A letter dated Sept. 13, 2012, from Kathleen Hollowell, a Modesto lawyer who represents the developers and former landowners, put the city on notice that her clients could sue if money they gave the city in April for infrastructure improvements to the land where Amazon.com is building a distribution center is not returned with 8 percent annual interest.
The former landowners include City Councilman Larry Buehner.
According to financial disclosure and conflict-of-interest statements filed March 31 with the California Fair Political Practices Commission, Larry Buehner owns 50 percent of Westside Property Management, which is named in the Sept. 13 letter.
He indicated in that report that he receives $10,001 to $100,000 in interest income each year from the partnership.
Larry Buehner said his brother Kenny Buehner, who is general manager of Westside Property Management and partial owner of the company, is handling the matter. The councilman said he had limited knowledge of the possible suit.
“I have stock in Westside, but I don’t know how much,” he said Thursday, Oct. 11. “I didn’t have anything to do with the Amazon sale — that’s Kenny. I need to get up to speed on that.”
Larry Buehner said he was not present when the City Council met behind closed doors to discuss the possible litigation.
Calls to Kenny Buehner were not returned this week.
The letter from Kathleen Hollowell states that it is against a state law to make any amendments or changes to a developer agreement outside the purview of a city council.
The land where Amazon.com’s fulfillment center will stand is part of the Westridge Business Park, which was originally entitled in January 2009. A developer agreement between the city and the then-landowners was reached in September 2008.
Draft agreements outlined $1.4 million in fees for road, sewer and water infrastructure improvements in the project area. However, the versions of the agreement adopted by the council in August and September 2008 were missing the provision that laid out those fees.
The fee provision was later included as part of the title process for the land after the city received a letter signed by the developers and previous owners Jan. 6, 2009, stating that the $1.4 million would be paid by the developers and landowners and asking that the provision be included in the developer agreement. The owners included Fritz and Donna Schali, Kenny Buehner and Larry Buehner.
The Schalis and the Buehners paid the money under protest in April 2012 as part of the Amazon.com land agreement, according to Joe Hollowell, who coordinated the developer agreement for the former landowners. Joe Hollowell is Kathleen Hollowell’s husband.
On Thursday, Oct. 11, the Patterson Planning Commission recommended on a 3-0 vote that the City Council reject a claim by the former landowners for the developer fees.
Planning commissioners Eric Bendix and Bryan Bingham recused themselves from the vote. Bendix stated that he recently sold a house to Fritz Schali. Bingham said he worked for the Patterson Cemetery District as general manager, and both Kenny Buehner and Fritz Schali sit on the cemetery board.
Deputy City Attorney Doug White said City Council members had said in closed-door discussions that they would reject the claim.
According to White, the former landowners contend that a previous city administrator did not follow the developer agreement law, but a developer agreement is considered a legal contract, he said.
The December 2008 letter from the developers asking to add the provision makes the developer fees part of the contract, he said.
Planning Commission Chairman Ron West said the developers should be held to the agreement.
“In my opinion, they’re required to pay,” he said. “We’ve always expected developers to pay their fair share of the improvements, no more and no less.”
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