CVIndependent

Sun05272018

Last updateWed, 27 Sep 2017 1pm

On Nov. 7, voters who live in the city of Palm Springs will go to the polls to select two new members of the Palm Springs City Council.

This election will mark a complete changing of the guard, so to speak, after the indictment of former Mayor Steve Pougnet and a couple of developers on corruption charges two years ago. The two new members will replace retiring City Council members Ginny Foat and Chris Mills, and joining three new members who were elected two years ago: Geoff Kors, J.R. Roberts and Mayor Rob Moon.

With City Manager David Ready, this new council will help guide a city that is enjoying the best of times … and, at the same time, suffering through the worst of times.

The city is more popular than ever as a tourism destination—yet it is enduring the aforementioned scandal involving its huge, signature downtown development project. Some areas, such as the Uptown Design District, are enjoying a resurgence—yet the homelessness problem continues to worsen.

The Independent’s Brian Blueskye recently spoke to each of the candidates about these various issues and more. He asked them about the issue of homelessness; the new vacation-rental ordinance; the lack of affordable housing in the city; ethics and transparency;the downtown redevelopment project; and the city’s relationship with the Agua Caliente Band of Cahuilla Indians. Finally, he asked each candidate whether the city is opposed to fun—a charge against the current council leveled by some, including the Cactus Hugs website.

Here’s what each of the candidates had to say.

The Palm Springs City Council Candidate Interview: Christy Holstege

The Palm Springs City Council Candidate Interview: Glenn Flood 

The Palm Springs City Council Candidate Interview: Henry Hampton

The Palm Springs City Council Candidate Interview: Judy Deertrack

The Palm Springs City Council Candidate Interview: Lisa Middleton

The Palm Springs City Council Candidate Interview: Robert Julian Stone

Published in Politics

Judy Deertrack is one of the loudest and most dedicated critics of the Palm Springs City Council—and it’s no surprise that she again decided to run for a council seat, after an unsuccessful run in 2013.

However, as a voice of opposition, Deertrack—who takes credit as one of the whistleblowers regarding the corruption scandal that led to the indictment of former Mayor Steve Pougnet—is often criticized as being “against” everything and not in favor of much. Deertrack said she’s aware of the criticism—but said her tone is necessary, because the city faces a danger of bankruptcy, and few people are acknowledging the dark cloud hanging over Palm Springs.

When I met with her at her campaign headquarters, she provided photocopies of various information related to the city budget and Measure J—a 1 percent sales and use tax approved by voters in 2011 that was slated to go toward city services, maintenance and redevelopment. The attorney and urban planning consultant has been one of the most vocal voices against the downtown redevelopment project; in fact, she told me she has a storage locker full of this information.

On the subject of homelessness, Deertrack said the problem is due to a lack of affordable housing. She said that the city’s homelessness task force has not been effective and that the city is not devoted to resolving the homelessness issue.

“This is not just a city problem; it’s a state problem,” Deertrack said. “The state is behind in almost 1 million affordable housing units across the state. It’s a crisis at this point. There are multiple causes, but certainly one of them was the loss in redevelopment funding. I’ve looked at housing throughout the valley, and the city of Palm Springs appears to be behind the other cities significantly. There hasn’t been a unit of affordable housing in this city (built) in over a decade.”

As for the new restrictions on vacation rentals, Deertrack mentioned a ballot initiative coming in the summer of 2018 that may decide the fate of vacation rentals—and added that residential zoning laws already define how to handle vacation rentals.

“The primary restriction is set by state law. It’s also set by local law in the general plan update—a general plan that takes years of work with the community working directly with their elected officials to come up with a long term vision for growth and development,” Deertrack said. “One of the first principles of residential development set by zoning laws in the state of California and all across the country is that residential zoning is primarily for residential use of a home for noncommercial purpose, with the outcome to be neighborhood peace and quiet. If you want to put in any type of commercial use, it can only be permitted under state law if you can demonstrate that by adding that … you are not creating a disturbance or not undermining the residential designation. This has been horrifically violated over time, and we have districts over in Warm Sands where you have residential zones … now with major noise problems. I support the people’s vote on it.”

