While the public comment period was sizzling for 1 ½ hours during the June 5 Tulare City Council meeting, another subject — Tulare City Councilman Greg Nunley’s subdivision — was simmering on the back burner.
At the onset it seemed innocent enough. Any new subdivision agreement, or extension thereof, is brought to council’s agenda whether in the consent calendar or general business, Josh McDonnell, community and economic development director, told the Voice.
Consent calendar item #8 read:
“Subject to receipt of certification that required bonding for remaining improvements will remain in place for the duration of the term of the agreement, authorize the City Manager to execute an amendment to the subdivision improvement agreement for the Tesori subdivision reflecting a twelve (12) month time extension from date of Council approval, resulting in a new subdivision improvement agreement expiration date of June 5, 2018.”
The Tesori subdivision
The Tesori subdivision is a project undertaken by Greg Nunley, who was elected to city council in 2016, while the project was well underway. He had recused himself from voting on the item, as normally done when a councilmember has a conflict of interest.
Michael Noland, an attorney for the Lagomarsino Group out of Visalia, stepped up alleging a California Government Code 1090 violation for the councilman and the city.
A 1090 violation is that of a “public official acting in his or her official capacity knowingly made or caused to be made a contract in which he or she had a financial interest,” according to PublicCEO.
Noland also attempted to raise doubt as to whether the necessary bond currently existed to maintain the agreement. A public records act request (PRA) revealed bonding for the agreement had expired, and as such a new contract would have to be initiated, he said.
Staff reports doesn’t verify existence of bonds, he said. Staff reports do not reveal that bonds do exist. “I think you are agreeing to a subdivision agreement that does not have bonds to guarantee the payment of the offsite construction, if it is not completed by the subdivider.”
And thirdly, Noland said, “On both former inquiries, Mr. Miller [the city engineer] responded it was not a renewable contract.”
Nunley, speaking as a citizen, responded, stating the bond doesn’t expire until June 23 of this year, and he had just paid an invoice to renew it for another year. He read a letter from his bonding provider – the bond automatically renews on June 23 and remains in full-force until the improvements are finished.
“For this project, we’ve been waiting 10 years for a reimbursement agreement to do the off sites of this project which it calls for in the subdivision agreement,” he said. “We are entitled to off-site reimbursements from the state highway fund that pays these expenses.
“The City of Tulare has neglected to provide us with a reimbursement agreement and it states in the subdivision agreement that if we start the improvements,” he emphasized, “if we start the improvements, as the developer, without having the reimbursement agreement in the amount $700,000 of improvements to be reimbursed to us for finishing an arterial road, that should have been handled with a specific plan when the school went in, that we can’t start the improvements.
“Does the city expect us to start improvements without a reimbursement agreement in place?”
He added that San Joaquin Valley Homes, with a neighboring development, received a reimbursement agreement within six months.
He asked for the Tesori agreement extension to be conditionally approved for one year.
Real estate broker and lifelong Tulare resident, Charlie Ramos, stood up and asked why council didn’t just wait for the bond renewal and/or off-site improvements to begin, and/or until the reimbursement agreement is taken care of, prior to the extension renewal. “Why take the cart before the horse and favor a councilmember?” he asked.
Visalia attorney, Michael Lampe, also commented referring to the Bella Oaks subdivision, also developed by Nunley, where two prior lots had been released [for development]. “There was supposed to be an agreement entered into with one of Mr. Nunley’s entities, and he refused to enter the agreement?” directing the question to Michael Miller, city engineer.
Apologizing to Lampe, McDonnell intervened, stating it was customary for the public to address the mayor, and for the mayor to then call upon staff for comment.
“I think we all know what that means, thank you,” Lampe responded.
Take a breather
Nunley wanted to address Lampe’s question – “the bonding amount of Tesori actually covered probably over 90% of the improvements for Bella Oaks. Isn’t that right Mr. Miller?”
In a moment of levity, meeting attendees rebuked him, telling him to address the mayor not a city employee. It did bring a grin to the developer’s face, and with a chuckle he continued his comment.
“And, there was no bond for Bella Oaks, Mr. Lampe.” He responded.
City Engineer Miller stated this was the last council meeting prior to the necessity of the extension renewal, and that upon renewal the city should receive a hard copy of the bonding agreement as verification.
According to City Attorney Heather Phillips, whose office had checked with the Fair Political Practices Commission, no 1090 violation exists.
“I just want to make the council aware that we have checked with the Fair Political Practices Commission, the FPPC, and they provided us with a written opinion that the council member is allowed to enter into contracts with respect to subdivisions,” she said.
Nunley concurred later to the Voice, saying he had researched any potential conflicts prior to running for city council.
“I can still develop land and I can do subdivisions,” he said.
Waiting for the reimbursement is costing him $13,000 per year, as he renews his bond, he added.
He rarely talks with the city’s community development or engineering offices, Nunley said. He has his staff communicate with them to avoid any conflict. “I get treated worse now than when Don Dorman was there,” he said. Dorman was a previous city manager, who retired in the fall of 2016.
Why the interest?
