Industry wants to kill its solar project at Tres Hermanos even though it might lose $20 million

After two years and a $20 million investment, the city of Industry is cutting ties with a controversial solar project on one of the largest swaths of open space in the region.

The City Council notified the developer of its decision to terminate the lease agreement earlier this month, City Attorney Jamie Casso said. The saga isn’t over yet, though. The company, San Gabriel Valley Water and Power, is contesting the termination.

“They have been in default under the terms of the lease,” Casso said. “They contest that, yes, but we believe their arguments are without merit.”

According to Casso, SGVWP violated the terms of the lease by not turning over studies and other documents paid for with Industry’s money. The company also failed to file a notice of preparation for the project under the California Environmental Quality Act.

Wade Hall, a representative of SGVWP, compared Industry’s efforts to a landlord trying to illegally evict a tenant. He said SGVWP has complied with all of the terms of the lease and noted that a court might need to decide who is right.

“We’ve done a lot of work, we’ve spent a lot of time and energy,” Hall said. “You can’t always back out as easily as you think.”

Industry potentially could lose its $20 million investment once the lease ends, as the agreement only requires the developer to repay the city once the solar farm breaks ground. Those terms were negotiated by the city’s former special counsel, Tony Bouza, according to Casso. Bouza, along with City Manager Paul Philips, were fired earlier this year following a shift in power on the City Council.

If the lease is terminated, Industry would have to sue SGVWP to recover those funds.

Councilman Newell Ruggles said he supports terminating the lease because he’s lost confidence in the project and has concerns about the money that was being spent without any oversight. He still supports the idea of a solar farm, but said he believes the decision shouldn’t be made in a vacuum.

“I think we’re going to have to work with our partners in the other two cities and come to some kind of agreement,” Ruggles said.

The lease negotiated in 2016 gave SGVWP the right to develop a 450-megawatt solar farm on Tres Hermanos Ranch, a 2,500-acre plot of land in the hills straddling Diamond Bar and Chino Hills. The ranch land, which Industry has owned for decades, is still home to grazing cattle today.

The deal would have created the largest solar farm in Los Angeles County and potentially generated enough power for as much as 10 percent of the city of Los Angeles.

Diamond Bar and Chino Hills control the zoning for the property. They claimed Industry did not follow the proper procedures before green-lighting the project. The two cities have sued the Industry six times in the past year. All of the lawsuits are still pending.

Industry can’t respond to a California Public Records Act lawsuit filed by Diamond Bar and Chino Hills because SGVWP will not turn over the required documents, according to Casso.

The city attorney said SGVWP should be able to produce feasibility studies, environmental reports and other planning documents paid for with Industry’s $20 million. But thus far, the company has only turned over thousands of pages of maps, photographs and weather data, Casso said.

Hall says they’ve complied with Industry’s requests, but some records are proprietary, particularly those related to efforts to secure financing for the solar farm.

“We’re not trying to hide anything,” Hall said.

In May, Industry issued a legislative subpoena — a rarely used power granted to city councils — ordering the company to turn over records. The city’s mayor, Mark Radecki, refused to sign the first subpoena, calling the order “illegal.” Industry later issued it with the vice mayor’s signature instead.

Hall contends the city then failed to properly serve the subpoena.

“We had to get copies from the court,” he said.

State law states the city’s mayor must execute the order, but Casso previously said he was confident the order would stand up even without the mayor’s signature.

Still, the City Council approved the subpoena for a third time Thursday morning. This time, Radecki supported the order and is expected to sign it. He did not return a request for comment about his reversal.

“The mayor raised a few concerns about the most recent subpoena that was issued, we addressed those concerns and issued a revised subpoena,” Casso said. He declined to provide detail about the specific concerns.

A comparison of the two subpoenas shows Industry is now asking to inspect only certain documents, rather than requiring the company to turn over those records completely. This would prevent the records from entering Industry’s possession and would make it more difficult for the documents to be obtained through a public records act request.

However, state law still requires Industry to produce any nonexempt records, even if they are held by a third party. Diamond Bar and Chino Hills’ public records lawsuits hinge on that requirement.

The new subpoena orders SGVWP to comply by Aug. 10. If it does not meet the deadline, the mayor can ask the Los Angeles County Superior Court to intervene.

One of the lead figures behind the solar project is no stranger to legal battles.

Last year, an investigation by the Southern California News Group discovered one of the developers, William Barkett of La Jolla, owed $50 million from past defaults, primarily from developments that never materialized and left investors holding the bag.

In one case, 204 investors lost $60,000 to $200,000 each, including some who lost their retirement savings, according to court records and interviews.

In a past interview, Barkett said he chose to work through the various claims instead of filing for bankruptcy and continues to resolve his outstanding debts.