(June 28) YUCCA VALLEY — This town of 20,700 faces a water quality crisis that will, if it is not redressed, severely impact all of its residents and trigger state action that could reduce it to a ghost town by 2022, an official with the California Water Resources Control Board told residents and community leaders last week.
The Colorado River Region Division of the California Regional Water Quality Control Board convened its regular meeting at the Yucca Valley Community Center on June 20. The meeting extended itself to more than three hours and forty-five minutes as state water board staff held forth on the pending May 19, 2016 septic system prohibition deadline which faces Yucca Valley.
Yucca Valley, which became the last of San Bernardino County’s 24 municipalities to incorporate in 1991, is likewise the last remaining city to function without a sewer system.
Long a remote and rustic desert area that attracted those wishing to remain well off the beaten track,  Yucca Valley made its first lurch toward urbanization in the 1950s when Norman J. Essig’s promoted it as both a getaway to and private residency for entertainment celebrities. He ventured capital toward that end, acquiring hundreds of acres, which he improved with roads around the region’s major arterial, Highway 62, also known as Twentynine Palms Highway.
While attracting movie stars as well as recording and visual artists was only marginally successful, the improvements did succeed in luring others by virtue of the relatively inexpensive land prices, and Yucca Valley grew sporadically over the years, appealing to the independent minded and lovers of the remote desert beauty. As early as 1973, when the area’s population was hovering below 5,000, there was a push to outfit the core of Yucca Valley with a rudimentary sewer system, one that would extend only to the town’s modest commercial area and the relatively sparse residential neighborhoods that surrounded it. But a water treatment facility and skeleton sewer system to which future developments could connect carried a price tag of roughly $10 million, well beyond the tiny community’s fiscal means at that time.
After the town’s November 1991 incorporation, civic officials continued to reflect and embody the values of their constituents, who eschewed big government and excessive regulation and put a premium on maintaining the town’s rural character. There was little collective will to pave any roads other than the town’s main thoroughfares and many town streets remain dusty trails to this day. A modern, urban sewer system is no more of an imperative to most locals. At the same time, the town council has been accommodating of most developers who expressed an interest in Yucca Valley, and over the first 20 years of the town’s history as an incorporated entity, gave builders what has essentially been carte blanche to build aggressively without incorporating urban land use standards.
Thus, the septic systems that had proliferated in Yucca Valley for three-quarters of a century remained the accoutrement of homes and businesses built within the 40 square mile city limits.
Ten years after incorporation Yucca Valley’s officials were notified by the state’s Regional Water Quality Control Board that the lack of a sewage treatment system had resulted in nitrates accumulating in the water table. Simultaneously, the Hi-Desert Water District, which serves the Yucca Valley community, experienced nitrate traces in district wells.
Local officialdom did not respond with alacrity. Rather some feigned outrage that the state felt it necessary to involve itself in what many perceived as a local issue. As a good number of those who had moved to Yucca Valley were senior citizens and retirees living on fixed incomes who had been attracted to the area by cheap land, they were alarmed by the concept of having to defray the cost for the installation of a sewer system. They were heartened and to a certain extent lulled into a state of complacency by their political leadership, which asserted the town would not fall victim to overreaching regulation imposed on it by Sacramento. Thus, the water table contamination issue was kicked down the road.
In the early 2000s, monitoring carried out by the California Regional Water Quality Control Board and the United States Geological survey demonstrated that residues left in the ground that seep into the aquifer had increased to levels that presaged health threats if the matter was not addressed. Those contaminants included nitrates and other pollutants including pharmaceuticals and salts.
Historic pumping increases from the 1940s to 1995 resulted in the water levels dropping faster than the nitrates from septic systems seeped downward. Thus, for years Yucca Valley was able to avoid the consequences of the contamination accumulating in the local soil. Eventually, however, as the water table dropped lower and lower as a result of greater utilization combined with limited recharge from rainfall, the water district began importation of state aqueduct water into Yucca Valley. Completion of the Morongo Basin Pipeline project and the accompanying completion and activation of recharge basins in Yucca Valley allowed the Hi-Desert Water District to begin percolating water into the aquifer and the water table began to rise. That water came in contact with the high levels of nitrates left over from decades of septic discharge and the nitrates found their way into some of the Hi-Desert Water District’s wells. Notice of the contamination triggered a scaling back of the Hi-Desert Water District’s recharge efforts, and the goal of reestablishing the Yucca Valley water table to the natural level present in the 1940s has not been achieved.
