(July 27)  The U.S. Secret Service put the kibosh on a counterfeiting operation active in at least two San Bernardino County cities.
According to federal agents, Paul Hernandez, 32, was arrested on July 22 in Rancho Cucamonga, while members of the Secret Service were serving a search warrant in Big Bear Lake City relating to the printing of 5,000 counterfeit $100 bills.
According to Chris Butler, the resident agent in charge with the U.S. Secret Service’s Riverside field office,  “Paul Hernandez was the main target in an operation called ‘Bear Trap.’ worked by Secret Service agents based in Los Angeles in conjunction with the Los Angeles Police Department and the San Bernardino County Sheriff’s Department. He was arrested without incident at around 10 a.m. Friday July 20 in the parking lot of the Bass Pro Shop in Rancho Cucamonga. Simultaneously, a search warrant was served at his residents in Big Bear, where his counterfeit plant used for the manufacturing of currency was located.”
Butler said that plant consisted of “a digital high quality copier. We did find the images on these particular notes to be of high quality. He did use a very good quality digital copier. What differentiates these notes is that in the place of the face plate number and the quadrant number all they had was a letter. For over $500,000 to have been passed, you know it is a pretty good note. We know there are more out there in circulation. We think he was in operation for two or three years.  We have determined that over $500,000 worth of these notes were passed in the greater Los Angeles area, Canoga Park, Moorpark, the Inland Empire and Nevada.”
Those victimized by Hernandez will be out of luck, Butler said. “If anyone has one of those bills, they will detect that when they try put it into their [bank] account. The bank will not accept it. The merchant will take the loss. If they try to deposit one, they will not slide through and go to the federal reserve. They will be caught at the bank level. They lack face plate numbers and quadrant numbers.”
Hernandez formerly had a counterfit plant set up in the San Fernando Valley, but moved to Big Bear when agents were closing in on him at the Los Angeles County location.
“He relocated to Big Bear and after we located him there we initiated the operation we called Bear Trap,” Butler said. “We  had him under surveillance and were watching him for a while.”
Butler said he could not disclose who Hernandez had been in contact with, but did say “There is the possibility of more arrests in the future.”
It has not yet been determined whether Hernandez will be prosecuted by federal or state authorities, Butler said. Counterfeiting is a federal crime but it can also be prosecuted by state prosecutors.
“He was taken to West Valley Detention Center,” Butler said. “He was interviewed there. He may be going locally. He may go federally. We do not know at this time. It looks like he is going locally at this point but that may change later. Bear Trap was an operation handled out of the Secret Service Los Angeles office.”
No matter who handles the case against Hernandez, Butler said, “He’s looking at some serious time, well over five years.”

(July 20)  All criminal charges have been dismissed against lieutenant William Maddox, the third highest ranking of seven current and former sheriff’s department employees indicted by a grand jury in March 2011 on charges relating to the falsification of training records.
According to documents filed with the Superior Court, theft and perjury charges that were previously lodged against Maddox have been withdrawn “in the interest of justice.”

Bill Maddox

Maddox, who was an executive officer at the Colorado River Station in Needles for the last portion of his 26 years with the department, was never interviewed by investigators and did not appear before the specially impaneled criminal grand jury that indicted him.
In the indictment, sheriff’s corporal David Pichotta, lieutenant Russell Wilke, retired assistant sheriff Michael Stodelle, retired captain Hobart Gray, custody specialist Angela Gray, training specialist Sallyann Christian and Maddox were accused of falsifying records for the Commission on Peace Officer Standards and Training, the state agency which certifies law enforcement officers with regard to skills and specific technique qualifications. By earning certificates, officers can have their pay level increased or otherwise qualify for advancement or promotion. According to the indictment, Angela Gray and Christian added the names of Pichotta, Wilke, Stodelle, Hobart Gray and Maddox to the rosters of training classes they never attended, enabling them to claim higher pay and retirement benefits.
The district attorney’s office has now acknowledged that Maddox was erroneously included in the indictment. Maddox’s attorney, Michael Scafiddi, proffered documentation and information to the district attorney’s office demonstrating Maddox  completed all of the training certification courses he was credited with completing and that he had followed proper department procedure in earning and claiming those credits. The district attorney’s office independently verified that information.
“For years the sheriff’s department had a program similar to programs of other police departments that allowed its employees to use their practical life experience to get college credits,” Scafiddi told the Sentinel. “For his dispatch class, Bill applied for certification based upon his work opening a dispatch center in the desert. Doing that required him speaking with other agencies throughout the state and researching both technical and procedural issues.  He was told by the sheriff’s academy staff that qualified him to audit the dispatch class. Auditing classes is a common occurrence and what students often do to get credits.  He relied upon the academy staff and never knew or was told there was anything wrong. He was instructed by his captain to apply for the advanced certificate ten months later. The case was mishandled by the sheriff’s department from the beginning. The sheriff’s department had a political agenda. If they had done a competent investigation and looked at the evidence before they took this to the grand jury to get a true bill, he would not have been charged. He was not given the opportunity to testify before the grand jury. There is no way he intended to hurt anyone or steal anything and he certainly did not commit perjury.”
