In a situation remarkably similar, and with multiple parallels, to the events that preceded the Colonies development debacle that cost San Bernardino County’s taxpayers $167 million, the board of supervisors on November 19 considered, but held off on, the sale of 1,252.21 acres of so-called surplus flood control property to a residential developer.
The 1,252.21 acres in question lie within what is now referred to as the Etiwanda Heights Neighborhood and Conservation Plan Area, contained within the current Rancho Cucamonga City Limits. The property, set amidst what under normal conditions is a dry alluvial creek, during fall, winter and spring rainstorms transforms into a raging river, was used historically by the San Bernardino County Flood Control District to manage stormwater runoff from the San Gabriel Mountains flowing south into both the Day Creek and Deer Creek streams. Over the past four decades, according to Noel Castillo, San Bernardino County’s chief flood control engineer and Terry Thompson, the director of San Bernardino County’s real estate services department, improvements made by the San Bernardino County Flood Control District, including the Day Creek and Deer Creek Debris Dam, spreading grounds, and channels, have rendered the property unnecessary for flood management and surplus to San Bernardino County Flood Control District needs.
Nearly 16 years ago, the county board of supervisors, as it was then composed, on February 24, 2009 declared a 1,200-acre portion of the property surplus, thereafter inviting proposals relating to the utilization of the property, preparatory toward the potential sale of the property. At that time, a portion of the flood control property fell within the Rancho Cucamonga City Limits and the majority of the property was situated on unincorporated county land within the City of Rancho Cucamonga’s sphere of influence.
The intent as enunciated by the county at that time was for the county to arrange an in-house purchase of the land from the San Bernardino County Flood Control District at market value as to be determined by an appraiser, a price estimated at somewhere between $50 million to $80 million. Thereafter, the county was, under the terms of a cooperative agreement with Rancho Cucamonga to jointly plan the development of the area. This represented some degree of complication, as the city prided itself on its relatively higher development standards to all, or most, of the surrounding jurisdictions, and ultimately, it was anticipated, all of the 1,200 acres would eventually be annexed into Rancho Cucamonga. Assuming the conflict in city vs. county standards would be resolved, the joint plan called for the issuance of a request for qualifications to developers willing to compete for an entitlement to build on one of two sub-areas within the 1,200 acres designated as “Area A” and “Area B.” The agreement specified that it would be the City of Rancho Cucamonga which would conduct the public hearings relating to the development proposals and select, i.e., recommend, what were to be deemed the two “best qualified” developers, in order of preference, to the county board of supervisors for the determination of which two development companies would be permitted to operate in each of the sub-areas. If the board rejected either or both of the city’s recommendations, the board would have the discretion to choose any developer, either from among those which had competed or those which had not submitted a proposal.
Several companies – including Rancho Alliance Investors, LLC, Foremost Communities, K & K Developers, Richland Communities, Brookfield Homes and Toll Brothers prepared presentations with regard to their vision of how the property was to be developed, including the balance of residential to commercial uses, and to what intensity, meaning density, with regard to the residential components.
Rancho Alliance Investors was composed of the Lewis Group of Companies/Lewis Homes, Diversified Pacific, Young Homes, and Shea Homes. The partnership between Jeff Burum, the founder and principal of Diversified Pacific and a co-managing office of the Colonies Partners, and the Lewis Group of Companies/Lewis Homes was noteworthy as Burum and the Lewis Family had been rivals within the context of development at the west end of the county for nearly a decade-and-a-half at that point.
The presentations of the development proposals were made during daytime hours at the Rancho Cucamonga’s city council meeting chambers.
While Rancho Alliance Partners, represented by David Lewis of Lewis Homes, made what was deemed by many monitoring the proposals to be a thoroughly impressive presentation, the entire process became mired in controversy as a multiplicity of complaints were registered with the San Bernardino County Grand Jury over what were alleged to be irregularities and improprieties in the competition, stemming in large measure from Burum’s past generosity with regard to filling the campaign coffers of politicians heading the county and city who were ultimately overseeing the developmental rights sweepstakes relating to the Rancho Cucamonga flood control property.
