Ontario Rethinking Efficacy Of Suing LA

(December 9)  Ontario has declared a temporary legal truce with Los Angeles over its effort to wrest back ownership and control of Ontario International Airport.
On June 3 Ontario filed a lawsuit against Los Angeles claiming the larger city has been purposefully mismanaging the airport. The lawsuit seeks the return of the airport to Ontario’s possession.
In August, Ontario overcame a motion by Los Angeles to have the suit dismissed, but has made little progress legally since that point.
With the prospect of years and perhaps decades of protracted and expensive litigation over the issue, with no guarantee that it will prevail, Ontario has apparently reached the conclusion that working out a solution outside the legal forum may be the better approach.
On December 5, Riverside County Superior Court Judge Gloria Connor Trask consented to allow both parties to put further legal action on hold at least until January 31 while they seek a resolution. Los Angeles, represented by attorney Steven S. Rosenthal and Ontario, represented by the law firm Sheppard Mullen Richter and Hampton, indicated their legal teams will take a hiatus while officials seek to hammer out a solution between themselves.
The development reflects more of a change on Ontario’s part than on that of Los Angeles. Three days after the suit was filed, then-Los Angeles Mayor Antonio Villaraigosa sent a letter dated June 6 to Ontario Mayor Paul Leon offering to reopen negotiations over the transfer of ownership and management of Ontario Airport from Los Angeles to Ontario.
In that letter, Villaraigosa stated, “I stand ready to resume negotiations between our cities upon withdrawal of the city of Ontario’s lawsuit against the city of Los Angeles.”
Villaraigosa, whose term as mayor ended less than a month later, held out hope that the airport ownership and management differences separating the two cities could be ironed out expeditiously and perhaps before he left office. “I have always believed, and continue to believe, that if we work together in good faith, we can achieve such a transfer,” Villaraigosa wrote “I continue to support regionalization of air traffic, with the long-term growth of Ontario International Airport as a viable alternative to Los Angeles International Airport (LAX). While these are difficult times for medium and small airports across the nation, I agree that focused marketing of Ontario International Airport can and should help grow Ontario International Airport over the long-term.”
Villaraigosa said he and Los Angles were taken aback by the lawsuit.
“With all of the above in mind, I was quite perplexed that the city of Ontario would file a claim and subsequent lawsuit,” Villaraigosa said. “Given the urgency you and other stakeholders have expressed, it would be more productive to continue our negotiations with the shared goal of identifying a mutually acceptable way to accomplish the transition. Both sides should sit down again and hammer out a mutually agreeable arrangement.”
Ontario, which maintained that Villaraigosa’s letter had not been received until June 12, told Villaraigosa in a letter from Mayor Paul Leon  “a legitimate settlement meeting cannot be subject to an unreasonable condition precedent,” rejecting  Villaragoisa’s call for Ontario to drop the lawsuit. “That is not a reasonable demand,” Leon wrote. “Ontario filed the lawsuit after all other avenues of relief were exhausted.  Having been forced to file the case, it is not going to withdraw it as a prerequisite to a settlement meeting, especially given that the current Los Angeles mayoral administration will be transitioned out of existence in a little more than two weeks. With your administration’s professed desire to seek a negotiated resolution before you leave office, it should withdraw the demand that the lawsuit be dismissed prior to any such discussions.”
While Ontario officials had expressed their belief that Villaraigosa’s successor, Eric Garcetti, would be far more amenable to having Los Angeles let the airport go back to Ontario, they were chastened to learn that Garcetti was made even more upset by the filing of the lawsuit than his predecessor. In October, Ontario City Councilman Alan Wapner, who has taken the lead among Ontario officials with regard to Ontario’s assertion of what they consider the city’s rightful control of Ontario Airport, publicly expressed himself as being frustrated with Eric Garcetti and his lack of focus on Ontario Airport and his seeming unwillingness to dialogue with Ontario with regard to the airport’s future.
Last week, however, there was indication that Wapner and other Ontario officials have engaged in some level of introspection, perhaps concluding that it is not reasonable to expect Los Angeles to be carry on blithely while Ontario is suing it.
Ontario and Los Angeles have not always been at loggerheads over the airport.
In 1967, when Ontario Airport had a gravel parking lot and was servicing fewer than 200,000 passengers per year, Ontario and Los Angeles entered into a joint powers agreement to allow Los Angeles to use its clout with airlines to increase flights into and out of Ontario. Under Los Angeles’ guidance, the airport grew, more airlines began flying out of the facility and improvements were made to its runways and terminals. In 1985, after all of the conditions set down in the 1967 joint powers agreement had been met, Ontario deeded the airport to Los Angeles for no consideration.
In 2007, the airport achieved its high mark in terms of passenger traffic, when 7.2 million passengers enplaned there. But since that time, passenger traffic through Ontario Airport has diminished to 3.9 million per year and Ontario officials maintain that Los Angeles World Airports (LAWA), the corporate entity that Los Angeles utilizes to run Los Angeles International, Van Nuys Airport and Ontario Airport, has stifled Ontario International in a deliberate effort to benefit Los Angeles International, where improvements have been made and passenger traffic has continued to rise for the past seven years. In its now-four-year-long campaign to have Los Angeles deed the airport back to Ontario, Ontario officials have publicly insisted that LA should relinquish the airport for no consideration because the airport is considered a public benefit property which has no sale value. Privately, however, Ontario has offered Los Angeles $246 million for the airport. Simultaneously, Los Angeles has sought potential private and public buyers for the aerodrome at reported prices ranging from $225 million to $650 million. Last year Los Angeles revealed the existence of Ontario’s $246 million offer, embarrassing Ontario officials with an exposé of the discrepancy between their public and private statements. Last year, Ontario, with the county of San Bernardino, formed the Ontario International Airport Authority, an entity intended to take over ownership and operation of the airport once Los Angeles relinquishes it.
Los Angeles officials attribute the decline in passenger traffic through Ontario to the recession that has persisted since 2008 as well as widespread changes in the airline industry in which air carriers have reduced flights to outlying airports or non-centralized hubs. They say the airlines have proven resistant to LAWA’s earnest efforts to lure the airlines back to Ontario.  The terms of the 1967 agreement remain in place and Los Angeles maintains it has consistently lived up to that agreement.
In January, Los Angeles offered to sell the airport to Ontario for $475 million. In April, Ontario rejected that offer.
In his letter to Villaraigosa, Leon emphasized that Ontario believed Los Angeles was overpricing the facility, saying that “Ontario would be very interested in sitting down with the current administration to discuss a potential resolution” but only if the Los Angeles “administration is willing to consider terms materially less dramatic to Ontario than its prior demand of a $475 million payment for the return of Ontario International Airport.”

