In an extraordinary turn of events that was both unanticipated and unprecedented, officials with the cities of Chino Hills and Diamond Bar have persuaded their counterparts with the City of Industry to give up their aggressive development designs on 2,445-acre Tres Hermanos Ranch.
The immediate upshot of the settlement worked out between the three municipalities puts to rest six lawsuits Chino Hills and Diamond Bar had launched against the City of Industry in 2017 and 2018.
The Tres Hermanos property, long the rustic playground of oil baron Tom Scott, former Los Angeles Times Publisher Harry Chandler and the heirs of California pioneer John Rowland, was twice purchased by the City of Industry in the course of 40 years, each time with the intention of utilizing the acquisition to host extensive utility facilities that would complement the intensive industrial uses within the City of Industry. In 1978, the City of Industry paid $12.1 million ($30.6 million in 2019 dollars) for the land, and later transferred ownership of the property to the city’s redevelopment agency, known officially as the Industry Urban Development Agency. Indications over the years were that the property would be utilized to host a reservoir or reservoirs which would have water holding capacity equivalent to the fifth largest body of water in Southern California.
In 2011, legislation closed out all redevelopment agencies statewide, and ownership of the 2,445 acres transferred to the so-called successor agency to the redevelopment agency.
A handful of real estate development concerns including GH America Inc. and South Coast Communities of Irvine expressed interest in acquiring the 2,445 acres at Tres Hermanos Ranch for the purpose of developing it both residentially and commercially, offering $100 million for it. In August 2017, the City of Industry, which had substantial representation on the boards of both the successor agency to the Industry Urban Development Agency and the oversight board to the successor agency to the Industry Urban Development Agency, boldly took action to acquire the property. After the city tendered a $41.65 million offer on the property, in very short order the oversight board, at its August 24, 2017 meeting, directed the successor agency to sell the property to Industry for the aforementioned $41.65 million. That action was accompanied by an indication that the ranch would be in large measure converted into a solar power generating field utilizing photovoltaic panels to generate 450 megawatts of electricity while leaving some of the property dedicated as “open space” for public use. In nearly equally short order, the cities of Chino Hills and Diamond Bar raised objections with the California Department of Finance. After the California Department of Finance allowed the processing of the sale to proceed, Chino Hills and Diamond Bar lodged a series of legal actions in 2017 and 2018, all of which sought to thwart Industry’s plans to lease the property for use as a large solar facility. In the face of those legal challenges, the City of Industry moved forward with its arrangement with La Jolla-based San Gabriel Valley Water and Power, headed by William Barkett, to lease the ranch property to the company for $1 per year, extend to the company a 65-year option on continuing the lease of the property and an exclusive right to develop a solar farm at the ranch, and provide Barkett with loans and other funding for feasibility studies and preparations relating to the solar project, what was essentially a commitment of public financing of the company’s efforts in the initial stages of the project’s development. In exchange, San Gabriel Valley Water and Power committed, once the solar plant was functioning at capacity, to make an annual payment of $4 million to the city for the use of the property along with the sale of the energy to be produced there to the city and City of Industry-based businesses at bargain basement rates.
In defiance of normal standards of public disclosure that attend the operation of governmental entities, the City of Industry provided virtually no information about the proposed project beyond a rudimentary description of its parameters, while essentially bankrolling the San Gabriel Valley Water and Power in the earliest stages of the project preparation. Ultimately, that lack of accountability redounded to the City of Industry’s detriment, as Barkett and San Gabriel Valley Water and Power burned through roughly $14 million in carrying out preliminary planning on the project and spent another $6 million in legal fees and other nondescript expenses by December 2017 without producing anything tangible in terms of physical assets on the ranch grounds nor anything other conceptual plans and projections as to generating capability. The city satisfied San Gabriel Valley Water and Power’s billing up to that point for that work and those expenses, but began questioning whether the company was working in good faith toward the goals outlined in their development agreement. When Barkett and San Gabriel Water and Power next submitted invoices for services relating to the solar farm proposal exceeding $1.5 million but was not convincingly responsive with regard to the justification for that billing, the city council balked at making those payments. In January 2018, the city council took up discussion of firing all three Industry staff members most closely identified with championing the solar project – then-City Manager Paul Philips, then-City Clerk William Morrow and Anthony Bouza, an attorney the city was employing with regard to the solar farm’s development and legal issues, moving by the end of January to sack Morrow and Bouza, and thereafter summoned up the requisite votes by the end of February to hand Philips his walking papers.
Having spent $53.75 million over the years in securing the property, then squandering another $20 million in its thoroughly unproductive relationship with San Gabriel Valley Water and Power, and with its legal bills mounting in having to fend off the lawsuits brought by Chino Hills and Diamond Bar, the City of Industry last year entered into quiet negotiations with the latter two entities.
On Tuesday February 5, Chino Hills Mayor Cynthia Moran announced, “Months of negotiations have led to a new partnership among our three cities that will benefit the entire region. I applaud the City of Industry, and their leadership, for taking a new direction and recognizing that this beautiful natural property in the middle of our urban area is a valuable environmental asset that should be protected.”