Amid the board of supervisors being pressured by the grand jury and community activists to terminate purchase agreement with the San Bernardino County Flood Control District and dissolve the cooperative agreement with the City of Rancho Cucamonga in favor of selling the property either in total or piecemeal though the county’s traditional auction procedure, members of the board of supervisors lost their enthusiasm for allowing the competition between Rancho Alliance Investors, LLC, Foremost Communities, K & K Developers, Richland Communities, Brookfield Homes and Toll Brothers to proceed to a conclusion..
Accordingly, the development of the 1,200 acres in accordance with the outlined disposition process never took place, and the development of the property being put on hold was ostensibly attributed to the then-ongoing economic downturn.
In 2017, the 1,200 acres became the focus of some interest when the City of Rancho Cucamonga began pushing what it had dubbed the North Eastern Sphere Annexation Project, which called for then 40.12-square mile city annexing somewhere between 4,085 acres and 4,115 acres – from 6.383 square miles to 6.43 square miles – at the top of its northeastern quadrant. Included in that acreage to be brought into the city pursuant to the North Eastern Sphere Annexation Project were the 1,200 acres of flood control property.
That plan proceeded apace and on November 9, 2020, the Etiwanda Heights Neighborhood and Conservation Plan Area, described as 4,085 acres including the roughly 1,200 acres of flood control property, was annexed into the City of Rancho Cucamonga.
The City of Rancho Cucamonga, determined to ascertain exactly what it had picked up, had survey work undertaken to refine the boundaries of the property. The total area of the flood control property was determined to be approximately 1,253 acres.
Slightly more than a month after Rancho Cucamonga had effectuated the annexation, on December 15, 2020, the San Bernardino County Board of Supervisors declared the property was no longer needed for flood control and was surplus land pursuant to Government Code section 54221(b)(1). Thereafter, the San Bernardino County Real Estate Services Department issued notices of availability. An entity, which the county has declined to identify, engaged in what Thompson characterized as “good faith” negotiations” over a period of more than two years. However, no deal was able to be completed,” he said, and the parties ceased negotiating.
In September 2023, the Sentinel is informed, the real estate services department began talks with developer James Previti and his representatives on behalf of his company, Frontier Enterprises. Those exclusive discussions, given clearance by San Bernardino County Chief Executive Officer Luther Snoke, ripened into an understanding that Previti’s company was qualified to take on the development of the property. Previti expressed interest, it is said, in the full 1,253 acres, while indicating that he was not prepared to undertake a comprehensive project at once. In response, on October 22, 2024 the board of supervisors officially reiterated its declaration that the 1,253 acres of by the San Bernardino County Flood Control District-owned property is not needed for flood control use, pursuant to County Policy 12-17, Water Code Appendix Section 43-6, and Government Code section 54221(f)(1)(N). Thereafter, the San Bernardino County Surveyor’s Office prepared updated legal descriptions of three distinct areas of the property, referenced as the South Area containing approximately 730.94 acres, the Central Area containing approximately 320.32 acres, and the North Area containing approximately 200.95 acres. The property has been redefined as consisting of 1,252.21 acres.
The county has reached a tentative agreement with Previti, which specify that he is to pay $93 million plus interest for the property and complete the transaction within a five-year original term, and that if he is “unable to complete the purchase in either a single acquisition for the entire property, or in multiple acquisitions that total the entire developable property, [he will] have the option to extend the original term for five more years following the expiration of the original term.”
To actuate the agreement, Previti is required to pay the San Bernardino County Flood Control District $2.5 million within fifteen days of the county’s approval of the agreement. If he is to extend the agreement another five years toward the end of the first five-year term, Previti “shall submit an additional extension deposit of $2,500,000.00 to the San Bernardino County Flood Control District at least 10 days prior to the expiration of the original term.”
Previti is required, within one year after the approval/signing of the agreement, to submit a minimum of 60 acres of the property that he intends to acquire in the first phase for the county’s review, provided that such portions shall consist of entire acre parcels within the South Area.”
