SUPERIOR COURT OF CALIFORNIA
COUNTY OF ORANGE, CENTRAL JUSTICE CENTER
DEPARTMENT C20
WESTERN RIVERSIDE COUNCIL OF GOVERNMENTS, PLAINTIFF/PETITIONER,
CASE NO. 30-2010-00357976
VS.
THE CITY OF BEAUMONT; AND DOES
1 THROUGH 100,
DEFENDANT/RESPONDENT.
________________________________
HONORABLE DAVID R. CHAFFEE, JUDGE PRESIDING
REPORTER’S PARTIAL TRANSCRIPT
MAY 22, 2014
APPEARANCES OF COUNSEL:
FOR PLAINTIFF/ JEFFREY V. DUNN
PETITIONER: THOMAS J. EASTMOND
ATTORNEYS AT LAW
FOR DEFENDANT/ WALTER P. MC NEILL
RESPONDENT: RACHEL L. MC VEAN
ATTORNEYS AT LAW
KATHY D. HOFFMAN, CSR #5787
OFFICIAL COURT REPORTER
SANTA ANA, CALIFORNIA – THURSDAY, MAY 22, 2014
AFTERNOON SESSION
(THE FOLLOWING PROCEEDINGS WERE HAD IN OPEN COURT:)
THE COURT: GOOD AFTERNOON, LADIES AND GENTLEMEN.
ALL RIGHT. WELL, I HAVE TO SAY I’VE BEEN SCRIBBLING FOR THE LAST THREE HOURS. MY HAND ACTUALLY HURTS AS A RESULT OF TRYING TO GET THIS INTO SOME FORM THAT IS UNDERSTANDABLE. AND SO I AM TO A DEGREE PROBABLY LARGELY GOING TO BE EDITING IT AND READING AT THE SAME TIME, OR READING AND EDITING AT THE SAME TIME, YOUR CHOICE OF ORDER.
WHAT I WANT TO DO IS THIS: I ALWAYS ANTICIPATE IN A CASE OF THIS NATURE THAT THERE WILL BE AN APPEAL. AND I ANTICIPATE ALWAYS IN A CASE OF THIS NATURE THAT SOMEONE WILL REQUEST A STATEMENT OF DECISION, AND SO UP FRONT, SO THAT I DON’T FORGET LATER ON, I’M DIRECTING THE PREVAILING PARTY, IF THERE IS A REQUEST FOR A STATEMENT OF DECISION, TO PREPARE A PROPOSED STATEMENT OF DECISION AND TO ATTACH TO IT AND INCORPORATE BY REFERENCE A TRANSCRIPT OF THAT WHICH I AM ABOUT TO ENTER INTO THE RECORD IN TERMS OF THE COURT’S RULING AND FINDINGS ON THIS CASE.
I SHOULD START, AS I THINK I TRIED TO DO MAYBE BACKHANDEDLY THIS MORNING BY TALKING ABOUT THE LACK OF TIME LIMITS FOR THIS TRIAL, BY COMPLIMENTING ALL FOUR OF THE LAWYERS INVOLVED IN THIS CASE. NOT ONLY DID I FIND YOU TO BE VERY NICE PEOPLE, WHICH IS ALWAYS A NICE THING BECAUSE SO MANY PEOPLE IN OUR SOCIETY FIND LAWYERS TO BE ANATHEMA, BUT I ALSO FIND YOU TO BE SCHOLARS AND EXCELLENT PRACTITIONERS OF OUR PROFESSION.
MS. MC VEAN, I HAVE THE IMPRESSION YOU’RE KIND OF EARLY ON IN YOUR CAREER.
MS. MC VEAN: YES, YOUR HONOR.
THE COURT: I THINK YOU HAVE GREAT PROMISE.
MS. MC VEAN: THANK YOU.
THE COURT: APPRECIATED YOUR BEING HERE, ESPECIALLY
SINCE YOU’RE CANADIAN.
