Paradise lost?

Beneath his tan ball cap embroidered in green with the words “Save Our Gateway,” Mike McLaughlin’s broad smile is easily visible through his thin gray beard. But his smile shrinks and his tone turns serious when he discusses the proposed Skyway Plaza project, a 295,000-square-foot shopping center, most likely featuring a Wal-Mart store, set to be built at the Skyway entrance to Paradise.

He doesn’t mince words. “This would be an obscene end to what is a jewel of a drive,” he says, referring to the Skyway between Chico and Paradise, where he’s lived for 30 years. For his part, McLaughlin has worked to promote California State Scenic Highway status for the road.

Besides the dread of having the very entrance to their town—its “gateway"—turned from oak-studded hillsides to an asphalt-and-concrete shopping center, the committee’s members are convinced the development will change Paradise forever, introducing for the first time the kind of corporate commercial development southeast Chico, with its mall and big-box stores, exemplifies.

“I think the overriding objection is that people have come to this town to avoid this development and sprawl,” McLaughlin says.

The shopping center will take away from the “character and ambience” of the community, hurt the town’s fragile economy, create problems with the water supply, cause commercial sprawl down the Skyway and quash the effort already expended in revitalizing the downtown, he charges.

And yet, to hear town councilmembers and others who support the project tell it, some of those very factors—the fragile local economy and troubled water system, in particular—are reasons why the project is desperately needed.

Because of the lack of large retail outlets, Paradise shoppers are going to Chico and elsewhere to buy the things they want and need, supporters point out, and the town is losing millions in sales tax revenues each year that could be used to fix such things as the leaky water system and to convert existing businesses from septic tanks to sewers.

Not only that, the developer, Sacramento-based shopping center giant FHK, has made considerable concessions to get the project approved. Altogether, the company will pay some $6 million for amenities designed to make the project more attractive, including dedicating three acres for a public park overlooking Butte Creek Canyon.

McLaughlin and his group, the Save Our Gateway Committee (SOG), have been working to stop the project for more than three years. During most of that time they fought against it as it moved through the local planning and approval process, until it finally got a thumbs-up from the Town Council in June.

Days later, SOG took to the streets, setting up tables at local storefronts including Kmart, Safeway and Stratton’s Market. For three weeks, McLaughlin and 40 volunteers endured the heat in order to gather the 1,681 signatures needed to put the project on the November ballot. In the end they submitted more than 4,000 signatures.

The group has also filed a lawsuit against the town of Paradise, the Town Council and FHK Paradise claiming, among other things, that the town failed to comply with the California Environmental Quality Act (CEQA) and state planning and zoning law prior to approving the project.

However, while the lawsuit certainly can slow down the project, it probably can’t stop it altogether. So, for SOG, as for FHK, the result of years of work will hinge most of all on the election.

The one thing all parties agree on is that, for good or ill, the Skyway Plaza project will change Paradise forever. As a result, the Nov. 2 vote is looming as perhaps the most important one since residents voted to incorporate the town in November 1979.

Paradise began life in the 19th century as a gold mining town, then turned to apple farming when the gold played out. Its colorful history is still recognized by such annual celebrations as Gold Nugget Days and the Johnny Appleseed Festival.

Its quiet, slice-of-rural-America quality for decades has made the community—which now has nearly 27,000 residents—a picturesque setting for retirees or people simply looking to escape the big city.

For most of its history it was part of unincorporated Butte County and had no government of its own and little in the way of land-use planning. Instead, it grew informally, as former apple farms were split into parcels for people looking for their own “God’s half-acre” among the pines and oaks.

Small, locally owned stores popped up along the main arterials, the Skyway and Pearson and Clark roads. Eventually a few small shopping centers emerged, mostly to house supermarkets. For years the largest—and only—major corporate retail outlet has been the Kmart on Clark Road. Otherwise, Paradise is a rural residential community of mostly large lots spread out over a large area.

