By Mark Gutglueck
Alarm is in a neck-and-neck competition with suspicion over the City of Industry’s move to purchase from its now defunct redevelopment agency the 2,450-acre Tres Hermanos Ranch, which straddles the borders separating Los Angeles, Orange and San Bernardino counties.
The sprawling property within and abutting Tonner Canyon consists 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. The ranch was purchased by the City of Industry’s Redevelopment Agency for $12.1 million in 1978 from the heirs of the three magnates – capitalist brothers – who acquired the ranch and gave it its name – 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.
The purchase was unusual if not entirely unheard of, as the property was not in or even contiguous with the City of Industry.
Industry’s redevelopment agency’s acquisition came six years after the Pomona Valley Municipal Water District floated the concept of using a portion of the property for a water storage and treatment system in 1972. That talk went so far as the compiling of a feasibility study for the “Tonner Canyon Water Project.” The feasibility study was retired to a shelf and was never actuated. Industry’s investment was based on other water-related operations, including making it the destination for treated sewage water generated by the Los Angeles County Sanitation Authority, the further treatment of that water on the site and its blending with other available water sources for sale to industrial users or local municipalities for irrigation or landscaping purposes.
In 2000, Industry officials began to publicly discuss creating a network of reservoirs totaling 275,000 acre-feet on the property, which would have been equal in size to the seventh largest water storage facility in all of Southern California. Some of those reservoirs would have been on Tres Hermanos Ranch and some would have gone onto adjoining land then owned by the Boy Scouts of America, the 2,500-acre Firestone Boy Scout Reservation. Signaling it was serious about the concept, Industry, through its redevelopment agency, purchased the Firestone Boy Scout Reservation for $16.5 million in 2001.
Those plans, however, ran head on into howls of protest from – coupled with legal action by – environmentalists as well as the City of Brea, which demanded that exhaustive environmental studies on the reservoir proposal be carried out before any applications were made. The courts did not require the filing of those reports, ruling that they would not be necessary until a formal application for approval of such a project was filed. Nevertheless, the resistance halted Industry’s stampede toward undertaking the reservoir project.
In the meantime, Industry officials were content to allow the property to abide as rustic, indeed idyllic, open space within the larger context of encroaching civilization and the ever more intensive residential, commercial and industrial land uses of the region. For decades, Industry permitted ranchers to graze their cattle there. Among those ranchers was former City of Industry Mayor John Ferrero, whose herd populated the pastureland and rolling hills, adding to its picturesque charm.
In 2011, the California Legislature passed AB X1 26 and AB X1 27, which shuttered all of the state’s redevelopment agencies, and called for the rerouting of redevelopment money to law enforcement and education efforts. A coalition of cities fought the law, but the state Supreme Court upheld the legislation. Thus all of the state’s 482 incorporated cities and all 58 of its counties were put in the position of not only ending their redevelopment programs within the confines of their jurisdictional limits, but divesting themselves of the assets held by those agencies. A protocol for doing so was established under the law, which entailed the creation of a successor agency to each redevelopment agency which would discharge any yet outstanding financial obligations that agency had and disposing of, subject to the approval of the California Department of Finance, those assets. The disposal of those assets was not immediate by any means, as liquidating everything the redevelopment agencies possessed in a forced fire sale would have resulted in properties up and down the state being sold off far below their market or intrinsic value. Many cities, Industry included, have yet to see at least some of their former redevelopment agencies’ assets liquidated.
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.
That purchase came roughly a year after GH America Inc. and its partner, South Coast Communities of Irvine, tendered a $101 million offer to take Tres Hermanos Ranch off of Industry’s successor agency’s hands.
Since that time, or maybe even before then, the City of Industry has looked like it is not above engaging in a bit of profiteering. Exactly what is going on is not clear, but it appears that the City of Industry wants to make a purchase of the property from its redevelopment successor agency and then flip it to GH America Inc./South Coast Communities, Ed Roski of Majestic Realty, or perhaps another deep-pocketed buyer. A multitude of issue flow from this circumstance, not the least of which is that there is, at a minimum, a major institutional conflict of interest at play. The successor to Industry’s redevelopment agency consists of Industry’s mayor Mark D. Radecki, and the city’s four councilmen – Cory C. Moss, Roy Haber III, Newell W. Ruggles and Abraham N. Cruz. A counterweight, a slight one, consists of the state oversight board to the successor agency, which counts among its members its chairman Santos Kreimann, the chief deputy assessor for Los Angeles County, and Michael Gregoryk, vice president of Mt. San Antonio College in Walnut.
Industry has a history of being riddled with political corruption of a sort so embedded into the community there is little prospect of countermanding it. A 12.064 square mile city, Industry has a mere 219 residents. 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. Part of the formula for carrying this off included the city employing a woman as the city’s finance director who routinely would show up for work at 11 a.m., go to lunch at noon and then return to work at 1 p.m., and then go home at 1:15 p.m. In return for the cushy assignment, she would provide no oversight of the contracts going to Perez’s family businesses, rubber stamping everything. Perez proved every bit as slippery as Ferrero, and he was never indicted or criminally charged. After he left the city and revelations about his depredations emerged, the city in May 2015 filed a lawsuit against him, his four sons and entities related to them, alleging “public corruption and personal profiteering” that cost the city millions of dollars. Perez had seen what was coming well in advance, however, and he backed a slate of three challengers in the municipal election in the month following the filing of the lawsuit. A total of 97 votes were cast in June 2015 election and when the tallying was done, all three of his hand-picked candidates were chosen.
