Backroom Fiasco

How Schenirer, council cost city $28 million

By Jeff Harris
October 2023

Can a gas station that never got built cost taxpayers more than $28 million? Yes, when that unbuilt gas station involves Crocker Village.

Turning an industrial site into a neighborhood of homes, shops, parks and offices is never easy. Crocker Village was no exception—a difficult infill project from inception two decades ago.

The village sits atop a former polluted rail yard. It required deep, expensive environmental remediation.

Some residents opposed Crocker Village from the start. When developer Paul Petrovich introduced the idea of a gas station within the development, opposition became more intense.

The fueling station was not allowed under the project’s zoning rights. That meant a conditional use permit from the city was necessary. Petrovich applied for the permit, and won approval from the planning and design commission.

The Sierra Curtis Neighborhood Association appealed the decision, forcing the City Council to consider the matter. Councilmember Jay Schenirer, who represented the area, got busy in discussions with neighbors and the development team.

He got too busy. Schenirer’s actions led to years of litigation. While making his rounds, Schenirer advocated to stop the gas station. He didn’t uphold his duty to remain unbiased in a quasi-judicial hearing.

At a meeting that proved more staged than objective, the City Council overturned the planning commission and denied the gas station permit. Schenirer made the motion to deny. He followed a script of how the hearing would unfold.

That script became evidence when Petrovich sued the city, claiming he was denied a fair and unbiased hearing. The script indicated the council’s vote was predetermined—a backroom deal worked out in advance by several councilmembers.

What followed was an expensive, humiliating loss for the city.

In finding for Petrovich, Superior Court Judge Michael Kenny wrote, “Councilmember Schenirer’s assistance to opposition to the gas station in obtaining the City Council’s vote against the project was not a mere technical error that can be deemed harmless or nonprejudicial, but rather a fundamental flaw in the process.”

Kenny continued, “In the days preceding the hearing, Councilmember Schenirer was no longer a neutral, unbiased decisionmaker… There was evidence that Councilmember Schenirer was counting—if not securing—votes on the City Council against the gas station and communicating an ‘update’ on that score to Mayor (Kevin) Johnson… Petrovich did not receive a fair hearing.”

The judge said Schenirer prepared “talking points” for the Sierra Curtis neighborhood group and Johnson. That’s not all. Schenirer coached opponents to advocate for denial of the gas station. The court documents are exhaustive and fascinating.

They make you wonder about other deals, other decisions.

The City Council, led by a newly elected Mayor Darrell Steinberg, a close friend of Schenirer, decided to appeal the court’s decision—an expensive process unlikely to succeed.

The state appellate court denied the city’s appeal. A new hearing was ordered for the conditional use permit. Schenirer recused himself, but history repeated. The City Council voted down the gas station a second time.

Again, Petrovich sued, this time for damages, financial and personal. The Sierra Curtis neighborhood group successfully defeated the gas station with Schenirer’s help, but taxpayers must pay millions of dollars for the victory.

Under a settlement, Petrovich will receive $26 million from the city, in retribution for Schenirer’s actions. In addition, the city spent more than $2 million in legal fees.

Luckily, the city doesn’t have to cover the full settlement in cash. City Manager Howard Chan negotiated a deal for the city’s purchase of a building owned by Petrovich at 827 K Street.

The building accounted for $18.5 million, leaving the city on the hook for $7.5 million in cash. Petrovich received an apology from the city, plus a park named for his family.

The moral of the story? Elected officials must keep their actions and words within the law. To do otherwise is an abuse of power. As usual, taxpayers got stuck with the bill.

Jeff Harris represented District 3 on City Council from 2014 to 2022. He can be reached at cadence@mycci.net. Follow us on Facebook, Twitter and Instagram: @insidesacramento.