It has no sewer system, which means that every toilet in town is connected to a septic tank and drains eventually into the ground. And its water system, run by the Paradise Irrigation District—the very name speaks to the town’s agricultural past—is old and leaky. And there’s little money to fix the problems.

That’s because, ever since Proposition 13 passed in 1978, capping property tax rates and limiting assessments, local governments have been unable to depend on property tax revenues to build and operate the sewers, parks, schools and other services residents want and need. Increasingly, they have turned to other revenue sources—utility users’ taxes, developer impact fees and especially sales tax revenues—to pay for city services.

But Paradise has an exceptionally weak retail base. Because of the lack of retail outlets, many of its residents go elsewhere, especially Chico, to shop in big retail stores—to the tune of about $100 million annually, town officials estimate. If the Skyway Plaza Project is built, they figure, about half that money will stay in Paradise—and with it hundreds of thousands of dollars annually in sales tax revenue.

The tax issue started coming to the fore in 1999, when FHK, led by one of its general partners, Fred Katz, signed a purchase agreement on a 59-acre plot just west of Neal Road on the hill where the Skyway splits as it turns into a highway heading down to Chico.

For the next five years, Paradise’s Town Hall became a battleground, as the project worked its way through the planning and approval process and environmental- and economic-impact reports were introduced and public opinion was voiced.

It has been a see-saw battle. In March of this year, the opposition enjoyed a small victory when the Paradise Planning Commission voted 3-2 against changing the town’s General Plan and rezoning the 59 acres to commercial use.

Katz and FHK appealed, putting Skyway Plaza’s fate in the hands of the members of the Paradise Town Council. The momentum shifted dramatically in June, when the council overturned the Planning Commission’s recommendation and voted in favor of the project, 4-1.

FHK Companies is one of the most successful developing firms in the Western United States, having built nearly 80 large commercial projects throughout California and in Nevada, New Mexico and Hawaii. In his 25 years as general partner for the company, Fred Katz has managed 30 large developments, including the East Avenue Market Place in Chico and the Safeway Plaza in Paradise.

After looking at possible sites on Wagstaff and Clark roads and another on Maxwell Drive, FHK Companies closed escrow on the Skyway site in 2002. The company will develop approximately half of the land, with 182,000 square feet of that going quite possibly to a Wal-Mart “superstore.” (The Chico Wal-Mart is 120,000 square feet.) There will be 1,581 parking spaces.

Although Katz will actually develop only 30 acres of the property, he says the parcel possesses more than enough space.

“Everyone who comes and goes [to and from Paradise] will know you’re there,” Katz says, speaking on the phone from his office in Sacramento. “There will be a lot of synergy keeping people up the hill.”

The project will be phased in over 10 years and will include a large discount retailer, smaller general retailers, a convenience store, restaurants and a hotel.

Katz says it is still too early to know exactly what businesses will occupy the site because of the pending referendum and annexation procedures. The town of Paradise has to wait until the November election before filing an application to the Local Agency Formation Commission, or LAFCo, to bring the site inside town limits. Similarly, Katz can’t annex into the Paradise Irrigation District until the application is submitted.

SOG’s lawsuit will attempt to decertify the environmental-impact report on the project. Katz says FHK Companies is not obligated to fix every problem, only identify the problems and propose mitigation measures. He says this type of lawsuit takes about two years to resolve, but that it’s just another part of the process.

“It’s a nuisance, but it’s an expected nuisance,” Katz says.

Katz says the Skyway Plaza will be the most expensive project ever developed by the company because of the terms and conditions put on it, some $6 million in amenities required by the town in the development agreement.

For that reason, he will not rule out putting in a Wal-Mart, he says.

“We agreed to an awful lot,” Katz says. “We haven’t been asked to agree to this many concessions before.”

Each member of the Paradise Town Council insists that drafting a strong development agreement with an experienced developer like Katz was a daunting task. When all was said and done, all the members, with the exception of Mayor Ray Dalton, believed the right decision had been made.

For one thing, says Councilman Alan White, the center portion of the property south of the Skyway crossroad is better suited for commercial zoning than residential. The council made a compromise by protecting a substantial portion of the canyon view for a park rather than closing it off for private residential development.

