L.A. Developer Awakens North County's Sleeping Village by the Sea

Lessons Learned by Rick Caruso, Elected Officials and Carlsbad Voters

Signatures have been validated on a referendum overturning Carlsbad's city council approval of a shopping center on the shore of the Agua Hedionda Lagoon. It's time to reflect on lessons learned from the developer's failed attempt to bypass city voters, the normal review and approval process, and the California Environmental Quality Act.

When L.A. developer Rick Caruso approached city officials three years ago, they urged him to build community support for his plan. They must have assured him 48 acres of land adjacent to the pristine lagoon would be the perfect place for a shopping center.

In courting the developer, however, they may not have told him about the 2006 Battle of the Propositions. Prop E, prohibiting all commercial development there, failed to pass by just 56 votes.

The billionaire developer began his campaign to build community support by having his company, Caruso Affiliated, join the Lagoon Foundation as a deep pockets contributing partner. One of his development managers earned a seat on the AHLF Board of Directors.

I suspect it was Caruso's generosity that led to the Lagoon Foundation Board chair's signature on the Agua Hedionda South Shore Initiative. Adding the signatures of a former chair of the Chamber of Commerce and a former city planning commissioner completed the ruse of a "citizen-led" initiative.

Caruso probably figured buying the signatures of 15 percent of city voters would be cheaper and less risky than an election campaign. The Citizens for North County's all-volunteer army of referendum signature gatherers proved the out-of-towner underestimated the locals.

On May 12 the Carlsbad city clerk received the developer's "citizens initiative" proposal. Three days later, Sean Welch, an attorney with a San Rafael, California law firm created the Preserving Carlsbad Open Space the Right Way, California Domestic Corporation.

Caruso invested in a signature gathering drive second to none, recognizing it would require lots of money and plenty of deception. His campaign to build a mall twice the size of the Carlsbad Premium Outlets would be disguised as an environmentally-friendly grassroots crusade to save the Strawberry Fields.

The developer's door-to-door signature contractors, posing as local residents, carried petitions with the bogus promise the initiative would be submitted "directly to the voters." Mailboxes were flooded with promotional materials.

A video of children romping through long grass in open fields splashed across social media and TV screens, with only glimpses of a "pedestrian-friendly retail promenade," the name chosen for the Nordstrom-anchored mall.

From January 1 to June 30 Caruso Affiliated donated $2.8 million to the Preserving Carlsbad Open Space the Right Way, Inc. The fledgling company spent $2.6 million during those six months. 

The small print accompanying its marketing materials read, Paid for by Preserving Carlsbad Open Space the Right Way, with major funding by Caruso Affiliated. Financial disclosure documents reveal, however, Caruso Affiliated was the only donor paying for those mailers and TV ads.

Those being asked to sign petitions might not be so eager if they knew the only benefactor of the campaign was also its prime beneficiary. Paid for entirely by Caruso Affiliated could be a turnoff. Borrowing from the Bard, methinks Mister Caruso understood that a developer, unlike the rose, under any other name smells a lot better.

Here's a sample of vendors profiting from Caruso's campaign under the alias, Preserving Carlsbad Open Space the Right Way.

$541,000 to Waterfront Strategies, Washington DC, a media buying firm.

$400, 000 to The Baughman Company of San Francisco, "the top creative persuasion mail firm in the business."

$400,000 for Television ads by local affiliates.

$40,000 to Method Campaign Services, Los Angeles. "Our high quality signature gatherers receive thorough training to guarantee that you attain the numbers you need."

$13,000 to the Callidus Consulting Group, San Diego. Matt Hall and Michael Schumacher are among their partial sampling list of clients. Financial disclosure forms show Hall paid them $4,000 in his 2014 mayoral race, and Michael Schumacher $1,750 in his city council campaign. Curiously, Preserving Carlsbad Open Space is not in their list of clients.

Of the $2.6 million spent on Caruso's initiative campaign, Carlsbad businesses got about $30,000.

By comparison, the truly citizen-led referendum drive spent about $9,000, funded entirely by individual donations and fund raisers, to collect enough signatures to overturn the city council's decision to refuse to put Caruso's corporate-led project up for a vote, as promised. 

Lessons learned?

1. Caruso Affiliated, you can't buy Carlsbad voters.

2. City Council, don't underestimate the power of the people.

3. Carlsbad voters, stay awake, do your duty as citizens, and keep watch on your elected officials.

The Riehl World pledges to do its part.