Dr. Kali Chaudhuri’s KPC Group has once again emerged as the most likely buyer of troubled Victor Valley Community Hospital.
Riverside-based KPC appears to have supplanted both Ontario-based Prime Healthcare Services, owned by Dr. Prem Reddy, and  St. Joseph Health System, which operates St. Mary Hospital in Victorville, as Victor Valley Community Hospital’s main suitor.
A federal bankruptcy judge has approved KPC Group’s $33.8 million offer for the takeover of the hospital. This is the second offer KPC has made in two years.

Kali Chaudhuri

In 2010, Victor Valley Community Hospital, staggering under more than $20 million in debt, filed for Chapter 11 bankruptcy protection and the 101-bed hospital was put on the auction block. KPC Global Care, one of KPC Group’s entities, outbid Prime Healthcare, tendering a $37 million offer in November 2010 that was $2 million above Reddy’s offer. But after KPC obtained the state attorney general’s approval for the takeover, it failed to finalize the acquisition because it was not able to line up financing and that deal fell apart in May 2011. Subsequently, a federal bankruptcy court judge approved an agreement allowing the non-profit arm of Reddy’s for-profit venture, known as Prime Healthcare Service Foundation, to purchase the hospital for $35 million.
KPC now needs the approval of the state Attorney General’s Office to complete the deal. Last year, after Reddy’s $35 million offer was accepted by the bankruptcy court, the state attorney general’s office on September 20 intervened, blocking Reddy’s plan. A major consideration was that Victor Valley Community was founded and set up as a non-profit institution.  The attorney general’s office had moved to ensure that the High Desert preserve at least one non-profit hospital in an area with a multiplicity of for-profit medical centers, including one already owned by Reddy, Desert Valley Hospital.
“We have concluded that this proposed sale is not in the public interest and will likely create a significant effect on the availability or accessibility of health care services to the affected community,” acting chief deputy attorney general Michael Troncoso said at that time.
Nevertheless, with Victor Valley Community teetering on the brink of financial collapse, Reddy on October 14, 2011 proffered capital in the form of loans and a consulting arrangement to prevent the hospital from having to close its doors. That assistance was codified in the form of what was called a “post-petition revolving credit and security agreement between Victor Valley Community Hospital as borrower and Prime Healthcare Management, Inc. as lender.”
The California Attorney General’s office redoubled its effort to prevent that agreement from being actuated and filed on October 28 for a temporary restraining order to prevent the hospital from entering into a financing plan and consulting arrangement with Prime Healthcare. On October 31, Superior Court Judge Steve Malone tentatively denied the attorney general’s request for the restraining order. In November, Malone again denied the state attorney general office’s effort to block the $6 million financing and consulting agreement. Prime Healthcare never acquired Victor Valley Community Hospital, however.
The scenario was made more complicated when, also in November, KPC Global reasserted its interest in acquiring Victor Valley Community, filing legal and financial documents to create an entity known as Victor Valley Hospital Acquisition Inc., and indicating it stood ready to put up $31.1 million toward that end. Victor Valley Community Hospital officials were somewhat resistant to the KPC Global offer at that point, and were seemingly more favorably disposed to working with Prime Healthcare.
In January, St. Joseph/St. Mary made a $35  million bid on Victor Valley Community Hospital  but has not followed through with an arrangement on financing.
At present, KPC has commitments to cover the full $33.8 million purchase price of Victor Valley Community.

