Part 1- A Specious Lawsuit by the Bretton Woods Developer, David Taormino as agent for the Binning Ranch Company LLC, Forces the University Retirement Community (URC) to Abandon Plans to Construct an Enhanced Memory Care Facility at the Project Site. The Developer Proposes to Alternatively Construct 30 Detached Senior Homes which Seemingly Violates the Supposedly Immutable Voter-Approved Baseline Features of the Project but Which Could Result in Millions Dollars of Additional Profits to the Developer.
By Alan Pryor
This is Part 1 of a planned series of articles discussing how the City Council is approving entitlements for the Bretton Woods project that violate the project's supposedly unchangeable Baseline Features. These Baseline Features were contained in ballot language presented to voters and upon which the voters relied when the project was approved at the polls in November 2018. The approved entitlements also completely change key provisions of Development Agreement between the Developer and the City that was also very prominently presented to the public prior to the vote.
The development of the Bretton Woods project (formerly known as and presented to voters as the West Davis Active Adult Community) has a checkered history of post-election actions taken by the Developer to alter the scope of the project to his direct financial benefit. Indeed, the cumulative impact of all of the changes in project features agreed to by our City Council will probably result in tens of millions of dollars in additional profits accruing to the Developer.
But the changes are also very detrimental to the prospects of local Davis seniors when trying to purchase down-sized homes at the Bretton Woods project. The changes also substantially decrease the likelihood that Davis residents will ever be able to obtain adequate local cognitive care for their loved ones because a planned memory care facility on the project site will likely never materialize.
In particular, one such change means that University Retirement Community will not be able to construct an enhanced memory care facility on a portion of the project's property or that a specialized care facility will ever be constructed on the site as otherwise represented to voters in the project's supposedly iron-clad Baseline Features in the ballot statement.
On this Tuesday's City Council Consent Calendar, the Council is posed to approve purported routine new entitlements to the Bretton Woods senior housing project previously approved by Davis voters in a Measure J/R vote in November, 2018. The accompanying Staff Report for the Consent Calendar item in question reads as follows:
"Item 4 (6:55)
All matters listed under the Consent Calendar are considered routine and non-controversial, require no discussion and are expected to have unanimous Council support and may be enacted by the Council in one motion in the form listed below."
For the most part, the proposed routine entitlements for the Bretton Woods projects have to do with ministerial approvals of final plot maps for about half of the project and the assignment of portions of the Development Agreement between the City and the Developer to a new builder of the project recruited by the Developer.
Closer reading of the Staff Report, however, reveals other material changes in the project that are anything but "routine and non-controversial". In fact, certain changes in the project appear to be direct violations of the Baseline Features of the project approved by voters in November of 2018.
Baseline Features Compared to Development Agreements
Baseline Features of a project are elements of the project that actually appear on the ballot measure itself and, which if changed, require subsequent voter approval. They cannot be changed at the sole discretion of the then current City Council. Indeed, the ballot measure for the Bretton Woods project specifically stated
"Compliance with Baseline:
West Davis Active Adult Community is required to develop in accordance with the Baseline Features stated above, subject to mandatory compliance with state and federal laws. "
In other words, the Baseline Features of the voter-approved Bretton Woods project are sacrosanct elements of the project and they are not allowed to be changed by the Council at all. Any changes to the Baseline Features is a right reserved exclusively for the voters under the provisions of Measure J/R.
In contrast, the majority of project requirements are instead put into a Development Agreement signed between the City and the Developer. This agreement specifies all other project requirements imposed on the Developer that are not in the Baseline Features. Development Agreements can be changed at any time for any reason by any City Council which is why Developers always try to put as many project requirements into the Development Agreement instead of in Baseline Features.
In the case of Bretton Woods, one change made by in the Development Agreement approved by the Council as demanded by the Developer was the functional elimination of key provisions that otherwise required that 90% of homes sold in the project be reserved for buyers with a "Davis connection" (i.e. the "Davis-Based Buyers Program" – see David Taormino and Bretton Woods Are Attempting a ‘Bait-and-Switch’ with the Davis-Based Buyers Program).
There are also two Baseline Features of the project (thus far) that the Developer has proposed changing that violates the provisions of measure J/R, as follows:
1) The requirement for use of the 3.2-acre parcel on the southeast corner of the project to be used for "either the expansion of University Retirement Community (“URC”) for the benefit of its residents or for use by another specialized senior care facility", and
2) The requirement to "Establish a foundation and seed funds for the initial planting and ongoing maintenance of the oak forested area in association with the HOA and appropriate local organizations".
This Part 1 of the series will only address the proposed elimination of the expansion of URC for an enhanced memory care facility which is instead proposed to be replaced by 30 detached senior homes.
