March 13, 2003
The Almost "Hole" Story
by William Cunningham
Assembly Room, A. K. Smiley Public
A Bit Of Prologue
local issue in modern times has so transfixed the people of Redlands, and to a lesser
extent the region, than the so-called Donut Hole controversy. Tens of
thousands of words and nearly daily headlines filled, and continue to fill, the local
press. And while the Hole is nearly two square miles in area with more than
sixty individual property owners, all the events in the news have revolved around Majestic
Realty and its 126 acre parcel.
the controversy has deeper roots going back more than twenty years, it is only the last
decade, when Majestic Realty came on the scene, that saw seemingly unending litigation, a
Majestic competitor suing the city over asserted favoritism toward Majestic, a second
dropping efforts claiming interference from Majestic, another competitors
representative sent to prison, the injection of well over a half-million dollars into
Redlands politics in addition to several times that much spent to influence state
and county legislation and elections.
before has so much money been spent in
political and legal efforts to gain advantage in a contest which pitted the state
legislature and governor, the county and neighboring cities against Redlands.
to the fact that the story consists of so many interrelated events involving many players this paper is more a recitation, a
chronology, of those happenings rather than a full narrative which would have taken many
times these pages and even more sorely tried the listeners and any possible readers.
much that follows may be characterized as biased by my personal participation, I do
believe that no one has greater knowledge of the events reported, in light of the fact
that I have been an intimate participant and observer of city affairs over the last three
decades - first from 1973 to 1987 as member of the board of education, with frequent
interaction with the city, then from 1987 through 1999 as a member of the city council
and, lastly, from 1987 til the present in a leadership role in The Redlands Association, a
grass-roots organization which, among other activities, monitors city and county affairs.
the story of the Donut Hole is far from complete and is probably decades from
a last chapter, I believe the events recounted here are worthy of timely telling.
are best told from their beginnings.
Note: The facts, circumstances and events as set forth
are true and correct to the best of my knowledge and belief. The conclusions that have
been drawn represent my opinion based on those facts, circumstances and events.
The Almost Hole Story
Donut Hole, itself, is an artifact created at the time when the Chapman family
of Orange County acquired what was, up until
a few years ago, called Marigold Farms.
north from the Santa Fe Railway right-of-way to the Santa Ana River and bounded on the
east and west by California Street and Mountain View Avenue, with the exception of a few
small in-holdings, the property was roughly one square mile in area.
had been assembled by Arthur Gregory in the first decades of the twentieth century.
has been said that the Chapmans annexed Marigold to Redlands in the 1960's in anticipation
that it would become commercila/industrial at some future time and to keep it from falling
prey to an ever-expanding San Bernardino.
net result of that annexation was to leave a county island, some two square miles in
extent, between the Chapmans and the rest of northwest Redlands. This area, now
colloquially known as the Donut Hole, lay between Lugonia Avenue on the south,
the river on the north, Tennessee and California streets on the east and west,
encompassing roughly two square miles, now about 1,100 acres,
time the city annexed the river-edge lands on the north for its sanitary landfill (which
it acquired from the county in the 70s) and the municipal wastewater treatment
plant, leaving the Hole a true hole.
contrast to the row crops of Marigold Farms, the Hole was totally devoted to
first major event affecting the Hole began in 1980, when a number of property
owners, led by Louis Fletcher, among others, agitated to have all of the county area,
which at that time also included lands extending south of Barton Road as well as the
Hole, the Chapman property as well as most of northwest Redlands, plus the
north portions of Loma Linda, about seven square miles in all, master planned for future
property owners proposed to assess themselves a per acre fee, form a planning committee,
hire consultants and come up with a forty year plan for development.
overlying jurisdictions gave their blessings and the project was seriously underway in
important fact needs to be kept in mind for later reference - the county agreed that its
area would become a part of Redlands, if and when development occurred, and the county
covenanted that the city would be responsible for infrastructure, particularly, water and
sewer, its investment protected by automatic annexation at the time of development.
city spent millions in good faith reliance on that guarantee.
master plan, the East Valley Corridor Specific Plan, also known as CSA 110, was completed
and adopted by the three jurisdictions in 1989.
about this same time a series of events occurred that had significant impact, either
directly or indirectly on the future of the Hole.
no particular order they were: the creation of the City of Yucaipa; the closure of Norton
Air Force Base, with the concomitant creation of the Inland Valley Development Authority
(IVDA); the completion of the countys new general plan; and the attempt by Loma
Linda to annex lands to its east that were in Redlands Sphere of Influence, including most
of San Timoteo Canyon.
response, and as might be expected, a number of actions were taken by Redlands.
they had earlier voted down annexation in 1986, more than 400 residents of southeast
Redlands petitioned the city to annex them. Measure N had been adopted which protected their
rural lifestyle, and they did not want to become a part of Yucaipa, a likely development
absent Redlands effort to annex.
by Assemblyman Bill Leonard, the state had just created the Inland Valley Development
Authority (IVDA), which included not only the former Norton Air Force Base but also all
lands lying within three miles of the bases perimeter.
