After nearly a decade of preparations and commitments toward extending the Gold Line light-rail commuter system eastward into San Bernardino County from the San Gabriel Mountain Foothill Region of Los Angeles County, senior staff with the San Bernardino County Transportation Authority early this month recommended that the authority’s board give serious consideration to withdrawing its support, funding and participation in the project altogether.
“Many of you have heard for many years now about the Gold Line and their efforts to build into our county,” San Bernardino County Transportation Authority Executive Director Ray Wolfe said toward the close of the September 4 meeting of the authority’s board. “An important connection is being made. The costs of the project when they opened bids and finally awarded the contract were significantly higher than the funding available to build to Montclair, and so they are building to Pomona as the initial phase. They have in their contract a firm two-year bid requirement to build from Pomona North to Montclair. That’s a $550 million cost to build 3.3 miles because they have to tear out the MetroLink tracks, move them to the south side of the corridor to make room for the Gold Line tracks. So I’m going to come back to you through committee next month and hopefully to the board in November with a recommendation that we throw in the towel. There’s another alternative that is much more cost effective and will allow us to take the funds that are identified for the Gold Line right now. There’s $80 million identified in our county. We’re short $15 million at this point. Those funds can be used for other priorities in this county. And so, look for a conversation at transit committee next month, and hopefully that conversation will carry forward to the board. I think it’s time for us to start making some tough decisions on a project that has been a challenge for many years. The recommendation that we’ll bring forward will look to solve the problem that the Gold Line has purported that they can only solve. We can do it a different way.”
Formerly known as the San Bernardino Association of Governments or SANBAG, the San Bernardino County Transportation Authority has a governing board consisting of a council member or mayor from each of the county’s 24 incorporated cities as well as all five of the members of the county board of supervisors. Wolfe’s signal at the San Bernardino County Transportation Authority’s September 4 meeting that he believes county officials would do well to seek an alternative to the extension of the light rail system, the first of its kind in San Bernardino County since the Red Line was abandoned nearly 70 years ago, did not sit well with city government officials on the county’s west side.
The San Bernardino County Transportation Authority functions as the steward of Measure I funds.  Measure I was a San Bernardino County funding initiative that imposed a half-cent sales tax collected throughout San Bernardino County for transportation improvements. Measure I was first approved by San Bernardino County voters in 1989 and was extended by a second vote in 2004 to remain in place through 2040.
It was noted that 65 percent of the county’s Measure I revenue is generated within the seven cities at the west end of San Bernardino County, and that the Gold Line is a major project as part of the strategy for alleviating traffic gridlock in that region. With the extension of the Gold Line into Western San Bernardino County on the drawing boards for over a decade with vaguer plans for it to extend as far east as San Bernardino, Redlands or Yucaipa by the middle of the current century, the cities on the west side of San Bernardino County have in part shaped their planning to provide for transit districts – consisting of higher density residential units surrounding the rail corridor – in their jurisdictions. They consider the Gold Line to be an intrinsic element of the character of their respective cities’ futures, and they were miffed with what they considered to be Wolfe’s cavalier reversal with regard to a planning process that has been years in the making and refining.
“He doesn’t believe in or totally understand the success of the Gold Line and what it has done for the people who utilize it,” Ontario Mayor Paul Leon said of Wolfe. “To throw in the towel now, without a study and without asking the people what they want, would be a travesty to the voters and the hundreds of thousands of those who are stuck on a freeway that does not move in either direction twice a day for long periods of time.”
Instead of flinching at the cost, Leon added, “SBCTA [the San Bernardino County Transportation Agency] needs to fully understand and appreciate the project, so it can explain to the residents of this county what the benefit is of seamlessly connecting the Gold Line into San Bernardino County as an affordable option into and out of Los Angeles, where many of our residents work.”
Montclair Mayor John Dutrey, who was at the September 4 meeting, reacted immediately to what Wolfe had said.
“I support the Gold Line coming to Montclair,” Dutrey said, just prior to the meeting being adjourned. He too said the inflation of the cost should not dissuade San Bernardino County officials from allowing the project to proceed. “I know when the bids came out the numbers were much higher,” Dutrey acknowledged, but he said funding augmentations would not come out of the San Bernardino County Transportation Authority’s coffers. “There’s not a commitment for this agency to pay more into the Gold Line,” Dutrey said. “The movement is to seek the $465 million for it. I think it’s wrong for us to throw in the towel. I don’t think you and I have had that discussion. You told me about your option B if indeed the funding for Gold Line is not there in the next two years. I’m a little disappointed to hear this, Ray. I just want to state that I support, and I think this region needs to support, the Gold Line to Montclair when this agency’s not being asked to pay any more money into it.”
The Gold Line is a 31-mile light rail line running from Atlantic in Los Angeles west along 3rd Street to Indiana Street to 1st Street west to Little Tokyo through a tunnel under Boyle Heights with two underground stations there, from which it continues on to Alameda Street in Little Tokyo, where the line turns north and crosses over the Hollywood Freeway with a stop at Union Station. From Union Station, the Gold Line heads north on an elevated rail to Chinatown and then crosses the Los Angeles River adjacent to the Interstate 5, continuing north/northeast, running through Lincoln Heights, Mount Washington and Highland Park. Just north of Highland Park, the route crosses over the Arroyo Seco Parkway at the 110 Freeway and continues through South Psadena and then downtown Pasadena, Old Pasadena and then enters the median of the 210 Freeway, east to Sierra Madre Villa, where east of Pasadena the route crosses over the eastbound lanes of the Foothill Freeway (Interstate 210) west of Santa Anita Avenue, with stops in Arcadia and then Monrovia, thereafter reaching Duarte and the City of Hope. Crossing over the San Gabriel River, the Gold Line reaches Irwindale and thereafter continues to its Azusa Station.
The Gold Line Construction Authority right now is in the first stages toward a nine-mile, $806 million extension of the light rail line from Azusa to northern Pomona. The track will reach Pomona by late 2025. Thereafter, the line is to be extended another 3.3 miles from Pomona through Claremont to Montclair at that city’s existing Montclair Transit Center. According to the Gold Line Construction Authority, to extend the line from north Pomona to Claremont will entail a cost of $450 million. The extension from Claremont to Montclair will run roughly $96 million.
If the San Bernardino County Transportation Authority Board follows Wolfe’s recommendation, the funding for the extension beyond Claremont will be cut off.
It is Wolfe’s contention that there are more cost efficient ways of providing commuter rail service bridging Los Angeles County with San Bernardino County, according to both Otis Greer and Tim Watkins, who oversee the San Bernardino County Transportation Agency’s legislative and public affairs division.
Specifically, Greer and Watkins maintain, constructing another set of tracks to accommodate the Gold Line exclusively would entail a squandering of most of the $96 million it would cost. Greer and Watkins say that Wolf instead proposes using the existing tracks on which the MetroLink train runs from Claremont through San Bernardino County for another form of light rail, using passenger cars pulled by what they called a “hybrid” engine.
The existing MetroLink track, which was originally established by the Southern Pacific Railroad, accommodates the Los Angeles to San Bernardino MetroLink trains, which run every half hour, as well as accommodating five freight trains over the track on a daily basis.
Wolf’s proposal to apply a version of the light rail concept, using the hybrid engines identical to what is being proposed for a light rail system now under construction in Redlands, will reduce unnecessary redundancy and save a substantial amount of money, according to Greer and Watkins.
Unlike MetroLink, which features departures every half hour, the Gold Line runs with greater frequency, meaning every five to seven minutes during peak commuting hours and every 12 to 15 minutes during off-peak hours. Wolfe believes the existing line running through San Bernardino County can accommodate all of the various trains – MetroLink, the five daily freight trains and the hybrid-drawn rail cars he intends as a replacement for the proposed Gold Line.
A primary issue, according to Wolf is the expense.
According to Greer, in constructing the Gold Line within the same rail line right-of-way where the MetroLink tracks are now placed, what occurs is that over a short span along that right-of-way, a temporary line to accommodate MetroLink trains is constructed. Once that span of temporary track is completed, it is connected to the existing track used by the MetroLink trains. Thereafter, the MetroLink track is demolished and what is then laid down in its place is a new MetroLink track and another track for the Gold Line. Thereafter, the temporary track is removed.
The creation of the temporary track entails tremendous expense and remains serviceable only for the time the other two tracks are being laid down, Greer said.
There has been an escalation in the costs of the Claremont to Montclair extension that is forbidding, Greer said. “Early on in process before bids came in, our understanding was the total cost to San Bernardino County was to be $73 million,” Greer said. Over time, while the San Bernardino County Transportation Authority remained committed to the project, Greer said, “We saw the cost going up. We were told it was going to be closer to $80 million.”