The city of Victorville squandered at least $116 million on efforts to develop electrical generating projects since 2005, according to the final report of  the 2011-12 San Bernardino County Grand Jury.
The city’s failed power plant projects were among five elements of Victorville’s municipal and ancillary operations scrutinized by the 2009-10, 2010-11 and 2011-12 grand juries. The grand jury also considered the city’s overall financial condition, its use of interfund loans and restricted funds, hangar construction and airport bond expenditures. Last year and the previous year, the grand jury did not include any findings with regard to Victorville in those years’ final grand jury reports, which are traditionally released on June 30, the close of the governmental fiscal year. Included in the section of this year’s report pertaining to Victorville was a performance audit conducted by the San Francisco-based accounting firm of Harvey M. Rose Associates.
With regard to the power plant debacles, the grand jury examined two such efforts engaged in by the city of Victorville and the Southern California Logistics Airport Authority (SCLAA), which is an adjunct to the city dedicated to the civilian use conversion of the former George Air Force Base.  Those two projects were the 500-megawatt Victorville Power Plant #2 (Victorville 2) and the 14-megawatt Foxborough Electrical Generating Station.  The Victorville 2 project was initiated by city officials based on an evaluation and recommendation from Inland Energy, a firm with a significant financial interest in having the city build a large power plant. The Foxborough Plant was intended to provide low cost energy to tenants at the Foxborough Industrial Park. Both projects, the grand jury contends, were initiated without a clear project plan, project goals, adequate research nor due diligence to determine if they were consistent with other municipal power plant development projects and arrangements for their completion. And both, according to the grand jury, were marred by inadequate project controls and the reliance on recommendations from contractors who have had a financial interest in the projects.
“Contrary to industry best practices, the city of Victorville, and by extension the SCLAA, have initiated large high-risk capital projects without conducting proper due diligence or ensuring proper controls,” the grand jury report states. “Rather than conducting a competitive process for awarding major development contracts, city management has executed contracts to companies and individuals with previous experience or familiarity with the city. Rather than conducting transparent risk assessments and establishing clear project plans, city management has failed to fully assess potential risks and has not established project plans with clearly stated goals, budgets, milestones, or performance measures. Instead of establishing clear and effective controls, policies, and procedures, city management has allowed contractors to operate without close oversight and has not consistently enforced contract terms. The absence of fully assessed risks, established project plans, and instituted controls has contributed to substantial failures of at least two power generation projects that required considerable financial investment.”
According to the grand jury, after the cities of Victorville and San Marcos in October 2003 became the founding members of the California Clean Energy Resources Authority (Cal-CLERA) but were unable to attract other municipalities to join that joint powers agency, the city bought into a March 2005 recommendation by Inland Energy that the city should “commit to undertaking the development of a 500 megawatt hybrid plant at Southern California Logistics Airport without delay.” That recommendation, the grand jury noted, was based on Inland Energy’s observation that city possessed a “unique blend of positive political, economic, and infrastructure factors that favor the development of such a plant.”
Inland Energy, which stood to gain by its further participation in the project, according to the grand jury, in its “evaluation downplayed the financial risk to the city, stating that ‘The city’s economic risk is mitigated by the fact that such a fully permitted plant at the SCLA [Southern California Logistics Airport] site could likely be sold or transferred in 2007-2010 for far more than it cost, if the city elected not to proceed with the plant’s construction.’’
Furthermore, according to the grand jury, “The Inland Energy evaluation also noted that the city could initiate the project without a definitive plan. City management did not conduct proper due diligence before initiating the Victorville 2 project. Specifically, management did not conduct a thorough independent analysis of risks prior to recommending that the council approve the development agreement with Inland Energy and, notably, a subsequent agreement to purchase expensive turbine equipcment from General Electric. Neither city management nor Inland Energy established a formal business plan for the project and never established a project budget. Without such planning, the city and SCLAA proceeded without clearly defined goals, milestones, or performance measures. For instance, throughout the project and even after the city had committed over $182 million to General Electric for fuel generation equipment and related services, it was still unclear whether the city would own the plant or if it would be sold to a third party operator. City management did not prepare an independent risk assessment and there is no evidence that potential risks were formally discussed by the city council. Although no formal business or project plan was established, it is apparent from interviews with city officials and from a review of the Inland Energy agreement that the initial goal of the project was to make the necessary preparations so that the project could be ‘build ready.’”
Build ready meant that the city would design the plant, obtain the requisite permits, and procure land so that another firm could construct and operate it. The grand jury said that Inland Energy represented that it would take roughly 24 months to fully permit the plant so that a developer could purchase the development rights, build the plant, and either operate it or allow another firm or the city, through Victorville Municipal Utility Services, to operate it.
However, according to the grand jury, “City management and the city council never formally established a budget for the Victorville 2 project. The closest approximation of a project budget can be found in the Inland Energy contract.” That budget, the grand jury noted, estimated $5.5 million in costs over a two year period, which was simply for the “permitting” of the power plant and did not include the cost of land purchases, potential borrowing costs, such as bond issuances, and staff time. Over time, the actual cost escalated.
According to the grand jury, “The city entered into the no-bid contract with Inland Energy based on a proposal from the company.” The grand jury noted that city management and the city council committed to the having Inland Energy lead the way with regard to building the plant largely on the basis of Inland Energy’s participation with Baltimore-based Constellation Energy in the successful development of the High Desert Power Plant, sometimes referred to as Victorville 1, the permitting process for which was first undertaken in 1998 and which came on line in 2003 and was widely seen as a lucrative success for the private interests.
“The development agreement with Inland Energy was based on a previous agreement between Inland Energy and Constellation Energy for development of the High Desert Power Plant,” according to the grand jury. “The agreement was written by attorneys representing Inland Energy using the High Desert Power Plant contract as a template. Although the city attorney reviewed and provided comments on a draft contract, it does not appear that the city attorney or other city managers actively negotiated the terms of the agreement to be substantively more beneficial to the city than the template contract it was based on. In fact, the agreement that the city entered into appears to be significantly more generous to the developer than the template agreement.”
The city made inadequate review of the contract terms, the grand jury found, noting the “agreement vaguely defines and poorly controls the provision of services. The agreement with Inland Energy allows for the company to be compensated for two types of services: (1) ‘development services’ and (2) ‘supplemental services.’ The agreement defines ‘development services’ as including: negotiating any agreements necessary to implement the project, and securing those permits and approvals required to entitle the project for development, including any task having the purpose of improving or enhancing the value of such entitlements. These services were the core of Inland Energy’s role in the Victorville 2 project and included the permitting of the plant. These services were eventually expanded to include assistance with the construction of the plant. Inland Energy was paid approximately $12.2 million from 2005 to 2010 for development services related to the Victorville 2 project. The agreement broadly defines ‘supplemental services’ as including: any on-going technical or management task deemed necessary by the city manager of Victorville including supervisory, administrative, consulting, advisement and other management services.  While these services, to an extent, may have been related to the Victorville 2 project, the supplemental services clause has been used to justify services completely unrelated to the project. Specifically, the city has paid over $607,000 to Inland Energy through May 2010 under this clause for other, consistently unsuccessful, projects. These expenditures have included over $166,000 for consulting services related to the city’s unsuccessful efforts to obtain federal grant funding under the U.S. Department of Homeland Security’s Immigrant Investor Program, also known as ‘EB-5’, and over $182,000 for consulting services related to the city’s unsuccessful attempt to develop and construct a power plant at the Foxborough Industrial Park in the Bear Valley Redevelopment Project Area. Additionally, Inland Energy was paid over $258,000 for consulting services related to the city’s efforts to investigate the possibility of becoming a community choice aggregator. While this service was related to the Victorville 2 project, it ultimately provided no tangible benefits to the project, the city, or SCLAA.”
According to the grand jury, the contract performance terms were poorly constructed and implemented. “The development agreement contains no effective performance measures for Inland Energy,” the report states. “There are no specific mechanisms that would allow the city council or city management to hold the contractor accountable for its performance.”
The compensation structure specified in the development agreement with Inland Energy provided for two payment methods: a monthly management fee at a rate of $150 per hour for “consultant” staff and $250 per hour for “senior consultant” staff, and a portion of “project operating profit.”