IVDA boundaries enclosed approximately one
third of the city, reaching south of Barton Road and east of Orange Street, including
lower San Timoteo Canyon, the river wash lands south of the Highland city boundary, and
had but one defense - to immediately sue to stop the formation of the IVDA - and
simultaneously proceed with annexation of the lands in dispute with Loma Linda and
Yucaipa. The lands next to Highland. And the Hole.
threat of losing all property taxes from new development and acquiescing to the power of
the right of eminent domain over a major fraction of the city to an outside agency, the
IVDA, could not be accepted. And the loss of the canyons would violate their historic
identity with the city and cause the city significant loss of investment on infrastructure
to serve them.
to stop Loma Lindas aggressive attempt to move eastward and to finalize the future
of the canyon areas, Redlands applied for a competing annexation which included the
petitioners area, all of Live Oak and San Timoteo Canyons in San Bernardino County
west of I-10, as well as a significant area north of Barton Road.
a prolonged battle, most intensely with Loma Linda, before the Local Agency Formation
Commission (LAFCO), the city compromised, giving up two square miles of its sphere to Loma
Linda but saving the canyons, most of the county lands north of Barton, and nearly all
those threatened by annexation to Yucaipa. Seven square miles were added to the city.
property owners in the river wash also agreed to annex, adding another several square
miles to the city, including the current site of the Cemex aggregate processing plant.
majority of the sixty odd Hole owners refused, and the cityss
first attempt to annex the island failed.
citys IVDA suit, when finally resolved, excluded all of the cities of Redlands and
Highland from that agency (Highland had joined us in the suit), created an airport
authority separate from the IVDA and stipulated that as Hole properties were annexed to the city the property
taxes on that development, the tax increment, would be split fifty - fifty
between the agency and the city, with the agencys share to be spent for
infrastructure improvements within the Hole.
early nineties saw the collapse of the building industry. Many developers went under and
properties were foreclosed.
against the tide, a group called Cities Pavilion approached the city with a proposed
entertainment center which ultimately planned a hotel, restaurants, two ice rinks, a
fitness center, a theater and shops. The
project was to be located on 57 acres on the east side of the intersection of Route 30 and
San Bernardino Avenue. The projects proponent was Jane Un, a San Timoteo Canyon
resident who had been key to Redlands successful annexation of that area.
was followed in July 1994 when the first ever major development proposal in the
Hole, and the only one to this date, came to the city. Pat Meyer, a prominent
local planner, developer representative and lobbyist met with city staff to present plans
for a power center plus mall.
Majestic Realty of City of Industry fame had
entered the picture. They pushed for accelerated approval for their center and associated
mall on 126 acres immediately west of, and across the freeway (Rte. 30) from the Pavilion
project. Proposed tenants in the projects first phase, the power center, included
Target, Barnes & Noble, several other name retailers, in the order of 40 shops and
a multi-plex theater.
second phase, the mall, was to consist of three or four majors.
the project that is under construction today..
project grew out of John Curcis purchase of most of the property, which had been in
bankruptcy court for many years, on the recommendation of J.J. Ramirez who had managed
Curcis citrus properties. Curci, the patriarch of the family that operated San
Bernardinos Carousel Mall, and in his eighties at the time, brought Ed Roski and his
Majestic Realty in as the managing partner of the proposed enterprise. They acquired
Ramirezs remaining 55 acres in the block, made an agreement with Forest City, one of
the major mall developers in the country, and started negotiations with the city.
Annexation was initiated.
did not go well from the beginning.
the city had cut development impact fees in half to encourage development, Majestic found
them unacceptably high and demanded greater concessions.
second sticking point was their demand for a theater, immediately.
Krikorians theater downtown was under construction after all the major chains had
refused to build in Redlands. The city saw a downtown theater vital to the city
cores survival and felt that Krikorian must be allowed time to establish a customer
base before facing competition. Plus the Pavilion project had approval for a second to be
built after a delay.
analyses and common sense dictated that a third theater in this limited market would
marginalize them all, with only the major chain having the resources to survive. Edwards
Theaters, Majestics proposed tenant had dominated several markets, including the
Ontario Mills. The city, after wooing Krikorian to build and hoping that his theater would
be the catalyst for downtowns revival, asked Majestic to wait a time before building
a theater. They refused.
was during this time that councilmembers from Chino contacted the city about their
experiences in dealing with Majestic. They warned the Redlands council that
Majestics promises were not to be trusted. Chino had spent in access of $10 million
for infrastructure dependent on a Majestic promise to build a mall immediately after their
power center. They charged that Majestic had reneged. Built warehouses, instead. And left
Chino with massive debt and a reduced tax base to support it. They were especially vocal
about a Majestic vice president, who was leading the Redlands negotiations at that time.
same summer of 1994, Mayor Swen Larson met with a deputation of Hole
landowners who proposed annexation on terms the city could not meet, namely: immunity from
future initiatives; apartment development; city funded infrastructure; a fire station; and
limits on impact fees.
soon deteriorated to impasse. Majestic publicly condemned the city, withdrew from
negotiations and at the urging of their two local representatives, Meyer and attorney John
Mirau, took their project to the county in 1995, citing a new growth management measure as
the reason, in spite of the fact that the measure placed no additional requirements on
their project and Majestic had more than enough time to complete processing well before
December, when the measure would have taken effect.
spring The Redlands Association had circulated a petition
to place its second growth management initiative, Measure H, on the fall ballot to strengthen the provisions of Prop R and
Measure N and restore what had been lost to city council attack.
