Displaced by a hospital

When a city’s awash in national chains and big box stores, small business owners stand out—and stick together.

That’s what some mom-and-pop operations are doing in the Stonelake neighborhood of Elk Grove now that a proposed hospital might displace them. The controversy is swirling around a shopping center at the corner of Elk Grove Boulevard and West Taron Drive, which has become a destination for everything from stylish haircuts to Mediterranean pastries.

The enclave was an unmentioned casualty when city leaders and California Northstate University unveiled their plans for a new hospital in mid-December.

The announcement that Elk Grove would get expanded medical services and a Level II trauma center sparked media fanfare across the region. But the fact that seven small businesses had no clue they’d lose their premises has led to a backlash on the west side of the city.

Coupled with residents’ concerns that the hospital will lead to increased traffic, noise and crime, the business owners have mustered an organized resistance to what had looked like a big political win for Mayor Steve Ly, who was not supported by the City Council for re-election in November.

Northstate University and city leaders continue to stress that the project can cut the time for ambulances rushing people to a trauma center from 20 minutes to 5 minutes, in many cases being the difference between life and death. But the hospital may end up killing small businesses in the area.

December surprise

When David and Liz Brown opened Dreaming Dog Brewery in 2017, they were realizing a dream. He had been home-brewing ales for 20 years before he decided to showcase that talent at a community gathering point in his neighborhood of west Elk Grove. The Browns say they did five years of research before selecting their commercial location. Once they settled on Stonelake Landing, they struggled through months of planning, building and permitting, followed by months of trying to grow a customer base.

Today, Dreaming Dog Brewery is a hit. It has Brown’s own Belgians, lagers and IPAs on tap. Crowds come in for live music, stand-up comedy, sports, fundraisers and karaoke nights. Many now consider the brewery a neighborhood hub. When the Browns learned that the shopping center’s owner, Ethan Conrad, sold it for $12.6 million to Northstate University in January 2018, they were immediately worried. They say that they reached out to the medical school’s general counsel, Paul Wagstaffe, to get answers and that Wagstaffe led the couple to believe there was nothing to worry about.

“He said they wanted to see the small businesses in here succeed,” David Brown recalled.

Then, almost a year later, the couple noticed a barrage of news stories about the university opening a 250-bed teaching hospital and emergency room. Brown said he contacted Wagstaffe again, but this time the conversation went differently. The Browns were told their brewery would have to make way for the hospital. Plans revealed since then indicate that at least six other small businesses will also be evicted: Stone Bake Oven, Like Academy, Miyabi restaurant, Stone Lake Nail & Spa, Majesty Afro-Caribbean Food Store and the Flaming Grill.

Last week, Wagstaffe told SN&R he wouldn’t answer questions until March about how Northstate University has handled public outreach for its hospital.

Meanwhile, for the Browns, relocating might not be an option. To reopen, they’d have to find a location with 800 amps of power, a rolling door and delivery truck access. The couple’s commercial real estate agent says that is a tall order in Elk Grove. Of equal concern, a new location means new architectural plans, new construction permits from the city, new fire and sewer permits from the county and a complicated process of updating their state and federal liquor licenses. David Brown said even if they find another location, they’ll likely have to shut the brewery down for six months, which they probably can’t afford.

“We’ve done everything we reasonably can to make this business work,” he said. “It really took the wind out of our sails when this came up.”

Melinda Robinson was hanging out at Dreaming Dog when she learned about the proposed hospital. Robinson lives in the neighborhood and has concerns about traffic and helicopter noise, but she’s also worried about the area losing small businesses.

“They’ve been places that are really servicing our neighborhood,” Robinson said. “At one point they were having trouble renting spaces, but over the last year it’s been steadily increasing, and it’s all been small businesses.”

The fate of the shopping center was on the minds of many who attended the January 9 Elk Grove City Council meeting. When Liz Brown told council members she felt betrayed by them, she received loud applause.

“In the end, if Dreaming Dog Brewery goes down—goes out of business—I will look back at my time in Elk Grove with sadness instead of joy,” Liz said from the podium. “But I will be able to sleep at night, and look myself in the mirror, knowing that I never lied to people and never betrayed their trust. … And I’m not sure you can do the same.”

‘This is going to be a fight’

Liz Brown wasn’t alone in confronting the City Council at the first meeting since the hospital’s announcement. A line of residents from the Stonelake neighborhood said they felt blindsided by news of the project and expressed fears about the impacts. Several noted that while the mayor openly campaigned on bringing a hospital and emergency room to Elk Grove, he didn’t make clear that it would be in Stonelake.

However, speaking to SN&R during the campaign, Ly did say that he believed Elk Grove’s best chance of landing a hospital was by working closely with Northstate. That was of cold comfort to those taking the podium.

“If the mayor of this city really had our best interests at heart, he would be steering these types of businesses to the eyesore area of the abandoned skeleton buildings at 99 and Grant Line,” said Barbara Patterson. “This monstrosity of a building would be less offensive there. There are other vacant lots available with better access that should be considered.”

Randy Becker, who emphasized he lives in east Elk Grove, was nonetheless incensed about revelations of a hospital in west Elk Grove.

“Quite frankly I’m a little pissed off,” Becker told the council. “I get that we need a hospital on the I-5 corridor. There isn’t one from north Stockton to Sacramento. I understand the importance of it, I really do. But it does not need to be built where the proposed site is. …. This is going to be a fight. And you better figure out if you’re going to be part of it, and what side of history you want to be on.”

Several speakers also raised the influence of campaign financing on the hospital project.

Public records show Ly received $3,000 in campaign contributions from Northstate University’s CEO Alvin Cheung in his 2018 re-election campaign. Councilwoman Stephanie Nguyen accepted $13,000 in campaign funds last year from Region Builders, the political arm of the area’s largest construction association. Region Builders’ CEO Joshua Wood was conspicuously front and center during the hospital’s announcement December 20 and also attended the January 9 City Council meeting.

Over the last two years, council members Darren Suen, Steve Detrick and Pat Hume have each accepted accepted thousands of dollars in campaign contributions from area construction companies and building trade associations.

At the heated meeting, Cheung attempted to address the concerns. “We are taking concrete steps to reach out to, and work with, the business community, neighborhood leaders and local organizations,” Northstate’s CEO told the crowd. “We have a process to work with each and every business tenant immediately impacted by this project.”

After Cheung left, Wagstaffe reemphasized those points, saying Northstate University wanted to work with the small businesses to “try to give them a Stonelake happy landing.”

He added that the university would emphasize transparency moving forward, though Wagstaffe later declined to speak with SN&R about the hospital.

One resident who worries Northstate’s process won’t be transparent is Edgar Sanchez, who’s lived in Stonelake for 17 years. Sanchez is still hoping a new location for the hospital might emerge.

“We’re right behind the Stonelake Wetlands Preserve, which is a federally protected land that can’t be built on,” Sanchez said. “There’s a lot of protected habitat and birds that make their homes there. Now, we’re going to have helicopters coming through?”

He added, “And it just doesn’t make sense to destroy the small business owners.”