At that point, the San Bernardino County Transportation Authority had dedicated $39 million in Measure I dollars toward the project and did a joint application with the Los Angles Metro Transit Agency for a State of California Transit and Intercity Rail Capital Program grant. That application was successful and it brought in $250 million on the Los Angeles County side, which made a significant but not complete inroad on the $850 funding deficit that jurisdiction had, and provided another $41 million of the San Bernardino County portion of the funding gap, covering the entirety of the projected expense on the eastern side of the Los Angeles County/San Bernardino County border in terms of getting the line to Montclair.
Subsequently, however, when the project went out to bid, it turned out the cost of building the line from Claremont to Montclair would not contain itself to the once-hoped $73 million or even $80 million, but had escalated to $96 million.
According to the advocates of the Gold Line, certain elements of the San Bernardino County Transportation Authority, including Wolfe, are leery of the Gold Line because of its user cost. A one-way Gold Line ticket from its east end to its west end costs $1.75. Riding the MetroLink from San Bernardino to Union Station costs $13.25 round trip. Upon the Gold Line making its way to Montclair, some San Bernardino County Transportation Authority officials fear, riders will abandon MetroLink in droves in favor of transportation that costs a little more than a fourth of what it requires to use MetroLink.
Greer insisted that the San Bernardino County Transportation Authority and Wolfe are simply seeking to be responsible stewards of public money.
“Starting from the perspective of ‘What is the objective?’ I think what the county and City of Montclair want is a high quality transit system,” Greer said. “How do you provide that? We think that we can do that, save $50 million or $60 million and deliver it sooner versus waiting another nine years to deliver it.”
Greer said, “One thing missed in the argument is MetroLink has secured a substantial amount of money from the state. MetroLink wants to see an increase in its service frequency all the way to Union Station. What we are proposing is having the entire service line improved, and not just in segments. What we are proposing to do with the hybrid between Claremont and Montclair will be a pilot program to see how that service can be delivered. Right now we have service every thirty minutes. If the Gold Line is completed to Montclair, it will not be running at full capacity. With the hybrid program, we can start with one or two cars and add capacity to trains to accommodate the increase in demand. As the demand increases, the service level offered by the hybrid can increase with it.”
Greer continued. “It is the escalating costs that have driven this,” he said. “Our goal is not to remove high frequency commuting opportunities from Montclair. Our intent is to have a really serious conversation about being able to provide that service economically. Our board has an expectation of that service being provided. That [the Gold Line] is the plan that was promised. What we want to offer is a way we can provide a similar service for far less money. He [Wolfe] is asking the board to take a look at it and consider it,  but the decision is up to the board. They can reject it. He is just doing what he is paid to do, which is to provide the board with information for them to make an informed decision.”
Montclair City Manager Ed Starr said he did not want to prejudge what Wolfe’s position is before hearing from him directly.
“On Monday [September 23] I have a meeting with SBCTA to go over the conceptual plan,” Starr said. “I can speak with you in more comprehensive detail then.”
In regard to the proposal to simply dispense with the plan to extend the Gold Line into San Bernardino County, Starr said, “The city is preparing a position and we will have a position. The Gold Line is central to our effort to revive north Montclair. It is crucial not only to our transit corridor and general plan but the specific plan we have for Montclair Place. We are trying to create a transit district that is to appeal to well-educated Millennials employed in the greater Los Angeles workforce who are attracted to living in an upscale, high-density community who want to use transit to commute to their jobs in Los Angeles and the West San Gabriel Valley and Pasadena. Those are the types of Millennials with decent wages we want living in our transit corridor who are interested in using alternatives to the freeway to get to their jobs and workplaces. We want to recreate north Montclair into a suburban urban environment. We’re still a suburban area but we want to offer a lot of urban features that have appeal to an educated and sophisticated population, such as a mixed use high density commercial living environment, accompanied by high density residential, high-end rental office space. We also want to attract employment opportunities to the area, as well as a full range of transit options. Our position all along has been that our effort to reinvent north Montclair is highly dependent on transit. We already have bus service and MetroLink and ride hailing services that operate out of the Montclair Transit Center, which is one of the largest transit centers along the MetroLink and intended Gold Line corridors. It makes perfect sense that we want to add transit options and opportunities. The Gold Line is the key component. Though we have MetroLink and bus service, in all of that there is nothing penetrating into the Foothill Cities of the San Gabriel Valley. The Gold Line also will give us a less expensive commuting option. While fare on the MetroLink runs riders at least $8, a one-way ticket on the Gold Line costs $1.75.”
Starr pointed out that the downside to the Gold Line user traveling to downtown Los Angeles is that it will take an extra 15 to 20 minutes to reach that destination. Still, he said, the Gold Line offers more trips into the heart of the megalopolis than MetroLink. “The Gold Line runs more frequently during peak hours, leaving every five to seven minutes,” Starr said. “In the off-peak hours it runs every 12 to 15 minutes. The MetroLink runs every half hour. There are a lot of reason why we want the Gold Line extended to Montclair. It will provide a mix of transit services. The Gold Line falls more in the line of light rail. SBCTA is heavily invested in MetroLink and Mr. Wolfe feels there would be a decline in ridership on MetroLink if the Gold Line becomes operational and that is why the senior staff of SBCTA is resistant to promoting the extension of the Gold Line to Montclair. We believe what we are doing with regard to the buildup of north Montclair and the increase in the concentration of high density housing there will create not only a demand but a requirement for both of these services [the Gold Line and MetroLink] to carry the increased ridership that will create. The projection is that upon completion of the Gold Line there will be ridership of 5,600 per day from eastern San Bernardino County departing from the Montclair Transit Center. There will be a significant number of riders from the east end of the county arriving at the Montclair Transit Center who will transfer to the Gold Line. We will have need for both of those units in Montclair, Metrolink and the Gold Line, to carry that transit load. An argument they [Wolfe and his staff] made was that when the Gold Line reached Azusa there was a 25 percent decline in ridership from the Covina MetroLink. It is true that the residents in Azusa who were previously using MetroLink in Covina gravitated to using the Gold Line in Azusa, but in the time since then the Metrolink ridership has climbed back to its historic levels.”
Starr said the future is arriving faster than anyone can prepare for. He said that reality is reflected in the consideration that the ridership levels projected for the Gold Line in 2035 have already been reached. He said that as those using the freeway become more disenchanted with traffic snarls and three hour commuting times, and as they become aware of the other options they have, such as MetroLink and the Gold Line, they will abandon their cars in favor of traveling to work by rail.
“People who use the transit system are looking for a savings in cost, what is more convenient and what is most accessible, and what will get them to their destination quickly,” Starr said. “Those things are completely compatible with bringing the Gold Line to Pomona, Claremont and Montclair. More importantly the Gold Line is necessary to what we are doing in north Montclair. We have demonstrated to builders that we are interested in a revamped community and that we believe the transit district is attractive to the type of projects they are constructing.”
There is a synergy to having a public transportation system that offers a multiplicity of transit modes featuring through-routes to a comprehensive set of destinations, Starr said.
“We want to get a connection to Ontario International Airport,” Starr said. “To get that connection, we need an increase in ridership. If we are to get that, we need to tap into those who are traveling with one of their destinations being the San Gabriel Valley and the foothill cities.”
Establishing those transportation connections to Pasadena, La Canada/Flintridge, San Marino, Burbank, Arcadia and Sierra Madre will provide a long term economic benefit to San Bernardino County, Starr said. “The people in those communities have higher incomes than in the communities south of there, along the 10 Freeway corridor,” Starr said. “The Montclair Transit center is two blocks from the 10 Freeway. With the express lanes that are scheduled along the 10, you are talking about a seven minute trip from the Montclair Transit Center to Ontario Airport on a shuttle bus. That is a convenient service and a service that in my mind would be important to increasing airline traffic out of Ontario. This would involve those elements of the San Gabriel Valley and especially its foothill communities bringing money into this area and spending in San Bernardino County.”
Ontario Mayor Paul Leon said the future need for rail transport between San Bernardino County and Los Angeles County will increase going forward and will eventually exceed the capacity of a single rail line. The time to establish the second track is now, before the costs escalate further or things occur that will prohibit building a new set of tracks, he said.
Moreover, Leon said, the light rail solution is a newer one with a far longer life potential than the mode of transportation the MetroLink system, with its diesel engines, represents.
“I have heard those conversations about the hybrid,” Leon said, dismissively. “They are talking about a technology that will become defunct before it comes to be operational. They are reliant on fossil fuels. In California, why would you want to use a diesel train when you can move to renewable energy-fueled engines like the Gold Line?”
