More Than 3 Months After State Rejects Upland’s Fraudulent Grant Request, City Admits It Lost Out

At last acknowledging what many residents have known for over two months, Upland city officials have conceded without elaboration that the city will not be tapping into any of the State of California’s Proposition 68 largesse to improve Memorial Park.
Rather than simply reduce the scope of the $8.5 million grant that the city had asked for, the California Department of Parks and Recreation shut the City of Gracious Living out of the running from any grant money whatsoever.
City officials were unwilling to respond to requests for comment, a far cry from the verbal abuse the city’s former recreation services manager and other city officials heaped on city residents or members of the press for asking what undergirded the city’s confidence that the state would provide the full $8.5 million grant the city was seeking. Posing such questions, Upland Recreational Services Manager Doug Story insisted, was irresponsible, reckless, unethical and potentially libelous. He said the state would free the full $8.5 million for release to the city by the end of December 2019. Those who suggested otherwise were either lying or being unrealistic, he said.
The city’s application for the Proposition 68 grant was one hatched in desperation last year as part of an effort to head off mounting resident anger over city officials’ acquiescence in San Antonio Hospital’s move to carve away a 12 percent portion of Memorial Park for use as a parking lot. The hospital’s need had grown out of its failure to make adequate planning to accommodate the influx of patients and patient family members that ultimately accompanied the completion of the energetic effort to expand the hospital that began in 2011 and concluded in 2017, involving adding the $160 million four-story Vineyard Tower at 999 San Bernardino Road, increasing the number of beds at the institution from 271 to over 400, upping the number of stations in the hospital’s emergency room from 34 to 52, outfitting 12 more intensive care units, and constructing another $30 million, 60,000-square-foot structure at 1100 San Bernardino Road which included quarters for a satellite City of Hope oncology clinic. Provision for parking was not included in the application/plans approved by the City of Upland for any of these projects as required by law.
On March 26, 2018, with 72 hours notice from city staff, the city and the city council were presented with a proposal that had emanated from Story’s immediate boss, then-Development Services Director Jeff Zwack, along with then-City Attorney Jim Markman, then-City Manager Bill Manis, then-Assistant City Manager Jeannette Vagnozzi, and the city’s management consultant, Marty Thouvennell, the city’s one-time police chief who had served as interim city manager from July 2016 until January 1, 2018. The Zwack/Markman/Manis/Vagnozzi/Thouvennell proposal called for the city selling 4.631 acres of the southwestern portion of Memorial Park, which contains a baseball field that is actively used by the city’s youth sports leagues. The main campus of the hospital immediately adjoins the park, and the hospital wanted to convert the baseball diamond and some of the greenland around it to a parking lot to accommodate the hospital’s burgeoning clientele.
In compliance with the recommendation by Manis, Zwack and Markman, the city council voted 3-to-1 to approve a purchase and sale agreement between the hospital and the city, with San Antonio Hospital committing to paying $906,931.55 per acre, or a total of $4.2 million, to acquire the 4.631 acres. Mayor Debbie Stone and then-council members Gino Filippi and Carol Timm went along with making the sale. Councilwoman Janice Elliott opposed it. Then-Councilman Sid Robinson, who normally voted in lockstep with Stone, Filippi and Timm, was not present at the meeting.
Manis, Vagnozzi, Thouvennell Zwack, Markman and the three prevailing members of the council, sensitive to San Antonio Hospital’s status as the city’s major institution and largest employer, considered accommodating its needs to be paramount.
In approving the sale, the city council also authorized City Attorney James Markman to undertake a so-called validation proceeding intended to foreclose any procedural or future legal challenge to the sale. In its validation action filed with the court, the city invited anyone opposed to the sale to lodge a protest. A challenge to the validation had to be filed within 60 days. Once the court validated the sale, any future lawsuits contesting the sale would be barred. The calculation by those favoring the sale was that no one would go to the expense of hiring an attorney to make an answer to the validation petition.
