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Growing pains felt by local business owners
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Posted by editor Mon Dec 10, 2007 11:19:48 PST
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0 responses 0 comments “I’m sure this will come up again with other businesses in the center,” said Cathie Sibley, owner of Guido and the Blonde’s Italian Bistro, at the Nov. 5 city council meeting. Sibley had just been handed a bill from the city for nearly $57,000 in “mitigation fees” associated with moving her existing business into the nearly completed development next to Albertsons, The Orchard Shopping Center on Tucker Road.

Sibley was correct.

One month later, on Dec. 3, the subject did come up again, when Susie Atherton, owner of Canine Creek Dog Wash & Boutique, addressed the city council after receiving notice that she would have to pay more than $16,000 before she would be allowed to occupy her businesses new home.

Atherton won Tehachapi’s Small Business of the Year award for 2006, and was also named Retailer of the Year for 2006/2007 by Pet Product News International. She is planning to expand her successful pet-related retail business. The day she received notification from the city, she had been poised to sign a contract with the center’s developer, Sobel Investments, to go ahead with costly tenant improvements, stretching her investment capital to its limit.

“I don’t have time to wait for months while you guys debate this,” said Atherton, adding that she has already given notice to vacate her current location after signing a lease with Sobel Development more than three months ago. “My business will essentially be homeless in 30 days unless I am allowed to defer these fees.”
Atherton has obtained an attorney and has given her new landlord an ultimatum, but an answer remains forthcoming.

Like Sibley and Atherton, new business owner Christy Collins has invested everything she has in her new endeavor, a maternity store called “Little Bundles.” Collins received a bill for nearly $7,000.

According to the city, the fees are based on square footage, with fees for retail space costing significantly less than a restaurant, which the city deems, “more intensive.”

“You go so far, there’s no turning back,” said Collins.

While Sibley has been fortunate enough to find an alternate location downtown, all three business women expressed concern that the city has given the developers the “choice” to defer these fees to their tenants. In all three cases, the business owners said they were not informed of the fees until months after they had negotiated their leases.

“They basically just point their fingers at each other,” said Atherton.

When advised by Councilman Stan Beckham to beware of non-disclosure by developers, Atherton responded, “That’s like saying, ‘Raise your hand if you’re not here!’ The city bears the responsibility to make sure developers are doing the right thing.”

Also at issue, in the case of existing businesses who are either moving by choice or may have been forced out of a lease, as was Sibley, business owners currently receive no credit for any previously paid mitigation fees.

The age-old chicken or egg debate continues.

Community Development Director David James argued that it’s the business, not the building, that impacts city coffers, requiring financial mitigation through increased use of public services, including connections to sewer and water systems as well as traffic mitigation.

“Please be advised however, that any negotiations for the developer to pay some or all of the outstanding mitigation fees are between the tenant and the developer and the city can not get involved in this issue. However, having stated this, the fees nevertheless [must] be paid by someone, tenant, developer or some combination of the two before the city can issue an occupancy permit,” stated a letter signed by James and addressed to Atherton.

Others, including Mayor Pro-Tem Deborah Hand and Councilman Stan Beckham, expressed beliefs that the onus is on the developer to pay the fees.

“This is exorbitant,” said Hand. “These are our small businesses. We don’t want them to go out of business and we don’t want to discourage the homegrown mom and pop from upgrading,” said Hand, echoing similar sentiments at both meetings.

In the past, the city has agreed to allow businesses who have also been caught off guard by the costly mitigation fees to pay over time, as was the case with Que’ Pasa Restaurant, which currently pays in installments on more than $50,000 in city imposed fees.

The council has proposed that city staff develop new policies that would allow them to impose a “shopping center fee” upon the developer at the first phase of development, and they will be addressing the issue further at the Dec. 17 council meeting.

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