrations long expressed by builders and developers in the area — no clear process, no consistent policies, a confusing fee structure and a failure to disclose project requirements up front.

“The process is broken. I started talking to the Ridgecrest Area Association of Realtors and then builders and developers in town to see if we could come up with a list of the concerns and a plan to address them,” said O’Neil.

“After hearing all the stories — which really all echo the same problems, for the most part — we were able to synthesize that into a pretty comprehensive analysis.”

Before approaching the council, O’Neil sent out a proposal to city officials offering to work with them to develop best practices to guide projects.

“Of course, the city doesn’t see the problems the way the rest of us do. And you can’t talk about implementing better practices if there is a general refusal to acknowledge the problem.”

O’Neil said that one of the challenges in highlighting these problems is that business owners are afraid to challenge the city too aggressively.

“They can’t afford to have an adversarial relationship with the city — their livelihoods are at risk.

“But as director of the EDC, I believe part of my role is to advocate on behalf of people who have already invested in our community — not to mention the future investors we might be turning away by our lack of competency.”

Some asked during the meeting that the city consider hiring a consultant to review city processes. City Manager Ron Strand noted that the city already had a consultant. But O’Neil said the city hired a consultant only to analyze the fee structure, and they have a consultant who can review drawings.

“The fee structure certainly needs to be simplified — it’s so complicated that they could not calculate the same result twice for the Son Land development.”

O'Neil also disagreed that development fees should be a source of revenue for the city. “The fee structure should cover the cost of plan checks or other services specifically related to that project.”

But even the services provided through the city have been rife with mistakes that have cost local developers tens — and even hundreds — of thousands of dollars.

While scores of local builders and developers have added their input to RAAR and IWVEDC, O’Neil said, the experience of Rusty and Tina Warren, owners of the automotive service business of the same name, outline the egregious failings in the city’s process.

When the Warrens were unable to secure a deal to purchase their current location from their landlords in 2011, they began to look elsewhere.

They inquired about a piece of property in the city’s business park (once considered as the site for an Indian gaming casino). After waiting on the hook for two years, the Warrens reached out for a definitive resolution. City officials finally revealed that then-Mayor Dan Clark’s wife had a financial interest in the property, and that the city could not sell it as long as Clark was on the council.

“We were like ‘Why couldn’t you have told us that two years ago?’” said Tina.

But the Warrens later discovered their top location choice — on China Lake Boulevard, north of Home Depot — had come down in price.So they purchased the property — paying cash — and began the planning and development process.

“I do have to say that although the city made a lot of errors, we found that the whole industry has problems. And if you’re the developer, you’re the one who pays for everyone else’s mistakes,” said Tina.

“Last year we hemorrhaged money. It just got to the point where we had to walk away and find another solution.”

The China Lake Boulevard development was supposed to cost $379,000 to prep for development. “That alone made my heart sink, but that cost eventually ballooned up to well over $750,000.”

Among the most painful of those unanticipated costs was an $83,000 median that Caltrans ordered the Warrens to build. “We called Caltrans before we even purchased the property. When we asked if we needed to do anything, they told us there were no requirements,” said Tina.

“When those medians first started going in on China Lake Boulevard, Caltrans had money in its budget to provide that. They were ready, and the city interrupted and said, ‘No, don’t do this.’”

The city engineer reportedly expressed concern that water might not drain properly. “Of course Caltrans could have done what we did, which is to build slits into the median. But instead the city stopped Caltrans from building it, and ultimately we had to pay for it.”

It is illegal for the city or state to require a business to improve frontage of someone else’s property. “We probably could have fought it if we had the time and the money, but we had neither.”

The city engineer also signed off on the plans for the development — without catching the absence of required water and sewage provisions. “So that cost us another $100,000 with the contractor, but that also meant we had to go back to loan, which added another $5-6,000. Not to mention interest,” said Tina.

“We are a small, family owned business. These costs are impossible for us to absorb.”

Other surprises included a Landscape and Lighting Maintenance District — apparently a piece of code on the city’s books since the 1970s. That requirement has not been regularly enforced, but the Warrens were among the first to be held to the mandate.

In addition to paying for two new light poles, the Warrens were also billed $7,500 for a “study” related to the lighting district. “How can they require you to keep coughing up money for things they don’t tell you about up front?”

When it came time to provide curbs and gutters, the city engineer stopped the contractor after forms went up for concrete. “The city engineer said that the sidewalk was not up to code,” said Tina.

“But the contractor said that the sidewalk matched up with both sides, and met the specs outlined by the city.”

The city engineer said the road was too high, compared to the level of the sidewalk. The road was inadvertently raised by a project that was unrelated to the Warrens’ development.

So the project was delayed again while the Warrens and the city came to terms on what they should be required to do to fix a problem they did not cause. Ultimately, they ate $30,000 to tear out one section of the road to fix it.

“Then there were the delays,” said Tina. Every time the Warrens needed the city to sign off on something, it was weeks before staff would act. “It normally required numerous phone calls, or a visit to city hall from our contractor, us or both before we could get the city to sign off.”

Between delays and change orders, the project was two years behind. Toward the end of the project, when the property was supposed to be recorded by the county, more delays and mistakes meant that the Warrens’ tax certificate was about to expire — meaning another $9,000 potentially lost.

“By this time, we had fought so many battles, spent so much money, lost so much time, we were just bled out,” said Tina.

The Warrens began driving the process by calling ahead to make sure staff was aware of their roles in regard to the recording of the map and at work when their action was needed. Ultimately, the property certificate was still rejected by the county because it did not have the city clerk’s stamp.

“I thought, ‘This is just bull.’ If you make mistakes like this as a business, you find a way to make it right. Our city staff is paid to provide this service — this is what they do for a living — yet there is no accountability,” said Tina.

“Part of the problem is that there are no consequences for our city’s failure to perform,” said O’Neil. “I think our community has to come together and demand that they improve their level of service.

“We have people in this community who are smart and experienced enough to partner with the city to develop a better process.

“In the private sector, businesses are motivated to learn from their mistakes because they have to pay for them. We are asking the city to reduce their mistakes and be accountable,” said O’Neil.

Although the Warrens ran out of money to continue the development, they noted that their story has a partially happy ending. They were able to purchase the land they are operating on, securing the future of their business.

“We still plan to improve our property and make it a beautiful asset to our community. I really wish we could have done that with the property on China Lake,” said Tina. “It’s too late for us, but I would really like to see the city resolve these issues. If they don’t, we will never be able to grow economically,” said Rusty.

Will they be able to recoup their investment by selling the property?

“My God …” said Tina. “I hope so.”

Story First Published: 2019-03-29