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02-05-2019 CC Rpt 03Meeting date:./- // Q I cl c� c� REQUEST TO SPEAK COMMENTS ARE LIMITED TO 3 MINUTES The Red Light on the podium indicates your time has elapsed NOTE — THIS IS A PUBLIC DOCUMENT SUBJECT TO POSTING ON THE CITY'S WEBSITE. YOU ARE NOT REQUIRED TO PROVIDE PERSONAL INFORMATION IN ORDER TO SPEAK, EXCEPT TO THE EXTENT NECESSARY FOR THE CITY CLERK TO CALL UPON YOU. PLEASE PRINT pp �r Name: /�C0/1►tc� VVI �y� W C� -- Company/Association/Organization (if any): Address or Area of Residence (Optional): t-� LA J I wish to speak under: 1. PUBLIC COMMENTS SECTION Subject: `\ w&o �'( c l►�t1o� 2. AGENDA ITEM NO. FAVOR OPPOSE The City Council is interested in your comments. You may address the City Council regarding any item within the subject matter jurisdiction of the City Council, provided no action or discussion may be taken on items not appearing on the agenda unless authorized by law, except the City Council may briefly respond to statements made or questions posed. PLEASE SUBMIT TO CITY CLERK PRIOR TO MEETING 1 Meeting date: al!5 t q C`� �GUUJ REQUEST TO SPEAK COMMENTS ARE LIMITED TO 3 MINUTES The Red Light on the podium indicates your time has elapsed NOTE — THIS IS A PUBLIC DOCUMENT SUBJECT TO POSTING ON THE CITY'S WEBSITE. YOU ARE NOT REQUIRED TO PROVIDE PERSONAL INFORMATION IN ORDER TO SPEAK, EXCEPT TO THE EXTENT NECESSARY FOR THE CITY CLERK TO CALL UPON YOU. PLEASE PRINT Name: �J / f/`' ��C3 GNB Company/Association/Organization (if any): Address or Area of Residence (Optional): I wish to speak under: / 1. PUBLIC COMMENTS SECTION Subject: / 0�� 2. AGENDA ITEM NO. FAVOR OPPOSE The City Council is interested in your comments. You may address the City Council regarding any item within the subject matter jurisdiction of the City Council, provided no action or discussion may be taken on items not appearing on the agenda unless authorized by law, except the City Council may briefly respond to statements made or questions posed. PLEASE SUBMIT TO CITY CLERK PRIOR TO MEETING Date: ayuaq 1�if ?-U I Item: q Distributed at the City Council Page 1 Meeting after Agenda was posted San Gabriel Valley Water and Power, LLC February 5, 2019 VIA HAND DELIVERY Re: Master Ground Lease for Tres Hermanos / Breach of Lease by City of Industry and Claims against the City of Diamond Bar and the City of Chino Hills and council members individually for Tortious Interference with Prospective Economic Advantage. To Konradt Bartlam, I am writing this letter to you as the City Manager of Chino Hills and as a public official, on behalf of San Gabriel Valley Water and Power, LLC ("SGVWP") to put you on notice that SGVWP has a Master Ground Lease (the "Lease"), dated May 17, 2016, with the City of Industry ("Industry") that covers the Tres Hermanos property (the "Property") if acquired by Industry or an affiliate or assignee of Industry. We have just learned that City of Diamond Bar ("Diamond Bar"), City of Chino Hills ("Chino Hills"), and Industry have each scheduled closed session meetings of their respective City Council for today at 5 p.m., with respect to approval of a settlement of pending litigation between the parties and a related acquisition of the Property. The fact that these meetings were scheduled to be held concurrently, at three separate locations, and on 24 hours' notice, demonstrates a conscious, coordinated, and well-planned attempt to avoid public awareness, scrutiny, and comment regarding the matters being considered by the three City Councils. In particular, these actions indicate an intentional effort by the cities to minimize the ability of SGVWP to protect its rights under the Lease, which would be violated by the proposed approvals. Moreover, it appears that the three municipalities are attempting to make significant decisions regarding acquisition of the Property—and compliance with CEQA regarding that acquisition—without any public input, by including it as part of a "settlement agreement" regarding pending litigation, in clear violation of law, including the Brown Act. In addition to harming the public interest generally, these actions improperly interfere with the Lease and SGVWP's economic interests. You may have been told by Industry that the Lease has been terminated, and the Property is no longer subject to the Lease. This is not true. Please see the attached letter we sent to Industry on August 30, 2018 , which gave Industry notice that (1) Industry's purported unilateral termination of the Lease is ineffective, (2) Industry is in breach of the