City Manager Fires Back at Gold Line Construction Authority

Editor's Note: City Manager Scott Ochoa wrote the following under the title "GLCA Attacks Monrovia" in response to GLCA Chairman . Full coverage of the conflict between the city and GLCA over a proposed land deal can be found and . Mayor Mary Ann Lutz also wrote a response to Tessitor's letter that can be viewed in the attached .pdf of Ochoa's report.

At Tuesday night’s City Council meeting, the City Council/Redevelopment Agency Board held a joint public hearing to consider a proposed purchase and sale agreement (PSA) between Monrovia and the Gold Line Construction Authority (GLCA) for property owned by Monrovia and to be used by GLCA for its M&O Facility (M&O Property). The proposed PSA reflects the deal struck by the City and GLCA negotiating teams earlier this year, after having negotiated with each other in good faith for nearly two years. While Monrovia remains committed to the deal as it was negotiated, GLCA is now trying to force Monrovia to pay GLCA’s costs to settle two lawsuits filed against GLCA by Excalibur Holdings (an adjacent property owner who sued (i) the GLCA in February over its adoption of the SEIR and (ii) both GLCA and Monrovia over the PSA.

In its lawsuit challenging the PSA, Excalibur alleges that a 2004 settlement agreement between Monrovia (both the City and Agency) and Excalibur prohibits Monrovia from either condemning or causing the condemnation of Excalibur’s property. This is incorrect.

The 2004 settlement agreement is the result of litigation between Monrovia and Excalibur stemming from the Agency’s 6th amendment to its redevelopment project area in 2002. Excalibur sued the Agency on the grounds that the environmental impact report was insufficient. Ultimately the parties settled in 2004 by executing a “tolling agreement” that preserved Excalibur’s right to reinstate its original lawsuit should Monrovia condemn or cause the condemnation of Excalibur’s property. Nonetheless, Excalibur inexplicably relies on this settlement agreement to challenge the PSA for the M&O Property – despite the fact that the settlement agreement has no bearing whatsoever on the M&O Property.

Furthermore, Monrovia is neither acquiring, condemning nor causing the condemnation of Excalibur’s property. Indeed, Excalibur’s own SEIR lawsuit filed against GLCA in February 2011 will have a greater impact on whether or not their property is acquired. That is, if Excalibur’s boasts about the alleged deficiencies contained in the SEIR are true, GLCA will not be able to acquire Excalibur’s property regardless of whether Monrovia sells the M&O property to GLCA. Thus, for our part, we have advised GLCA to continue with our proposed transaction, and allow Excalibur to sue GLCA and Monrovia on the alleged breach of the 2004 settlement agreement.

Rather than proceed with the PSA as negotiated, GLCA – out of frustration, opportunism or both – has stated that, unless Monrovia pays millions of dollars toward the settlement of Excalibur’s lawsuits, GLCA will condemn Monrovia’s property. While this threat certainly demonstrates that GLCA, and not Monrovia, is the driving force behind the condemnation of properties for the M&O Facility, it is certainly the wrong thing for GLCA to do to a fellow public agency.

At Tuesday’s public hearing, staff made its presentation and reiterated the guiding criteria that we have articulated for nearly two years – any consideration of locating the proposed M&O Facility in Monrovia had to:

• Expedite the construction of Phase II of the Gold Line (through the Foothill Corridor);
• Hold Monrovia harmless financially; and
• Mitigate any environmental impacts associated with the project.

As negotiated by GLCA and Monrovia, total value consideration for the 13.87 acre site is $39.6 million for land, City expenses, and potential lost revenue; $16.5 million in identified public improvements and infrastructure; and the construction of a 350 space parking structure for Monrovia’s Gold Line station.

The attorney for Excalibur spoke in opposition and was incredulous. Among other absurd allegations, he accused Monrovia and GLCA of manufacturing a phony disagreement for his client’s benefit; he then went on to allege that GLCA does not lawfully exist and that Monrovia and GLCA were engaged in racketeering activities and conspiracies under the RICO Act (as in the RICO Act used to prosecute the Mob). Ultimately, however, his primary objections seemed to revolve around Monrovia, his client, and the 2004 settlement agreement.

The next speaker was the special counsel for the GLCA and, ironically, his objections also revolved around the settlement agreement. He referred to the Council’s consideration of the proposed PSA as merely approving a “proposal” because his clients have withdrawn their support for the previously negotiated deal points, and reiterated GLCA’s position that Monrovia must “participate” in settling the Excalibur litigation (i.e. pay millions of Monrovia taxpayer dollars to resolve GLCA’s problems acquiring the Excalibur property).

There were no other speakers and Mayor Lutz closed the Public Hearing. At that point, staff responded to the two speakers’ statements and then, one by one, the Council members voiced their respective views on the matter. Mayor Lutz and Mayor Pro Tem Garcia were angry and disappointed in the GLCA for their behavior and attitude. Councilman Shaw and Councilwoman Shevlin were equally disappointed that GLCA would threaten and try to cast Monrovia as the villain in this scenario, especially after Monrovia had given the GLCA a viable alternative when no other options were available to it. Councilman Adams, foreshadowing his vote, referenced his strong distaste for the deal and GLCA and asked the Council to simply stop negotiations immediately and withdraw from the project.

In the end, the Council voted 4-1 to continue the matter to June 21 so that GLCA and Excalibur might be able to reconcile their differences.

Perhaps foretelling that the discussion on the 21st will be very short – and/or the potential litigation between GLCA and Monrovia will be protracted, should they bring a condemnation proceeding – the GLCA released an op-ed piece in the local press on Friday evening, ostensibly to give their side of the story. It contains many errors and omissions, and Monrovia has prepared a rebuttal.

Ultimately, and in reflection on the point of GLCA’s op-ed – that they are somehow being squeezed on all sides and are merely trying to build their project – it is difficult for them to cast themselves as victims in this scenario. The board members of the GLCA are all elected officials in other cities along the alignment; they would – or should – do the same thing that the Monrovia City Council is doing: protecting the interests of their residents.

The staff of the GLCA operate a construction authority; their job is to build something and move on, handing over the project to a third party (in this case METRO) - thus, they won’t have to live with the impact of the project once construction is finished. But Monrovia will, and that is why every dollar of value – in cash as well as public improvement investment – is so critically important. It is definitely worth fighting for. If Excalibur Holdings and their attorneys believe this entire episode to be an elaborate ruse perpetrated for their amusement and intrigue, then they are sorely mistaken. Truly, the lack of substance in their statements and allegations speaks to the lack of merit in their legal claims.

Lastly, and perhaps most notably, the GLCA has options – it can pay Excalibur enough to make it a willing seller; it can try to condemn the property it needs for the M&O Facility; it can redesign the project to exclude Excalibur; or it can walk away. I can say without equivocation or tentativeness that we knew, early on, that the time might come when Monrovia would have to walk away from this deal – when it might stop making sense to pursue. We reconciled with that potential outcome at the outset of our discussions with GCLA in July 2009. No one is forcing this site upon GLCA; if they can make a better deal elsewhere along the Gold Line alignment, then perhaps the time has come for them to reconcile to this alternative as well.