Allen Warren’s neighborhood
The District 2 councilman owes money all over town. He's been sued dozens of times. And North Sacramento loves him.
Steeped in the violet stage lights of the Artisan Theatre on Del Paso Boulevard, just down the way from the development company he founded a quarter-century ago, Councilman Allen Wayne Warren took his opponent’s best shot.
And then he smiled.
It was May 12, less than four weeks before 3,967 voters from this northeastern district of struggling businesses, derelict lots and resilient neighborhoods advanced Warren to a second term as their voice inside City Hall. At this candidates forum organized by the Del Paso Boulevard Partnership and North Sacramento Chamber of Commerce, residents filled the auditorium to consider the alternatives.
The deliberations quickly spun one-sided.
At one point, rival candidate Sondra Betancourt asked the incumbent a pointed question: Did Warren, a prolific developer with ownership ties to dozens of properties in his district, stand to benefit financially from a land deal that would bring a Grocery Outlet to the supermarket-starved area?
Before Warren could answer, the audience pounced to his defense.
“You just want to own it!” one woman shouted. “Don’t hate on him because he got property.”
“We don’t even know who you are!” another man yelled.
Lesson learned: If you come at the king of District 2, you better not miss.
Raised in the heart of Del Paso Heights, the man called “Wayne” by those close to him left home a rising baseball star and reappeared years later as the people’s developer, building affordable homes in hardscrabble neighborhoods like his own. Warren became the pride of the Heights, a prodigal son who returned to share his prosperity.
At least, that was the narrative before the housing market collapsed and Warren’s business empire stumbled over bankruptcies and lawsuits.
In the years since, and mostly behind the scenes, a more complicated portrait has emerged—of an overextended developer who made promises he couldn’t keep, and who may be focusing on rebuilding his empire while the people he represents are left wanting and waiting.
According to a four-month examination of court documents and tax, property and other public records, Warren and his companies owe nearly $500,000 in overdue property taxes, unpaid state business fees and delinquent code enforcement fines.
Concerning the latter, three of Warren’s corporate entities owe nearly $12,000 in fines to the city he represents, which incurred the expense of removing weeds at more than a dozen of his vacant properties. Seventeen are located in Warren’s district, meaning he’s inadvertently contributed to the very blight he was elected to resolve.
For his part, Warren says these figures only look bad if you consider them outside of a larger economic context.
“We probably had over $100 million of property in debt during the recession, and we paid it back,” he told SN&R during a wide-ranging interview at his New Faze Development Inc. headquarters. “Surviving the downturn, to me, greatly outweighs any criticism about me as a businessperson.”
Survived it he did. Today, Warren juggles both political duties and economic interests. But lines have been crossed. And there are questions about whether Warren is using his office to dig himself out of the red.
“I don’t live for other people’s acceptance of who I am,” he told SN&R. “I know who I am.”
But does everyone else?Mutual—or conflicted—interests?
The rectilinear headquarters to New Faze Development Inc. stand at the corner of Del Paso Boulevard and Winnipeg Street in North Sacramento. It’s a sand-gray building with lanky windows and a buzzer-entry door. Its salvaged design is shrewdly industrial, conveying working-class authenticity even as the comforts of success harbor inside.
A stair column twists past well-appointed art pieces to Warren’s modest office, which is a good 10 degrees warmer than the rest of the building. But the developer-politician looks unbothered by the balmy conditions. Dressed business-tropical in a light-pink linen shirt and khakis, Warren’s five o’clock goatee is dusted with silver, a gift from his demanding constituents, according to Mary Watts, a family friend who happens to be one of those constituents.
“He’s pulled in every direction,” said Watts, 73, founder of the TLC Soup Kitchen in Del Paso Heights. “I visited my councilman recently and saw that his beard was gray and said, ’What are they doing to you?’”
On the day he met with SN&R, Warren had taken part in a strategy session to reopen a community center that had been leased out to a charter school for the previous eight years. The effort comes with an ambitious plan to launch a year-round college-and-sports academy.
