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Vernon council members face recall over ties to troubled solar developer

A pitch to build a solar and wind project in Jawbone Canyon in the Mojave Desert could cost two Vernon City Council members their seats.

The tiny manufacturing city’s three other council members, two former mayors and the Vernon Chamber of Commerce are backing a recall effort against Diana Gonzales and Carol Menke over their support of a solar developer accused of stealing $20 million from the nearby City of Industry. The developer, the Silverado Co., wanted to build a solar and wind project on 17,482 acres of land owned by Vernon near Tehachapi.

An LLC run by the same individuals, San Gabriel Valley Water and Power, is under investigation by the Los Angeles County District Attorney’s Office and is the subject of years-long litigation initiated by Industry.

‘Taken advantage of public’s trust’

Recall proponents say Gonzales and Menke attempted to push through the energy contracts, despite Industry’s public allegations of fraud against the developers.

“Sadly, Gonzales and Menke have taken advantage of the public’s trust by using their elected positions to have the City of Vernon sign contracts with inexperienced solar developers,” said Steve Feed, chairman of the Chamber of Commerce board, in a statement. “Gonzales and Menke knew of this failed and allegedly corrupt energy deal in the City of Industry as Industry has filed a lawsuit to recover over $20 million from this same group of individuals who were heavily lobbying for a shell contract.”

A motion to negotiate with Silverado was shot down by the council majority in June 2020 for not going through a competitive bidding process. Two months later, the Los Angeles County District Attorney’s Office raided the homes and offices of key figures from the Industry project. No arrests have been made.

Purchased property in 2008

Vernon purchased the Mojave property in 2008 with the intent of developing alternative energy sources, but since then it has become a money pit, with $54 million spent on studies that led officials to conclude a “viable, affordable project on the city’s Jaw Bone property does not exist,” according to a presentation from April 2020. The property faces significant challenges for development because of its rugged terrain and its location within an elevated fire risk area, officials said.

An “action alert” sent out by the Chamber of Commerce in June alleged Vernon would pay three to five times more per kilowatt to buy energy under the Silverado proposal than it would obtaining the energy from other sources.

The petition to recall alleges Menke and Gonzales violated their duty by “inviting corruption into the city” and accuses them of trying to install individuals favorable to the solar deal in city-owned housing. Vernon underwent political reforms in 2011 following a threat from the state Legislature to revoke the city’s incorporation.

At its Tuesday, March 2, meeting, the Vernon City Council certified signatures and scheduled a special election for June 1. The nomination period for candidates to fill the vacancies, if the recall is successful, ends March 18.

Reached by phone Wednesday, Gonzales said she was unable to speak at the time and would call back later. She did not, and also did not respond to a subsequent phone call. Menke could not be reached for comment.

Council members defend decisions

In the recall petitions, both defended their decisions to support the project.

“I promised, if I was elected, to do something about the city-owned vacant land in Kern County which has sat useless and unproductive for years,” Gonzales stated. “A developer presented a proposal for a public/private partnership to develop wind and solar on the property wherein the City would receive significant returns on their investment. The idea was presented to the City Administrator and City Council heard the general proposal. It was not approved.”

The city owes $70 million on the property and makes as much as $5 million in interest only payments every year on the loans, according to Gonzales.

Menke stated the recall is an attempt to “preserve a rubber-stamp council” and that she was targeted for asking tough questions.

Both Gonzales and Menke allege the recall is in response to them challenging an attempt to place Mayor Leticia Lopez’s family members in city-owned housing.

Lopez did not return a call for comment.

Tres Hermanos pitch

Vernon is one of at least two cities that the developers shopped a solar project to in the wake of Industry’s fraud allegations. Industry originally partnered with San Gabriel Valley Water and Power to produce a 450-megawatt solar farm on land it owned outside of its jurisdiction, too. Curtis Fresch, the brother of former Vernon Administrator Eric Fresch, was hired as Industry’s utility administrator about the time the project began.

At the time, Industry controlled 2,500 acres of rolling hills, commonly referred to as Tres Hermanos Ranch, straddling Diamond Bar and Chino Hills. Those two cities, however, opposed the solar farm and challenged it in court.

Eventually, Industry relented, cut ties with San Gabriel Valley Water and Power and fired several employees. The city sued SGVWP in 2019, its owners, Frank Hill and William Barkett, and a host of others who they say participated in a scheme to siphon off $20 million in taxpayer funds. The lawsuit is still pending, as is a criminal probe launched by the District Attorney’s Office.

Barkett, Hill and Tony Bouza, an attorney originally hired to represent Industry’s interests, showed up later in Commerce and tried to convince the Commerce City Council to buy the land out from under Industry so the project could continue where it left off. The same players began pitching to Vernon after Industry sold Tres Hermanos to a joint conservation authority.

According to the Vernon City Council’s minutes, Gonzales recommended entering into a purchase power agreement and bringing in Bouza during a June 2020 meeting. Barkett’s son, Anthony Barkett, made a presentation at the meeting.

Questions have been raised about Bouza’s role in the Industry project, and in the subsequent pitches to Commerce and Vernon, because of the potential conflict of interest. Industry hired Bouza’s firm to negotiate the proposed solar project, but documents uncovered by the Southern California News Group last year showed Barkett owed Bouza $1.5 million at the time. The city alleges Bouza never disclosed his past business relationship with Barkett and officials have raised concerns about the attorney’s participation in other proposals since then.