By Gustavo Arellano
By R. Scott Moxley
By Alfonso Delgado
By Courtney Hamilton
By Joel Beers
By Peter Maguire
By Charles Lam
By Charles Lam
Photo by Keith MayIn January 1995, county officials were one month into the hair-pulling, record-breaking financial chaos of the 1994 Orange County bankruptcy. When they weren't checking the lobby couches for loose change, officials in the county's Hall of Administration were looking at unprecedented program cuts, mass firings and perhaps even complete takeover by Sacramento.
Raising money—any money—became a top priority.
Suddenly, a seemingly harebrained scheme to fill in a five-acre flood-control basin in Orange and sell the land to a developer didn't look quite as stupid, counterintuitive or dangerous.
The scheme began in September 1994, when county flood-control engineers studying the Fletcher Flood Control Basin—a dip in the earth at a bend in the Santa Ana River—concluded that a couple of million dollars in improvements could transform the basin into hot real estate.
Financial panic transformed the modest proposal into a slam-dunk land deal. Last week, the Weekly revealed how the county spent the next five years dumping more than 60,000 cubic yards of fill into the Fletcher Basin without making any of the required improvements outlined in the September 1994 project report. The county filled the basin without conducting any environmental-impact reports or seeking permission from state and federal authorities, despite earlier findings that such reports and permits were necessary before any construction could begin (see "When the Levee Broke," June 9). As a result, the Fletcher Flood Control Basin is no longer a basin—a bad situation for the surrounding neighborhood, since the county says it now believes Fletcher is vital for flood control.
Apparently, nobody mentioned any of this to the basin's prospective buyers.
"Right now, they have a big dirt ditch out there," said Thomas Searles, president of the small, Orange-based development firm DSA Commercial Real Estate Group. "What's it going to retain? Nothing."
Since 1998, Searles has been negotiating with the county to buy the Fletcher Basin. He's had a difficult, miserable time, which is understandable considering the basin should never have been for sale in the first place.
"When you fill in property, you have to compact the dirt," said Searles, describing additional work the county never did on Fletcher. "In its present condition, the site is useless. It's also a cardinal sin not doing toxic tests on the soil. We don't bring soil onto our site—we don't even put it on the truck—unless it has been tested. Because once it gets onto our site, it becomes our problem."
Searles first came across the Fletcher site two years ago. "We saw the property, and it looked like a good thing to develop," said Searles, who worked with the City of Orange Redevelopment Agency on his proposal to build a "high-image industrial facility" on the site. "But the county is a very difficult entity to work with. They say one thing and then do another."
To help speed his proposal through county halls, Searles brought in his old friend Ernie Schneider as a lobbyist. You may remember Schneider as the county administrative officer who got the sack for the 1994 bankruptcy. But Schneider—who started his Orange County career in 1971 as a Flood Control District systems analyst —also possesses a specialist's knowledge of development and environmental issues.
Since his January 1995 firing, Schneider has worked quietly as a lobbyist for Hunsaker & Associates—an engineering-design firm that has worked on some of the county's most lavish development projects, including Newport Coast, Coto de Caza's South Ranch and golf course, and the Ritz-Carlton in Laguna Niguel.
The mere mention of Schneider's name certainly sped things up, but not in the way Searles intended. Internal e-mails obtained by the Weekly through the California Public Records Act show that from December 1999 through April of this year, county engineers scrutinized the Fletcher Basin's flood-control capacity.
The sudden interest, according to one source with intimate knowledge of the work on Fletcher, wasn't an accident. "You wouldn't see this much back-and-forth [correspondence] if it was anybody other than Ernie," the source said.
Schneider said he met with three Flood Control District engineers, including program manager Herb Nakasone, who originally authorized the filling of the Fletcher Basin. His goal was to nail down both a selling price and a fair cost for fixing the Fletcher Channel —work the county deemed vital to any future development.
He failed miserably.
"We were prepared to do $1 million in channel improvements," said Schneider. "But they wanted us to do improvements far in excess of the value of the property."
Internal county documents place the cost of these improvements at $3 million —a figure Schneider and Searles deny ever hearing. Searles said his company was willing to pay for a new channel through the property but not for any improvements outside the basin. "What the county wanted was so outlandishly expensive I never considered it," he said.
In fact, Schneider and Searles never had a chance. The county's surreptitious filling operation had already destroyed Fletcher's value as a flood-control basin. Sources connected to the Flood Control District told the Weekly that selling the property would have exposed that secret history—something the county didn't want at all. That meant Fletcher would go back to being a flood-control basin, even though it now had zero flood-control capacity.