MS. MC VEAN: THANK YOU, YOUR HONOR.
THE COURT: AND SO TO THE OLD HANDS, WHICH ARE THE OTHER THREE OF YOU, YOU KNOW, THANK YOU FOR YOUR EXCELLENT PRESENTATIONS, ALL THREE OF YOU. YOU KNOW, OBVIOUSLY IN A CASE OF THIS NATURE, SOMEBODY WINS AND SOMEBODY LOSES, AND THE CHIPS HAVE TO FALL WHERE THEY MAY. AND TO A DEGREE, AS YOU WILL HEAR, I AM GOING TO BE GIVING SOMEWHAT A PIECE OF MY MIND TO A CERTAIN DEGREE AS WELL.
AND IT’S NOT ALWAYS EASY TO SWALLOW. AS ADVOCATES, I REMEMBER THIS SO WELL WHEN I WAS A LAWYER ALL THOSE YEARS AGO, WE ALL FEEL AS LAWYERS MORE THAN A LITTLE RESPONSIBILITY TO OUR CLIENTS TO FIX IT, TO WIN FOR YOUR CLIENTS REGARDLESS. THAT ISN’T THE NATURE OF THE BUSINESS. AND SO, YOU KNOW, I AM TELLING YOU UP FRONT THAT I APPRECIATE YOUR ADVOCACY, AND I APPRECIATE YOU AS PEOPLE, IRRESPECTIVE OF THE RESULT OF THIS.
AND, YOU KNOW, BELIEVE ME, ALL FOUR OF YOU ARE WELCOME HERE ANY DAY, ANY TIME, TO TRY ANOTHER CASE. I WOULD BE HAPPY TO HAVE YOU. YOU MAY NOT BE HAPPY TO HAVE ME, HOWEVER. SO WE BEGIN, AND STRANGELY ENOUGH, I WAS TOLD A LONG TIME AGO NEVER PUT YOURSELF INTO A DECISION OR OPINION, AND YET I’M ABOUT TO DO THIS BY SAYING THIS:
I AM AN OLD, EMPHASIS ON THE WORLD “OLD,” COLLEGIATE OARSMAN. PERHAPS YOU HAVE SEEN THE MOTIVATIONAL POSTER SHOWING AN EIGHT-OARED RACING SHELL IN ACTION ON THE WATER UNDER THE HEADING OR TITLE OF “TEAMWORK.” THERE IS SOMETHING SIMPLE BUT ELEGANT ABOUT A SPORT WHERE NINE PEOPLE CLIMB INTO A 60-FOOT LONG, BY 24- TO 32-INCH WIDE, 200-POUND RACING SHELL, AND AFTER LONG ARDUOUS WEEKS, INDEED, MONTHS OF TRAINING, LINE UP ON THE STARTING LINE TO ACHIEVE A SINGLE PURPOSE, TO BEAT ALL CHALLENGERS OVER A 2,000 METER COURSE.
WHAT’S REQUIRED IN THIS? STRENGTH, SKILL ON THE PART OF EVERY PERSON IN THE BOAT, BUT AT THE END OF THE DAY, ALL THAT IS WASTED IF EACH OF THOSE OARSMEN, OR ANY OF THOSE OARSMEN, IS OUT OF SYNC OR NOT PULLING TOGETHER.
THE INSTANT CASE REPRESENTS AN INTERGOVERNMENTAL DISPUTE OVER THE AGE OLD PROBLEM OF HOW TO FUND SIGNIFICANT INFRASTRUCTURE CONSTRUCTION PROJECTS. IN THIS CASE THE PROJECTS TRANSCEND THE TYPICAL LOCAL STRUCTURE, TO INCLUDE REGIONAL TRANSPORTATION. THE CREATION OF THE TUMF PROGRAM REPRESENTS A REGIONAL STRATEGY TO FINANCE AND CONSTRUCT REGIONAL ARTERIAL HIGHWAYS AND ROADWAYS IN A COGENT, SYSTEMATIC, AND HOPEFULLY ECONOMIC FASHION.
