SLO tale of falsified documents, code violations and water theft

August 13, 2015

By KAREN VELIE

Editor’s note: This is the second in an exclusive series about developers Ryan Petetit and John Belsher, their development projects, their failures to abide by building requirements, legal troubles, and unpaid monies owed to subcontractors and investors. Read part one here.

Two San Luis Obispo-based developers find it easy to obtain building permits, as well as what appear to be special favors, from city staff and officials – despite falsifying contractor license numbers, disabling water meters and violating a variety of building codes.

John Belsher, 61, and Ryan Petetit, 28, principals of PB Companies, are involved in more than a dozen proposed projects that once completed, they say, will be be worth more than $300 million. Belsher and Petetit have worked together for more than three years, but PB Companies have yet to finish construction of any of its residential or commercial structures.

One example of development issues plaguing the pair is renovation of a single-family residence at 1179 San Carlos Drive in San Luis Obispo that turned into the demolition of the home and a plan to build a new house at the address.

In 2011, Petetit purchased the home with funds from multiple sources. Several investors said the developers claimed they were remodeling the home, with plans to sell it in about six months.

However, Rush Sheppel, a partner in several PB Company projects and an investor in the San Carlos Drive property, said the developers told him their plans were to construct a home for Petetit to occupy. After a new home would be constructed on the lot, Petetit would get a mortgage to pay back the investors, Sheppel said.

In mid-2011, Petetit began applying for permits for an extensive remodel under a contractor’s license number belonging to HJ Construction. After city inspectors became aware of multiple code violations, they contacted HJ Construction President Dominic Judge, who said he had never worked on, or even bid to work on, the project.

“I am not affiliated with or working on the remodel,” Judge said in a April 3, 2012, letter to the city.

After receiving multiple citations for violating water drainage requirements, in July 2012, the city suspended Petetit’s building permits. In Sept. 2013, Petetit paid his outstanding fees and fines, and his permit was reinstated.

In Jan. 2014, Petetit demolished the home. Following the demolition, the city slapped him with several notices of violation and an administrative citation, according to superior court records.

Several of the investors filed three foreclosures on the property for a total of approximately $200,000, according to property records.

On Oct. 14, 2014, the city of San Luis Obispo filed a claim for injunctive relief because of Petetit’s repeated code violations and because the property had become a public nuisance, according to court documents. The city’s claim referred to 17 notices of violation, two permit suspensions and eight field corrections.

On Nov. 18, 2014, the city entered into an agreement with Petetit in which the city agreed to lower his fines from $14,700 to $1,500, and Petetit agreed to diligently pursue construction of the residence, according to the contract.

Since then, the property has remained essentially untouched.

On June 23, Assistant City Attorney Jon Ansolabehere sent a letter to Belsher saying that Petetit had failed to comply with his part of the agreement to begin construction and that the city would no longer stand by its agreement.

In addition, Ansolabehere noted that Petetit tampered with a water meter in order to steal water.

“The city’s investigation revealed that the city water meter had been altered and water had been illegally consumed in violation of San Luis Obispo Municipal Code sections 13.04.070 and 13.04.150,” the letter says.

In May of this year, just days before a scheduled foreclosure sale, Petetit paid several disgruntled investors and was able to curtail the foreclosure, according to property records.

Even though planning documents are public records, planning staff reported that City Attorney Christine Dietrick has ordered them not to disclose Petetit’s notices of violations and agreements.

A neighbor who lives across the street from the project, Terry Mohan, said that he has been told that the city has negotiated another deal with Belsher to give Petetit another chance to build his home, though the city has refused to release the document.

“Now we find out some back room deal at city hall negotiated by John Belsher is giving Petetit yet another chance to torment the neighborhood,” Mohan said. “This smacks of political cronyism at least, and perhaps corruption and political payback at worst.”

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