Regarding affordable housing, Deertrack again said the city needs follow its own ordinances and plans.

“There’s a housing plan (city officials) committed themselves to that they abandoned,” she said. “If we do not follow the laws, there needs to be a state audit of the funds in the city, and the state needs to come in with some oversight. Following the general plan would the major part. Bringing in the state oversight due to lack of compliance—part of the problem with that is a good part of California is out of compliance. But I don’t think (other cities) are out of compliance as seriously as this city is.”

Transparency has been one of the key issues in Deertrack’s campaign—and she almost seemed offended when I asked her about it.

“Do you know who you’re asking here?” Deertrack said. “… It’s very unfortunate. We got something (in the downtown redevelopment project) that is five to six times the height and density of what was advertised to pass Measure J. What happened is that they passed a bond issuance a year after Measure J was passed, where they issued $47 million to (now-indicted developer John) Wessman; $42 million went to the project; $11 million that was for the parking structure; and $32 million went into a private escrow account for Mr. Wessman with no auditing powers. To date, when a public request goes into the city, they indicate that they have no powers to check whether the money is there, how it has been used, and what portion of it is remaining.”

Deertrack said she has the experience to maintain good relations with the Agua Caliente Band of Cahuilla Indians.

“I’ve worked in tribal affairs for over 13 to 15 years in the Taos Pueblo tribal government. My late husband was full-blooded Taos Pueblo,” she said. “I was in a culture where there were 2,000 tribal people, and there were seven non-native people, and I was one of those seven. I lived in the tribe’s restricted area during that entire period. It took years for them to build trust, and it took me years to build confidence and sensitivity to tribal issues, because there is a huge cultural gap. But I’ve had extensive training in tribal sovereignty, and I have enormous respect for tribal culture. We have tribes here that have acted as guardians of this land throughout the millenniums, and I do not intend to see us tear that to pieces.”

The success or failure of the downtown redevelopment project did not seem to be something Deertrack cares about; instead, she expressed concern about the finances of the project.

“Mr. Wessman gets 100 percent of the profits as it stands and gets 100 percent of the ownership value,” she said. “What he did was took the income-producing lots, and got a 75 percent rebate on bed tax over 30 years, which is unheard of. The problem with a project like that is that no one has any information as to the underlying financial structure of it.”

Deertrack said the FBI public corruption task force has a 90 percent conviction rate.

“This isn’t a popular thing to do, but it’s a very necessary thing to do, and I’ve been relentless on this,” she said. “The indictments (include) the names of nine to 12 people who were trading information. Some were on the Planning Commission, and some were on the City Council. … The scandal hasn’t been addressed or touched in this town, and you have a candidate on the Planning Commission who is running, and no one is talking about this. Every person on that Planning Commission should have, when they knew someone was influencing their vote outside of the public-hearing process, had an ethical and legal responsibility to go to the city attorney and report misconduct, or go to the district attorney.”

When I asked her about claims by some that the City Council seems opposed to fun, Deertrack managed to steer even that question toward the downtown corruption scandal.

“They’ve taken the fun out of my life for the past three years,” Deertrack said with a laugh. “They’re pretty protective of the city’s party environment and its diversity. We have an extraordinary level of public events here, and it’s the strength of this town. We do know how to party, and I have a background as a vocalist in Broadway and in opera, and I go out and sing all over town—restaurants, private parties, assisted living, and it’s part of my donated time. That is the one thing we all have in common. We all need to clean up the other things, because (they’ve) created a dark cloud. There’s an imminent threat of bankruptcy in this city, and nothing is going to stop the party faster than that, so we better attend to this business.”

Published in Politics

Judy Deertrack and Robert Stone—both of whom have declared their intent to run for the Palm Springs City Council—recently disclosed that they were informants to the FBI regarding the Palm Springs City Hall corruption case.

The case has resulted in bribery charges in connection with downtown development against former Mayor Steve Pougnet and developers John Wessman and Richard Meaney.