In Search For Budget Fix, Upland To Consider Privatizing H2O Department

(December 11)  An option cash-strapped Upland may be gravitating toward in its effort to stave off a potential deficit in the upcoming fiscal years consists of what has been termed the “privatization” of its municipal water and sewer divisions.
In October, Upland City Manager Stephen Dunn said his city was on the verge of bankruptcy and after having engaged in a series of fiscal gymnastics to balance the current 2013-14 budget, the city will require at least $3.5 million in additional revenue annually to continue to provide city residents and businesses with the same level of service the city is currently providing.
As of last month, Dunn said, the city’s general fund is hard-stretched to cover Upland’s bare operating expenses. Funding for street repairs, equipment and vehicle maintenance, post-employment benefits, equipment replacement, economic development and solutions to the city’s growing homeless problem has been entirely depleted.
The general fund accounts for most of the city’s services. It funds 73 activities related to the basic function of municipal government.  Dunn said.
In October, Dunn said that the only alternative to drastic service cutbacks consisted of revenue enhancement, most specifically a tax that would need to be approved by a majority of the city’s voters. To emphasize his point and support his case, Dunn referenced a 2012 auditor’s opinion from the certified public accounting firm Mayer Hoffman and McCann and Standard and Poor’s intended downgrading of the city’s credit rating. Mayer Hoffman and McCann said there are serious questions with regard to the city’s solvency to the point that in a short while “it will be unable to continue as a going concern.” According to Standard and Poor’s, the city, which has already been downgraded from an AA credit rating to an A+, is in danger of seeing its credit rating eroding even further. A municipality’s credit rating directly impacts the interest rate it must pay when borrowing money.
To balance the city’s current $39 million budget, Dunn said Upland’s entire municipal operation is borrowing heavily from rapidly evaporating reserves, while relying on income from two of the city’s enterprise funds which remain in the black, its water and sewer service funds.
Last month, the city formed a budget balancing task force consisting of ten members – two appointed by each member of the city council. That committee is examining a panoply of means by which the city is to come to terms with its fiscal crisis. Already, even before the committee has begun an examination of the alternatives or moved toward any recommendations, the second-guessing has begun. Many Upland residents sitting on the sidelines have begun to weigh in on what path the city should take out of the financial abyss.
While one group of citizens is calling for the city to embark on cost cutting efforts including streamlining and making more efficient its processes and functions and eliminating services and redundant or nonproductive personnel, others are advocating that the city generate revenue to sustain the current level of service. The two most likely methods of revenue generation are raising taxes and selling off city assets.
What appears to be the city’s biggest potential cash cow is its water and sewer division.
Dunn, in passing, in October mentioned “privatizing” the water and sewer division.  No specifics were given at that time. Indeed, councilman Brendan Brandt vociferously signaled his reluctance to even consider such an option without first being provided with more in-depth information. It was that daunting task – considering this depth of information – that in large part led to the formation of the budget balancing task force committee, which is charged with making those examinations and evaluations and then providing a recommendation to the council after having done so.
Privatization could take many forms.
At one extreme, the entire system, lock, stock, and barrel – that is wells, treatment facilities, pipe, pump stations and meters – could be sold to the highest bidder. Once the water and the means of delivering it were in the hands of a private entity, there would be no local governance on the rates customers would pay for the precious commodity of water or the wastewater service they receive.
There is also the possibility of semi-privatization.  A model for this would be what occurred in Rialto.
Historically, roughly half of the city of Rialto’s residents received their water from the municipal water system. The other half  were customers of Western Water, a private company.
As early as 2008, former Rialto City Manager Henry Garcia opened up a dialogue with New Jersey-based American Water about that company taking over the city’s water utility. Garcia never closed that deal, though after having laid the basis for it, his successors, interim city manager Mark Kling and then Mike Story, progressed toward what evolved into a semi-privatization deal.  Story, aggressively examining and addressing the city’s infrastructure and service needs, concluding as had Garcia, that the city did not have the financial wherewithal to undertake needed water system upgrades on its own. He recommitted to making a deal with American Water and in March 2012, the city council approved by a 4-1 vote entering into the 30-year lease of the municipal water system with the company.  As part of the arrangement, the city agreed to a 114.8 percent increase in water and wastewater rates by 2016, such that the average water bill of Rialto households utilizing 17,000 gallons per month was to jump from $26.27 per month to $64.14 monthly and increase the wastewater treatment fee from $25.97 to $61.46 as of January 1, 2016.
That move immediately provoked a response in the form of a petition drive by members of the Utility Workers of America, the union representing city water division employees, to force a city-wide referendum on the takeover. In less than seven weeks, over 6,400 signatures were gathered to meet the threshold of 3,800 valid signatures of registered voters needed to force the matter to a vote. The petitions created an opportunity for city residents to reject the takeover by means of a mail vote to be conducted by the city. If more than 50 percent of the ratepayers returned the mail-in ballots rejecting the takeover, it would not go into effect.
But in a crafty piece of sleight-of-hand, Rialto officials short-circuited that challenge when they quietly took action to find another company to manage Rialto’s water operations. With two swipes of a pen, the city of Rialto in July 2012 substituted American Water out of the picture and entered into a contract with San Francisco-based Table Rock Capitol to take on the role of water service operator.
Table Rock, doing business as Rialto Water Services LP, supplanted American Water Works Co. Inc. as the city’s water and wastewater service provider, and then farmed out the operation to entities expert at water and sewer operations. Eventually, it worked out a deal with Veolia North American to run the city’s wastewater plant.
