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Judge rules in favor of Signature Properties over construction of Neal Elementary

Original post made on Jun 10, 2008

"Ambiguous" was the word used in a tentative ruling delivered by a judge in the case of Signature Properties v. Pleasanton Unified School District.

The ruling was released late today, and effectively makes an amended cooperative fee agreement signed seven years ago by the two feuding parties illegal and void, removing any obligation for the private developer to build the city's 10th elementary school in the Vineyard Corridor, to be named Neal Elementary School.


Read the full story here Web Link posted Tuesday, June 10, 2008, 5:47 PM

Comments (63)

Posted by Eco Doc, a resident of Downtown
on Jun 10, 2008 at 7:54 pm

Those of us who read the Signature contract realized that both PUSD and the City of Pleasanton got "out lawyered." It was clear years ago that Neal would never be built.

The sad thing - how many millions of PUSD and City of Pleasanton (I know the City withdrew from this a while ago but they spent time and money on it for several years) taxpayer dollars were blown on this legal challenge?

That money is gone forever. What used to be a >$60M reserve in P-town City coffers in 2003 is now down to $26.6M (last Mayor's State of the City Report) - and who knows what we really have left in the PUSD lock box. Are we going the way of Vallejo?

No Neal School = more traffic, more pollution, more global warming. Blowing money on the lawsuit over the years meant less money for teachers, programs and school operating budgets.

Next time - get "real" contract lawyers and business negotiators to do the work properly up front PUSD and City of Pleasanton so this NEVER happens again! This situation was entirely preventable.


Posted by What Next?, a resident of Mission Park
on Jun 10, 2008 at 8:54 pm

I agree with Eco Doc that this situation was probably preventable with a proper contract up front. My understanding is that Signature paid less in school taxes for the agreement to build the school. I believe it was $2 per square foot less. Shouldn't they at least be obligated to pay those taxes now? Way to go Signature! Rape the land, weasel out of your tax obligations and walk away with a boat load of money and the city manager to boot! The mistake by the district started when they thought they were negotiating with honorable people. Once honest people head down that road they always get screwed by the lawyers. Lesson for all school districts and municipalities: Developer=Schiester. Always has, always will.


Posted by educated resident, a resident of Vintage Hills Elementary School
on Jun 11, 2008 at 5:39 am

I learned a few years ago from a school board member that the contract was written by the school district's lawyers not by Signature. So the District has no one to blame but themselves for paying millions to lawyers who provided incompetent advice. This is a perfect example of Politics winning over intelligence. We deserve better from leaders who are supposed to be in charge of educating our kids. Who will educate them and how much will it cost us? When money is wasted like this, don't ask us for parcel taxes to fill the gap.


Posted by Hey Been There.,,, a resident of Pleasanton Meadows
on Jun 11, 2008 at 7:01 am

If you only knew how much gets wasted.


Posted by Hey Been There.,,, a resident of Pleasanton Meadows
on Jun 11, 2008 at 7:10 am

It is also kinda hard to not say "YEAH JUDGE!"


Posted by Jen, a resident of California Reflections
on Jun 11, 2008 at 1:07 pm


Isn't school trustee Pat Kernan a Land Trust Attorney? He was on the board through the negotiations and strongly supported this agreement. He advocated his fellow board members as well as the City Council to enter into this agreement. Kay Ayala and members of the public were advocating not to enter into the agreement.

I hope PUSD will make a commitment to the public that they will no longer use the Lazano Smith Law firm in the future. When Kay Ayala and other members of the public appealed to the district to not enter into this contract Harold Freidman representing PUSD publicly said it was an "ironclad agreement" and a good deal for the district, Pat Kernan agreed.

Our City Manager at the time was newly married to Signatures very clever attorney.

Signature Properties has been bad for Pleasanton.

Signature gives developers their bad name.






Posted by Mike, a resident of Highland Oaks
on Jun 11, 2008 at 4:04 pm

We elect public officials to not only represent our best interests, but also to see that those interests are realized. To wit: I certainly appreciate your thoughts and good intentions, but I expect results when my money is being thrown around.

Mistakes are an unfortunate reality; but when the cost of a potential mistake is significant, it calls for more effort to minimize the possibility of such a mistake occurring.

It appears that such effort was not made in this case.


Posted by Fred, a resident of Another Pleasanton neighborhood
on Jun 11, 2008 at 4:29 pm


Mike I agree what do you suggest should be done about it?

Not enough people pay attention.