In total, Deertrack, who is an urban lawyer, and Stone, a real estate broker and author, say they invested about 7,000 hours into collecting more than 10,000 pages of documentation.

According to Stone, he called the U.S. Attorney on the morning of April 10, 2015.

“That afternoon, I received a return phone call from Joseph Widman, U.S. attorney for Riverside County,” Stone said. “He informed me that a supervisory FBI agent, Colin Schmitt, was also on the line.”

Widman and Schmitt were intrigued by what they heard, Deertrack and Stone said, and an in-person interview was set up to be held about 20 days later.

“Judy and I spent 90 minutes discussing the case with Widman, Schmitt, Jorge Chavez from the DA’s office and three field agents,” Stone said. “The last words Schmitt said to us were: ‘You have the full attention of the federal government at the highest level.’”

Deertrack explained what they found that led them to contact the authorities.

“Robert researched the mayor’s income and found a defunct corporation making payments to Pougnet,” she said. “Over three years, I testified to the City Council on 22 projects that appeared suspect. Eighteen of those projects are now in the indictments.”

According to sources, Pougnet and Wessman hated each other, so Meaney was brought in to handle the alleged payments, because he was the mayor’s friend. One of the investigators at one point called the trio “the dumbest criminals ever” because of the way the alleged incriminating payments were made—and there is a possibility that one of the three suspects might cooperate with the DA in return for immunity or a lighter sentence.

Beyond taking credit as whistleblowers, Deertrack and Stone said they couldn’t comment on many specifics, as the case is still under investigation. However, they were obviously able to comment on what they’d do if elected to the Palm Springs City Council come November, when two seats will be up for grabs.

“We need to have a two-term limit,” Stone said. “Eight years for the mayor, and that’s it, because an absolute power corrupts.”

It is worth noting that Pougnet was on the City Council from 2003 to 2007, when he was elected mayor. He served two terms and was apparently going to run for a third before deciding against it when the scandal erupted in 2015.

As for Deertrack, she said her first initiative would be to protect the city from what she called further legal and financial troubles by asking for more state and federal help.

“My very first response would be a motion for the City Council to immediately contact the FBI, U.S. attorney general and state attorney general to confer and identify any ongoing threats to funding, projects or infrastructure as a result of the 18 or so projects that appear in the indictments, and partner with these agencies on remediation,” she said. She referred to the scandal that rocked the city of Bell, and said that city’s remediation actions saved Bell up to $100 million.

Both said they may lose votes as a result of their reputations as whistle-blowers and frequent city-government critics. They also said that they don’t fear for their safety in the wake of their criticisms.

“The intense public scrutiny is its own protection,” Deertrack said. “That does not mean our role was without risk. We were cautioned at times by law enforcement to be careful.”

On a lighter note, Stone, who has authored four books so far, hinted that he may write about the city corruption case one day.

“It’s such a book,” he said.

Published in Politics

John Wessman was a mighty developer, known for his lucrative deals across the Coachella Valley—and his significant influence at Palm Springs City Hall.

The high point of his career was supposed to be the Palm Springs downtown revitalization project, currently estimated by experts at $350 million in value.

Today, however, Wessman is better known for being indicted on numerous counts of alleged bribery involving former Mayor Steve Pougnet—and involving that downtown development project.

Wessman effectively retired upon the indictment and is not talking to the media. So, in an attempt to find out the latest news regarding the downtown development project—which has benefitted from millions of dollars from Palm Springs taxpayers via Measure J—we reached out to city officials, all of whom still publically support the downtown project. We started by trying to talk to Mayor Robert Moon.

We received this response from Amy Blaisdell, the city’s communications director: “Mayor Moon asked me to reach out to you regarding your request for an interview. He and the other councilmembers along with the city manager will not be granting interviews at this time regarding the investigation and recent indictments.”

This was a lie: Three weeks later, Robert Moon, City Manager David Ready and City Councilman J.R. Roberts sat down for a chat with KMIR.

In any case, we reached out to Judy Deertrack, a local urban lawyer and activist. She is a land and government-affairs consultant, and a legal specialist in land-use law. She is a Palm Springs resident and has lived and worked in the Coachella Valley since 2004. Here’s an edited version of our chat.

