Council postpones 400 block appeal

Mayor details his arguments against the project

The statue of Eric Tognazzini keeps an eye on vacant parcel.

The expected showdown between Hollister Mayor Ignacio Velazquez and the City Council over a San Benito Street development this week was delayed until June 3 because city staff didn’t release a report to the public ahead of the meeting on May 6.

After the mayor’s lawyer questioned the report’s timing, the council’s attorney, Lauren Layne of the Fresno law firm of Baker, Manock and Jensen, recommended the public hearing’s continuation. The hearing was set to consider the appeal to the planning commission’s approval of a commercial/residential project and an office building at the corner of San Benito and Fourth streets, known as “the 400 block.”

In past votes regarding the 400 block, the council has voted 3-1 in favor of the project, with District 2 council member, Rolan Resendiz voting against. Velazquez has indicated he will take the city to court if the appeal is rejected.

Layne advised the council May 20 that Velazquez’s lawyer had objected because a new staff report on the 400 block appeal had not been prepared before the meeting was scheduled, which she said “could be interpreted” as violating Hollister municipal code. Because of this, she recommended continuing the appeal to June 3.

Because the mayor owns The Vault banquet hall next to the vacant development site, he has recused himself from all decisions on the 400 block project, because of the appearance of a potential conflict of interest. He said he filed the appeal “as a private citizen.”

“We received correspondence from Mr. Ignacio’s legal counsel, regarding some confusion on the municipal code regarding when the public hearing should be scheduled and when the staff report should be prepared. Specifically, your municipal code states, the director shall prepare a staff report for appeals and schedule the matter before the appropriate appeal body identified after completion of the report,” Layne told the council prior to the start of the May 20 appeal hearing.

“In this instance you held a special council meeting I believe on May 6, 2019 and you set a public hearing for this evening, the staff report is dated May 9, 2019. Because there is some ambiguity there and it is something we can easily correct, my recommendation to the council would be that we either reschedule this meeting to June 3 or that we continue.”

Layne told the Free Lance that while Velazquez’s lawyers believed that not posting the staff report before the May 6 meeting was a municipal code violation, she said the code itself was ambiguous. In an effort to give Velazquez’s team and the public time to read the report, however, she recommended continuing the meeting to a later date.

In a closed session on May 13, the city council, with Velazquez recused, unanimously voted to appoint Layne as special counsel for the appeal. City Attorney Jason Epperson said he had recused himself because the mayor was the appellant and Epperson wanted to avoid an appearance of bias.

Carly Jo Briggantino, a spokesperson for Del Curto Brothers development, told the council that she believed Velazquez wanted to postpone the meeting for “economic and personal reasons.” Del Curto Brothers is the developer for the 400 block project and, along with the Community Foundation for San Benito County, would be buying the key downtown land parcel for $375,000 less than the city spent to acquire and clear it.

Velazquez had filed an appeal of the Hollister planning commission’s decision to approve the tentative site map for the 400 block, the conditional use permit and subdivision plan for the project. The hearing was set for May 20,  when the council would decide whether or not to uphold the planning commission decision, but Velazquez’s lawyers got a call from the city’s attorney the afternoon before the meeting saying the hearing would be continued until next month.

Velazquez’s attorneys had sent two letters to the planning commission prior to filing the appeal and later filed an appeal, citing the same four reasons: The project violates the maximum residential density for the project site, does not qualify for a “density bonus” (meaning additional apartments) and requires a full California Environmental Quality Act review; and the city didn’t comply with state law in realigning an alley that separates the two project sites.

The 400 block became the responsibility of the city’s redevelopment agency following the 1989 Loma Prieta earthquake. The property was purchased in 1991 by the agency, with badly damaged structures still standing.

According to the 400 block’s long-range property management plan, the agency purchased the property for $703,000 and paid $62,000 to demolish one of the structures. That would be around $1.3 million in 2019 dollars, according to the U.S Inflation Calculator.

In 2017, the city entered into a disposition agreement with Del Curto Brothers Development and the Community Foundation to sell the property for $390,000—an amount that the city had included in its Request For Proposals, based on a 2015 appraisal. A second appraisal was conducted in 2016, which placed the property value at $690,000; but the higher appraisal was withheld from the council until it came to light after the vote.

An associate for the law firm Schute, Mihaly and Weinberger, Edward Schexnayder, is working with Velazquez. He said Velazquez’s legal team planned to explain to the council that the city could legally back out of the agreement.

“There’s been a misconception that the project was locked in in 2017,” Schexnayder told the Free Lance. He also said his appeal would focus on “zoning inconsistencies.”

Velazquez and his lawyers believe the project is not subject to a density housing bonus, which would allow 22 units of housing be built in the mixed-use apartment space instead the 18 the lot size would allow. Four of the units in the Del Curto Brothers development will be below-market-rate housing, which is part of the city’s justification for approval.

When establishing the number of units that would be allowed, Schexnayder said the city used both lots to measure the amount of housing that could be allowed, despite the fact that the projects—a non-profit office building for the Community Foundation, and a commercial/residential building for the Del Curto Brothers—are separate.

Schexnayder told the Free Lance that after the firm wrote the letters to the planning commission that said the project exceeded the city’s residential zoning permit, city staff responded that they considered the foundation offices and the mixed-use building all one project.

Schexnayder said, “Those are the rules everybody plays by and they basically can’t build a project that doesn’t play by those rules .”

The city has responded to all of Velazquez’s and the lawyer’s points against the project in the staff report for the appeal. The city claims the project is exempt from an environmental review because there was once commercial space at the site.  The density bonus is allowed, city staff said, because the projects are part of one larger development separated into two phases.

Velazquez’s lawyers specialize in municipal law and represent cities and citizens in similar cases. The firm also acts as the city attorney for some cities.

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