The development will be served by a small, onsite wastewater-treatment facility. Chad Wemple, who owns the adjoining four acres west of Katz’s property overlooking the canyon and is a third-generation Butte Canyon resident, points out that, if the land were used for residential development, it would only add to Paradise’s septic problems.

Wemple, who soon will begin construction on his Tuscan Ridge Winery, acknowledges that he has a vested interest in the project because of its proximity. But he says it makes sense to work with Katz because, by doing so, he’s had a hand in making it a better development for the community.

In addition to a required police and fire substation, Katz will dedicate the three acres to the park and picnic area overlooking Butte Creek Canyon, construct a monument with a fountain and provide new bike paths.

Apart from the environmental benefits of having an onsite wastewater facility, Wemple says the park in itself will be a tremendous asset to Paradise. He says he’d like to see jazz festivals in the park with revenue going to canyon maintenance.

“It can be a good thing for Paradise if done tastefully,” he says.

The Town Council also imposed strict guidelines on the aesthetics of the shopping center. According to the development agreement, the buildings won’t be constructed in the typical boxy warehouse style, but rather in a village setting with the appearance of multiple roofs. Before ground is even broken, the plans will be reviewed by the Design Review Board and approved by the Town Council.

“I lay awake many times. It wasn’t a sheep herders’ convention when we voted,” says Town Councilman Sam Dresser. “Our staff did a beautiful job working with him [Katz] to make sure we were not impacted negatively.”

Dresser, who’s lived in Paradise since 1964, says he didn’t like the idea of the shopping center at first, but he knew retail services were needed for the growing community. He added that he would have preferred to have stopped growth 40 years ago, when houses were being built on the land where he hunted, but that a no-growth attitude isn’t going to help the town.

“It would be a hard press for a supervisor to deny a $700,000 tax increase,” he says. “Things change. Now let’s get on with it.”

Mayor Ray Dalton cast the lone nay vote against the project. He did so because of the possibility of a Wal-Mart, he says, as well as the fact that the hotel and conference center will not be included in “Phase 1” of the development.

“If it would have had a hotel, it would have been a benefit to Paradise. Quite frankly, without it, it will be a detriment to downtown business.”

According to the development agreement, after a tenant has been secured in the anchor store, FHK Companies will spend $60,000 over 15 years on feasibility studies to determine whether a lodging facility is “economically viable at that point in time.” If the company fails to do the studies, it will have to pay out an additional $233,000.

Dalton believes the chances of a hotel ever being a part of the project are slim because Katz has already backed out of an original promise not to put in a Wal-Mart.

“If he intended on keeping his agreement with me, he would have done so,” Dalton says. “Business is business, and character is character.”

Pam Figge worked with Katz on the East Avenue Market Place project in Chico. Figge, who has been a land use planner in Butte County for the last 25 years, says the town of Paradise is going to have to stay on Katz to make sure he follows through with the concessions he’s agreed to.

“He was not an easy person to work with,” Figge says.

Figge, who lives in Paradise, has made hundreds of recommendations for development projects and helped initiate Paradise’s General Plan. She says she is not anti-growth, but she believes the Skyway is a poor choice for commercial development. If a shopping center goes in at the town’s entrance, nothing will distinguish Paradise from any other community, she opined.

“You’ve seen it all over America, where everything looks the same,” she explains. “You have to be careful where land use is placed.”

Then there’s the Wal-Mart possibility. That has a number of people worried, especially small-business owners.

The project may keep money from going to Chico, they say, but it could also draw money from existing Paradise businesses—an estimated $24.1 million in sales, according to the economic-impact report on the project.

Paradise Sporting Goods is a wall-to-wall fortress of camouflage garb, rods and reels and enough bait and tackle to equip a fleet of fishermen. A coffee maker and a stack of Styrofoam cups sit by the counter for early-rising hunters and anglers.