Let’s dig in from scratch: When did the trouble start brewing with the Palm Springs downtown project?

The problem with the downtown plan is that it was processed as … a relatively modest redevelopment project for the Desert Fashion Plaza that involved demolition and renovation.

How was Measure J entangled with the downtown project?

In early 2012, the state of California (ended cities’) redevelopment powers and financing, but the city went on to enlarge this project anyway, and financed it with a municipal bond issuance for $47 million that is paid back through Measure J funds at $3.3 million per year for about 25 years.

What was Wessman’s cut in the whole deal?

Since the original release of $47 million in 2012, change orders, (the) purchase of the event center lot, and its proposed approvals have added about another $20 million. Wessman has also gotten an additional $150 million in hotel subsidies coming to him through a bed-tax rebate. This project originally did not anticipate hotels. That is inching toward a quarter-billion in subsidies.

Has the $47 million been spent by Wessman, and has it been spent solely on capital improvements?

No one knows, but $32 million went into a private escrow account owned by Wessman for this project, and the city claims it has no access to know the status of that account currently.

How did the city of Palm Springs end up in such a mess?

I can’t in a few words give an exact story of what happened. Suffice to say, the permits started going through as project finance agreements rather than engineered diagrams. The city and Wessman kept the conceptual plans fairly private and vague enough that the dimensions could be changed at will, and there was no clear planning process in sight. A lot of this bypassed public hearings, except for the hotels.

So Wessman was also given a lot of freedom?

There appeared to be no upper limits … because the city used and abused the planned development permit (PDD). The specific plan set limits on height… and setbacks, and bulk, and floor-area ratio. Then the PDD took those limits away.

Is it possible the city violated any significant regulations and laws?

California’s environmental-review laws say that when cities set limits in their general plan and specific plan, it creates an environmental threshold for impacts, and when they build in excess of those limits, violating the threshold is a “significant environmental effect” that creates the need for further data, evaluation, public hearings and mitigation of project impacts.

How exactly did the city get away with such inconsistencies?

Palm Springs exceeded the limits of its plan on downtown, and then concluded there was no significant environmental effect of doing so—and made what I consider to be false findings that the project “was consistent and in conformity” with the general plan and specific plan, when, in fact, using the PDD and the project finance agreements to set the project development standards and requirements was a violation of those mechanisms.

The resulting “inconsistency” between the project and the specific plan is why in January 2016, the new City Council went back in and re-did about 50 percent of the wording of the specific plan to eliminate all of the outstanding inconsistencies. It was a major cleanup—but is not allowed in the state of California. A plan cannot be later amended to conform to illegal approvals that violate the plan.

It appears that the whole downtown affair is far from over.

Well, the original specific plan is lost to time and many, many changes. All of this occurred during an alleged racketeering scheme between the mayor (Pougnet) and the developer where the mayor, in the words of District Attorney (Michael) Hestrin, was paid to influence the vote of a majority of the sitting City Council. And no matter what was happening, and how illegal the permit processing became, there was always a majority vote—and tremendous pressure put on the architectural and planning commission boards to pass this project up and along, not on evidence, but on influence.

There were some attempts by the city to clean up the mess, correct?

That awful specific plan cleanup … in January 2016 was the tail wagging the dog! … The city over time absolutely bastardized the development restrictions on this project, and now City Hall is bragging they have cut the size by 49 percent. How unique! This sounds like a retail fire sale where the prices are increased 100 percent, and then cut back 50 percent, and we are told we just got a bargain.

What can be done to remedy this downtown quagmire?

This city and its citizens should be demanding change—a lot of change—and a lot of explanation for what has happened. Instead, we are allowing ourselves to be bullied and hoodwinked. The citizens of Palm Springs have been far too compliant with this outrage. Part of the problem is that no one is demanding information. Virtually no one is challenging the inconsistencies and untruths that abound on the public record. Just a few have stood up—too few!

If you were on the City Council, what would you do?