The failure of the Developer to provide for an endowed "Foundation" to plant and maintain the oak-forested area as mentioned above will be discussed in a later article along with the functional elimination of the Davis-Based Buyers program in the Development Agreement and what it means for the Developer's increased profits.
URC Will now NOT be Able to Use a 3.2 Acre Parcel at Bretton Woods for Expansion or a "Specialized Medical Care Facility"
Unfortunately, it now appears that an enhanced memory care facility will not be developed on the 3.2 acre by URC "for the benefit of its residents or for use by another specialized medical care facility" site as required by the Baseline Features and approved by voters. Instead, according to the Staff Report prepared for the Council's Consent Calendar tonight, the project is now slated to instead include "An approximately three-acre continuing care retirement community site, which would likely contain 30 assisted living, age-restricted detached units."
So the project has morphed from a promised specialized enhanced memory care facility on the 3-acre parcel into 30 detached senior home sites. As shown later, this will probably provide millions of dollars in additional profits to the Developer compared to what he would have otherwise received by selling the property to URC as he was previously contractually obligated to do and which he represented to the voters in November 2018.
The causes of this seemingly incongruous change in project specification are rather seamy and are the end result of a lawsuit filed by the Developer to abrogate an executed land purchase option agreement granted to URC by the Developer prior to the election.
During the election campaign, the Bretton Woods Developer constantly ballyhooed the fact that he had signed this option agreement to sell the 3.2 acre parcel of land in question to University Retirement Community (URC), a much beloved Davis senior care facility located Covell Blvd. from the Bretton Woods project.
Much was also made of URC's tentative plans to establish an enhanced memory care facility on the site which could be used by existing URC clients to seamlessly transition to a more appropriate specialized care environment .
This arrangement solidified enough internal support for the project by URC to the extent that URC declined a request by opponents of the project before the election to hold an informational event on the premises in advance of the forthcoming election. URC had previously agreed to such events prior to earlier Measure J/R votes ostensibly to allow their members to become fully informed before any such votes.
As readers are aware, the Measure J/R vote on the Bretton Woods project passed by a comfortable margin and all appeared to be well for the implementation of the plans for the enhanced medical care facility by URC. But the Developer had other nefarious plans designed to enhance his own profits rather than allowing the future specialized memory care facility to be developed by URC that the Developer himself repeatedly touted during the campaign as one of his primary benefits to seniors..
The Spurious Lawsuit Filed by the Developer
Instead, on October 2, 2019, a lawsuit was filed by the Developer (Binning Ranch Company LLC as signed by its Developer agent, Davis Taormino, as plaintiff) against URC (as defendant) in Yolo County Superior Court (Case CV19-2085). (The full lawsuit can be accessed at the bottom of this article). The Developer was represented by Boutin Jones of Sacramento. Amazingly the complaint essentially alleged that URC violated the Option Agreement because they did not do enough to help him win the election that he in fact won!
As stated in the complaint,
"...June 2, 2017, Binning Ranch and URC entered into an Option Agreement and Agreement of Purchase and Sale...The Option Agreement granted URC the exclusive option, on certain terms and conditions, to purchase approximately 3.2 acres of the Property:
a. If URC were to elect to exercise the option, the Option Agreement set a purchase price of $16 per square foot of usable land. (Exhibit A, Section 5.1.)
b. In consideration of the option, URC agreed to make a First Option Payment of $10,000, and an Option Continuation Payment of $150,000..."
to be paid upon the successful completion of the affirmative vote of the pending measure J/R ballot measure and other project entitlements.
The lawsuit further stated that,
"In the event of URC's breach of any term or provision thereof, the Option Agreement provided that Binning Ranch's sole remedy would be to terminate the Option Agreement by giving written notice. (Exhibit A, Section 6.2.) Additionally, the Agreement entitled Binning Ranch to retain all payments made by URC upon URC's breach. (Exhibit A, Section 6.2.)"
All of these provisions of the Option Agreement are fairly standard for such types of agreements. Typically the termination of such agreements is caused by the failure of the optionee (URC in this case) to complete the sale of the transaction by not delivering the remainder of the payment due on the sale of the property and thus foregoing the right to purchase the property.
However, there was one other provision in the Option Agreement under which the Developer claims that URC breached their agreement. That is, the Option Agreement specified that, "As an additional material consideration for Owner's Grant of the Option to Optionee, commencing immediately after the Effective Date and continuing throughout the Term, Optionee shall publicly and actively support Owner's campaign relating to the affirmative support of the Measure R Vote."
In his lawsuit, the Developer alleged that URC failed to fulfill this provision in their contract (despite the Developer having won the election by a comfortable margin) and demanded the cancellation of the Option Agreement and forfeiture of all option payments made thus far.