David Bryning has owned and operated the shop since 1996. He talks to his customers as he would talk to a group of friends. When an employee asks him how much to charge a man for a fishing rod, Bryning shouts from the back of the store, “Fifty-five for him, since he’s bought so many.”

It’s this kind of customer service that Bryning says a Wal-Mart won’t be able to compete with. But it’s evident by the tone of his voice that he is concerned with possibly having to compete with Wal-Mart’s prices. And when he talks about the council’s decision, he makes no secret of how he feels.

“I think they should all be recalled, personally,” he says.

Bryning says the council did a disservice to local business owners by approving the project and that he’s preparing himself to take a financial hit: “I’m going to hope for the best and prepare for the worst.”

Barbara Ely is another local business owner worried about her future, which led her to attend many of the Town Council meetings regarding the Skyway Plaza project. Her store, Back at the Ranch, is tucked between Round Table Pizza and Corlin Paints in the Safeway Plaza shopping center, which Katz developed in 1986.

She says she isn’t opposed to having a hotel and restaurants, but like many others she does not want to see a Wal-Mart in Paradise. She says it would be the death of not only her business, but also local pharmacies and sporting goods stores.

Ely, whose business specializes in Western wear, says she won’t be able to compete with the retail giant’s prices on Wrangler jeans. She says she is going to have some tough decisions to make, including refocusing her business or possibly even shutting down.

“As soon as I find out what’s going in, I’m going to make a decision on my store,” Ely says. “I can’t compete with Wal-Mart.”

Ely says local businesses may not generate the revenue that large retailers do, but stores like hers are the ones that donate money to local sports and other community activities.

“If the small business goes out, who’s going to do that for people?”

Stratton’s Market is the epitome of a mom-and-pop operation. The store has been a fixture on Sawmill Road since 1934, and one look at it conjures up images of a simpler time. Owner Ruby Stratton says she is not concerned with the impact on her business but more with the visual scar it will leave on the town.

Her objection to the project is “not from the viewpoint of someone who’s been in business for 70 years,” she says. “It’s from the viewpoint of someone who’s lived in Paradise for 57 years.”

Ed Salome is the executive director of the Paradise Chamber of Commerce. The members of the Town Council had a tough choice to make, he says, between bringing in much-needed tax revenue and affecting existing businesses. He thinks the councilmembers made the right decision.

“You can’t be a primarily residential community,” he says.

Town Manager Chuck Rough also agrees with the council’s decision. He insists that it will not interfere with ongoing improvement efforts, including the Paradise Downtown Revitalization Master Plan, which the Town Council adopted in September 2000, and the town’s Redevelopment Plan, adopted in July 2003. The Redevelopment Plan was put in motion after voters approved Measure K, which established the Paradise Redevelopment Agency in 2002.

The Redevelopment Plan will make aesthetic improvements to residential areas, expand the commercial-retail base and redesign and redevelop stagnant or improperly utilized areas from Neal Road all the way up to Gate Lane, north of Wagstaff.

The Downtown Revitalization Plan will cost approximately $10 to $12 million over the course of 10 years and will be funded through various federal and state loans and grants as well as private investment that will contribute additional millions of dollars. It will concentrate on the Skyway area from Pearson to Elliott roads and will include the installation of sidewalks and traffic lights, façade renovation and establishing an active downtown merchants’ association.

Rough says the types of stores that would potentially fill the Skyway Plaza shopping center would not hurt the specialty shops that occupy the downtown area along the Skyway.

“If I believed that this would undermine what we’ve already done, I wouldn’t be in favor of it,” Rough says.

But the main objective of the revitalization plan is to improve downtown’s septic capacity. Paradise is one of the largest communities in the nation still operating on individual septic tanks. For years the problem has put constraints on existing businesses’ growth, mainly restaurants and laundromats, and has limited new ones from moving into the downtown area.

The town plans to install clustered wastewater treatment systems that would allow business owners to buy into a system and pay only for what they use. The town hopes the program will resolve lingering health issues and eliminate existing leach fields, creating increased available land for businesses.

