Subscribe to our Newsletter
Today: 19.Jun.2018
Articles
Categories
Search - Contacts
Content
Newsfeeds
Search - Weblinks
Thursday, 06 June 2013 22:49

Sedona Mayor Asks for $500K 'In Lieu Fee' In Exchange for Zoning Change

One council member calls the request 'extortion'

Mark Stevenson owns a piece of land with an undeniably ugly old office building on it. He wanted to build something lovely for the residents and vistors of Sedona, Arizona.

"Our vision is to create an aesthetically enhanced restaurant that combines Community, Sustainability, Artistry, and Beauty, where both local residents and visitors alike can meet and enjoy "bella cocina" (beautiful cuisine) with dramatic views of the red rocks during the day and the stars at night," reads the cover letter to the Planning and Zoning Commission.

In order for that vision to come to pass, Stevenson needed a zoning change from Office Professional (OP) to General Commercial District (C-1). Stevenson and his team worked diligently with the City of Sedona's staff and committees to ensure that Sedona's rigid specifications were met, and finally arrived at the last hurdle: Approval from the Sedona City Council.

So, it must have come as a surprise when during the discussion of the project, Mayor Rob Adams stated, "In my experience with doing development agreements, or zoning changes, or community plan updates, this is our opportunity, particularly in the zoning change process to negotiate community benefits in exchange for the entitlements."

How much of a community benefit? Adams' idea was a $500,000 donation to the City of Sedona in exchange for the zoning change.

Really? Yes. A $500,000 'in lieu fee' that the "...City could utilize to provide benefits to whatever we come up with." And, evidently, this practice is commonplace in the City of Sedona, although typically the requests for fees and 'community benefits' are handled in smaller, less public settings.

Mayor Adams was bold in making his request, "I would like to hear you say, 'I'm willing to put up a reasonable amount of money, considering the fact that when I do get that zoning change, we know that the value of property is going to be increased fairly significantly from an OP to a C1.' So, I'd just like to have an offer from you and see if we could say that we all feel good about that and sing KumBayAh."

When Stevenson heard the amount Adams had in mind, his response was quick and clear, "That, we're out."

From there, the conversation continued, until finally one council member used the word, "extortion."

Read below for the entire context, and the resolution.

sedona comparison

 

The Meeting

What: Approval of Zoning Change in order to expand and remodel the existing vacant office building into an upscale restaurant.

When: May 14, 2013 Sedona City Council meeting, item #9c.

Link to the City Council Documents for the May 14 meeting

Link to the City Council Video of the meeting, item number 9C.

To make it easier, we have transcribed the pertinent part of the discussion below. Some repetitive phrases, such as "um," and "you know," have been omitted.

We also have duplicated the video to a YouTube format, to make it more convenient to watch at the correct time. Nothing in this time period was edited out or in:

Transcript

Sedona Council Meeting 5-14-13

Rob Adams, Mayor
In my experience with doing development agreements, or zoning changes, or community plan updates, this is our opportunity, particularly in the zoning change process to negotiate community benefits in exchange for the entitlements. As I look at the benefits that you are proposing, most of them really would be included in a development agreement, required by a community development as part of your development. I'm not seeing a lot of other community benefits in the form of parks, and affordable housing and things like that. Obviously, each development, depending on its size, depends on the benefits that would be requested. So, earlier in the last meeting, we talked about actually having the public dedication on some of the properties in town. In the last meeting, we talked about actually having the public dedication on some of the property, and staff seems to be not supporting that idea. So, I want to talk about a couple of other things and get into a negotiation here.

Rob Adams, Mayor
The affordable housing that Councilor Lattrel brought up. This has been part of the negotiations in the past, and developers have become accustomed to doing either onsite affordable housing to accommodate some of their employees, or doing an in lieu payment so that it goes into an affordable housing fund, and the city can actually develop affordable housing. So, I'm wondering, regarding an in lieu fee, or possibly some other things, since you have a curb cut there, maybe that would be a good place for a transit shelter. We run the Verde Links up and down 89A. Possibility of donating toward that. Would you be amenable to that idea.

Michael Stevenson 

Yeah, that would be fine. We actually pursued the local transit shuttle service, and found out that it turned into a private shuttle service, no longer public, so we abandoned that. But we understand, we looked at possibly putting an exit off through the driveways and coming up and actually putting it up fairly close to the restaurant.

