Field of nightmares

What's next for SLO if voters reject the Marketplace project?

by and

NOW OR NEVER:  Mayor Dave Romero worries that if voters veto The Marketplace, the county could approve the project on its own terms and the city would lose out on a great deal. - CHRISTOPHER GARDNER
  • Christopher Gardner
  • NOW OR NEVER: Mayor Dave Romero worries that if voters veto The Marketplace, the county could approve the project on its own terms and the city would lose out on a great deal.

#Getting over the overpass

Who ever knew that such an innocuous structure - part of a roadway - could provide so much fodder for debate and be so important, historically, to a town? The Prado Road overpass is for some the lynchpin that justifies the Marketplace; for others it's one more example of a sweetheart deal for out-of-state developers.

To grasp how a piece of infrastructure, like an overpass, has driven so much debate, it's best to look back to 1994 when San Luis Obispo city officials updated the General Plan.

The idea is that development pays for itself, but it's not that simple in situations like the Prado Road overpass because the need for the overpass is obviously not strictly for development use. The overpass was included in the '94 General Plan and had already been identified by the city as a needed improvement, so city officials created a table of percentages that forecast the projected use of the proposed overpass. The variables are many.

The allocation of the Prado Road interchange costs is based on future developments that haven't been born yet, like those eventually destined for the Sunset Drive-in area, prompting the need for an overpass.

City projectors say such developments will account for 4.7 percent of the overpass, and the future housing in the Margarita area will account for 13 percent of the overpass use.

According to the city's numbers, the proposed Marketplace project will account for 52 percent of the overpass use, so under the "development pays for development" model, Marketplace developers would be responsible for 52 percent of the cost of the overpass, plus an additional 18 percent they hope to get from future developers.

The city, because it is responsible for 30 percent of the use, will pay 30 percent of the cost of the overpass. This money will not come from the general fund but instead from Transportation Impact Fees (TIF) over the next 30 years. TIF fees come from development projects and other building projects. This is where there's a point of contention.

TIF money is designated for new infrastructure projects and collected from building projects. Under the plan for the Marketplace, the Prado Road overpass will be first priority for TIF funds for the next 30 years.

That means that the money that is normally dedicated to creating new infrastructure will be dedicated to the overpass for the next 30 years.

Proponents of the Marketplace and the overpass say that's okay because the overpass has been part of the general plan and this is something the city would be unable to afford otherwise. Opponents say this is bad because the city won't have money to pay for other projects like an LOVR overpass and Orcutt grade crossing.

But before construction of The Marketplace can begin, Caltrans has to approve the project, which won't be anytime soon.

According to Caltrans, the current plans for the overpass are not up to snuff and the city and developer have a lot of work to do before a viable overpass can begin construction.

"We haven't told them no, but we haven't told them yes because we don't have the engineering," said Tom Houston, who is overseeing the Prado Road overpass for Caltrans. "They have a long way to go."

According to Caltrans, which would eventually own the overpass, the main problem with the current plan is flooding. The Dalidio Ranch and the adjacent section of Highway 101 is a floodplain, which makes it especially tricky to build there. Caltrans says development can occur as long as it doesn't make the flooding situation in this location worse, and adds the city and the developers have not created an adequate design for the overpass to address this.

In the end it's Caltrans that is ultimately liable for the overpass and the highway, so it has to make sure the project is properly engineered.

"They have some hurdles. I'm not saying anything's insurmountable, but it's not a done deal," Houston said.

Houston says it's optimistic to think an overpass would be completed in the next five years, even if the city handed in new overpass plans today. The new plans would then have to go through a series of approvals, including but not limited to the Army Corps of Engineers, Caltrans, Fish and Wildlife Service, and the Regional Water Quality Control Board. Houston joked that a shopping mall does not rank to high on the list of priorities at the already overburdened Fish and Wildlife service.

NOT BUYING IT:  City Councilwoman Christine Mulholland dismisses Romero's stance as a scare tactic: "It's like saying we've got to shoot ourselves in the foot, otherwise the county will shoot us in the foot. So we have to do it first." - CHRISTOPHER GARDNER
  • Christopher Gardner
  • NOT BUYING IT: City Councilwoman Christine Mulholland dismisses Romero's stance as a scare tactic: "It's like saying we've got to shoot ourselves in the foot, otherwise the county will shoot us in the foot. So we have to do it first."