Scafiddi said Maddox “served the public for 26 years with distinction and honesty and for the last 16 months he has been called a criminal and a liar. I am disappointed in the sheriff’s department but I have to give credit to the district attorney’s office. After they found out the truth they did the honorable thing and dismissed the charges. It is a shame a good person had to be put through this because of the unprofessional work of the sheriff’s department. It cost him thousands and thousands of dollars to restore his good name.”
Deputy District Attorney Dan Silverman, who is prosecuting the seven defendants, said that taking the information now available to the prosecutor’s office into consideration, he would no longer be able to prove Maddox had engaged in the actions previously alleged and that his office could not establish criminal intent on Maddox’s part.
The case against the remaining six defendants is still proceeding toward trial. All six have pleaded not guilty. A status hearing on the case is scheduled for September 14. Silverman maintains the information provided to prosecutors by Scafiddi, while vindicating his client, in no way mitigates the actions of the other six.

(July 20)  NEEDLES — Community Healthcare Partners, the newly formed non-profit that is seeking to buy the Colorado River Medical Center, will not insist on over a million dollars worth of repairs being made to the facility before the purchase, that company’s founder said.
Bing Lum, a doctor of pharmacology who grew up in Needles and is the principal of AM Pharmacy, which earlier this year was the runner-up in competition to take over the hospital, is also the principal and founder of Community Healthcare Partners.
Lum this week in an exclusive interview with the Sentinel said an earlier report that AM owns Community Healthcare Partners was in error and he further disputed previous representations that Community Healthcare Partners was insisting on the city undertaking what could run to more than a million dollars worth of repairs to the hospital before his group purchases it.
“Structurally, Community Healthcarer Partners is not related to AM Pharmacy at all,” Lum said. “It is a brand new company, its own company. It is a stand-alone non-profit. Basically, I formed it to be the entity that would own and operate Needles Hospital.
“We will purchase the hospital ‘as is,’” Lum continued. “We have done our due diligence with respect to the land, the building and the equipment. What we are set up to do as a company is operate hospitals. We are in the business of making sure they work and are providing a service and are able to continue as a business entity, make money, so they have long term stability. We know the Needles Hospital has a lot of deferred maintenance issues. It has been challenged operationally and therefore  financially for years. What it needs going forward is capital investments and to provide for the health needs of the community.”
The city took on ownership of the Colorado River Medical Center in April 2008 after Brentwood, Tennessee-based Lifepoint Hospitals, a for-profit corporation, embarked on an effort to move the institution’s equipment and personnel to Valley View Hospital, another facility it owned in Arizona, roughly 12 miles from Needles.
Because of long-running inadequate billing practices, including failures to invoice Medicare and Medi-Cal as well as insurance companies and patients in a timely fashion, the hospital has lost money, representing a financial liability to the city. The city created the board of trustees to oversee the hospital, and that panel, together with the city council, has come to a consensus that spinning the facility off to an independent operator is the best solution for ensuring that the community has adequate medical care without soaking the taxpayers.
In June 2010, Needles voters passed Measure Q, which called for keeping the hospital open and absolving the city of the financial burden of subsidizing the facility by having a non-profit entity selected to run the hospital.
In accordance with Measure Q, Needles Hospital, Inc. and AM Pharmacy, owned by Lum, along with other entities last year submitted competing proposals for the takeover of Colorado River Medical Center. After the other proposals were rejected, the hospital board on January 5 considered both Needles Hospital, Inc.’s and AM Pharmacy’s offers. The board seriously entertained AM’s overture, by which it proposed to buy the hospital and 5.71 acres of surrounding property without the accounts receivable for $3 million, with any debts deducted from the sale price. AM, which is a for-profit entity, had agreed to create a non-profit arm with which to operate Colorado River Medical Center, and have Lum, who was raised in Needles and graduated from Needles High School in 1979, oversee the hospital operation. The board, however, rejected AM’s offer by a vote of 2-4 before ultimately accepting Needles Hospital, Inc.’s offer on a 3-2 vote. On January 10, the city council followed the hospital board’s recommendation, and voted to approve the sale of Colorado River Medical Center and the 5.71 acres it sits upon to Needles Hospital, Inc. for $3,587,002. For that amount, Needles Hospital Inc. was to take possession of most assets and liabilities of the hospital, including accounts receivable, operating inventory in place, outstanding bills and unemployment obligations. Non-assumed debts were to be deducted from the purchase price, but the city was to keep any cash in the hospital’s coffers at the time of sale. Needles Hospital, Inc. was formed and headed by former Needles Councilwoman Rebecca Valentine.
On January 27, the city represented by Mayor Ed Paget, and the board of hospital trustees represented by chairman Jeff Williams, and Needles Hospital, Inc. represented by Valentine, signed a purchase agreement, opening escrow. Needles Hospital, Inc. was given until April 26 to show proof of funding for the purchase of the hospital and until May 25 to close escrow.
Needles Hospital, Inc. sought to arrange an $8.46 million loan through the U.S. Department of Agriculture that would allow the non-profit to purchase the hospital and make necessary repairs to keep it operational, including reroofing the building, structural upgrades,  and putting in new boilers and wiring. The non-profit was not able to produce proof of financing by the April 26 deadline, effectively ending Needles Hospital, Inc.’s chance of acquiring the institution. The city then entered into negotiations with Lum.
