1 Vernice Hankins
From: Nikima Newsome
Sent: Tuesday, March 22, 2022 3:24 PM
To: Vernice Hankins
Cc: Esterlina Lugo; Denise Anderson-Warren
Subject: FW: Personnel Investigation re Surplus Land Act Importance: High
Hi Vernice,
I know this is a little late but this needs to be added to the agenda as an add‐to and sent to Council. Can you please do so?
Thank you,
Niki
Nikima S. Newsome (She/Her), MPA/MMC
Assistant City Clerk
(310) 458-8211
santamonica.gov
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From: Alan Seltzer <[email protected]>
Sent: Tuesday, March 22, 2022 2:10 PM
To: Nikima Newsome <[email protected]>
Cc: Joseph Lawrence <[email protected]>; Lori Gentles <[email protected]>; David White <[email protected]>
Subject: FW: Personnel Investigation re Surplus Land Act Please add the email below dated October 26, 2020, to the public comment on Item 8.A (Appointment of Interim City Attorney).
Thank you.
From: Eda Suh <[email protected]>
Sent: Monday, October 26, 2020 5:26 PM
To: [email protected]; [email protected]; [email protected] 2 Cc: Lori Gentles <[email protected]>
Subject: Personnel Investigation re Surplus Land Act
Dear Ms. Zurawska, Mr. Brock, and Mr. Epstein:
I am writing to you in my capacity as the Acting City Attorney overseeing the administrative investigation that was conducted into your allegations of wrongful conduct by Interim City Manager Lane Dilg, Interim City Attorney George S. Cardona, Deputy City Attorney Susan Cola, Housing and Economic Development Director Andy Agle, and Senior Development Analyst Kriss Casanova (collectively, “respondents”). You allege that respondents failed to provide certain information to the State of California Department of Housing and Community Development, Division of Housing Policy Development (“HCD”), regarding the application of Assembly Bill 1486 (“AB 1486”), which amended the Surplus Land Act (“SLA”), with respect to the development of the Plaza at Santa Monica by a development entity (“Developer” is used herein for any iteration of the developers or their attorneys).
The City retained independent attorney-investigators Arlene Prater and Ethan Walsh of Best Best & Krieger, who interviewed five individuals and examined documentary evidence. The investigators concluded based on the credibility, weight, and sufficiency of all the evidence generated during the investigation that none of the allegations were sustained and there were no violations of the City’s Code of Ethics or any other applicable City policy, law, or regulation in the matters at issue. The factual background and findings are as follows:
In 2013, the City and Developer commenced negotiations to redevelop a site for a mixed-used development (the “Project”). On March 19, 2014, the City and Developer entered into a written Exclusive Negotiating Agreement (“ENA”) for the Project. The ENA expired on December 19, 2015, but the City and Developer continued to meet and work on the Project. A letter dated January 23, 2019, from Mr. Agle to Developer, memorialized the parties’ agreement to continue non-binding negotiations (the “January 23, 2019 Agle Letter”).
AB 1486 was subsequently signed by the Governor in October 2019, to become effective on January 1, 2020, and which imposes new restrictions on the development of surplus land but exempts certain projects where the local agency and developer have entered into an exclusive negotiating agreement or legally binding agreement for disposition of property if completed by December 31, 2022. In a letter dated December 12, 2019, Ms. Cola asked Developer for their review of the applicability of AB 1486 to the Project (the “December 12, 2019 Cola Letter”). A responsive letter dated December 16, 2019, from Developer to Ms. Cola set forth Developer’s position that the Project is exempt from the new SLA requirements (the “December 16, 2019 Developer Letter”). By letter dated January 22, 2020, Mr. Agle requested that HCD determine the applicability of the new law to the Project; by email the next day, Ms. Cola provided HCD a copy of the expired ENA and the December 16, 2019 Developer Letter. In a letter dated January 27, 2020, Ms. Cola informed Developer that the City was seeking HCD’s determination of the applicability of AB 1486 to the Project (the “January 27, 2020 Cola Letter”). A February 12, 2020 email from HCD to Ms. Cola and Mr. Agle rejected one of Developer’s contentions that the SLA does not apply and stated that there was insufficient information provided by Developer to explain Developer’s other two contentions to HCD. In a letter dated March 16, 2020, Developer provided HCD additional information and documents to support Developer’s position that the Project was exempt from the new law, including the January 23, 2019 Agle Letter. A responsive letter dated March 24, 2020, from HCD to Developer concluded that it appeared the City’s disposition of the Project site qualified for an exemption based on the existence of an ongoing ENA, which is not defined in the SLA, nor does the SLA state that it must be in writing.