Rob Adams, Mayor
Ok. A couple of other things that came up for me, you know, the possibility of providing some attractive plaques on the edge of the property, where you're looking to the, I guess it would be to the north and describing some of the landmarks and the rocks and things like that. To me that would be another community benefit, where people could come up there and take a look. You know the other things that you're doing, the painter's point, the dedicated pathway, that type of thing, those things are all great. But, I'd like to see a little bit more.

Michael Stevenson
We actually had a conversation with Jennifer Burns, several days ago, and we agreed to actually foot the bill for the development of the vista point that actually would go across our property line and into the forest, again she was concerned about directing the traffic where the hikers on the path, we would put that together, we also agreed to put in that signage that you're talking about throughout the back, because we want to promote the mountains and the names of the mountains and those kinds of things.

Rob Adams, Mayor
It would be great for your, you know, the people that are in the restaurant, the patrons as well as the visitors.

Michael Stevenson
Along with that, Mayor, I think you've heard of the term 'dark sky'. Part of that, we're working with Nat White, who is an astronomer up at Lowell Observatory. He's not only going to help us do the dark sky compliant applications and things, but we're also going to try to encourage the Lowell Observatory to work with the restaurant in bringing programs down, signage down, to promote the dark sky and the constellations and everything that we in Sedona love to look at.

sedona7

Rob Adams, Mayor
Well, I've seen you've done a tremendous amount of work. I appreciate the group that you've put together, the renderings that you've come up with, you know, the amount of work that has gone into this has been phenomenal. So, I appreciate all that. We're just coming down to the bottom line here, and I'm wondering if maybe you would consider just an in lieu fee to be put into an account that would be utilized where the City could actually develop something, I don't know what the best way to go at this is. But instead of saying specifically, you need to put this plaque, this plaque, this plaque in, or a transit stop, or whatever, it would simply be an in lieu fee that the City could utilize to provide benefits to whatever we come up with.

Michael Stevenson
Is that a blank check?

Rob Adams, Mayor
I'm thinking that would be good.

Rob Adams, Mayor
Do you have a dollar amount in mind?

Michael Stevenson
How about $5000?

Rob Adams, Mayor
How about $500,000?

Michael Stevenson
That, we're out.

Rob Adams, Mayor
I mean a realistic amount. You know, what do you think that it's - you know, it's hard for me to say. But, I would like to hear you say, 'I'm willing to put up a reasonable amount of money, considering the fact that when I do get that zoning change, we know that the value of property is going to be increased fairly significantly from an OP to a C1.' So, I'd just like to have an offer from you and see if we could say that we all feel good about that and sing KumBayAh.

sedona6

Mike Ward
Mayor, may I ask [City Attorney] Mike Goimarac a question?

Rob Adams, Mayor
Sure.

Mike Ward
Is it appropriate for a Councilor or a mayor to negotiate between himself or herself and a client at a council meeting unilaterally?

Michael Goimarac, City Attorney
Well, ultimately, any agreement is going to have to between the developer and the City Council as a whole, that's all I can say.

Rob Adams, Mayor
Of course.

Mike Ward
So, what will happen, then, is we would have to agree, as a group, to whatever results from this discussion.

Rob Adams, Mayor
I think you could ask me that. My intention is to have the council support that. I'm just opening the conversation, because this is the opportunity for us to have that discussion. We are going to be asked to vote up or down on this entitlement, this zone change, tonight, so I'm looking at creating a reason, another reason, to support it.

Rob Adams, Mayor
Well, I'm still talking with Mr. Stevenson, if we can have that conversation right now.

Michael Stevenson
I'm actually at a loss for words, because I really don't know what you mean. When you say a 'larger number' than my offer of $5000, that means we're probably not talking about the same thing.

Rob Adams, Mayor
I'm just wondering, in the conversation with staff, because you have talked about this. You acknowledge in here that, you acknowledge that affordable housing and providing for affordable housing in other projects has been something that the City looks for in return for providing the entitlements. I'm going to use another project, George Moore's project right next door. He spent a considerable amount of money establishing the parking area and the trail access. A considerable amount of money. So, I'm just using that as a comparison for getting those entitlements.