The imported water has actually diluted the nitrates so water tests now show nitrate levels below the maximum contaminant level allowed by the state and the U.S. Environmental Protection Agency.
In the meantime, the discharge of septic waste continues and the United States Geological Survey determined that nitrates accumulating beneath Yucca Valley are present in ever increasing concentrations and at depths that pose a threat to the groundwater, including a calculation that 880 acre-feet of septic discharge currently reaches the groundwater every year.
In 2007, the California Regional Water Quality Control Board, the state agency responsible for protecting water quality, adopted a resolution identifying the town of Yucca Valley as one of 66 communities throughout the state with groundwater threatened by the continuing overuse of septic systems. The board further declared Yucca Valley as a top priority for eliminating the use of septic systems, meaning Yucca Valley’s is one of the five most seriously threatened water supplies in the state.
Nevertheless, local officials resisted taking immediate action, as they lacked the financial wherewithal to undertake the construction of a sewer system. Nor did the city have the will to impose any kind of building or development moratorium that would stabilize the problem.
For a while, town and the water district officials were able to delay the imposition of state mandates by forging a memorandum of agreement with the Regional Water Quality Control Board and the Hi-Desert Water District to allow interim permits for new septic systems while planning for a wastewater system proceeded. But they could not suspend the consequences indefinitely.
By 2010, Yucca Valley’s population had zoomed to 20,700, an increase of 3,835 or 22.7 percent over the 16,865 town residents counted in the 2000 Census.
In 2011, the town was firmly informed that it had only five years to take a definitive step toward water quality compliance.
The Regional Water Quality Control Board has imposed three progressive phases of septic discharge prohibitions on Yucca Valley. Under the state mandate, phase 1 of a wastewater system must be completed or significantly on its way to completion by May 19, 2016 or enforcement action will be initiated. The first phase of the project is to cover the downtown area of Yucca Valley, the area most proximate to the heart of the groundwater basin.  Similarly, phase 2 must be completed or nearly completed by May 19, 2019 and phase 3 must be completed by May 19, 2022. The last two phases lie further out where future concentrated development is most likely to occur.
On June 20, the State Water Resources Control Board’s sub-executive director, Jose Angel, told those gathered at the community center the state will be methodical and thorough in enforcing the prohibition, holding the town to account to complete each phase of the project by the succeeding deadlines and taking steps to ensure that each residential and commercial property within each phase’s geographical boundaries ties into the sewer system once it is in place.
And indeed the state has utilized draconian measures in the past against other communities that failed to come into compliance, such as in Los Osos, which was under a similar order from the California Water Resources Board and failed to heed it. The entire community of Los Osos became subject to an enforcement action, which was done in a lottery fashion, in which random property owners were selected to receive cease and desist orders with the potential of daily fines for non-compliance. They were ordered to discontinue the discharge from their septic systems, seal them off and pump them at regular intervals. If they did not, they were subjected to fines of up to $5,000 per day.
Of tremendous moment is where and how the town of Yucca Valley and the water district, which is to undertake the project as the lead agency, will find funding to build the system.
In the past, the main focus was on seeking grants and low interest loans to be followed up by a debt servicing mechanism on those loans. One such effort was Measure U, sponsored by the town last year and which appeared on the November ballot. If passed, Measure U would have imposed a one-cent sales tax within Yucca Valley. Town officials said the lion’s share of those proceeds would go toward building the sewer system. Measure U was defeated, however.
The water district has done much of the preparatory work for the wastewater system, calculating that the entire system can be constructed for $125 million. The system would consist of a water treatment plant and a collection system entailing over 400,000 linear feet of pipe.
The district has obtained a $20 million authorization from the Bureau of Reclamation and has applied for a low to no-interest loan through a state revolving fund and continues to aggressively seek grants. In the end, there will yet need to be significant financial participation by the town’s residents. A dated calculation is that each parcel in Yucca Valley will be counted upon to provide $16,700 toward the system construction debt burden.  If the $125 million cost of the project can be defrayed over 30 years, water district officials calculate the project can be financed through homeowner assessments of $20 to $40 per month to cover just the construction costs of the system. Operational charges will be additional.
A significant number of Yucca Valley residents are retired seniors living mostly on fixed incomes who moved to Yucca Valley because they considered it to be an inexpensive place to retire.
The town and water district have yet to make an all-out appeal to Yucca Valley’s leading citizen, former mayor, former California Assemblyman and current Congressman Paul Cook.