“That’s going to be a huge project,” Warren teased.
One of the project’s stakeholders, Richard Dana, said it wouldn’t be happening without Warren.
“In this particular case, we really turned to Allen for support within the city,” said Dana, executive director of the Mutual Assistance Network, a neighborhood improvement nonprofit in Del Paso Heights. “Allen has been at the center of all of this.”
Watts and other residents also praise Warren for the opening of the Viva Supermarket in Del Paso Heights, an effort that began under his predecessor, former Councilwoman Sandy Sheedy, but for which Warren gets props.
But Warren says he isn’t finished.
He’s working on a vision-board list of priorities for his next term—like renovating the Iceland Skating Rink and devising an economic strategy to transform the intersection of Marysville Boulevard and Grand Avenue into a town center for East Del Paso Heights. “It could be art galleries, it could be restaurants, it could be any number of things,” Warren said. “The fact that I don’t have to run in November gives me a bit of an advantage so I can really focus on finishing this year strong.”
He says one of his biggest priorities is eradicating blight in his district, so much so that his office led the city’s effort to hire 40 local high school students to comb the district looking for neglected lots, trashed alleyways and overgrown weeds, a wildfire hazard.
“I want our community to look healthy,” he told SN&R. “We want to promote pride of ownership.”
And yet, ironically, Warren’s high school force may end up tattling on him.
According to city records obtained through a public information request, 20 vacant properties belonging to three corporate entities operated by Warren have been cited for weed abatement or code violations. He’s paid off one of those fines, appealed two and owes a total of $11,742 on the remaining 17.
This is the most obvious example of the collision between Warren the public servant and Warren the businessman. But it’s not the only one.
Warren’s emergence as a politician marks his second public reinvention—and his most fraught. What made him so well-regarded as a developer—his heavy investment in his own community—has opened him to conflict of interest perils as an elected official and questions about whose interests he truly serves—his constituents’ or his own?
For instance, Warren’s corporate aliases own dozens of real property interests within a three-block radius of the planned Grocery Outlet site, which encompasses 29,292 square feet along Del Paso Boulevard, between Darina and El Camino avenues. Warren told a debate audience in May that he “put out a call to developers” to help initiate the sale of the city-owned site. And when the Sacramento City Council approved the $150,000 sale to Petrovich Development Co. on March 15, Warren didn’t recuse himself from voting in favor of the deal, despite the financial benefits a grocery store could have on his myriad nearby investments.
Warren’s Assent I LLC owns 42 parcels less than three blocks east of the Grocery Outlet site, parcels that are being developed into single-family homes by his New Faze Development company.
This is Renaissance Park—or the idea of it, anyway. Approximately 80 detached homes in various states of completion—some just wood skeletons, others fleshed in Sheetrock and dozens more fully formed under three coats of stucco. Near the entry point to this neighborhood, on a dirt lot cracked with weeds, a squat construction trailer belongs to New Faze Development Inc. This is Warren the developer’s latest gambit, what he describes as a $15 million investment in his community.
It’s paying off.
Assessor records show that Warren’s Assent I LLC has already sold 38 finished homes to individual buyers since May 2014. A nearby grocery store should only increase demand.
Warren’s dealings on both sides of the aisle could very well put him in conflict with California’s Political Reform Act, which requires public officials to disqualify themselves from official matters that materially affect them—like encouraging a developer to build a desirable business within walking distance of his company’s brand new housing development.
“If a council member acts in his or her official capacity in a manner that benefits the member personally, that’s a problem,” said Hana Callaghan, of Santa Clara University’s Markkula Center for Applied Ethics. “That’s a classic breach of the duty of loyalty that public officials owe to the public they are elected to serve.”
Assistant City Attorney Sandra Talbott told SN&R on Tuesday her office considered the matter covered by attorney-client privilege and was unable to comment.
Warren argues that the two aspects of his persona should be considered separately.