The Lagomarsino Group was the master developer of Del Lago, in which Tesori is a subdivision. Del Lago includes Plaza del Lago, a retail component of the development, which includes Wal-Mart; Home Depot, etc. according to the Lagomarsino Group website. The group remains interested in Del Lago as a whole, Miller told the Voice.
In an interview following the meeting, Nunley said he knew the reasoning for the Lagomarsino Group’s interest. “Fred [Lagomarsino] wants me to do the improvements, so he doesn’t have to.”
A call to Noland, representing the Lagomarsino Group, for comment had not been returned as of publication time.
Why the delays?
The original Tesori subdivision improvement agreement was recorded not quite five years ago, in November, 2013. The reimbursement agreement is complicated and involves a lot of parties, Miller said. “It has been back and forth, as to what items are reimbursable.”
Electrical lines, maintained by Southern California Edison along Mooney Blvd. include city, county and state jurisdictions, he said.
While the state is responsible for the actual Highway 63, which is Mooney Blvd., the city maintains the property on the west side of the street and the county on the east, McDonnell added. Electrical could involve all three, as power poles could need to be moved, and lines may need to be taken underground requiring an easement. And, there is also the matter of arterial roadways.
Currently, an agreement sits on Nunley’s desk, according to city staff.
It is true that a reimbursement agreement for San Joaquin Valley Homes was signed fairly quickly, earlier this year.
“There were no arguments as to what was reimbursable or not,” Miller said, adding the city didn’t have to start from scratch because the Tesori agreement acted as a template for the
San Joaquin Valley Homes agreement.
What’s at stake?
The Tesori development’s offsite reimbursable agreements could run approximately $700,000, Nunley said. Actually, around $800,000 for which the developer would be responsible for approximately $100,000. Those reimbursements would come from builders for each individual property, referred to as difs, and would be paid to the city which in turn would reimburse the developer, in this case Nunley’s company.
As a developer, Nunley risks reimbursement of his expenses if no agreement is in place, as per Municipal Code, Chapter 8.64.020. He does not want to lose those funds.
Municipal Code – Chapter 8.64.020 (A)(2)
§ 8.64.020 Reimbursement agreements.
(A) Whenever improvements are required to be installed adjacent to property other than that being developed or in greater size or capacity than that required for the development of the property under consideration, the applicant installing the improvements may be eligible to enter into a reimbursement agreement with the city if the following conditions are satisfied:
(1) The city and applicant agree that the improvements significantly benefit and serve property that is not within the subdivision or site development area;
(2) All anticipated oversize improvement costs have been reviewed and approved by the City Engineer, and included in the subdivision improvement agreement or separate development agreement, prior to the start of their construction;
(3) The improvements are included in the city’s development impact fee program as a fee generating component, unless otherwise authorized by City Council;
(4) The city and applicant enter into a reimbursement agreement in a form approved by the City Attorney; and
(5) The applicant submits evidence of the actual costs of the improvements described in the reimbursement agreement as follows:
(a) Evidence shall be provided in the form of receipted bills, canceled checks, or contracts, and shall be subject to the review and approval of the City Engineer.
(b) Evidence shall be submitted within 90 days of the city’s acceptance of the improvements by notice of completion. If the required evidence is not submitted within this time period, the applicant shall not be eligible for any reimbursements under this ordinance.
Following the item being the agenda item placed on hold, while staff searched out the various documents needed for review, and the city attorney reviewing those documents, the council voted 3-0 for the extension at the end of the council meeting. Nunley recused himself.
Attempting to dig a deeper hole didn’t pan out
Earlier, during the public comment period, Ramos, the realtor, raised the potential of councilmembers receiving special favors, such as city permits, citing a personal well within city limits which he felt inappropriate. “It should be capped,” he added.
Ramos implied that maybe it had been done without permission, “oops, I made a mistake,” adding that because it was done by a member of the council who could get away with that. He did not mention any names.
Nunley later verified the comments were aimed at him. While building his own property on three acres within the Tesori subdivision, he wanted to maintain a well for irrigation purposes, as allowed by the city. Private wells on property within city limits date back to when there was no city water service in place. There is currently a city resolution, dating back to the early ‘90s, allowing for well development by private land owners for irrigation purposes.
Nunley submitted a well application for his own property in May, 2017, which was approved. He shared the paperwork with the Voice, indicating it was all above board. He also stated he has shared the information with the concerned Ramos.
And lastly, the city attorney’s contract
With so much going on at the last council meeting, it should also be noted the renewal of the city attorney’s contract had not placed on the agenda. An employee performance evaluation for the city attorney as submitted by Councilman Nunley was set for the closed session agenda, however, the mayor cancelled closed session that night. The former contract with the attorney expired on June 6.
While the city and its attorney do not currently have a contract, Goyette & Associates’ attorneys Heather Phillips and Sarah Tobias are still working for the city, according to Phillips.
“The contract has expired, though we are working with the City to get a new one in place following the Council’s 4-1 vote and notice of intention to extend/renew the contract [during the May 1 council meeting],” Phillips said in an email. “Since no retainer agreement is in place, we revert to the original hourly agreement we had with the City when we were appointed in an interim capacity [in 2017]. I anticipate that a contract will be on the agenda for the next meeting.”