Lease, and (3) SGVWP intends to enforce the Lease, if necessary in a court action seeking injunctive relief and/or significant damages. You and those you serve in your city appear to have been misled to believe that, if Industry did not acquire the Property by December 31, 2018, SGVWP's rights under the Lease would be terminated. This is not true: Industry breached the Lease well before December 31, the Lease remains in effect, and SGVWP has the right to force Industry to perform under the Lease. Additionally, Industry's failure to close on the Property by the December 31 deadline is Page 2 a further effort to frustrate the purpose of the Lease and a further breach of the Lease. Finally, for Diamond Bar, Chino Hills and Industry to concurrently approve a Joint Power Authority (JPA) 35 days after the purported expiration of the time period specified in the Lease, when Industry had 16 months to acquire the property, is nothing short of collusion and bad faith. Industry's actions are already in breach of the Lease. Any further action taken by Industry to limit the use of the Property without the consent of SGVWP will be a further breach of the Lease and frustration of the purpose of the Lease, and any action taken by Chino Hills or its council members in agreement, conspiracy or otherwise complicit with Industry to limit the use of the Property or terminate the Lease is a tortious interference with prospective economic advantage of SGVWP. Therefore, please be aware that if you take any action tonight to limit the use of the Property, SGVWP will seek relief for all monetary amounts and other benefits that would have flowed to SGVWP if the City had complied with its obligations and acted in good faith as well as damages against Chino Hills and, to the extent authorized by law, each of the council members individually. Sincerely, 6,e-, , -3 -,� William Barkett San Gabriel Valley Water and Power, LLC August 30, 2018 VIA OVERNIGHT DELIVERY AND (TO JAMES M. CASSO) E-MAIL Troy Helling James M. Casso Acting City Manager CassQ & Sparks, LLP 15626 E. Stafford Street 13200 Crossroads Parkway North, Suite 345 Suite 100 industry, California 91746 Industry, California 91744-0366 icassoawcassosoarks.com Re: City of Industry's duly 5, 2018 Correspondence Concerning Master Ground Lease; Notice of the City's Default Under Master Ground Lease Dear Mr. Helling and Mr. Casso: I am writing on behalf of San Gabriel Valley Water and Power, LLC ("SGVWP") in response to the City of Industry's July 5, 2018 letter ("July 5 Letter"), which purports to terininate the Master Ground Lease entered into on May 17, 2016 by the City and SGVWP, as amended (the "Lease"). The City purported to terminate the Lease once before, per its May 23, 2018 letter to SGVWP ("May 23 Letter"). SGVWP rejects the City's claim that the Lease has terminated or will terminate as a result of the May 23 Letter and/or the July 5 Letter, The City has issued those letters and otherwise indicated that it will not perform, under the Lease, despite the fact that SGVWP has continued to perform under the Lease and comply with all, Lease obligations. The City's actions appear to be part of an overall strategy to deprive SGVWP of its rights and benefits under the Lease, including, without limitation, significant financial returns on SGVWP's investments and work performed under the Lease. Although SGVWP is hopeful that the City will reconsider its position, SGVWP has no choice but to give notice, pursuant to Section 17.5 of the Lease, that. the City is in default of the Lease. Moreover, the City has breached the implied covenant of good faith and fair dealing. As a result, SGVWP reserves all rights to enforce the Lease and/or obtain compensation for all monetary amounts and other benefits that would have flowed to SGVWP if the City had complied with its obligations and acted in good faith. N4x. Troy Helling and Mr. James M. Casso August 30, 2018 Page 2 I. The City's July 5 Notice of Termination Was Invalid and Ineffective. On June 27, 2018, SGVWP submitted the Notice of Preparation for the City of Industry Gabriel Solar Project Environmental Impact Report (the "NOP") in compliance with Section 23(a) of the Lease, The City's July 5 Letter ass" that it is terminating the Lease "due to SGV WP's failure to comply with the provisions set forth in Section 2.3(ay'of the Lease in four ways. As explained below, the City's purported reasons for asserting that SGVWP has not complied with Section 23(a) of the Lease are meritless and, along with the City's refusal to accept the NOP, attempt to terminate