Under the terms of the settlement, the City of Industry is to become a full voting member of the Tres Hermanos Conservation Authority, a joint powers agency formed in January 1999 by the cities of Diamond Bar and Chino Hills. The authority’s board will increase from four to seven members, with the City of Industry allotted three board positions, Diamond Bar two members, and Chino Hills two members. The City of Industry will sell Tres Hermanos Ranch to the Tres Hermanos Conservation Authority with deed restrictions that limit future use to open space, public use, and preservation.
“Being a regional resource is at the core of what the City of Industry is all about, like the businesses located in our city, open space also brings a greater benefit to our region,” said City of Industry Mayor Mark Radecki. “With Tres Hermanos Ranch, the value is in what the land means to the people of this region, to the wildlife that use it as a corridor, and in what our communities can accomplish together to protect the special environment that has been preserved.”
According to the settlement, the City of Industry will absorb 90 percent of that purchase price in the sale of the land to the conservation authority. Chino Hills and Diamond Bar will cover 10 percent of the sale price prorated according to the acreage within their boundaries. With 1,750 acres of Tres Hermanos Ranch in Chino Hills, and 695 acres in Diamond Bar, Chino Hills will pay Industry $2,959,967 and Diamond Bar will pay Industry $1,205,033.
“This is an incredible opportunity that truly reflects the best interest of our community and residents,” said Diamond Bar Mayor Carol Herrera. “We now have a seat at the table for Tres Hermanos and a voice to ensure it remains a valuable open space resource in our cities and region for decades to come.”
“The Tres Hermanos Conservation Authority is a public body with posted agendas and opportunities for public participation,” said Troy Helling, Industry’s city manager. “The interests of all three cities and our communities will be represented as discussions occur in the coming years about how best to conserve this important resource.”
Konradt Bartlam, Chino Hills’ city manager, told the Sentinel, “The settlement agreement has been approved by all three cities” and “It’s as tight as we can make it,” but said there are yet actions that must be completed to put everything in place. “There are a variety of conditions to the settlement agreement,” he said. “One is that we will not finally dismiss our lawsuits until San Gabriel Valley Water and Power are no longer at issue.”
According to Bartlam, the agreement is to last into perpetuity and will not sunset. He said, however, that the agreement does not absolutely ward off some form of development taking place on at least a portion of the property. “There are provisions for any future use to be approved by the joint powers authority board and the underlying jurisdiction,” he said, but added, “The deed restriction limiting the property to open space, preservation and public use will not be removed.”
Asked if a future conservation authority board acting in conjunction with majorities of all three cities city councils could act to essentially abrogate the principles of open space and preservation to thereby urbanize the property, Bartlam said, “I believe it will be impossible for that scenario to occur.”
Bartlam said the term “protect” in the agreement “was inserted by the oversight board as a deed restriction when they approved the sale to the city” and that the condition has survived into the current agreement involving the three cities.
Asked how the term “open space” is to be defined, Bartlam said that trails would qualify as open space. He said that a reservoir would “perhaps” be considered open space. “Keep in mind that there is a reservoir on the property now,” he said. As for windmills, Bartlam said “I would not consider windmills as open space, but they could be considered a public use depending on who owns/operates them and for what purpose.” Bartlam said that solar panels disguised as trees or painted as giant flowers might also be considered to be a public use.
With regard to what guarantee existed that Chino Hills’ definition of open space will match the City of Industry’s definition of open space, Bartlam said, “Ultimately it will be the decision of the joint powers authority board and the underlying city council. Obviously any serious disagreement would likely be adjudicated by a court.”
With regard to the term “public use” as is used in the agreement, Bartlam said that simply because the public has access to something or gets to use it, it does “not necessarily” qualify as a public use. A park, Bartlam said, would certainly qualify as a public use, and he said a swimming pool and tennis courts “perhaps” might meet the public use specification. As to whether an amusement park or shopping mall would fall within the rubric of a public use, Bartlam said, “Not in my opinion.” Bartlam said that cottages for the homeless, duplexes for the homeless or apartments for the homeless “perhaps” might meet the definition of a public use. As to high-rise apartments or even mega-high-rise apartments being considered a public use, Bartlam said “It depends on who owns/operates them and for what occupants.”
Bartlam said any emerging dispute between Chino Hills and the City of Industry over the definition of open space would not be grounds for abrogating the settlement.
As to how many of the 2,445 acres were to be preserved and in what form, Bartlam said “The joint powers authority board will have all rights as a property owner, with the deed restrictions and underlying city jurisdiction dictating what that might be.”
Bartlam was asked if he was confident that the City of Industry and its officials could be trusted, given the intensity of the dispute Chino Hills had with the City of Industry that resulted in the filing of three of the six lawsuits against Industry relating to Tres Hermanos Ranch. “I trust no one,” he said. “I have told them that trust is earned, not given. They still need to prove themselves.” He said that the intense misgivings he had a year ago with regard to the City of Industry and its intent toward Tres Hermanos Ranch “still may be” justified, “but in this deal we are partners. Perhaps they are reforming themselves. I will say this: Troy Helling, their new city manager, is a genuine guy, not like their past city managers.”
-Mark Gutglueck