It is an obligation of the sitting City Council to first order a full accounting of expenditures and funds from Wessman on the project to date. Then, audit all accounts, and confer with the state of California on compromised public funds, such as municipal bonds or subsidies. Identify notification responsibilities to the bond-holders. The city has not acknowledged these obligations to date.

Published in Local Issues

A bottle, perhaps two, of Barolo might have helped cost the city of Palm Springs a fortune.

The Italian red wine was served during a meeting in 2010 between Steve Pougnet, then Palm Springs’ mayor, and developer John Wessman. Before the meeting, Pougnet had publicly talked about filing eminent-domain proceedings against Wessman’s Desert Fashion Plaza—which the developer had kept largely empty for almost a decade.

The following day, at the State of the City luncheon, Pougnet announced a deal with Wessman and a “new downtown vision that will benefit all of Palm Springs and the valley.”

The bond between Pougnet and Wessman grew after that. The mayor was hired to work for the Palm Springs International Film Festival—which has long included Wessman as a board member and vice chair. IRS records show that the Palm Springs International Film Society, the nonprofit that runs the festival, paid Pougnet $37,500 in the fiscal year 2011-2012, while Wessman Development Co. was paid $90,638 for building rent.

That was not the first time Pougnet and Wessman would find their financial interests linked.

In 2012, according to public records, Wessman purchased a property at the foot of the Tramway Road for $1.1 million. The property, known as Pedregal, was once owned by developer Dennis Cunningham, who lost the development. In addition, the City Council, led by Pougnet, awarded Wessman $4 million that Cunningham owed in bonds on the property.

The high-profile FBI raid of Palm Springs City Hall on Sept. 1, 2015, gathered documents and other evidence regarding Pougnet’s deals with developers, including Wessman. But beyond the ongoing scrutiny and the corruption probe, Wessman finds himself busier than ever.


Despite his high profile, Wessman remains an enigma: Not much is known about the man himself. His age is even hard to pin down; a Palm Springs Life article from May 1980 said he was 40 then; if accurate, that would make Wessman now 76 or so.

Wessman—who did not directly respond to requests to speak to the Independent—grew up on a farm in Hemet, surrounded by his six brothers and Swedish-born parents. As a teen, he worked in construction and never finished a college.

In 1964, he was employed by a construction company owned by Warren Coble and Arthur Press. A year later, Wessman bought out Press, and in 1972, he parted with Coble as well.

He’d soon develop one of the most unusual—and profitable—developing philosophies the valley has ever seen. In that aforementioned Palm Springs Life piece, he stated: “… I make more money from keeping property than I do by building and selling.”

The most prominent example of Wessman’s business strategy can be found smack-dab in the midst of downtown Palm Springs. It all started with the Desert Fashion Plaza, which he managed to keep largely vacant after purchasing it in 2001. Over the years, he held on to the property—and wore down many of his critics, a group that at one time included Pougnet.

Then in 2011, Palm Springs voters approved Measure J, a 1 percent increase in the city sales tax slated to be used on various city projects. Soon thereafter, the Palm Springs City Council, lead by Pougnet, opened the city’s wallets for Wessman Development Company.

“In the initial round,” said local real estate broker Robert Stone, “he got $32 million in public funds to help with the private improvements to the Desert Fashion Plaza parcel. It was simultaneously accompanied by another $11 million for streets, sidewalks and infrastructure improvements that are typically a developer expense.

“Then there were a bunch of change orders to the original giveaway,” Stone said. “When Wessman failed to provide adequate open space as required by the city’s specific plan for the site, the city bought a large parcel from him and made it permanent open space. They paid him $5.3 million for it, based on an appraised value which considered the value of the parcel if fully developed.”

One of the key elements of Wessman’s development is a Kimpton Hotel, rising quickly where the Fashion Plaza once was. However, Wessman has never built a hotel before.

“The 155-room Kimpton Hotel is our first hotel project,” said Michael Braun, the senior vice president at Wessman Development Co.

According to Braun, who’s also Wessman’s son in law, the Kimpton will be first new relevant large hotel in Palm Springs since 1988, when what is now the Renaissance was built.