Though Cook has acknowledged that building the sewer system is a desirable goal, he has long maintained the state is overstepping its authority by requiring that it be built on the local dime. When he was the region’s representative in Sacramento, Cook effectively undercut the project’s proponents, referring to the demand that Yucca Valley transition from septic systems to a sewer system as “just another unfunded state mandate.”   He dwelled at length upon the cost of the project and what he considered his constituents’ inability to bear that cost. He predicted last year that “This [the Yucca Valley sewer system] is never going to happen. We have to remember what type of community this is. We got to be very, very careful when we start talking $125 million to people who cannot afford it because we do not have the businesses and the state’s not going to give you the money.” As assemblyman, Cook said he was not afraid to confront Governor Jerry Brown over the issue and “get a bloody nose.”  Cook said that as a California legislator he would seek to force the California Water Resources Control Board to provide Yucca Valley residents and businesses access to extended term, reduced interest rate loans along with debt forgiveness.
Now no longer a California state legislator, Cook has yet to use his position in Washington, D.C. to see if he can tap into any pork barrels to fund the project.

(June 28) NEWBERRY SPRINGS—K Road Calico Solar LLC has pulled the plug on its plans for the Calico Solar Energy Project.
According to the California Energy Commission, New York-based K Road Calico Solar last week requested to surrender the license that it acquired from Tessera Solar in December 2010, two months after Tessera was issued a permit for a 663.5-megawatt solar project on 4,613 acres of Bureau of Land Management property roughly 17 miles east of Newberry Springs on October 20, 2010.
Despite its intended provision of renewable energy sufficient to power 200,000 households, the project was faced with opposition from  environmentalists and nearby property owners, among others.

(June 28) HESPERIA—This city of 90,173, which throughout its 25 years as a municipality has been handicapped by the physical division of the Santa Fe Railroad tracks, will turn a new leaf tomorrow when the $27 million Ranchero Underpass is set to open with a ribbon-cutting.
The railroad tracks have long prevented motorists from easily transiting from the east to west side of the city and vice versa. The Myra McGinnis Bridge on Main Street in the middle of the city is the only place in town where drivers can forge the divide. On the city’s extreme north end, on Bear Valley Road at the  border with Victorville, the tracks can also be crossed.
The new underpass connects both sides of Ranchero Road under the railroad tracks at the city’s south end.
Long contemplated as a needed improvement to the community, the underpass will cut significant time and distance off some local trips.   The underpass is to be augmented in 2015 with the completion of the $59 million  Ranchero Road interchange at Interstate 15 further west.
Festivities for the underpass opening will begin at 8 a.m. with a 5K run, followed by the ribbon cutting at 10 a.m., and a classic car parade at 11 a.m.

(June 28)  A recent ruling by a federal bankruptcy judge hinted at the possibility that current and former public employees of financially troubled municipal or governmental entities could see their pensions reduced.
In recent years, three large California cities, including San Bernardino, have filed for bankruptcy protection in federal court. That has spurred a tenacious round of legal skirmishing between those cities and their creditors. One creditor the three cities have in common, the California Public Employees Retirement System, has been particularly insistent that it should be exempt from any payment or debt deferrals those cities are entitled to under federal bankruptcy protection.
The California Public Employees Retirement System, known by its acronym CalPERS, has now and for the foreseeable future will have an ongoing relationship with the bankrupt cities, just as it does with all other cities participating in its system, one that contractually requires that it make good on payments to individuals who retired from those cities. At the same time, the cities are contractually required to continue to pay into the retirement system.
In the case of San Bernardino, beginning in August, corresponding with the period it has been in bankruptcy, it ceased making payments to CalPERS. In the eleven months just ending, San Bernardino has accrued an unpaid bill with CalPERS totaling  more than $14.1 million. So far, CalPERS has continued to make pension payments to city of San Bernardino retirees. Just how long that will continue is an as-yet-unanswered question.
The city has vowed that as of July, it will reinitiate making its retirement fund payments. At this point it wants to renegotiate the financing plan for the money on which it is in arrears. CalPERS, concerned that showing leniency to San Bernardino would result in other financially challenged municipalities throughout the state temporarily skipping out on their financial obligations to the fund, is holding the line on a policy that it maintains is crucial to preserving the integrity of its entire pension program and will not allow San Bernardino to refinance its unpaid employee retirement contribution debt.