“I have a business life and I have a political life,” he said. “People didn’t put me in office to be figuring out my own personal life. They put me in office to help them figure out issues in the community. And that’s what I’ve been doing.
“On the other side, I’m figuring out every day how to make my business grow or be better. Every day.”
But even those who respect Warren as a politician acknowledge his many property holdings pose a unique challenge for the city’s conflict-of-interest guidelines.
“In Allen’s case, it’s real tough when you got all these [holding] options and properties,” said Rob Kerth, the former District 2 Council Member who lost to Warren in 2012. “I think it’s just because the sheer volume of businesses.”
Beside Warren’s flagship company, New Faze Development Inc., SN&R was able to link 26 business aliases to Warren, 14 of which owned 69 parcels as of August 2, according to state and county records.
That may yet be a partial list because of the fractured nature in which property ownership data is siloed between multiple state and local agencies. But it’s enough to illustrate the central dilemma: that he’s a man divided by his duties as a public servant and his interests as an entrepreneur.
It’s something Warren’s rivals and critics have suspected for years, though they’ve rarely been able to prove those suspicions.
“It’s certainly a question. It’s not an accusation, but it’s a question,” said Betancourt, a 63-year-old neighborhood association representative who challenged Warren’s candidacy for the second time. “How do we all benefit from this? How are we all better? A lot of people have placed their faith in him.”
Betancourt tried raising a similar point during the candidates forum in May, but was drowned out by a partisan audience. In that moment, it was Warren who came to Betancourt’s defense.
“I think it’s a wonderful question,” he said, subduing the hecklers. “Let me just say that, over the last 25 years, my company has invested heavily in this community. Because I care about this community.”
Cheers ripped through the theater. The moderator barked for order. Warren continued.
“Let me just say I’ve owned a lot of properties and I continue to own a lot of properties,” he said.
“And going to own some more, too!” a woman shouted.
“And I hope to own some more,” Warren said.
“Amen!” the woman said.
The crowd erupted. The moderator slumped. Warren sat comfortably under the spotlight.Lifting the corporate veil
Mark Gallagher thinks he knows the kind of businessman Warren is.
In February, the Folsom attorney filed a breach of contract lawsuit against Warren on behalf of a landscaping company that says it’s owed more than $112,000 for services rendered at two apartment complexes that Warren owns through corporate aliases. The lawsuit is one of 34 that names Warren as a defendant or respondent dating back to 1994, according to a review of Sacramento Superior Court’s online database. Nineteen of the lawsuits were filed during peak recession years, from 2008 through 2012, when Warren was unable to secure financing for a number of in-utero development projects.
“Allen was overextended,” said Kerth, the District 2 council representative from 1992 to 2000. “People who want their money have a long memory.”
Even as the larger economy recovered, additional lawsuits have been filed (and this doesn’t count the now-recanted sexual harassment claim made by a former staff aide). The most recent civil claims portray Warren as a corrupt businessman, who, not unlike Donald Trump, allegedly defrauded his investors while enriching himself. And, also like the Republican presidential nominee, they accuse Warren of using bankruptcy laws or limited liability shields to outrun his creditors.
“That’s kind of this guy’s M.O.,” Gallagher contended.
First, a primer on limited liability companies, or “LLCs.” As the term indicates, limited liability companies insulate their owners from the troubles of their business enterprises. If an LLC falls into debt or stops meeting its financial obligations, collectors can’t go after the owner’s personal assets to recoup what they’re owed.
According to Franklin A. Gevurtz, a professor of administrative law at the University of the Pacific’s McGeorge School of Law, the category was created to encourage people to start small businesses, so they wouldn’t be afraid of losing everything if the startups failed. LLCs are also popular among developers, who create project-specific LLCs to protect their companies from being dragged down by an unsuccessful venture. LLCs provide their owners, called “members,” with lots of legal cover. And it’s a status that Warren has put to prolific use.
Of the 26 past and present business entities SN&R linked to Warren through Secretary of State and Franchise Tax Board records, all but three are or were LLCs. Seven remained active, according to state records.