According to the grand jury, “There is no cap to the amount that can be billed. The company’s 2008 projections for the operational expenses of the 500 megawatt plant includes this compensation, which was estimated to be $4.5 million per year by grand jury sources. Further, the development agreement contains no clauses to limit this compensation to a defined period of time or a capped amount.  Assuming that the plant was built and then operated for 30 years, Inland Energy would be entitled to compensation of approximately $135 million over the life of the plant (without adjusting for inflation). Under this scenario, Inland Energy would be compensated with an additional $135 million over 30 years for what was estimated in the agreement as 24 months of design, development, and permitting work. The operating profit clause appears to be an unusual form of compensation and potentially troublesome for the effective sale and operation of the plant.”
Inland Energy’s management of the project was particularly poor in one regard, according to the grand jury, resulting in the city’s loss of a $50 million deposit with General Electric.
“In 2007, as Victorville 2 permitting was nearly completed, Inland Energy began advising the city to move forward with the purchase of equipment for the proposed plant,” according to the grand jury. “Inland Energy initiated negotiations with General Electric (GE) and advised the city, with some urgency, that it was important to make a commitment to GE due to the length of time required to procure the equipment and the desire for the plant to go online in accordance with the state’s energy demand schedule. Several city officials have stated that Inland Energy was driving the process to develop the Victorville 2 project with equipment purchases. Specifically, Inland Energy officials were briefing city officials, in closed session ‘workshops,’ with slide presentations that recommended the city move forward with a large financial commitment for the equipment purchase. On December 4, 2007 the city council ratified a resolution, which had been previously adopted in closed session, authorizing the city to execute an agreement with General Electric to purchase certain power plant generation equipment at a total contract price of $182,036,824. The contract called for the city to make an immediate initial down payment of $52 million on the equipment. The remaining $130 million was due in November 2008. According to city management, city officials were confident at the time that additional funding could be secured due to perceived demand from other jurisdictions in Southern California. Ultimately, city officials moved forward without any written or legal commitments from these jurisdictions, without bond financing in place, and without a committed third party prepared to purchase the development rights. City officials ultimately could not secure funding for the remainder of the purchase price of the power plant equipment. As a result, the city did not make its second scheduled payment in November 2008 and, on April 16, 2009, GE declared that the city had defaulted under the contract. Further, GE asserted that the city still owed additional amounts under the contract termination clause, although the city disputed the obligation. On May 18, 2010, approximately one year after the city defaulted on its obligation, the city and SCLAA came to an agreement with GE to settle the dispute. According to the settlement agreement, GE shall retain all funds ($50,020,000) provided in the initial payment. However, as a future sales incentive, the city is entitled to credits of up to $10 million on future purchases from GE, subject to certain conditions. The credits expire on April 30, 2016.”
The grand jury noted that city management is still trying to sell the development rights to the project. “City management asserts that the Victorville 2 Project is still ‘active’ as the city has purchased land and accumulated entitlement permits for the power plant,” the report states. “City management has made attempts for over three years to sell the development rights to the project. Despite a request for proposals sent out in May 2009 to 13 firms, which had expressed interest, the city has not been able to successfully identify a project developer. City officials have noted that potential buyers must negotiate primarily with Inland Energy, due to the clause in the firm’s development agreement with the city granting the right to five percent of project operating profits, estimated at $4 million to $5 million annually, for the life of the project.”
According to the grand jury, “The Victorville 2 project has cost the city over $76 million to date including approximately $50 million lost to General Electric for the power plant equipment, $12.1 million disbursed to Inland Energy for development services, $3.8 million to other services providers, and $8.6 million for the purchase of parcels for the project. This estimate of project costs does not include funds dispensed for consulting services provided by Kinsell, Newcomb, & De Dios, the city’s bond underwriter and to Goldman Sachs for financial services.”
The grand jury was as scathing in assessing the city’s performance with regard to the effort to build the much smaller Foxborough Power Plant, which commenced in 2004. That plant was intended as a small generating station to serve two anticipated tenants at the Foxborough Industrial Park, Nutro and ConAgra. The plan was for the electricity to go directly to the industrial park’s tenants without being conveyed onto the state power grid, thereby saving users the ten percent surcharge the state levies, and encouraging occupancy and expansion of operations into and at the industrial park
“The Foxborough Power Plant project was initially conceived as a method to provide low cost energy and steam to two incoming tenants at the Foxborough Industrial Park on the assumption that these two incoming tenants, Nutro and ConAgra, required a total of between five and ten megawatts of power for their operations,” according to the grand jury. “The city procured no-bid services from a consultant firm, Carter and Burgess, Inc., beginning in June 2004. This firm was retained to design, develop, and construct a cogeneration power plant to service the energy needs of tenants at the Foxborough Industrial Park in the city’s Bear Valley Redevelopment Area. The project was undertaken by the city without a thorough assessment of risks or sufficient expertise. Through a series of mishaps the project was never completed, wasting tens of millions of dollars of public funds.
“Neither city management nor Carter and Burgess established a risk assessment, business plan, or formal budget,” the grand jury report continues. “Without such planning, the city proceeded without clearly defined goals, milestones, or performance measures. In fact, the project was initiated with the broad objective of providing low cost power directly to tenants at the Foxborough Industrial Park without connecting to the California electrical grid system. However, toward the end of the project city management changed course and looked at options to connect the plant to the grid system.”
The grand jury said the project failed because of “dramatic growth” in its price tag.
“According to interviews with city officials, the Foxborough Power Plant project was initially estimated to cost the city approximately $17.5 million,” the grand jury report states. “However, the costs of the project quickly rose to $22 million. In April 2005, approximately 10 months after the project commenced, the city council approved a $41 million bond issuance for the project. In June 2006, approximately two years after the initiation of the project and four months after the anticipated completion, the city council approved a second bond issuance that provided an additional $21 million in financing to Carter and Burgess. The final cost of the Foxborough Power Plant project topped $91 million with press accounts stating that over $95 million had been spent. Out of this amount, Carter and Burgess was paid approximately $8.2 million.”
The city was ill-served by Carter Burgess, the grand jury said, and was able to prove that in court, though it has yet to recoup the money lost.
“Due to a series of mishaps, including an overestimation of the power needs for certain tenants, multiple design revisions, and the failure of certain power generation equipment, the Foxborough Power Plant was never completed,” the grand jury report states. “Following the cancellation of the construction project, the city initiated civil litigation against Carter and Burgess relating to the failure of the project. In December 2010 a Riverside County jury unanimously ruled in favor of the city and awarded Victorville $52,116,367 to be paid by the developer’s parent company. Despite the award of approximately $52 million, the city will still be left with approximately $40 million in losses. Further, the judgment award has not yet been paid and is under appeal.”
The grand jury recommended that the Victorville City Council “Draft and implement planning policies and procedures for all city and SCLAA capital projects. Such policies should incorporate best practices, including an independent evaluation of risks and fiscal impact.” Furthermore, the grand jury called upon the city council to “Draft and implement capital project controls, policies and procedures for all city and SCLAA capital projects. Such policies should incorporate best practices such as establishment of a project plan, including a project budget, which is periodically revisited and formally approved by the city council and/or SCLAA Board of Directors in open sessions. The policies should also include requirements for implementing performance measures that are regularly reported to the council during the life of a project.”
In addition, the grand jury said “Victorville needs to establish procurement controls, including requirements for competitive bidding, increasing levels of control over approval of professional service contracts based on cost to the city, and standard documentation requirements for the payment of invoices.”
And the grand jury indicated that Victorville has failed to adhere to California’s open public meeting law, the Ralph M. Brown Act.
“The city council should establish policies to ensure that its operations are consistent with the requirements of the State Government Code relating to open meetings and best practices, as they relate to government transparency,” the report concluded.
While issuing a prepared statement that “Certainly the findings and conclusions are cause for concern,” Victorville city officials noted that “Many of the recommendations were implemented previously and the city is committed to making every effort to continue to implement recommendations, which will continue to ensure the economic stability of the city.” But city officials suggested that the report was in part “inaccurate” as well as “inflammatory”, as well as out of date with regard to some facts and two years late.
“Many of the findings and recommendations would have been better timed for release in 2008 or 2009, as significant progress has been made since then,” according to the statement.
The city also noted that Jon Roberts, the city manager under whom the events referred to in the report transpired, is no longer with the city.

