Lawsuits and Ethical Questions Swirl around Giant Newhall Ranch Development

Friday, March 14, 2014

 “Why would [the state Department of Fish & Wildlife] accept vehicles if they already have an apparent oversupply?” a Department of Finance employee asked, in an email, about the gift from the developer of the giant Newhall Ranch north of Los Angeles that it is overseeing.

The Los Angeles Times didn’t have an answer to that question last week when it wrote about Newhall Land and Farming Co. giving the agency a 2008 Ford Explorer and a 2008 Ford 150 truck for use by two of its scientists as they worked on the project.

The story highlighted criticism of the department’s relationship with the developer, who has worked for three decades to put 20,000 homes and 60,000 people along the environmentally sensitive Santa Clara River, just days before another lawsuit was filed to halt the project. A common complaint has been the close nature of relationships between developers and government agencies that oversee them.

The gifting of the vehicles was included in the contract between Newhall and the department as “part of a $1.7-million agreement under which the company has paid for staff time and other costs associated with its projects,” according to the Times. The department also extracted $10 million from the company as an endowment for conservation.

They are, in many ways, partners. But there are limits and the vehicles raised some eyebrows. Fish and Wildlife administrative officer Ann Raymond emailed an associate,  “The company wants to ‘gift’ 2 new vehicles to us as part of the contract. I just don't want to run into problems with this contract or the ‘gifts.’ ”

Jessica Levinson, law professor L.A. City Ethics Commission vice president, told the Times that very well could be a conflict-of-interest problem. “The developer is giving something to the people who are making a determination as to a project that could benefit it,” she said.

Newhall spokeswoman Marlee Lauffer took a more pragmatic view of things: “The Department and Newhall Land considered these vehicles necessary equipment for the staffers to complete the task of assessing the project's more than 12,000-acre area . . . and its range of habitats.”    

Los Angeles County approved a broad outline for the Newhall development in 2003 but planning bogged down when the economy tanked.

The developer, LandSource Communities Development, was owned by Lennar Corp., one of the nation’s largest home builders. It sold the majority of the company to MW Housing Partners in 2007 at the height of the real estate bubble.

California Public Employees’ Retirement Service (CalPERS) was a one-third partner in the purchase, underwritten by a banking consortium.

The company quickly went bankrupt and emerged in July 2009 as Newhall Land Co. It was debt free with $90 million in cash—and owned by the banking consortium. Lennar retained its 15% interest and management control of the project.

CalPERS lost its entire investment—$970 million.

Fish and Wildlife officials signed off on the project in 2010 and lawsuits quickly followed. A suit challenging the Environmental Impact Report (EIR) was filed in state court. Environmentalists won and the appeal was heard last month.

Last Friday, a federal lawsuit was filed in U.S. District Court in Los Angeles. The Center for Biological Diversity, the Wishtoyo Foundation, Ventura Coastkeeper, Friends of the Santa Clara River and the Santa Clarita Organization for Planning the Environment sued the U.S. Army Corps of Engineers and the U.S. Environmental Protection Agency for issuing permits without properly considering the impact on the environment and Native American ancestral sites.

–Ken Broder


To Learn More:

Newhall Land's Gift of Trucks to Fish and Wildlife Raises Concerns (by Jessica Garrison, Los Angeles Times)

Lawsuit Fights to Save River, Wildlife from Sprawling Newhall Ranch Project (Center for Biological Diversity)

Newhall Ranch Project Faces New Hurdles with Environmentalists' Suit (by Louis Sahagun, Los Angeles Times)

LandSource Emerging from Bankruptcy (by Teresa Burney, Builder)

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