The tentative agreement requires that Previti, as his company’s development of the property proceeds, acquire property to be set aside to me mitigation requirements imposed by what the agreement refers to as “resource agencies,” such as the California Department of Fish & Wildlife, “and as may be necessary to meet the required amount of mitigation land needed to develop the target parcels.” , within the Central Area and North Area.
The tentative agreement states that, “Approximately 159 acres of the property is subject to an open space easement that was approved by the board of supervisors on September 8, 1986 and granted to the county as mitigation for the Day Creek Water Project. The open space easement that is held by the county will remain on the Property if the San Bernardino County Flood Control District sells the property.”
In 2017, when the City of Rancho Cucamonga was holding public discussions with regard to the 4,085-acre to 4,115-acre North Eastern Sphere Annexation Project, which encompassed what was then refereed to as the 1,200 acres of flood control property, municipal officials indicated that just 579 of the 1,200 flood control district acres would be developed. In the tentative agreement for Previti’s purchase of the 1,252.21 acres, there is no limitation on development of the property beyond the 159 acres to be preserved as open space.
The tentative agreement does not require Previti to act as the owner/developer of the subdivisions to be built on the acreage, and it allows him to sell the property, at his own discretion to any purchasers, as long as he provides back to the county 50 percent of the profit – that is, the difference between what he pays to buy the land from the county flood control district and the amount he obtains by selling it.
In preparation for finalizing the agreement, Previti, who is the president and CEO for Frontier Enterprises, located at 2151 E. Convention Center Way, Suite 222 in Ontario, had Richard Munkvold, who is the chief financial officer for Frontier Enterprises, form a limited liability company, Rancho Etiwanda LLC. Richard Munkvold signed the articles of organization for Rancho Etiwanda, LLC, located at 2151 E. Convention Center Way, Suite 222 in Ontario, on November 12, 2024.
When the board of supervisors considered the purchase and sale agreement with Previti and the accompanying escrow instructions, it delayed final action due to what was described as “missing paperwork.”
The matter was continued until December 3.
The development of flood control property which had served to provide dams, settling basins, spreading grounds for water also flowing down from the San Gabriel Mountains and its foothills not in Rancho Cucamonga but in neighboring Upland more than two decades ago ended up costing San Bernardino County and its taxpayers $167 million plus interest.
The 489 acres, owned by the San Antonio Water Company existed in a western extension of the same alluvial creek along the San Garbriel Mountain foothills as the 1,252.21 acres f flood control property in Etiwanda Heights. During an even less than major deluge, the entirely of the property would become a raging river. A few quarries had been sunk into the property, from which gravel had been extracted during the early decades of the 20th Century. Those quarries were utilized as catch basins and recharge basins, into which the flood water would pour and then gradually settle into the water table.
In the late 1970s, the San Antonio Water Company, having deemed the property, which involved some wells, as surplus, sought to make it available for purchase to an interested party.
Several land developers lined up, including Orange County-based Pennhill Land Company, Orange County-based Kohl Company, the William F. Lyon Company and the Lyon Company. Each of the four highly-reputable development companies seriously examined all of the requirements to get an actual entitlement to build what would eventually be dubbed the San Antonio Lakes project. That included redressing the overwhelming drainage issues on the property, which would entail building a contrivance to carry rainwater away and meet the statutory requirement of ensuring that in the face of the worst flooding that could be expected to occur statistically in a 100-year period the houses built there would remain one foot above the level of the accumulated water. That was too daunting, each in succession concluded, and they all walked away from the concept of purchasing the land and developing it.