A City Manager in bed with developers (then marries him), no one does anything.
Our Mayor rewrites the laws to suit herself, no one does anything.
City council ignores the guidelines of the Vineyard specific plan to accommodate special interests; no one does anything.
Elected officials that don't live in Pleasanton, no one does anything.
Incompetent attorneys (or are they?), but no one does anything.

And we thought national politic were bad!

Who wants to add to the list?










Posted by Ron, a resident of Bonde Ranch
on Jun 11, 2008 at 4:35 pm


Who should be held accountable for this travesty?



Posted by enough is enough!, a resident of Vintage Hills Elementary School
on Jun 11, 2008 at 5:42 pm

The judge ruled that the developer is right and instead of demanding accountability from the govt officials who had to know they did not have the law on their side and spent millions of our taxpayer money, we have people criticizing the developer, who obeyed the terms of the legal agreement.

The real issue is city government officials and the school board who aren't real leaders willing to tell the citizens the truth. If our local govt. keeps wasting money like this, not only will we not have a new school, we will have a second rate city and school district swimming in debt.

Let's focus on the people who squandered our tax $. $2.5m is $1000 per household. $5m is $2000 per household. Let's focus on accountability.


Posted by What Now?, a resident of Mission Park
on Jun 11, 2008 at 7:32 pm

The school district should send Signature a bill for the taxes they owe @ $2 per square foot. If the agreement is not valid, the tax laws still are valid. It violates equal protection if the school district doesn't go after those taxes. Every other developer and citizen pays school taxes up front before permits are issued. You owe us Signature now pay up you welcher!


Posted by Rick, a resident of Vintage Hills Elementary School
on Jun 11, 2008 at 7:35 pm


What a terrible waste of money.

This was the second trial! After loosing once in court, you better make sure you are on solid ground before you launch an appeal.

So now we are staring at a 5.5 million dollar hit.
That would have taken care of the projected budget shortfall for a couple of years.

WHO IS GIVING PUSD LEGAL ADVICE.

Finally, I don't want to hear another word about building an elementery schoolin the Vineyard Corridor. It is not needed and PUSD can not afford it especially after this debacle.


Posted by frank, a resident of Pleasanton Heights
on Jun 11, 2008 at 8:47 pm

The above article says:

"To view a copy of the 15-page ruling by Judge Hernandez, visit www.pleasantonweekly.com. "

Oh yeah? where is it?


Posted by frank, a resident of Pleasanton Heights
on Jun 11, 2008 at 9:07 pm

Enough is ... says:

"Let's focus on the people who squandered our tax $. $2.5m is $1000 per household. $5m is $2000 per household. Let's focus on accountability."

The number sounds about right. Pleasanton population ~70K and 25K households (property parcels) sounds close.

Now, this school government group is singing the parcel tax song!!! More money to squander!!!

It matters not what political bent they are. Tax and spend democrats or borrow and spend republicans. Governments have become a worse-than-ever problem when it comes to inefficiency in spending the taxpayer's dollar. Time for change.


Posted by Disgusted, a resident of Alisal Elementary School
on Jun 11, 2008 at 9:10 pm

I have a suggestion. Why doesn't the District try to hire the "very clever attorney" that Signature has? Clearly that would give the District an advantage given the numbskulls they have been relying upon. Additionally, the District should adopt a new policy which would provide that they will only do business with those who have lawyers dumber than the ones the District has. I know that this would severely limit the companies they could do business with. On the other hand, it would level the playing field and perhaps allow the simpleminded members of the Board to make decisions that do not subject the District to losing millions of dollars.

Finally, I agree with Enough is Enough. I am not an expert but it looks like the Judge said that the Developers did nothing wrong. The Judge said that the District violated the Agreement. Let's focus on the real problem. The District evidently entered into an Agreement that they either didn't understand or never intended to follow. They have now learned that the laws apply to everyone--even them. Disgusted


Posted by Jack, a resident of Downtown
on Jun 11, 2008 at 10:03 pm

The judge got it right. The whole thing was a money grab by the school district. PUSD never wanted the school, and never intended to open or operate the school. Like in Stoneridge, Del Prado and other neighborhoods over the years, they wanted the land, so they could sell it in the future for housing. That's why Signature said they would "build the school," not pay for a school. This city has had so much money for so long our leaders have had a financial "free ride."
Those days are over...


Posted by E.K. Hornbeck, a resident of Foothill High School
on Jun 11, 2008 at 10:46 pm

It's clear that this entire deal was mishandled from start to finish by PUSD.