Powerful opposition is forming to the inclusion of eminent domain as a key component of the foreclosure fighting arsenal a newly-formed homeowner assistance joint powers authority is seeking to acquire.
The county of San Bernardino and the cities of Fontana and Ontario have banded together to form the Homeowner Protection Joint Powers Authority, which is charted to assist “underwater” homeowners and stave off pending foreclosures.
Throughout the county, 264,122 of the 488,422 single family homes in its constituent 24 incorporated cities and towns and unincorporated areas have at some point in the last four years been underwater. Of those 264,122 homeowners whose homes cost more than their current assessed value, 63.7 percent or 168,246 had received notices of default. Unemployment in the county is roughly 12.6 percent.
At the prompting of county chief executive officer Greg Devereaux, the joint powers authority was formed and a  variety of approaches to the problem have been contemplated, including bringing in private broker negotiators to change the terms of loans or coordinating relief for beleaguered  homeowners through the federal Home Affordable Refinance Program, along with an innovative strategy that calls for using government’s power of condemnation to seize the mortgages on those upside down homes to allow those homeowners on the brink of being thrown out on the street to renegotiate downward the terms of their loans.
Historically, the power of eminent domain has been used by governments to force private landowners to sell property, i.e., real estate, needed for public improvement projects. Under that process, a legislative body or local governing board condemns the property and takes the property in exchange for what is determined to be fair market value. Previously, eminent domain had been utilized for public works projects such as roads, bridges, water treatment facilities and the like. In 2005, the U.S. Supreme Court, in the case of Kelo v. New London, widened the government’s eminent domain authority to allow the city of New London, Connecticut to seize from Suzette Kelo her home so the property could be in turn provided to a private developer for development in conjunction with a redevelopment plan.  The court, in a 5-4 decision, ruled the 3,169 new jobs and $1.2 million a year in tax revenues to be realized as a consequence of the development justified the seizure from Kelo, since the project could be construed as a benefit to the community and as such was a permissible “public use” under the Takings Clause of the Fifth Amendment.
Some see in Kelo v. New London an opening that will allow eminent domain to be used in other circumstances where community benefit can be cited as justification.  One of those at the forefront of that movement is the San Francisco-based investment group, Mortgage Resolution Partners. Mortgage Resolution Partners is seeking to create a niche for itself by working to counteract the proliferation of so-called securitized mortgages, i.e., the practice of bundling mortgages which are then sold to massive numbers of investors. That practice has been seen as a contributory factor to the mortgage crisis because it has created a situation in which a single lender no longer holds the mortgages, preventing homeowners from renegotiating their loans when the value of their property has plummeted.
Mortgage Security Partners has offered to work with the Homeowner Protection Joint Powers Authority toward its goal by applying eminent domain against mortgage holders.  Mortgage Resolution Partners has already secured the backing of investors representing over a billion dollars in ready capital to fund the effort and take possession of the mortgage notes in line with the current market value of San Bernardino County homes they are tied into. The homeowners would get renegotiated loans that reflect the actual value of the property. Mortgage Resolution Partners would earn a fee on each transaction.
Eminent domain long has been derided as a potentially onerous and overreaching power of government. The contemplated expansion of that power triggered the objections of eighteen real estate and banking business and trade entities, who last week collectively sent a letter to San Bernardino County, Ontario and Fontana bemoaning any approach that would involve the use of condemnation proceedings to acquire mortgage notes.
The trade groups maintain the plan to use eminent domain constitutes “very serious legal and constitutional issues,” that would prove “immensely destructive to U.S. mortgage markets by undermining the sanctity of the contractual relationship between a borrower and creditor.”
In the letter dated June 28 to the San Bernardino County Board of Supervisors and Fontana and Ontario city councils, the organizations, including the Inland Valleys Association of Realtors, American Bankers Association, National Association of Homebuilders, the Securities Industry and Financial Markets Association, and the Association of Mortgage Investors  maintain that contrary to alleviating the foreclosure crisis, the use of eminent domain could worsen an already bleak real estate market by creating reluctance on the part of banks and lending institutions to make loans. “This program could actually serve to further depress housing values in the county by restricting the flow of credit to home buyers,” the letter states.

