California dreamer meets reality

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California dreamer meets reality Backer of $100 million resort plunges into Spirit Lake's political quagmire

Benjamin Shors - Staff writer

SPIRIT LAKE _ It was hour three of the public hearing, and the crowd was restless.

People shuffled their chairs on the cafeteria floor and huddled in whispered conversation. A few slowly shook their heads -- almost sadly -- as if they understood something that John Sempre never would.

The California businessman had brought lawyers, a real estate agent, townspeople, even a hydrologist to speak in favor of the $100 million resort that he hopes to build in the town of 1,700.

But now Sempre was losing the audience. They complained that he was dodging their questions.

He stayed loose, laughing, but his exasperation showed.

"Look," he said at one point, "I'm not even a developer. I'm a ... pharmacist!"

Sempre spoke honestly at the April 4 meeting: By most accounts, he has built a successful wholesale pharmacy company.

But in 25 years of dabbling in real estate, he has never completed an undertaking like the development he proposes in Spirit Lake.

To pull off the project, Sempre is banking on persistence and his company, Southwood Pharmaceuticals Inc., with sales he estimates at $8 million a year.

In Spirit Lake, Sempre has entered perhaps the most fractious political climate in North Idaho, an atmosphere that has slowed his proposal.

"This is politics, Spirit Lake, Idaho, and it's interesting and it's fun," he said in a phone interview last week from his office in Irvine, Calif. "It's the most active thing I've ever seen in my life."

Last fall, his golf course and resort appeared to be gliding toward approval.

But in November, the mayor was recalled. Two months later, the city administrator resigned. Both have since worked for Sempre. In December, a push by the City Council to annex 200 acres of Sempre's land into the city -- a critical step in the proposal -- was angrily shouted down by residents.

And Sempre's development, which could drastically alter the face of this small town, was suddenly in flux.

"We're not backing off," Sempre said. "If it takes me 10 or 15 years to do this, I'm going to do it."

On Tuesday, Sempre will have another chance to defend his development, at 6:30 p.m. at Timberlake Junior-Senior High School, a meeting sponsored by the Chamber of Commerce.

Chamber president Sue Fox called it a "non-political" gathering. But Fox is also Sempre's real-estate agent, and in this small town, nothing escapes politics.

Local skeptics If suspicion grew trees, Spirit Lake would be a timber town again.

But the mill's been closed since 1939 and the greatest effect of suspicion is a widespread distrust of outsiders -- particularly developers.

While surrounding cities have boomed and gobbled up land, Spirit Lake's city limits have remained largely unchanged. The town hasn't had a major annexation since 1994, when about 100 acres were brought into town to accommodate the high school.

But it has had few development opportunities like the one proposed by Sempre. Developers that have approached the city, such as New York Mountain Properties in the 1970s, have been turned away, or abandoned projects.

For some residents, Sempre has raised hopes about better jobs, better services and the possibility of fixing Spirit Lake. The clay-bottom lake has holes that turn its north end to mudflats in early summer.

"I believe you will find that Mr. Sempre is a deviation from the normal developer," City Administrator John Austin wrote to Planning and Zoning Commissioner Gary Ventress on Nov. 20. Austin cited Sempre's "world-class" architect team, and called him a "bona fide" developer.

Sempre credits both Austin and former Mayor Bill Moe for working with him.

"They opened up the city to us," Sempre said. "It's not like right now, when you can't get anything done."

But just months later, neither Moe nor Austin were city employees. Both have since joined Sempre's project as consultants.

In a Nov. 7 ballot, residents recalled Moe by a 10-vote margin, after his effort to pave 15 miles of new streets.

On Nov. 14, his last day in office, Moe signed an ordinance allowing the council to annex land without going through review by the planning and zoning commission.

"We changed the requirements to match what the state required," Moe said. "In essence, we took planning and zoning out of the loop."

"It's not common at all," Gary Young, planning and zoning director for nearby Post Falls, said of the council's decision. Annexation and rezoning are considered and recommended at the same time by most planning and zoning commissions, he said.