THE FACT THAT THE COUNTY OF RIVERSIDE, AND EVERY LOCAL GOVERNMENTAL ENTITY IN WESTERN RIVERSIDE COUNTY, OR WESTERN REGION OF RIVERSIDE COUNTY, EVENTUALLY JOINED IN THIS ENDEAVOR, REPRESENTS NOT ONLY THE IMPORTANCE OF THIS TRANSPORTATION INFRASTRUCTURE, BUT ALSO THE VIABILITY OF THE ENTERPRISE. LIKE ROWING, THE ONE CAVEAT IS, AND WAS, THAT ALL OF THE MEMBERS OF THE TUMF PROGRAM NEED TO PULL TOGETHER.
AS DEMONSTRATED BY EXHIBITS 1003 AND 1004, THE CITY OF BEAUMONT ADOPTED THE TUMF MODEL ORDINANCE. ITS LEGISLATIVE BODY, THE CITY COUNCIL, THEREBY PROVIDING CLEAR POLICY DIRECTION, REQUIRED THAT THE CITY COMPLY WITH THE REQUISITES OF THE TUMF PROGRAM.
THE PROBLEM APPEARS TO BE THE INCONSISTENCY, OR THE APPARENT INCOMPATIBILITY, OF THE C.F.D. CREATED BY THE CITY IN 1993 TO BUILD INFRASTRUCTURE WITHIN THE CITY LIMITS, INCLUDING TRANSPORTATION INFRASTRUCTURE. AFTER THE PASSAGE BY THE BEAUMONT CITY COUNCIL OF THE ORIGINAL TUMF ORDINANCE IN 2003, CITY STAFF, FROM THE CITY MANAGER ON DOWN, ADOPTED A POSITION THAT THE CITY’S TUMF OBLIGATIONS WERE SATISFIED BY THE CITY TRANSPORTATION PROJECTS, LARGELY FUNDED AND CONSTRUCTED THROUGH C.F.D. 93-1.
THEIR ARGUMENT, SIMPLY STATED, IS THAT ANY WORK DONE ON A CITY ROADWAY IDENTIFIED BY THE TUMF NEXUS STUDY, AS INCLUDED WITHIN THE TUMF NETWORK, WAS A QUALIFIED TUMF PROJECT, FOR WHICH THE CITY SHOULD BE CREDITED AS HAVING CONSTRUCTED AS ITS OWN, OR AS PART OF ITS TUMF OBLIGATION.
THE COURT IS SATISFIED AND FINDS THAT THE POSITION OF CITY STAFF WAS MOTIVATED BY CERTAIN COMMITMENTS TO BEAUMONT AREA DEVELOPERS, AS WELL AS AN IMPERATIVE TO HELP FUEL FURTHER AND GREATER DEVELOPMENT WITHIN BEAUMONT CITY LIMITS. SIMPLE ECONOMICS EXPLAIN WHY CITY STAFF WOULD TAKE SUCH A POSITION.
UNDER THE C.F.D., THE CITY ISSUED BONDS THAT PAID FOR THE TRANSPORTATION PROJECTS. THE BONDS WERE SECURED BY LIENS ON THE INDIVIDUAL PARCELS WITHIN THE CITY’S LIMITS.
THE BONDS, PAID BY A SUPPLEMENTAL — OR A SUPPLEMENTAL BILL ADDED TO THE ANNUAL PROPERTY TAX LEVY. NO UP FRONT MONEY WAS REQUIRED TO BE PAID BY ANY DEVELOPER WHO OPTED FOR THIS FORM OF FINANCING.
