Rendering of the proposed Davis Street 
Wellness Center at 3081 Teagarden Street.

In response to allegations of sexual misconduct, San Leandro City Manager Chris Zapata denied the claims and, instead, asserted they were attempts by the accuser to aid final approval of a medical cannabis dispensary in the city, of which she has a financial interest.

But whether the allegations by Davis Street Family Resource Center CEO Rose Padilla Johnson is a full-blown example of the #MeToo movement coming to San Leandro City Hall or about the Davis Street Wellness Center dispensary seeking to sidestep a Jan. 31 deadline to repay the balance of a federal loan required by the city before it can begin selling medical cannabis may be known next week.

Gordon Galvan, the former San Leandro councilmember who is involved with the dispensary says the group plans to deliver the remaining $325,000 of a $500,000 federal Community Development Block Grant (CDBG) loan for the building at 3081 Teagarden Street before next Wednesday’s deadline.

The planned dispensary is slated to open in a cordoned off section of the Davis Street Family Resource Center, a non-profit that helps the poor, women and children. The city has long-maintained having a dispensary in a building purchased using federal funds represented a liability for the city, in addition, to violating the loan agreement signed in 2009.

However, Galvan says group is also asking the city to place the payment in escrow while its attempts have the Alameda County assessor split the parcel move forward.

According to Galvan, the city’s demand to repay the loan, also upheld by the San Leandro Board of Zoning Adjustments last November, will be satisfied and splitting the property between the non-profit and the dispensary will then no longer present any legal liabilities for the city in the event federal authorities decide to crackdown on cannabis in the state.

Once the assessor portions off the dispensary from the non-profit, Galvan said, he believes the city should refund the loan proceeds back to the Davis Street Family Resource Center.

Jeff Kay, the interim San Leandro city manager named to replace Zapata, who was placed on paid administrative leave this week pending the investigation into Johnson’s claims, says the city disagrees with Galvan’s assessment. The Wellness Center’s proposal does not alter the requirement to pay back the federal loan, he added.

“Splitting the parcel doesn’t change this,” said Kay. “The new parcel housing the dispensary would still be on the same piece of land that was purchased with the loan proceeds and would still be part of the ‘property’ as defined in the loan agreement.

The city also sought guidance from the U.S. Department of Housing and Urban Development this week, said Kay, and the federal agency agreed with the city’s determination.

In an interview, Galvan said either way, the requirements for the conditional-use permit will be satisfied before Jan. 31 and the Davis Street Wellness Center is planning to open its doors to medical cannabis customers on April 20.

However, it is unclear what will occur if the group fails to repay the federal loan before next Wednesday. The city’s monthly zoning board meets the next day–too late to be placed on its Feb. 1 agenda.

In an interview earlier in the week, Kay said the city is willing to continue to work with the dispensary applicant, although the end result of non-compliance with the zoning board’s decision could result in the revocation of the dispensary permit, said Kay.

Meanwhile, San Leandro’s third medical cannabis dispensary permit holder, Blum San Leandro, is likely to gain approval from the zoning board next Thursday for its conditional-use permit to put a 13,000 square-foot dispensary and manufacturing facility on Fairway Drive.

Despite San Leandro being, outside of Oakland and Berkeley, one of the East Bay’ early adopters of medical cannabis dispensaries, none of the permits it has issued beginning in 2015 has received approval to open its doors for business. The first permit, issued to Harborside, has not move forward in the conditional-use permit process.