CHINO HILLS— California Public Utilities Commission President Michael Peevey on July 2 ordered Southern California Edison and the city of Chino Hills to ready information and prepare testimony by February 28, 2013 pertaining to the options for undergrounding large scale transmission lines previously approved to be strung from massive towers through the heart of the city.
In issuing that order Peevey further instructed Chino Hills officials to determine how much of the added cost of undergrounding the lines the city and its taxpayers and electrical ratepayers are willing to bear.

Michael Peevey

The preparations Peevey has called for will set the table for a later public hearing on the issue of undergrounding the cables for the $2.1 billion Tehachapi Renewable Transmission Project, which is intended to generate at least 1,500 megawatts of power from new windmills to be erected within a 50-square mile wind field in Kern County and then convey that electricity to the Los Angeles basin.
In 2009 Southern California Edison obtained from the California Public Utility Commission over Chino Hills city officials’ objections permission to utilize the long-existing 3.8 mile-long  power line right-of-way through Chino Hills from Tonner Canyon to the Riverside County line to erect 200-foot high towers to hold the line that is to traverse the upscale city in the far southwestern corner of San Bernardino County.
The city of Chino Hills sued Edison in 2010, claiming the company was on the verge of  “overburdening” the power line easements, but West Valley Superior Court Judge Keith D. Davis ruled the California Public Utilities Commission has exclusive jurisdiction regarding the route used by Edison. Chino Hills appealed Davis’s ruling to the 4th District Court of Appeal, but on September 12, 2011 the appeals court affirmed Davis’ finding that the California Public Utilities Commission and not the courts has exclusive jurisdiction over property rights issues between the city and Southern California Edison (SCE). That legal effort cost the city more than $2.3 million.
Even as the towers were being erected in Chino Hills last fall, the city made a last ditch appeal to Peevey, who visited the city and called for a delay while alternatives to the tower were sought and research on and discussions of alternative routing methods were carried out. Further work on the towers was suspended on November 11.
Monday’s ruling is an important milestone in the progress toward what Chino Hills officials and residents hope will be a change in the method of transmitting the electricity that will banish what they consider to be the unsightly towers from their landscape.
Peevey stopped short of saying that the towers, 12 of which have been erected within the city limits and five of which now stand in Carbon Canyon, will be dismantled, but indicated the PUC will conduct a forum by which alternatives to the towers will be thoroughly and comprehensively considered in time for Southern California Edison to have the Tehachapi Renewable Transmission Project up and running within three years.
“My objective is to ensure that the PUC moves promptly to develop a complete record with respect to the alternative of putting this line underground in Chino Hills, including the environmental impact of this type of construction. We need a better estimate of the cost based on a detailed engineering design,” Peevey said. “I applaud the efforts of SCE and the city of Chino Hills to explore this alternative through settlement negotiations over the past few months. Those talks have been very helpful in narrowing the scope of the controversy. By today’s ruling, I am directing both sides to sharpen their pencils to bring the underground solution into better focus.
“This will allow the PUC to then select, through its final decision in this case, the best solution for this important renewable energy transmission line,” Peevey continued. “We cannot lose sight of the fact that time is of the essence in getting this line completed and energized by 2015. We must enable the delivery of electric generation over the project on the schedule currently anticipated.”
In the ruling itself, Peevey said he wants all of the issues pertaining to the portion of the Tehachapi line through Chino Hills, referred to as Segment 8A, hashed out so the Public Utilities Commission “may reach a timely and lawful resolution that affirms a viable route for the project within that segment, releases the construction stay, and enables the delivery of electric generation over the Tehachapi Renewable Transmission Project on the schedule currently anticipated.”
Specifically, Peevey said he wanted Edison to prepare testimony related to preliminary engineering data it has acquired on the undergrounding of a single-circuit with three cables per phase in conduit in the existing Chino Hills right-of-way and the undergrounding of a single-circuit with two cables per phase in conduit in the existing Chino Hills right-of-way. He said he had excluded a third option for an undergrounded single-circuit with one cable per phase in conduit in the existing Chino Hills right-of-way “because that option would not supply enough margin under normal and emergency conditions.”
Many Chino Hills residents and officials hailed Peevey’s order, focusing most readily on the presumed likelihood of the elimination of the towers, which locals consider to be a visual blight that will negatively impact property values in the city. They generally looked beyond the implication in Peevey’s order that the city and its residents will need to bear a good portion of the financial burden of undergrounding the electrical circuits.
“Chino Hills should develop prepared testimony responsive to Southern California Edison’s prepared testimony on the three cables per phase and two cables per phase in an undergrounded, single-circuit cross-linked polyethylene conduit in the existing Chino Hills right-of-way,” Peevey wrote in his order. “In particular, Chino Hills should identify and clearly quantify any financial commitment it is prepared to make to minimize the total additional cost of an underground option as compared to the project initially approved for Segment 8A.”
According to Edison officials, the cost of digging a six-foot wide, 3.8-mile long trench the entire length of the existing easement through town and burying a double-circuit line will cost from $703 million to $1 billion.

A British company is proposing erecting several score of 195-foot high wind turbines in the desert north of Yucca Valley on Black Lava Butte and Flat Top Mesa north of Pipes Canyon Road between Pioneertown and Yucca Mesa.
London-based Element Power, which has its main North American office in Portland, Oregon, is doing exploratory work to determine whether it will seek to permit the project under the aegis of the Desert Renewable Energy Conservation Plan, which calls for 33 percent of California’s commercially-produced electricity sales to be provided by renewable sources by 2020. Element believes that if it applies under the plan, its permits will be expedited.
In July 2011, Element Power erected two 197-foot high towers to conduct meteorological tests to collect data on wind speed and direction at that height at that location. The Bureau of Land Management in 2010 gave Element permission to build those towers. Element hopes to determine from that data whether building a wind farm at that location will prove commercially viable.
While some endorse the concept of aggressive corporate efforts to develop renewable energy and certain environmentalists embrace the wind farm concept, others, including some environmentalists, are opposed to the project proposal.
Some opponents cite the harm they perceive the placement of turbines will have on the desert vista. They and others find objectionable the harm they say the wind turbines will have on eagles, bats, and other birds that fly through or inhabit the area. Another point of protest hinges on  the possible destruction of Native American rock art and other archeological artifacts in the area. Other critics point out that the remote location of the wind field will require that the electricity be transported a considerable distance, and that a considerable percentage of the energy will be lost during that line transport.
If Element Power elects to proceed with the project, it will need to erect eight miles of transmission lines and towers to deliver the energy to the California Power Grid’s existing electrical transmission lines.
Three groups opposed to the project on environmental grounds, the California Desert Coalition, Save Our Desert, and the Center for Biological Diversity, are seeking to have that portion of the desert which was identified as an Area of Critical Environmental Concern in the Desert Protection Act introduced to Congress in 2011 extended to include Black Lava Butte and Flat Top Mesa.
There is also potential opposition to the project by another, non-environmentally-oriented group –  the Marine Corps. The Department of the Navy is seeking to expand the Twentynine Palms Marine Corps Base’s Desert Warfare Training Grounds west into Johnson Valley and military officials have concerns the towers could prevent aircraft from hugging the terrain as they carry out low-flying training missions in support of ground maneuvers.