June when the petition was presented and Mayor Larson moved to have it placed on the
ballot, Meyer, assisted by three Majestic lawyers and the help of Councilman Foster and
his allies, Pat Gilbreath and Gilberto Gil, successfully stopped Larsons effort. The
Foster forces, encouraged by former mayor Carole Beswick and city council candidate Ray
Alexander, the chamber of commerce president, both opponents of growth management, then
voted for a study of the measures impacts, which resulted in the city wasting more
than $80,000 for a patently flawed document that merely served to delay the process. When
the measure finally made the ballot, massive amounts of money flowed in to the opposition
campaign. At first, the oppositions local leaders, the Barbara and Larry Wormser and
Shirley Harry, a local realtor, refused to divulge the moneys source. It was only
when the required state campaign reports were ultimately filed that it was revealed that
Majestic had spent more than $280,000 out of the roughly third of a million dollar
campaign effort to defeat the measure. The opponents prevailed by 223 votes out of more
than 13,000 cast. The proponents had spent less than $5,400 in defeat.
the measures provisions would have had no impact on the Majestic project. It had its
genesis in the city councils emasculating Measure N, adopted by the people in 1987,
when they adopted the new city general plan. After the city had spent more than $600,000,
plus five years and hundreds of hours of a citizen committees and staffs time
developing the new plan, a new city council majority, led by Foster and Gilbreath, had
trashed the plan and spent another $400,000 for a revised, urbanizing plan which violated
the provisions of Measure N.
led to litigation with the city attempting to overturn Measure N. The court downgraded it
to a zoning ordinance but the Association was awarded fees of $6,345 by the court.
the last weeks of the Measure H campaign, Councilman Foster sued fellow councilmember
Cunningham and Association vice president Tex Moore over a campaign ad in a deliberate attempt to injure and defeat both
the measure and Cunninghams reelection campaign.
The court threw out Fosters suit as a sham without merit.
It was later revealed that Fosters Orange County lawyer was Majestics and the
developer had paid all of Fosters expenses, approximately $15,000. Cunningham and
Moore represented themselves.
the last analysis, the defeat of the measure quite likely turned on a little known
incident in which many suspected Majestics hand, once again. All of the
Associations 6,116 pieces of mail, their single effort to reach a fraction of the
citys 35,000 registered voters and counter the myriad of material sent out by the
opposition, the phone surveys, the focus groups, was sitting on
the floor of the post office distribution facility on Thursday morning, two days after the
election. Delivered to the Redlands Boulevard facility in plenty of time, eight days
before the election, it is reasonable to assume that had voters received them, the
elections outcome would have been different. Well
never know, but legend tells us that a kingdom was lost for the want of a nail. Post
Office inspectors never offered an explanation.
Banda, a newcomer to city politics and Measure H supporter was elected. Cunningham was
returned for a third term.
not revealed until after the election, in the spring of 1995, all of Cunninghams
records in the city clerks files were requested by an attorney associated with
Majestics lawyers. Not long after, he received notification from the Fair Political
Practices Commission (FPPC) that he had violated the laws regulations twice, six
years earlier - his participation in the canyons annexation and his voting to
continue for two weeks a request from the hospital for the city to issue a bond in their
behalf. Although the FPPC agreed that his participation in the canyon annexation was of
economic disadvantage to him and that he desisted from further activity once learning of
the regulations. He was fined $3,000, nonetheless..
member of Majestics law firm, an important player in Orange County Republican
politics, had worked at the FPPC in the past.
In a bit of irony, the chairman of the FPPC at the time was later fined $28,000 for
infractions of the law after he left the commission and became a party lobbyist.
early 1996 Majestic was back talking to the city.
his last acts before leaving office, Foster had led his allies to offer half fees, drop
the long-standing annexation requirement for city services and eliminate all landscaping
requirements for Majestic if a wall or berm were put up around their parking lots.
was under additional pressure from Cities Pavilion, which had received concept plan
approval the previous October.
a workshop in February, the city offered Majestic a half fee subsidy. They turned it down,
demanded more. Recognizing events were going nowhere, Mayor Larson joined Cunningham and
newly elected Councilmember Geni Banda in restoring full fees.
same month another mall developer, Harry Newman, approached the city with a proposal for a
major retail center on California Street, north of the freeway. The Redlands Fashion
Center would include a power center, a three story 1.9 million square foot mall, a
Kaiser clinic, offices - covering several hundred acres in all. Newman asked for no city
spite of the fact that from the beginning it was recognized that the only practical and
economic source of water and sewer service to Majestic and the Hole was from
the city, Majestic sought and received, over the citys opposition, permission from
the Santa Ana Regional Water Quality Control Board to build a package sewage
treatment plant on their property. Knowledgeable observers all agreed that the cost was
prohibitive and issues of disposal of sludge and effluent made the project impractical.
