By Mark Gutglueck
Chino Hills city officials and residents find themselves faced with a multitude of unpalatable options in the aftermath of the City of Industry’s purchase of 2,450-acre Tres Hermanos Ranch.
Immediately following the determination by a Los Angeles County-based redevelopment agency dissolution oversight board allowing the City of Industry to purchase Tres Hermanos Ranch, the City of Chino Hills asked the California Department of Finance to examine that sale and audit the history of the offers to purchase the property. There were previous offers to buy the land that were more than double the $41.6 million that was ultimately accepted as the sales price. The City of Diamond Bar made a similar request of the California Department of Finance.
There is little about the Tres Hermanos Ranch circumstance that is straightforward. The ultimate resolution of issues emanating from it will impact three different counties – Los Angeles, San Bernardino and Orange – and the matter is greatly complicated by the consideration that the state of California’s wholesale elimination of municipal redevelopment agencies more than five years ago foreclosed the ability of the City of Industry to utilize the property for utilities, as it says it intends, at no further land acquisition costs.
On one hand, Industry’s stated intended purpose for the property – converting it into a massive solar power generating plant – represents to a sizable contingent of Chino Hills residents a far more desirable utilization of the property than the designs of developmental interests which are angling to cover the property with wall-to-wall residential units, some 15,000 homes, condominiums or apartment units on the land straddling both Chino Hills and Diamond Bar on either side of the border separating southwest San Benardino and southeast Los Angeles counties. But Chino Hills officials and citizens are distrustful of the City of Industry all the way around, from its elected officials, to its staff, and even its status as a governmental entity answerable to a minuscule population. The total population of the 12.06 square mile city within the greater Los Angeles megalopolis at present is 206, which is 13 fewer than the 219 counted in the 2010 Census. An entirely different ethos applies in the City of Industry, where, like its name implies, industry is king. Those living there are a breed unto themselves.
One of the city’s founders, James Marty Stafford, employed his status in the community and his control of city officials to orchestrate a number of questionable deals enriching himself and those in his circle. Ultimately, one of those deals, the construction of the 660-acre, $65-million Industry Hills and Sheraton Resort, involving kickbacks and bid-rigging, came to the attention of the FBI and the U.S. Attorney. Stafford and five others were indicted and they all entered guilty pleas to a variety of criminal charges in 1984 and agreed to pay $4.5 million in fines. Stafford spent three years in federal prison. Miraculously, John Ferrero, who was the city’s first mayor elected after its founding in 1957 and who remained in office an astounding four decades, was never charged, despite having been installed into – and maintained in – his position by Stafford. The ground charted by Stafford and Ferrero was covered by one of Ferrero’s successors, David Perez, who would use his position as a councilman and then mayor to steer more than $326 million in city contracts to his family over a period of two decades.
But just as Chino Hills and Diamond Bar officials are wary of the motives, intentions and ethics of the City of Industriy’s leaders, likewise, given the stakes involved, many Chino Hills residents are growing distrustful of their own city officials.
For residents on both sides of the Chino Hills/Diamond Bar boundary, those stakes involve the relative tranquility of their neighborhoods and preventing further impaction of the clogged roads they use during the initial part of their commute to work every morning and then back home in the late afternoon or early evening. For the City of Industry, those stakes, at least ostensibly, relate to its plans to utilize a significant portion of those 2,450 acres for a renewable energy project which will generate enough electricity annually to service the debt Industry will have accrued for the construction of the plant plus $19 million in revenue on top of that. For GH America and South Coast Communities, who had previously teamed together to offer to buy Tres Hermanos Ranch for $101 million, their stake in this is a potential $2.25 billion profit. For Chino Hills’ politicians, their stake in the deal is enough money to virtually ensure their election to any higher office they choose to seek in the form of guaranteed political donations from GH America and South Coast Communities.
From its inception, Tres Hermanos Ranch had money all through and all over it. Lying at the confluence of San Bernardino, Los Angeles and Orange counties, it was acquired and created as the shared asset of three fabulously wealthy men – oil baron Tom Scott; Harry Chandler, former publisher of the Los Angeles Times; and William Rowland, son of John Rowland, who led pioneers over the Santa Fe Trail to California and the San Gabriel Valley in the 1840s – three capitalist brothers.
The ranch lies within and abuts Tonner Canyon, consisting of oak woodlands, riparian habitat, rolling hillsides, canyon creeks, cattle pastures and grazing land for longhorn steers, chaparral that offers cover for bobcats, mountain lions, skunks and opossum, scattered black walnut trees and glades that hum with the buzz of honey bees at certain times of the year. Nearby residents treasure the property as open space. But the march of progress and the profit to be had by development render the wishes that the property will remain undisturbed for the next several generations unrealistic. In 1978 it was purchased from the Scott, Chandler and Rowland heirs by the City of Industry’s Redevelopment Agency for $12.1 million.