THE DEVELOPERS THEREBY HAD NO CARRYING CHARGES FOR THE COST OF BORROWED MONEY TO PAY UP FRONT FOR CONSTRUCTION OF THESE TRANSPORTATION PROJECTS. MOREOVER, THE COSTS ARE EFFECTIVELY HIDDEN FROM THE PROPERTY BUYERS, WHO DO NOT SEE PRICE INCREASES TO COVER DEVELOPER OUT-OF-POCKET DEVELOPMENT COSTS. INSTEAD, THE BUYER PAYS FOR THE PROJECT INCREMENTALLY OVER THE LIFE OF THE BOND THROUGH THOSE TAX ASSESSMENTS OR ADDITIONS TO THE TAX BILLS.
CONTRARIWISE, TUMF REQUIRES UP-FRONT PAYMENTS OUT OF POCKET FROM DEVELOPERS. OF COURSE, IT IS EXPECTED THAT THESE COSTS WILL BE RECOUPED BY AN INCREASE IN SALES PRICE OF THE PROPERTIES THAT ARE CONTAINED WITHIN THE DEVELOPER’S PROJECT. THIS SOMETIMES RESULTS IN A RISK OR GAMBLE THAT CERTAIN DEVELOPERS ARE UNWILLING TO ASSUME.
THE NET EFFECT OF THIS DICHOTOMY IS, FOLLOWING THE BEAUMONT PREFERENCE, TO GIVE BEAUMONT THE EDGE IN ATTRACTING DEVELOPERS AND GREATER DEVELOPMENT AS AGAINST ALL OTHER WESTERN RIVERSIDE JURISDICTIONS THAT IMPOSE THE MANDATED TUMF FEE UP FRONT.
SMALL WONDER THEN THAT THE BEAUMONT IMPERATIVE WAS ALSO TO KEEP ALL MONEY COLLECTED VIA C.F.D. 93-1 IN TOWN AND SPENT ONLY ON LOCAL IMPROVEMENTS AND FACILITIES.
ALL OF THIS LEADS INESCAPABLY TO THE COURT’S FINDING THAT CITY MANAGEMENT AND STAFF CONTRACTORS VIOLATED THE DIRECTIVES OF THE CITY’S TUMF ORDINANCES TO SATISFY THIS IMPERATIVE.
IN THE END, IT APPEARS THAT THE CITY EXPECTED TO BE TREATED DIFFERENTLY IN THE TUMF PROGRAM THAN ALL OTHER MEMBERS OF THAT PROGRAM.
MOREOVER, IT IS CLEAR THAT CITY STAFF CHOSE TO OVERLOOK THE CLEAR MANDATE OF THE CITY COUNCIL REVEALED BY ITS ADOPTED TUMF ORDINANCES, INCLUDING THE DIRECTION TO COMPLY WITH THE TUMF PLAN. OF PARTICULAR NOTE IS THE TUMF REQUIREMENT THAT POST-2003 FINANCING MECHANISMS, SUCH AS C.F.D. 93-1, BE MADE TO CONFORM TO THE TUMF PROGRAM, AND THE REQUIREMENT THAT NEW FINANCING PLANS OR BOND ISSUES FOR TRANSPORTATION, OR FOR THAT MATTER, CREDIT OR DEVELOPMENT AGREEMENTS, HAVE PRE-APPROVAL FROM W.R.COG.
A WORD ABOUT CONFORMANCE OF C.F.D. 93-1 WITH TUMF IS APPROPRIATE. THE COURT’S QUESTIONS OF MR. MC NEILL ABOUT C.F.D. 93-1 AND LIMITING ITS COVERAGE TO EXCLUDE REGIONAL RANSPORTATION, THOSE QUESTIONS, THAT IS, WERE NOT SIMPLY IDLE THOUGHTS. IN THE COURT’S ESTIMATION, C.F.D. 93-1 COULD HAVE BEEN, AND, INDEED, SHOULD HAVE BEEN, MODIFIED TO EXCLUDE REGIONAL TRANSPORTATION PROJECTS, WHILE CONTINUING TO COVER OTHER LOCAL PROJECTS, INCLUDING WATER, SEWAGE, AND LOCAL TRANSPORTATION.