Asked about his propensity for forming LLCs, Warren described them as project-specific partnerships that make accounting easier and “typically wrap up” when the projects do.
But LLCs can also be easily abused, say legal experts.
Failing to adequately capitalize an LLC, misleading potential creditors about how much money it has (or doesn’t) and who is involved (or isn’t) are considered forms of business fraud, Gevurtz said. So is using the limited reporting requirements to siphon company assets into the owner’s personal accounts or other company accounts, especially when there are debts to pay.
During his reelection campaign, Warren loaned himself $27,800 in monetary and nonmonetary contributions from himself, as the head of New Faze Development Inc., and in direct contributions from two of his LLCs. One of the entities, New Faze Advisors LLC, owes more than $7,700 in unpaid property taxes to the county and another $2,500 to the Franchise Tax Board, county and state records show. Along with the other entity, New Faze Holdings LLC, all three companies have been sued as recently as 2013 for failing to pay alleged debts.
Gevurtz says this could be a problem.
“A company that can’t pay its bills shouldn’t be distributing money, whether it’s to pay the owner’s salary or contribute to his campaign,” he said.
Gallagher said it appeared from his research that the councilman uses LLCs fradulently.
“This guy about uses them as a shell game,” he said.
It’s similar to the game Trump has been accused of running in his various business dealings, particularly the Atlantic City casinos he left piled with debt while somehow managing to clear a personal profit. It happens enough that there’s even a term for when courts discover the fraud—it’s called “piercing the corporate veil.”
Gallagher says he suspects that’s happening here, but is waiting on documents via a discovery motion to come to a final conclusion.
“Here’s what I will say: The apartment complex is generating money. It’s not going to the vendors. So it’s going somewhere,” he said.
In campaign finance disclosure forms submitted by Warren, the two apartment complexes boast fair market values of more than $1 million each, and annual gross income in excess of $100,000 per complex.
But Warren is so behind on his property taxes for one of the complexes—he owes more than $208,000 in back taxes and fines for Alpine Terrace Apartments—that he risks losing it, said a county tax official who spoke on background.
Warren dismissed the landscaper’s lawsuit as politically motivated.
“I don’t even know who that company is,” he said. “I have never dealt with them. They deal with the property manager. They just named me because they think that if they name me that I’m just going to buckle. I don’t give a fuck about that.”
Gallagher offered his own colorful retort. “I don’t know how many exclamation points you can put after ’bullshit,’” he said. “That’s nonsense.”
As for Gallagher’s client, Humberto Arreola, the owner of the landscaping company, he says he didn’t know who owned the apartment complexes until he called the property management company one day, frustrated about another unpaid bill. Arreola says the person on the other line clued him in to the big-name owner.
“When he told me who he was, I found out he was a city council [member],” Arreola said. “That’s when I started to worry about who owes me money.”
Whether Arreola ever sees that money is another question. Gallagher told SN&R he’s attempting to settle the case, but Warren projected confidence.
“I will tell you that, just about every lawsuit, if not every one, I’ve won them all. Or, they were either settled and they were settled on my terms,” Warren said. “I don’t know that your court filings will tell you that.”
They don’t, actually.
Online court judgments and documents weren’t available for lawsuits prior to 2006. Almost all of the settlements after that year were sealed, making Warren’s claim impossible to verify.
But in June 2015, a judge ordered Warren and four of his business entities to pay Wells Fargo Bank more than $516,000 in attorneys’ fees and other legal costs. That legal battle started more than a decade ago, when the bank accused Warren and his business entities of failing to repay two unsecured lines of credit worth $1.8 million.
Warren says he’s appealing that decision.
“I believe I’m right,” he said. “If I believe I’m right, I fight.”His unfinished masterpiece
In person, Warren has all the attributes of a onetime baseball stud—the mellow self-assurance, the easygoing nature. He’s loose, jocular, especially when holding court on his favorite subject—his quixotic brush with the Big Show, a multiyear saga that broke his body but nurtured his ego. Speaking in his characteristically languid purr, Warren can be a spellbinding contradiction, like a breaking ball that sneaks past the strike zone.