CalPERS has moved to sue San Bernardino, maintaining that it has priority status among the city’s multitude of vendors, suppliers and creditors, and that the courts should force the city to meet its $1.2-million-per-month obligation to the public workers’ retirement fund. So far the judge overseeing the case, Federal Magistrate Meredith Jury, has refused to grant CalPERS’s motions, ruling that requiring the city to expend its scant revenue to cover retirement costs would undercut San Bernardino’s effort to get back on its feet financially. Nevertheless, CalPERS is not prepared to accept the $14.1 million installment repayment plan the city has proposed, maintaining that under California law the withheld money, interest, penalty interest, late fees and all costs of collection are due it immediately, and that further delays will entail accruing interest and that interest will continue to accrue until the due amount is fully paid.
Unlike San Bernardino, the cities of Stockton and Vallejo, which have also declared bankruptcy, did not discontinue their CalPERS payments. But there are outgrowths of those cases which could have a resounding impact on the future financial health of cities as well as those who have retired after working for those municipalities. Vallejo and Stockton’s bankruptcy filings were challenged by creditors other than CalPERS, some of which hotly contested those cities’ ability to selectively transfer the financial burden those bankruptcies will result in to just some of those cities’ creditors.
U.S. Bankruptcy Judge Christopher Klein is overseeing the Stockton bankruptcy. In a ruling that confirmed the propriety of that bankruptcy filing, Klein  heard opposition from National Public and Assured Guaranty, bond insurers who had worked with Stockton in the past and are owed a considerable amount of money. Klein overruled  National Public and Assured Guaranty’s  challenge, but suggested that the bond insurers could seek to be made whole further down the road, upon Stockton’s exit from bankruptcy.
Klein referenced Section 904 of the bankruptcy code which prevents the courts from interfering with the political authority of the debtor municipalities. Klein granted Stockton’s request to set aside the city’s health benefit debts, suggesting that had the city requested the same authority to modify its pensions, he also would have granted the city that authority.
In recent years, there have been several highly publicized cases of pension spiking, including examples of high ranking public employees who, while employed earned salaries in the $200,000 per year range but by adding on vacation pay, leave pay and other forms of compensation on top of their salaries used for their retirement calculations, have received yearly pensions approaching $300,000. Though Vallejo, Stockton and San Bernardino have yet to request pension modifications, it appears that a judge of a like mind to Klein’s would grant reductions or even eliminations of pension enhancements.
Thus, under the principle of the “balancing of hardships,” a city in a state of financial duress beset upon by a multitude of creditors, all of which could not be fully satisfied by that city’s available financial means, would appear to have grounds to seek to reduce pensions deemed to be excessive.

(June 28)  UPLAND–The Upland City Council this week postponed ratification of the 2013-14 fiscal year budget, signaling that the city’s department heads have not trimmed a sufficient degree of spending from their respective spending plans for the city to meet city manager Stephen Dunn’s goal of salting away $1.5 million into reserve accounts.
Dunn, who was the city’s finance director before he was elevated to city manager, told the Sentinel earlier this month that he is confident the city will receive roughly $40 million in revenue in the twelve months between July 1, 2013 and June 30, 2014 and can meet the goal he has imposed on the city’s department heads of holding overall operating expenditures to $38.5 million. He said at that time he anticipated bringing the final budget to the city council at its last meeting in June.  At the council’s last June meeting on Monday, however, Dunn told the council, “The budget is not ready to be presented. I’m hoping to present it by July 9.”
Dunn told the Sentinel that more than two months ago he instructed the city’s department heads to start with the assumption that the city will have roughly the same amount of general fund money in the upcoming year – $40 million – that it had in the current fiscal year.  He told the department heads his goal was to have the city build a $1.5 million reserve into the budget.
The department heads returned in early May, Dunn said “with $1.8 million more in expenditures than the $40 million in expected revenue.”  Subsequently, Dunn said, adjustments were made and as of the first week of June, he said “We were at a breakeven point, with revenues matching expenditures.” Dunn sent the city’s top staff back to work, hoping they would collectively reduce spending across the board to meet the goal of $1.5 million in further reductions. His terse statement to the council in public on Monday indicated the department heads had yet to meet his mandate.
To allow the city to continue into the new fiscal year, the council at Dunn’s request approved a resolution continuing funding for the fiscal year ending June 30 until the 2013-14 budget is ready. That entailed a short term $923,000 loan from the city’s water fund to the general fund.
In nearly concluded 2012-13, Upland functioned on a balanced general fund budget that took in $39.8 million in revenues matched by $39.8 million in expenditures.

(June 21)  The county of San Bernardino’s legal costs as a consequence of its acquiescence in the Santa Margarita Water District’s approval of the so-called Cadiz Valley Water Conservation, Recovery and Storage Project last year have zoomed to near $1.5 million.