Under the terms of a 1,600-page concession agreement signed by all parties, the city kept title to the facilities but leased them to Table Rock for a period of 30 years, Rialto was given roughly $35 million, Table Rock committed to making $41 million in water and wastewater system improvements, Veolia was given a subcontract to run the sewer system and all of the city’s water and wastewater department employees were moved off the public payroll and hired by, variously, Table Rock or Veolia. In this way, further city pension costs for those employees were reduced, though the city is still committed to making good on what they are due for the years they did work for Rialto as municipal employees.
Other privatization permutations are possible. In the city of Needles, for example, the city created its own public utilities authority and sold the water and sewer divisions to that entity. In that way, the city can convert revenue into the water division – which is by law supposed to be maintained in a sequestered account to be used strictly for maintaining the system, making improvements to it, or obtaining water – and put it into its general fund to support other city operations without having to pay it back.
And while all of these approaches may have an upside for the city, i.e., City Hall, the municipal operation, there is a potential downside to the residents of the city.
In this way, referring to the water division as a “cash cow” becomes something of a misnomer. Perhaps more appropriate would be “sacrificial lamb” or “golden egg-laying goose.”
Upland residents need not look far to see the result of private ownership – corporate control – of a municipality’s water supply. Westward across the city limits and county line in Claremont, Golden State Water Company is charging residential users there four times what Upland citizens pay for their water.
If the water/wastewater system is sold or leased to a private entity, Dunn said, there is a reasonable expectation that would result in increased rates for residents.
“If they were to capitalize the water system, they will have to borrow money,” Dunn said. “If they have to borrow money, they will have to make payments to service that debt and the bondholders are going to make sure you have enough revenue to at least cover the debt plus all overhead.  Debt service ratio, also known as the debt service coverage, is the ratio of cash available for debt servicing to interest, principal and lease payments. A debt service ratio of at least 1.25 is standard in the lending industry. Thus, ratepayers are likely to see rate increases of at least 25 percent in the initial stages of the takeover of a public utility by a private company. Future increases could be expected as well.
The selling of a city-controlled asset such as a utility presents the city with at least a temporary cash flow advantage, Dunn said.  “Our utilities are accounted for as an enterprise,” Dunn said, which requires that all of the funds pertaining to it be kept in a sequestered account. “We can’t move that money into the general fund without a basis for doing so. By leasing the system and converting that asset into the possession of a private company, the company pays the city for the privilege of running the system and that money goes into the general fund.”
Dunn told the Sentinel this week that no decision to sell Upland’s water division has been made. Nor has the budget task force committee yet considered it. Nevertheless, he said, privatization of the city’s water and sewer divisions is “third” on the list of options he said he wants the committee to consider when it begins its deliberations.
“We are not committed to this,” he said. ‘We haven’t got close to that. It is one of the top three things I would consider. If the committee recommends it, it still has to be approved by the city council. Just because the committee recommends it, it is not necessarily going to be accepted by the council. The only reason this is out there is because when it comes to raising revenue, we can talk about taxes  but getting residents to approve it is going to be difficult. So, at the same time we are looking at what assets we have. When we use the term privatization we are not necessarily talking about selling the  water division, but more like changing from public sector to private sector employees.”
The idea was sparked, Dunn said, at least partially by the circumstance in Rialto.
“When we heard of the Rialto deal, I talked to the company about it,” he said. “I wanted to know what it entailed. After they [Table Rock] did the Rialto deal, they were obviously reaching out to other cities. They reached out to us. They threw out $30 million plus a potential $4 million per year. That was not firm and they said they would  have to study it to come up with a hard set of numbers. It is hard to say right now how they would make it result in system capitalization, which would exist in the form of them borrowing against the system using the rates paid by customers as a form of debt service. Obviously that would require an increase in rates.”
“We haven’t pulled the trigger on this,” Dunn said. “It is definitely an option, just as it was an option in 2001.”
Dunn’s reference was to a fiscal crisis that faced the city a dozen years ago that resulted in the consideration of a host of cost-cutting and revenue-enhancing moves. “What the city would  consider is a transfer of the water asset and its accompanying sewer service,” Dunn said. “It is an option available and I am testing to see if it is up for consideration with the committee and the council, as I don’t want to waste my time if I don’t have support for it from the council. If they don’t even want to consider it, I don’t want to spend effort on this if they have no interest in dealing with it. I could see it happening if everything lines up and there is support. I could live with a lease arrangement, personally, but I am not advocating selling our water department outright, by any means.”
Dunn said the public should not blur the distinction between the city’s water department and the local purveyors of water, which include the San Antonio Water Company, Western Water, an entity known as the Water Facility Authority, which is a consortium of five water agencies, and Metropolitan Water. The city owns 68 percent of the San Antonio Water Company and owns a few wells independently. A privatization move would not involve sales of any of those entities, he said.
One option available to the city with regard to its water division does not involve privatization, Dunn said. The city could, he said, simply up its water rates. Dunn said the city council can essentially act on its own to raise water rates, subject only to the restriction of Proposition 218, which provides customers/rate payers with the opportunity to protest the rate increase. If more than 50 percent of those subject to the rate increases file written protests, the rate increase cannot be effectuated, under Proposition 218. But the Proposition 218 restriction, Dunn said, is a mere formality, since without a highly organized rate increase opposition campaign, the prospect that a majority of residents will lodge protests is virtually nonexistent he said.
Councilman Gino Filippi this week told the Sentinel, “No one to my knowledge is advocating selling of any water/sewer assets. I am interested in the discussion of possible options regarding contracting out of water/sewer operations.”