the Lease in the July 5 Letter, and other actions, are indications of the City's bad faith and refusal to abide by the terms. of the Lease. First, the City asserts that it had already terminated the Lease pursuant to the May 23 Letter. It purports to do so on the grounds that SGVWP failed to provide documents requested by the City in February 2018 pursuant to Section 25.1.1 of the Lease. However, in SGVWP's letter dated May 8, 2018, we explained why the City had no contractual night to the documents in question and, shortly thereafter—and without recognizing or conceding any obligation under the Lease— � made an initial, voluntary production of documents in a good -faith effort to facilitate the goals of the Lease. The City responded to SGVWP's good -faith effort with the May 23 Letter, purporting to terminate the Lease. In SGVWP's letter to the City dated May .29, 2018; we again explained that the City has no contractual right to the documents it requested, and further explained that the City failed to terminate the Lease by not complying with Section 17.1.2 of the Lease. In that letter, we also stated that, "[a]s your May 23 Letter conforms, the February 201.8 demand for documents was nothing more than - a pretext to try to avoid the consequences of the City's prior actions .... This latest action is particularly egregious in light of SGVWP's good - faith attempts to resolve this matter, which included providing documents to which the City has no contractual right." Second, the City asserts that the NOP is invalid because "the City does not have jurisdiction over the relevant portion of the Total Site, and the City does not serve as the lead agency for any proposed project at the Total Site.' This argument is made in bad faith. In September 2017, the City appears to have ratified the purchase -and -sale agreement for the Tres Hermanos Property (the "Property"). Thereafter, the City represented to SGVWP that the City would be acting as the lead agency for the purposes of undertalcing environmental review and approving the project pursuant to the California Environmental Quality Act. Given the City's involvement in the project—including advancing and reimbursing funds for exploration of a solar energy project intended to provide power and revenues to the City —the City was well within its authority to serve in that role as lead agency for the project) Despite having led SGVWP to believe that the See Public Resources Code, § 21067; 14 Cal. Code 1tegs. §§ 15051--15053 (the CEQA lead agency may include the agency involved in carrying out the project or the agency with the gfeAtest responsibility for supervising or approving the project as it whole); see also Center for Biological Diversity v. County of Sam Bernardino (2016) 247 Cal.App.4th 320, 340 (lead -agency may include "the public agency with the greatest responsibility for supervising or approving the project as a whole"); Planning & Conservation League v. Castoic Lake Water Agency (2009) 180 Mr. Troy Helling and Mr. James M. Cassa August 30, 2018 Page 3 City would be acting as the lead agency, the City has failed to complete the purchase of the Property and now asserts that it willnot act as the lead agency. The City is estopped from using SGVWP's reliance on the City's representations as a pretext for terminating the Lease. Third; the City takes issue with the statement in the NOP that the City "is requiring that an Environmental .Impact Report (EIR) be prepared for the project identified below," and asserts that "SGVWP's request for a NOP on June 27, 2018, is of no moment, as no solar project has ever been submitted to, or considered by, the City." As an initial matter, the City fails to identify any requirement in Section 2.3(a)=or, indeed, anywhere in the Lease—requiring the submission of a solar project prior to the submission of an NOP. Moreover, the City is making this assertion in bad faith. The City requested, and SGVWP agreed, that an EIR be prepared. The City cannot mislead SGVWP by requesting that an EIR be prepared, and then use SGV WP's reliance on that statement as a pretext for terminating the Lease. Furthermore, since deciding on preparation of an EIR, the City has cancelled a number of scheduled meetings with SGVWP at which SGVWP was to provide fl rther details regarding the project described in the NOP. Fourth, the City asserts that "the Lease required both a request for an initial study and a NOP', and that "SGVWP failed to make any request for an initial study prior to the June 30, 2018 deadline." Yet again., this is an assertion made by