Wessman recently announced plans to build yet another significant hotel downtown: a 150-room Virgin Hotel. Some opponents of Wessman’s project have expressed concerns about density, traffic and parking space for the proposed 69-foot-tall hotel. According to Braun, there is no problem.

“Based on current approvals, the downtown site has more parking spaces than required,” Braun said.

Another problem is the current occupancy rate for Palm Springs hotels, which is less than 60 percent. Additionally, other hotels may be built soon, including one by the Agua Caliente tribe on its downtown property.

Again, Braun said there was no problem. “You have to distinguish between various hotel-product offerings,” he said. “Palm Springs needs several new four-star products to attract a different tourist segment. The … occupancy rate is irrelevant, as it relates to all product offerings in Palm Springs.”

According to Judy Deertrack, a local urban lawyer, the downtown project morphed over time into something quite different than what was in the original plan.

“There has been no attempt at a market study or feasibility study since 2011, even though the project has grown from an expected $110 million in construction costs to its current estimate of $350 million,” Deertrack said.

“All the way through, the downtown development has shown a lack of public hearings and transparency, (and an) inappropriateness (in) the way the entitlements have gone through on the consent calendar and new business agenda without public notice, hearings and citizen review,” she said.

Over the years, Wessman has been associated with at least 44 companies, according to public records; 33 of the companies are still active.

“About five years ago, I did a search to find out how many parcels Wessman owns personally or in conjunction with other investors under his many DBAs,” Stone said. “At that time, he owned 135 properties in the valley. They were all commercial properties or unimproved land.”

Deertrack expressed serious concerns about the ongoing FBI investigation.

“The elephant in the room,” Deertrack said, “is the connection between the ongoing public corruption investigation, for possible fraud or undue influence, and the extraordinary entitlements granted to Wessman. The cities are prohibited from granting contracts or land entitlements to a developer or party who is a source of income to any City Council member, the mayor included.”

As for the FBI probe, Braun had only this to say: “It is company policy not to comment on any ongoing investigation.”


Meanwhile, Pougnet is no longer part of the City Council. While the new council slate seems to be keeping a more watchful eye on Wessman’s project, new Mayor Rob Moon said via email that construction will definitely continue.

“At our last City Council meeting, our council agreed unanimously that we were not content with continuing to ‘kick the can down the road’ on the downtown development. As I said at that meeting, further unnecessary delay is not fair to the developer, the residents, and certainly not to the downtown businesses who have been impacted by construction and the associated traffic, dust and noise. The council therefore stepped up to the task for which we are responsible, and we voted on each and every designated block and decided on height, density and setback for each of them.”

Moon said that while Wessman is currently planning to build two hotels, he has agreed not to build a third—at least not for a while.

“Wessman Development has agreed not to build a third hotel, currently described as a JC Marriott, until the members of the downtown hotel association have two years of occupancy over 62 percent,” Moon said. “That is a request made by the other hoteliers, which our Planning Commission has publicly supported, as well as the City Council. Nobody, least of all the other hotel owners, want to saturate the market.”

As for what Deertrack called the “elephant in the room”: What would happen to the city funds given to Wessman if he or Pougnet were ultimately prosecuted?

Moon said he did not know the answer to that question, and that he would forward the query to City Manager David Ready. Ready, in turn, forwarded the question to City Attorney Doug Holland.

“The developer’s obligations are secured by a performance deed of trust, and in the event the developer defaults on its obligations, the city has the right to exercise its rights under the performance deed of trust, and ultimately force a sale of the property for which financing has not been secured, and building permits have not been issued,” Holland said “This is the city’s primary enforcement tool.

“The city has acquired the parking structure and certain lots, and therefore, the payments for these assets would not be part of any default. Two properties have been released from the performance deed of trust (the Kimpton parcel on Block C-1 and the “West Elm” building on Block A) because these properties were fully financed, and building permits were issued. The remainder of the project is still subject to the performance deed of trust.

In other words … since the Kimpton and West Elm properties have been released, the city would have no real recourse regarding those parcels should criminal charges be filed.

Published in Local Issues