Group Says It's Against Spanos Deal

STOCKTON, CA - Developer A.G. Spanos Cos. agreed when the city approved construction of Spanos Park West that the subdivision would include a certain amount of multifamily housing. But after fulfilling a third of its obligation, and after building a shopping center and selling land to Wal-Mart for a planned store, Spanos told the city it has no more room to build. In five or six meetings over several months this year, the company and City Manager Gordon Palmer negotiated a deal that would relieve Spanos of its remaining obligation and allow it to build multifamily homes elsewhere or, if Spanos prefers, to pay a per-unit fee of $2,000.

Palmer, Mayor Ed Chavez and City Attorney Ren Nosky said the amount is reasonable. Eric Parfrey of the Sierra Club said it is not. "That ought to cover, what, the front doormat or something?" he said. "That is pretty insulting. The city should just not even bother." The construction of townhouses, apartments and other high-density housing matters to city planners because such homes typically are more affordable and more conducive to mass transit than are traditional, single-family homes. And in 2002, when the council approved construction of Spanos Park West, Stockton required that the subdivision include 935 high-density units. The developer so far has built 308 units, in an apartment complex off Interstate 5.

Spanos originally planned to build hundreds of units more in the subdivision. But in 2004, it sought instead to expand commercial building at the site, including a Wal-Mart. Stockton's administration that year favored the construction of retail centers at the city corners, in large part for the sales tax revenue they could provide, and it encouraged Spanos in its endeavor.

Mike Hakeem, an attorney for Spanos, said he told Palmer in discussions this year that the city's support of commercial development at the site made its high-density housing requirement unenforceable. The city could have chosen one or the other, he said, not both. Nosky disagreed. The two sides compromised and recommended a deal. The Stockton Planning Commission took up the proposal Nov. 13, the same evening it blessed Spanos' bid to build another subdivision, The Preserve, also on the city's northwest side.

Hakeem and Palmer proposed that Spanos fulfill its commitment in Spanos Park West by building 488 high-density units in two other planned developments, Crystal Bay, which was approved earlier this year, and The Preserve, which the council is expected to approve next month. The company also would build 157 high-density units downtown, or pay a per-unit fee of $2,000. "There's no secret that our strong first choice, clearly, from a business as well as a political and practical solution, is to build the units," Hakeem told the commission. "That's what we do for a living."Hakeem said Friday that Spanos is interested in two sites downtown. He declined to identify them.

No one at the Planning Commission hearing opposed the measure, and the body approved it without dissent. The council is expected to adopt the deal next month. Parfrey said he will protest. He said $2,000 is nowhere near enough to pay the cost of building an apartment unit. A per-unit fee $10,000 to $30,000 would be more appropriate, he said. "It's an appalling move by the city staff," Parfrey said. "I cannot believe that they are allowing Spanos to get out from a commitment to actually build."

Palmer and Hakeem said Spanos initially offered a per-unit fee of $1,000. Palmer said he could not build an apartment unit for $2,000, but that the money, should Spanos choose to pay instead of build, could be leveraged by nonprofit builders to fund construction. Palmer and council members said Spanos is more likely to build than to buy out.

Councilman Clem Lee said Spanos, whether fairly or not, has "taken some hits in the past year and a half" from critics claiming Spanos' interest in building is only on the city's north side, not downtown. "I think they are committed to the core, and they want an opportunity to prove that," Lee said. "I think that's what this is."

The deal, if approved, would afford Spanos 10 years to build homes or pay, or a combination. The planned Wal-Mart at Spanos Park West, meanwhile, has yet to be built. After lower courts ruled that the city's 2004 approval of the store was illegal, the case has been briefed before the California Supreme Court. A ruling has not yet been made.