Morro Bay officials shut down business competitors of council members
February 17, 2014
By JOSH FRIEDMAN
(Editor’s note: This is the first in a series about allegations of abuse of power and selective enforcement of laws in Morro Bay. Several videos, showing police and planning staff interacting with people who have business interests in the city, are attached at the bottom of the story.)
Morro Bay officials have targeted new start-ups in the city that would have competed with businesses operated by current and past city council members, several businessmen say.
Morro Bay’s planning and permitting offices, city attorney’s office and the police department have taken part in the effort to restrict competition, the businessmen said.
The Morro Bay Police Department set up a plan to shut down a proposed arts center in the old Morro Bay Sun Bulletin building, a department memo obtained by CalCoastNews shows.
The arts center was the brainchild of Jim Davis and Rick Holliday. The two signed a master lease for the 8,000 square foot Sun Bulletin building at 1149 Market Avenue in May 2011. They planned to create a center for the arts, which would incorporate music, an art gallery, offices and some type of eatery.
When they tried to submit their building permit and business license applications, city staff called them into an impromptu meeting with then-Planning Director Kathleen Wold. Wold refused to accept their applications and architectural plans and instead ordered them to construct a tavern or hotel at the Market Avenue building, Davis and Holliday said.
“I remember distinctly her saying you can’t do music. You have to do a tavern or hotel,” Davis said.
Wold then threw the plans down on a planning table and ordered the pair to meet with the city attorney and police chief, Davis and Holliday said.
Davis and Holliday then met with Rob Schultz, who was Morro Bay’s city attorney, and then-Police Chief Tim Olivas. John Weiss, owner of Coast Electronics, who was present at the meeting, confirmed that the meeting occurred.
Schultz also ordered Davis and Holliday to put in a bar or motel, the two men said. No options were allowed.
“It felt intimidating,” Davis said. “The tone was harassment.”
Schultz went so far as to warn them about going into competition with established business owners in Morro Bay, Holliday said.
Schultz denied the allegations, calling them ridiculous.
Holliday said a councilwoman, who owned a business across the street from the building, too, threatened him about going into competition. Carla’s Country Kitchen owner Carla Wixom, then known as Carla Borchard, sat on the city council from 2008 to 2012, when she unsuccessfully ran for mayor.
Shortly after signing the lease, Holliday was eating breakfast in Wixom’s restaurant, he said. Holliday told Wixom that he and Davis were thinking of putting in offices, hosting bands and creating some type of eatery.
“She said straight up that will never happen,” Holliday said. “She said you will never get a competing business there.”
Wixom denies the conversation occurred, saying she never spoke with Holliday about his business plans.
But, Holliday said she told him several times that he would never open a competing business and made jokes about him being unable to get permits and a business license.
By the end of 2011, Holliday ended his lease, saying it was impossible to operate a business at the location.
Davis continued his efforts to start up the arts center. In early 2012, he was joined by Los Osos Mexican Market owner Rey Diaz. Diaz moved into the downstairs, with Davis retaining the upstairs. Diaz planned to open a Mexican market in Morro Bay. His Los Osos location sells groceries and includes a grill, where customers eat Mexican food.
On Jan. 14, 2012, Diaz arrived at the building to move in his belongings. Just after Diaz arrived, police officers did too, according to graphic artist Toby Schultz, who was working in the building at the time.
The officers said they were responding to a report of an illegally parked car but proceeded to question Diaz about the business he was putting in the building, Schultz said. An officer then asked Diaz if he would be going into competition with Wixom.
“‘So, you’d be in competition with Carla?’ That was exactly what he said,” Schultz recalled.
After questioning Diaz, the officers walked over to Wixom and spoke with her for at least ten minutes, Schultz said.
A second witness, who asked to remain anonymous because of fears of retaliation, said the officers spoke with Wixom for about 20 minutes following the interaction with Diaz. Before the police went to question Diaz, Wixom was pointing them in the direction of Diaz, the source said.
Wixom said she does not recall the incident and that she would not have directed the officers to Diaz. She said, though, that she is close to police officers and talks to them frequently.
Diaz would not comment on the incident. Diaz does not want to upset city officials, several sources said. Diaz is concerned that it might jeopardize his use of the building.
The Morro Bay police log for the day shows that officers were responding to a “suspicious person incident.” City Attorney Anne Russell did not provide the names of either the person who was considered suspicious or the complainant when CalCoastNews requested the records under the California Public Records Act.
Since then, Diaz had begun to construct the market and gained preliminary approval to open the business. He has not received permission from the city, though, to operate a grill.
As Diaz flirted with opening the market, Davis continued to pursue his dream of hosting bands in the upstairs for private video production and small performances. Davis managed to host several bands in the building and even shot a music video there. City officials said he could only use the property for storage.
On Oct. 31, 2013, the Morro Bay Police Department issued a memorandum planning a raid on Davis’ activities. In the memorandum, Police Commander Bryan Millard wrote that Davis and Holliday had been hosting parties with live bands and that a disturbance would likely take place that evening. Millard directed the officers who would respond to the party to obtain a signed noise complaint from a neighbor, issue a citation and call the city building inspector and fire marshal, who had volunteered to come out to the scene after hours.
Although Holliday had been gone from the building for nearly two years, Davis hosted performances and had planned a Halloween party with a live band that night.