Eleven separate lawsuits challenging the  Cadiz Valley water project, which upon completion will extract an average of 50,000 acre-feet of water from the East Mojave Desert annually and convey it via pipeline to Orange and Los Angeles counties for use there, have been filed in San Bernardino County, Orange County and in U.S. District Court. Two of those lawsuits have been litigated to completion or been dropped. Nine remain active.
The lawsuits allege that the project will drain the aquifer in both the Cadiz Valley and nearby Fenner Valley, wreaking environmental harm; that the approval process for the project which allowed a water district in Orange County more than 217 miles from the  project area to serve as the lead agency for the project and oversee its environmental certification violated state and federal environmental laws; that the county of San Bernardino failed to abide by its own desert groundwater management plan in approving the project; that the environmental impact report for the project was inadequate; and that approval of the project violated provisions of both the National Historic Preservation Act and the Federal Land Policy and Management Act, and that the Bureau of Land Management failed to conduct a proper review of the cultural and environmental impacts of the project; that the extraction of the water will interfere with salt mining and other pre-existing industrial operations in the area; and other issues.
Plaintiffs include Delaware Tetra Technologies, which operates a salt and mineral mine in the Fenner Valley, the Center for Biological Diversity, the National Audubon Society, the Sierra Club, the International Union of North America Local No. 783, the National Parks Conservation Association, the Colorado River Branch of the Archaeological Heritage Association, Santa Margarita Citizens and Ratepayers Opposing Water Nonsense, and Rodrigo Briones.
The project is an undertaking of Los Angeles-based Cadiz, Inc., which since the 1980s has operated a 500-acre organic grape, citrus, melon and pepper farm in the Cadiz Valley. Cadiz, Inc. arranged to have the Santa Margarita Water District, to which it is contracted to deliver a portion of the water to be extracted from the desert, to assume lead agency status for the project’s approval. Many of those opposed to the project considered that to be a conflict of interest. San Bernardino County contemplated but in March 2012 ultimately elected against challenging Orange County-based Santa Margarita’s assumption of that lead agency status on the project and instead on May 1, 2012 entered into a memorandum of understanding with that district and Cadiz, Inc. and its corporate entities, including the Fenner Valley Mutual Water Company, allowing Santa Margarita to oversee the environmental impact report for the project and conduct the public hearings related to project approval. On October 1, 2012, the San Bernardino County Board of Supervisors gave approval to a groundwater monitoring plan to facilitate completion of the project.
The project generated a flurry of lawsuits in which San Bernardino County, Santa Margarita and Cadiz, Inc. have been named as defendants. Even before those lawsuits materialized, the county, on March 27, 2012, retained the San Francisco-based law firm of Downey Brand to assist county counsel in responding to any lawsuits it contemplated might be triggered by the project at what was then said to be a not-to-exceed cost of $449,322. Within four months, however, those funds had been exhausted and on July 24, 2012, the board authorized a $250,000 amendment to the Downey Brand contract, increasing the amount to $699,332.  Legal billings to the county by Downey Brand ate up that funding by last December, and Christine Kelly, who was then county land use services director, asked the board to give approval for the expenditure of another $250,000 to cover continuing legal costs, pushing the Downey Brand contract to $949,332. Downey Brand’s total billing to the county now exceeds the million dollar mark and this week the board of supervisors complied with the current county director of land use services Tom Hudson’s request “to increase the contract with Downey Brand by $500,000 from $949,332 to $1,449,332 for outside legal challenges related to approvals of the memorandum of understanding by and among the Santa Margarita Water District, Cadiz, Inc., Fenner Valley Mutual Water Company, and the county of  San Bernardino related to the county ordinance for desert groundwater management.”
The county finds itself pressured inside and outside the courts for having relinquished oversight over the project to the Santa Margarita Water District, which approved the environmental impact report for the project, despite data provided by biologists and hydrologists contradicting that report. Among those inveighing against the project is U.S. Senator Dianne Feinstein, who has publicly stated that the project’s proposed extraction of more than one million acre-feet of water from the Eastern Mojave Desert over the 50-year life of the project will significantly exceed the United States Geological Survey’s estimate of the area’s recharge capability.
Environmentalists insist Cadiz has cynically overrepresented the amount of annual precipitation recharging the groundwater basins in the Cadiz and Fenner valleys, and that springs linked to those ground water basins within the Mojave National Preserve and the plants and animals that depend on them are thus under threat.
Among those condemning the county’s approval of the project is John Goss, a former assistant administrative officer with San Bernardino County who drafted the county’s desert groundwater management ordinance before it was adopted in 2002. Goss said that ordinance was violated when the memorandum of understanding between the county, Cadiz, Inc. and the Santa Margarita Water District had been entered into before a groundwater management plan for the Cadiz project was adopted.