Michael Stevenson
If that's where you're going with this, I'd have to say no.

Rob Adams, Mayor
I'm not saying that...

Michael Stevenson
That's what I'm hearing, so...

Rob Adams, Mayor
I'm saying money in an entitlement fund. So, in your discussions with the staff, and you were talking about plaques, and you seemed to be agreeable to a transit stop, you know, there needs to be a shelter at a transit stop. You know, that type of idea. Was there discussions about costs of those kinds of things?

Michael Stevenson
No. in our conversations with Jennifer Burns, we agreed to take care of those costs, because of the concern for the forestry service in an investment. With the, not having a dedicated easement, I just picked those costs up and said, 'If that makes you feel better, I'll do these costs, so you won't have any investment there.' But, again, putting the whole project together, I feel like we've done everything we possibly can to turn that piece of property into what the original intent was from the City, and so I think we've done, over this past year, working with the City, everything we possibly can do. I'm a businessman, and I don't have unlimited funds. So, this is a budgeted project that I'm working on right now, and I just don't have that kind of money to go out and do a big donation to the City.

Rob Adams, Mayor
We're just looking for a number.

Michael Stevenson
Yep.

sedona10

Barbara Litrell
I was just going to say, a project that has crossed my mind, and that has come up in the community planning process - and I certainly don't expect you to pay for it - but is that, as we go forward, we really do need to underground the utility wires in West Sedona. That's coming up everywhere, and that's going to be a multi-million dollar project sooner or later. And it's occurred to me that as we go forward, now, with the beginning of development again happening in Sedona, that that may be a fund that we should consider for developers to begin contributing to. So that we really enhance the beauty of West Sedona, because right now, it's a visual nightmare as you go down that street. So, you know, looking at in lieu fees, and not making it specifically affordable housing, but considering another important project that will enhance the community. All of the benefits that you've listed - how long have you owned the property, Mr. Stevenson?

Michael Stevenson
Four and a half years.

Barbara Litrell
Ok. All the benefits that you have listed attribute to you and that property. And, to the degree that the community will participate and attend the restaurant and so on, it's still on the property. Versus a community benefit that is not on the property. And I guess that's where the description of Dr. Moore's property is that it was separate, and therefore, it did benefit the community. So, as we look at that, and I wouldn't sit here and say, 'Give me a number,' but I think that's something that we really need to be thinking about as we're going forward with all of this. So, I don't know how you can talk about that further, think about that further, but that's something that would benefit the community and that we needed to look at as a longer term project. A thought.

Rob Adams, Mayor
Councilman McIlroy?

Dan McIlroy
Mayor, with due respect to you, and I don't want you to take what I'm going to say wrong, but, I'm extremely uncomfortable with using our position to approve a project. And in a sense, it strikes me as almost extortion that we're touching on. And it bothers me very much. This gentleman wants to have a project approved. And we're using that leverage of our power as a City to twist his arm to do something. Maybe the project has, you might say, the community benefit, is there somewhere. But we should not use our position as public servants to extort money from people who are not willing to give it to us voluntarily. Now, let me ask you my questions, Mr. Stevenson.

Michael Stevenson
Sure.

Dan McIlroy
How many employees will you have at this restaurant when it opens next year?

Michael Stevenson
I would venture to say 40. 30-40 employees.

Don McIlroy
Yes, 30 or 40 that don't exist at the moment. Mayor, I apologise if I've offended you, but I feel very strongly about abuse of our public power in a situation like this.

Rob Adams, Mayor
Vice Mayor?

Mark DiNunzio
My sense is, as an old horse trader, we wonder why there wasn't more negotiation at lower levels as this moves through the process in private conversation. I also believe that it's awful late in the game to be talking about… and I also have a thought that this is going to be an ongoing business, run by a proven operator. And the non-profits in this town are not shrinking violets, and they will be at your doorstep, with good cause. Chamber music, or Film Festival, there will be plenty of opportunity going forward from this point to be supportive of the fruits of your labor and sharing it with our community. I understand what you're doing, but I'm uncomfortable also with the format of the forum that we're in, to have this kind of discussion.