TWENTYNINE PALMS —In reaction to a recommendation by the San Bernardino County Local Agency Formation Commission, the Twentynine Palms Water District Board of Directors on June 27 voted to initiate the process of divesting the area’s fire district from the water district.
After the California Department of Forestry ceased providing local fire service in 1958, the Twentynine Palms Water District extended its responsibilities to include fire protection, thus beginning a 54-year-run of overseeing the fire department that has grown now to include two fire stations. But the cost of running the fire department now exceeds the special revenues provided to the water district to maintain the service and in April, residents within the water district’s service area rejected a ballot initiative, Measure H, which would have levied a special fire service assessment on all water district customers.
According to fire chief Jim Thompson, the fire department’s only alternative to balance its books at this point is to shutter either the fire station in downtown Twentynine Palms or the one on Lear Avenue, which provides first response for most of the unincorporated county area within the water department’s jurisdiction.
The Local Agency Formation Commission (LAFCO), which oversees jurisdictional issues throughout the county, in its five-year service review of Twentynine Palms delivered on May 7, 2012 stated that the demands of operating the fire district are now outrunning the water district’s funding ability. The report, authored by LAFCO executive officer Kathleen Rollings-McDonald, assistant executive officer Samuel Martinez and project manager Michael Tuerpe, said LAFCO’s review of the water district’s financial books “identifies a significant deficiency in funding” such that “the water district’s fire operations are unsustainable as presently financed.”
Rollings-McDonald on May 24 told the water district’s board members that the district would have to overcome the financial challenges facing the fire department, or cede control of the department to another entity by July 1, 2013. She said the water district could either on its own spin the downtown station off to the city of Twentynine Palms and the Lear Avenue station to the county fire division and thereby surrender the special tax to both of those entities or in the alternative invite the county fire division to expand its sphere of influence and annex the water district’s territory for the purpose of providing fire service, complete with an arrangement to have the county inherit the special tax.
Last week, the entire water board, with director Nicholas “Bo” Bourikas not present but voting in absentia in writing, moved to pursue filing an application, at a processing cost of $15,400, with the San Bernardino County Local Agency Formation Commission to sever fire service from the district.
The fire department has continued to provide fire protection to all areas within Twentynine Palms’ city limits after the city’s 1987 incorporation. The city does not contribute to, participate in or subsidize the fire department’s operational budget. Theoretically, fire department finances are independent of the water district, with water rates totally devoted to the provision of water to customers. Fire department operations are defrayed entirely by a special tax on properties throughout the service area of the department.
The water district’s boundaries and the city limits are not coterminous, as the water district serves areas outside the city as well as within it.
In 2007, the city and the district began earnest discussion of annexing the fire department to the city, and formed a Joint Agency Fire Department Committee to look into the matter. On June 9, 2009, then-city manager Michael Tree told the council that if the transfer were to be made it would be best to do it totally and in one fell swoop rather than in stages. But because of complications with regard to the authority for the special tax and the formula for the distribution of tax revenues, as well as the discrepancy between the city limits and the district’s service area, the city elected to forego the takeover.
While the city remains reluctant to annex the fire department in total, if forced to take on the downtown station it could employ its own firefighters to man it or contract with the county or the California Division of Forestry, also known as Cal Fire.

A woman who was recently promoted to the position of  captain with the Redlands fire department has sued the city, its fire chief and two battalion chiefs, alleging she was thrice earlier denied that promotion on the basis of gender discrimination.
Eva Toppos, 36, who went to work with the Redlands Fire Department in June 2001, was named firefighter of the year in 2008 and  was promoted to engineer in July 2009, alleges she twice, in 2009 and 2011, tested at the forefront of her colleagues who were vying for the position of fire captain but was not promoted. She claims that when she applied to take part in the competition for an open captain position in 2007, she was not permitted to do so.
In Toppos’ suit, her attorney, Michael McGill, asserts that fire chief Jeff Frazier in 2009 told her she had “performed exceptionally but would not be respected as a captain because she is a woman” and in 2011 Frazier told her she had finished second and there was nothing about her performance that needed to be improved upon. According to Toppos, Frazier assured her she would eventually be promoted if she continued in the capacity of “engineer for another year or two and let the guys get used to the idea of a female captain.”
According to the suit, “Plaintiff was not promoted even though she had more experience than the two firefighters that were promoted.”
McGill maintains Toppos experienced retaliation and harassment for complaining, including being subjected to rumors of her having affairs with some of her colleagues, which she believed may have led to two stress-induced miscarriages. She was also subjected to obloquy for taking maternity leave, according to the suit.
“Plaintiff’s gender was a motivating reason for the actions taken against plaintiff,” McGill states in the suit.
The suit was filed on June 11. Almost simultaneously, Toppos received a promotion to fire captain.
In its response, the city denied all of the allegations in the lawsuit. Redlands officials would not respond to questions about whether Toppos’ promotion was made before or after the lodging of the lawsuit or whether the promotion was given in response to the suit.

SAN BERNARDINO—Graduation rates among high school seniors throughout San Bernardino County increased by 3.5 percent in the 2010-11 academic year, the California Department of Education announced this week.
While the 74 percent graduation rate in San Bernardino County trailed the statewide average of 76.3 percent, the graduation rates among Hispanic and African- American students were higher in San Bernardino County than statewide averages.
The Department of Education’s figures did not include statistics from the just-concluded 2011-12 academic year, making those for 2010-11 the most recently available. According to the data, the county’s overall graduation rate, which stood at 71.5 percent in 2009-10, advanced 3.5 percent to 74 percent in 2010-11. In comparison, the state averaged 74.8 percent graduates in 2009-10 and saw a 1.5 percent improvement to 76.3 percent in 2010-11.
The graduation rates for African-American high school students in San Bernardino County jumped significantly between 2009-10 and 2010-11, rising 6.5 percent from 60.5 percent to 67 percent, putting them at 4.1 percent above average for all black students in California.
Hispanic students in San Bernardino County also made significant strides in fulfilling educational goals. In San Bernardino County, Latino students bettered the graduation rate for Hispanic students statewide, posting an average of 71.4 percent, which eclipsed the California average of 70.4 percent.
The graduation rate for Caucasians in San Bernardino County was 81 percent in 2010-11, an improvement of 3.7 percent over the 77.3 percent recorded in 2009-10, but nevertheless behind the state average of 85.5 percent.
San Bernardino County’s statistics with regard to the converse of graduation, i.e., dropout frequency, also showed an improvement.
The dropout rates for the county’s black students dropped 5.5 percent to 20.2 percent, encouragingly under the state average of 24.7 percent.
The Hispanic student dropout rate in the county was 17 percent, which was 0.7 percent lower than the statewide trend.
The dropout rate for white students fell from 14.8 percent in 2009-10 to 10.7 percent, an improvement but still an unfavorable comparison to the overall state rate of 8.9 percent for 2010-11.
Among county students for whom English is a second language, graduation rates improved 2.5 percent to 60 percent, putting the county just off the state average of 60.3 percent. Socioeconomically disadvantaged students in San Bernardino County who graduated increased 4.6 percent from 65 percent in 2009-10 to a graduation rate of 69.6 percent in 2010-11, just behind the rest of the state, which averaged 70 percent.