Leon continued, “Ray Wolfe keeps misinforming his board. He wants to spend money in Needles. We need to alleviate heavy traffic here, at the nexus of San Bernardino County and Los Angles County, one of the most heavily traveled commuting corridors in the world. We need to give people who live here an affordable way to get to work. How dumb is it not to build a straight line all the way to the airport? This will benefit not only our city but the entire region. People can use all of the parking we have at the airport and then you would have all of those people not contributing to the gridlock on the freeway. Instead they will board a train and virtually fly into Los Angeles or Pasadena or any of the San Gabriel Foothill cities, either working on their computers or getting an extra half hour or 45 minutes of sleep instead of crashing and killing one another.”
The objections that are being raised about a funding gap and using that as the basis for shutting down the project is penny wise and pound foolish, Leon said.
“The federal funds will come,” Leon said. “If you offer a transportation mode and you are one mile or less from a freeway, that triggers the availability of federal funds. [Congresswoman] Norma Torres told me, ‘Get it ready and I’ll find you the money.’”
-Mark Gutglueck

With Councilman Marc Lucio dissenting, The Chino City Council Tuesday night approved the construction of a 503,000 square foot FedEx parcel delivery facility on 74.4 acres on the southwest corner of Flight and Merrill avenues just east of Chino Airport.
The project was originally submitted by  Scannell Properties in 2016, at that time calling for a development covering 140 acres, including property extending onto the airport land itself.  In 2017, the land at Chino Airport was removed from the project’s scope.
The $90 million construction phase of the project does not include a $100 million cargo conveyor system that will go into the building. The project fits within the Chino Airport Business Park and Commerce Center.
The Chino Planning Commission reviewed the project on June 17, 2019, and recommended on a 4-to-1 vote approval of the project’s land use map and amendment and the certification of the project’s environmental impact report. Though Director of Development Services Nick Ligouri said some of the impacts of the project cannot be fully mitigated, a condition imposed on the project prohibits FedEx trucks with three or more axles from using Kimball Avenue between Euclid and Hellman avenues.

The political leadership in Upland is convulsing as it continues to assimilate the implication of a number of financing arrangements that involved entities within the city making use of the city’s tax-exempt bonding authority over the last dozen years.
The reverberations of those institutions or ventures experiencing financial setbacks and consequent difficulty in debt servicing those bonds has come to include the firing of the president and chief executive officer of San Antonio Regional Hospital together with pointed questions about conflicts of interest related to the issuing of those bonds involving Upland’s city attorney and his law firm.
At the time the bond issuances were made, city officials were given assurances the arrangements would have no impact on the city’s credit rating whatsoever. Now, however, with the poor performance of some of the entities benefited by that bond financing and the prospect that the bondholders will sustain losses on those investments, the city’s involvement in setting up financial instruments that fail, no matter how ostensibly insulated it is from the monetary impact, is bringing into question the soundness of city officials’ judgment and the reliability of the city’s word and endorsements.
Questions about those financing arrangements in which the city lent its status as a municipal corporation and nonprofit concern without full regard to the long term viability of the bonds recently came home to roost when the board for San Antonio Hospital on September 10 fired the hospital’s president and chief executive officer, Harris Koenig.
Having begun operations originally at the southeast corner of Arrow Highway and San Antonio Avenue in 1907 before moving to its current location just south of the eastern terminus of 11th Street and north of San Bernardino Road and west of Memorial Park, the institution for generations was known as San Antonio Community Hospital. In 2011 it embarked on a six-year long series of planned expansion stages intended to transform it into a regional hospital. Over that span, the number of beds at the institution increased from 271 to over 400. Included in that expansion was the $160 million four-story Vineyard Tower at 999 San Bernardino Road, which upped the number of stations in the hospital’s emergency room from 34 to 52, while creating and outfitting 12 more intensive care units.
In 2017, San Antonio Regional Hospital undertook a partnership with the City of Hope, entailing the erection of a $30 million, 60,000-square foot structure at 1100 San Bernardino Road to house an ambulatory care center as well as a City of Hope outpatient cancer center on the first floor.
The City of Hope-affiliated facilities entail ones offering chemotherapy, radiation, and surgical services, intended to be of benefit to local cancer patients undergoing chemotherapy, as the treatment regimen they are subjected to can greatly weaken and fatigue them. Having the outpatient center in Upland can reduce the traveling distance for many of those patients and their families by as much as 24 miles, the distance between San Antonio Hospital and the City of Hope in Duarte.
On November 27, 2017, the Upland City Council voted to authorize the undertaking of an installment sale for financing to benefit San Antonio Regional Hospital, making available a portion of the $125,000,000 in certificates of participation for San Antonio Hospital a previous city council had authorized in 2011.
What the city was engaged in vis-à-vis the certificates of participation and San Antonio Hospital is what is referred to as conduit financing in which the city allows its authority to be used so that the certificates of participation, a type of bond, can be marketed as tax-exempt instruments, making them more attractive to potential “participants,” that is, bond purchasers. Since the purchasing is done through the city, this financing allows San Antonio Regional Hospital to benefit from the tax-exempt status to receive a better interest rate on the certificates of participation.
Orrick, Herrington & Sutcliffe, the city’s bond counsel, prepared and reviewed the documents relevant to the sale, as did City Attorney James Markman with regard to documentation and procedure, to move the transaction forward.
San Antonio Hospital agreed to indemnify the city and its officers, agents and employees with respect to the financing and to reimburse the city for its costs incurred in the financing.
City officials were assured that there was no and would be no future direct or indirect impact on the city as a result of the financing, and that neither the faith or the credit nor the taxing authority of the city is pledged to the repayment of the certificates of participation.
The city has engaged in other conduit financing arrangements with various entities registered as nonprofits providing low income or senior citizen housing in the city.
According to Londa Bock-Helms, the city’s finance officer, the city has no risk whatsoever in lending its tax-exempt bonding authority to those entities it deems fit. Even though the purchasing of the bonds or certificates of participation is done through the city, the city is not responsible for servicing the debt those entities such as San Antonio Regional Hospital or the operators of senior citizen/low income housing projects take on when they obtain upfront financing from the proceeds from the bond sales or certificate sales, Bock-Helms said.
“The city has no obligation or liability in a conduit financing situation,” she said. “If one of those defaults or doesn’t make its bond payments, it doesn’t negatively affect the city. For the city there is no negative outcome with regard to what happens to those entities. If they fail or default, it’s all on them. It has nothing to do with the city.”
Bock-Helms said the entities issuing the bonds put strictures in place to ensure the integrity of the financial instruments in question, be they tax exempt bonds or certificates of participation. In the case of conduit financing for low income housing projects, she said, “The first priority for the use of the rent is to pay the debt service. The rents from the housing rentals are what is used to secure the debt. The first thing the rents received go to is to pay the debt service on the bond issuance.”
She said similar commitments existed in the arrangements for the issuance of the certificates of participation at the hospital, with a portion of the hospital’s operating revenue set aside to make monthly, quarterly or yearly payments to the certificate holders.
The city has the ability to use bond financing and could use bond financing for its own efforts to create infrastructure or public improvements, but has not done so for some time, Bock-Helms said. She said the city’s last issuance of bonds for itself consisted of water bonds issued in 2011.
Bock-Helms said the city’s bond rating stands at a mediocre AA-. Its bond rating is not a major issue at present, she said, because the city is not looking to do any issuances to raise money.
“If we don’t have a bond issuance,” she said, “we don’t have a bond rating.”
Bock-Helms contradicted the information and documentation obtained by the Sentinel showing that San Antonio Regional Hospital’s bond rating had been downgraded this year.
Bock-Helms said, “With regard to their [San Antonio Regional Hospital’s] bond rating, it has not changed. When the certificates were issued, it was a triple b. It is still a triple b.”
According to a report from moodys.com dated May 8, 2019 obtained by the Sentinel, Moody’s Investors Services downgraded San Antonio Regional Hospital’s bond revenue rating from Baa3 to Baa2. Simultaneously, the hospital’s fiscal outlook was revised from stable to negative. That particular action immediately impacted $1.42 million of rated debt issued by the City of Upland.
Indications were that San Antonio Hospital had bitten off more than it could chew and it would have to spit some of what it had in its mouth out before swallowing or run the risk of choking.  According to Moody’s, the hospital was suffering from poor operating performance and its debt service coverage was out of whack. It had a marked decline in its liquidity and was facing increasing competitive pressures just as its affiliation with the City of Hope was diluting its income stream.
Bock-Helms did not reference Moody’s when addressing San Antonio Regional Hospital’s bond rating, instead citing Standard and Poor’s financial ratings company figures relating to the hospital. She did acknowledge that San Antonio Regional Hospital’s bond-rating outlook had been changed downward.