Notwithstanding, Majestic continued to pursue the possibility.
of 1996 saw the county, to accommodate Majestic, form a CSA (County Service Area) in the
Hole in direct violation of their 1984 agreement with the city and their own
general plan. Both Redlands and the East Valley Water District expressed concern about the
contamination threat to their water supplies by the countys proposed two wells and a
package wastewater treatment plant next to Alabama Street. The countys
own department of health services refused to support the proposal.
response Redlands challenged the countys action as a violation of state
environmental law, the creation of a special district with planning powers, and violation
September the city re-instituted the long-time requirement of annexation for services.
Majestic withdrew their annexation application at LAFCO.
Hansberger, who had opposed the citys annexations and had encouraged canyon property
owners to file suit to overturn the canyon annexation, was locked in a neck and neck race
for county supervisor. He sought and received thousands of dollars in campaign
contributions from Majestic.
this time two of Majestics direct competitors were moving forward in the city.
power center, the Redlands Crossing project on the triangle now occupied by
Home Depot, had started processing and was reputed to have signed tenants.
second, the massive Redlands Fashion Center, was in negotiation with three major mall
developers, eventually settling on the Taubman Company.
narrowly won the supervisors race and Majestic again had a voice in county
government which they have continued to flex till this day.
once again announced immediate development. They hired former county supervisor Bob
Hammock at a reputed $100,000 to head a public relations campaign, joining Meyers, Mirau,
Gilbreath and Beswick.
not only in the Redlands market, but regionally, was growing fierce.
Carousel Mall had sued the City of San Bernardino over alleged favoritism to Inland
Center. And Inland Center, itself, was casting worried eyes on events in Redlands.
Homes, a major developer in the county, took over the Redlands Crossing project. The
Fashion Center developer, Taubman, deposited $150,000 of a promised $500,000 as support
Inland Center in San Bernardino entered the fray. They recognized that if either the
Fashion Center or Majestics mall were to be built, they would be marginalized and
faced with failure.
surprisingly, Majestic reopened negotiations with the city.
took an abrupt and dramatic turn. Inland Center had lured Robinsons-May back after a
brief two year absence with reputed subsidies and facility improvements costing $16
million. Both Majestic and the Fashion Center had pinned their development hopes on
getting the store as the first anchor for their malls. The net effect of
Inlands success was to kill both Taubmans interest in the Fashion Center and
Forest City to apparently withdraw from Majestic.
was then left with Redlands Crossings competing power center to deal with.
Homes, after expending significant time and money, dropped its effort to develop the
Redlands Crossing project, citing unspecified business tactics by Majestic. At last
Majestic had the field to itself. They graded their site in anticipation.
not for long.
mid 1997 the Redlands Associations third growth management initiative, Measure U,
had qualified for the November ballot. The long-dormant Cities Pavilion received plan
approval for a revised project. Zelman, a
real estate investment trust (REIT), represented by a Ben Reiling, had taken over the
Crossing Project and had started processing. And a revised Fashion Center project promoted
by Nu-Western Development, owned by Orin Ericcson, an Arizona mall developer, was back on
the scene with the addition a large residential component north of San Bernardino Avenue
to be developed by Kaufman & Broad.
continued playing the county off against the city. They sued the city for removal plus
damages over a sewer line which had bisected their property for more than 40 years and
which now directly affected their development plans. The city prevailed.
also won its lawsuit challenging the countys formation of the CSA in 1996, its
environmental impact report (EIR), the violation of its general plan and the East Valley
Corridor Specific Plan.
was left with just two choices 1) come to the city, or 2) get the county to amend their
general plan on spheres of influence.
long after, Majestic began construction of a water reservoir in violation of the
courts decision, which led the court to threaten the developer with contempt. Work
city and Majestic resumed negotiations and it was agreed that all litigation would be put
on hold while they proceeded.
after making every attempt to accommodate to their demands to no avail and learning
Majestic had sued the city, once again, the day before he had unknowingly met with them, Larson refused to meet with Majestic
representatives the last months of his time in office, saying, Ill never meet
with those s again.
has since reported that he was approached by Majestic representatives with a $100,000
offer if he would run for reelection.