The validation procedure was directed to the courtroom of Superior Court Judge David Cohn in San Bernardino. To the chagrin of city and hospital officials, Marjorie Mikels, an attorney living in the city, as well as the Inland Oversight Committee represented by Cory Briggs, an attorney based in both Upland and San Diego, filed answers to the validation action. Those responses took issue with the sale on multiple grounds, among which was that the city selling off a slice of the park – in particular the one sold by the council on March 26, 2018, which included the long extant and actively used baseball field – is tantamount to abandoning public property. Such abandonments, under state law, cannot be effectuated without a vote of the citizens residing in the jurisdiction that owns that property.
Faced with not one but two challenges to the sale he had not anticipated, City Attorney Markman sought to convince Judge Cohn that the city council, acting on its own authority, was within its rights to sell off city land. In response to the argument that a municipality’s abandonment of property it owned and was putting to beneficial public use had to be subjected to a vote, Markman asserted that selling the property did not constitute an abandonment.
Ultimately, some 14 months after the sale of the park property was approved by the city council, on May 29, 2019, Judge Cohn, after hearing the responses to the city’s filing, dismissed its petition for validation. Judge Cohn’s ruling cleared the way for anyone with standing – meaning essentially any city resident – to file a lawsuit challenging the sale.
Penultimately, hospital officials have resigned themselves to the necessity of subjecting the sale of the property to a citywide vote. It earlier appeared that balloting would take place in conjunction with the March 2020 California Primary Election. Now, however, it appears that the vote, if it is to take place at all, will not come until the November 2020 General Election.
Before 2018 had fully run, the fallout from the move to sell the city park property was settling hard. In June of that year, Zwack abruptly retired as the city’s development services director. In September, Manis resigned as city manager, effective November 1, 2018. Councilman Sid Robinson, whose status in Upland had largely been based upon his involvement in the city’s youth sports leagues, suddenly found his position as a member of the city council whose voting record was virtually indistinguishable from those of Mayor Stone and council members Filippi and Timm untenable, given Stone’s, Filippi’s and Timm’s support of eradicating one of the city’s baseball diamonds. He announced he would not seek election that November. When that election was held, Filippi and Timm, who had become the object of a large number of voters’ wrath in part due to their March 28 vote to sell off 12 percent of Memorial Park, were voted out of office, while Councilwoman Janice Elliott, who had opposed the parkland sale, emerged victorious in her effort to gain election in the city’s newly created Second District, as the city held its first by-district election.
Both Assistant City Manager Jeannette Vagnozzi and City Attorney Jim Markman, the other architect of the parkland sale, managed to survive the close of 2018. Indeed, at the last meeting in November 2018, just before the lame ducks Filippi, Timm and Robinson departed from their elective posts, with Timm participating by means of recommendation while she was in North Carolina visiting her parents over the Thanksgiving holiday, Vagnozzi was elevated to the position of city manager. Some six months into her tenure as city manager, however, Vagnozzi was forced out by the newly composed city council, a little more than two weeks before Judge Cohn’s ruling dismissing the validation action the city had filed to keep the sale of the park property from being challenged. At that point, Markman found himself under siege. Not only was his legal expertise and judgment subject to question, it was painfully obvious that his militating on behalf of the hospital in its effort to obtain the park property for a parking lot was out of step with a sizable cross section of the most civically-active residents of the city. In October, as the city council was making preparations to terminate him, he resigned as city attorney.
A month before Markman’s forced departure, San Antonio Hospital CEO and President Harris Koenig had been fired by the San Antonio Hospital Board of Directors. Koening had been named the president and CEO of San Antonio Hospital in June 2011 and, using financing that consisted in large measure of $125,000,000 in certificates of participation issued using the City of Upland’s bonding authority, immediately thereafter embarked on the earlier-described six-year-long series of planned expansion stages intended to transform San Antonio into a regional hospital. Among the board’s concerns that had brought about Koenig’s termination was the hospital’s continuing lack of profitability two years after the expansion had been completed in 2017.
Last summer, with the hospital’s parking lot no longer able to accommodate the number of people seeking care who check in to the hospital, either on an in-patient or out-patient basis, to say nothing of those accompanying or visiting the hospital’s patients, the new administration at Upland City Hall, led at that point by Rosemary Hoerning, who had been elevated to acting city manager to replace Vagnozzi, felt put upon to do something to aid the hospital, the city’s leading institution.