In 1996, Dan Richards and Jeff Burum formed the Colonies Partners with the intent of developing the property. With the backing of 21 other investors, Richards and Burum raised $16 million to purchase from the San Antonio Liquidation Trust the 489 acres, located in the northeastern quadrant of Upland, intent on converting that land into a residential subdivision with some order of a commercial component. Shortly after acquiring the property, the Colonies Partners sold, for $17 million, 40 of the acres to the State of California/the California Department of Transportation (Caltrans) to accommodate the placement of the 210 Freeway in a long strip running east-west the length of the property near its northern end. That $17 million payment included the purchase price of the land plus severance damages to cover the cost of any damage the Colonies Partners loss of the property and Caltrans use of it would entail.
Undaunted by the inability of four established and highly reputable development companies to push through with their plans for the property and invigorated by the consideration that they had managed to acquire 449 acres – 489 acres minus the 40 sold to Caltrans – at a profit of $1 million, Richards and Burum pushed on. As the two active managing principals in the Colonies Partners, they understood that the project’s success would consist of getting majority support on the governmental decision-making panel that had jurisdiction and land use authority over the property upon which the project was to be built, which in this case was the Upland City Council, while finding some way of transferring the tremendous cost of providing the infrastructure that needed to be built to allow the project to proceed from their company to the local public agencies, i.e., the taxpayers. Through a shrewd investment of less than $25,000 in political contributions to the mayor and city council, Richards and Burum gained influence over that body. It so happened that Upland, at that time a city of 68,570 population, had recently downsized its municipal operations, dispensing with its assistant city manager, its city engineer, its engineering department and a significant portion of its community development/planning divisions. With Richards having arranged for the project’s acceptance on the political level, he and Burum overcame the practical issues relating to getting city staff acquiescence in the undertaking by agreeing to pay for the city to hire contract engineering and planning professionals to monitor and guide the municipal approval process for the proposal, including meeting development standards and passing inspections. With the money in their paychecks originating with the Colonies Partners, those contract planning and engineering professionals enlisted to work on the project by the city acted accordingly, ensuring that the project could proceed.
As the old hand who knew the political lay of the land, Richards, a former elected official and member of the Republican Central Committee, worked almost invisibly from the backroom, wiring arrangements politically, while the younger and hungrier Burum, who was more steeped in the ins and outs of the building industry, along with his brother Phil, took on a more public role in the promotion of the project.
A major issue was the need for infrastructure to accommodate the project, in particular flood control. When it was proposed to Jon Mikels, who was then the supervisor for the Second District, which included all of Upland at that time as well as adjoining Rancho Cucamonga and San Antonio Heights, that the county participate in the construction and partially defray the cost of a 67-acre retention basin around which the homes the Colonies Partners were to build would be situated, Mikels demurred rather abruptly, telling Richards and Jeff Burum in strong terms that if the Colonies Partners was determined to develop problematic property, development from which it would ultimately achieve a profit, it would have to pay for on its own the infrastructure that would have to accompany the project. According to county officials, the Colonies Partners wanted the county, through its flood control division, along with the Army Corps of Engineers, to pay for the lion’s share of the flood control channelization and retention basins as part of a deal that would involve those water-holding-and-conveying facilities being built on property within the remaining 449 acres or on another 22.3 acres the Colonies Partners had tied up south of the project area.
Mikels was highly cognizant that the placement of the freeway near the north end of the Colonies Partners’ property had transitioned what was empty and unimproved land into prime commercial acreage, greatly enhancing its value. He remained adamant that neither the county nor its flood control district cover the costs of the Colonies Partners’ undertaking. Given that the property had been designated on zoning maps as open space and was shown as undevelopable without the storm drains, basins and channels required to prevent that property and other properties next to it from being inundated during heavy rains, Mikels insisted that the project be held in abeyance until such time as the Army Corps of Engineers got around to constructing a regional drainage network that would alleviate flooding there or the Colonies Partners itself took up the construction of the water diversion system needed. Mikels said he was unwilling to put up $1 million toward the project the Colonies Partners was proposing as the county’s share of the regional infrastructure burden and that the county was unwilling to throw $3 million toward the construction of the 67-acre holding basin to be located on the Colonies Partners’ property.