You allege that respondents improperly and intentionally hid information from HCD relating to the applicability of the amendments to the SLA. Specifically, you allege that Mr. Agle’s January 22, 2020 letter to HCD failed to mention either the January 23, 2019 Agle Letter or the December 12, 2019 Cola Letter, the contents of those 3 letters which stated that the ENA expired in 2015, that the City and Developer agreed there were no commitments to continue negotiations, and that Developer agreed there could be no damages or other remedy claim by Developer against the City if they stopped negotiating. You allege that this information was repeated in the January 27, 2020 Cola Letter, which was also not sent to HCD. You further allege that respondents knew there cannot be a “constructive” or oral ENA under settled California law, and that the ENA must be approved by the City Council, which was not done here, and respondent attorneys had an obligation to inform HCD of this settled law. You assert that had HCD been provided the foregoing information, HCD might have reached a different conclusion.
The investigation found that respondents were not obligated under the SLA or any other legal requirement to seek HCD’s guidance, but respondents decided to request it because of HCD’s role in overseeing the SLA process and determining compliance with the SLA. The City’s request to HCD at this stage of the Project is not mandated by law, so there is no specific guidance on what information or documentation a city would be required to provide HCD. Therefore, the investigators determined that respondents did not violate any legal or policy requirements by not providing to HCD the letters cited by you. Regardless, the information that you allege was concealed from HCD was actually provided to HCD: the City explicitly stated in its letter to HCD that the ENA had expired by its terms; HCD understood that the ENA was no longer in effect; and all correspondence between the parties made clear that all parties understood the ENA was no longer in effect.
Further, HCD did have the January 23, 2019 Agle Letter before making its determination (provided by Developer with their March 16, 2020 letter to HCD), and you admitted that the contents of the January 23, 2019 Agle Letter and the December 12, 2019 Cola Letter were “carbon copies.” The investigators found no substantive difference in those letters and the latter letter would not have added anything; so, HCD did have the information that you allege was “hidden” from HCD before HCD provided its two opinions.
Therefore, the investigators determined that there is no evidence to conclude that respondents concealed or failed to provide certain substantive or factual information from HCD because HCD had the information at issue when it made its determination regarding the Project.
The investigation also found that there is not “settled” California law on the question of whether a constructive or oral agreement qualifies as an “exclusive negotiating agreement” such that it would qualify for the exemption under the SLA. This exemption had just been enacted, and as HCD noted in its determination, there is no specific definition of an exclusive negotiating agreement for purposes of the exemption. The investigators found that there are valid legal arguments on both sides of the question of whether the exemption applies in this circumstance, which is why respondents sought guidance from HCD before AB 1486 took effect; however, until the courts provide additional guidance, this will not be a settled issue.
Therefore, the investigators determined that there is no evidence to conclude that respondents concealed or failed to provide any legal analysis or legal opinion to HCD or had an obligation to inform HCD about any “settled law” because there is not any settled law that would apply to the language of AB 1486.
The investigators concluded that there is no evidence to support the claims of violation of the City’s Code of Ethics or any law, regulation, or City policy, or any improper motive by respondents, or any of the respondents in their communications with HCD, or in any other manner, as alleged.
Based on the above findings, the City considers this matter closed. Thank you for bringing your concerns to the City’s attention and for your cooperation in this investigation.
Eda Suh
Chief Deputy City Attorney, Public Rights Division
City Attorney’s Office
4 1685 Main Street, Third Floor
Santa Monica, CA 90401
Tel. 310.458.8348
[email protected]