Lum’s offer through Community Healthcare Partners for the hospital came in at $500,000 less than the $3 million bid AM made last year. While the city had hoped Community Healthcare Partners, Inc. would offer something close to the $3.6 million figure featured in an appraisal of the hospital and the property it sits on obtained by the city last year, Lum said the $3.6 million figure is unrealistic and inflated, being applicable in a large urban area but not appropriate in an underpopulated rural setting.
Though Community Healthcare Partners is an entity legally distinct from AM Pharmacy, Lum said his experience with AM Pharmacy as a provider of  “outsourced” pharmacy services to existing for-profit hospitals gives him and his non-profit an advantage over Valentine and Needles Hospital, Inc.
“We have been operating for years as a successful company,” Lum said. “We have access to resources as a start up because of our access to our existing company’s capital. We can do that. That was a challenge for Mrs. Valentine. Her non-profit had never done business. It is very challenging to get financing or do something of that nature when you have not had any history.”
The city council is scheduled next week, on July 24, to consider entering into the purchase agreement with Community Healthcare Partners. If the hospital board, which has already approved the purchase agreement then acts quickly to ratify the management agreement for the hospital, Lum said he believes “We could conceivably be in there and working in one week.”
At present, the hospital has one doctor on staff, Ed Paget, who is also Needles mayor. Lum said he will enlarge the hospital staff.
“I am going to bring in doctors,” he said. “That is one of the big pieces of the operation that is missing. There is no specific number, but I will bring in whatever we need, whether it is one or ten specialists. Specialists are what the hospital has lacked for years and years. We are not looking to get rid of anybody. We will continue to employ the existing people and will be hiring new people.”
There will be capital investments as well, Lum said.
“There certainly are some stories about how Lifepoint took all the equipment to its new facility in Arizona,” Lum said. “The hospital was able to get some pieces back. For sure, they lost some stuff but did get some stuff back. One of the big things to replace is the CT scanner. Most likely, I would be taking on that project as soon as I walk through the door. Once we get into place and are up and running, we will start on making repairs to the HVAC [heating, ventilation and air conditioning] system, the boilers and the roof. We will need to apply to the Office of Statewide Health Planning and Development, which is the regulatory body that has 100 percent authority on anything a hospital does. We will need their approval, so I anticipate you will measure our progress in months rather than days.”

(July 20)  Members of the Upland city council emerged from a specially called closed-session at the Upland Carnegie Library on July 17 without taking any reportable action.
The meeting was convened for the council to interview representatives of six law firms that are being considered to replace Bill Curley and his firm, Richards Watson & Gershon, as Upland city attorney.
The council in April went out to bid for a new contract for city attorney services, receiving in response sixteen separate proposals from lawyers and firms. After a review of those applications by city clerk Stephanie Mendenhall, who also serves as the city’s director of human resources and risk management, as well as administrative services director Jeff Zwack, ten applicants were eliminated, leaving six potential candidates – the law firms of Aleshire & Wynder; Burke, Williams & Sorenson; Gutierrez, Fierro & Erickson; Jones & Mayer; Liebold McCendon & Mann; and Robbins & Holdaway.
According to Mendenhall, the applicants were vetted and given preliminary ratings based on a host of criteria, including experience in the field of municipal law, ability to handle specialized cases in-house and their respective litigative track records.
The inclusion of the Gutierrez, Fierro & Erickson law firm among the six was something of a surprise in that the firm’s principal partner, Jimmy Gutierrez, was recently hired as a temporary replacement for Curley and it was announced at that time that Gutierrez’s firm would not vie to become city attorney on a permanent basis.
Among the six firms whose representatives were interviewed Tuesday night, Jones & Mayer and Robbins & Hodaway were the most highly rated in the initial analysis completed by Mendenhall and Zwack, the Sentinel has learned.
The Jones & Mayer firm serves as city attorney in Blyth, South Pasadena, Costa Mesa, Fullerton, Grand Terrace, Maywood, La Habra, Westminster and Stanton.
Robbins & Holdaway currently represent the cities of Loma Linda and Montclair. Richard Holdaway one of the partners in Robbins and Holdaway, has the further advantage of having worked in the law firm of Donald Maroney, a previous Upland city attorney.
The final selection process is to be a democratic and mathematical one, according to Mendenhall. Each member of the city council and city manager Steve Dunn, who participated in the interview session Tuesday night, will rate the firms. At that point, those ratings and the earlier ratings made by Mendenhall and Zwack will be tallied to winnow down the field of competition further or derive a victor if one clearly emerges as top dog. Based upon further negotiations over salary and terms, that firm will be selected.
While all of those associated with the firms under consideration are looking forward to the possibility that their law office will be selected for the Upland job, upon actually occupying that position the winner may soon find it has waltzed into a buzz saw.