THE CITY COULD HAVE REDUCED THE LIMIT OF BONDED INDEBTEDNESS AUTHORIZED FROM THE 655-MILLION-DOLLAR AMOUNT INDICATED BY MR. MC NEILL, TO, FOR INSTANCE, 600 MILLION, OR FOR THAT MATTER, 550 MILLION, IF SO NECESSARY, TO REFLECT WHAT I WOULD CALL A TUMF INCREMENT, AND THEN COMPLIED WITH THE TUMF PROGRAM REQUIREMENTS TO IMPOSE A TUMF FEE UPON NEW DEVELOPMENT.
INSTEAD, THE CITY OPTED FOR WHAT ONE COULD CALL THE, QUOTE, WILLFUL CHILD, END QUOTE, SYNDROME. INDEED, THE EVIDENCE REFLECTS THAT CONTRARY TO TUMF ORDINANCES, CITY STAFF TRIED REPEATEDLY TO MAKE THE TUMF PROGRAM CONFORM TO THE C.F.D. 93-1 PROGRAM, RATHER THAN CONFORM THE C.F.D. 93-1 TO TUMF.
IN MAKING ITS FINDINGS, THE COURT IS CONSTRAINED TO COMMENT IN SOME SMALL FASHION ON THE CREDIBILITY OF THE WITNESSES. HERE, THE COURT NOTES THAT IT WAS EXTREMELY IMPRESSED WITH THE CHARACTER, QUALITY, AND CREDIBILITY OF PETITIONER’S EXPERTS, MESSRS. CHYLINSKI AND ZIMMERMAN.
MR. ZIMMERMAN’S ANALYSIS OF THE CITY’S ROAD PROJECTS ALLEGEDLY ON THE TUMF NETWORK, PROVIDED AN ENCYCLOPEDIC VIEW OF THE DEFICIENCIES IN THE CITY’S CLAIMS TO HAVE MEANINGFULLY PARTICIPATED IN AND CONTRIBUTED TO THE TUMF PROGRAM.
SIMILARLY, MR. CHYLINSKI’S REVIEW AND ANALYSIS OF THE FINANCIAL AND COMPLIANCE ISSUES OF THE CITY’S CLAIMED COMPLIANCE WITH TUMF WERE REVEALING; INDEED, THEY WERE STARTLING. RESPONDENT’S WITNESSES, PARTICULARLY, MESSRS. DILLON, HUGHES, AND MOORJANI EITHER LACKED SPECIFIC KNOWLEDGE OR WERE NOT CREDIBLE IN THEIR TESTIMONY REGARDING COMPLIANCE WITH THE TUMF CONTRIBUTION REQUIREMENTS.
AT BOTTOM, THE COURT FINDS THAT IN NO INSTANCE DID THE CITY’S CLAIMED CONSTRUCTION OF TRANSPORTATION IMPROVEMENTS SATISFY THE TUMF REQUIREMENTS TO ADD TRUE ROADWAY CAPACITY. IF ANYTHING, THE EVIDENCE SHOWS POOR LOCAL TRANSPORTATION PLANNING AND EXECUTION, RESULTING IN BOTTLENECKS AND DELAYS THAT IMPAIR THE NECESSARY ADDED CAPACITY.
MOREOVER, THE COURT FINDS THAT THE CITY FAILED TO COMPLY WITH THE TUMF PLAN, REQUIRING PRE-APPROVAL FOR POST-2003 FINANCING OR DEVELOPER AGREEMENTS OR DEVELOPER CREDITS, AND GENERALLY FAILED AT EVERY TURN TO COMPLY WITH VIRTUALLY ANY OTHER TUMF PLAN REQUIREMENT.
THE EVIDENCE SADLY REVEALED SOMETHING MORE THAT THE COURT FEELS OBLIGED TO SPEAK TO. THE EVIDENCE AND TESTIMONY REVEALS THAT CITY MANAGEMENT AND STAFF ENGAGED IN A PATTERN AND PRACTICE OF DECEPTION THAT TRANSCENDS THE TYPICAL GIVE AND TAKE OF DISPUTE NEGOTIATION. HAD THIS BEEN A TYPICAL CIVIL TRIAL CONTAINING ALLEGATIONS OF FRAUD, I WOULD HAVE FOUND FRAUD BY CLEAR AND CONVINCING EVIDENCE AS AGAINST THE CITY.