Last year, a signal that something was up came when the City of Industry bought 800 acres of land in Tonner Canyon near Tres Hermanos Ranch and the Firestone Boy Scout Camp for $7.2 million.
City of Industry officials have given conflicting signals as to what their intention is with regard to the property. The sheer enormity of the GH America and South Coast Communities offer, which carried with it the tacit understanding that there would be no restriction on developing the land residentially, was taken as an indication that the land would host massive residential subdivisions. At the same time, however, Industry officials have indicated they were sincere about using the property for utility related purposes.
Two entities held sway over the property – the successor agency to the Industry Redevelopment Agency and the redevelopment agency dissolution oversight board. The first is an absolute creature of the City of Industry in that its board members are the members of the Industry City Council. The oversight agency consists in large measure of representatives of Los Angeles County and other local agencies, which have an interest in the funds to come available for education and public safety uses as a consequence of the 2011 state legislation shuttering the redevelopment agency. Among its members are its chairman, Santos Kreimann, the chief deputy assessor for Los Angeles County, Michael Gregoryk, vice president of Mt. San Antonio College in Walnut and Congressman Esteban Torres. In this way it is less of a creature of the City of Industry than the successor agency, although it does count among its board members Industry City Manager Paul Phillips.
On August 24, the oversight board, in a 4-3 vote, bypassed the $101 million offer from GH America and South Coast Communities and elected to sell the property to the City of Industry for $41.65 million.
In something of a kneejerk reaction, the cities of Chino Hills and Diamond Bar asked the state Department of Finance to undertake a 60-day review to determine if the sale is legal and reject it if any anomalies are discovered. Chino Hills sent a letter to the Department of Finance immediately, on August 24. Diamond Bar followed four days later with its request. Both cities are calling for the sale to be vacated, as the price – discounted by some $59 million from what GH America and South Coast offered – is what they claim is tantamount to a gift of public funds. Both cities, upon which a portion of Tres Hermanos Ranch sits, say they will sustain a significant loss of tax dollars as a consequence of the nearly $60 million reduction in sales price. In its letter, Chino Hills maintains that the City of Industry’s intended use of the property to host a solar farm makes the property more valuable than the $101 million GH/South Coast offered.
The California Department of Finance acknowledged it had received the two letters but offered no further comment.
Among Chino Hills and Diamond Bar officials there is distrust of the City of Industry. One issue is the inexactitude and waffling attending the City of Industry’s representation that it will limit development of the Tres Hermanos Ranch to the solar plant and attendant utility augmentations. There is concern that the City of Industry will make future add-ons to the development scheme on Tres Hermanos Ranch that will go beyond the solar plant.
Coexisting with the distrust of the City of Industry is pointed concern by some that GH America and South Coast Communities have a development and intensity of land use agenda that is far more onerous than the stated intentions of the City of Industry. Reliable sources report that GH/South Coast intended to construct 15,000 units on the Tres Hermanos property and that it was and yet remains prepared, if it can obtain title to the property, to push ahead with building entitlement applications, litigation and political donations to key decision-makers to get clearance to build the 15,000 units. An insinuation in all of this is that GH/South Coast has the will and the financial means to bankroll the future political careers of any or all of several Chino Hills and Diamond Bar council members as an inducement to modify the zoning restrictions on the property that currently limit the maximum number of units to be built on the 1,750 acres in Chino Hills to 467, and on the 700 acres in Diamond Bar to 624. Simple majority votes on the city councils of either city could alter each city’s general plan and zoning map. In this way, skeptics maintain, the GH/South Coast consortium could obtain an entitlement to build to a magnitude of ten times or more the intensity of development represented by the 1,091-unit limit there now.
In this way, it comes across to many that the City of Chino Hills, by its challenge of the sale to the City of Industry, is continuing to hold the door open for GH/South Coast.
Mayor Ray Marquez sought to address these perceptions.
The major issue, Marquez said, is the City of Industry’s lack of transparency. “In the last two years, I have reached out to the Industry city manager,” Marquez said. “I had a meeting with him and then another meeting with him which our city manager attended, and nothing of any substance was discussed or disclosed. I reached out to the mayor of Industry, Mark Radecki, whom I like and have a good rapport with personally, but I was able to get nothing out of him either. About a year ago, we had another meeting with Mark Radecki and councilman [Abraham] Cruz. Councilwoman Cynthia Moran was there. [Industry consultant] Frank Hill was there and he gave us some information about solar panels. That was the last thing he said to us. Initially he had talked about three reservoirs. One was a holding pond for rainwater run-off. Another was for recycled water and another to store water from the California Water Project, water brought in by the aqueduct. That is what they led us to believe they were working toward. When Frank Hill threw in the stuff about the solar power project, Mark Radecki and councilman Cruz didn’t say much of anything. But that [a potential solar project] was laid out for us at that time, so we learned about this maybe a year ago, that a solar farm was a possibility. There were no details. We shared what we had heard with [the City of] Brea. Brea has concerns with a reservoir being built because there is a fault line that runs through Carbon Canyon.”