What is clear is that the San Antonio Regional Hospital’s board of directors is concerned about the hospital’s performance. According to Moody’s, the hospital had operating revenues in Fiscal Year 2017 of $323 million, but is carrying the liability of certificates of participation issued in 2017 and 2011 which are are secured by a gross receivable pledge of the hospital. Meanwhile, the hospital has no debt service reserve fund. Covenants impacting the hospital include an ongoing debt service coverage test of 1.1 times, and additional indebtedness tests.
Koenig became president and CEO of the hospital in June 2011. It was under his leadership and guidance that the hospital embarked on its expansion and the taking on of its now substantial debt. Though the board has made no official pronouncement, it apparently felt Koenig was in some measure responsible for the precarious position the hospital now finds itself in.
Upland’s relationship to the hospital is a complex and involved one, entailing several close community ties, financial interdependence and no small amount of community pride. The hospital is the city’s largest employer, larger than the Upland Unified School District and the City of Upland combined. It is also the city’s single largest provider of services to individuals living outside the city, thus representing a major draw of revenue into the city. It is the city’s largest major non-governmental institution.
The city has over the years made significant concessions to the hospital. On multiple occasions going back decades, as the hospital has expanded, the city has provided portions of adjacent Memorial Park to the hospital, primarily to expand its parking lot. Most recently, in 2018, the then-city council, composed of three members who have since been voted out of office or who chose not to run, agreed to sell to the hospital 4.631 acres of Memorial Park for the hospital to utilize as a parking structure. That move resulted in a firestorm of controversy and resistance on the part of the city’s residents, which was in some measure responsible for the changeover with the election cycle at the end of 2018 in three of the council’s members. Coincidental with that was the effort by City Attorney James Markman, who was also involved in vetting the 2017 certificates of participation issuance for the hospital, to obtain a validation order from the Superior Court precluding any of the city’s residents from taking legal action to block the sale of the 4.631 acres of parkland to the hospital. Citizens contested that validation action, resulting in the hold-up in the city’s provision of the land to the hospital for the parking structure and further resulting in the court denying the city’s validation action. At present, the sale of the park property to the hospital is up in the air, such that the hospital, following its recent expansion, is now in a crisis over the lack of adequate parking space.
The downturn in the hospital’s operational performance, the firing of Koenig, the prospect that the hospital could default on its bond funding arrangement through the city and the suggestion that the city is in some measure impacting the hospital’s performance because of its sudden unwillingness to turn park property over to the hospital has startled the members of the city council, which includes three who have been on the panel for less than a year. They are learning of the bond funding arrangements made through the city on behalf of the hospital, that the past members of the council had at best an imperfect understanding of that arrangement and at worst a complete misunderstanding of its implication. They are troubled by the involvement of the city’s advisors and the city attorney in recommending that those past city councils proceed with the bonding arrangements. They are equally anxious about the prospect that a default on those bonds, or certificates of participation as they are called, will result in, if not direct financial liability to the city, than a blow to the city’s reputation and a questioning of the quality of the city’s leaders prudence and judgment.
Asked about the difficulty the hospital was experiencing in staying current on its bonded indebtedness, Bock-Helms said, “That would be a question for hospital officials.”
-Mark Gutglueck

Three months after the San Bernardino City Council moved to cut the pay of two of its elected city officials and roughly a month after a Superior Court Judge nixed that cost-cutting move, the city council on Wednesday night voted to appeal that ruling.
In 2016, San Bernardino voters passed Measure L, which dispensed with the city’s original charter adopted in 1905. The new charter reduced the mayor’s administrative authority and designated both the city attorney and city clerk positions as appointed rather than elected ones. City Attorney Gary Saenz and City Clerk Georgeann Hanna, who in 2015 had both been reelected to terms ending at midnight March 31, 2020, were still entitled by law to remain in their elected posts until the expiration of their terms.
In June, the city council voted, with council members Ted Sanchez, Juan Figueroa, Henry Nickel and Bessine Richards prevailing and council members Sandra Ibarra, Fred Shorett and Jim Mulvihill dissenting, to reduce Saenz’s and Hanna’s pay over the final nine months they will be in office. Saenz was formerly getting  $246,266 in total annual compensation as city attorney, including salary, benefits and add-ons, and Hanna was receiving $171,466 in total annual compensation as city clerk, including salary, benefits and additional pay.
The council voted to reduce the $184,700 Saenz was scheduled to receive between July 1, 2019 and March 31, 2020 to $100,000 and cut the $128,600 Hanna was scheduled to get over the same nine-month span to $52,500. Thereafter, Saenz and Hanna hired the firm of Wagner & Pelayes to represent them, challenging the pay cut.
Judge David Cohn on August 16 ruled that the city did not have the legal authority to reduce the pay that had been current for the positions Saenz and Hanna hold at the time they were elected and he ordered the city to restore them to their previous remuneration levels.
In a closed session on Wednesday, the council took up the question of whether to abide by Cohn’s ruling or challenge it. Nickel reversed his position from his vote in June, voting along with Shorett and Mulvihill against appealing Cohn’s decision. Ibarra, however, was not present, and so the council deadlocked 3-to-3, with Sanchez, Figueroa and Richard favoring making the appeal. As mayor, John Valdivia is not empowered to vote on most matters. However, he does possess tie-braking authority. Valdivia voted to make the appeal of Cohn’s ruling.
The decision was announced by Assistant City Attorney Sonia Carvalho after the council initiated its public session on Wednesday night following the conclusion of the panel’s closed session.
-M.G.

By clicking on the blue portal below, you can download a PDF of the September 13 edition of the San Bernardino County Sentinel.

Sentinel 09-13-19

By Mark Gutglueck
David Serrano, the owner of the Jet Room marijuana dispensary that has been established in Adelanto, through his law firm paid then-Adelanto Mayor Rich Kerr $35,000 in the days, weeks and months before and after Kerr voted to confer upon the Jet Room permits and licenses to sell marijuana from its 17499 Adelanto Road address, including expanding the city’s marijuana sales zones to include the district where the dispensary is located.
Kerr did not report the money provided to him as political donations, depositing the checks into an account he had ostensibly set up for campaign purposes but which he used for his own personal expenses.
Serrano’s Jet Room was the first marijuana retail operation permitted and up and running in Adelanto, representing a significant deviation from the city council’s initial declared intent, embodied in the passage of Ordinance 539 on November 23, 2015, with regard to marijuana/cannabis-related businesses allowed to function within a specified area in the 53-square mile city’s industrial zone. Initially under Ordinance 539, the city limited the type of such businesses to cultivation operations exclusively, and did not permit the sale of the product to end users within Adelanto’s city limits, prohibiting retail sales of the drug while allowing wholesaling of the crops grown in the city to dispensaries located elsewhere.
At  the April 27, 2016 council meeting, Kerr first signaled that the city might allow an alteration of its policy to allow medical marijuana dispensaries to set up operations in Adelanto in the future. Present at that meeting was Manny Serrano, who was the spokesman for the High Desert Cannabis Association. Manny Serrano was also the brother of David Serrano, an attorney affiliated, variously, with the Law Offices of David Serrano and the Professional Lawyers Group, San Bernardino.
On September 22, 2016, David R. Serrano and his wife, Julia Orama-Serrano, initiated the purchase of the Jet Room property, consisting of a 2.23 acre lot and existing structure at 17499 Adelanto Road, the northeast corner of Adelanto Road and Joshua Avenue. On October 3, 2016 they entered into escrow with the owner, Dmitri Manucharyan, paying $450,000 for the property. The transaction was completed on October 11, 2016. Serrano put out that he intended to convert the structure on it, which had formerly been a lounge doing a brisk business among airmen more than two decades previously before George Air Force Base was shuttered in 1992 but which had lain fallow ever since, into a law office.
