Birch Hills Golf Course, An Independent Legal Review.

Thankfully, for all of us, Dwight Manley sent a copy of the massive set of documents accompanying the October 1st item to accept title of the BHGC (Brea Hills Golf Course) to his attorney for review.

Richard Montevideo is the Chair of Rutan & Tucker, LLP’s Environmental Law Practice Group since 1992.

The review that follows was provided by him and shared with members of Council and the City Manager prior to last Tuesday’s circus of a Council meeting.

 

 

Property Transfer Document Review

There is a lot to unpack with these documents, but from my initial review of the Settlement Agreement, the AS IS Indemnity Agreement, the Guarantee, the Consolidated Area Easement Agreement and the Environmental CC&Rs, I have the following big picture comments from the perspective of protecting the City’s interest:

  1. For both legal and practical/business reasons, the City should clearly be preparing a formal Phase I Environmental Assessment Report on the Property before taking title to the same. The Phase I Report would provide some legal protection to the City from future enforcement action, and equally important, would consolidate all in one report, a description of the history operations that led to the contamination, a description of the type, levels and media of contamination, the remedial work that was conducted, the residual contamination that remains, and the risks posed by the residual contamination that remains.
  2. For all contamination on the Property, except for essentially contamination caused by Union Oil and that exceeds an existing cleanup standard, the City is indemnifying the seller, including Union Oil. As such, unless this provision is changed, the City should do everything it can to make sure it fully understands the nature and extent of the contamination, meaning conducting a Phase I Report and further evaluating the risks associated with the existing contamination for onsite workers and guests/invitees.
  3. The contaminants of concern at the Property, i.e., PCBs, dioxins, furans, arsenic among others, especially the dioxins, are significant carcinogens and thus the City should have the resulting risks associated with the residual contamination evaluated by a qualified environmental consultant, and presumably a toxicologist/risk assessor. If there is a problem in the future and someone is hurt or claims they are hurt from the contamination, it would be a PR problem for the City, in addition to being a significant legal problem.
  4. Pursuant to H&S code section 25359.7, the seller of the property is required to provide written notice of the existence or potential existence of all hazardous substances it knows or believes exists on the property to the buyer. In this case, I see no evidence of any due diligence disclosures that have been made to the City. Such due diligence reports/disclosures would provide a beginning point for the City to hire an environmental consultant to conduct a Phase I Report.
  5. The protections provided to the City under the various agreements are weak.   Essentially, the City is providing a full release of any all claims under Civil Code 1542, except for among other items, contamination caused by Union Oil that is above current regulatory agency action levels. Thus, if the cleanup standards change in the future, the City is on the hook for addressing the contamination. And in fact, DTSC is currently reviewing and will soon be issuing new guidance/policy on vapor intrusion standards, which may or may not impact the Property, depending on the nature of any volatile organic compounds on the site and their location.
  6. If a problem arises in the future resulting from existing contamination found to exceed existing cleanup standards (which is the only scenario requiring additional work by Union Oil), even then there is no direct remediation covenant that extends to the City. Instead, the City only has a general indemnity to rely upon and will need to show it has suffered some Loss before the general indemnity will kick in. in short, if there is some existing contamination exceeding existing/current cleanup standards, the City will not be able to require Union Oil to clean up the contamination. Normally, in a situation like this, you would negotiate a Remediation Covenant in the Agreement triggering an automatic cleanup obligation.
  7. Stormwater runoff, including dry weather runoff, is a significant issue in California, and golf courses can be big offenders of runoff limits, especially for nitrates, fertilizers, pesticides, etc. From the documentation provided, it is unclear whether the City has hired anyone to evaluate the stormwater runoff compliance issues, but it is clear that the City will be accepting this obligation.
  8. A certain quantity of contamination was buried within the Consolidated area, which then has resulted in a recorded set of Environmental CC&R imposed on this property. The City should make sure that its current and future use of the Consolidated area will not violate these restrictions. This is where again a Phase I Report would be helpful/important.
  9. The AS IS/Indemnity Agreement the City is committing to arbitration and waiving its right to a jury trial.
  10. The “Guarantee” provided by Union Oil is NOT a separate indemnity, but nothing more than Union Oil guarantying the very limited indemnity provided in the AS IS Indemnity agreement.
  11. The Guarantee agreement contains a Confidentiality clause which is unenforceable or otherwise irrelevant in this context when it is being provided for the benefit of a public agency. Either way, it looks bad from the City’s perspective and makes no sense.

I do not know the business/financial benefits of the transaction from the City’s perspective, but from a pure legal and environmental risk perspective, there are a number of issues that the City should take a second look at.