Thirteen months prior to that, GH America Inc./South Coast Communities had made a $101 million offer to the successor of the redevelopment agency for Tres Hermanos Ranch, and the city seemed well on the way toward accepting that proposal. Following the June 2015 city election, with Perez’s team now in political ascendancy, the city halted all progression toward that sale and came up with its own purchase proposal.
Industry’s $41 million bid was rejected as too low by the state’s oversight board. Undaunted, it has now come up with $59 million more, and is offering to purchase the property for $100 million. City officials have given less than a clear description of exactly what they will do with the land once they have it, saying only that the city will “explore all options” while offering vague commitments, in city manager Paul Philips’ vernacular, to the effect that “the land will be preserved for open space, public uses, and public facilities.”
One indication was that city officials believe they can sell the property to a development company for upwards of $150 million or, by packaging it with the 3,300 acres that includes the Firestone Boy Scout Camp and its adjoining land, unload it all for somewhere in the neighborhood of $250 million. No development interest would be willing to make the purchase, however, without an assurance up front that the entities the new owner would need to deal with to get entitlements to build will be amenable to an aggressive development plan. This is problematic in that little more than 1,000 homes could be constructed on that portion of the property in Los Angeles and San Bernardino counties under current Diamond Bar and Chino Hills municipal zoning allowances. The relevant zoning on that portion of the property in Orange County, which lies within the City of Brea’s sphere of interest, is less clear, although densities of the magnitude necessary to justify a purchase in the price range Industry officials are contemplating are not likely.
A growing concern is that Industry has already hooked up with a so-called zerk, that is, an entity capable of delivering the requisite political grease to Diamond Bar, Chino Hills and Brea officials to get the land use approvals needed to make a $250 million sale possible.
Industry has retained former Whittier state Assemblyman and state Senator Frank C. Hill III, 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.
Already under preparation, the Sentinel has learned, is a plan to provide elected officials in Diamond Bar, Chino Hills and Brea with the political cover they need to justify massive general plan and zoning changes to allow the construction of upwards of 15,000 homes in and around Tonner Canyon. Part of the development proposal will entail the construction of an eight lane highway to be touted as a way to alleviate rush-hour gridlock that exists on the area’s freeways and thoroughfares. This is to be coupled with hefty political donations to elected officials, some of whom have ambition for higher office. Hill is to orchestrate the delivery of this largesse, which is to be provided legally in the form of political action committee donations ostensibly unconnected with the City of Industry or the development companies interested in Tres Hermanos Ranch.
Industry officials dismiss objections to the city having retained Hill, saying such reservations are prissy and misplaced. Among Industry officials, Hill has been publicly praised as someone “who gets things done.”
Chino Hills Mayor Ray Marquez told the Sentinel the current goings-on with regard to Tres Hermanos Ranch have caught his attention.
“If the City of Industry is willing to pay $100 million for that property, they have some purpose in mind,” Marquez said. “I don’t know what their intention is because they won’t tell me, and that scares me.” He said any development involving Tres Hermanos Ranch would have a profound impact on Los Angeles, Orange and San Bernardino counties along with Diamond Bar, Brea and Chino Hills, not to mention the City of Industry, if the latter ends up as the purchaser. “I do care about the region as a whole, but my main concern is Chino Hills,” Marquez said. He said he had been led to believe that the City of Industry would not be eligible to purchase the land unless it intended to put the property to use toward some public purpose such as a solar farm or reservoirs. That there was talk of “an agreement behind the scenes” for the land, or a portion of it, being spun off to developers was alarming, he said, all the more so since the intensity of development being contemplated would be incompatible with the standards on that portion of the property within Chino Hills. “Fifteen thousand homes is something we do not want in our community,” Marquez said. “Under our current zoning codes, there could be, as it is, 600 homes built there. If they were to put in some parks, they could get up to 385 more homes, but that would be it. We would not permit more than 1,000 homes total.”
If there is some move afoot to develop Tres Hermanos Ranch, Marquez said, the City of Chino Hills is not engaged in it. “We have had no dialogue with the City of Industry, or anyone from the City of Industry, Mr. [Frank] Hill or whoever,” Marquez said. “That includes me or any other member of the city council, the city manager and our director of development. No developer has spoken with anyone representing the city. Nobody from anywhere has spoken to us about any proposed development. If they are talking to anyone in the city, I have no idea who that would be.” In fact, the mayor said, the exact opposite applies. “We have been trying to hold the City of Industry accountable,” Marquez said. “I have been trying to get a meeting with the City of Industry city manager for almost six months. I have a meeting scheduled next week with the [Industry] city manager to find out what the city’s intention is so we are not surprised if there is a development proposal relating to Tres Hermanos.”
Marquez said, “My guard is up – completely up.”
Former Chino Hills Councilwoman Rossana Mitchell, who remains involved in a number of public issues in the city, said, “The sentiment of the Chino Hills community is that there be no development in the Tres Hermanos area. The City Council of Chino Hills needs to stand by its residents and not sell us out.”