In a stunner, this new city is trying to muscle in to buy 2,500-acre Tres Hermanos Ranch

In a move that stunned three cities working to map a future for one of the largest remaining open spaces in the region, a small southeast Los Angeles County community has launched a $42 million effort to wrestle the ranch land away from the City of Industry.

Industry and Chino Hills, one of the cities with jurisdiction over the near pristine, 2,500-acre Tres Hermanos Ranch, already have threatened to sue if Commerce moves forward with its bold venture.

“It’s unbelievable,” said Konrad Bartlam, Chino Hills’ city manager. “If they think we wouldn’t sue them, as we have sued Industry, they’re completely crazy.”

Industry, which has owned Tres Hermanos through its former redevelopment agency for decades, was approved to buy back the land on the eastern edge of Los Angeles County by a county oversight board last year, but it has not closed the deal yet because of a series of ongoing lawsuits.

The city of roughly 200 residents had to buy back the land when redevelopment agencies across the state were forced to dissolve.The state Department of Finance has signed off on the deal, said Jamie Casso, Industry’s city attorney.

“It’s mind-boggling that anybody would think that this is possible,” Casso said of Commerce’s move.

Litigation filed by Diamond Bar and Chino Hills is preventing Industry’s attempts to acquire the title, Casso said. Those cities sued Industry over an attempted solar project that they claimed violated environmental and planning laws. The proposed solar farm deal fell apart as a result of a political shift in Industry.

3 cities negotiating deal

Since then, the three cites have begun settlement negotiations that could allow for joint control of the rolling hills and pastures. Except for a few ranch buildings and grazing cattle, Tres Hermanos Ranch is largely untouched. Situated at the intersection of Los Angeles, Orange and San Bernardino counties, the property was appraised at $100 million if sold on the open market.

However, Commerce now argues that Industry waived its first right to the property by not finishing the sale and has asked the county oversight board to sell it the land instead, according to a letter sent to the county. The request inadvertently appeared on the oversight board’s agenda last week and set off a flurry of concern that the board would consider the matter.

The meeting subsequently was canceled because the agenda wasn’t properly approved, and the item is not guaranteed to be on a future agenda, according to Susan Huff, a deputy executive officer with Los Angeles County.

The request sent by Commerce’s city staff included a placeholder for a supporting resolution by the Commerce City Council that has not been voted upon yet. On Tuesday, at least two Commerce council members were unaware of who they were even negotiating with for the property.

The deal is fraught with legal complications. The oversight board already has approved the sale to Industry and doesn’t have the authority to unilaterally approve a new buyer.

Industry’s successor agency, as the actual property owner, would have to agree to sell to Commerce, before the matter can go to the oversight board, and that’s unlikely because the successor agency is run by Industry’s City Council.

A long-range management plan for the property, approved by the state, requires it to go out to bid if Industry declines to buy it. And at least one housing developer already has offered more than the appraised value if the land goes to auction.

Legality of move questioned

Representatives of county Supervisor Hilda Solis, who represents Industry, and Supervisor Janice Hahn, who represents Diamond Bar and Chino Hills, question the legality of Commerce’s attempted coup. Both supervisors have said they want the land preserved for open space as much as possible.

Commerce’s request would not be permissible or effective if taken up by the oversight board, according to Michael Kapp, Solis’ communications director.

“The item would have violated the Oversight Board’s agreement with the City of Industry, who holds a right of first purchase for the sale of the property,” Kapp said in an email. “Furthermore, even if Industry should reject the sale under the original agreement, the sale cannot be simply substituted or transferred to another jurisdiction, it would have to go out to public bid.”

Commerce appears to be working with individuals who wanted to build a solar farm on Tres Hermanos Ranch with Industry’s blessing. Commerce’s request to the county oversight board included an agreement to take over any existing leases on the property.

A limited liability corporation called San Gabriel Valley Water and Power had a lease with Industry to build a solar farm capable of producing up to 450 megawatts of power. The power potentially produced could meet the needs of roughly 10 percent of Los Angeles, according to solar experts, and would provide the land owner with a stable revenue source.

$20 million investment probably lost

An investigation by the Southern California News Group found Industry had paid more than $20 million to the developer with little scrutiny of the company’s spending.

When the solar deal fell apart, Industry’s relationship with the developer turned contentious, and the two sides have been fighting in court for months.

Commerce is desperately looking for new revenue sources ahead of a potential state crackdown that could decimate nearly a quarter of the city budget by limiting the kind of gaming allowed in the city’s lucrative card clubs. One option recently approved by the Commerce City Council includes an expansion into utility services.