VICTORVILLE—A jury this week acquitted a 20-year-old Las Vegas man of gross vehicular manslaughter and deadlocked on the lesser charge of negligent vehicular manslaughter while intoxicated in regard to the death of California Highway Patrol  Officer Justin McGrory.
Rafael Garcia was driving a car with four passengers in the early morning of June 27, 2010 as they were returning to Las Vegas from Los Angeles when the vehicle plowed into McGrory, who was conducting a traffic stop on the right shoulder of northbound I-15 roughly a mile south of Hodge Road.
In  an interrogation by investigators after the accident, Garcia acknowledged he had smoked marijuana several hours before beginning the drive back to Las Vegas. A subsequent blood test showed there were cannabinoids in his system. Garcia said he had started to fall asleep at the wheel, but continued driving while using the car’s cruise control.
One of the passengers in the vehicle had a medical marijuana prescription and a search of the car turned up about two-and-a-half ounces of marijuana.
After deliberations lasting three-and-a-half days, the jurors made findings of not guilty of gross vehicular manslaughter while intoxicated with marijuana, not guilty of gross vehicular manslaughter and not guilty of child endangerment of a juvenile who was in the car. The panel split 9-3 in favor of acquittal on a charge of negligent vehicular manslaughter while intoxicated
The jury did rule Garcia guilty of transporting marijuana after trial judge Eric Nakata refused to allow Michael Becker, Garcia’s attorney, to inform the jury that one of his passengers who had a medical prescription for marijuana was allowed to possess the drug under the terms of the Compassionate Use Act.
Becker, Garcia, and deputy district attorney Jill Gregory, who prosecuted Garcia, are due back in court on July 27 when motions from the district attorney’s office will be due on a decision of whether to proceed with a retrial of Garcia on the negligent vehicular manslaughter while intoxicated charge.

In Yucca Valley, a bastion of political conservatism where limited-government sentiment predominates, the ascendant ideology has created a circumstance in which the state is now threatening action that in the words of the town’s former mayor and current state Assemblyman Paul Cook could transform Yucca Valley into a “ghost town.”

Paul Cook

The town’s burgeoning population has created and accelerated the need for the construction of a wastewater treatment system and a demand by state regulators that locals build it. In reaction to what they perceive as heavy-handed government intrusion into their affairs, local voters have consistently elected leaders who have either outright defied or simply ignored the regulators, while consistently instituting policies that have delayed or obstructed the provision of the infrastructure.
The delays, in turn, are escalating the eventual cost of providing the infrastructure, lessening the likelihood that once the grudge match with the state is resolved, local residents will be able to bear the cost of the infrastructure.
Long a remote and rustic desert area that attracted those wishing to remain well off the beaten track, a major development in Yucca Valley’s evolution toward becoming a larger community was Norman J. Essig’s effort beginning in the 1950s to establish 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, which is 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.
In November 1991, the town incorporated, becoming the 24th and last municipality in San Bernardino County to do so.
City officials, embodying the values of their constituents, eschewed big government and excessive regulation. Many town roads remain unpaved to this day. Other citified amenities such as wastewater treatment, are non-existent. When elements of the populace’s libertarian values clashed with popular sentiment such as the desire of some residents to maintain the town’s rural character and prevent urbanization, the issue was resolved by providing developers with carte blanche to build aggressively without incorporating urban land use standards.
The town did not undertake the construction of a municipal sewer system. Instead, the septic systems that had proliferated in Yucca Valley for a half-century remained a constant 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.
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 the previous decade, 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 risen to levels that presaged health threats if the matter was not addressed. Those contaminants included nitrates and other pollutants including pharmaceuticals and salts. Water levels are deep enough to have delayed the need for a wastewater treatment system.
In an effort to reverse severe declines in water tables resulting from limited recharge from rainfall,  the water district began importation of state aqueduct water into Yucca Valley, which in turn caused notice of the contamination.  Whereas historic pumping increases from the 1940s to 1995 resulted in the water levels dropping faster than the nitrates from septic systems seeped downward, with the completion of the Morongo Basin Pipeline project and the accompanying completion and activation of recharge basins in Yucca Valley, the Hi-Desert Water District began to percolate 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. This 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 and refused to impose any kind of building or development moratorium that would stabilize the problem. While suspending any action at least five years into the future, the town of Yucca Valley forged 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 proceeds. The city was not able, however to stave off state-imposed septic discharge prohibitions due to be triggered as of May 19, 2016. Under that mandate, phase 1 of a wastewater system must be completed or significantly on its way to completion by that date or the state will initiate enforcement action. 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.
Currently,  finding funding remains the main focus as grants and low interest loans are sought. The Hi-Desert Water Agency, which is to undertake the project, is seeking to lead the community into an acceptance of the sewer system. The town of Yucca Valley, while evaluating for the water district various funding options for the project, in keeping with the laissez faire, minimal-governmental-interference philosophy that has traditionally been the platform of its elected leadership, until very recently has stayed  at arm’s length from the matter.
Indeed, Yucca Valley’s leading citizen, Paul Cook, who served on the Yucca Valley City Council for eight years, from 1998 until 2006, and is now serving in the California Assembly and is one of two candidates who has qualified for a run-off in the newly drawn 8th Congressional District, more than any single political entity has prevented the wastewater project from moving ahead. As 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 has dwelled at length upon the cost of the project and what he considers his constituents’ inability to bear that cost.
“We have to look at this from some perspective of a cost analysis,” Cook said. “This 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. I’m not afraid to talk to Governor [Jerry] Brown.  I work for you and we’re not afraid to get a bloody nose.”  Cook bragged he would tell Brown, “In Yucca Valley, we want you to declare Yucca Valley a historical site because we’re going to be a ghost town!”
More recently, Cook has acknowledged that building the sewer system is a desirable goal, but still maintains that the state is overstepping its authority by requiring that it be built on the local dime.
“When a state bureaucracy imposes a septic tank prohibition, sets a 2016 deadline, and doesn’t offer funding to deliver the project, it is without question an unfunded mandate,” Cook said. “It is imperative that the California Water Resources Control Board provide Yucca Valley residents and businesses access to extended term, reduced interest rate loans along with debt forgiveness.  Additionally, every Proposition 84 dollar appropriated to our region needs to be made available to the Hi-Desert Water District to help deliver the lowest cost sewer system to our community. While protecting water quality is a laudable goal, the costs associated with constructing a sewer and wastewater treatment plant could have a potentially devastating impact on Yucca Valley without these resources.”