When the council attempted to annex the land at a Dec. 12 meeting, citizens loudly protested. Weeks later, the ordinance was rewritten, again allowing for planning and zoning review and recommendation. The final decision on annexation resides with the council.

Also in December, Austin prepared a report showing that annexing 200 acres of Sempre's land into the city would bring in up to $30,000 in tax revenue, if completed before the end of the year.

But a review of Sempre's property tax records shows that the annexation would have brought in far less.

The 211 acres of county land are valued at $605,000. Because of timber and agricultural exemptions, the land has a taxable value of $147,000. With a .0054 city levy rate, the land would have brought in only $800.

For 93 acres of city land valued at $567,000, Sempre's company was charged $6,100 in taxes.

In calculating the $30,000 in tax revenue, Austin estimated that the combined 300 acres would increase in value eight times to $8.17 million, if annexed and zoned commercial.

"I remember all along I said it was up to $30,000," Austin said in an interview last week, "and that it would be up to the county assessor to determine."

Mike McDowell, chief deputy tax assessor, differed with Austin's estimate of the tax revenue.

"Based on our records, I don't see that happening," McDowell said.

The taxes wouldn't rise until the land use changed, McDowell said. The timber exemptions would still apply even if the land was annexed into the city, and the zoning would not affect taxes.

"Something physically needs to change" for the taxes to increase, McDowell said.

On Jan. 9, Austin's resignation was accepted by the council. Seven days later, he began work as a consultant for Sempre. After his recall, Moe joined Sempre's payroll as a consultant, earning about $300 a month, the same amount he earned as mayor of Spirit Lake.

"It smells. It smells to high heaven," said Jack Fraser, a member of a citizens group that led the effort to recall Moe. "What (Sempre) doesn't realize is that he's alienating a lot of people. It's going to backfire right in his face."

City attorney Jerry Mason said there is no law to prevent Moe from working for the developer, once he'd left office.

"It's somewhat unusual," Mason said. "But then again, Bill didn't exactly leave office in a normal manner. He's got a right to make a living."

Moe said Sempre is a "straight arrow" whose project would be a financial boon to the city.

"The only people who are against it are those who want Spirit Lake to stay the same," Moe said. "Well, I'm sorry, it's not going to.

"What they ought to realize is that his project is going in."

NYC, LA, Spirit Lake John Sempre's route to Spirit Lake began in New York City.

Sempre was born there in 1942, and raised by his mother, Josephine, a bookkeeper. He met his father once, but knows almost nothing about him.

"I think he worked for the government," Sempre said.

He has a brother, James, whom he has not spoken with for years. He thinks James sells vending machines.

He graduated from Brooklyn College of Pharmacy in 1967 and the following year moved to California, where the pay was much better.

He worked in several pharmacies, holding two jobs at a time. In the mid-1970s, he moved into real estate.

"There's never been a hotter market in history," he said of the California land boom. "You'd put a house up, and the same day it'd sell."

By 1977, Sempre's real estate business in Studio City, Calif., had Century 21's third-highest sales volume in the country, he said.

He got married and had a son, who is now in graduate school studying physical therapy. The marriage lasted seven years.

The closest he came to developments were two projects in Phoenix. He got permits for two subdivisions, Meadow Brook and Sunny Slope.

But rather than build the units, he sold the plans to another developer, turning a "healthy" profit, he said.

It is a fear that has been expressed in Spirit Lake -- that Sempre will simply walk away from the project.

But architect John Barakonski, who works on condominiums and hospitals, said Sempre enjoys the project and that it is a diversion from work.

"He seems to have a Midas touch," said friend Charles Trinbeth, another architect. "I would not doubt that he would carry off a project like this. He's running a company that brings in millions of dollars."

Southwood Pharmaceuticals remains privately held, and Sempre is the company's sole stock owner. He hopes to make an initial public offering of stock next year.

Through Southwood, Sempre became acquainted with Dr. Fred Garcia, founder of the California-based Newport Anti-Aging Medical Associates.