#Ben Romo of Save San Luis says a lot could change in the time it take to approve a new overpass, and it could affect what stores eventually end up calling Marketplace home, possibly even a Wal-Mart. Big box stores that have shown interest in The Marketplace could opt out and open in other parts of the city or county during the overpass study, and that might give Wal-Mart the chance to come in.

Ernie Dalidio says no way, absolutely not; The Marketplace will not house Wal-Mart.

"We've never had any contact with Wal-Mart," Dalidio said. "We have no interest in putting them in. We know probably 85 percent of the community doesn't want Wal-Mart."

Dalidio dismisses any Wal-Mart talk as frustrating disinformation put out by Save San Luis. "There's a plethora of stores that want to come in. Why would we want to [add Wal-Mart]?"

Dalidio says that he even offered to enter into a contract with the city that would prohibit Wal-Mart from opening at The Marketplace, but the city declined.

Currently it's unclear how much of an interest Dalidio has in The Marketplace and input on what stores will eventually locate there.

"[The Dalidio family has] a shared say. We have an influence," Dalidio said.

Another point of contention regarding the overpass is the city's agreement that gives the developer a percentage of the sales tax revenue from The Marketplace.

The city has projected that The Marketplace will bring in about $1.5 million in sales tax revenue. Thirty percent of this is immediately taken by the city because this is the amount of sales tax revenue that is forecasted to be taken from exiting businesses, aka the Transfer Factor.

That leaves 70 percent of $1.5 million, which will be split by the city and the developer annually for the next 30 years. In a good year, the developer will make back the amount of money he had to pay that year for the overpass, but this situation is unlikely, city officials say. Marketplace proponents like Mayor Dave Romero say 50 percent of something is better than 100 percent of nothing. Also, the city says it's common practice to share sales tax revenue to lure developers.

If sales are good and the cost of the overpass does not increase too much, then the developer could get back what he's invested in the overpass from the sales tax the city is sharing with him, but Bill Statler, city finance director, said the scenario is unlikely. City officials say this is justifiable and fair because of the scope of the project, the importance of the overpass to the city, and because the city has made the developer meet an unusually high amount of requirements.

Meanwhile, the city will be collecting its 65 percent of the sales tax revenue without being on the hook for the overpass.

Staff Writer John Peabody can be reached at

Will the county approve if the city doesn't?

One of the main arguments coming from the pro-Marketplace camp states that if the people of San Luis Obispo city reject the project in the upcoming special election, then the development would automatically bounce back to the county. At that point, people like Mayor Dave Romero and property owner Ernie Dalidio warn, the county would approve the project on its own terms, and that the city would lose out on a great deal.

That special arrangement includes honoring city requirements to protect open space, create affordable housing, and provide traffic mitigation. The developer, in this special deal, would also advance about 70 percent of the funds needed to build the Prado Road overpass.

That argument raises some very interesting questions. Would the county simply override city voters and approve the development on its own terms? How long would that county approval process delay the project? If they county does approve, would the special deals between city the developer be forever lost? And what about capturing the $1.5 million in sales tax revenue?

For answers to those questions, New Times spoke with the people who should know best: the County Board of Supervisors.

Automatic approval?

Shirley Bianchi was quick to debunk this myth.

"I don't know why the county would approve it automatically," Supervisor Bianchi said of the Marketplace.

NO INTEREST:  If the Marketplace does pass, landowner Ernie Dalidio maintains he is committed to keeping Wal-Mart out of the development despite whatever delays in construction may arise. - CHRISTOPHER GARDNER
  • Christopher Gardner
  • NO INTEREST: If the Marketplace does pass, landowner Ernie Dalidio maintains he is committed to keeping Wal-Mart out of the development despite whatever delays in construction may arise.

#Bianchi admitted that she hadn't given this issue a great deal of attention yet, for if Measures A, B, and C pass, she'll never have to vote on it. But developers would be taking a leap of faith to think they could count on Bianchi's vote of support.

"I have a thing about prime ag land," she said. "As a result, I'm not real happy about this project."

But without having seen the Environmental Impact Report (EIR) and other documentation, she explained, "I really cannot make a valid decision."

Supervisor Jim Patterson made it quite clear how feels about the plans to develop the Dalidio Ranch for commercial use.

"That's prime ag land, and I wouldn't be in favor of turning over to developers. But, he added, "I would support the voters either way, up or down."