A significant case the city is involved in which in part brought about the decision to severe its contract with Richards Watson & Gershon is a lawsuit brought by the county of San Bernardino against the city, the state Department of Transportation (Caltrans) and the county’s transportation agency, San Bernardino Associated Governments, known as SANBAG. That lawsuit relates to Upland’s approval of the Colonies at San Antonio residential and Colonies Crossroads commercial developments and the $102 million settlement cost the county sustained when the developer, the Colonies Partners, sued the county over flood control issues after the county built the 20th Street storm drain at Upland’s behest in conjunction with Caltrans’ extension of the 210 Freeway across property owned by the Colonies Partners. More than four years ago, the county offered to settle the case with Upland for $2 million. Richards, Watson & Gershon, on hehalf of the city, declined that offer. The city has paid $4.9 million in legal fees to Richards Watson & Gershon to defend against the suit, nearly two-and-a-half times the amount of the settlement offer. What some council members have characterized as excessive billings has been cited as the reason for terminating Upland’s contract with Richars, Watson & Gershon.
The city has potential liability in the scores of millions of dollars because it had requested that the county flood control district build the 20th Street storm drain. Further, it was the city of Upland that had given approval to the Colonies projects, which were built on property once owned by the San Antonio Water Company and which were criss-crossed with flood control easements recorded in the 1930s. It was the county’s action in constructing the terminus of the 20th Street storm drain so that it vectored water into a flood control basin covered by one of those easements which led to the Colonies Partners’ suit against the county. At issue in the county’s suit against Upland is the city’s negligence in approving the Colonies projects without clearly demarking responsibility for the provision of infrastructure, such as flood control basins and channels, to accommodate the project.
The Colonies Settlement case must go to trial by October. In addition to the $2 million settlement offer made by the county, there have been intensive backroom negotiations between the city, its emissaries and county officials and representatives aimed at forming a settlement short of trial. According to reliable sources, an accommodation that would have brought an end to the litigation without any monetary burden on Upland tentatively endorsed by both of the county supervisors whose districts cover Upland – Second District Supervisor Janice Rutherford and Fourth District Supervisor Gary Ovitt – as well as county chief executive officer Greg Devereaux has been forged by intermediaries. The terms of that settlement would have required that Upland consent to some of its officials – most importantly city councilman Ken Willis – submit to an intensive round of questioning, including being submitted to a deposition, that is, questioning under oath. Willis was part of the city council that endorsed the Colonies projects. He was also a political ally of former Upland mayor John Pomierski. The Colonies Partners were major Pomierski backers, having made considerable monetary donations to his electioneering fund. Pomierski in return was highly supportive of the Colonies at San Antonio and Colonies Crossroads projects. In 2011 Pomierski was indicted by a federal grand jury on bribery, extortion and conspiracy charges. He pleaded guilty to bribery earlier this year.  Like Pomierski, Willis received hefty campaign contributions from the  Colonies Partners. In 2010, former county supervisor Bill Postmus was indicted by a specially-impaneled state/county grand jury on bribery and extortion charges related to his vote in 2006 to approve the county’s $102 million settlement with the Colonies Partners. In 2011 he pleaded guilty to those charges. Subsequently, Jeff Burum, one of the managing principals in the Colonies Partners, and former county supervisor Paul Biane, who voted with Postmus in 2006 to approve the $102 million settlement, were indicted by another specially-impaneled criminal grand jury and charged with involvement in the same bribery, extortion and conspiracy scheme that involved Postmus. That indictment alleged that $100,000 donations made by Burum to political action committees formed or controlled by Postmus and Biane were actually bribes made to reward them for their votes to approve the $102 million settlement. For nearly three years beginning in 2004, Bill Postmus was the chairman of the San Bernardino County Republican Central Committee. In 2007, he was succeeded by Biane as chairman of the GOP in San Bernardino County. Biane was succeeded, eventually, by Willis as chairman of the San Bernardino County Republican Central Committee. Burum was a major contributor to the San Bernardino County Republican Central Committee. Both Burum and Biane have pleaded not guilty to the charges against them contained in the indictment.
Ironically, though Curley is no longer Upland’s city attorney, his firm – Richards Watson & Gershon – remains Upland’s legal representative with regard to the Colonies Settlement lawsuit, as the city is reluctant to bring in another firm, given the investment the city made in having lawyers with that firm familiarize themselves with the issues involved in the litigation.
Richards Watson & Gershon, which rejected the county’s $2 million settlement offer on the Colonies Settlement litigation more than four years ago, again rejected the more recent informal county offer to settle the suit conditional upon an agreement to have Willis subjected to questioning. Instead, the law firm made a motion to prevent a deposition of Willis from proceeding.
With the October trial date approaching and the potential for an outcome that would include a substantial judgment against the city, whoever the new city attorney will be faces the prospect of having to make a series of no-win judgment calls. One of those  will entail deciding whether to seek to protect the city’s taxpayers or instead accede to the wishes of the city’s elected leadership and shield at least one of those leaders from a round of hard-edged, embarrassing and even painful questioning. That decision parallels a decision to either contradict the pattern of pricey advice the city has received so far from Richards Watson & Gershon or stay the course with a risky strategy to forge ahead to trial.
Moreover, by not accepting the county’s terms for settlement nor making an accompanying motion for a good faith settlement that would apportion and limit any judgments against the city sought by other parties, the city remains open to further settlement costs as a consequence of cross-complaints filed against Upland by Caltrans and SANBAG, the county’s transportation agency. Such an outcome on the watch of the new city attorney could greatly diminish that firm’s prestige and hurt its ability to obtain municipal law work in the future.

