Amid concerns primarily over the City of Goleta’s ability to regulate a nearby oil-processing facility, the City Council has decided to postpone taking over the historic Barnsdall-Rio Grande Gas Station at 7900 Hollister Ave.
The transfer agreement written up between the city and the property owner, Sandpiper Golf Trust, contained a covenant that left council members worried that the city would be limited in its ability to shut down the Ellwood Onshore Facility, which processes oil and natural gas from the currently inactive offshore Platform Holly oil rig.
The Spanish colonial revival-style Barnsdall Gas Station was built in 1929 during Goleta’s prolific oil-production years. It was abandoned in 1950.
The property is part of Sandpiper Golf Club, which is owned by Beanie Babies mogul Ty Warner, who also owns Montecito Country Club, as well as Four Seasons Resort The Biltmore and the Coral Casino Beach & Cabana Club.
Goleta officials and Warner began discussing the preservation of the dilapidated landmark in 2009. In June 2015, Warner announced plans to donate it to the city.
City Manager Michelle Greene said the appraised value of the property was $1.3 million at the time.
The agreement before the council on Tuesday would have transferred ownership of the gas station building and a quarter-acre of land at no cost to the city, which is eager to restore the landmark.
The covenant in the transfer agreement at the heart of the council’s discussions originated when ARCO, which originally owned the golf course and gas station land, sold the area, and required that any subsequent transaction include a provision barring the new owner from terminating the nearby Ellwood Onshore Facility, now operated by Venoco Inc.
Sandpiper Golf Trust was thus required to include the covenant in the agreement, City Attorney Tim Giles said, but language was added clarifying that the stipulation cannot be enforced because cities cannot enter into contracts curbing their police powers.
The City Council — and many Goleta residents — want to shut down the Ellwood facility due to the potential for an oil spill, the facility’s extended lifespan and its legal nonconforming use status.
Members of the public who spoke at Tuesday’s meeting expressed concern that the covenant may still limit the city’s range of regulatory options.
“We don’t know if Venoco has a right to enforce, as a successor interest, that agreement,” said Linda Krop, Environmental Defense Center chief counsel who was representing a trio of environmental organizations.
Krop wondered how a judge would interpret what she called “conflicting language” in the covenant.
“This is not a normal issue of retaining your police power because of the language in Covenant 13 and (ARCO’s) 1990 agreement,” she said.
Another concern of the council and public speakers was potential liability for remediating hazardous materials discovered on the site.
“We’re missing a ton of information here that could have a huge impact on the city’s future liability,” Krop said.
Giles said any contamination of the land that is found to have occurred prior to the transfer would be Sandpiper Golf Trust’s responsibility, whereas any that occurred after would be the city’s.
He also said there was ample case law to support the assertion that public entities like cities cannot surrender their police powers in an agreement like this one.
He offered a firm “no” when asked by Councilman Roger Aceves if anything would tie the city’s hands if it approved the agreement that day and then decided to immediately take steps to shut down the Ellwood facility.
Aceves said Sandpiper Golf Trust had put considerable time, effort and goodwill into helping craft an agreement that would be beneficial to the city.
“Now we have an important building that we’re losing the opportunity to protect for other side issues that, as explained by our city attorney, are nonissues,” he said.
Aceves’ four colleagues reiterated that Warner’s donation was an extremely generous one, but believed there were still too many legal questions that needed answers.
“I think we’ll get there, I think we’ll come to an understanding, but in the spirit of public participation and transparency, I think we need more time,” Mayor Paula Perotte said.
The council directed staff to conduct additional legal review of the covenant, of case law that would render it unenforceable for the agreement, of the city’s regulatory options for the Ellwood sit should it accept the agreement, and to clarify liability for hazardous materials discovered on the Barnsdall property.
— Noozhawk staff writer Sam Goldman can be reached at sgoldman@noozhawk.com. Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.