Another of Paradise’s infrastructure problems is the loss of than 700,000 gallons of water a day from old, leaky water mains. This means 15 to 16 percent of the total water output doesn’t reach customers, says Ray Auerbach, manager of the Paradise Irrigation District.

There is approximately 75 miles of old steel main running under Paradise that needs to be replaced, at a cost of approximately $500,000 per mile. Do the math, and this adds up to roughly $37.5 million to fix all of the mains.

In order to prepare for the new fire substation, Katz must replace and extend the water main on the Skyway. Auerbach says the area surrounding the project site near Russell Drive and Vista Village is vulnerable to fire because the fire flow is only 250-300 gallons per minute, well below the 1,000 gallons per minute needed to extinguish a blaze. Auerbach says replacing the old main will boost flow to where it should be.

“There are benefits [to the project] that haven’t been discussed.”

Auerbach also says that, despite what some people think, allowing Katz to annex, or use PID’s resources, will not take away from existing customers’ access to water.

“We think we have a pretty good policy,” Auerbach says. “We think it protects the people in the district.”

One of the factors influencing town councilmembers to approve the Skyway Plaza project was worry that Katz would simply turn to Butte County for approval—and would get it.

A big part of the council’s decision, Vice-Mayor Scott Lotter confirms, was based on wanting to maintain control over the project. Had the council not approved the project, Katz simply would have pursued annexation through the county.

Of course, now that the project will appear on the November ballot, that possibility has risen again. While he hesitates to say how he’d vote on the project, Paradise-area Supervisor Kim Yamaguchi does not have kind words for project opponents.

It the project comes to the supervisors, they will base their decision on the facts placed in front of them, he says. “We can’t thumb our nose at someone based on emotion.”

He says SOG let emotion take over by going forward with the lawsuit and that the group should have just let the referendum process run its course. Yamaguchi says Katz is too smart a developer not to get expert firms to perform his EIRs, and that it will be difficult for SOG to win in the legal arena.

“They’re going to get a black eye on that one.”

For his part, SOG’s McLaughlin is confident that voters will support the referendum on Nov. 2.

He notes that, even before the Town Council approved the project, his group conducted a professional poll through J. Moore Methods, a Sacramento-based polling firm that has conducted polls for gubernatorial races in California. The results of the poll showed that 61 percent of the 300-person sample was opposed to the development at the gateway.

“Anecdotally, people are steadfast in opposition and seem quite angry with the Town Council,” McLaughlin says.

The council itself should have put the project on the ballot, says Jaime Holloman, a family/child therapist who’s lived in Paradise for 10 years and is a member of SOG.

“It’s too big a decision for five people,” he insists.

But Vice-Mayor Lotter disputes SOG’s poll results. The poll was flawed, he charges, because 70 percent of the sample was over the age of 50 and wasn’t representative of the town’s primary consumers.

He says that many of those against the project are the same people who opposed the redevelopment plan two years ago. There will always be people who don’t want change of any kind, he insisted.

“I call them CAVE people—citizens against virtually everything.”

McLaughlin knows it may be his last chance to stop the project. Now all he can do is wait and campaign. If the referendum passes, the lawsuit will go out the window. If the people say they want a new shopping center on Nov. 2, the lawsuit will go forward—maybe. McLaughlin and SOG are leaving their options open.

If the lawsuit is pursued and succeeds, the Skyway Plaza EIR would have to be amended and it could go back to the council for another vote. There will be three open seats in the November election, and one of them is Mayor Dalton’s. As a result, all three seats would have to go to anti-project candidates for the council to change course.

Chuck Rough doesn’t believe the lawsuit will affect the project’s progress. “We know we’ve crossed the T’s and dotted the I’s, and we are confident that we will succeed,” Rough says.

As far as Fred Katz is concerned, the referendum and lawsuit are minor delays. He’s convinced that construction will begin in a couple of years. He says matter-of-factly that these challenges are why he got in the business in the first place.

“It’s kind of fun. It’s fun to win. We think we will win and they will lose … and it will be satisfying." He pauses. "And if they win it will be satisfying for them."