(July 20)  RIALTO—With little fanfare, the city of Rialto has terminated its relationship with New Jersey-based American Water Works Company, Incorporated.
The never consummated marriage between American Water Works and Rialto was a rocky two-year affair that began when former city manager Henry Garcia was overseeing the city and came to a close during current city manager Mike Story’s stewardship of Rialto.
It was Garcia, while he was wrestling with an aging and decaying municipal water system, who originally courted American Water Works. Pursuant to negotiations Garcia carried out with the New Jersey-based for-profit company, American Water Operations and Maintenance, Inc., a division of American Water Works that was to function as a local company known as Rialto Water Services, would take over operation and maintenance of the water district. The city was to retain the district’s water rights.
The company was to further take on all aspects of operations, maintenance and billing, effectively running both the water and sewer utilities for three decades.
Water and wastewater division employees were to be allowed to transfer into the city’s engineering or public works divisions if they wished, remaining as city employees with their public pension plans intact or were to be allowed to go to work with American Water, which would have been required to guarantee those employees would remain employed for at least 18 months with salary and benefits equal to those offered by the city. That guarantee was to sunset after a year-and-a-half.
Before Garcia departed as Rialto city manager to become city manager in Moreno Valley in January 2011, he had arranged for American Water to make $45 million in upgrades to the water system and  assume all debt owed by the city’s water utility division and fund all needed infrastructure improvements to the system.
In return, city officials agreed to allow American water to significantly increase the water service and sewer service rates to be charged to customers.
Roughly half of the city of Rialto’s of 99,171 residents receive their water from the municipal water system. The other half are customers of Western Water, a private company.
During his tenure, Garcia was unable to close the deal with American Water, but the city inched ever closer to it. When Garcia left for Moreno Valley in 2011, he was succeeded by police chief Mark Kling, who stayed in place as interim city manager for six months, functioning merely as a caretaker. During Kling’s run as city manager, no progress toward handing the management of the city’s water system to American Water was made.
When Mike Story was hired as city manager last summer, he aggressively addressed the city’s infrastructure and service needs, concluding as had Garcia, that the city did not have the financial wherewithal to undertake the water system upgrades on its own. He recommitted to making the deal with American Water. In March, the city council approved by a 4-1 vote entering into the 30-year lease of the municipal water system with American Water Works Co. As part of that deal, the city agreed to a 114.8 percent increase in water and wastewater rates by 2016, such that the average water bill of Rialto households utilizing 17,000 gallons per month will jump from the current rate of $26.27 per month to $64.14 monthly and increase the wastewater treatment fee from $25.97 to $61.46 as of January 1, 2016.
That move immediately provoked a response in the form of a petition drive by members of the Utility Workers of America, the union representing city water division employees, to force a city-wide referendum on the takeover. In less than seven weeks, over 6,400 signatures were gathered to meet the threshold of 3,800 valid signatures of registered voters needed to force the matter to a vote. The petitions created an opportunity for city residents to reject the takeover by means of a mail vote to be conducted by the city. If more than 50 percent of the ratepayers returned the mail-in ballots rejecting the takeover, it would not go into effect.
But in a crafty piece of sleight-of-hand, Rialto officials short-circuited that challenge when they quietly took action to find another company to manage Rialto’s water operations. With two swipes of a pen, the city of Rialto substituted American Water out of the picture  and entered into a contract with San Francisco-based Table Rock Capitol to take on the role of water service operator.
Table Rock, doing business as Rialto Water Services LP, will supplant American Water Works Co. Inc. as the city’s water and wastewater service provider, and will itself farm out the operation to entities expert at water and sewer operations. At present, Table Rock is in negotiations with West Valley running the water division and Veolia North American about running the city’s wastewater plant.
The city will need to get all parties to agree to terms stipulated in a 1,600-page concession agreement to actuate the takeover.
City manager Mike Story said, the takeover, management and improvements to the water system envisioned under American Water will now be carried out “unchanged” under the guidance of Table Rock. The 114.8 percent increased in water and sewer rates by 2016 will proceed as well.

(July 20) TWENTYNINE PALMS — Fifty-four years after it assumed responsibility for fire protection in this desert community, the Twentynine Palms Water District has elected to spin the Twentynine Palms Fire Department off to the  San Bernardino County Fire Division.
In 1958, when the California Department of Forestry ceased providing local fire service, the Twentynine Palms Water District extended its responsibilities to include fire protection.
When the city of Twentynine Palms incorporated in 1987, the city did not create its own fire department and the water district’s fire department subdivision has continued to provide fire protection to all areas within Twentynine Palms’ city limits. The Twentynine Palms Fire Department now counts among its capital possessions two fire stations, Station 421 in downtown Twentynine Palms and Station 422 in the unincorporated Desert Heights area. The fire department’s service area is not coterminous with the 29 Palms City Limits, and in addition to providing fire protection service to the 59-square-mile city also serves 29 square miles of the surrounding unincorporated county area.
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 district.
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.
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 hand the downtown station over 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.
On June 27, with director Nicholas “Bo” Bourikas not present but voting in absentia in writing, the water board 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. Undetermined at that time was whether the county or the California Division of Forestry and Fire Protection, the entity known as Cal Fire which relinquished firefighting responsibility in the area more than five decades ago, would be the successor agency.