The idea of the Marketplace proposal going back to the county is a not a contingency that Supervisor Katcho Achadjian looks forward to. The county already had a chance to review the project in 2002, at which time they agreed - along with the city and the developer - to return the proposal to city.

"Nobody wants to see a tug of war between the county and the city. We made an honest effort to work with all parties, and we thought we had a deal," Achadjian said. "We all feel like the project belongs to the city."

"It's my personal belief that the cities and communities have the right to plan for themselves," Patterson said. "I would support whatever the voters decide relative to the development of that property."

Of the four Board of Supervisors members who have a stake in the city, Jerry Lenthall would be the most supportive.

"I have supported the property owners' right to develop," Lenthall said, and he has supported the Marketplace all along.

County compromise

If the Marketplace were built on county property, its supporters say that the city would lose out a real sweet deal. But opponents say that's merely a scare tactic to win support in the city.

"It's like saying we've got to shoot ourselves in the foot," said City Councilwoman Christine Mulholland, a staunch opponent of the development. "Otherwise the county will shoot us in the foot. So we have to do it first."

The county would not have the same obligations as the city, in terms of preserving open space and funding the overpass, but new arrangements can always be negotiated, Supervisor Achadjian explained.

One of the biggest advantages for developing the Marketplace within the city would be the project's access to city services, water, and sewage. Without city infrastructure, the development would have to manage its own wastewater.

Based on the size of the project and the conditions of the property, Councilwoman Mulholland doesn't believe such a massive shopping center would qualify for a wastewater discharge permit. And in this rare instance, she and Supervisor Lenthall appear to be in agreement.

"I doubt that you'd see a project of that size developed in the county," Lenthall said. "The city has the infrastructure."

If Lenthall and Mullholland are right, then this election is about much more than just developing on city land vs. county land. It's really about stopping The Marketplace, because if the city doesn't want it, the county can't do it.

"Regardless of the political will of the board of supervisors, there are other agencies involved," Mulholland said.

There are also questions of who would pay for the Prado Road overpass and whether the city's open space requirements would be respected.

"If the county had to pay for the overpass, I wouldn't support it," Achadjian said.

"If we don't have to, why should we?" he asked hypothetically. "But on the other hand, I would be respectful of the city general plan [as far as the preservation of open space is concerned]."

"Who knows if we could negotiate those same deals or not," Patterson said of the special arrangements made between the developers and the city. "It's just speculation."

Definite delays

In any case, Supervisor Patterson expects it would take at least two years for the county to review and approve the Marketplace project. His peers estimate a similar timetable, beginning will a General Plan amendment, followed by regulatory agency reviews, EIRs, and so on.

The area is currently zoned for agriculture, and if it remains in the county's hands it would have to be rezoned for commercial or residential or whatever uses they want, Patterson explained. Amending the General Plan to change the zoning would be the first step in a very long process.

Supervisor Achadjian had another idea. He suggested that if the city voters reject Measures A, B, and C, a countywide election might be in order. All the supervisors seem to agree that this would be a very costly process. A special election would probably have to be billed to the applicant. Otherwise, it would have to wait until the next general election in June 2006.

EASY AS A-B-C?:  It's up to the voters to decide April 26 if The Marketplace project is a good deal for the city of SLO. - CHRISTOPHER GARDNER
  • Christopher Gardner
  • EASY AS A-B-C?: It's up to the voters to decide April 26 if The Marketplace project is a good deal for the city of SLO.

#Tax take

Marketplace proponents are claiming that the county would jump at the opportunity to build the shopping center on its property just to capture all that sales tax revenue for itself. Supervisor Achadjian agreed that the project might be attractive for that reason, especially considering today's budget shortfalls.

But Supervisor Bianchi warns against overestimating the significance of that revenue. For the city, which depends so heavily on sale taxes, that money is of vital importance, but for the county, it represents a much small portion of its total budget.

Furthermore, she added, the development might bring with it additional expenses, for things like law enforcement and wastewater management.

"[The Marketplace] may be an asset to city, but a liability to the county," Bianchi suggested.

Election prediction

Based on the number of Yes on A-B-C signs in the residential areas compared to the No on A-B-C signs, predominantly in the windows of downtown businesses - businesses often owned by folks who don't live in the city and therefore can't vote on the measure - Achadjian suspects that the Marketplace will likely win voter approval.

"I just hope that when the dust settles, we're all able to work together."

Staff Writer Jeff Hornaday can be reached at


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