Pubdate: Tue, 10 May 2016
Source: Los Angeles Times (CA)
Copyright: 2016 Los Angeles Times
Contact:  http://www.latimes.com/
Details: http://www.mapinc.org/media/248
Author: Paloma Esquivel

TOWN REINVENTS ITSELF AS DESERT POT SPRINGS

Down-On-Luck City Experiences a Marijuana Boom

DESERT HOT SPRINGS, Calif. - Carlos Bravo, the owner of a tow company 
here, was at work late last year when a real estate agent came to him 
offering half a million dollars for 5 acres of undeveloped, 
brush-pocked desert - five times what he'd paid for the land six 
months earlier. "I thought he was joking," Bravo said. The man came 
back the next day, making it clear he was not.

A few days after he had signed the paperwork, Bravo said, another man 
offered him $1 million.

As the first city in Southern California to legalize large-scale 
medical marijuana cultivation, Desert Hot Springs has been inundated 
by marijuana growers and developers. They are buying up dusty desert 
land - some with no utilities or roads - in hopes of cashing in as 
California's marijuana growers come into the open under new state regulations.

"It's pretty chaotic," said Coachella Valley real estate broker Marc 
Robinson. "I'm getting tons of calls from all over the world, all 
over the United States. My newest clients flew over from Germany."

Despite a sizable need for new infrastructure to support the indoor 
growing projects, the rush has officials in this downtrodden town 
dreaming of new income.

"I can only imagine what we can do with the tax revenue," Mayor Scott 
Matas said. "We're in need of parks, our roads are dilapidated. All 
around - our sidewalks, curbs, gutters." The city is pushing hard to 
help developers get their projects up and running as it increasingly 
faces competition from a number of desert cities also eager to bring 
growers to town.

Financial necessity

Desert Hot Springs' foray into marijuana stemmed from financial need, 
officials said.

The city has long tried to position itself as a Coachella Valley 
tourist destination alongside its resort-town neighbors south of 
Interstate 10, but it's never managed to attract the same level of 
development. Median household income here is $33,500 - far below the 
state median.

The town's destinations simply aren't enough "for it to become a 
vibrant and viable city instead of just a dusty little town north of 
the I-10," said Heather Coladonato, president of the Desert Hot 
Springs Chamber of Commerce, which is working closely with growers.

In 2014, after the city declared a fiscal emergency, the council 
voted to legalize dispensaries and cultivation. Zones where growing 
was permitted were established, including on a stretch of barren 
desert dotted with a couple of churches and auto repair shops.

Since the ordinance passed, officials have approved applications for 
at least 11 businesses with plans for more than 1.7 million square 
feet of cultivation operations.

Each year, the city will tax growers $25 per square foot of 
cultivation space for the first 3,000 square feet and $10 per square 
foot after that. At least eight other projects are in the approval process.

Police Chief Dale Mondary said he had strong reservations about the 
city's move toward cultivation.

"Just from a law enforcement standpoint, obviously we're 
philosophically opposed," he said. "I took the stance: 'I can either 
pout about it or get on board and at least have my voice heard.' "

The businesses have agreed to hire 24-hour armed security guards and 
install cameras that police can access remotely, Mondary said. 
They're also planting what he called "hostile landscaping " - cactus 
and other plants that could be difficult for intruders to pass.

No cultivators are up and running yet, though a small number could be 
growing by this summer, officials said.

Growers, many of whom have been quietly practicing their trade in 
garages and other underground spaces for years, are eager to "come 
out of the shadows," said Jason Elsasser, who is planning a 2-acre 
project in town.

The rush to set up shop in cities that permit cultivation was pushed 
forward by state legislation signed into law late last year. Growers 
will be able to apply for state licenses by 2018, but they will have 
to show they have local licensing before they can get a state permit, 
said Steve Lyle, a spokesman for the California Department of Food 
and Agriculture.

The crush of developers in Desert Hot Springs led to a tripling of 
land prices in the area, real estate brokers said.

But there are signs that the projects - which require intensive 
lighting and air conditioning - could face long infrastructure 
delays. In recent weeks, owners learned it could take years just to 
get sufficient electricity to some of the businesses.

Southern California Edison spokesman Robert Laffoon-Villegas said the 
utility expects that some growers' power needs could be so large that 
"it would be like adding a small city to the system."

"In order to do that safely it does require significant study ... and 
it may require significant infrastructure," he said.

Meda Thompson, a real estate broker who advertises on fliers 
decorated with marijuana leaves, said the issue has caused some 
properties to fall out of escrow.

To help address the concerns, the city manager is now preparing to 
hire a project manager who would oversee infrastructure issues for growers.

In the meantime, the city is facing increasing competition.

In nearby Cathedral City, officials recently began accepting 
applications from growers and dispensaries. So far, they have 
received about 20, said Community Development Director Pat Milos.

In San Bernardino County, Adelanto began accepting applications from 
growers late last year.

That city, which has been on the brink of insolvency in recent years, 
has asked applicants to sign a statement acknowledging its financial 
hardship and agreeing to "support, and not oppose, any initiative 
that the city or the voters of the city initiate to raise business 
taxes and business license fees."

So far, it has approved at least 30 applicants who have proposed 
operating more than 1.2 million square feet of cultivation space. 
Some, like in Desert Hot Springs, would be in now-vacant desert plots.

The city of Coachella, meanwhile, has opened an area to growers 
previously zoned for auto wreckage yards.

Mayor Steven Hernandez said he expected the businesses to bring 
better-paying jobs to the city's lowincome residents, particularly 
migrant farmworkers.

"I've got a lot of people working in the fields every day," he said. 
"If I can get those guys into the middle income ... they can buy 
themselves a nice house in Coachella and maybe not have to work so much."

Building challenges

Calabasas attorney Bob Selan is leading an effort by several 
dispensaries to build a 380,000-square-foot cultivation business park 
in Desert Hot Springs.

The challenges of building from the ground up in the desert have been 
great, he said.

"The way you have to design these things for climate control and 
conserving water and conserving energy, it's very hard to do it, and 
it's very expensive," he said. "We have consultants, engineers, 
architects, lawyers, accountants, you name it ... on top of that we 
have all the cannabis experts."

Though the scramble to establish large-scale facilities has been 
influenced by the possibility that Californians may legalize 
recreational use of marijuana this year, Selan said his facility 
would do fine even without such a law.

"The demand for medical products was so high, this was just to fill 
the need for that," he said.

Elsasser, who is planning the 2-acre project, had a successful real 
estate company in Yucca Valley until the housing crash. The downturn 
left him with several vacant homes, in which he used to grow marijuana.

"Cannabis cultivation kind of saved me," he said.

On a recent weekday, he walked through an empty steel-shell building 
on Little Morongo Road that he plans to soon begin converting into a 
cultivation facility.

"This is going to be all built out into a high-tech, 40-light grow 
right here," Elsasser said, using the number of overhead lights the 
facility will contain to indicate its size.

Pointing to a chain-link fence surrounded by brush, he added, "Back 
there is going to be all greenhouses."

Then Elsasser gestured toward a handful of buildings down the road 
that were owned by other growers and developers.

"Those are all going to be cultivation," he said.

Little Morongo Road will eventually be the backbone of a bustling 
warehouse zone, packed to the brim with growers, Elsasser said.

"This property is right on Park Avenue," he said, waving toward the 
desert brush and dusty road and imagining the swanky New York 
thoroughfare. "It may not look like it. But it is."
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MAP posted-by: Jay Bergstrom