Answers Filed To SEC’s Fraud Complaint Against Victorville

(December 10)  LOS ANGELES—Slightly less than a month after a U.S. District Court judge rejected motions by the city of Victorville, its airport authority and assistant city manager Keith Metzler to dismiss the Securities and Exchange Commission’s complaint against them, lawyers for those entities on December 9 filed an answer to the entirety of the SEC complaint, denying any wrongdoing on the defendants’ part in connection with a 2008 municipal bond offering.
On April 29, the Securities and Exchange Commission (SEC) alleged that fraud was committed by the city, the airport authority and Metzler, who fills the dual roles of assistant city manager and executive director of the airport authority, when misrepresentations were made to the purchasers of bonds, the proceeds from which were intended to assist in the development of Southern California Logistics Airport. Those misstatements were made, the SEC alleges, specifically with regard to bonds issued in April 2008.
The airport authority was formed by the city of Victorville to facilitate the conversion of the former George Air Force Base, which was shuttered by the Department of Defense in 1992, into a civilian airport. The Southern California Logistics Airport Authority, which has as its board of directors all five members of the Victorville City Council, issued bonds which were sold to investors to generate revenue to be used in making the base’s civilian use conversion.
Also charged in the SEC’s April complaint were  Kinsell, Newcomb & DeDios Inc., the underwriter for the bond offerings; that company’s owner, Jeffrey Kinsell; and Kinsell, Newcomb and DeDios Inc.’s investment banker Janees Williams.
Lawyers for  Kinsell, Newcomb & DeDios and Jeffrey Kinsell and Williams filed answers to the SEC complaint in June.
Coordinating their filings on August 30, the law firm of Arent Fox, on behalf of the  city and the airport authority,  and the law firm of  Orrick, Herrington & Sutcliffe, on behalf of Metzler, sought to have the complaint dismissed before  filing their answers.
The gist of that argument was that even if the hangar valuations were overstated, they were not material misrepresentations by which the financing of the bonds in terms of the city’s and airport authority’s ability to continue to make payments to the bondholders was threatened. At no time did the actual debt service ratio between the bonds and the assets securing them fall below the SEC’s own standard of 1.25, Arent Fox maintains, exonerating the city and the airport authority.
Orrick, Herrington & Sutcliffe asserted that Metzler provided the correct hangar valuation information, twice, to KND before the bond issuance.
U.S. District Judge John A. Kronstadt on November 14 ruled that the combined defenses’ overall rationale for dismissing the case against the three defendants was “unpersuasive,” and that the bulk of the matter should go forward. The judge did, however, make a determination that the SEC has not yet presented any convincing evidence to show the defendants improperly gained from their alleged misconduct, which is the basis of the SEC’s prayer for disgorgement, a form of relief seeking restitution of ill-gotten profits from security law violators.
Fundamental to the SEC complaint is the allegation that the defendants made misrepresentations with regard to the value of four airport hangars that Victorville referenced in its official statement for an April 2008 bond offering. The value of all four hangars was listed at $65 million. The county assessor later valued the hangars at $27.7 million. The SEC alleges that the authority used the inflated estimated values to mislead bond investors.
Arent Fox maintains that even if the hangar valuations were overstated, they were not material misrepresentations by which the financing of the bonds in terms of the city’s and airport authority’s ability to continue to make payments to the bondholders was threatened.
The SEC complaint consists of nine claims for relief and one prayer for disgorgement. The authority is named in the first two claims for relief. Kinsell, Newcomb and DeDios [KND] is named in the third, fourth and eighth claims for relief. KND and Jeffrey Kinsell are named in the fifth and sixth claims for relief. Victorville, Jeffrey Kinsell, Williams and Metzler are named in the seventh claim for relief.  Jeffrey Kinsell and Williams are named in the ninth claim for relief.
In the prayer for disgorgement, all the parties are named.
“Given that the SEC has engaged in a three year investigation into this matter, its decision to present no allegations support[ing] of the request for disgorgement is significant and telling,” Kronstadt found in dismissing that portion of the case against Victorville, the authority and Metzler.
The SEC has now appealed Kronstadt’s dismissal of the prayer for disgorgement. On December 10, Terree Bowers of Arent Fox told the Sentinel that he intended to file a response to the SEC’s appeal “within the next two or three days.”
In its answer to the complaint, filed on December 9, Arent Fox lodges a first affirmative defense which maintains, “The complaint, and each of its causes of action, fails to state facts sufficient to constitute a cause of action.”
The city, the Southern California Logistics Airport Authority and Metzler are further demanding a jury trial.
In earlier filings with the court, Arent Fox maintained that the SEC complaint lacks materiality in that the city and the airport authority did not overvalue the hangars beyond a point that threatened the integrity of the investor’s bonds and that the SEC was delaying an examination of that issue. “[T]he SEC’s opposition attempts to shift the battleground, arguing that the court ‘need not’ consider it now, or that the basic arithmetic supporting it requires a ‘complicated calculus’ of ‘19 pages of complex math,’ as if to suggest that it is too hard to understand,” the defense brief filed this summer states. “Both of these premises are false. The court should—indeed, it must—decide whether the facts alleged by the SEC satisfy its burden to demonstrate materiality in the complaint. And it must consider the calculations, because that is the only way to determine whether the SEC’s allegations indeed state a claim. In short, the court is both legally and intellectually capable of determining whether the SEC’s complaint adequately alleges materiality. The determination is possible and proper at this stage in the case.”
The material misrepresentations which the SEC alleges are the linchpin of the case, defense attorneys maintain. Thus, the SEC’s inability to demonstrate material misrepresentations were made to the bond buyers undermines the entire case against the city and the authority, those attorneys argue.
According to the SEC’s complaint, by April 2008, the airport authority was forced to refinance part of the debt incurred to construct the hangars and other projects by issuing additional bonds. “The principal amount of the new bond issue was partly based on Metzler, Williams, and Kinsell using a $65 million valuation for the airplane hangars even though they knew the county assessor valued the hangars at less than half that amount,” according to Elaine C. Greenberg, chief of the SEC’s Municipal Securities and Public Pensions Unit. “The inflated figure allowed the airport authority to issue substantially more bonds and raise more money than it otherwise would have. It also meant that investors were given false information about the value of the security available to repay them.”
SEC investigators say that Jeffrey Kinsell, KND, and another of his companies misappropriated more than $2.7 million in bond proceeds that were supposed to be used to build airplane hangars for the airport authority.
Orrick, Herrington & Sutcliffe’s James Kramer told Kronstadt that responsibility for any misrepresentations with regard to the value of the assets securing the bonds fell to the bond underwriters. “Metzler provided the correct information to KND in March and April 2008,” Kramer said in presenting a timeline of the bond offering.
Kramer took issue with Metzler having been included in the case at all. According to Orrick, Herrington & Sutcliffe, “the SEC itself alleges that Mr.  Metzler provided the correct hangar valuation information, twice, to KND. In light of this admitted fact, the SEC’s theory of recklessness boils down to the notion that Mr. Metzler engaged in ‘an extreme departure from the standards of ordinary care’ by, in essence, not assuming that KND ignored the updated valuation and failed to pass it along to the [bond marketing] consultant and by not taking it upon himself to check KND’s, and the consultant’s, math. This is not a plausible theory of recklessness, and the SEC points to no case on such facts that says it is. The SEC now tries to distance itself from its own allegations by claiming that it is ‘meaningless’ that Mr. Metzler, on two separate occasions before the April 2008 bond issuance, provided accurate updated hangar values to KND.
According to the SEC, Metzler “did not provide this information to the consultant, which he knew needed that information to calculate the important tax increment.”