On July 12, at a joint meeting of the Twentynine Palms Water District, including its legal counsel and staff, Twentynine Palms Fire Chief Jim Thompson, the Twentynine Palms City Council and its legal counsel, county fire chief Mark Hartwig and Rollings-McDonald, a decision was made to have the county’s fire department subsume the fire department.
Assessing operational costs for the department, Hartwig said the county could support one chief and one firefighter/paramedic at Station 421 in downtown Twentynine Palms and two firefighters/paramedics at Station 422 on Lear Avenue in the unincorporated Desert Heights area for $1 million to $1.3 million annually.
At present, the department consists of seven permanent/professional firefighting personnel: the fire chief, two fire captains, and four engineers. The department also employs an administrative assistant. The department boasts 30 volunteers, who work one shift per week.
The proposal is for the county’s fire division to annex the 87 square miles of the fire protection area currently under the jurisdiction of the water district.
As the fire department is currently being operated, the water district anticipates revenues throughout fiscal 2012-13 of $1,241,000 and expenditures running to $1,480,202. Without some further infusion of revenue into the fire service’s budget, with the continuation of current staffing and operational levels, by the end of the 2013-14 fiscal year all of the fire division’s funds, operational and reserve, will be exhausted.
LAFCO will charge the water district $15,400 to process its divestment application, which will include the conducting of public hearings. The submission of the final application together with all necessary documentation is to be made by October 1. Hearings will be held thereafter.

(July 20) APPLE VALLEY—Citing her hiring to a position in the San Diego County Land Use Services Division and her need to relocate, Apple Valley Town Councilwoman Ginger Coleman has resigned from her elected position effective July 26.
Coleman began work in government as a clerk typist for the city of Victorville’s fire department, worked for a dozen years in Victorville before going to work for two years in the planning department with the city of Adelanto, and then obtained a master’s degree in public administration at California State University, Domiguez Hills before going on to become the director of planning at Altech Engineering. In her resignation letter, she wrote  “I have been honored to serve my community. It is with sadness that I announce I will not be running in this election and that I will also be resigning from the town council, effective July 26, 2012. My last council meeting will be July 24th.”
Coleman’s letter continued, “The economy has adversely affected development for many years now, and every indication is that it will continue to do so for several years to come. As a professional land planner with a masters degree in public administration and lifelong Victor Valley resident, this is not a decision I have reached easily; however, while serving the community is a noble cause, ultimately my family must come first. Therefore, I have accepted a position in San Diego County. Neither this position nor the commute allows me time to perform the duties of a council member in a way that would benefit Apple Valley.”
Town officials are now contemplating their options for replacing Coleman, who was first elected to the council in November 2008 and would have needed to stand for reelection this year to remain in office.
The state’s election code provides the town council with the authority to appoint Coleman’s replacement for the remainder of her current term, which will elapse in December. Such an appointment would give the appointee the opportunity to run as an incumbent in the November election, which can be considered an advantage. The council can also keep the position vacant until after the election is held.

(July 20) BARSTOW—Controversial political figure Anthony Riley has been hired as the city of Barstow’s official public spokesman.
The Barstow city council agreed to provide Riley with a $58,200 annual contract to field questions from the press, generate press releases and facilitate the provision of information to inquiring citizens. The contract does not specify the hours he is to work or set a requirement for his being in place at City Hall.
Riley, an Oak Hills resident and member of the Hesperia School Board, was an employee of Passantino Andersen Communications and most recently held the position of spokesman for Brad Mitzelfelt’s just concluded unsuccessful campaign for Congress.
In 2010, Riley was an unsuccessful candidate himself for the Republican nomination in the 59th Assembly District.
Riley will be called upon to help Barstow put its best foot forward, a role that was previously filled by spokesman John Rader. Riley has been at the center or fringe of negative publicity in the past. An associate of former county supervisor/assessor Bill Postmus who joined Postmus on the Republican Central Committee, Riley was alleged to have been a recipient of political patronage at Postmus’ behest when he was hired into a position within the county’s economic development department. Riley departed from that post after Postmus was overtaken by scandal which led to his indictment and conviction on political corruption charges. Anthony came in for a further round of negative press when, after the Adelanto Charter Academy lost its charter in 2011 because of operational and financial irregularities, it was revealed that Riley was paid $6,500 on January 15, 2010, ostensibly to facilitate the charter school’s contact with Ron Griffith, director of preschool services for the county, and to assure that 20 to 30 kindergarten students would be enrolled at the academy. It was widely circulated that Riley had done nothing in exchange for the money.
Simply in taking up the assignment with the city, Riley generated controversy. He resides 41 miles from Barstow, well outside the geographical sphere in a proposed residency requirement for city officials discussed by the city council at its June 18 meeting. There is a requirement that critical city officials live within 15 miles of City Hall.
An effort to reach Riley at Barstow City Hall Wednesday was unsuccessful.
Riley’s contract provides a commitment that he remain in place for one year and the contract can be extended based upon a decision to fund the post in future budgets.

(July 13) SAN BERNARDINO—Joining the ranks of such California municipal fiscal pariahs as Vallejo, Stockton and Mammoth Lakes, San Bernardino this week became the first city in San Bernardino County history to declare its intention to file for bankruptcy protection.
