Skyborne Developer Pays Council Members for Special Deal as City Falters

DESERT HOT SPRINGS, Calif. - Nov. 18, 2013 - PRLog -- DESERT HOT SPRINGS, CA – Spending $6,000 to save $200,000 is a good bargain. That $6,000 is the amount a local developer recently paid to the political campaigns of three members of the city council who are expected at tomorrow’s meeting to approve the developer not paying the city the $200,000 as promised.

For a city that is broke and on the threshold of bankruptcy deals like this are expected

At least one person is exiting the city council on December 2 due to the election. But all three members of the council – Yvonne Parks, Scott Matas and Jan Pye – will still be maintaining majority control at the November 19 meeting where the matter of Jim Kozak and his Skyborne Ventures development is once again on the agenda.

City Being Asked to Give Away Another $200,000
While the city faces an uncertain financial future that could involve bankruptcy and a loss of its police department, developer Jim Kozak of San Diego as principal for Strategic Land Partners is asking the city council to forget the $200,000 payment he now owes the city and instead have the city accept his IOU.

It is not a matter of Jim Kozak not having the money; he bought the multi-million dollar Skyborne development from D. R. Horton for pennies on the dollar. Horton is the nation’s largest new home builder.

That money owed the city from Jim Kozak, if available, would fund much needed road repairs and other improvements along Pierson Boulevard. The $200,000 is scheduled to be added to $400,000 the city has already received. However, every time the city has been through this before the city always end up losing.

In fact, the city of Desert Hot Springs is rife with unfinished residential developments abandoned not just during the economic downturn but from more than a decade before.

The Snellenberger project west of Highway 62 is one example that over a decade after the last earthmover left still remains an torn up eyesore of what once were magical and colorful painted hills. Now the project is a scar on the landscape that is little more than a source of windblown dust.

More importantly, that abandoned Snellenberger development cost the city staff time as well as cost the water district more than a million dollars to put in a sewer line to what ended up being nothing on the edge of nowhere. Those significant public expenditures have not been recovered and may never be.

Dozens of unfinished residential developments remain littered throughout the city illustrating a variety of problems due to development bonds expired and developer’s IOUs abandoned.

Residential developments across the city are missing required landscaping, perimeter walls, street lighting, sidewalks and street pavement. What was once the financial responsibility of private sector developers has become the unfinished burden of the city collapsing under the loss public sector funding.

City Unable to Say No Gets the Shaft
Developers in this city often obtained special favors resulting from a cozy relationship with council members and a weak planning commission unable to say no or unsophisticated in negotiating for the best due the city.

If a developer wanted a zoning variance in order to cram in more residential lots, as expected the planning commission capitulated, else the council would give in on appeal. Across the city requirements for lighting, landscaping, sidewalks and paving was compromised with a nod and a wink. Even the prohibition against wooden fences was lifted, without opposition, resulting in broken fences today in developments scarcely a decade old.

That unwillingness to hold developers to task is unusual in the Coachella Valley as other cities hold fast to maintaining high standards. Loosening these standards in Desert Hot Springs has proven a detriment to economic development, leaving parts of the city looking ruined and in fact being ruined.

Those favors for million dollar developers, trading the security of bonds and the permanence of payments for a promise bound by nothing more than a paper IOU has ended up creating narrow streets leading to schools, flood and public safety problems, as well as added expenditures to the public city budget to make up for what was supposed to be paid for by private development impact fees.

True Economic Development?
Having the money in the city coffers will by no means solve the city’s financial woes but would provide some benefit to the city through a job’s creating public works project and improvements to an unfinished Pierson Boulevard. That is what the money is intended to do, paying for economic development.

Obviously the city receives no benefit with the developer keeping the $200,000 in his bank account.

However, consider that the council majority agreed to follow the recommendation of former city manager Rick Daniels at a council meeting in March of 2013 to take an IOU from Jim Kozak in exchange for allowing a $10 million bond to expire. (http://www.desertvortex.com/2013/03/18/10-million-given-a...)

Also consider that the city also agreed not to hold the Jim Kozak to task to build the public park in Karen Drive that was promised as part of the original developer agreement for Skyborne.

From Bargain to Bankruptcy
Yes, it is a bargain to pay $6,000 in exchange for not having to pay $200,000. In some people’s mind that’s good economic development. It certainly is for Jim Kozak. Yet, that very generous decision for Yvonne Parks, Scott Matas and Jan Pye, does not in any way benefit the people of Desert Hot Springs.

That the matter is coming before the lame duck council tomorrow evening is no accident. That city staff is recommending bowing down to Jim Kozak to gamble away the security of an agreement in exchange for a promise with no collateral is another example of the failure of the city. Paying high salaries apparently does not buy the experienced professional staff needed to make the good decisions for the city.