SGVWP and one of its lead figures, troubled developer William Barkett, have attempted to pressure Industry to return to the project. SGVWP filed a lawsuit attempting to block Industry’s efforts to get an accounting of the $20 million loaned to the company by the city.

Separately, Barkett’s personal attorney has filed a lawsuit on behalf of an alleged citizens group in Industry that accuses city officials of corruption and asks a judge to intervene in the City Council’s decision-making. Emails released in that lawsuit showed Barkett’s company was a member of the citizens group at the time the litigation was filed.

The attorney, David Gilmore, denied Barkett’s involvement, but would not disclose the members of the citizens group when asked by a reporter.

Industry’s attorneys have alleged the corruption lawsuit is retaliatory. The suit is still pending.

Intentions revealed by accident

Commerce’s efforts became public last week when the consolidated oversight board tasked with disposing of redevelopment assets in Los Angeles County’s District 1 accidentally sent out a draft agenda late Monday that included Commerce’s request to buy the land. The chair of the oversight board, Michael Gregoryk, then canceled the meeting because he had not approved the agenda before its publication,

On Tuesday evening, officials from Industry and Chino Hills appeared at a Commerce City Council meeting, where the council was set to talk about the deal in closed session, and threatened to sue if Commerce didn’t back down. Both cities sent letters outlining their objections and potential legal challenges to Commerce’s request.

“Chino Hills requests that the closed session agenda item be continued and that City representatives be directed to meet with Diamond Bar and Chino Hills representatives before any further actions are taken to acquire Tres Hermanos in the hope that litigation between our three cities can be avoided,” wrote Elizabeth Calciano, an assistant city attorney in Chino Hills.

Commerce’s city attorney later reported they chose not to discuss the closed session item as originally planned. After the meeting, Mayor Hugo Argumedo said the city is still reviewing the purchase as a potential opportunity and deferred questions to City Administrator Edgar Cisneros.

Commerce has been meeting in closed session about Tres Hermanos for roughly two months, according to Argumedo. The meetings, generally described as involving potential litigation, may have run afoul of California’s Brown Act, an open government law that requires a real threat of litigation to justify meeting behind closed doors. It’s unclear who would be threatening to sue Commerce as the city had no ties to Tres Hermanos before its plans were revealed.

Commerce mum on ties to solar project

In a phone interview, Cisneros would not comment on whether the city is working with San Gabriel Valley Water and Power, saying he would not get into the minutiae of the city’s efforts before discussing it with his City Council.

“It’s the city’s understanding that there is this property that is not under contract,” Cisneros said. “We’re simply evaluating the opportunities there.”

Cisneros quickly ended the call after refusing to answer specific questions about Commerce’s plans.

Darcy Burke, a spokeswoman for San Gabriel Valley Water and Power, said she wasn’t aware if the project was moving forward with Commerce following Industry’s decision to cut ties.

“Since then, multiple cities have reached out to San Gabriel Valley Water and Power in regard to the Tres Hermanos Solar and Open-Space project,” she said. “Efforts on this project, as far as I know, have been silent for some time.”

SGVWP needs a partnership with a public agency to move its project forward. A covenant tied to the land limits its use to certain public facilities and open space.

Industry lawyer retained by Commerce

Cisneros confirmed Commerce has hired Anthony Bouza as special counsel. Bouza represented Industry in its efforts to bring the solar project to Tres Hermanos. He was fired along with most of the city’s administrators earlier this year.

Documents show Commerce wants to take over a lease for the failed solar project that Bouza negotiated on Industry’s behalf.

Bouza helped draft the purchase and sale agreement between Industry and its former redevelopment agency, according to Industry officials. Commerce used a nearly identical copy of that agreement — in the same uncommon font chosen by Industry’s city attorney — as part of the request sent to the oversight board.

While working in Industry, Bouza negotiated a clause in the lease agreement with SGVWP that required the developer to pay back the $20 million loan only if the project broke ground. Because Industry killed the deal, it is unlikely the city will see any of that money again as a result.

Industry has claimed in a lawsuit that SGVWP will not produce documents showing how the money was spent and has turned over very little evidence of its work.

Bouza is potentially violating a State Bar of California rule requiring members to obtain “informed written consent” from former clients if the attorney has obtained confidential information that would harm the former client and benefit the new one.

“It is worrisome, but it is also a matter for the State Bar to look at,” said Casso, Industry’s city attorney. “He has confidential information.”

Cisneros said Commerce hasn’t explored any potential conflict with its hiring of Bouza and said any issues would be “between him and the City of Industry.”

Bouza could not be reached for comment.