On October 26, 2016, the Adelanto City Council gave initial approval to Ordinance 553, which allowed medical marijuana dispensaries into the City of Adelanto. Because of a series of delays, the ordinance did not come up for a second confirming vote it needed to go into effect until May 2017. Prior to that second reading of the ordinance, on November 29, 2016, the city council held a public discussion relating to the pending passage of Ordinance 553 allowing the sale of medical marijuana in Adelanto, in particular the boundaries of the city’s marijuana dispensary overlay zones, which were to govern where dispensaries could be located. As a result of that discussion, the council articulated the intent to expand the marijuana dispensary overlay zone to include the  property at 17499 Adelanto Road. The same day, November 29, 2016, David Serrano’s wife, Julia Orama-Serrano, cut Kerr a $5,000 check drawn against the Law Offices of David Serrano Real Estate Trust Account at the Bank of America, with the designation “Adv Xmas Fund” in the memo line. On December 5, 2016, Kerr deposited the check into an account ending in the numbers 0917 which he had opened at US Bank in June 2014, and which Kerr had declared in a California Fair Political Practices filing to be the account for his 2014 mayoral campaign. Despite the Fair Political Practices filing identifying that account as one intended for his electioneering funds, Kerr had made another filing with the Fair Political Practices Commission certifying under the penalty of perjury that he had raised no money for and had spent no money on his campaign between January 1, 2014 and December 31, 2014, covering the year he was first elected mayor. Kerr utilized the 0917 account primarily as a personal bank account, using the funds in it for routine purchases at Home Depot, grocery stores and restaurants, drug stores, sporting goods stores and gas stations. In his campaign fund disclosure documents filed for 2016, Kerr made no disclosure of the $5,000 he had received from the Law Offices of David Serrano Real Estate Trust Account.
On February 16, 2017, David Serrano submitted $1,000 in fees to the City of Adelanto, in the form of a check from the Law Offices of David Serrano Real Estate Trust Fund in conjunction with a “comprehensive plan” for the Jet Room at 17499 Adelanto Road.
On February 27, 2017 a check for $10,000 was made out to Kerr against the Professional Lawyers Group, San Bernardino  account bearing the indication “Plaintiff Advance” in the memo line. It was deposited into Kerr’s US Bank 0917 account on February 28, 2017. Kerr did not disclose the $10,000 from the Professional Lawyers Group on any of his campaign disclosure filings for 2017.
On March 31, 2017, another check drawn against the Law Offices of David Serrano Real Estate Trust Fund, this one for $1,348, was written to the City of Adelanto with the phrase “Jet Law 17499 Adelanto Road Adelanto” in the memo line.
On May 17, 2017, a revised version of Ordinance 553 relating to allowing marijuana sales to take place in Adelanto, which updated the version of the ordinance first voted upon on October 26. 2016, was given its first reading, passing by a vote of 3-to-1, with Kerr voting in support of the ordinance. That version of the ordinance included a general plan amendment, which expanded the marijuana dispensary overlay zone to include the Jet Room property in the district where the operation of marijuana dispensaries is permitted. Kerr did not disclose having received, at that point, $15,000 from David Serrano and his wife or the entities with which David Serrano is affiliated. Nor did he make an effort to recuse himself from the vote which had benefitted David Serrano and the entities with which Serrano was affiliated.
On May 24, 2017, the second and final reading of and the vote on the revised version of Ordinance 553 took place at that evening’s city council meeting, passing 3-to-1, with Councilman John Woodard abstaining and Councilman Ed Camargo voting no.  That vote included the acceptance of the dispensary overlay zones in which the Jet Zone property was included. Kerr again supported the ordinance allowing the operation of marijuana dispensaries in the city and ratifying the marijuana dispensary overlay zones, benefitting David Serrano.
At the same May 24 meeting, the city council passed Resolution 17-12 on a unanimous 5-to-0 vote, establishing the Adelanto Cannabis Dispensary Permit Committee to be charged with determining which applicants for medical marijuana dispensary permits would be granted what was then supposed to be a limit of four such permits.
On June 16, 2017, another check for $10,000 written against the Professional Lawyers Group, San Bernardino account was made out to Kerr, bearing “Advance” in the memo line. Kerr deposited the check into his US Bank 0917 account on June 21, 2017. Kerr did not disclose the $10,000 from the Professional Lawyers Group on any of his campaign disclosure filings for 2017.
On August 23, 2017, then-City Manager Gabriel Elliott publicly announced how the Adelanto Cannabis Dispensary Permit Committee created by the passage of Resolution 17-12 on May 24 of that year was too be fleshed out. The committee, Elliott said, would consist of the mayor and the mayor pro tem, the city planner and two members of the public to be chosen by the city manager. That same day, August 23, 2017, a check was written for $10,000 against the Professional Lawyers Group, San Bernardino account to Kerr, bearing the memo “Advance”  and was deposited into Kerr’s US Bank 0917 account that day. Kerr did not disclose the $10,000 as a campaign contribution on any of his Fair Political Practices forms for 2017.
Between March 9, 2015, and November 6, 2017, there were 30 deposits into Kerr’s US Bank 0917 account, primarily cash, totaling $21,757. In this same timeframe, Kerr’s wife, Mistey, was collecting “donations” from the public for a never fully specified charitable cause. Much of the money provided to her during this time consisted of cash-stuffed envelopes provided to her while she was in attendance at the city council meetings her husband was presiding over. On March 17, 2017, Kerr opened another account at US Bank, with an account number ending 9895. Beginning in August 2017 and running until October 12, 2017, Kerr deposited $32,500 in checks made out to “Re-elect Rich Kerr Mayor of Adelanto 2018”  from various businesses and business owners in Adelanto into that account. On October 4, 2017, Kerr transferred $22,580.25 from the 9895 account into a third US Bank account, which was designated as Kerr’s official 2018 campaign account, otherwise known as “Richard Kerr DBA Committee to Reelect Richard Kerr,” which bore an account number ending 5129. In the months of October and November 2017, which were roughly one year before the next election for Adelanto mayor, Kerr withdrew $4,980 from his campaign account, using the money for what appears to have been non-campaign related living expenses.
Kerr, who was retired from the Marine Corps, also had a Navy Federal Credit Union Account with an account number ending 1705. This appeared to be his primary personal account into which his monthly military pension of $1,745 was automatically and regularly deposited. At the time of his election in 2014, Kerr was employed by Motorola as a cell tower technician, both installing and upgrading antennas and signal repeaters. By 2015, his status as the mayor of a California city had upgraded his cachet in the corporate world, and he was employed at that point by SDI International. From January 2015 through the end of October 2016, SDI International was making $2,500 weekly deposits into Kerr’s Navy Credit Union 1705 account. Kerr was dropped from the SDI International payroll at the end of October 2016. Kerr by 2016 was also working for Tech USA, LLC, with weekly payments from that entity being deposited into the 1705 account. From January 2016 to May 2016 direct weekly deposits of $2,100 from Tech USA were being made into the 1705 account. From May 2016 until January 2017, the direct weekly deposits from Tech USA into the 1705 account dropped to $1,300 per week. Kerr’s relationship with Tech USA appeared to be drawing to a close at the beginning of 2017, with what was a penultimate direct deposit of $296.99 on January 19, 2017. Four months later, however, it appears he was temporarily reinstated with Tech USA on a short-lived assignment, when Tech USA made direct deposits totaling $5,962.63 into the Navy Federal Credit Union 1705 account in May 2017. Those closed out the direct deposits made into that account by Tech USA.
By early 2017, the FBI had initiated in earnest an investigation into graft and corruption in Adelanto and the atmosphere surrounding the city’s rush toward legalizing all manner of operations with regard to the cultivation, refinement, warehousing, distribution, wholesaling, retailing and the manufacturing of derivatives of marijuana. Some seven or eight months into that operation, two separate FBI agents working undercover with an informant who had access to Councilman Jermaine Wright had tripped him up. One, posing as an arsonist-for-hire, had gotten Wright to pay him $1,500 to torch his restaurant, Fat Boyz Grill, as part of scheme to collect on Wright’s $300,000 fire insurance policy. That agent, whom Wright referred to as an “electrician,” assured the councilman he could make the cause of the fire appear to be an electrical problem. The other undercover FBI agent, who was masquerading as an applicant to establish a marijuana distribution company in Adelanto, paid Wright $10,000 cash – two stacks of 100 $50 bills – in exchange for Wright’s assurance that he would line up votes on the city council to grant the “businessman” the permits he needed and that any code enforcement activities against the marijuana transportation business would be curtailed. When Wright was confronted by a third FBI agent with the evidence that had been accumulated against him, he agreed to cooperate in the FBI’s probe going forward, maintain the confidentiality of the investigation and surreptitiously use a recording device as requested by the FBI to advance the investigation into corruption in the City of Adelanto.
That arrangement did not last long, and fell apart when Wright, who was not aware that the arsonist-for-hire was in fact an undercover FBI agent, approached the FBI informant who had introduced the arsonist-for-hire to him, identified him as a “snitch,” and yet not recognizing that the informant was working with the FBI, made overtures about making arrangements to have  “the electrician…go away,” that is, killed. Wright further sought to fake his being assaulted in an effort to convince the FBI and federal prosecutors he was suffering from a head injury and consequent memory loss as a ploy to get out from under having to testify. The FBI at that point ceased its effort to employ Wright as an informant and arrested him.
