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Turmoil Threatens Newfound Prosperity

Desert Hot Springs is booming, but two city officials are suspected of benefiting illegally.

August 01, 2005|Louis Sahagun | Times Staff Writer

DESERT HOT SPRINGS, Calif. — After languishing for decades as the low-rent alternative for service workers from nearby Palm Springs-area resorts, this desert outpost known for its relaxing thermal waters is booming.

The population of 19,400 is expected to double by 2015. Lots that sold for $8,000 a few years ago fetch 10 times that amount. City coffers are brimming with building fees.

But the town's newfound prosperity has not brought stability. As city leaders grapple with the demands of explosive growth -- widening roads, increasing services, building sewers -- allegations have surfaced that at least two prominent officials may have used their positions to benefit from the growing affluence. These are among the issues:

* A potential conflict of interest involves a councilman's vote to approve a major subdivision without disclosing that he had purchased land nearby. The City Council is scheduled to discuss the matter Tuesday.

* The council has requested that a county grand jury investigate a land purchase by the city manager, who later urged the council to approve a development and road upgrades near his property.

* The city manager fired the police chief last March, a few days after he went to the FBI and county prosecutors with what he described as "evidence of possible criminal activity within different functions of city government."

"Our greatest problems have always been naivete and ineptitude," said Lane Sarasohn, president of the Desert Hot Springs Chamber of Commerce. "You make the best of the cards you're dealt, and this city is still playing with very few face cards."

'Old Chaos,' 'New Chaos'

The city is still stinging from the stigma of its 2003 municipal bankruptcy. Desert Hot Springs was on the losing end of a 1995 lawsuit brought by a developer after the City Council rejected his project. The city was under court order to pay $10.8 million in damages. Only last year, the city floated a bond to pay off the debt. But the protracted litigation and bankruptcy had kept developers away for nearly a decade.

Adam Sanchez, head of the local Boys and Girls Club and a member of the city's Planning Commission, has come to refer to bankruptcy as the city's "old chaos" and the controversies currently rattling City Hall as the "new chaos." Residents and developers alike are worried that political woes will hinder the growth and vitality that they have long hoped for.

City Atty. Patricia Larson said the district attorney's office has "talked to a number of people" and confirmed that an investigation has been launched. But, she said, "I haven't a clue about what they are looking at."

Ingrid Wyatt, a spokeswoman for the Riverside County district attorney's office, would neither confirm nor deny that there is an investigation.

In the meantime, skip loaders are chewing up the landscape in California's 25th fastest-growing city, which used to be little more than a hodgepodge of mom-and-pop businesses, trailer parks, modest homes with septic tanks and spas that catered to snowbirds. Today, new stucco homes with panoramic views of mountains and desert-scapes command $250,000. The first shopping centers are sprouting along the main drags and crews are repairing some of the worst roads in the desert.

Necklace of Cities

Southern California's newest boomtown is spread across alluvial plains in the northwest tip of the Coachella Valley, part of a necklace of cities that stretches 30 miles from Palm Springs to Coachella. Newcomers there are a mixed lot, and many were priced out of neighboring cities of Rancho Mirage, Palm Desert and Cathedral City.

Take mortgage broker Scott Lantman and his wife, Diah, who recently moved out of a Palm Springs condominium and into a new 1,935-square-foot house here with a spectacular view of Mt. San Jacinto. The couple paid $220,000 for the house.

"We heard so many negative things about this city, that there were bad people living here, and drugs and gangs," Diah Lantman said while watering the lawn of a frontyard decorated with palms and edged with red brick. "But we think this area is changing fast. We just love it here."

After years of being little more than a desert burg with barely enough money to pay for essentials, city organizations, including Little League teams, the Boys and Girls Club and the Fourth of July parade committee, are receiving donations and sponsorship from developers eager to win over townsfolk.

But given their significant financial stake in the community, the developers are also worried about the controversies enveloping City Hall.

In a boardroom draped in subdivision maps, Walter Luce, chief executive of Mayer-Luce Development Group, put it this way: "We have $140 million invested in this town. We are going to move this city forward, and protect our investment.

"So we are demanding political stability -- no, we are dictating it," Luce said. "What is needed right now is a good city hall with competent people."

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