Subsequently, when the county refused to consider the Colonies Partners’ proposal that the county go halves with the company on the cost of the $25 million basin they were proposing to have the county flood control division construct on their property, toward which they were willing to provide the land at no cost and cover $12.5 million of the construction price, the Colonies Partners, in 2002, sued the county and its flood control division over the outstanding drainage and flood control issues relating to the project. That same year, Richards engineered a political coup to remove Mikels, whom he and Burum considered to be the primary obstruction to the project, from office. They did so by delivering, either directly or indirectly, $70,000 in political donations to Paul Biane, then a Rancho Cucamonga councilman, who challenged Mikels in the 2002 election for the Second District supervisorial position.
A primary focus of the Colonies Partners lawsuit against the county was what became known as the 20th Street Flood Drain. The county flood control district, accommodated Caltrans, which had completed the 210 Freeway, and the City of Upland, by constructing the 20th Street Flood Drain to convey run-off water from the 210 Freeway and north Upland. Relying upon the flood control easements that had been in place on and recorded in 1933, 1936, 1939 and 1962 against the 489 acres of San Antonio Water Company land that had been sold to the Colonies Partners, the county deposited the water from the 20th Street Storm Drain onto the Colonies property. This, the Colonies Partners alleged, had damaged their property, their investment and their project.
Over the course of four years as the company pursued the lawsuit and the county defended against it, the Colonies Partners and its principals emerged as the most prolific donors of money to San Bernardino County politicians and officeholders. In the meantime, as the lawsuit dragged on, the judge originally hearing the matter, Peter Norell, entered a ruling which favored the Colonies Partners, one that held the flood control easements on the land sold by the San Antonio Water Company to the Colonies partners had been “abandoned,” essentially by what Judge Norell reasoned was years of non-use or neglect. The county appealed that decision to the Fourth District Court of Appeal in Riverside, which reversed Judge Norell, stating the easements were still intact and that the sale of the property to the Colonies Partners did not render the easements invalid. The case was then transferred from Judge Norell to Judge Christopher Warner, where it went to trial. In the course of the litigation before Judge Warner, which was carried on as a bench trial in which Judge Warner served as both the judge and jury, he ruled that the county had not underused or neglected the flood control easements but had overused them, such that they were extinguished. This overuse of the easements and their extinguishment was a central factor in Judge Warner’s tentative ruling and findings in July 2006 in favor of the Colonies Partners and against the county, in which he opined county officials had engaged in deceit, coercion and jendangering public safety. There was, following the entering of Judge Warner’s tentative ruling an ongoing four-month delay while he considered not only finalizing the decision but what penalty should be assessed against the county. County attorneys and the lawyers with its outside legal representative were awaiting Judge Warner’s final entering of judgment, readying an appeal they were confident would succeed, given the prior appellate court ruling that the easements were intact and the logical absurdity that existed between Judge Norell having ruled that the county had underused the flood control easements and Judge Norell’s ruling that the county had overused the flood control easements.
Before that took place, however, three members of the Board of Supervisors – Bill Postmus, Paul Biane and Gary Ovitt – in a controversial 3-to-2 vote with supervisors Josie Gonzales and Dennis Hansberger dissenting on November 28, 2006 voted to confer a $102 on the Colonies Partners to settle the lawsuit. From 2002 up until the time the trial before Judge Warner commenced, Postmus, Biane and Ovitt had been major recipients of political donations from Burum, Richards and the Colonies Partners in general. Subsequent to the settlement, between March 2007 and the end of June 2007, Postmus and Gary Ovitt’s chief of staff, Mark Kirk, established political action committees. In that same time frame, Burum and his brother Phil cut two separate $100,000 checks from the Colonies Partners’ account to the newly-created political action committee set up by Kirk, known as the Alliance for Ethical Government. They also wrote two separate $50,000 checks to the political action committees, Inland Empire PAC and Conservatives for a Republican Majority, which were established by Postmus with the assistance of his business partner Dino DeFazio and his political associate, Adam Aleman. Burum and his brother further provided a $100,000 check to a previously existing political action committee that had been set up by Biane’s chief of staff, Matt Brown, the San Bernardino County Young Republicans, over which both Biane and Brown had control. In addition, the Colonies Partners provided a $100,000 check to the Committee for Effective Government, which had been set up after the settlement by Jim Erwin, the one-time president of the union for San Bernardino County’s sheriff’s deputies who had served during the last two years of the litigation between the Colonies Partners and the county as a lobbyist seeking to induce county officials to settle the suit on terms favorable to the company.
