by Gene Beckman
The settlement of litigation between the City and the developer of the Powder Canyon property is wonderful news for all of our citizens. The Committee to Protect the General Plan would like to congratulate Council members George Cooke, Carol Engelhardt, Judy Hathaway-Francis, Fred Klein, and John Powers on their successful cooperative work in resolving the City's suit. The "Stipulation for Entry of Judgment" in favor of the City of La Habra Heights was the result of a careful negotiation process.
Formal mediation of this dispute commenced before a retired Superior Court Judge in October 1995. During the next three months, the entire City Council met with Forum to negotiate the settlement. The developer attempted mostly to discuss what kind of project the City would allow in the future. The Council, however, was united in its rebuff of consideration of any such matters, insisting that the developer pay his contractual obligation to the City. What exactly was his obligation?
When the developer first submitted his project, he paid a $20,000 processing fee. The developer used a loophole in our City's code to resist paying any more fees. (This loophole was later removed by the new City Council after the April 1994 election.) The Powder Canyon project went through major revisions and kept expanding in scope. For example, when the first proposal was submitted (in 1989), only 3 million cubic yards of dirt were supposed to be graded. The final proposal called for over 10 million cubic yards of dirt to be moved enough to pile 41 feet of dirt on all 42 miles of our streets if it were spread out over the entire City.
The expanding scope of the project meant a dramatic rise in planning fees. City funds in the amount of $400,000 (!) were spent processing this project. The ever expanding scope also meant an increasing level of non-conformance to the General Plan. The project could have and should have been denied as a violation of the General Plan. This would have stopped the hemorrhage of City money for project processing.
But the four members of City Council at that time who were strongly pro-development decided to negotiate with the developer for a portion of the total fees in order to keep the project alive. On August 21, 1992, City Council discussed a "Reimbursement Agreement," which the Council signed on August 27, 1992. In exchange for $145,000 in fees, the City promised to render a decision on the project by November 12, 1992
a completely unrealistic expectation for a development of this magnitude.
In 1992, the City received $60,000. The balance of the $145,000 was to be paid when the project was "disposed of" by the City that is, when the project was either approved or denied by Council or by community referendum. A referendum was required after two of the pro-development Council members removed themselves from participation in deliberations because they had a potential conflict of interest. The community then rejected the project with its far-reaching changes in our General Plan by a 2-1 margin.
The City demanded payment of $85,000 and special election costs of $11,000. The developer refused to pay. In March 1994, the City filed a civil action against Forum Country Clubs ( the developer) to collect $96,000. The court later allowed the developer to file a cross-complaint against the City for alleged "civil rights violations" for not approving the project.
After three mediation hearings, the City and the developer entered into a binding Settlement Agreement, which calls for an Entry of Judgment for the City and against Forum. Forum also agreed to dismiss, without prejudice, its cross-complaint against the City.
The Judgment calls for the payment to the City of the sum of $210,000 no later than December 15, 1996. The City has a senior secured interest in the property and can foreclose on the property if payment is not made by December 15, 1996.
The sum of $210,000 represents $96,000 for payment of a portion of the processing fees and the special election held in November 1993. The remaining $114,000 is an award of attorney's fees expended by the City in this litigation. The City acknowledged its legal responsibility to process any future application for development by the developer in accordance with the State of California's Permit Streamlining Act. In addition, Forum will have to pay off years of outstanding property taxes at the close of escrow. Ten-percent of the taxes (about $70,000), but none of the penalties or back interest, will go to the City.
The resolution of this suit means that the community has prevailed in
forcing the developer to do something he has never done before honor
his obligations to the citizens of La Habra Heights. It also shows how
residents working together can bring about positive solutions to the problems
facing us. Let us hope that this process will be a model for citizens,
demonstrating how rewarding it is to get involved and stay involved
in our community's affairs. Constant vigilance is the key to maintaining
our lifestyle.