Also note, that the above are the larger issues with the agreements as written, but there are many more. The agreements appear to me to be seller oriented.

A “Reasonable Person” Responds.

I’ve made no attempt to distill Mr. Montevideo’s observations into lay language. As lawyers are apt to say, these remarks are understandable by “any reasonable person” – no reason for me to butt in.

I’ll close by simply saying this, all concerned… Council, Staff, “we the people”, have only a fraction of the facts and information needed to make a prudent decision in this matter.

By failing to admit their error, by not putting on the brakes to give much closer scrutiny to the details and implications of a decision this huge… Council fails us miserably.

BHGC, An Unmitigated Disaster Waiting To Happen.

Today, Brea Matters again addresses the recent vote by Council to assume title of the BHGC (Brea Hills Golf Course).

Red DiceWhen I launched Brea Matters in October 2011, a key catalyst was former City Manager Tim O’Donnell’s favorite definition of leadership, “Leadership is disappointing your constituents in increments they can absorb.”

Long ago ingrained as the management mantra of Brea’s Council and Staff, it has proven to be sadly accurate in it’s premise.

How Much Have You Absorbed?

In ten years, I’ve lost track but in recent times we’ve “absorbed” the disappointments of the 1976 Paramedic’s Tax, the 1991 RDA bond refinancing that produced a $50 million unaudited slush fund, the loss of the Gateway Center – a prime city asset, loss of the Yorba Linda Police contract, reorganization of the Brea Fire Department.

Plus the mismanagement of Landscape, Lighting & Maintenance Districts (LL&MD) and Community Facilities Districts (CFD), Tiered Water Rates, and these self explanatory fiascos: Koreagate, Madrona, Rock Garden, unfunded pension debt and Brea Envisions

Council and staff count on our short memories and propensity to forgive. Next Tuesday they will once again rely upon their old mantra to get them off the hook one more time.

Misdirection, Misinformation and Misconceptions.

The first thing you’ll be fed is a litany of useless historical “facts” designed to lull you into a dull sense of inattention. Detailed descriptions of the “parties” involved, clarification of the original intent of the title exchange and justification of redesigning the course into substandard quality.

They’ll try to justify the ridiculous $80/yard excavation fee as a basis to project future mitigation fees. Everyone put your calculators away. We’re missing one important factor in the equation, without which no accurate projection is possible. They have no clue exactly what the remaining unmitigated condition of the BHGC is, how many acres… how many yards of “dirty dirt”… remain after the admitted partial mitigation done to save Chevron $13 million in additional costs.

The BHGC: Permitted Uses, Prohibited Uses.

We’re told, by the City Attorney, that permitted uses include a golf course or other outdoor recreational use, and the addition of a community or banquet facility. Prohibited uses include residential development, hospitals, clinics and medical offices.

So, does “permitted” mean legal and “prohibited” mean illegal? These terms have been tossed about as equivalents and they’re anything but!

City Attorney Boga stated that, with certain permissions, the city could do whatever they wished with the property. Permissions from OC Healthcare Agency, US EPA, Birch/Kraemer LLC and Union Oil.

He failed to mention that, assuming getting all of those permissions was even remotely possible, that Chevron would be absolved of their requirement to maintain the parking lot and the city would assume the responsibility.

Plus, changing the BHGC to a non-park use requires voter approval of Brea residents. Really?

When Is Our Voice, Our Vote Obligatory?

BHGCDid we get to vote on whether we were willing to trade the $8 million In Lieu Fees for the eventual title to a semi-toxic stripped down golf course worth, at best $5 million? No.

Did we ever get to vote on whether we believed the city, in addition to routine municipal responsibilities, should be free to commercially compete with all manner of local businesses? No.

Did we get to review the detailed legal documents and agreements required to effect this transfer of title and vote whether we supported the transfer with all of its complicated and fiscally threatening limitations? No.

One member of Council, for reasons I still find incomprehensible, was recused and the four remaining members of Council voted unanimously to take ownership of this white elephant.

Have You Absorbed Enough Yet?

I have! And if response to the prior blog and commentary on the Brea Buzz is any indication, many of you have reached total saturation as well.

You’ve got about two days to make your thoughts and concerns known to Council before they launch into their dog and pony show to justify the unsupportable vote they cast two weeks ago.

Juked out of simply putting their propaganda on the city website, thereby giving it the full weight and credibility of the interwebs, they’re stuck making it look like a formal report Tuesday evening.

Luckily Matters From The Audience follows this sugarcoated attempt to justify after the fact… so those of you with the chutspa are welcome to step up to the podium and give these folks a piece of your mind.