Marquez said he had only recently learned about Industry’s acquisition of the acreage in Tonner Canyon. “I didn’t know anything about that,” he said.
Marquez said there has been a constant discrepancy between remarks Industry officials have made and their intent as revealed in official filings and applications. He said he and other city officials had tried to verify the verbal representations with what is put down on the verifiable record. That has not always been easy, he said. One way of gathering information, Marquez said, was to attend Industry’s successor agency and oversight board meetings. “Something like eight meetings were cancelled,” he said. “We were not able to get the information through attending public meetings, so we basically had to file public records act requests. It took a long time to get most of what we asked for. A lot of what we received was redacted. But from that, we had a rough idea of what they are going to do. They have said certain things but we really don’t have a commitment from the City of Industry on what their plans are. They have never reached out to our city with specific plans. I don’t really trust them. I’ve reached out to get information about the project but the City of Industry has not been transparent or truthful. We don’t know what they are going to do there.”
With regard to the development plans on that portion of Tres Hermanos Ranch in Chino Hills, Marquez asked, “Is it going to be solar panels? A lot of the land around Grand Avenue would probably be used for that because it is flat. I anticipate that is where they will put solar.”
Despite the ostensible relative desirability of a solar farm to an intensified use residential development, Marquez said he was leery of his constituents’ eventual displeasure with a high profile renewable energy project. He analogized it to the city’s experience with the Tehachapi Line, the high tension electrical cables and accompanying 197-foot high towers Southern California Edison sought to place in the city.
“Southern California Edison said they were going to put power lines through Chino Hills,” Marquez said. “No one was concerned initially. They didn’t see them and they weren’t involved. They heard about them but it was no big deal. The day they went up, a majority of the people in Chino Hills knew at that point they didn’t want them and that is when the fight started. If they [the City of Industry] put in solar panels, we are going to have the same thing. As soon as they come in here it will register directly with everyone who can see them, and people are going to feel in their hearts that the city didn’t do anything to fight it. We have to be proactive in the community. We have to hold more meetings and use social media to engage in community outreach so people can be involved. If people would rather see solar panels than houses, they may believe there should be more open space. If the City of Industry is going to spend $41 million in buying that property, they expect to make money. So we are looking at the possibility that we are going to have all of the property covered with solar panels, and very little open space.”
Marquez was dismissive of suggestions that the challenge lodged with the Department of Finance over the sale to the City of Industry would lead to the resurrection of the sale of the land to GH America and South Coast Communities, and would result in the intensive residential development that the lion’s share of the Chino Hills community is adamantly opposed to.
“They [the City of Industry] can’t really develop it as residential,” Marquez said. “They must keep it as either open space or a public facility. If another developer bought it without restrictions on the property, then our general plan still allows a maximum of 670 units on the 1,750 acres in our city. Nobody is going to spend $100 million to build 670 units.”
Marquez acknowledged that hidden or unanticipated forces might be at work which could result in a move to develop the property residentially and which could saddle Chino Hills with having to accept greater density than it wants.
“This is what I am afraid of: The governor is pushing affordable housing,” said Marquez. “Right now or within the last couple of months there are or were five or six senate bills pushing affordable housing. Under some of those bills, a developer could come in and not have to honor the general plan. The state legislation is looking to streamline everything and that would give the developers license to build whatever they want.”
Another area of concern with regard to the City of Industry is its willingness to dispense with crucial elements of the environmental certification process, Marquez said. “They were going to put in a stadium in their own city and CEQA [the California Environmental Quality Act] was not a consideration for them,” he said. If the City of Industry is willing to do that within its own borders, it will have no scruples in doing the same thing in Chino Hills, Marquez said. He said buying into Industry’s proposal blindly would subject Chino Hills to long term consequences it might not be prepared to live with.
“Per our general plan, solar panels are not something that is allowed there [on either side of Grand Avenue near the city limits],” Marquez said. “I don’t think they are sensitive to that.”