Rob Adams, Mayor
I just want to say, that the negotiation of community benefits is something on every development agreement, or zone change, or community plan amendment, has been part of the process. As I looked at the process it went through in the Planning and Zoning, and I know the issue was brought up. And that negotiation never really was successful. So, we're the entity that makes the final decision, and I consider this the opportunity to do that, on behalf of the community. To call it extortion, Councilor McIlroy, I know that you didn't mean to offend me, but, I've been involved with a few more of these than you have, and it is part of the process. So, the developer is getting entitlements that enrich him. And the community should get the benefit as a result of the City offering those entitlements. That's the process.

Don McIlroy
Mayor, we shouldn't hold him hostage to that.

Rob Adams, Mayor
No, holding hostage is not the word. It's not. It's negotiating on behalf of the community in getting community benefits for the entitlements that the developer is getting. That's my point.

sedona3

Rob Adams, Mayor
Councilor Martinez?

John Martinez
To me, from what I've heard, this has gone through P&Z, this has gone through staff, and they're presenting it to us. And that was not brought up, that we want in lieu fees for this. To me, in regards to community benefit, there's three that I can think of. Number one, he will be hiring people, people will be working, and it's going to be benefitting not only those individuals, but also the community. Number two, let's face it. What's sitting up there on that ridge is an eyesore. Everytime I go by there, I get embarrassed about people coming in. And I say, we've got to do something with it. I know there have been negotiations before on what to put up there, and they've all failed. This is a fabulous idea on what we should be putting up there. That to me, is a community benefit. The third one, and it was mentioned earlier, is that this is going to be a great gateway, because I know that's been mentioned in the Community Plan, on these three gateways that they want to put in there, that would be an excellent gateway, especially to West Sedona. I think it's a start, and we should not, especially after, I believe, Mr. Stevenson said he will be putting - I'm going to put a bus stop, that's the wording I'm going to use. To have a bus stop or something like that out there in front, and also put in the plaques in the back. To me, that is a community benefit. But, now that you've made mention of this, kind of late in the game, to now start bringing up all these additional things. So, I cannot support that line of questioning, and I believe, as I just mentioned, that there's a number of community benefits that they are meeting, and it should be based on that. I don't think we should try to go a little bit further in trying to get a little bit more money.

Michael Stevenson
Mr. Mayor can I say something please? There's a huge tax incentive for the city with this, too. Currently, rental income is 3% of the rent, which is maybe a couple of hundred dollars a month coming in out of that. We put in a restaurant that does $4-5M per year, and you're looking at $150-200K of tax revenue for the city, that's a huge benefit.

Rob Adams, Mayor
I got that, and I read the packet, and I understand that. And that's normally a part - sales or bed tax revenue is normally a part of the time where a benefit is given during the entitlement process. You're not any different than anybody else. I'm just saying that, you know, I was disappointed that during the process earlier this discussion didn't take place, and that negotiation didn't happen. I'm thinking that maybe that there are a number of people on Planning and Zoning that are newer, we haven't done much zoning in the last four years, so, that's just kind of the way it went. So, I'm bringing it up. And it's at the will of the council one way or another, whether we ask for more entitlements. In responding to Councilor Martinez, you have not agreed to to put in a transit shelter or a stop or the plaques. This is just something that has been discussed. So, I'm just asking if this might be part of the community benefits that you would provide. It's that simple.

Michael Stevenson
And my answer is no.

Rob Adams, Mayor
Ok. Councilor Litrell?

Barbara Litrell
I think in defense of the Mayor's position, I understand where he's coming from and I agree that everything that's happening is going to enrich your property, and yes, it's going to provide sales revenue to the City, and so on, which it would do, no matter where you built it, ok? I think what we're saying here is at other levels, the right conversations did not take place. So, I guess the question I have is, could we invite further discussion between staff and the applicant to go back and talk about these things and see what they come up with? As a thought.

Michael Goimarac, City Attorney
Are you asking me that question?

Rob Adams, Mayor
Yes, Mike.

Michael Goimarac, City Attorney
I think the options before the Council are as follows. 1) You can certainly continue this hearing to a date certain, I think that would eliminate a need to renotice it to see if there are any opportunities to pursue community benefits, or address other concerns that you raise. 2) You can certainly vote against the rezoning as has been proposed, and then the applicant has the option of coming back with a new proposal, maybe with more community benefits, or to address the concerns that you've expressed about safety and so forth, or you can vote in favor of it as it is proposed. I think the applicant has made it clear that what's on the table right now is what's on the table, and he would like an up or down vote. But those are your options at this point in terms of what you can do.