the City in bad faith. The City has already communicated to SGVWP that an EIR must be prepared for the site, which makes a request for an initial study unnecessary. The City's insistence on a request for an initial study is thus merely another pretext upon which to terminate the Lease without legitimate grounds. Regardless, and without conceding the validity of the City's argument, SGVWP hereby requests preparation of an initial study of the project described in the NOP. Having been made within the 60 -day period referenced in Section 2.3(a) of the Lease, this request cures any alleged breach. Moreover, the City has suffered no prejudice from the request beim made after June 30, 2018. For these reasons, the July 5 Letter is an invalid and ineffective attempt to terminate the Lease, as was the May 23 Letter. The Lease remains in effect. H. The City Is Attempting to Deprive SGVWP of its Contractual Rights and Benefits. In addition to the City's invalid efforts to terminate the Lease, the City has taken other actions which demonstrate its bad faith intent to breach its obligations under the Lease. The City has now attempted on three occasions to misuse its legislative subpoena power to obtain all of the documents reflecting work performed by SGVWP and its consultants in furtherance of the Lease, including privileged attorney-client communications, protected attorney work product (collectively "Privileged Information') and confidential and proprietary Business Cal.AppAth 210, 239; City of Sacramento v. State Water Resources Control Rd (1992) 2 Cal.App.4th 960, 971 (the rule allowing the agency acting .first to serve as lead agency is "consistent with the legislative goal of assuring environmental impact assessment in governmental planning at the earliest possible time."). Mr. Troy Helling and Mr. James M. Casso August 30, 2018 Page 4 information of SGVWP and its consultants ("CPBI"). If the City truly believed that it was entitled to the documents under the Lease, it could have attempted to assert a valid breach of contract action and requested that a court order specific performance by SGVWP. It chose not to do so, clearly because there is no valid argument that there was ever any breach. instead—and presumably because it realized that SGVWP would prevail in any such action—on May 15, 2018, the City called a Special Meeting of the City Council to consider a resolution that would authorize issuing a legislative subpoena to obtain the documents that it had been improperly demanding pursuant to Section 25. 1.1 of the Lease since February 2018. Despite City staff having recommended approval of the resolution, a legislative subpoena did not issue, apparently because the mayor refused to sign it. In response, the City called another Special Meeting of the City Council on May 25 to have the mayor pro tem, sign a legislative, subpoena. After SGVWP pointed out that this was improper —a fact confirmed by the mayor, who commented in a local pape? that I didn't attend the meeting today because I think the proposed action by the council ... is illegal and I didn't want to be a part of it" the City withdrew that subpoena and dismissed the action it had filed to enforce it. The City has now issued a revised legislative subpoena on July 26, which originally demanded a document production on August 10. SGVWP was forced to file an action in the Los Angeles Superior Court and obtain a temporary restraining order (issued. on August 9), to preclude enforcement of this subpoena, which has no valid legislative purpose and is facially overbroad. These repeated attempts to force the City's interpretation of the Lease on SGVWP through a legislative subpoena—the first of which occurred before the City even purported to terminate the Lease on May 23—are further indications of the City's bad faith and its unwillingness to abide by the Lease terms. SGVWP has now learned that the City is attempting to move forward with development of the property that is the subject of the Lease, including potentially with a solar power project identical or similar to the one proposed by SGVWP in the N0P, but without any involvement by SGVWP. This information is set forth by City Councilmembers and officials in an article published in the San Gabriel Valley Tribune on August 18, 2018, entitled "With Death of Solar Farm Project, Warring Cities Explore Shared Control of Tres Bermanos Ranch."3 These actions, combined with the City's two attempts to terminate the Lease, demonstrate that the City has had no intention of performing under the Lease, at least since it