With regard to the suggestions that GH America and South Coast Communities would spread around political donations to buy radical increases in the intensity of development on the Tres Hermanos property, Marquez said, “Paying off politicians? I don’t like that terminology. Could it happen? Yes.” But he said, anything along those lines would “supersede our regulations and our general plan and our numbers. I have to apologize if I have given anyone the impression that I am the type of politician that can be bought off,” adding, “I did run for the state legislature. And I did get money from developers, but whatever money I received or might receive in the future is not going to change my morals or my integrity. This is Chino Hills, not the City of Bell or the County of San Bernardino, where the assessor was on the take. If anyone thinks we are going to have 10,000 homes built on the Chino Hills portion of Tres Hermanos Ranch, they’re smoking dope. The city council here would not do that. We’re not perfect and we do make mistakes, but I can say with 100 percent certainty we are not going to change the general plan or engage in any kind of zoning variances so some company from Irvine can cover that property with wall-to-wall houses. I would stake my reputation on it. The kind of money you are talking about can buy a lot of influence up in Sacramento but that has nothing to do with Chino Hills. I love this city.”
Before anything is done with the Tres Hermanos property, Marquez said, “I want a consensus from our community. I want there to be in-depth talk about transportation. Carbon Canyon is already severely impacted. So is Grand Avenue. There has been talk about a road in Tonner Canyon. That would be a very expensive road to build. That would be a conversation that I would like to see between the County of San Bernardino, the County of Orange and the County of Los Angeles. I would like to see hiking trails from Chino Hills to Brea and from Brea to Diamond Bar. I spoke with Claire Schlotterbeck of Hills For Everyone. There is an area in Tonner Canyon that is part of what they are trying to protect and which they would like to acquire to help with the wildlife corridor they are committed to getting. That is a nice trail through Carbon Canyon. I want to see if it is possible to keep most of it open. If there is going to be a developer other than the City of Industry, then we need to keep the minimum residential density. We have to balance it out. We are serious about no more than 467 units. My belief is they should all be north of Grand Avenue so that area by the lake going into Tonner Canyon is kept as natural as possible.”
Marquez returned to the subject of the City of Industry’s unreliability.
“We have been trying to get from them what they are going to do for the last two years,” he said. “Before they were talking about a reservoir. From what they are saying now, it still could be a reservoir, but that is only partially true.” Marquez lamented, “The only person on their end who has been straight with me is Frank Hill, but he has a lot of baggage.”
Industry retained Hill, a former state assemblyman and state senator from Whittier, to represent the city with regard to a number of issues, including the overhaul of its public utility division and in conjunction with the Tres Hermanos Ranch proposal. Hill is with the consulting firm Cordoba Corporation. Hill has long had a close relationship with the City of Industry, and in particular the Tres Hermanos Ranch, predating his time with Cordoba. While he was a legislator, he log-rolled legislation that removed requirements that the city develop affordable housing as part of a trade off in which the Industry Redevelopment Agency granted the Pomona Unified School District clearance to construct Diamond Ranch High School on a tract within Tres Hermanos Ranch. Hill served in the California State Assembly and California State Senate from 1982 until 1994. In 1994, Hill was convicted of taking a $2,500 bribe during an undercover FBI sting in exchange for his agreement to assist with legislation. He spent four years in prison.
Marquez says he is in an unenviable situation, having to rely upon Hill as the most credible and forthcoming representative of the City of Industry. “Do I believe everything he says?” Marquez asked “No.” The contradictions emanating from Industry are perplexing, he said. “People are believing what they [Industry officials] are saying,” Marquez said. “That is because they have a propaganda machine, and are engaging in very intense PR [public relations]. Publicly, they are saying the land on Tres Hermanos Ranch will be preserved for open space, public uses, and public facilities. At the same time, their city attorney has said ‘We are going to have 10,000 homes built on Tres Hermannos.’ The City of Industry is also on record in the San Gabriel Valley Tribune that it is going to put 10,000 houses on Tres Hermanos Ranch. That’s doubletalk, plain and simple. They are trying to lead people to believe they will do something everyone will accept in Tres Hermanos. First, they had someone who was going to spend $100 million for it and now they end up getting it for $41.6 million themselves. I was there when it happened and I was left scratching my head. I don’t know how it happened. There is a lot of misinformation. I want to keep my community abreast of what is going on as far as Tres Hermanos Ranch is concerned. We are going to need to reach out to our citizen and keep them informed. They are misinformed as far as the City of Industry goes if they are trusting them as to what they said they are going to do.”
Repeated efforts to obtain input from Industry City Manager Paul Phillips and Industry Mayor Mark Radecki were unsuccessful.
Industry officials in the past have said that city officials in other cities who are answerable to tens of thousands of residents do not have an understanding or appreciation of the situation in the City of Industry, which has just over 200 residents and is committed to industrial expansion. They maintain their city’s imperative with Tres Hermanos Ranch is to secure it for the creation of utilities, in particular those for the production of power and the availability of water, which are industrial necessities.
By Mark Gutglueck