Barbara Litrell
Thank you, I appreciate that.

sedona4

Rob Adams, Mayor
Councilor Williamson.

Jessica Williamson
I'd just like to say that, these people aren't standing here before us out of the goodness of their heart. They are business people. They are going to get something from of this zone change. So, this was zoned a certain way originally for reasons, if we change that, it's only reasonable that there be a reason, for doing it other than the normal reasons that would accrue from someone making money out of a restaurant. Barbara's point is exactly right on, the things that have been mostly done do accrue mostly to your success. Certainly the overlook does not. The overlook is something that is additional. The trailway, the deceleration lane. but they do cost money, so this isn't really extortion, this is really, you want to put a business somewhere, that's a beautiful place, and you would like us to allow you to do that, so you can make some money, so we can get some tax money, so people can be employed, and so we have something beautiful up on that hill, instead of something that looks terrible. So, certainly to say that it's extortion, it really does not understand at all, the process of granting a zone change and what that means. Things are zoned for a reason, and to change them there has to be a very good reason, so the mayor is absolutely right in that.

Jessica Williamson
I have trouble doing something at this late point that you don't want to. My thing right now is to either vote for it or against it, I think it's beautiful, I think it's a great use of the property, I like the project. But I also think that talking more about other community benefits separate from the benefit to that particular site, would be really useful in the future, but I don't feel comfortable right now in, at this point in the process, going back with a clearly reluctant developer who has proceeded, I presume in good faith up to now. So, I know we're the final people, and I know we can do what we want on this, but that's kind of how I feel now.

Mike Ward
Mike, you said our options were to approve, disapprove, or put to a later date. If we disapprove it, does it have to go through the entire P&Z process again?

Michael Goimarac, City Attorney
Yes.

Mike Ward
So, it would be starting all over.

Michael Goimarac, City Attorney
The other thing it's important to know is that if you disapprove it, the developer also has the option to develop the property as it's currently zoned. He could change the proposal to something that would fit within the office/professional zoning. So you just need to know to understand that that's one option in his packet, too.

Rob Adams, Mayor
Ok, Mr. Stevenson, I'm going to support this zoning change. I brought up a point that has been discussed before. You know it's part of the process. This isn't your first rodeo, you've done other projects.

Michael Stevenson
No, I am surprised. I'm sorry. But I am.

Rob Adams, Mayor
Well, it has been the process that I've been involved with for the last seven years on City Council. So, I think that you have a great development that you're proposing here, there are community benefits, my feeling is that, as a City Council, and as a City, that we should be fair and equitable to all people that do developments here and treat them all the same. Again I was bringing up the point of Mr. Moore's development, and the cost that he put into the parking area and the trailhead access and the other things that he did, you know, why would we treat one developer differently than we would another?

Rob Adams, Mayor
So, it is late in the process, it's unfortunate that this kind of cast a little negativity over this process, I felt as though my job as a City Council member is to negotiate on behalf of the community, to the community's best interest, and I tried to do that. You're not interested in that, but I'm still going to support the project. I feel as if it's unfortunate, and I hope that, out of the good of your heart, that you choose to put other amenities on that property. So, that being said, I'd like to make a motion.

Rob Adams, Mayor
Is the council prepared for that?

Rob Adams, Mayor
I move to approve resolution number 2013-10, creating as a public record, those provisions of an ordinance rezoning property in case number PZ 13-00003(ZC).

Rob Adams, Mayor
The motion has been made by Mayor Adams, seconded by Councilor Ward, any further discussion? All those in favor of the motion please say 'Aye'. (chorus of Ayes.) All those opposed (silence): Motion passes unanimously.

sedona5

 

Last modified on Friday, 07 June 2013 13:21
Lynne LaMaster

Lynne LaMaster is the Founder and Editor of the eNewsAZ Network of websites. She asks a lot of questions! In her spare time, she loves photography, cooking and hanging out with her family.

Login to post comments
All content copyright © 2007-2017 by eNewsAZ & may not be republished or reproduced without written permission. All Rights Reserved.

Editor Lynne LaMaster

Phone:928.458.5119

Prescott, Arizona