Thursday, February 06, 2014

City of Palmdale v. City of Lancaster (Cal. Ct. App. - Feb. 6, 2014)

I'm not one of those hard-core anticapitalist "stop feeding the pigs on Wall Street" types.  Nonetheless, whenever the veil gets pulled back on how bailout money and redevelopment funds are spent, I often have a reaction that views these transactions to be (1) depressingly, (2) incompetent.  With a hint of (3) corruption.

My overall sense of these things did not change when I read this opinion.

General Motors stops making Saturn cars.  Which leaves Juan Gonzales -- the owner of Saturn of Antelope Valley -- pretty much hosed.  So Juan decides that he's going to switch his lot to Chevrolet, which requires him to get a Chevy dealership.  Chevy's fine with that, but it requires him to have (1) a very good lot, and (2) be ready really quickly.

So Juan tries to get a lot in the Palmdale Auto Mall -- one of the view places in the area that will satisfy Chevy's requirements.  But the City of Palmdale essentially refuses to rent or sell him a spot there.  It's not that Palmdale hates auto dealers.  But apparently Palmdale prefers that someone else -- Mr. Maile (who has a history of other dealerships at the Palmdale Auto Mall) -- get the Chevy dealership that's up for grabs.  Whether that's a legitimate motive I leave for others to decide.

Regardless, the only other place that Juan can possibly go that satisfies Chevy's requirements is the Lancaster Auto Mall.  You'd think that the City of Lancaster (which owns the mall) would have Juan over a barrel, since if he can't open at Lancaster, he's done.  And you'd be right.  So Lancaster's in the driver's seat.

But the Lancaster City Council nonetheless decides -- and I leave it to you to figure out the reason -- to give Juan over $600,000 in financial assistance to open up a lot at the Lancaster Auto Mall.  Which, to no one's surprise, Juan happily pockets.

One more thing.  There's a crystal clear state law -- Section 53084 of the Government Code -- that flatly prohibits cities like Lancaster from doing what Lancaster did.  Section 53084 provides that cities "shall not provide any form of financial assistance to a vehicle dealer . . . that is relocating from the territorial jurisdiction of one local agency to the territorial jurisdiction of another local agency . . . within the same market area."  And there's absolutely no dispute that Lancaster and Palmdale are in the same market area.

So let's add "illegal" to whatever other adjectives we'd like to append to the Lancaster City Council's decision to provide over half a million dollars in taxpayer largess to the desperate Mr. Gonzales.

The City of Palmdale -- to benefit itself and/or Mr. Maile -- promptly sues.  The trial court enters a preliminary injunction prohibiting Lancaster's assistance.  And Mr. Gonzales, seeing the writing on the wall, closes up his Saturn lot and immediately opens up a Chevy lot in Lancaster.  Without any apparent financial assistance from Lancaster.

That'd be a telling story even if it ended there.  A little information about how (and perhaps why) cities "race to the bottom" in fighting for business in their area.  Even when they totally don't have to.

But it doesn't.

The injunction on Lancaster providing financial assistance to Gonzales lasts for two years.  Four days before it's set to expire, the City of Lancaster pays Gonzales $300,000.  Pretty much exactly half of what it originally tried to pay him but which the court blocked.  This time -- at least ostensibly -- in return for agreeing to operate his Chevy dealership in the Lancaster Auto Mall for ten years.

Palmdale sues again.  But this time the trial court denies relief.  And the Court of Appeal affirms.  The payment isn't (at least in theory) for "relocating".  It's for "staying".  So now it's totally fine.  That this makes it completely easy to circumvent the relevant state law, and that there's pretty much no way in the word that Gonzales would ever even be able to move his lot during the next decade (since the only other acceptable location to Chevy -- the Palmdale Auto Mall -- is a no-go), is irrelevant.  The statute says what the statute says.

What a wonderful use of taxpayer dollars.  Not only the payments that Lancaster made to Gonzales.  But also the money in spent defending these various lawsuits.

Because I'm sure the City of Lancaster is just rolling in dough.