In one breath, he’ll note that he doesn’t read the Sacramento Bee or SN&R and contends he doesn’t care what people think. In the next, he’s offering an unsolicited peek at his trophy room, where his awards from various organizations neatly array on a chestnut desk beside a large portrait of him, one of two in the building, and beneath an artist’s rendering of his incomplete masterpiece.
This is Del Paso Nueva.
Aside from the many unfinished development projects that permanently froze in time when the market collapsed, Warren’s most gutting failure occurred in late 2008. Disagreements over loan repayments with a failing bank forced him to put three of his company’s subsidiaries under bankruptcy protection and, ultimately, surrender ownership of a trio of housing projects. One of those projects was the already-underway Del Paso Nuevo housing development in North Sacramento, which was supposed to bring a mix of market-rate and affordable homes to an area needing both.
Years later it’s the councilman who’s helping others put the finishing brushstrokes on it.
After years in limbo, the city and the Sacramento Housing and Redevelopment Agency entered into a public nonprofit partnership with the development company Pacific Housing Inc. to complete the final half of a 300-home community in Del Paso Heights. At least 51 percent of the homes must be sold at affordable rates to families earning no more than 80 percent of the area’s median income.
“That project wouldn’t have happened if Allen didn’t push for it,” said Dana of Mutual Housing Assistance, which is conducting outreach and homeownership classes.
Dana says Warren pushed SHRA to put the next phase out to bid in an attempt to jump-start the development, even though he suspects it stung Warren not to be the one to construct it.
“I think it had to be frustrating in a way not to return to it in his original capacity,” Dana said.
In many ways, Warren’s story was shaped by the southern diaspora that brought so many black families to California during the early-to-mid-20th century, as they followed rumors of prosperity and relief from racial hostility.
His mother’s side migrated from Shreveport, La., and his father’s side from “the woods” of Arkansas, he said, and was one of the first black families to settle in the Sierras. “A lot of black families from the south came to California looking for a better way of life,” Warren said.
The Warrens found it in Del Paso Heights. Both his parents worked at McClellan Air Force Base—his dad painted aircraft—but still had to improvise when it came to feeding all eight kids. “I remember for a month or two straight, we had chicken pot pies every day. I mean, literally every day,” Warren grinned. “And even to this day, I still like them. … They never made it seem negative.”
Warren inherited his athletic passion from his father, a high school football star in Quincy, where his records still stand. He has uncles and cousins who played in the pros, and it seemed that was where Warren was headed.
But when he was 14, a drunk driver killed his father just one mile from the homestead, at the very intersection Warren now wants to turn into a town center. The intersection where, years later, he built the current home of the Greater Sacramento Urban League, an education and employment center for underserved youth and adults.
That was cathartic, Warren said, “a way for me to do something positive at that intersection.”
But at the time, there was just grief. Warren felt unmoored. His love of the game, misplaced. But he was excellent at faking it, better than most, and quickly developed a regional reputation as a triple-threat athlete at Grant Union High School. After a spell, the game started giving back.
By the time the New York Yankees called him up in 1988, crippling injuries made Warren question whether he really wanted to be there, taking at-bats alongside the likes of Bernie Williams and Deion Sanders.
“I knew I could play with them. There was no doubt in my mind,” he said. “And I knew my body wasn’t right.”
Warren returned to California State University, Hayward, and buckled down. His grades improved and he graduated, becoming the first in his family to do so. After a stint as a mortgage broker on the East Coast, Warren returned to Sacramento and started New Faze Development Inc. in 1993. In 2002, he relocated his office to its current location from Gold River. It was a statement, he says, made in response to a pair of high-profile homicides in the Del Paso Heights area—of a young artist just out of college and a former neighbor that Warren encouraged to get involved in the community.
He felt responsible.
“I felt like I owed the community more than I had given it,” he said.
It’s hard not to believe him.