Chino, Lewis Homes & Lennar Split Costs On Construction Of Water Treatment Plant

(December 8)  The city of Chino, Lewis Operating Company and Lennar Homes have agreed in principle to share the cost of building a water treatment plant that will accommodate more than 14,000 new homes.
Lennar and Standard Pacific Homes are developing the College Park subdivision within the city of Chino, which upon completion will entail a total of 2,200 residential units in the College Park Specific Plan area. Thus far, 851 of those residential units have been completed and granted occupancy permits by the city. Lewis Operating Company, the successor to Lewis Homes, has an entitlement to build a total of 11,976 residential units within The Preserve Specific Plan area. Thus far, the city has granted occupancies to approximately 1,946 completed units in that subdivision, known as The Preserve.
At its November 5 meeting, the Chino City Council voted 4-0 to approve a memorandum of understanding with Lewis Operating Company and LS College Park LLC for the completion of a 3,500-gallon-per-minute  water treatment plant in Ontario.
While there were initial reports that the city would put up $2 million toward the cost of the water treatment facility, according to Jesus Plasencia, Chino’s associate engineer,  “The financial contribution by each party, including the city, has not been determined as of yet because the agreement terms are still being negotiated by the three parties.”
While the treatment facility will be located across the city limits in Ontario, it will be devoted entirely to serving properties within Chino and the city of Ontario is not participating in the project.
“Ontario is not a party to the 3-party agreement between the City of Chino, Lewis Operating Company, and LSCP (Lennar/Standard Pacific),” Plasencia said. “The proposed facility will provide water to customers within the city of Chino’s water service area, which includes but is not limited to The Preserve and College Park.  The City of Chino owns the approximately 13-acre property, which is located at the southeast corner of Schaefer and Campus Avenue in Ontario. This property was purchased for $572,592.”
The facility will be built in phases to match the demand for its treatment capability.
“The first phase of facilities on the property will have 3,500 gallons per minute (gpm) of treatment capacity,” Plasencia said. “The ultimate estimated treatment capacity at the property is currently planned to be 7,000 gpm. The ultimate build-out capacity of the Eastside Water Treatment Facility is intended to meet the water demand from both College Park and The Preserve.”
Plasencia added, “The ultimate build-out date and cost for the Eastside Water Treatment Facility are unknown at this time. However, the first phase of the facilities is tentatively scheduled to be operational by Summer/Fall 2015.”

Recent Rash Of Murders Pushes SB’s 2013 Homicide Count Near 2012 Mark

(December 11)  SAN BERNARDINO—2013 is in a dead heat with 2012 in the tally of homicides in the county seat.
On December 10, police were summoned by a 12:38 a.m. call from a man driving around looking at Christmas lights who spotted a man lying just beyond the paved section of Palm Avenue on the city’s north end north of Melvin Avenue. When officers arrived, they confirmed the man was dead. It was unclear whether the victim, s 21-year-old Hispanic whose name has not been released had expired on the scene or had been transported there.
The victim, who was pronounced dead on the scene, was the third homicide in a spate of homicides since Saturday, December 7, and the 45th of the year. He had sustained multiple gunshot wounds.
Two days previous, on Sunday December 8, Thomas Wayne Scholes, 57, a transient, was found stabbed to death in another part of the north side of San Bernardino.
Scholes, who was subsisting in homeless shantytowns that are hidden from open view less than a half-mile distant from where he was found, was lying on the ground in the cemented wash area near the 2200 block of West Donald Street when he was spotted by a passerby at 7:38 a.m. About six hours earlier, there had been a barking of dogs and nearby residents heard a car door slamming shut
Police have concluded that Scholes, who was knifed multiple times in the upper torso, was not stabbed at that location and was transported there.
On Saturday December 7 at around 10:31 p.m., police on patrol heard the gunshots that felled Kameron Brandon Patterson, 18, of San Bernardino. In attempting to determine where the gunshots had emanated from, they came across Patterson lying face down on the north side of the sidewalk at Evans and E Streets at about 10:35. He had been shot multiple times in the upper torso. He was transported immediately to St. Bernardine Medical Center but died shortly after physicians began attending to him.
San Bernardino’s 45 murders as of the close of the first 344 days of 2013 on December 10 were only two fewer than the 47 homicides recorded in San Bernardino during the 366 days of 2012.
Last year’s deadly mayhem continued right up to its final minutes.  A little more than an hour before midnight on December 31, Jason Kenneth Anderson of Victorville became the last and 47th homicide victim in the city of San Bernardino in 2012 when he was gunned down at 10:50 p.m. at 677 W 28th Street. The hail of bullets that felled Anderson injured three others.
The pace of killing in San Bernardino over the last two years represented a significant uptick from 2011, when 30 people in San Bernardino died at the hands of others.
The rash of murders over last weekend and Tuesday did not match the wave of carnage that took place in the final days of April and first week of May in 2012, when, between April 28 and May 7, a period of nine days, eight people were murdered in the city. In May 2012, 12 people were murdered in San Bernardino.
Despite the deadly pattern of violence this and last year, the murder counts were and are not on a pace equal to the city’s record high of 58 killings in 2005.