Specifically, the Developer alleges that "URC Did Not Continuously, "Publicly and Actively" Support the WDAAC Campaign". As evidence for this supposed gross misdeed on URC's part the lawsuit only cites the following one specific example of URC's purported transgressions,
"At times, URC even affirmatively refused to lend support for the campaign. For instance, on October 12, 2018, Taormino requested that the URC "Board submit a letter to the Editor [of the Davis Enterprise] in support of Measure L." Thirteen (13) days later, and just two (2) weeks before the election, URC's Executive Director relayed the URC Board's declination, stating "I have spoken to my board members these past few days and they are not comfortable putting their name on a letter with verbiage supporting Measure L." The Board did not submit a letter to the Editor, nor did URC publicly, actively, or otherwise, support the passage of Measure L in the days just before the election. In short, in the thick of the election season, when Binning Ranch needed URC's promised support the most, URC outright refused to provide it."
Can you possibly imagine a more distasteful lawsuit being filed to deny URC the opportunity to develop their enhanced memory care facility based on such flimsy allegations and with there being absolutely no apparent damages to the Developer since he, in fact, won the election?
As it turns out, URC was faced with the prospect of probably spending well in excess of $500,000 over several years to defend the lawsuit brought by the Developer to void the Option Agreement. Some local observers said the true price tag for their defense might have risen to well over $1,000,000 to see it all the way through trials and possible appeals. It's no wonder that URC instead probably chose to settle the matter and just walk away
In fact, a settlement conference in the matter was scheduled for February 16. By all outward appearances it seems that URC did indeed settle to avoid the prospect of such expensive litigation entering into the most expensive phase.
I believe this is because the Developer has already had Staff insert new language in their Staff Report to Council for this evening's Consent Calendar stating that the project will instead have 30 single family homes on the 3.2 acre sit instead of URC's enhanced memory care facility or other specialized care facility.
Millions of Dollars in Additional Profits are Probably Garnered by the Developer as a Result of this Lawsuit
One might speculate that the motivation for the Developer to use such heavy-handed legal means to force URC to settle the lawsuit and agree to the rescission of the Option Agreement is MONEY. Instead of selling the entire parcel to URC for $2,230,272 (at $16/sq. ft. x 3.2 acres x 43,560 sq. ft./acre ), the Developer could instead make far more by selling the land at a much higher valuation. As currently proposed in the Staff Report submitted to Council, the new proposal for this site envisions 30 sites with slightly in excess of 1/10th acre per lot. According to one local appraiser, such lots could sell for in excess of $250,000. It was stated that similar sized lot recently sold at the Cannery for $300,000.
If the 30 lots to be placed on the 3.2 acre site sold for $250,000 each, the Developer would realize gross income of $7,500,000 compared to approximately $2,230,272 if the sale to URC otherwise went ahead as planned. So the Developer was willing to sue URC and, if successful, potentially realize additional profits in excess of $5,000,000. The only casulaty is that URC then must forego any possibility of building an enhanced memory care facility on the 3.2 acre parcel.
Indeed, this apparent disdain for his supposed local senior constituency was also apparent when the Developer functionally neutered the Davis Based Buyers Program by throwing open home sales to all comers to the clear dis-benefit of Davis seniors for whom 90% of the sales were to be reserved.
Additionally, it has been reported by every prospective buyer that I have talked with that the Developer has canceled some, if not all of the home purchase contracts he signed with Davis seniors before the election. Some of the contracts reportedly specified a purchase price of $550,000 for which each prospective buyer gave him a $5,000 deposit to the Developer.
These pre-built home sales was also widely touted by the Developer as evidence of overwhelming local senior demand and support for the project. By the Developer's own admission, well over 100 local seniors executed contracts of sale with him for home purchases.
The reason the Developer gave to the prospective Buyers when recently canceling their contracts and returning their deposits was that he could not get a builder to build the homes and did not expect to be able to do so in the near future. Yet here we are only months later and the Developer has miraculously come up with a builder for about half the units to be built.
One might otherwise speculate that the ability to substantially raise the price for the homes for which the earlier contract were cancelled might play a factor in the Developer's decision to cancel those contracts
These Developer Misdeeds Would Not Be Possible if our City Council were not so Malleable and Willing to Give the Developer Anything He Wanted
In return for moving construction ahead and filling the City coffers with millions of dollars in fees and construction taxes, our City Council has functionally thrown the Davis senior community under the bus by agreeing to these project changes despite the promises made and subsequently broken by the Developer.
We have all heard our Councilmembers say on numerous occasions that Baseline Features could not be changed except by a new vote of the people. Well, apparently this not a true statement as demonstrated here with the loss of the "specialized senior care facility" that was promised to voters but now being potentially denied by actions by the Developer and approved by our Council.
The seemingly never-ending appeasements by the City to Developer demands even if they constitute violations of the supposedly iron-clad provisions of the Baseline Feature commitments presented to voters is a stark warning that the future promises and representations of Developers and our own City Council are not always to be believed.