Chad Mayes

Chad Mayes, the youthful mayor of Yucca Valley who championed limited government throughout his tenure in office before he resigned to become chief of staff to San Bernardino County Supervisor Janice Rutherford in 2010, was similarly opposed to imposing the intrusion and expense of creating a sewer system on the town’s residents, businesses and landowners.
Mayes’ father, the Reverend Roger Mayes, is a member of the Hi-Desert Water District Board of Directors, and a longtime advocate of limited government.
With the May 19, 2016 deadline looming, one community institution – the Hi-Desert Water District – is pushing for a transformation in the way things are handled.
Jennifer Cusack, the spokeswoman for the district, sounded an alarm about further inaction. “There is a state prohibition on the discharge from septic system as adopted by the California Regional Water Quality Control Board,” Cusack said. “There are three ways for people to comply. We can build the sewer system or they can seal off their system and pump it or they can build their own package treatment facility.”
Only the first of those three approaches has practical viability for the entire town population, she said.
“This is the solution we believe will be best for community,” Cusack said, explaining, “We have so many in the community using septic systems that we have saturated the ground with nitrates. The United States Geological Survey has studied it for a decade-and-a-half and confirmed the nitrate concentrations are from the septic systems. Right now the water we are delivering to our customers is safe, thanks to the high quality water from the Morongo pipeline.”
But recharging the aquifer with the imported water is limited due to the nitrate concentrations existing in the soil, Cusack said.
“We cannot continue to use septic systems as water moves nitrates further into the ground,” she said.
Cusack said the water district has done much of the preparatory work for the wastewater system. “In fact, our plans for a wastewater treatment system are well under way. We have done all of the environmental studies. We have clearance though the California Environmental Quality Act and National Environmental Protection Act. We have surveyed and mapped the project’s phase one and are ready to go. The collection system, consisting of over 400,000 linear feet of pipe, is the largest part of the project. It will be the most time-consuming and expensive component of phase 1 of the project. Phase 1 will protect all of the groundwater at the base of the valley. By the end of this summer we will begin the design for the collection system and it will have been paid for entirely by grants.”
Cusack acknowledged “Financing is a huge issue. There are significant costs. A high percentage of our population are retired seniors living mostly on fixed incomes who came here to live because it is an inexpensive place to retire. We have to be sensitive to that. We are seeking low interest funding though state revolving funds. We have applied for a low to no-interest loan through the state revolving fund and continue to aggressively seek grants. We have a significant need financially and have a  $20 million authorization from the Bureau of Reclamation, which will help. We are still going to need a component that comes from the residents. The question we need to answer is ‘What is the affordability threshold?’ We need to find out what the typical household in our community can afford.  We believe a majority of people understand this issue and would be willing to pay between $20 and $40 per month.”
The $125 million cost of the project could be defrayed over 30 years, Cusack said, and the debt servicing would involve loans satisfied by assessments on property owners. “Public agencies can form assessment districts,” she said.
Previous figures, which Cusack now says are dated, put each parcel’s share in the debt burden at $16,700.
“We do not have new figures, yet,” Cusack said. “We would form the assessment district to lien the properties to get a loan though state revolving funds. The assessment district would become the securing mechanism. The lien would be passed on to the next homeowner when the home is sold. We would not need to be paid until a year after construction is complete, 2017 or later.”
The formation of the assessment district would be made, Cusack said, through a mail ballot sent to the town’s property owners. A simple majority vote approving the district would result in its formation.
As of three months ago, however, there did not appear to be majority support for the assessment district’s formation. At the water district’s behest, BW Research carried out a telephone survey of property owners to measure their willingness to support an assessment of $15,000 to construct the sewer system. Thirty-two percent of respondents said they would vote in favor of the assessment district’s formation. Sixty-eight percent said they could not afford the current cost estimate.
Nevertheless, Cusack said Yucca Valley residents understand the need for the project. She said lowering the cost remains the key factor.  She cited the  previous approval of the Morongo Basin Pipeline Project as an indicator of the local population’s willingness to invest in necessary infrastructure when doing so is in the collective interest. She said that if the property owners have the facts they will make an informed decision.
One method of education is to let Yucca Valley’s residents know what will befall them if the system is not built. An illustration of that peril consists of the experience of Los Osos, California, which was under a similar order from the California Water Resources Board and failed to heed it.
“The goal is to protect our groundwater on our own and not have the state enforce its order,” Cusack said. “Los Osos became subject to an enforcement phase, which involved cease and desist orders, and that community is now building a wastewater system at a greater cost than originally planned. Enforcement is done in a lottery fashion, selecting random property owners to receive cease and desist orders with the potential of daily fines for non-compliance. They are ordered to then discontinue the discharge from their septic system, seal it off and pump it regularly. If they do not, they levy fines which can amount to up to $5,000 per day and they start by sending request letters for the homeowners to stop discharging from their septic systems. What they try to do is motivate them through their authority to solve the problem.”
Cusack admitted that there are still “some” members of the Yucca Valley community who do not believe a sewer system is needed.
“Distrust of government has created a situation where people do not realize they are hurting themselves,” she said. “We are hoping our community can educate themselves and learn we can do ourselves more harm than good by fighting this. It is true that this is a conservative community. People out here like to be left alone. But our community is able to solve problems once people understand we have problems that need to be solved. As priorities go, this is very important.  People for the most part do understand that septic systems  pollute the environment. Without safe water Yucca Valley will be a less attractive place to be. It is a fantastic place to live.”
Cusack said the community cannot afford to temporize.
“We have limited time to educate the property owners of the situation we are dealing with and get the cost low enough so it is affordable,” Cusack said. Initiating the effort now makes sense, she said, because “of the competitive construction market. The sooner we move the better. We need money to construct the project. The assessment district is the security mechanism needed to obtain the financing.”
And lead time is required on a project of this size, Cusack emphasized.  “Delays beyond an 18-to-24 month design process could result in increased costs as construction costs rise,” she said. “If we cannot get the financing by the time the design is complete, a delay in construction would be necessary and the project may not be completed by May 19, 2016. That is not a hard line date, but if we do nothing, it could lead to an enforcement phase of the regional board’s prohibition on the discharge from septic systems. The bottom line is we need to protect our groundwater.”
Yucca Valley Town Manager Mark Nuami told the Sentinel, “The town of Yucca Valley is working together with the Hi-Desert Water District in their efforts to deliver an efficient and low cost sewer system. We are pursuing grants and state funding to upgrade our local sewer systems.”
Revenue sources for the project are likely to prove elusive, Nuami said.
“State budget deficits are anticipated for years to come,” he said. “Given the legal nature of the state sewer mandate and the potential for large fines, it is our responsibility to find a solution that will create certainty, keep costs low and protect property values. We can’t continue to put this issue off to the future. A centralized sewer system is long overdue.”
Nuami concluded, “The town and Hi-Desert Water District are working together to identify funding solutions that will significantly lower the costs of the state-mandated sewer system improvements for local taxpayers.”