November the city applied to LAFCO for annexation of Redlands East Valley High School, in
response to the school districts request; Sunchase
Homes west of the school which had requested annexation previously; the twenty acre
Christian Home site, at their request; the Edison steam plant on San Bernardino Avenue;
either fifty percent of the registered voters and/or those holding fifty percent of the
assessed valuation control annexation, Majestic would have been forced into the city.
countered with a separate annexation application.
the face of tens of thousands of dollars spent in opposition by the Chamber of Commerce,
the police and fire unions, a Bob Roberts developer PAC and The Committee for a
Livable Redlands, led by Beswick, the Wormsers, Mirau and Meyer, the November 1997
election saw Measure U and its two proponent
candidates, John Freedman and Gary George win by comfortable margins. Councilman Gil was
December Cunningham was elected mayor and immediately restarted negotiations with
same month Krikorian Theater opened to large crowds.
the Cities Pavilion finalized a development agreement with the city and commenced clearing
their site. Central to their plans was a theater.
then challenged Redlands Crossings EIR and project approvals in an attempt to stop
the competing power center, at the same time offering a $2.5 million carrot if the city
would slow the Redlands Crossing project down.
vice president Brook Morris, in a meeting with Cunningham and George, agreed to annexation
under the citys standard requirements with the understanding that a theater would
not be opened within twenty four months of Krikorian. At that afternoons council
meeting John Mirau repudiated Morris. The council, in response, did not act on
Morris offer. For the first time it was recognized by those at city hall that there
existed more than one Majestic camp.
they were well ahead in the race to be first to develop, in August 1998 the Redlands
Crossings Reiling dropped out and soon after sued the city for damages, alleging
unfair preference by city officials for Majestic.
then resumed the planning process in the city and deposited funds for a socio-economic
Cunninghams invitation, Roski and Curci meet with Cunningham and George and several
weeks later, a second time with Cunningham and Banda. A deal was struck and
Majestics attorney, Timmish Chaikovsky, worked into the night drafting the
agreement. After conferring with Meyer and Mirau the following morning, Roski rejected the
terms he had agreed to.
who had replaced Morris on the Redlands scene, bitterly complained to city officials, once
again, that Meyer and Mirau were seeking control to frustrate all agreements.
there was open speculation at city hall that the local Majestic representatives were
seeking gain in delay and were hoping to use the developer against managed
growth council incumbents in the 1999 election.
presented the city planning commission its development plans for their power center. The
commissioners were so disappointed with what they were shown they decided to visit a Lewis
power center in Rancho and Majestics in Chino. While not demanding all the upgrades
needed to match the Lewis project, the commission required changes that Majestic
complained would cost an additional million dollars. Nonetheless, Majestic made the
was around this time that Cunningham was the subject of a field audit by the IRS. Every
financial record for three years was scrutinized over a two day period at which both
Cunningham and his wife were required to be present. No irregularity was found but it
wasnt until nearly a year later that he received formal notification.
the fall of 1998 Majestic formed a property owner group in the Hole, the
United Donut Hole Property Owners Association, or UDHOPA. Mirau then began wearing
two hats as both attorney to the group and Majestics spokesman. The groups
president, Richard Kunihara, announced to the city the groups minimum
demands for annexation: 1) the city to pay all costs; 2) a guarantee of all rights for a
period of thirty years; 3) exemption from the requirements of Prop R and Measures N and U;
4) all property taxes to be spent in the area; 5) completion of the Alabama Street bridge;
6) all municipal services made available on demand; 7) unlimited apartment development.
developer, through Hansberger, who dominated LAFCO at the time, defeated the citys
annexations of the Hole, the steam plant, the Caltrans right-of -way and
Redlands East Valley High School, with Hansberger criticizing the school board for
bringing its request forward.
the city had sought annexation of REV at the request of the schools, in spite of the fact
that it would cost the city economically, the Facts referred to its annexation as a
all other competitors out of the way - informal contacts continued with the Fashion
Centers proponents but nothing developed - in early 1999 Majestic turned its
attention to the Cities Pavilion project. Pavilions consultant, Jane Un,
was in bankruptcy court. Among her creditors was Meyer with a $3,000 small claim. Majestic
put $185,000 into Meyers claim action. While both Meyer and Majestic denied
Majestics involvement, their attorney confessed when the court demanded an
explanation - the judge saying that his court would not be used for political vendettas in
was later charged with real estate fraud relating to questioned notarization of documents
and claims of illegally transferring property ownership. She eventually entered a no
contest plea and was placed on probation.
that time, Majestic brought its first suit against the city in an attempt to overturn the
the county level Hansberger led the supervisors to amend the countys general plan to
eliminate cities control over planning within their spheres of influence. While
targeted at Redlands for Majestic, all county cities were affected and they protested, en
mass. Redlands, Rancho and Fontana joined in a lawsuit challenging the countys
action, with Fontana later dropping out.
and Redlands subsequently prevailed at both the trial court and appellate level, thwarting
the supervisors move.
this time Cunningham was audited a second time, received a clean bill of health and was
promised by the examiner a report to that effect. None was ever received.
expanding to the west coast, and liking Redlands demographics, made an agreement with the
city to locate on west Redlands Boulevard, a long-time blighted area. Offered large
concessions and subsidies by San Bernardino to build there, Lowes extracted a sales
tax rebate of fees from the city in a net amount of $291,000.
by Mark Bulot, whose father-in-law, Warner Hodgdon, had
been involved with Majestic in the creation of the City of Industry, Majestics base;
Jim Rissmiller, active in running PACs in county politics funded by developer interests;
and represented by Brad Hertz, an attorney associated with the law firm Majestic had used
in the Foster lawsuit in 1995, a professionally run referendum campaign succeeded in
gathering 5,000 signatures against the Lowes agreement.
