By Gail Fry and Mark Gutglueck
With the neutralization of their common adversary, it is perhaps too early to tell whether the City of Chino Hills and the City of Industry will again come to loggerheads with the City of Industry over the fate of the most significant expanse of open space at the southwest corner of San Bernardino County.
The City of Industry has had on-again, off-again possession and control of and developmental designs on 2,445-acre Los Hermanos Ranch, which straddles Chino Hills and Diamond Bar at the Los Angeles County/San Bernardino County boundary, for 42 years. During that time, proposals for the development of that property to varying levels of intensity have been discussed. Throughout that span, nonetheless, the property, long the rustic playground of oil baron Tom Scott, former Los Angeles Times Publisher Harry Chandler and the heirs of California pioneer John Rowland, has remained undeveloped. In the meantime, Chino Hills has transformed from a largely agricultural and rustic unincorporated pocket at San Bernardino County’s extreme southwest corner into an incorporated city in which the population has doubled and then tripled, continuing to escalate until it now stands at ten times the population it was when, in 1978, the City of Industry paid $12.1 million ($30.6 million in 2019 dollars) for the land, and later transferred ownership of the property to the city’s redevelopment agency, known officially as the Industry Urban Development Agency.
Indications over the years were that the property would be utilized to host a reservoir or reservoirs which would have water holding capacity equivalent to the fifth largest body of water in Southern California. As decades past and those plans failed to reach fruition, a segment of the growing population in Chino Hills had come to assume that the property was subjected to some order of open space protection, despite the surrounding contradictory indications that aggressive land development was the watchword in Chino Hills, in which one high end residential subdivision constructed after another transformed the community into the most affluent city in San Bernardino County.
In 2011, legislation closed out all redevelopment agencies statewide, and ownership of the 2,445 acres transferred to the so-called successor agency to the Industry Urban Development Agency.
A handful of real estate development concerns including GH America Inc. and South Coast Communities of Irvine expressed interest in acquiring the 2,445 acres at Tres Hermanos Ranch for the purpose of developing it both residentially and commercially, offering $100 million for it. In August 2017, the City of Industry, which had substantial representation on the boards of both the successor agency to the Industry Urban Development Agency and the oversight board to the successor agency to the Industry Urban Development Agency, boldly took action to acquire the property. After the city tendered a $41.65 million offer on the property, in very short order the oversight board, at its August 24, 2017 meeting, directed the successor agency to sell the property to Industry for the aforementioned $41.65 million. That action was accompanied by an indication that the ranch would be in large measure converted into a solar power generating field utilizing photovoltaic panels to generate 450 megawatts of electricity while leaving some of the property dedicated as “open space” for public use. In nearly equally short order, the cities of Chino Hills and Diamond Bar raised objections with the California Department of Finance. After the California Department of Finance allowed the processing of the sale to proceed, Chino Hills and Diamond Bar lodged a series of legal actions in 2017 and 2018, all of which sought to thwart Industry’s plans to lease the property for use as a large solar facility. In the face of those legal challenges, the City of Industry moved forward with its arrangement with La Jolla-based Gabriel Valley Water & Power, headed by William Barkett, to lease the ranch property to the company for $1 per year, extend to the company a 65-year option on continuing the lease of the property and an exclusive right to develop a solar farm at the ranch, and provide Barkett with loans and other funding for feasibility studies and preparations relating to the solar project, what was essentially an assurance of public financing of the company’s efforts in the initial stages of the project’s development. In exchange, Gabriel Valley Water & Power committed, once the 450-megawatt solar plant was functioning at capacity, to make an annual payment of $4 million to the city for the use of the property along with the sale of the energy to be produced there to the city and City of Industry-based businesses at bargain basement rates.
In defiance of normal standards of public disclosure that attend the operation of governmental entities, the City of Industry provided virtually no information about the proposed project beyond a rudimentary description of its parameters, while essentially bankrolling Gabriel Valley Water & Power in the earliest stages of the project preparation. Ultimately, that lack of accountability redounded to the City of Industry’s detriment, as Barkett and Gabriel Valley Water & Power burned through roughly $14 million in carrying out preliminary planning on the project and spent another $6 million in legal fees and other nondescript expenses by December 2017 without producing anything tangible in terms of physical assets on the ranch grounds nor anything other than conceptual plans and projections as to generating capability. The city satisfied Gabriel Valley Water & Power’s billing up to that point for that work and those expenses, but began questioning whether the company was working in good faith toward the goals outlined in the development agreement.
