Sacramento officials need to know a lot more about the Community Development Department's construction approval process and a suspended commercial building program before any action should be considered, Sacramento City Councilmember Kevin McCarty said Thursday.

Renne Sloan Holtzman Sakai, a law firm hired by the city to investigate the Community Development Department, must investigate how construction on a Nestlé water-bottling plant began in McCarty's district without building permits, how home-building permits were issued for a Natomas flood zone, when these practices began and how pervasive they are, he said.

Two weeks ago, the department's Facilities Permit Program was suspended after questions about the approval process for the plant revealed that Nestlé and contractors began construction work with verbal approval only. McCarty called the problems with the FPP and the practice of allowing construction without building permits the "second strike" against the department.

"We're investigating the department for wrongdoing in the Natomas Permit Program. We've asked that they look at this FPP process as well to see what was going on there as far as any wrongdoing," McCarty said. "By looking at Nestlé, we were able to bring to light some illegal activity that's been done maybe for a very long time."

The FPP is intended to speed approval for tenant improvements or renovation of commercial and industrial buildings involving businesses that do a lot of business in Sacramento and have established relationships with the city. The program may have "improved the city's relationships with developers," McCarty said, "but at what cost? At what expense to taxpayers? To residents?"

David Kwong, acting head of the Community Development Department, said last week that staff will ask the council to amend city code to allow FPP construction projects to start before building permits are issued — as long as a business has a written start-work authorization from the building division. The longtime practice, which predates the program, helped bring about the suspension of the FPP two weeks ago.

Any proposal involving the FPP is premature before the conclusion of the investigation, McCarty said.

"We owe it to our residents to make sure that our development department follows the law," he said. "We need to evaluate what's been going on with this FPP process and how long it's been going on. Then, and only then, should we talk about Mr. Kwong's proposal going forward."

Department staff want to "pull the program back, take a temporary pause" and bring to the City Council a "retooled FPP," department spokesperson Maurice Chaney said Thursday.

Retooling would happen "in concert with council just to make sure that the program is vetted thoroughly through the City Council and that they understand what the program is about," he said. "So, not only getting the appropriate info out to them, but just making sure that we’re transparent and open during that whole thing.”

The main question is whether the program is legal, said McCarty, who is proposing to change city code to require Planning Commission and City Council oversight of proposals for new water-bottling plants or any industrial facilities that use water for resale purposes.

Other cities allow construction with a start-work authorization only and the practice was incorporated into the FPP when that program was brought here from Portland several years ago, Kwong said. Sacramento City Manager Ray Kerridge developed the FPP for Portland 10 years ago when he managed that city's commercial inspections. Phoenix was the only other city in the country known to have a similar program at that time.

Meanwhile, Councilwoman Sandy Sheedy said the FPP's role has expanded over time. When the program started, it provided businesses a way to make tenant improvements quickly, she said. Now, it’s not being used in the way it was designed, she added.

“It morphed into something else that was completely different,” Sheedy said.

The city doesn’t want to be “unfriendly” to businesses, she said, but needs to be “cognizant” of how it works with them. Sheedy noted that she hopes the program can be made workable.

McCarty said he would like water-bottling facilities to require conditional use permits. Environmental reviews and public hearings are required for proposed development projects only if there's a request for a land-use change or a conditional use permit, he said. Neither were required for the renovation of the warehouse Nestlé is leasing.

The council was supposed to consider McCarty's proposal as an urgency ordinance on Oct. 27. But City Attorney Eileen Teichert said Nestlé hadn't done anything illegal. However, she determined that the department's practice of allowing construction to start without a building permit violates city and state codes.

"We screwed up so bad handing out building permits through this crazy FPP program, no court of law would find they (Nestle) did anything illegal," McCarty said.

Plenty of million-dollar projects never go before the council if there are no requests for zoning changes or conditional uses. Developer John Saca's failed 53-story Towers at Capitol Mall project never went before the council, he said.

McCarty and other councilmembers have said they knew nothing about the plant until a grassroots organization, Save Our Water Sacramento, contacted them in September. Councilmembers Rob Fong, Steve Cohn and Lauren Hammond said Wednesday they did not know about the program until after a stop-work order was posted on the door of the Nestlé plant Oct. 23.

On Thursday, Sheedy said she was unaware of the program until it was debated during the Nestlé controversy. Councilwoman Bonnie Pannell also said she had been in the dark.

“I knew nothing about the Facilities Permit Program before the Nestlé company’s move to Sacramento,” she said in an e-mail Thursday. “I’m looking forward to learning about how the program works. I will keep an open mind.”

There's much more the council needs to learn about the program, McCarty said, adding, "I'm proud that by bringing this Nestlé issue forward, we uncovered this very inappropriate activity in the city of Sacramento."

Staff reporter Kathleen Haley contributed to this report. Photo by Anthony Bento. Suzanne Hurt is a staff reporter for The Sacramento Press.