Prior to that however, the FBI on October 17, 2017 wired Wright up with an audio-recording device and had him engage in an in-person conversation with Kerr at Adelanto City Hall. In the course of that conversation, Kerr told Wright that he had resigned from his job and claimed he had not worked for a year-and-a-half, indicating he had no money coming in other than his pension of $1,745 monthly from the Defense Finance and Accounting Service and roughly $450 after taxes and withholdings, of the $660 per month stipend he received as Adelanto’s mayor. Nevertheless, during that period of time, Kerr and his wife were tooling about town in newly purchased late model luxury vehicles.
As part of its ongoing investigation into Adelanto, the FBI was scrutinizing the generosity business applicants in Adelanto were showing toward the city’s elected leadership. As soon as the city council moved to legalize one form of commercial activity involving marijuana in Adelanto in late 2015, the largesse shown toward the city’s elected leadership escalated.
“An analysis of checks deposited into Kerr’s bank accounts in relation to the legalization of marijuana activities on November 23, 2015 indicated a significant increase,” FBI Agent Kevin Boles told a federal judge in 2018. “In 2015, no checks from Adelanto business owners or marijuana developers were observed. In 2016, approximately $25,000 in checks from Adelanto business owners were deposited [into Kerr’s account]. In 2017, approximately $45,000 in checks from Adelanto businesses or business owners were deposited.”
In conjunction with that element of the investigation that followed the tangent relating to Wright, the FBI obtained on October 16, 2017 a search warrant for the premises of Wright’s restaurant, Fat Boyz Grill, which was served on the following day, October 17. Among the items seized during the search was Wright’s city-issued cellphone. The FBI extracted the data from that phone. According to a document later submitted to a federal judge by FBI Agent Boles, “I conducted a review of the extracted data and observed text message communications between Wright and Kerr from September  4, 2017 referencing a Facebook posting concerning the Jet Room. On September 4, 2017, Wright sent Kerr a text message that read, ‘This doesn’t look good for the process when someone’s bragging that they already got a permit and a license for something we haven’t even held a hearing for.'” Accompanying the text message, Wright attached a screen shot of a Facebook posting by Freddy Sayegh dated August 25, 2017 containing a photograph that Boles presumed to be Sayegh sitting in a chair with a Jet Room poster in the background. The post announced “30 days till the Grand Opening of the Jet Room Dispensary.” Sayegh is an attorney and the chief executive officer of Green Holdings Group, which in some fashion had become involved with David Serrano in the Jet Room.
Kerr replied to Wright’s text, according to Boles, with “Your right. Pls tell these guys to stand down, they are making it really hard to do my job.”
On September 22, 2017, the Adelanto Cannabis Dispensary Permit Committee met to rank the applicants for the dispensary permits. During the meeting Kerr did not disclose that he had received money from the law firms associated with David Serrano totaling $35,000, and he did not recuse himself from voting on the matter.  Five applications were considered at the meeting, with one being deemed to not meet the city’s requirements due to the applicant not having title to the property where his dispensary was proposed. The committee signed off on providing permits to the remaining four applicants, who included David Serrano, whose filing related to a license for the Jet Room.
When the search warrant was served at the Fat Boyz Grill on October 17, Boles questioned Wright, who was on the premises at the time. Wright told Boles that he had originally set up the proposed zone for medical marijuana dispensaries to exclude the Jet Room property, with the dispensary zone boundary ending some 14 feet from the property line of the parcel containing the Jet Room. According to a report subsequently written by Boles, Wright told him “The decision to expand the prposed zone to include the Jet Room was advocated by Kerr. During the same interview, Wright disclosed Manny Serrano had previously attempted to bribe Wright by asking, ‘What would it take to put me in the zone?’ Wright told me he never accepted money from Manny Serrano.”
In addition to the application for operating the dispensary at the Jet Room, David Serrano through the Professional Lawyers Group incorporated six corporate entities with the California Secretary of State’s Office on June 12, 2017, each with the general stateed purpose of medical marijuana cultivation or manufacturing. Those six corporations are Beaver Farms East Inc., Beaver Extraction East Inc., Beaver Farms South Inc., Beaver Extraction South Inc., Beaver Farms North Inc. and Beaver Extraction North Inc.  All six corporations used the address of Professional Lawyers Group, 1300 N. Mountain View Avenue in San Bernardino as a mailing address and used addresses at 16175 Beaver Road, 16179 Beaver Road and 16173 Beaver Road in Adelanto as their operational addresses. In actuality, officially according to the US. Post Office and the City of Adelanto, the 16173, 16175 and 16179 Beaver Street address do not exist at the location referenced in the filings. Rather, the existing address there, at San Bernardino County Assessor’s Parcel Number 3129261490000, is 16177 Beaver Road Adelanto, California. There are three buildings at the 16177 Beaver Street address. On September 26, 2016, David Serrano and Julia Orama-Serrano purchased the property located at 16177 Beaver Road in Adelanto for $1,825,000, with the sale recorded at the San Bernardino County recorder’s office on October 4, 2016. On November 20, 2017, several gift deeds were filed to reallocate ownership of the land to David Serrano and three individuals, Lisa Marie Guerro, Marcella Christine Castaneda and Jennifer Nicole Serrano. Guerro, Castaneda and Jennifer Serrano are believed to be David Serrano’s daughters. Fifty percent of the ownership remained with David Serrano and 16.6666 ownership was allocated to Guerro, Castaneda and Jennifer Serrano.  The six corporations created and registered with the California Secretary of State’s Office on June 12, 2017 have as their incorporating agents and officers Philip Rios, who is an attorney with the Professional Lawyers Group; Manuel Serrano; Julia Orama-Serrano, also known as Julia Serrano; Jennifer Serrano; Lisa Guerra, also known as Lisa Galvan, and also known as Lisa Serrano;  Marcella Castaneda; Hector Orama; Luis Orama; and Miguel Orama.
On November 6, 2018, Kerr failed to gain reelection and was turned out of office. Just two days less than six months previously, on May 8, 2018, the FBI had obtained search warrants and served them at Adelanto City Hall, the Jet Room, the offices of the Professional Lawyers Group at 1300 North Mountain View Avenue in San Bernardino and Kerr’s residence at 10679 Melody Place in  Adelanto. In the sworn affidavit in support of the petition for those search warrants, FBI Agent Boles referenced the $35,000 received by Kerr from the two law firms associated with David Serrano, and stated, “I believe the payments originating from David Serrano were, in fact, bribe payments to Kerr in return for his official acts of voting on ordinances that directly benefitted the Jet Room. I believe it is likely Kerr maintained his communication with Manny Serrano who, in turn, used David Serrano’s law firm to make the bribe payments as advance payments associated with a fictitious lawsuit in which Kerr is a plaintiff.”
On January 14, 2019, Kerr, represented by two attorneys from the Professional Lawyers Group, Keith Adesko and Philip Rios, filed suit against Malcolm Smith Racing, American Motorcycle Association, Grand Prix Series, So. Cal. M.C. and Adelanto Grand Prix, alleging they were collectively and individually responsible for injuries he had sustained when he was involved in a motorcycle crash at the Adelanto Grand Prix on January 14, 2017 in which he broke his left collarbone, cracked several ribs and suffered a partially collapsed lung. Kerr, who was mayor at the time, was riding his own dirt bike outside Stater Bros. Stadium in Adelanto and was being trailed by his children and grandchildren and within the Grand Prix area when his front wheel hit a soft spot in the dirt and he was thrown from the cycle.
According to the suit, “Defendants, and each of them, plan, operate, manage and promote an annual motocross motorcycle race event at the Adelanto Stadium. As a promotional gimmick, defendants encouraged plaintiff, the then-Adelanto mayor, to participate in the event and promoted his participation. Plaintiff, though an avid and experienced motorcycle rider, at 60 years of age is not physically capable of participating in a dangerous and physically demanding activity like motocross racing. Defendants knew, or should have known, of the demanding nature of the activity and should not have allowed plaintiff to compete in a race, much less promote and exploit the plaintiff’s participation for monetary gain. As a direct and proximate result of defendants’ negligence in allowing plaintiff to compete in a race, plaintiff crashed during the race and suffered serious injuries, including a fractured clavicle, for which plaintiff spent 10 days in the hospital.”
The suit was filed two years to the day after the crash, the last day before the statute of limitations on a civil suit in California expired. Elements of the suit clash with reports that circulated at the time of the crash, in particular one put out by the city’s, and Kerr’s, official spokesman at the time, Michael Stevens, who said Kerr was not riding as part of the race.