Bill Creates Off-Road, Military Compromise

(December 12)  A compromise incorporating the requests of off-road enthusiasts and the military’s need for expanded live-fire training facilities was incorporated into the final form of the National Defense Authorization Act of 2013, which was passed into law by Congress on Tuesday.
The final language of the act significantly downscales an earlier proposed expansion of the Twentynine Palms Marine Base and its Marine Corps Air Ground Combat Center, retaining much of Johnson Valley, which is home to the largest off-highway vehicle area in the United States, for recreational use.
The National Defense Authorization Act of 2013 preserves 99,870 acres of Johnson Valley as the Johnson Valley Off-Highway Vehicle Area. The deal will allow the Marines to expand the Twentynine Palms Marine Base into a portion of Johnson Valley and would end the threat of military expansion to the remaining off-road area.
The new Johnson Valley Off-Highway Vehicle Area is nearly as large as the Imperial Sand Dunes at Glamis and is explicitly designated for off-highway vehicle use under the new law. Included in this area is the entire “Hammers” area, both the front and back side. Spooners, Aftershock, Sunbonnet, the Riffle Monument, and the Cal200 Memorial (The Rockpile) are also located within the preserved off-road area. The majority of the Fry Mountains and full access to Soggy Dry Lake Bed are also guaranteed for off-highway vehicle use, as well as access to Emerson Dry Lake Bed.
This deal is the culmination of a years-long campaign to save the Hammers from base expansion. The famed “King of the Hammers” Race, which draws over 30,000 people to Johnson Valley every year, will continue under the new bill. The Bureau of Land Management estimates that Johnson Valley currently generates more than $71 million annually for local economies.
The Marines would be allowed to use a portion of the nearly 100,000 acre Johnson Valley Off-Highway Vehicle Recreation Area for a maximum of 60 days per year. It would be open to the off-road community for recreational use during the remaining 305 days.
The Marine Corps released the following statement: “The expansion of 29 Palms is the best investment the Marine Corps has made to ensure combat success and the safe return home of our Marines, as it addresses the Marine Corps’ current training and readiness shortfalls. The Marine Corps will now be able to conduct fully integrated, live-fire exercises based on current training requirements, while still preserving safe public access for Off-Highway Vehicle recreation in Johnson Valley.”
A key player in driving the compromise was Rep. Paul Cook, R-Yucca Valley, who in addition to representing the area in Congress, was a former Marine colonel who was stationed at the Twentynine Palms base. He is now a member of the House Armed Services, Veterans’ Affairs, and Foreign Affairs Committees.
Cook told the Sentinel, “My biggest concern has always been public safety. This agreement ensures public safety, while also balancing the training needs of the Marine Corps with the rights of the off-road community. It preserves California’s most important off-road recreation area for future generations. After years in which off-roaders have lived in fear of the closure of Johnson Valley, this permanently ends the threat of base expansion into off-road areas.”
San Bernardino County Supervisor James Ramos, whose Third District includes a portion of the desert affected by the legislation, stated, “This compromise reached on the Johnson Valley OHV recreational area is a well-designed plan that will protect our residents, local economy, and our recreation community while allowing the military to maintain essential training operations. I applaud Congressman Cook for his leadership in the House of Representatives, Senator Dianne Feinstein for her support, and my fellow board colleagues for standing with them on this critical issue.”
San Bernardino County Supervisor Robert Lovingood, whose First District also contains land impacted by the National Defense Authorization Act, said, “This is a victory for everyone. The Marine Corps gets land for training while preserving off-roading areas and the economic impact of the King of the Hammers event.”
Dave Cole, one of the founders of King of the Hammers, responded to the deal by saying, “While I am happy that we will be able to continue racing King of the Hammers in Johnson Valley, I am truly thankful that we have preserved the ability of future generations to enjoy this amazing area.”
Robert Lombardo, the Mayor of Yucca Valley said, “Saving a large portion of Johnson Valley not only allows for recreation to continue, but it makes it safer for the residents who would have been located so close to the proposed USMC boundary. I am excited to have the positive economic impacts of the off-road community continue, while allowing the Marines to meet their training needs.”
Mayor Dan Mintz of Twentynine Palms commented, “I’m proud that the voices of our communities were heard by our representatives in Congress, and I’m thankful that the Marines listened. We look forward to continuing our positive relationship with the Marines, while still being able to recreate safely. Off-roading has been a huge economic benefit to our city, and I’m thrilled that this deal will allow it to continue.”
Fred Wiley, the President/CEO of the Off-Road Business Association (ORBA), also weighed in on the deal, “The off-highway motorized recreation community considers this ground breaking legislation a ‘win’ for both the OHV community and the US Marines. A 5-year effort by the California Motorized Recreation Council (CMRC) has demonstrated that it is possible to share land in order to accomplish military training goals and protect motorized recreation areas. If not for Congressman Cook’s leadership, this shared-use agreement would not have been possible. As a result, Johnson Valley will soon be designated by Congress as the ‘Johnson Valley Off-Highway Vehicle Recreation Area’ managed by the Department of Interior.”
The base expansion will reach to include 88,130 acres once used exclusively for civilian off-roading. The Marines had originally coveted 168,000 acres for use in simulated battle training that would allow a target to be set upon by three contingents originating at points beyond visual range. Under the act, the Marines will be allowed to utilize 56,000 acres of land located in the Johnson Valley Off-Highway Vehicle Recreation Area for up to two months out of the year, during which time the public will be excluded from that land.

