Letters to the Editor

Viewpoint: Annex project not worth risks

I alone voted against the Walmart/Annex project at the Atascadero Planning Commission meeting on June 5.

That Walmart was one of the project applicants had nothing to do with it. The project entails costs and risks for Atascadero that greatly exceed the hopedfor benefits and rewards.

The Walmart/Annex Project commits the city to advance approximately $2.5 million to improve the Del Rio freeway interchange. Recovering that money depends on the Annex portion of the project being built. That is adoubtful matter, at best.

Five of the Annex’s six parcels were acquired through foreclosure last month by the Montecito Bank and Trust Co., from its borrower, The Rottman Group. Rottman was Walmart’s co-applicant on the project going back to 2006. Since then, it faltered financially, fell out with Walmart and lost all but one of the Annex parcels. So now five Annex parcels are held by a bank and the other is controlled by a disgruntled, insolvent developer. With the economy still stalled, and no white knights or angels around, assuming the Annex will be developed as Rottman planned is unrealistic.

Nonetheless, the city proposes to bet $2.5 million of taxpayer money on the premise that the Annex will be built as Rottman planned. Not only that, with the city suffering its own financial distress, it will take the $2.5 million from the Atascadero wastewater fund as a loan.

When I questioned this at the Planning Commission meeting, the city attorney summarily declared it legal, without elaborating on the grounds for his opinion. As to whether insurance would cover the risk of the wastewater fund coming up short due to an earthquake or other unplanned event (like a state mandate requiring additional wastewater spending), no answers were forthcoming. Given the sums involved, the irregularity of this inter-agency borrowing, and the various risks, a thorough, written analysis of the issues is the least a city official should have to justify approving such a “funny money” transaction.

Predictably, the Environmental Impact Report is also being challenged. Attorneys for project opponents submitted a letter arguing, most notably, that the EIR’s “fair share” analysis, under which Walmart bears only about half of the project’s traffic mitigation costs, is legally flawed. The city attorney and the EIR consultants dismissed those arguments at the Planning Commission meeting, but did not provide detailed written refutation. That led me to inquire whether insurance might cover the city’s costs in defending against litigation arising from certification of the EIR. Nobody had an answer to that question.

To justify a municipality proceeding in the face of costs and risks of this magnitude, there should be near-certainty that the community will make big money from the project. Here, however, the prospects are nothing like that. Annual sales tax revenues of about $320,000 are projected from Walmart, along with another $200,000 from the Annex if and when it is developed as originally proposed. Beyond that, there are only unquantifiable hopes that multiplier benefits will trickle through Atascadero from money spent at Walmart, even though Walmart’s products are sourced elsewhere and its profits go back to Arkansas.

The Walmart/Annex project’s limited upside cannot support spending $2.5 million that we don’t have, raiding the wastewater fund and exposing the city to risks of major financial loss and protracted litigation. Putting aside the culture-war distractions that come with Walmart’s involvement and assessing this project purely on its merits, it is plain that approval of it in its current form does not withstand analysis. The public’s money is not for gambling, especially in such large amounts and on such an unsafe bet.

Atascadero Planning Commissioner Len Colamarino is a business lawyer who practiced in New York for almost 30 years. He relocated to Atascadero in January 2005.

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