referendum was patently prohibited under state law and was stopped on a 4-1 council vote
(Gilbreath opposed) after City Attorney McHugh cautioned the city council that proceeding
would constitute a breach of contract with attendant exposure to large monetary damages.
a number of individuals filed for the upcoming fall city council election, the field was
soon winnowed by mysterious means to just two challengers of the incumbents
Banda and Cunningham. They were a Kasey Haws, who had worked at one time for
Majestics law firm, Latham & Watkins, and from which his San Bernardino firm was
reputed to get referrals. Haws firm had also received more than $100,000 in fees
that year from a Hole property owner, the LDS Church. And a Susan Peppler, who
identified herself as a Sacramento representative for State Farm Insurance.
also saw Majestic open a second front in Sacramento, promoted by local assemblyman Brett
Granlund of Yucaipa and long-time political ally of Hansberger. Granlunds bill, AB
1533, removed the Hole from Redlands sphere of influence and provided
for duplicate utility services, leaving Redlands multi-million dollar investment
defense, the city spent $30,000 to hire a lobbyist in the capital. Majestic used four
lobbying firms and two Sacramento law firm at an estimated cost approaching $1 million.
by the Majestic forces to legislators, led by Granlund and Mirau, centered on the
allegations that the city had no investment in the Hole, was refusing to
negotiate with the developer, and that the city was blocking any development there at the
cost of needed local jobs to replace those lost when Norton closed.
bill passed both houses.
one knows how much was paid out by Majestic to legislators, but assemblyman Joe Baca
received $8,000 from Majestic the day after the vote.
bill was attacked as unconstitutional by the California League of Cities and many utility
purveyors. Governor Davis finally vetoed the measure with the caveat that the city settle
with Majestic or he would sign it the next time.
had left the city in an untenable position, as Majestic now could, and simply did, refuse
city, sued by Majestic three separate times to stop or delay the Pavilion project,
prevailed in all three. Majestic was left with no more legal avenues. Pavilion, the
developers last competitor, could proceed.
Un had previously complained about a physical threat and the break-in of the Pavilion
offices by unknown individuals. Later faced with Majestics interjection into her
bankruptcy she then alleged that Majestic representatives were sitting in on witness
interviews on her fraud charge. In apparent response Un became involved in a failed scheme
to collect information from Majestics and Latham & Watkins trash, which
resulted in an additional criminal charge.
Moore, the Association vice president, refused to testify at trial, invoking his Fifth
the course of the Un trial a mysterious Majestic document was submitted by the defense
which purportedly recorded payments to various individuals in an attempt to damage
Cunningham. It was disallowed by the court and remained under seal.
During the trial, the local press carried headlines
and stories to the effect that Cunningham was implicated in Uns crime,
but he was never formally interviewed, called as a witness or charged.
was sentenced to eight years in state prison and threatened with expulsion from the
country for committing a crime while her bargained no
contest plea, which she had attempted to withdraw, was in effect.
brother and a family lawyer were also sentenced. A retired Redlands police officer,
Charles Varvel, who was employed by Un in the trash operation, received immunity in
exchange for becoming a prosecution witness.
this time the Press-Enterprise reporter, who was covering both the Un affair and the city
hall was hired by Majestics Riverside public relations firm which kept a steady
stream of negative material flowing into the local papers.
November Haws and Peppler, who ran as a slate
on a platform of getting along, a quick resolution of the Majestic issue, no
more money wasted on litigation and a reversal of the Lowes
deal, defeated incumbents Banda and Cunningham by a large margin. Haws, Peppler and
their protagonists spent more than $130,000, many times the highest amount ever in
Redlands election history, in the most negative campaign ever.
to their campaigns success were personal attacks on Cunningham related to his
association with Moore and his alleged complicity in the Un affair.
new council set as its primary goal the resolution of the Hole issue, a task
they approached confidently.
new mayor, Gilbreath, and council member George, believing that all could be quickly and
easily settled, met with UDHOPA. They were confronted with demands they could not meet,
namely: apartments with a density of up 24,560 people per square mile; an election to
overturn Measure U by March; and the city to pay all costs of development.
relations with Majestic went from bad to worse, with Chaikovsky characterizing the
councils behavior thus, These actions are as bad, and more likely worse, than
those of any prior city administrations.
spring also saw the special legislation, AB 1533, resurrected, as threatened by Granlund,
as AB 1544. Roski demanded that the city drop all opposition to its adoption and all
claims for the citys $5.5 million loss in stranded utilities in the
Davis signed 1544 into law and Majestic (Roski) later contributed approximately $100,000
to Davis re-election campaign.
negotiations failed, and a public war of words erupted between Mayor Gilbreath and
Granlund, with Granlund referring to Gilbreaths medication, or lack, thereof, and
Gilbreath calling Granlund, crazy.