After deliberating in a closed, executive session on Monday July 9 from which the public was excluded, the council met in public on July 10 and voted 4-2 with one abstention to direct city attorney James Penman to make the Chapter 9 bankruptcy filing.
The move to declare bankruptcy was a humiliating step down for San Bernardino, which in addition to being the oldest city in the county and the county seat, is, with a population of 209,924, the county’s largest city as well.
Seeking bankruptcy protection was opposed by two of the council’s members  –  councilmen Chas Kelley and Fred Shorett. Councilman John Valdivia, who was elected in November and seated on the council in March, abstained.
Referring to the vote as the most difficult decision she has been called upon to make as a council member, councilwoman Wendy McCammack said the city has worked itself into a financial position in which it cannot make expenditures on anything other than basic essential services. She was joined by councilwoman Virginia Marquez, Robert Jenkins, and Rikke Van Johnson in endorsing the filing. Penman said he would require several weeks to assemble the necessities required to make the actual filing.
Penman, in a cryptic statement he subsequently declined to clarify, alleged individuals affiliated with the city falsified the city’s financial documents in 13 out of the last 16 years. Those documents were doctored or otherwise altered to indicate the city was functioning in the black when it was actually running deficits, Penman said.
Penman did not specify which city officials had engaged in the fraud.  “I have my thoughts,” he said, “but that remains to be determined.”
He indicated the discrepancies had recently been brought to the attention of his office and that the information had been provided to investigative agencies, which he again did not specify, although from the context of his statement it appeared he was refering to the district attorney’s office and the state attorney general.
The sixteen years in question span the tenures of city managers Charles McNeely, Mark Weinberg, Fred Wilson and Shauna Clark. The lone hint Penman provided was that he was not referring to acting city manager Andrea Travis-Miller nor current finance director Jason Simpson, whom he credited with having found the discrepancies. Penman clashed with McNeely, who served as city manager from 2009 until he resigned earlier this year.
Valdivia, likewise, made an unclear reference to employees who he said had falsified budget figures. In abstaining, Valdivia said he was unwilling to cast a vote on the bankruptcy filing because he was not confident of the financial figures he had been quoted.
“The taxpayers of this city have been duped, hoodwinked and misguided for the past several years,” said Valdivia. .
Though he did not support the bankruptcy filing, Kelley said he wanted an investigative audit performed and for those who had played a role in the city’s economic demise to be held accountable.
The city’s slide toward insolvency has been ongoing for some time.  In 2008-09, the first full fiscal year after the downturn of the economy, the city had registered a $12 million shortfall by the end of the year. By the current fiscal year, 2012-13, city officials say the best figures available to them project that the city will spend a whopping $45 million more than it will bring in.
The governmental fiscal year runs from July 1 through June 30. Last month, in preparation for a news article concerning the anticipated budgets for all 24 of San Bernardino County’s incorporated cities and towns, the Sentinel   made inquiries  with all 24 city and town managers. San Bernardino alone among those municipalities was unable or unwilling to provide its projected revenues and expenditures for 2012-13. As of Tuesday, city officials said they still did not have a budget that could be publicly released.
The bankruptcy filing will leave the city council and city administration in charge of city operations and give the city, as a corporate entity, twelve to eighteen months to hold its creditors in abeyance while it attempts to straighten out its financial condition.
One undertaking that will likely follow is a major bloodletting, i.e. layoffs of municipal employees. The bankruptcy filing may also provide the city with the authority to abrogate the terms of many existing employee contracts and reopen negotiations with the bargaining units for various city employee groups. The bankruptcy filing will not, however, allow the city to renege on its pension payments to retired employees, a factor cited by Mayor Patrick Morris as a major one in the city’s deteriorating financial condition.
Travis-Miller told the council the city’s major financial burden is its payroll and steepening retirement costs, all of which is exacerbated by simultaneous declines in revenues

(July 13) Chino Hills homeowners will see annual assessments approaching $900 per year to cover the city’s cost of undergrounding the Tehachapi Line, according to one formula calculating the cost of eliminating the presence of  electrical towers through this upscale community in the southwestern corner of San Bernardino County.
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 corridor  right-of-way through Chino Hills from Tonner Canyon to the Riverside County limits to erect 198-foot high towers to hold the electrical lines that are to traverse the 44.7-square mile city.
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 California Public Utilities Commission President Michael Peevey, who visited the city and called for a delay while alternatives to the towers were sought and research on and discussions of alternative routing methods were carried out. Further work on the towers was suspended on November 11.
After months of on-and-off negotiations that have not settled the issue, on July 2 Peevey 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 the massive scale transmission lines.
While Peevey stopped short of saying that the towers, 18 of which have been erected within the city including Carbon Canyon, will be dismantled, he did indicate the Public Utilities Commission (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 completed by mid-2015. The language within Peevey’s order indicated undergrounding of the lines was the desired objective and Chino Hills residents and officials were greatly encouraged by the prospect that the towers, which locals consider to be a visual blight that will negatively impact property values in the city, will be removed. 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.”
Among Chino Hills officials there was reluctance to address that element of Peevey’s order which pertains to the city’s financial participation in defraying the cost of the undergrounding.