Probation Officer Pepper-Sprays Student At Junior High School In Victorville

(December 11) VICTORVILLE—A San Bernardino County probation officer pepper-sprayed a 13-year-old junior high school student on December 9 while morning classes were ongoing.
The as-yet unidentified probation officer was on the campus at Hook Junior High on an unrelated matter when the school’s administrators and faculty requested assistance with a student who had become highly agitated.
The request was made of the probation officer because a school resource officer was not available.
The student, described as 5-foot-11 and 210 pounds, had been pulled out of class around 10 a.m. for an undisclosed disciplinary action. The student was not on probation or subject in any way to the probation office’s authority. After deciding to send the student home, school administrators phoned his grandmother, the student’s legal guardian, to inform her of the action being taken against her grandson and request she pick him up. She refused that request and did not answer subsequent calls made to her.
In the meantime, the situation involving the student escalated, according to school officials, involving the student punching a wall and hurling items. The sheriff’s department was summoned. Before deputies arrived, the probation officer was drawn into the matter and a confrontation with the youth ensued.
Fearing the student, who had grown confrontational, was about to become physically combative, the probation officer pepper-sprayed him. The student became enraged and verbally threatened the officer with violence, upon which he was pepper-sprayed once more.
Arriving sheriff’s deputies then handcuffed the youth and took him into custody at 10:44 a.m.  He was booked into juvenile hall on charges of felony resisting as well as obstructing and delaying a peace officer.

Chino To Issue $11M In Bonds To Pay For Infrastructure In Preserve Development

(December 10)  The city of Chino intends to issue $11 million worth of bonds next year to undertake infrastructure and utility improvements to facilitate further progress on Lewis Operating Corporation’s The Preserve project.
Lewis Operating Company, the successor to Lewis Homes, has an entitlement to build a total of 11,976 residential units within The Preserve Specific Plan area, which consists largely of property that was formerly a part of the Chino Agricultural Preserve. Thus far, the city of Chino has granted occupancies to approximately 1,946 completed units in that subdivision, known as The Preserve.
In anticipation of Lewis Operating Company accelerating toward its developmental goals, the Chino City Council on November 19 voted unanimously to form a sixth improvement area in a community facilities district the city formed in 2004 to assist Lewis in paying for the infrastructure and other improvements needed for residential construction to proceed. The community facilities district lies within the confines of  Kimball, Hellman, and Sultana avenues and Chino-Corona Road.
The council voted to establish a special tax area at the southwest corner of Hellman and Kimball avenues and south of Bickmore Avenue between Rincon Meadows Avenue and Mill Creek Road. The next order of business will be taken care of at a hearing scheduled for January 7, 2014 when the council will entertain issuing the $11 million in bonds to pay for the improvements. Those bonds will be debt serviced by a tax to be levied upon future homeowners within the improvement area.
The overarching district, known as Communities Facilities District 2003-3, has five previously established improvement areas. They have been utilized to issue bonds to defray the cost of constructing streets, a sewer system, curbs, gutters, a community center, a fire station, water and gas lines, street lights, landscaping, medians, parks, parkways and flood control facilities.
The city has agreed to reimburse Lewis $55,000 in out-of-pocket expenses the company bore in applying to form the new improvement area.