Haws, without the knowledge of the rest of the council, was meeting in secret negotiation
working with Haws and Peppler, found $5.25 million in state grant money for
their campaign promised sports facility. Interestingly, it is approximately equal to the
investment the city lost to AB1544.
infighting subsequently broke out among council members, finally resulting in Mayor
Gilbreath joining councilmembers George and John Freedman in a legal challenge to 1544.
She was publicly chastised by Majestic supporters for her stand, Haws and Peppler among
the most outspoken and critical, as Granlund threatened withdrawal of the sports park
grant money if the city continued its challenge to 1544..
a small nine lot subdivision in Mentone, Majestics Mirau and Meyer then
unsuccessfully charged that the fee provisions of Measure U were in violation of
February 2001 the council majority of Gilbreath, Haws and Peppler, under the guise of
settling all litigation with Majestic, acquiesced to an agreement dictated by Majestic and
Foster, representing Supervisor Hansberger.
council did not see the agreement until the last minute while in secret session and were
cautioned by the city attorney that they would, in his opinion, violate state law, if they
agreed to its terms.
they had the opportunity to expose the agreements contents at a council meeting,
when it became public several days later, Freedman and George roundly condemned the
majoritys action in giving away 1) all say in any activity in the Hole,
whether in violation of law or not, 2) a promise to sue any citizen who protested any
activity in the Hole, 3) the right for any purveyor to use city land to
provide utility service, 4) all challenges to 1544 and all claims for reimbursement for
among its provisions was the requirement that the city apply to the courts to reverse all
the hard-won decisions where they had prevailed against Majestic. The appellate court
refused the request for reversal on the county amendment case and chastised the council
for their act of attempting to make a gift of public funds,
response to the councils action, The Redlands Association filed a lawsuit
challenging the agreement as 1) a violation of the California Environmental Quality Act,
2) a violation of state law by the city giving away its police powers designed to protect
the public health and safety, and 3) making an illegal gift of public funds
the last months of 2001 Haws and George met a number of times with Foster and Mirau to
make an agreement with the developer for the city to receive taxes in exchange for the
provision of services.
That November the Majestic - employee union slate of
George, Gilbreath and planning commissioner Jon Harrison defeated incumbent Freedman and
Cunningham in his second re-election attempt.
following council reorganization saw Haws, with Pepplers and Harrisons support
oust Gilbreath as mayor.
brought a Foster ultimatum to settle with the county and Majestic by January 8 on dictated
terms which the council saw just minutes before the vote and which were kept from public
view until the last minute. His conditions were: 1) the city to provide water and sewer
service at cost, 2) development to county standards, 3) sales taxes to be split 25 percent
city, 75 percent county the first year graduating to the city receiving all the taxes in
eleven years, 4) the city to be paid $25,000 for one year only to provide police services,
then to provide them in perpetuity without compensation, 5) annexation would not be
required by the city.
council bowed to Fosters demands.
response the Association mounted a referendum campaign and in just twenty two days
collected nearly 6,000 signatures, well above the 3,231 required.
spent a publicly admitted $133,000 to stop the effort - $17,000 to the Chamber of
Commerce, $50,000 to the police and fire unions and $65,000 to Bob Roberts. Most of
Roberts money went to professional campaign blockers, who harassed and
intimidated the referendums volunteers, triggering more than a half dozen police
the campaign Haws signed a mailer bearing the city seal and made automated phone calls,
the content of which, while primarily an attack on Cunningham, cast an unfavorable light
on San Bernardino. That citys mayor, Judith Valles, became so incensed with
Haws denigration of development standards in her city that she took a most unusual step and confronted him at a Redlands
city council meeting with a demand for an apology. Haws had earlier tried to head her off
with a personal letter but, in the end, was forced to apologize publicly.
Clerk Poyzer subsequently certified the petition as valid.
determined to deny the people a voice on the issue, the council sued Clerk Poyzer and the
Association, as the real party at interest, to keep the referendum off the ballot. The
court agreed with the council, finding several technical errors in the petition - the
pages were mis-numbered and the title, while not required, was not complete. The
and without warning to the city, the county cancelled the agreement.
council was left with having wasted more than $80,000 attacking the referendum in vain.
spite of an earlier warning of potential liability by Lockheed-Martin if they proceeded,
Majestic had been drilling two wells north of their site and hopefully out of the
contaminating perchlorate plume.
with the citys acquiescence, rerouted the citys sewer main which had bisected
the developers property to the frontage road. The Association challenged the action
as a violation of state law for public works projects. The court, in denying the
Associations request for a writ based its decision on Majestics claim that the
developer stood to lose $2.5 million if they did not break ground on the their project
within sixty days.
had come to California, was building its distribution center at Norton and had contracted
to build one of its stores on Majestics site. Too late to get their wells in
operation and build its package plant, Majestic needed utility services
exhausted all other practical alternatives, Majestic turned to San Bernardino for sewer
service. That city had refused an earlier request but with relations now poisoned with
Redlands, Valles agreed to provide service.
protect the interests of the people of Redlands, the Association challenged the San
Bernardino contract on environmental grounds, effectively delaying it for many months.
was left with no source of water and sewer service for their client, Kohls, which
was under a rigid schedule to open in early March.
