Safeway fights fee hike

In an ongoing battle over a proposed 16-pump gas station Safeway has proposed to build alongside its McDowell Boulevard store, the corporation is claiming that the City of Petaluma unlawfully increased development fees by more than 14,000 percent.|

In an ongoing battle over a proposed 16-pump gas station Safeway has proposed to build alongside its McDowell Boulevard store, the corporation is claiming that the City of Petaluma unlawfully increased development fees by more than 14,000 percent as a way to keep the project from being built.

Safeway accuses the city of increasing the Traffic Development Impact Fee to a point that Safeway would go from paying $11,858 in fees to paying $1.7 million.

In a letter sent to the city in November, Safeway lawyer Matthew Francois demanded that the new fee ordinance be repealed or that the gas station project be made exempt.

Area residents are being denied cheaper gas prices and tax revenues Safeway would provide, according to Francois. He added that the store has provided traffic impact, noise and air quality-greenhouse gas studies to the city.

Safeway says it would lose millions of dollars if the gas station project does not proceed.

The city has not taken action on Safeway’s application to get the gas station bid approved.

According to Francois, the council failed to pass a moratorium on new gas station construction at a meeting in March 2014, then passed a resolution in July 2014 increasing the fee such that Safeway would have to pay $1.7 million in fees to pursue the project.

“The city council unsuccessfully attempted to pass an unlawful moratorium designed specifically to stop the project in March 2014,” wrote Francois. “It appears that the moratorium effort was prompted by other gas station owners who were concerned about price competition.”

Petaluma enacted their Traffic Development Impact Fee policies in the 1990s as a means of paying for the impact any new commercial development had on traffic. Francois said the city council unanimously decided in July 2014 to alter the method used to calculate impact fees for businesses, increasing the impact fee specifically for gas stations.

By his calculations, this raised Safeway’s fee by 14,447 percent - going from “$11,858 to $1,725,040.” Francois said the increase effectively made the Safeway gasoline project unaffordable and created a “defacto ban” on not only their project, but all future gas stations in Petaluma.

“The TIF increase for the project is in excess of 14-thousand percent,” wrote Francois. “If this new, illegal TIF is not repealed and the project proceeds … (Safeway) would be forced to fund 1.053 percent of the total cost of all the city’s circulation improvements.”

Francois said that if Safeway was forced to pay the fee, it would be a price nearly as much as the total cost of construction for the new gas station and cause the project to be “financially unfeasible.” He added that the fee violated equal protection requirements, “in that it singles out the project and other gas stations” and subjects them to “substantially higher impact fees” than imposed on similarly situated commercial businesses.

While not specifically stating Safeway was prepared to take the city to court over the fee increase, Francois cited legal precedents to do so, including the California Environmental Quality Act, The United States Constitution’s 5th and 14th amendments, and several federal and state court cases.

Francois requested that the city either repeal the resolution outright, or at the very least grandfather in the Safeway project.

City Attorney Eric Danly was unavailable for comment at press time. Mayor David Glass referred all questions to Danly.

City Councilman Mike Healy, a local attorney, said the city’s staff was “continuing work to revalidate the correctness of the new fee program” and added “we’re trying to determine if their (Safeway’s) technical arguments pertaining to the appropriate calculation methodology have merit.”

Francois claims that the reason for the city’s change in fee structure is based on its desire to stop the gas station project and the city’s desire to help speed development of the proposed Petaluman Hotel and future hotel projects.

“On February 13, Ross Jones, the developer of the Petaluman, wrote to the city council because his proposed 54-room hotel without any parking would be required to pay traffic mitigation fees of $685,000 while receiving a credit of $23, 655,” wrote Francois.

The proposed Petaluman Hotel is located at the corner of Petaluma Boulevard and B Street, where a Chevron gas station once existed. Francois claims that Jones asked the council to increase impact fees for gas stations and lower them for hotels, which would have the effect of lowering Jones’ own Transaction Fee Impact totals.

(Contact E. A. Barrera at ernesto.barrera@arguscou rier.com)

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