Meanwhile, information surfaced that Barkett was using the money his company was obtaining from the City of Industry to defray expenses on other business activities he was engaged in that had nothing at all to do with the solar power project.
When Barkett and Gabriel Valley Water & Power next submitted invoices for services relating to the solar farm proposal exceeding $1.5 million but was not convincingly responsive with regard to the justification for that billing, the city council balked at making those payments. In January 2018, the city council took up discussion of firing all three Industry staff members most closely identified with championing the solar project – then-City Manager Paul Philips, then-City Clerk William Morrow and Anthony Bouza, an attorney the city was employing with regard to the solar farm’s development and legal issues, moving by the end of January to sack Morrow and Bouza, and thereafter summoned up the requisite votes by the end of February to hand Philips his walking papers.
Having spent $53.75 million over the years in securing the property, then squandering another $20 million in its thoroughly unproductive relationship with Gabriel Valley Water & Power, and with its legal bills mounting in having to fend off the lawsuits brought by Chino Hills and Diamond Bar, the City of Industry in 2018 entered into quiet negotiations with the latter two entities.
In February 2019, then-Chino Hills Mayor Cynthia Moran announced that an agreement had been reached by which the City of Industry, at least for the time being, abandoned its plans to use the ranch as a massive solar farm, and that the cities of Industry, Diamond Bar and Chino Hills would partner in “protecting” Tres Hermanos ranch while “recognizing that this beautiful natural property in the middle of our urban area is a valuable environmental asset.” Under the terms of that settlement, the City of Industry became a full voting member of the Tres Hermanos Conservation Authority, a joint powers agency formed in January 1999 by the cities of Diamond Bar and Chino Hills. The authority’s board was increased from four to seven members, with the City of Industry allotted three board positions, Diamond Bar two members, and Chino Hills two members. The City of Industry also made a commitment to sell Tres Hermanos Ranch to the Tres Hermanos Conservation Authority with deed restrictions that limit future use to open space, public use, and preservation. The precise selling price of the property was not specified. Mark Radecki, who was then Industry’s mayor, stated that “Open space brings a greater benefit to our region” and that the City of Industry saw value in “the wildlife” living upon the ranch grounds, and that he was enthusiastic about “what our communities can accomplish together to protect the special environment that has been preserved.”
According to the settlement, the City of Industry was to absorb 90 percent of the purchase price in the sale of the land to the conservation authority. Chino Hills and Diamond Bar were to cover 10 percent of the sale price prorated according to the acreage within their boundaries. With 1,750 acres of Tres Hermanos Ranch in Chino Hills, and 695 acres in Diamond Bar, Chino Hills was to pay Industry $2,959,967 and Diamond Bar was to pony up $1,205,033 to Industry. For its part, the City of Industry was to write down $37,485,000 of the $41,650,000 value of the property.
It is not clear, however, if the transfer of title on the property was ever made from the City of Industry to the Tres Hermanos Conservation Authority. There was a report that escrow on the sale had closed on February 11, 2019, but the Sentinel was unable to find any reference to the deeding of the property to the Tres Hermanos Conservation Authority at the San Bernardino County Hall of Records. At press time, it was unclear as to whether the deeding of property over to the Tres Hermanos Conservation Authority had been recorded in Los Angeles County, or whether, perhaps, the legal action by San Gabriel Valley Water & Power taken around the time of the sale against the City of Industry, Diamond Bar and Chino Hills prevented the transfer of the property.
Gabriel Valley Water & Power, which had not yet completely given up on the concept of the solar power project, filed a lawsuit against Industry, Diamond Bar and Chino Hills, which originated as a writ of mandate filed on February 8, 2019. The suit alleged breach of contract, tortious interference and that the three cities violated the Brown Act by working out the terms of the sale of Tres Hermanos Ranch to the Tres Hermanos Conservation Authority behind closed doors. At central issue were three simultaneously-held public meetings in February 2019 during which the three cities’ councils took reciprocal action that granted the City of Industry status as a member of the Tres Hermanos Conservation Authority.