October 31, the Association was informed by an anonymous source that the city had given
water and sewer service to Majestic. Utility staff members suddenly became unavailable.
When confronted the following morning City Manager Davidson admitted that the city had
provided service on October 8, three weeks before. It was later discovered that a Sun
reporter had stumbled onto the situation but had been met with a stonewall of silence.
city, the county and Majestic had deliberately attempted to run out the clock
on the statute of limitations by dealing in secret before anyone would know or could
city had given up millions of dollars in development impact fees intended to provide
infrastructure and retire debt, all control over what and how anything was developed on
the site, and any requirement for annexation or tax revenue.
days of learning what had been done, the Association filed a request for an alternative
writ with the court to stop all activity until the merits of their challenge could be
heard, charging that the city had violated Measure U, the city code and state law.
meetings to resolve the lawsuit among the parties ended in stalemate with the city
representatives stating that they intended to try to annex Kohls, but threatening to
defend the agreement against the Associations suit even if their proposed annexation, initiated in good
faith, with no commitments from Majestic, were to fail.
court is now scheduled to hear the Associations writ request later this month.
Associations challenge to the February 2001 agreement after two years of delays by
Majestics attorneys, including appeal to the state supreme court to remove the judge
from the case, was finally ruled in the developers favor in November. That ruling
has been appealed and may be a year away before final determination.
events now stand, the two lawsuits will probably not be finalized for many months.
the meantime, in obvious response to the associations challenge, the council has
authorized city staff to begin the process of annexation of Kohls, which opened on
March 7, and has announced intention to apply for annexation of each piece of the Majestic
property after it is developed.
will be all but the $915,000 Majestic paid for water and sewer service out of the
scheduled $10,073,349 in development impact fees that would be owed.
to press reports, the city has not made application to LAFCO. No one is assured how that
body or Majestic will respond.
amount of taxes, without which annexation would be a burden of mammoth proportions, will
be determined by the county at a time when it is losing revenue.
early 2003 the city contracted to provide fire service to the Hole, the fire
chief stating at the time that the men were on duty anyway. The city was to be paid
$67,000 each six months. The payment to made at the end of each six month period.
are two opportunities when the city could have required
annexation with full fees, all taxes and city standards.
had an iron clad commitment to open 28 stores in California on the same day in March. They
could not have done so without Redlands water and sewer, the only possible source. The
second opportunity presented itself when Kohls insurer would not agree to allowing
the stocking of inventory without Redlands fire protection.
had no other option but to come to the city, on the citys terms. Each time, the
council extracted none.
would hope that the intrigue, machinations and cut-throat competition surrounding events
over the past decade are behind us. That soon Redlands will assume its rightful role with
annexation of the Hole, bringing with it the benefit of full taxes, the
payment of fees and control over development standards.
will soon know whether or not Majestic will annex. The city has yet to begin the process.
An even larger question lies with the county. Now that it has a major sales tax generator,
will it give up those revenues, especially in a time of fiscal stress?
many ways the most important question lies with the future of downtown. Can it survive
cannibalizationand continue to prosper, or will it go the way of the downtowns
in San Bernardino, Ontario and so many other cities? What lies in the future for K Mart,
Mervyns, and Tri-City Center, itself? Can Harris Gottschalks survive
downtown if Majestics mall becomes a reality?
Hole, given time, will likely generate thousands of jobs, and if the analysts
are correct, they will be low-wage, just as those of this first project are. Either the
demographics of our town must change or we can anticipate commuter traffic on our streets
Sun newspaper in an editorial this week, advocated that Redlands relax its sign standards
and allow billboards as a money maker for the city.
the Hole is developing in the county, and with the knowledge that Granlund and
Foster (Hansbergers special projects coordinator) are in the billboard
business, Redlands may well see a many of them along Route 210, whether our code is
changed or not. Rumor had it in earlier days that as a part of his reward for his work in
Majestics behalf in Sacramento, Granlund was to get the Majestic signage contract.
is the cloudiest of crystal balls. As it stands, most anything might be built in the
Hole. But I do know one thing.
the Associations legal challenges be viewed favorably by the courts, only then will
the people of Redlands have been guaranteed a voice in the future of the Hole.
and of some interest, Home Depot, one of Majestics tenants in Chino, and several
other retailers have built on the old Redlands Crossing site.
Ms. Un, after spending more than two years in state prison, had her sentenced overturned
her real estate fraud trial now proceeds, the court dropped all charges on the trash crime. The question arises as to what effect
that decision will have on those sentenced for a crime which no longer exists.
I have no idea whether Un has retained a financial interest in the Pavilion property, it
would be ironic if another of Majestics vanquished competitors, like the phoenix,
were to rise again.
the coming decades be as interesting as the one just past.
will we still be able to recognize our town of today when all is said and done?
recording of those chapters must await the pen and perspective of another.
Note: The facts, circumstances and
events as set forth are true and correct to the best of my knowledge and belief.
The conclusions that have been drawn represent my
opinion based on those facts, circumstances and events.