Image not recoveredToxicWasteChemicalDrums-300x236.jpg
Several months ago I asked the question is it “safe” for the City to buy and develop the Whittaker-Bermite property from a public health and liability point of view? I had sited the former Secretary of Defense Donlad Rumsfeld’s now famous quote; “there are known knowns; there are things we know that we know. There are known unknowns. That is to say, there are things that we now know we don’t know. But there are also unknown unknowns. There are things we do not know we don’t know.”
It is the “unknown unknowns” that our valley community should be concerned about. Some of which I will write about soon as those have become “known unknowns” that should make residents pause!
In a series of commentaries including this one, we documented a laundry list of issues surrounding potential health concerns related to the decades of manufacturing and dumping of various compounds and chemicals at the Whittaker-Bermite property. This raised many more questions than we had answers for so we asked an attorney, a legal expert in real estate maters involving toxic substances, these questions and much of what you are about to read is an answer to those questions and more.
From the City of Santa Clarita’s new website, whittakerbermite.com the City Council states: “Should the City ultimately take ownership of the property through the lien purchase, pursuant to Federal Law, the Department of Toxic Substance Control ruling and existing insurance for the property, clean up liability and responsibilities would continue to rest with parties other than the City.”
This quoted text, cut & pasted right from the whittakerbermite.com
website, is apparently similar to emails the city has sent out to some members of the community advisory group (CAG) for Whittaker-Bermite, which essentially claims that the city would have no liability if they bought and/or were somehow involved in the development of the Whittaker-Bermite property. We cut & pasted the text in the event the City decided to go in and modify or change this statement after the publication of this commentary!
The legal opinion requested by The Beacon does NOT agree at all with that City Council quoted statement. It appears that City staffers (non-lawyers) are writing that propaganda.
As most know, due to attorney client privilege, the City will never show anyone other than City Council members and senior staff any written opinions from Burke Williams & Sorensen, the city’s “general counsel” or from Cox Castle & Nicholson, apparently the city’s “expert toxics council” concerning four issues:
(1) How the city can avoid paying for all or part of the remediation of the Whittaker-Bermite soil, or the ground water flowing from it, or other people’s real estate contaminated by the Whittaker-Bermite surface run-off or ground water, should other entities like Whittaker and AISLIC/Chartis (the insurance company) fail to do so;
(2) How the city can avoid lawsuit liability for personal injury or death arising out of toxic substances remaining on, under or flowing or blowing from the Whittaker-Bermite property;
(3) How the city as “partner with Lewis” can avoid liability to subsequent residential buyers for non-disclosure or inadequate disclosure of the types of toxic substances remaining in the soil near or under their homes; and
(4) How the city and its attorneys can structure the mortgage loan purchase, foreclosure, land planning, land development and resale transactions so that the City stays inside California and Federal law giving “mortgage lenders” or “innocent brownfields developers” protection from toxics liability.
The legal opinion requested by The Beacon went on to sight Clinton era Federal law designed to protect mortgage lenders who merely foreclose and resell a property, and looking at the 3 most important California “lender liability for toxics” and “Brownfield’s redevelopment laws”, the lawyer reviewing this information could not write an opinion letter to the City telling them “it’s safe for you to do what you want to do at Whittaker-Bermite.” It is quite possible that the City’s expert toxic lawyers have said the same or similar things or the City may have received written attorney-client privileged advice that “these are the risks you are taking.”
This is not a full opinion letter by any means, but it is valuable information from a legal expert that The Beacon requested so that our readers could have a better understanding; to be more educated on this matter. The following, as noted by The Beacon’s legal expert, are some of the huge “liability” issues that the City and the taxpayers’ public purse might possibly contend with:
(1) The city cannot safely rely on Clinton era Federal law intended to protect foreclosing lenders, because enforcement of state toxic clean up laws, and personal injury/wrongful death litigation claims, are state law matters where the states’ rights to legislate and the state courts rights to interpret common law and state statutes, are protected by the 10th Amendment to the U.S. Constitution; “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”
(2) After the Clinton era Federal law was enacted, the California Legislature at least twice amended Health & Safety Code Chapter 6.96 entitled “Hazardous Materials Liability of Lenders and Fiduciaries.” The law was ghost written by lawyers from several State Bar committees (environmental and real estate) to protect their mortgage lender clients who had lent on toxic real estate, but then the law was “edited” by an attorney for the California Communities Against Toxics (CCAT) and some plaintiffs’ lawyers lobbyists; that law specifically says that it doesn’t protect mortgage lenders who make (or buy and foreclose upon) mortgage loans “for investment purposes.” The Property and Environment Research Center’s (PERC) old position was that Porta Bella Lender LLC, the second mortgage lender on Whittaker-Bermite, has been in trouble under that text since it made its loan. The law has since been amended again, to make it clearer in terms of protection for mortgage lenders, but the CCAT attorney and the plaintiffs’ lawyers/lobbyists neutered the amendments, again, to make it even more clear that a mortgage lender cannot “structure” a mortgage loan purchase with the real intention of buying and developing, that the mortgage lender must quickly sell the toxic property after foreclosure for little more than the loan balance at foreclosure plus foreclosure costs. This would essentially eliminate the city from recouping the $25 Million it spent to pay the condemnation lawsuit settlements and the foreclosing lender cannot act as a developer of the property. The city may have already shot themselves in the foot with a number of effusive press releases and the content of the new Whittaker-Bermite website, in terms of showing their real intentions to “partner” with a developer, so it will be very hard for the city to hide behind this law in the future.
