Pacific Grove hires outside firm to investigate Project Bella negotiation snafu.

Two months ago the Pacific Grove City Council told residents the city would probably never get to the bottom of a failure to negotiate a reimbursement agreement with developers of the proposed Project Bella luxury hotel.

Council members reversed themselves on Wednesday, voting unanimously in closed session to retain an outside law firm to investigate what went wrong.

City Attorney David Laredo made the announcement, specifically linking the investigation to the employment performance of City Manager Ben Harvey.

Reimbursement negotiations with Domaine Hospitality Partners, LLC, started in early 2016 around the same time that former city manager Thomas Frutchey left to work in Paso Robles and Harvey was brought on as an interim city manager. (Harvey was hired permanently in April.)

At the crux of the issue is what happened after the City Council voted in February last year to enter into a contract with Domaine requiring the company to reimburse the city for costs related to preparing environmental reports for a Local Coastal Program with the California Coastal Commission.

Somehow that contract was never executed, and a subsequent contract in June did not include wording for costs related to the coastal plan. As a result, the city spent $163,000 on consulting work done by EMC Planning.

It’s unclear how much of that amount would have been reimbursed by Domaine, if any.

At its Feb. 2, 2017 meeting, the Council admitted that mistakes were made by city staff led by Harvey, but declined to take any action to pursue reimbursement from Domaine.

Since that time the city has been contacted by residents and received numerous public records requests, seeking documents hoping to find a paper trail that might yield some answers as to what happened, Laredo says in a phone interview.

“There has been a series of questions,” he says. “And the Council just felt it was important to resolve these with as much certainty as possible.”

He does not know how long the investigation by San Francisco-based Jackson Lewis will take, nor how much it will cost the city.

“I don’t have a timeline. I want it sooner rather than later, but I want it thorough,” says Laredo. “Thorough is more important than sooner.”

In the meantime, the hotel, which would replace the American Tin Cannery outlet mall, appears to be stalled. The city officially expired Domaine's application permit on Feb. 7 due to inactivity, despite promises then by developer Ronald Meer through a spokesman that plans are in the works and will be submitted "in the near future."