Those meetings were coordinated in advance, and the action taken at them was preordained, San Gabriel Valley Water & Power maintained. Gabriel Valley Water & Power asserted those actions were outright violations of the Brown Act, California’s open-meeting law which requires that governmental decision-making bodies not meet in secret to discuss any public issues or take action on such matters outside the scrutiny of the public. The coordinated public meetings at which the three city councils signed off on admitting the City of Industry into the Tres Hermanos Conservation Authority and then agreed to the sale of the Tres Hermanos Ranch property to the authority was an obvious effort to hide that the three cities had entered into illegal secret deliberations relating to a public issue, San Gabriel Valley Water & Power alleged.
San Gabriel Valley Water & Power’s suit was a dramatic and ironic reversal, since in 2017, both Diamond Bar and Chino Hills accused Industry of violating the Brown Act when it had negotiated and then officially ratified during a closed session the lease agreement with San Gabriel Valley Water & Power. In this way, both Chino Hills and Diamond Bar stood accused of conspiring with the City of Industry to do exactly what Chino Hills and Diamond Bar had less than two years previously identified as illegal activity.
The waters around the entire set of sordid arrangements was muddied further when Barkett, a longtime major Democratic Party donor, prevailed upon California Controller Betty Yee, a Democrat, to have her staff carry out an audit of the City of Industry’s finances. A group, Concerned Citizens of the City of Industry, formed, which was represented as a spontaneous manifestation of interest over public issues in the city, which has a population of just 204 residents. Concerned Citizens of the City of Industry, represented by attorney David Gilmore, filed a lawsuit seeking that a receiver be appointed to oversee the city’s operations. Subsequently, it was revealed that Gilmore had previously represented Barkett on a number of legal issues.
The City of Industry hit back, filing suit against San Gabriel Valley Water & Power and Barkett and the company’s lobbyist, former California Assemblyman and State Senator Frank C. Hill III, asserting the solar project was a ruse to kipe $20 million, which entailed fraudulent billings.
With the lawsuits from both side yet pending, on August 12, 2020, investigators with the Los Angeles County District Attorney’s Office made a series of early morning services of search warrants at the homes and offices of a multitude of individuals associated with the San Gabriel Valley Water & Power solar project, including Barkett, lobbyist Frank Hill and former Industry City Manager Paul Philips in Los Angeles, La Jolla, Cerritos and Whittier, as well as at two locations associated with the Cordoba Corporation, a consulting firm in which Hill is a principal and which at one time had been retained by the City of Industry to oversee San Gabriel Valley Water & Power’s progress on the solar project.
The following day, August 13, San Gabriel Valley Water and Power’s attorney, Peter Sunukjian filed a request for dismissal of the lawsuit originally filed on February 8, 2019 by San Gabriel Valley Water & Power against the City of Industry, Diamond Bar and Chino Hills.
“By dropping its lawsuit, San Gabriel Valley Water & Power has essentially admitted that its allegations were without any merit. They wanted to undo the cities’ collective commitment to preserve Tres Hermanos and they failed,” said City of Industry Mayor Cory Moss. Moss continued, “Like San Gabriel Valley Water & Power’s proposed solar farm, their lawsuit was a sham and we prevailed.”
The Sentinel’s efforts to reach City of Industry City Manager Troy Helling to determine what further developmental designs, if any, the City of Industry has with regard to Tres Hermanos Ranch was unsuccessful.
“After false allegations from the San Gabriel Valley Water & Power, and a legal battle that has been costly to all three cities, we are happy to see them drop their lawsuit,” said Diamond Bar Mayor Steve Tye. “This is a win that was long overdue.”
Chino Hills Mayor Art Bennett said, “This important victory safeguards this significant expanse of pristine property for the people and wildlife of this region. Our three cities will continue to work together as members of the Tres Hermanos Conservation Authority to preserve and protect Tres Hermanos Ranch for future generations.”
Barkett did not field a phone call placed to his La Jolla office by the Sentinel.
By Gail Fry and Mark Gutglueck