Story, had begun with the City of Upland in October 2015 as a development services specialist and was provided with a promotion to the position of Upland’s recreation manager commencing in October 2017. A condition of his promotion to that post by Thouvenell was that Story had to do the bidding of a number of city higher-ups. Thus, Story found himself, as the city’s recreational services manager, obliged to accommodate San Antonio Hospital and engaged in the paradoxical giveaway of a portion of the city’s premier recreational amenity – Memorial Park – and the compromising of the function of the municipal division Story had been promoted to lead. Story gamely sought to carry out the assignment he had been given, boldly seeking to obtain an infusion of state money to offset the reduction in parkland the city was sustaining in its effort to provide the hospital with property for parking and future expansion.
Story applied for the maximum amount of money the city could get under Proposition 68, which was passed by the state’s voters in 2018 and reallocated a portion of California’s $7.545 billion in general obligation bonds for expanding and enhancing parks around the state. In his application, Story put together an energetic park makeover plan to utilize the $8.5 million Upland was requesting under Proposition 68 to refurbish or replace Memorial Park’s playground equipment, add a water feature splash pad, an amphitheater and an artificial turf multi-sports competition field, augment the park with walking and exercise trails, a basketball court and an intensified outdoor nature conservancy with trees and plants hospitable toward bees, hummingbirds and the like. In this way, Story hoped, Upland’s citizenry would look beyond that accompanying the park enhancements would be the reduction of the 38.5 acre park by 4.631 acres.
The game plan was that the city’s park aficionados would be so enthusiastic about the improvements to the park the city would accrue that they would essentially ignore that 12 percent of it was being lopped off to create a parking lot. Some residents and members of the press expressed skepticism about Story’s confident pronouncement that the state would provide the full $8.5 million grant to Upland. When he was questioned and asked specifically how he could guarantee that the park grant money would be forthcoming, Story insisted that Upland had the money sewn up. When it was pointed out that the grant application process was a competitive one, and that the state would have the option of reducing the award in accordance with grant money availability and the strength of other applications, Story said that such a question was beneath the dignity of someone in the position of a municipal official, and he went so far as to suggest that the question itself was tantamount to accusing him of lying, which bordered on slander. Putting such a question into print, Story said, would cross the line into the province of libel, and would therefore be actionable.
Story’s reaction prompted inquiries into the grant application itself to be undertaken with the California Department of Parks and Recreation. Those inquiries prompted the state to take a serious look at the numbers provided by the city in its application. Upon review of the city’s submitted grant application, it was determined that some of the data forwarded to the state by the city as part of the application process had been falsified.
Two criteria are applied by the state in releasing Proposition 68 money. One test pertains to an applicant demonstrating that it has a “deficit” of parkland throughout its jurisdiction such that its park area is less than three acres per 1,000 people in the city overall. A second test relates not to the entire city but to the specific park for which a grant is being sought. That test uses a factor of determination in which the park is considered as providing recreational opportunities for a specific “service area” within the city, county or jurisdictional entity making the application. If those living within that service area can be demonstrated as having an average per-household annual income of less than $51,000, the state considers that park to be eligible for improvements a Proposition 68 grant could provide. An examination of both the grant application and city demographic data showed the city had fudged numbers in an effort to qualify for the grants. The Sentinel is informed that by the end of November, state officials had made a determination that the grant application should be rejected, and informed Story of such. Story checked out of Upland the first week of December, bound for the City of Beaumont, where he was to take on an assignment similar to the one he had in Upland, effective in January.
In the meantime, Upland municipal officials withheld from the public that the state had denied the city the grant. Councilman Bill Velto in December insisted the city was yet waiting for the grant money – all $8.5 million of it – to arrive. On January 2, Councilwoman Janice Elliot said it was yet the city’s official position that the Proposition 68 grant might come through.
Subsequent to the Sentinel’s January 3 publication of an article which relayed a report that the state had uncovered misrepresentations in the city’s grant application and that the application had as a consequence been rejected, Councilman Ricky Felix referred to the Sentinel as a purveyor of “fake news.”
Reached by the Sentinel today for a statement with regard to the state’s rejection of the city’s Proposition 68 grant application, Felix indicated it was a “bad time” for him to discuss the situation. “I’m with my family right now,” he said.
Mark Gutglueck


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