In 2010, the California Attorney General’s Office and the San Bernardino County District Attorney’s Office jointly filed criminal charges against Postmus and Erwin, charging Erwin with nine felony counts, including conspiracy to commit a crime, two counts of corrupt influencing, two counts of offering a bribe to a public official, two counts of extortion to obtain an official act, misappropriation of public funds and forgery. Postmus was charged with five felony counts, including conspiracy to commit a crime, accepting a bribe, a public official accepting a bribe, conflict of interest and misappropriation of public funds. The criminal case filed against Erwin and Postmus included an account of the action of five John Does identified as uncharged and unnamed criminal conspirators in their crimes. Though their names were not used, the five John Does were Richards; Burum; Patrick O’Reilly, who had been hired by the Colonies Partners as a contract public relations consultant; Mark Kirk; and Paul Biane.
Postmus and Erwin both entered not guilty pleas. Over the next year, prosecutors enhanced the five original felony charges against Postmus with three additional ones and merged that case with a separate case involving six felonies against Postmus relating to crimes he had committed in office as San Bernardino County assessor, a position he held after he left the board of supervisors. In March 2011, Postmus pleaded guilty to all 14 political corruption charges against him and agreed to turn states evidence. In April, he testified over a course of more than two weeks before a criminal grand jury, which in May 2011 indicted Burum, Biane, Kirk and Erwin on were charged with conspiracy, bribery, extortion, conflict of interest, tax fraud, tax evasion, perjury, financial interest misreporting and forgery. According to the indictment, Burum and Erwin schemed to corrupt Postmus and Biane through extortion, threats, illicit inducements and bribery to secure the $102 million settlement, they bribed Kirk and both Biane and Kirk acceded to the bribery and accepted kickbacks.
After a five-year-and-seven-month delay which included interminable pre-trial legal sparring including efforts to have charges dismissed and reinstated at the trial court, apellate court and California Supreme levels, jury selection in the case commenced in December 2016 and the matter went to trial before two juries – one for Burum, Biane and Kirk together and a separate jury for Erwin in January 2017. The trial lasted for eight months. The Colonies partners expended an estimated $17.5 million on the defense effort of all four of the defendants, each of whom had separate attorneys, with the lion’s share of that being devoted to the Burum’s defense. During the course of the trial, Burum was represented by no fewer than six attorneys. In September, Burum, Biane and Kirk were found not guilty on all charges against them. Erwin’s jury failed to reach a verdict on any of the charges against him and the district attorney’s office and California Attorney General’s Office, which jointly prosecuted the four, opted to dismiss the case against him rather than roll the dice in a retrial.
All four defendants then sued the county, the district attorney’s office, the state and the California Attorney General’s Office for malicious prosecution. Penultimately, the State of California and the California Attorney General’s Office were released as defendants.
In 2020, rather than going to trial against Burum, San Bernardino County settled with him for $65 million.
That brought to $167 million the cost the County of San Bernardino accrued, not including interest, as a consequence of the Colonies Partners’ twin Colonies at San Antonio residential and Colonies Crossroads commercial developments that took place on the former San Antonio Water Company property that was crisscrossed with flood control easements.
Afoot now is an effort by individuals from around the county to impress on the board of supervisors the need to ascertain, from both county officials and those in Rancho Cucamonga, a determination as to which entity – the county, the city or Previti – is to be responsible for the provision of the infrastructure that must be constructed to allow the development within the 1,252.21 acres to proceed in order to prevent the same type of misunderstanding that resulted in the loss of $167 million plus interest by the county and its taxpayers as a consequence of the Colonies development.