A prime mover in the county’s acquiescence in Santa Margarita’s approval of the project was former First District Supervisor Brad Mitzelfelt, who left office after he did not run for reelection in 2012 when he instead unsuccessfully vied for Congress. Mitzelfelt, whose district included the Eastern Mojave, received $48,100 in political donations from Cadiz, Inc.
The project’s proponents, including Scott Slater, the general counsel for Cadiz, Inc., insists the project is a “responsible and environmentally safe” one that “protects the desert” and provides thirsty Southern California with “an innovative water supply option.”
County officials maintain the county’s taxpayers are not being hurt by the litigation.
According to the memorandum of understanding the county entered into, Cadiz, Inc. and the Santa Margarita Water District are to reimburse the county for any of its legal costs relating to the project.
The county has incurred legal costs related to the Cadiz water project of more than $1.1 million to date. The county has received at least $650,000 in reimbursements, $135,000 from the Santa Margarita Water District and $515,000 from Cadiz, Inc.
An issue in the lawsuit brought by Santa Margarita Citizens and Ratepayers Opposing Water Nonsense pertains to the Santa Margarita Water District’s assumption of the financial liability of other parties involved with the project approval. Opponents of the project have questioned whether Cadiz, Inc., an agricultural and landholding company that owns or has options to buy 45,000 acres in the eastern Mojave Desert overlying the Cadiz and Fenner valleys’ aquifers but which has nonetheless not shown a profit for more than 14 years, will be able to sustain itself in the face of mounting legal challenges to the project. Those inveighing against the project not on environmental grounds but financial ones have questioned who will assume the company’s liabilities if it folds or declares bankruptcy.
When she was still serving as land use services director,  Christine Kelly stated, “The county of San Bernardino is to be reimbursed by Santa Margarita Water District, Cadiz, Inc., and Fenner Valley Mutual Water Company for all claims, liabilities, damages, or costs arising from or relating to any administrative or judicial action brought by any third party against the county, its agents, officers, or employees, that may arise from or be related to the county’s approval of the memorandum of understanding and the groundwater management, monitoring and mitigation plan.”

(June 21) Lawyers for Mike and Kim Denton have rejected a plea by Chino Hills City Attorney Mark Hensley that they agree to a temporary suspension of the lawsuit the couple has brought against the city over property encroachment issues.
The Dentons sued the city in 2011 after the city’s code enforcement division informed them in 2010 that the furthest extension of their backyard was encroaching on city-owned open space and that they had to remove their pool and spa along with landscaping that was already extant when they purchased the home in 1999 from Gloria Vitagliano.
The Dentons, who live on Hunters Gate Circle, offered the city $10,000 for the property, but the city rejected that offer, instead saying it would provide them with a 15-year easement for the continued use of the property.  The Dentons then retained the firm of Gresham, Savage, Nolan and Tilden to sue the city.
The Dentons claim the city allowed the Vitagliano/Denton encroachment, which was conspicuous and open, to stand, and did nothing to interfere with Ms. Vitagliano’s or their occupation of the approximately 1,574 square feet of land for more than 15 years. Nor did the city act in a timely manner to prevent them from removing a wrought-iron fence and replacing it with a glass wall and block fence, the Dentons assert.
Within the last month, however, city officials have proposed a “global settlement” with regard to a multiplicity of encroachment issues impacting properties in Chino Hills, where an estimated 270 homeowners have made improvements in what was formerly deemed city-owned open space bordering those parcels. Under the terms of those yet-to-be-worked-out solutions, landowners would be given the opportunity to buy the property they have intruded onto.
The city made a motion for summary judgment in the Denton case and other motions to reduce the scope of the litigation but was turned back by judicial rulings. Earlier this month, Hensley requested that the Dentons put the lawsuit on hold while a formalized proposal for the purchases of encroached-upon properties is drawn up. The firm representing the Dentons, Gresham, Savage, Nolan and Tilden, spurned that offer, maintaining no suspension of the case, which is now scheduled to go to trial in September, will be made without the presentation of a formal settlement offer before the court.

(June 21)  Los Angeles Mayor Antonio Villaraigosa earlier this month sent a letter to Ontario Mayor Paul Leon offering to reopen negotiations over the transfer of ownership and management of Ontario Airport from Los Angeles to Ontario.