TO BE CLEAR, HOWEVER, AND I WANT TO MAKE THIS VERY CLEAR, THIS IS NOT SOMETHING TO EVER BE ASCRIBED TO THE CITY’S CURRENT COUNSEL, MR. MC NEILL OR MS. MC VEAN. YOU’RE LAWYERS, NOT PARTICIPANTS.
FINALLY, MR. MC NEILL URGES THAT THE COURT IS PROSCRIBED BY LAW FROM IMPOSING A REMEDY REGARDING OR REQUIRING THE CITY TO COLLECT A TUMF FEE RETROACTIVELY, IF YOU WILL, FROM THE DEVELOPERS IN THE CITY FOR THE APPLICABLE DEVELOPMENT TIME PERIOD OF 2005 TO 2009. HOWEVER, THAT IS NOT THE REMEDY SOUGHT BY PETITIONER.
HERE PETITIONER SEEKS, AND THE COURT GRANTS, A WRIT OF MANDATE, COMPELLING RESPONDENT CITY TO REMIT SUMS COMMENSURATE WITH THE TUMF FEES IT HAD COMMITTED TO REMIT DURING THE RELEVANT TIME PERIOD OF 2005 THROUGH 2009. AND I DO NOT SPECIFY THE EXACT DATES. THE RECORD IS CLEAR AS TO THE START DATE AND THE ENDING DATE WHEN THE CITY WAS REMOVED FROM THE TUMF PROGRAM.
HERE, THE COURT FINDS THAT THE AMOUNT REQUIRED TO BE REMITTED IS TO BE THE TOTAL AMOUNT OF 42,994,879, PLUS INTEREST, TO BE CALCULATED AT THE LEGAL RATE BEGINNING OCTOBER 2009 AND TO THE PRESENT. AND PETITIONER WILL DO THAT CALCULATION, SUBMIT A DECLARATION ACCOMPANYING A PROPOSED JUDGMENT THAT OUTLINES HOW THE CALCULATION WAS MADE, AND HOW THE SUM — WHAT THE TOTAL AMOUNT OF THAT SUM IS TO BE ADDED TO THE AMOUNT OF THE JUDGMENT.
I’M DIRECTING MR. DUNN/MR. EASTMOND TO PREPARE THE JUDGMENT AND TO CIRCULATE, OF COURSE, TO MR. MC NEILL, AND ALSO OF COURSE TO THE COURT. WE CONCLUDE. ANY QUESTIONS?
MR. MC NEILL: FOR THE RECORD, RESPONDENTS REQUEST A STATEMENT OF DECISION.
THE COURT: YOU HAVE TO FOLLOW THE CODE OF CIVIL PROCEDURE. SO YOUR ORAL REQUEST IS NOT SUFFICIENT. YOU NEED TO MAKE IT IN WRITING WITHIN THE TIME FRAME PRESCRIBED BY THE CODE, BUT I’M NOT SURPRISED.
MR. MC NEILL: WELL —
THE COURT: ALL RIGHT. TO EACH OF YOU, I THANK YOU FOR YOUR PARTICIPATION HERE AND YOUR EXCELLENT PRESENTATIONS. I WISH YOU ALL WELL. AND GO ARMY, BEAT NAVY. THAT’S MORE FOR MS. TAYLER BERGER.
(DISCUSSION OFF THE RECORD.)
THE COURT: IT’S BEEN A LONG FOUR WEEKS. EVERYBODY GO HOME AND GET RESTED UP FOR THE NEXT ROUND.
MR. DUNN: THANK YOU, YOUR HONOR.
(END OF PROCEEDINGS.)