first requested the documents on February 1, 2018. Instead, it appears that the City intended all along to use that 2 See Henry, Industry mayor refuses to sign subpoena for Tres Hermans records, colleagues outmaneuver him, San Gabriel Valley Tribune (May 15, 2018) (ellipses in original), available at htti)s://www..savtribitn6.cori/2018/05/25/inditstrv-mayor�refuses-:to-sip-n-sub-noenarfor!,tros- hermanos4ecords-ollbagues-outriian,euver-him/, 3Available at httDs,//www.so-Wribune.com/2018/08/18/With-deatli-of-solar-fann-i)roiect-,vvarrinq- cities-ex-olore-!shared-control-of-tres-hetmanog-ranch/,. Mr. Troy Helling and Mr. James M. Casso August 30, 2018 Page 5 request for documents as a pretext to terminate the Lease, and then use the documents to move forward with the solar power project contemplated by the Lease, without honoring the commitments it made to SGVWP. SGVWP invested significant time, money, and resources into furthering the purposes of the Lease because, under the term of the Lease, .it would have received substantial financial returns on its investments. The City cannot unilaterally terminate the Lease, deprive SGVWP of those financial benefits, and then reap all of the 'benefits from the Lease for itself 111. Notice of the City's Default Under Section 17.5 of the Lease. The City has no valid basis for refusing to accept the NOP and/or purporting to terminate the Lease, as claimed in the July 5 Letter. The City's assertions in the July 5 Letter, as with its assertions in. the May 23 Letter, are indications of the City's bad faith and refusal to perform under the Lease. As noted, this letter thus serves as written notice pursuant to Section 17.5 of the Lease of the City's default. Pursuant to Section 17.5(b) of the Lease, the City has indicated, in its July 5 Letter, that it will not honor the obligations in Section 24 of the Lease, and the City will be in default if it does not cure this within twenty (20) days. in addition, pursuant to section 17.5(c) of the Lease, the City has repeatedly indicated—including in its March 9 Letter, May 23 Letter, and July 5 Letter—=that the City will not perform any of its remaining obligations under the Lease, and the City will be in default if it does not cure this within thirty (30) days. Given that the City's actions, both in purporting to terminate the. Lease and otherwise, have put the city at significant risk of a breach of contract action by SGVWP, we trust that You will provide this his letter to Mayor Radecki and the other Councilmembers. SGVWP stands ready to meet with the City, at any mutually convenient time and location, to discuss how the parties can move forward together to effectuate the Lease and advance their goals, However, if the City is unwilling to cure its default and engage in good faith with SGVWP regarding completion of the City's Lease obligations, SGVWP intends to seek court action requiring the City to perform under the Lease, enjoining the City from otherwise proceeding with a solar energy project at the Property or the property currently subject to the Lease, and/or awarding appropriate damages to SGVWP, including compensatory and exemplary damages, as well as the costs and expenses of suit, including reasonable attorney fees, as allowed under the Lease. Mr. Tray Helling and Mr. James M. Cassa August 30, 2018 Page 6 Sincerely,/— Wade Hall San Gabriel Valley Water and Power, LLC Date:upr tem: 3 Lynnae Sisemore Distributed at the City Council Vleeting after Agenda was posted From: Duane Thompson <datsawman@aol.com> Sent: Tuesday, February 05, 2019 5:11 PM To: City Clerk -web mail Subject: Comment for Tonight's Tres Hermanos JPA meeting. Please include this in comments from the public for tonights meeting. Regarding the Tres Hermanos Conservation Authority JPA; As a property owner in Chino Hills, I am very concerned about the proposed make-up of the Board of Directors of the Governing Board of Directors of the Joint Powers Authority. Chino Hills gets 2, Diamond Bar gets 2, but City of Industry gets 3. This clearly shifts the power to the City of Industry. If this is really going to work, there should not be an imbalance of power. Each city should have an equal number of members on the Board of Directors. If the City of Industry wants something, all it needs is one vote from either Chino Hills, or Diamond Bar to move it ahead. That hardly seems fair and potentially removes citizens from either Chino Hills or Diamond Bar from having a vote in approving or disapproving future development. Thank you, Duane Thompson 275 Verbena Ln. Brea, Ca. 92823 1