The letter, dated June 6, came three days after Ontario filed a lawsuit against Los Angeles claiming the larger city has been purposefully mismanaging the facility. The lawsuit seeks the return of the airport to Ontario’s possession.
In the 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’s term as mayor will end in less than a month. He held out hope that the airport ownership and management differences separating the two cities could be ironed out expeditiously and perhaps before he leaves office. He said he had a “continuing interest to work with you and your colleagues to facilitate transfer of the LA/Ontario International Airport (ONT) to the city of Ontario (or its designee, such as the Ontario International Airport Authority). I have always believed, and continue to believe, that if we work together in good faith, we can achieve such a transfer.
“I continue to support regionalization of air traffic, with the long-term growth of ONT as a viable alternative to Los Angeles International Airport (LAX),” Villaraigosa continued. “While these are difficult times for medium and small airports across the nation, I agree that focused marketing of ONT can and should help grow ONT over the long-term.”
Villaraaigosa 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,” Villaragoisa 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 maintained that Villaraigosa’s letter had not been received until June 12.
While noting that he partially appreciated the gesture, Ontario Mayor Paul Leon in a letter in response to Villaraigosa said his city was not prepared to abandon its litigious  stance. Leon noted that Villaraigosa will leave office on July 1, and said there is “very little time for the parties to bridge a considerable gap in their respective settlement positions within a very narrow window of time.  Nevertheless, as always Ontario is deeply interested in any settlement discussion that is in good faith and meaningful. However, a legitimate settlement meeting cannot be subject to an unreasonable condition precedent.”
Leon then rejected 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.”
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 passenger enplaned there. But since that time, passenger traffic through Ontario Airport has diminished to 4.2 million per year and Ontario officials maintain that Los Angeles World Airports, the corporate entity that Los Angeles utilizes to run LAX, 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-three-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 siting 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 ONT.”

(June 21)  LOS ANGELES—The city of Victorville, its airport authority, and assistant city manager Keith Metzler have responded to the U.S. Securities and Exchange Commission’s April 29 charges of fraud and demands for restitution with motions seeking to dismiss several of the allegations and request for payment.
Terree Bowers of the Los Angeles-based law firm Arent Fox represents Victorville, the Southern California Logistics Airport Authority (SCLAA), and Metzler, who fills the dual roles of assistant city manager and  executive director of the airport authority, all of whom were charged in April by the SEC.  Also charged were  Kinsell, Newcomb & DeDios Inc., the underwriter for bond offerings sold in conjunction with the effort to develop the airport, that company’s owner, Jeffrey Kinsell, and Kinsell, Newcomb and DeDios investment banker Janees Williams.
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. SCLAA, 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.
The SEC alleges that fraud was committed by the defendants when the proceeds from those bond sales were diverted to uses other than was specified in the bond documents and representations made to the bond purchasers, specifically with regard to proceeds from bonds issued between 2006 and 2008.
The 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, 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, which is a request for restitution of ill-gotten profits from security law violators, all the parties are named.
On behalf of the city, the authority and Metzler, Bowers last week filed a motion to dismiss the first, second, and seventh claims for relief, and to dismiss the prayer for disgorgement. In his filing Bowers asserted “the complaint fails to state a claim for these violations.” The SEC’s first and second claims cite fraud in connection with the purchase or sale of securities; the seventh claim alleges aiding-and-abetting violations of the Exchange Act.
According to Bowers, a former U.S. Attorney, Metzler “did not violate the federal securities laws.”
The case involves four airport hangars that Victorville stated in the official statement for the April 2008 bond offering were worth $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 the investors.
“Even if its allegations were true, the alleged $37.3 million inflated value ultimately boils down to only a $200,000 differential in tax increment, less than 1% of the $22.6 million tax increment used as security for the bonds,” according to Bowers. “The authority’s alleged misstatement was not material. The SEC cannot state a claim of aiding and abetting against the city.”
The next hearing on the matter is set for September 16 before Judge John A. Kronstadt in U.S. District Court in Los Angeles.

(June 21) The Upland Unified School District is asking its teachers to accept salary and benefit cuts in the upcoming school year of roughly $26,000 each on average, according to the union representing those teachers.
The district maintains the salary and benefit reductions will be somewhat more modest than the union is representing.
While the union claims the drawdowns are tantamount to one third of the teachers’ total benefit packages, the district maintains the cuts are closer to a one-fifth reduction.
The discrepancy consists largely of how the parings are to be structured.
Those reductions, whatever they amount to in terms of percentage, are needed if the district is to overcome a projected deficit in the neighborhood of $9 million in 2013-14.