The suit is roundly perceived as a means of offsetting the FBI’s working theory that the $35,000 in payments made to Kerr by the Law Offices of David Serrano and the Professional Lawyers Group, San Bernardino were bribes and indeed were, as the memo lines on some of those checks indicated, advances on the settlement to be obtained from Malcolm Smith Racing, American Motorcycle Association,  Grand Prix Series, So. Cal. M.C. and Adelanto Grand Prix with regard to the injuries Kerr sustained in the crash.
The difficulty with that defense strategy in the face of any criminal charges pertaining to bribery that might be filed is that the first $5,000 of the $35,000 paid to Kerr by the Law Offices of David Serrano on November 29, 2016 came two-and-a-half months before the motorcycle accident.
As of press time, Kerr has not been charged with receiving a bribe or bribes and David Serrano has not been charged with providing bribes.
Phone calls by the Sentinel to the Professional Lawyers Group, San Bernardino in an effort to obtain statements from David Serrano, Philip E. Rios and Keith Adesko ultimately were routed to Jim Powell, another lawyer with the firm. Asked if Serrano, Rios and Adesko would be willing to go on the record with regard to the issues pertaining to the Jet Room, the $35,000 originating with David Serrano that was provided to Kerr through the law firms he is associated with and the actual substance of Kerr’s suit over the injuries he had sustained at the 2017 Adelanto Grand Prix event, Powell said, “Probably not, but I will pass the message along to them.”
The Sentinel’s effort to make voice contact with Kerr on his cell phone was met with a text message response from Kerr that said “Please text me.” Kerr did not respond to the Sentinel’s follow-up text asking for his version of events relating to the payments he had received from David Serrano and his law firms and Kerr’s votes relating to the Jet Room.

City of San Bernardino’s officials are coalescing behind City Manager Terry Ledoux’s game plan to allow a county welfare building to progress to completion, occupation and operation at the periphery of the Muscupiabe residential district over a cacophony of protest.
Calculating that the anger of residents in the Muscupiabe District have over the unwanted project in their midst will not translate into a willingness to expend enough money to wage an extended legal battle contesting the project’s approval, city officials have resolved to support the well-heeled developer of the project and his prospective tenant, the County of San Bernardino, in seeing the project through to completion.
City officials believe they can weather the concerted opposition to the project and stand by the much maligned secretive approval given to the project last year, while sidestepping escalating calls that the county first be required to obtain a conditional use permit before the building can be occupied by its transitional assistance department.
Simultaneously, Ledoux is angling to use a threat of legal action by the building’s developer, Scott Beard, as a pretext to prevent opponents of the project from obtaining internal communications among various city officials and Beard that demonstrate the degree to which the city violated its own protocols in arranging to have the project application analyzed and considered not by the city’s planning commission but rather by a more obscure collection of city officials.
In December 2017, the San Bernardino County Board of Supervisors approved a recommendation from the county’s director of real estate services, Terry Thompson, and the director of the county’s transitional services department, Gilbert Ramos, that the county enter into a $14,036,184 lease agreement with 27th Street TAD, LLC, for approximately 38,150 square feet of office space to be located at the northwest corner of 27th Street and Little Mountain Drive site for occupancy by the transitional assistance department for the ten-year period beginning August 1, 2019 and running through July 31, 2029.
The county’s commitment to that arrangement, however, came prior to the City of San Bernardino, the jurisdiction in which the building was to be constructed, signing off on the project. That cart had been placed before that particular horse in large measure because 27th Street TAD, LLC is a company owned and controlled by Scott Beard. Scott Beard is the scion of Gerald Beard, a politically well-connected real estate mogul who made his first fortune with the manufacturing of Doughboy Pools before enlarging his wealth as a land speculator and developer. Gerald Beard’s son is no less less politically well-connected than his father and is indeed even more so. For the generation he has been involved in the development and the stewardship of properties he has developed or acquired and leased to deep-pocketed occupants, including governmental entities, Beard has cultivated connections among public officialdom by generous political donations to elected officials.
Beard was particularly well wired in with then-San Bernardino Mayor Carey Davis, and it was assumed by county officials that Beard would have no difficulty getting an entitlement to build the 38,150-square foot facility.
The historic and quaint Muscupiabe neighborhood on the city’s northwest side is among some of San Bernardino’s strongest and most impressive residential sections. Its entryway features large pepper trees and medium size homes, some of impressive architectural character.
The transitional assistance department, which is sometimes referred to by its acronym TAD, provides a wide array of federal and state-mandated social services and income assistance programs to the residents of San Bernardino County, particularly those whose loss of jobs or income has put them at risk of becoming, or has rendered them, homeless. In common parlance, what was being planned at the northwest corner of 27th Street and Little Mountain Drive was a welfare office.    Such a use of the property, it was understood at City Hall, was very likely out of keeping with the expectations of a significant portion of those living in the Muscupiabe district. Recognizing that this put Beard on a collision course with that neighborhood sentiment which would create a firestorm of controversy and severe protest when the project came up for public review in the venue typically used for just such project approvals – the open forum of a planning commission hearing – city staff rerouted consideration away from the planning commission and instead placed it before the city’s development and environmental review committee, consisting of various members of city staff, primarily department heads and those from the community and economic development department.
Though the lion’s share of city committee and commission meetings, just as city council meetings, are videotaped and televised, the timing of the meetings is a crucial consideration. Whereas planning commission meetings are typically held on Tuesdays at 6 p.m., development and environmental review committee meetings are held on Wednesday mornings at 10 a.m., a time when employed adults are generally unable to attend because of their work commitments. Thus, the consideration of the TAD building at 27th Street and Little Mountain Drive was undertaken in a relatively obscure forum.
Moreover, there were other anomalies about how the project was presented and vetted, which lowered its profile and reduced the likelihood that those in the Muscupiabe neighborhood would take stock of what was coming their way.
One of those was the mislabeling of the project. While at the county no bones were made about what the project was – a building to house an office of the transitional assistance department, a division of the county’s human services department – at the city level, an architect’s inaccurate description line on a rendering for the building in which “resources” was substituted for “services” in the heading human services was adopted as a general description of the building along with the use of the acronym for transitional assistance department – TAD. For virtually everyone who was unfamiliar with the acronym, this changed the implication to suggest that the building was intended to house the county’s human resources or personnel department.
A second misnomer was applied to the project. In internal memos to the city council relating to Beard’s proposal as well as in the disclosure notifications to the residents living in proximity to the project, the structure to be built was referred to in planning profession jargon as one which would feature “office professional” uses, or as a “professional office” building. Those terms carry a different connotation than the designation “commercial office,” which more accurately fits the actual 27th Street TAD, LLC project. A professional office refers to a workplace where employees of a company work in a clerical and corporate environment, functioning separately in cubicles or at desks or interacting with one another or both but essentially with little or no contact with the company’s clients and customers on site. This use generally involves a less substantial flow of traffic into and out from the site. In a commercial office, in addition to housing the employees of the businesses located at that location, those venues involve a daily or constant influx of customers to those businesses, entailing a much more substantial number of people and vehicles into, on and departing from the site on a constant basis during normal business hours. It thus appears that the city’s representation of the 27th Street TAD, LLC project obscured not only that the building upon completion would be a welfare office but that there would be a substantial amount of traffic into and through the area around the project in terms of people and cars coming onto and leaving the site.
2018 was an election year. Prior to the election being held, in October, the move toward having the development and environmental review committee pass judgment on the project at 27th Street and Little Mountain Drive was set. On November 6, incumbent Mayor Carey Davis was defeated by challenger John Valdivia, who since 2012 had been the city’s Third Ward Councilman. The election had an implication for the project proposal, as Beard was not only one of Davis’s primary backers in terms of political contributions, but his de facto campaign manager.
Thus, Beard, it turned out, had bet on the wrong political horse. Though the election was over November 6 and the outcome in the race clear by the morning of November 7, there was yet a six-week lag until those victorious in the November 6 race would be sworn in and installed in office on December 19. For that duration, Carey Davis would remain as mayor, a lame duck, but nevertheless yet the mayor and capable of exercising the full measure of political power in that capacity.
There ensued a mad rush to have Beard’s project fully approved, while City Hall was yet under the sway of Carey Davis. Thus it was that just eight days after the election, on November 14, 2018, the project at 27th Street and Little Mountain Drive was taken up by the environmental and design review committee during a hearing in which the project was identified on the agenda as “an office building” and the zoning on the site as “commercial office.” The agenda further minimized the impression that the project would have a substantive impact on the area by saying it was “categorically exempt” from the requirement that an environmental impact report relating to the project be provided.
With no residents present to inveigh against the project, Beard’s request that he be given entitlement to build it came off without a hitch.