(3) In 2004, the Legislature enacted what was called its “Brownfields” law, Chapter 6.82 of the Health & Safety Code, the California Land Reuse and Revitalization Act of 2004. The law’s goal was to make it possible for developers to redevelop properties like Whittaker-Bermite with limited risk of being sued or disciplined by Department of Toxic Substances Control for toxic contamination of ground water or nearby properties. There are incredibly complex hoops for a brownfields developer to jump through to obtain the “limited immunity” provided by the law. The City’s lawyers could potentially guide the City through the hoops if the City wanted to be the developer of the property. That said, unsupervised City staffers might screw up and do some of the things the law says cause immunity to be lost, simply because they would not pay attention to every nuance of the statute. The law is weak in terms of providing ironclad protection from subsequent lawsuits for homebuyers on former brownfields properties.
Even worse, there are 3 key sentences in this law which kills any broad claim that the City as a Whittaker-Bermite developer would have no liability for toxics in, under or which have flowed from the Whittaker-Bermite property:
25395.86. (a) This chapter does not provide immunity from any of
the following: (1) Liability for bodily injury or wrongful death.
25395.106(a) This chapter does not provide immunity from any of the following: (1) Liability for bodily injury or wrongful death.
25395.109. This chapter shall remain in effect only until January 1, 2017, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2017, deletes or extends that date.
(4) Several years earlier, the California Legislature enacted Health & Safety Code Chapter 6.10 called the California Land Environmental Restoration and Reuse Act. One of the purposes of that act was to allow public agencies like cities, to be brownfields redevelopers of lands they acquired, and negotiate with the toxics regulatory agencies as to potentially allowing the cities to self-regulate as to toxics remediation. This law cannot be used for decommissioned military bases, but it does not explicitly prohibit the use of the law for brownfields redevelopment of a former defense contractor’s property. Again, the law provides complex hoops for a city to jump through to obtain the “limited immunity” provided by the law. (as previously mentioned above, unsupervised non-lawyers on the City’s staff could screw up and do some of the things the law says cause immunity to be lost, simply because they would not pay attention every nuance of the statute.) This law may be a better fit for what the city wants to do than the law summarized in (3) above. However, once again there are 2 big holes in the city’s potential immunity from “toxics liability”:
Section 25402.1 (d) (1) Notwithstanding any other provision of law, the immunity provided by this section does not extend to any of the following:
(E) Any person,
including, but not limited to, the local agency, that engages in gross negligence with respect to the site investigation or remediation of the property.
Section 25402.1 (d)(2) Notwithstanding any other provision of law, the immunity provided in this section does not apply to, limit, alter, or restrict any of the following:…(B) Any action for personal injury, property damage, or wrongful death.
In essence, this pre 2004 city-remediates-brownfields-as-developer law is worse than the 2004 law described in (3) above because there is no immunity for third party property damage.
Under any scenario, at the very best, if something went wrong, the City could expect to incur massive attorney’s fees and court costs defending itself. That, in and of itself, could have severe financial ramifications or even worse a potential bankruptcy for the City of Santa Clarita.
Once again I must point to the pattern of incompetence displayed by some City of Santa Clarita leaders in matters such as the eminent domain proceedings which went horribly wrong and resulted in a stunning $25.3 million dollar judgment against the City. This was a stinging defeat which apparently contributed to the sale of City Hall in a lease back arrangement.
Like the addicted gambler, the City is trying to double-down on this court judgment in order to get back to even; this may just end badly like it does for the chronic gambler.
The entire Whittaker-Bermite property development that the City of Santa Clarita seems bent on doing is yet another example of the Emperor is wearing no clothes!
Some of these pseudo leaders, like Councilman Frank Ferry, are outright liars. These people can not be trusted as has just been shown by some of the questionable information being presented on the City’s Whittaker-Bermite website. The Whittaker-Bermite property development should be left to professionals not the arrogant amateurs who are populating the leased corridors of City Hall trying to hide their blunders in yet another ill-conceived scheme!
Dave Bossert- Commentary
Dave Bossert is a community volunteer who serves on a number of boards and councils. His commentaries represent his own opinions and not necessarily the views of any organization he may be affiliated with or those of the West Ranch Beacon.