The Upland Teachers Association has countered with a proposal by which each teacher would agree to make $20,400 in concessions on average to help the district ride out the current financial storm.
Currently, teachers in Upland Unified are paid from $37,758 to $78,575 per year, depending on educational level, certification, and seniority.
In 2007, Upland Unified boasted $20 million in reserves. But in the six years since, a stagnating economy, declining property values and dwindling income into the district, together with increases in teacher and other employee pay have eaten up that surplus and left the district, according to projections, in the position of spending nearly $9 million more than it will take in during the next school year if it does not trim its expenses from its operational budget from the just concluded 2012-13 school year.
Gary Rutherford, the district’s superintendent until his abrupt departure in January to assume the superintendent’s position with the Desert Sands Unified School District in Riverside County, had overseen a gradual decline in the district’s financial condition.
The San Bernardino County Superintendent of Schools issues ratings of the fiscal conditions of districts throughout the county on a regular basis, using a three tier system. Those districts that have revenue exceeding their operational costs and can maintain reserves are designated “positive.” Those that essentially break even with regard to their revenues and expenditures are pegged as “qualified.” Those that take in less money than they spend are rated “negative.”
In fiscal year 2010-11, both the first and second interim financial ratings for Upland Unified were positive.  In 2011-12, the first interim report was positive and the second was qualified.  In 2012-13, while Rutherford again sought a positive rating, the first interim report rated the district as qualified. For the second interim report, Rutherford sought a qualified rating, only to be met with the news, just as he was departing the district, that the rating was negative.
In the aftermath of Rutherford’s departure, Sherrie Black was enlisted to serve as interim superintendent. Though she has been credited with being more forthcoming to both the school board and the public about the district’s financial circumstance than her predecessor, Black has been struggling with the district’s financial situation her entire tenure as interim superintendent.
Two months ago, the district hired a new superintendent for the upcoming 2013-14 school year, Dr. Nancy Kelly, who is in the process of leaving as Redondo Beach Unified School District human resources director.
It is yet to be seen if Kelly will have the necessary wherewithal to map the district out of its financial doldrums.
Last December, Rutherford and Black, who was then assistant superintendent of human resources for the district, were anticipating a 2013-14 deficit of $4.5 million. In the last six months, that projected deficit has doubled, even as efforts to redress it have intensified.
According to Black, 91 percent of the district budget consists of personnel costs and the only solution to the fiscal crisis is to rein in those costs, which means significant concessions from the district’s collective bargaining groups with regard to contracts that have already been put into place and which will need to be renewed in upcoming years.
Already, the unions have given an indication they are willing to bend substantially in deference to  financial reality. The question remains, however, whether that will keep the district solvent.
In a letter to teachers, the negotiator for the Upland Teacher Association, Debbie Glenn, said that in response to the district’s proposal that teachers collectively accept $5.8 million in cuts, she countered with accepting $4 million in cuts.
The district wanted increased class sizes and caseloads, furlough days, salary freezes and rollbacks as well as increases in the teachers’ contributions to their health care plans. The teachers’ association’s counterproposal called for no change in class sizes but allows furlough days, salary freezes and a more modest employee contribution to health care than the district is requesting.
According to Black, the district has hitherto covered in its entirety the health care plans for teachers’ and their family members, translating to an insurance cost of roughly $15,000 to $16,000 per employee per year.
The association is now willing to have its members pick up $6,000 of those costs.
Overall, the association is prepared to see individual teacher’s monthly compensation packages lowered by $1,500 to $1,900 per month. The association has indicated it is willing to abide by these reductions for two years, until June 2015, if the district’s financial condition does not approve, and one year, until June 2014, if the state restores funding by that point.
Despite the association’s flexibility on the salary and benefit issues, no actual agreement has been made. Last week, the district threatened to declare an impasse and enforce its dictates unilaterally. Further discussions are on tap this week but had not been concluded by press time.
The district maintains its problems stem less from past fiscal mismanagement on the part of Rutherford and former assistant superintendent of business services Deo Persaud than the state’s practice of deferring payments to school districts.
Just under 79 percent of its revenue comes from the state of California, but at present and for the last three years, the state has been paying Upland Unified and other districts an average of 77 cents per dollar owed to it on time. The rest of that money has been deferred, resulting in the district, at its own financing cost, making arrangements to borrow money against that future revenue, using what are referred to as Tax Revenue Anticipation Notes, a type of short term bond. According to auditors, dependence on those bonds and the financing costs associated with them have snowballed on the district. Moreover, the state has made no cost of living adjustments for the district since 2008.