Paula Radke, who lives in a nearby commercial building called the police to complain about the noise. Radke told CalCoastNews that she had been instructed by neighbors to make the call before the event began. Radke says she lives legally in the building, but city files show that she applied for, but never obtained a permit allowing residential use.
Police officers Gene Stuart and Sue Gomes responded to the noise complaint and told her to sign a noise complaint, Radke said.
Stuart and Gomes called building inspector Brian Cowen and waited outside the building for more than 20 minutes before approaching Davis, a video made the night of the raid showed. While waiting for Cowen to arrive, Stuart ordered the band’s drummer to continue playing music.
“Go rock one more,” Stuart said on video. “Just do the song.”
Stuart and Gomes later issued Davis a disturbing the peace violation, charging him with a misdemeanor.
When Cowen arrived, Davis would not allow him to enter the building. Then, without inspecting the building, Cowen declared the entire 8,000 square foot structure unsafe and ordered everyone to leave, the video shows.
“They essentially shut us down,” Davis said. “It’s a total violation of property rights and free enterprise.”
Cowen said that the building tenant and party host had violated state codes. But Cowen did not cite the particular codes, the video shows.
“Per state law, you can’t use this building for any use other than storage,” Cowen said to Davis on the video. “By having these people in the building, you are endangering them.”
But Cowen refused to explain how he had made the determination that the building was unsafe.
Cowen red-tagged the building. Red tagging requires the city to shut off the water, gas and electricity and bar the public from entrance. Cowen later posted a notice citing state building and fire codes.
A few months later, the San Luis Obispo County District Attorney’s Office dropped the disturbing the peace charge against Davis. Millard, though, said in an interview that his officers acted appropriately.
“We do work with the planning department as a partner agency in enforcing the laws,” Millard said.
The memo resulted from a meeting of the code enforcement committee, Millard said. The committee, which is comprised of representatives from different departments, including police and planning, meets to discuss code enforcement issues in the city, Millard said.
Code enforcers do not act on behalf of council members, Millard said.
“There is no direct action where a council member would talk to an officer and action would take place,” Millard said.
Building owner Clark Kayler, a Sacramento-based woodworker, said having his building red tagged was like getting slapped with a scarlet letter.
“They are allowed to just label a building unsafe,” Kayler said.
Kayler said the city has selectively enforced legal codes against him since he purchased the property in 2009.
Morro Bay planners have denied all business proposals for the Sun Bulletin building that occupy a cumulative total of more than 2,000 square feet. The city cited parking requirements as the primary reason for the occupancy restriction, even though the property includes an adjacent gravel lot.
Additionally, city records show that businesses have occupied the entire building on multiple occasions, dating back to its construction in 1969. The original business, a marine supply manufacturer and retailer, even used the parking lot for business activities, according to Morro Bay resident and former store employee Eddie Sylvester.
“When we were there, no one could park in the lot because we had it full of equipment,” Sylvester said. “The city uses parking against people when they want to.”
Other businesses on the block have grandfathered status and have no parking requirements. Radke’s business relinquished its parking lot in a property sale and remained open. Still, about one half of the parking spaces on Market Avenue are unoccupied during business hours.
Morro Bay has singled out his building, Kayler said.
“The scrutiny is not there for some people, and the scrutiny on my property never ends,” Kayler said.
Both Kayler and Morro Bay Councilman Noah Smukler, point to a 1986 city plan as evidence that the building owner has the right to make use of his property. The Beach Street Area Specific Plan calls for the protection of commercial activity in the area despite the existence of neighboring housing.
“It clearly shows that building has a right to be utilized,” Smukler said. “We have a specific plan that was approved and the community has adopted.”
The plan also called for the city to create parking stalls perpendicular to the sidewalk on Market Avenue to increase the amount of on-street parking. The city created the parking stalls on bordering Surf Street but never did so on Market Avenue.
One resident in the adjacent neighborhood is Councilwoman Nancy Johnson. Johnson’s Morro Avenue house with an adjacent vacation rental looks down on Kayler’s building.
Several individuals involved with the building allege that Johnson, also a political ally of Wixom’s, has frequently surveyed the property and rallied neighbors to oppose business activity there.
“I heard Carla and Nancy were really active down there in trying to fight that,” Smukler said.
Johnson said she never opposed businesses at the building and rather worked to lure them in.
The building is currently vacant, with the exception, of containing some Mexican market equipment. No new tenants have arrived since Halloween night when the building was red tagged.
Holliday and several associates have filed suppression of business and harassment claims against the city. Davis plans to do so as well, he said.
Audio and videos of the Halloween night incident:
Audio of Morro Bay Police officer Gene Stuart telling a man wanting to attend the Halloween party at the Sun Bulletin building that he gets a free pass to urinate in the street. Stuart does not want the man to tip off the building tenant that police are outside.
Video of Morro Bay Police officer Gene Staurt explaining that he has been up 36 hours and knows something is going on, but he is not sure what that something is because of his lack of sleep.
Morro Bay Police officer Gene Stuart says he is going to give a noise violation, but then orders the band to play one more song.
Morro Bay building inspector Brian Cowen says Jim Davis is violating state code though he will not divulge what code is being violated. He then red tagged the building.
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