It was not until after Beard’s contractors fenced off the site and began grading there earlier this summer that the residents of the neighborhood took notice of f what was happening. A few made inquiries, learning that a welfare office was going to go into the neighborhood.
27th Street and Little Mountain Drive lies at the confluence of the city’s 2nd, 5th and 7th Wards, represented by council members Sandra Ibarra, Henry Nickel and Bessine Richard, respectively.
By early August, the Muscupiabe neighborhood was awakened and up in arms. Ibarra, in whose Second District the project is located, and Nickel, whose Fifth District borders the project site, took up the cause for the area’s residents, vectoring attention to what had occurred in November, and advocating that the city apply some remedy to the situation. At the August 7 city council meeting, after they insisted that the burgeoning crisis come up for discussion, former City Attorney James Penman advised the city “preserve the status quo and freeze the situation …  by issuing a stop work order.” Penman told the council it should “stop and freeze everything in order that you can do a proper investigation to determine what happened. If you don’t issue the stop work order, the developer continues to build and acquires vested rights. Later [when] the residents get a writ of mandate and make him stop, he is going to sue the city for allowing him to continue to build and spend money.”
When Ibarra and Nickel sought to usher the council toward doing just as Penman was advising, taking action before Beard proceeded with actual building activity beyond the grading he had done up to that point, they encountered resistance from the remainder of their council colleagues. Deputy City Attorney Sonia Carvalho advised against imposing a stop work order on Beard after the city had given him approval to proceed with the construction of the building, telling the council the city could in the alternative seek to require that Beard’s intended tenant – the county – obtain a conditional use permit to operate a human services office at that location. The council receded from any direct action at that point, instead voting to have City Manager Teri Ledoux and city staff proceed with an  investigation into the situation Ledoux said she had already initiated, and report its findings back to the city council on August 14.
By August 14, however, Beard was threatening to sue the city if it took any action whatsoever – against him, his company, or the county – that would interfere with the completion of the project. In an auger of things to come, Ledoux refused to release the investigation she had undertaken, claiming it involved confidential information that would be improper to release while the prospect of legal action by Beard yet hung over the city. Muscupiabe District residents, who had earlier been led to believe the investigation’s results would be forthcoming and that the answers to the questions they were promised would be provided grew more disconcerted than previously. One of those, Kathy Mallon, who lives in the Blair Park Neighborhood immediately adjacent to the Muscupiabe District, submitted, on August 17, a request made under the California Public Records Act that the city produce information, documents and data that many people previously assumed would have been forthcoming with Ledoux’s so-called investigation.
Referencing “APN 0148-021-66, Northwest corner of Little Mountain Dr and W 27th St.,” Mallon wrote, “Please provide all permit application documents filed by 27th Street TAD and ATC Design Group” and “Please provide all staff reports used in support of the D/ERC [Design and Environmental Review Committee] evaluation” and “All email communications between staff and city administrators either internal or with the applicant/property owner. List below of known city staff and administrators to include but not limited to: R Carey Davis, Benito Barrios, Andrea Miller, Teri Ledoux, Jeff Bloom, Oliver Mujica, Brian Gumpert, Gary Akers, Hernando Cotangco, Robert Sepulveda, Robert Linberg, James Lane, Gracie Johnson, Stephanie Sanchez.”
Benito Barrios was the Second Ward Councilman in 2018. Jeff Bloom was the city’s acting community development director in 2018. Mujica was and is San Bernardino’s planning division manager. Gumport is with the city’s building and safety division. Akers is with the city’s land development division. Sepulveda is with the city’s public works engineering division. Lane is with the city’s environmental control division. Johnson is the city’s integrated waste division representative. Sanchez is the commission’s secretary. Miller was then the city manager.
Mallon sent her public records request via email directly to City Clerk Gigi Hanna, with electronic carbon copies to Ledoux, Nickel, Mayor John Valdivia and Ibarra.
In the four weeks since, the city has utilized a series of stalling and delaying tactics to avoid having to turn over the communications Mallon requested.
This week, city officials indicated Mallon will at last be provided with the materials she requested on September 17, a full month after her request was made. Word now comes, however, that officials will renege on that commitment again. The Sentinel is informed that Ledoux will assert a categorical exemption to having to supply the emails, texts, memos, and instant messages on the basis that doing so would harm the city’s legal position if Beard, as he has threatened, files suit against the city.
According to one well-placed city official, “There are memos and communication about this. The law allows the city to withhold information connected to pending or existing litigation and Beard has publicly stated that he will sue over this and I believe it has been discussed in closed session. In Public Records Act requests like this, it is Best Best & Krieger [the law firm the City of San Bernardino contracts with to serve as its city attorney] that reviews the request and determines what to release.”
The calculation city management is making is that it has more to fear from Beard than it does from the irate citizenry in the Muscupiabe District. Five-sevenths of the current city council – First District Councilman Ted Sanchez, Third District Councilman Juan Figueroa, Fourth District Councilman Fred Shorett, Sixth District Councilman Jim Mulvihill and Seventh District Councilwoman Bessine Richard do not represent constituents directly impacted by the project and therefore will encounter no untoward consequences for allowing Beard and the project to proceed. As members of a seven-person decision-making panel, Ibarra and Nickel have insufficient political muscle to force any action with regard to the project, such as instituting a requirement that before the county occupies the building with the transitional assistance department that it first obtain a conditional use permit, through which process conditions on that occupancy could be mandated that might mitigate the impacts upon the Muscupiabe neighborhood.
The Sentinel is reliably informed that Ledoux, in addition to withholding the communications Mallon requested from Mallon, is preventing the documents from being released to either Ibarra or Nickel.
Of interest and consequence in all of this is Mayor John Valdivia’s stance with regard to the project. Ostensibly, Valdivia carries no brief, and has no love lost, for Beard, who after all was the single strongest electioneering force on behalf of his opponent in last year’s election. The residents of the Muscupiabe District, those who were shortchanged by his rival, would seem to be his natural constituency, a group for whom he could now go to bat and whose support forever after would then presumably be his. Inexplicably, however, Valdivia has not embraced the Muscupiabe District’s cause. He spurned both the Muscupiabe Neighborhood Association and the nearby Blair Park Neighborhood Association early last month when they invited him to a forum at which their grievances were to be articulated to county officials including Supervisor Josie Gonzales, San Bernardino County Real Estate Department Director Terry Thompson and San Bernardino County Transitional Services Director Gilbert Ramos as well as Ledoux and current San Bernardino Community & Economic Development Director Michael Huntley, along with Beard himself. Valdivia has continued to hold the residents of the Muscupiabe District at arm’s length. Instead, he has sided with Ledoux, whose strategy appears to maintain the rectitude of the city’s action in approving the project in November and simply stonewalling and outlasting the resistance the Muscupiabe District residents are putting up. Ledoux’s calculation is that the members of the Muscupiabe neighborhood will neither collectively nor individually put up the money needed to hire an attorney to challenge the city’s approval process in court. For the residents, this has created a Catch 22-type scenario as applies to the communications Mallon has requested. It is widely assumed among those opposed to the project that somewhere in the communications the city is hiding and refusing to hand over is a smoking gun or perhaps more than one smoking gun, a sentence or paragraph where the desirability of keeping the consideration of the project from taking place in the far more open forum of a planning commission hearing as opposed to the obscure confines of the city’s development and environmental review committee is explicitly stated. Considering the way in which Ledoux is intent on keeping those communications under wraps, several people have come to believe that what she is attempting to keep from surfacing is a direct order from top echelon city official to someone in the city’s community development division to not have the planning commission review the project. Ledoux’s reluctance to allow open access to the communications among Beard, the former mayor, the former city manager and top city planning officials is a strong indication, several people have openly indicated, that some San Bernardino city official or officials in 2018 pulled strings to prevent the proposal for a welfare office now scheduled to be placed into the Muscupiabe residential district from being considered and vetted properly in an an open process commensurate with the serious impact the project will have on its immediate environs.
Were the residents of the Muscupiabe District to obtain such a piece of evidence, any legal challenge of the project approval they pursued would almost certainly succeed.
For that reason, Mallon and other Musciabe District residents find it particularly galling that Ledoux is using a threat of legal action against the city by Beard, whom they suspect of colluding with the city against their interests, to prevent them from obtaining evidence of that collusion so they can marshal proof that they are at the very least owed a chance to have the project reconsidered in an open forum where all of the impacts of the project are given a complete and unvarnished airing before they are consigned to coexist with what they consider to be a development that is incompatible with the present ambiance of their neighborhood.
At this point, the ball is now in the court of the residents of the Muscupiabe District, who face the option of accepting the city-dictated inertia of letting the project run its course through to completion or employing an attorney to legally contest the city’s approval process.
-Mark Gutglueck