County Revamps Commercial Solar Power Project Development Code

(December 6)  San Bernardino County supervisors on December 3 approved an ordinance that provides restrictions on the placement and intensity of commercial solar energy generating plants and provides a yearly fee schedule to cover the county’s costs for providing services to the facilities.
The ordinance amends the county’s previous development code relating to solar energy projects. It’s first reading Tuesday will be followed up by another vote to give it final approval on December 17. It will go into effect 30 days thereafter, effectively ending a moratorium on solar projects that has been in place since June.
Much of the impetus for the development code change and the moratorium that preceded it came from a coalition of residents in the county’s rural desert communities, who are opposed to such facilities being sited in proximity to their homes. While many of them advocated solar plants being restricted to remote desert areas, environmentalists intent on the preservation of critical habitat for wildlife such as the desert tortoise have been resistant to the concept of locating large solar plants on pristine desert grounds.
The ordinance adopted this week does not resolve that paradox, but does put in place some measure of what both sides deem to be a layer of protection for existing communities and natural resources.
“This does not fix everything, but it’s a good step in the right direction,” said Third District Supervisor James Ramos. Ramos and his board colleague First District Supervisor Robert Lovingood represent San Bernardino County’s vast desert area.
“There were many solar projects that were in the wrong places at the wrong time,” Lovingood said. “Overall, I think we are taking a balanced approach that is needed.”
The revamped development code protects natural resources, rural residential areas and tourism, said Terri Rahhal, the county’s planning director.
The regulations being put in place will ensure that solar project developers gravitate toward using land zoned for commercial and industrial use that are removed from existing residential communities; that the projects have access to existing power transmission lines and that the projects do not result in erosion, dust generation or nighttime light pollution. The new standards introduce restrictions to prevent the projects from impinging on the scenic panoramas in and around Joshua Tree National Park and other wilderness areas or interfering with operations at the Army’s Fort Irwin military reservation or Marine Corps facilities in Twentynine Palms and Johnson and Wonder Valleys.
Solar project proponents will be required to demonstrate their projects are compatible with existing and planned land uses, and will not negatively affect sensitive resources, such as scenic views, habitat, agricultural land and air quality.
Solar plants and other commercial renewable energy facilities will be restricted to land that carries  resource conservation, agricultural, floodway, rural living, rural commercial, neighborhood commercial, general commercial, service commercial, highway commercial, community industrial, regional industrial and institutional zoning designations.
Under the section titled “Required Findings for Approval of a Commercial Solar Energy Facility,” the ordinance states, “(a) In order to approve a commercial solar energy generation facility, the planning commission shall, in addition to making the findings required under Section 85.06.040(a) of the San Bernardino County Development Code, determine that the location of the proposed commercial solar energy facility is appropriate in relation to the desirability and future development of communities, neighborhoods, and rural residential uses, and will not lead to loss of the scenic desert qualities that are key to maintaining a vibrant desert tourist economy. The planning commission shall consider:
 (1) the characteristics of the commercial solar energy facility development site and its physical and environmental setting, as well as the physical layout and design of the proposed development in relation to nearby communities, neighborhoods, and rural residential uses; and
 (2) the location of other commercial solar energy generation facilities that have been constructed, approved, or applied for in the vicinity, whether within a city or unincorporated territory, or on state or federal land. (c) The finding of fact shall include the following: (1) The proposed commercial solar energy generation facility is either (A) sufficiently separated from existing communities and existing/developing rural residential areas so as to avoid adverse effects, or (B) of a sufficiently small size, provided with adequate setbacks, designed to be lower profile than otherwise permitted, and sufficiently screened from public view so as to not adversely affect the desirability and future development of communities, neighborhoods, and rural residential use. (2) Proposed fencing, walls, landscaping, and other perimeter features of the proposed commercial solar energy generation facility will minimize the visual impact of the project so as to blend with and be subordinate to the environment and character of the area where the facility is to be located. (3) The siting and design of the proposed commercial solar energy generation facility will be either: (A) unobtrusive and not detract from the natural features, open space and visual qualities of the area as viewed from communities, rural residential uses, and major roadways and highways, or (B) located in such proximity to already disturbed lands, such as electrical substations, surface mining operations, landfills, wastewater treatment facilities, etc., that it will not further detract from the natural features, open space and visual qualities of the area as viewed from communities, rural residential uses, and major roadways and highways.
 (4) The siting and design of project site access and maintenance roads  have been incorporated in the visual analysis for the project and shall minimize visibility from public view points while providing needed access to the development site.
 (5) The proposed commercial solar energy generation facility will not adversely affect the feasibility of financing infrastructure development in areas planned for infrastructure development or will be located within an area not planned for future  infrastructure development (e.g., areas outside of water agency jurisdiction).
(6) The proposed commercial solar energy generation facility will not  adversely affect to a significant degree the availability of groundwater supplies for  existing communities and existing and developing rural residential areas.
 (7) The proposed commercial solar energy generation facility will minimize site grading, excavating, and filling activities by being located on land where the existing grade does not exceed an average of five (5) percent across the developed portion of the project site, and by utilizing construction methods that minimize ground disturbance.
 (8) The proposed commercial solar energy generation facility will be located in proximity to existing electrical infrastructure, such as transmission lines, utility corridors, and roads, so that: (A) minimal ground disturbance and above ground infrastructure will be required to connect to the existing transmission grid, considering the location of the project site and the location and capacity of the transmission grid, (B) new electrical generation tie lines will be co-located on existing power poles whenever possible, and (C) existing rights-of-way and designated utility corridors will be utilized to the extent practicable.
(9) The proposed commercial solar energy generation facility will be sited so as to avoid or minimize impacts to the habitat of special status species, including threatened, endangered, or rare species, critical habitat areas as designated by the U.S. Fish and Wildlife Service, important habitat/wildlife linkages or areas of connectivity designated by county, state or federal agencies, and areas of habitat conservation plans or natural community conservation plans that discourage or preclude development. (10) Adequate provision has been made to maintain and promote native vegetation and avoid the proliferation of invasive weeds during and following construction.
(11) The proposed commercial solar energy generation facility will be located so as to avoid or mitigate impacts to significant cultural and historic resources, as well as sacred landscapes. (12) The proposed commercial solar energy generation facility will be designed in a manner that does not impede flood flows, avoids substantial modification of natural water courses, and will not result in erosion or substantially affect area water quality.
(13) The proposed commercial solar energy generation facility will not be located within a floodway designated by the Federal Emergency Management Agency (FEMA), has been evaluated for flood hazard  impacts pursuant to Chapter 82.14 of the development code, and will not result in increased flood hazards to upstream or downstream properties.
 (14) All on-site solar panels, switches, inverters, transformers, and substations shall be located at least one foot above the base flood elevation as shown on the Flood Insurance Rate Maps.
(15) For development sites proposed on or adjacent to undeveloped alluvial fans, the commercial solar energy generation facility has been designed to avoid potential channel migration zones as demonstrated by a geomorphic assessment of the risk of existing channels migrating into the proposed development footprint, resulting in erosion impacts. (16) For proposed facilities located on prime agricultural soils or land designated by the California Farmland Mapping and Monitoring Program as prime farmland, unique farmland, or farmland of statewide importance, where use of the land for agricultural purposes is feasible, the proposed commercial solar energy generation facility will not substantially affect the agricultural viability of surrounding lands.
Contained in the ordinance is a noticing requirement that the developer advise any municipal advisory council, water agency and community services district where the project is proposed that the project is to be built. Noice must also be provided to all residents living within 1,000 feet of a proposed project’s external boundary.
The ordinance also establishes fees to be assessed annually, intended to mitigate the costs of providing public services to commercial solar energy generation facilities. Parcel sizes between zero and 4.99  acres will pay $580 per acre annually; those from five to 14.99 acres will pay $280 per acre annually; and those of 15 acres or greater will pay $157 per acre annually.
Solar project developers must obtain and maintain annually a special use permit that will entail subjecting their facilities to initial and annual code enforcement site inspections to ensure the projects are in full compliance with the ordinance.
The ordinance does not apply to rooftop solar installations. Developers can also get around the ordinance’s restrictions “There were many solar projects that were in the wrong places at the wrong time,” Lovingood said. “Overall, I think we are taking a balanced approach that is needed.” by locating their projects on state and federal land where the county does not have land-use jurisdiction. County land use services staff is developing a renewable energy element for the general plan that is to include a comprehensive map of contemplated energy development zones.  Upon completion, which is not anticipated until late 2014 or early 2015, that map will be incorporated into the ordinance.