Both councilwoman Gwen Norton-Perry and councilman Peter Rogers, citing what they called a conflict of interest that exists because of the proximity of their homes to the power line corridor, when contacted by the Sentinel declined to make any comment or field any questions pertaining to the full implication of Peevey’s order, including whether they believed the city’s residents would be willing to bear a portion of the cost of the undergrounding.
At issue is how much of the cost the city and its residents will be called upon to shoulder and how that cost would be defrayed. One suggestion is that Southern California Edison and the city would split the cost.
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 run from $703 million to $1 billion. In this way, the city’s share of the cost, assuming it will be called upon to pick up half the tab, will come to somewhere between roughly $351.5 million and $500 million.
Multiple options exist by which that share of the cost could be defrayed or amortized. One option would be to bypass the city government altogether and have the city’s ratepayers, as Southern California Edison customers, bear the cost through a special surcharge on their electric bills. Another option would be for the city to share in the burden by issuing bonds or taking out loans and using the bond proceeds or the loan to cover its portion. One formula proffered consisted of the city having its business and residential elements splitting the debt service responsibility on the loans or bonds. In this way, the debt service on an issuance of $500 million over 30 years would require total payments of roughly $1 billion, including interest. Assuming the business community would pick up half that amount over the 30-year life of the loan or bonds, Chino Hills’ homeowners would be called upon to pay $500 million to bondholders or the lending institution over the thirty year life of the obligation. With roughly 18,700 households in the city, each household would be responsible for $26,737.96 of that debt. Defrayed over thirty years, each household would be called upon to assume a yearly assessment of $891.26. Such an assessment, if passed by the city council, would be placed on each homeowner’s property tax bill.
When he was asked directly whether he saw the city’s willingness to bear some of the cost of the undergrounding of the line as key to an agreement to eliminate the towers in Chino Hills, Mayor Art Bennett declined to comment.
Nor would Bennett expound on whether the city has contemplated using its reserves or bond financing or loans to pay for its portion of the undergrounding cost. He likewise declined to speak to whether he believed Edison’s $703 million to $1 billion estimate of the undergrounding cost to be realistic or whether he considered it likely that the city’s residents would collectively be willing to share in paying for a portion of the undergrounding. Bennett was unwilling to say whether he believed that Southern California Edison should be totally responsible for the undergrounding cost.
When he was asked if the city would be willing to levy assessments on its residents to ensure the lines are undergrounded if the PUC indicates that some degree of city or city ratepayer participation will be needed to achieve that end, Bennett offered no response.
Councilman Bill Kruger said he was reluctant to make any definitive statements about the matter because “I don’t want to give a quote now that would be inappropriate since what is being looked at is all the different options for undergrounding. The PUC‘s decision is not going to happen for a year and right now there are ideas all over the place.  We can’t make a definitive statement until we know what all of the options are and what So Cal Edison will be presenting.”
Nevertheless, Kruger said, his council colleagues and other city officials recognize that the PUC expects the city to share in the cost of the line undergrounding.
“That is an issue,” Kruger said. “That is part of the big picture. No one knows what the cost will be. I’ve heard everything from nothing up to a super high number. There will be some cost. Some people are not going to be happy with that. But until there is a firm offer [from Edison] it is counterproductive to be talking about what that number should be.”
City manager Mike Fleager also acknowledged the city was  “asked to submit testimony in that area in regard to contribution to defray some of the cost,” adding he was “not surprised” by Peevey including that in the order.  “We have been debating  since before 2009 the cost of any and all added costs Edison would have above its ordinary costs [in erecting the towers],” Fleager said. “There has been discussion and debate about the alternatives. But at this point we will be preparing significant testimony on all of the issues and we will be going through a thoughtful process with regard to submitting all of our comments from the standpoint of undergrounding and financial contributions, and it is premature to be disposed to any option.”
As to what parameters there are for the city’s financial participation in the undergrounding effort, Fleager said he was unaware “of just what alternatives the PUC is looking at. There isn’t any particular formula or percentage that has been dictated to the city.” Thus, he said, it was “premature to predict what would be required by the PUC.”
Councilman Ed Graham, noting that the city spent $2.3 million in legal fees in seeking to countermand the PUC permit for the towers, said he was not convinced the city or its residents should be called upon to pay for any part of the undergrounding
“I think we have done quite a bit already,” he said.
If the PUC dictates that the city must share in the undergrounding cost or otherwise accept the towers as a permanent part of the landscape, Graham said he did not know whether the city’s residents would support the city becoming financially involved.
“I really have no idea,” he said.
Nor was he in a position to say whether the city council would support using the city’s reserves or creating an assessment district to pay for the undergrounding. “We haven’t discussed that,” he said.
Despite the consideration that the city has spent the last three years in an effort opposing the towers, Graham said city officials have not yet initiated any sort of dialog with city residents relating to the concept of taxpayer or ratepayer participation in defraying the cost of burying the cables and that the time to broach that subject with the public has not yet come.
“That’s way down the road,” he said. “It’s way too early for that.”
Asked if he was concerned that by temporizing and not having in place an assessment district or some other means of generating revenue to pay for the undergrounding, the PUC might decide against the undergrounding option and simply allow the towers to remain in place and be powerized, Graham said, “I would hope that wouldn’t be the case. We have to wait to February 28 to see what happens.”