In 1999, Garcia, deep in debt to Sempre and his pharmaceutical company, offered him the Spirit Lake land.

"I thought, `Hey, this looks pretty nice,"' Sempre said. He bought 59 acres for $273,000. Then another 236 acres for nearly $550,000. He is hoping to add another 100 acres to the site.

"This is strictly a hobby with me," Sempre said. "I could move as slow as I want on this."

He may have to move slowly.

Sempre has lived in New York and Los Angeles. He has not lived in Spirit Lake, and for some residents that is a problem.

Unanswered questions Bob Root is 74 years old, and almost by way of introduction he announces, "and I was born in Spirit Lake in 1926."

He is at turns jocular and passionately defensive of small-town life. He wears suspenders and a ball cap, and the best job he ever had was working night security in a lumber yard. Alone, walking through stacks of 2-by-4s, he sang to himself.

Like many residents, he drove to cities such as Spokane and Coeur d'Alene for work. There were few jobs in Spirit Lake. And even fewer developers looking to invest.

"Poverty was like a moat for us," said Root, who has seen developers pass through the town but never stop. "They'd come, and they'd say, `Oh geez, who'd ever want to live here?"'

Sempre's development has stirred such passion in Root that he's put down his thoughts in a letter.

"Opportunists and Developers of today, go away. Start from scratch and impress yourself elsewhere. You do not need us and ours to continue to live and glorify yourself."

Root and many others have a long list of questions that they say Sempre has never answered.

The issues include:

• It was widely understood, and reported by city officials, that Sempre had donated one acre along Maine Street to the city. But Sempre said that donation was contingent on the city rezoning the acre as commercial to allow for a tax break. The planning and zoning commission recommended against a zone change based on a tax break, and Sempre rescinded his offer.

• There have been serious doubts raised that Sempre can fix Spirit Lake, which loses water through holes in its clay bottom. At the April hearing, Sempre told the crowd he would spend $80,000 to fix Spirit Lake if the land were annexed and rezoned. A Spokane engineering firm hired by Sempre recommended using a plastic liner or ash to seal the clay bottom of the lake. Sempre said the $80,000 would fix 50 percent of the problem.

• Citizens have called for a planned unit development to show exactly what would be built. Sempre said the city does not require a PUD, and that it would be too costly. But he has publicly criticized the conceptual design of his own architect.

• The commercial rezoning will increase the marketability and value of the 300 acres, according to Rand Wichman, senior planner for the county. Residents worry that Sempre will rezone the area, then sell off the land for commercial uses. But an annexation agreement could force Sempre to develop the land as proposed. Fox, Sempre's real-estate agent, said this week that the developer will change his zoning request to residential in response to the fears.

• The state Department of Environmental Quality placed a moratorium on expanding the city's wastewater facility, which serves 560 units. "We're way over the design capacity on the disposal of the wastewater," said Eric Eldenburg, city engineer. Eldenburg recommended developers be required to pay for all the sewer improvements needed to handle the additional load. Sempre said both he and the city are uncertain of the extent of sewage problem.

Sempre will have a chance to respond to those questions at Tuesday's meeting.

But even if the questions can be answered, he'll face opposition from those who simply don't want growth.

"If you talk outside, your speech echoes," resident Elizabeth Keene said of the lake's solitude. "He's going to eliminate all the wetlands for the fish and wildlife and replace them with a boat dock."

Supporters say many in the town welcome the development but have kept quiet rather than risk offending neighbors who oppose growth.

"I've seen two different opportunities go by over people's attitudes," said Terry Stidman, who owns 40 acres adjoining Sempre's property. "For people not to have change, they might as well go over to the high school and tell their kids not to graduate."

Sempre said the time is right for development.

"I think a lot of people have been waiting a long time for change up there," he said. "I think that it's time. It will be a beautiful place."

• Benjamin Shors can be reached at (208) 765-7147 or by e-mail at benjamins@spokesman.com.



-- Anonymous, April 29, 2001


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