But what are the consequences? Will any of the top district administrators--up to and including Dr. John Casey, the PUSD Superintendent--lose their jobs over this multi-million dollar debacle?

I don't think so. Heckuva job, Dr. Casey, heckuva job.

I wonder what programs and equipment PUSD could have purchased for the $2 million in legal fees it used to pursue the "case" against Signature? A first-year law student could have told PUSD that the "contract" with Signature was so vague as to be unenforceable, and let's not forget the judge's ruling that even if there WAS an enforceable contract, PUSD violated the terms by not preparing the infrastructure (water, etc). Another "heckuva job" by Dr. Casey and his Merry Band.

And now Signature is suing PUSD for $2.5 million in legal fees? What if PUSD loses that suit? The district will be broke and have to lay off teachers. And even if doesn't lose, how many hundreds of thousands must PUSD spend to defend against that lawsuit?

Let's face it, folks: Pleasanton is a great community but Dr. John Casey and the people he has hired are mismanaging PUSD into bankruptcy. The School Board needs to oust Dr. Casey and all of the people he's hired. It's time to clean house and bring in competent administrators. This debacle over the never-to-be-built Neal Elementary School proves it.


Posted by Bob, a resident of Birdland
on Jun 11, 2008 at 11:31 pm


John Casey was not around when the contract was negotiated and agreed to. He has been handicapped with a school board that has mislead the community about building Neal school.

School trustee Pat Kernan, an attorney, has been involved with the agreement all the way through.

Anyone that was around saw Signature property deceive the district and the community when they refused to honor their previous agreement, but said they would compromise by offering this one.

The district has incompetent attorneys but Signature conned our community with the help of the then City Manager.

You are being made a fool also if you don't see Signature for their sleazy behavior.







Posted by Jerry, a resident of Oak Hill
on Jun 11, 2008 at 11:40 pm

Do you suppose a parcel tax will be needed to pay the legal cost....:)


Posted by Kate, a resident of Foothill High School
on Jun 12, 2008 at 12:32 am


Perhaps legal fees and administrative raises...;]


Posted by Hey Been There.,,, a resident of Pleasanton Meadows
on Jun 12, 2008 at 5:24 am

John Casey was not in his position when the contract was negotiated and signed. He truly is not accountable for this one. However, Pat Kernan, an attorney and someone who DOES NOT LIVE IN PLEASANTON ANY LONGER, was involved.

Therein lies the REAL problem.

Kernan


Posted by Anonymous, a resident of Another Pleasanton neighborhood
on Jun 12, 2008 at 6:07 am

Why does PUSD use Lozano and Smith? Web Link

Since the lawyers wrote the contract, which is invalid, can't the district recover its losses from the law firm?


Posted by No surprise here, a resident of Vineyard Avenue
on Jun 12, 2008 at 6:33 am

You cannot absolve Casey; this was about greed to get more than $8.5 million to build the school. You can debate the effectiveness of the lawyers, but they only took on the task at the request of Casey. The statistics showed all along that the school didn't need to be built based on future enrollment. The discussion, however, stayed focused on "getting the money out of Signature" and side stepped the point that there was no interest or long-term funding in/for building that school. And we're skipping the travesty of the city getting the district to pay $4.5 million for the road changes on Vineyard. You can thank Ayala and McGovern there.

There is enough blame to go around. My concern now is the children in our community. There needs to be meaningful discussion about school size, class size, and limiting what a parcel tax can be spent on for the community's children. The hydraulics of a new money source without appropriate limitations can free up money in the general fund that can then, say, give a raise to a superintendent. I'd be for a parcel tax, just not in the hands of Casey.

I think Signature would have paid years ago as agreed, and the money wasted on lawyers could have paid years of operating costs, and clearer thinking would have put a parcel tax in place at the same time that would have helped all the schools have the programs that best serve the kids. But there's not a lot of that kind of thinking going on in the superintendent's office. No surprise here, I don't like the guy.


Posted by just wondering, a resident of Danbury Park
on Jun 12, 2008 at 8:37 am

Interesting that the individual who was President of the Board of Trustees at the time the agreement was signed with Signature is now on the City Council. Hopefully, the City Council won't start agreeing to contracts like this one


Posted by move forward, a resident of Amador Valley High School
on Jun 12, 2008 at 9:03 am

It is interesting to read how everyone seems to hate the developer for violating an agreement makes disparaging remarks about his company, wife etc....

I'll bet that Ruby Hill which Signature Properties developed has brought more tax revenue to Pleasanton than almost all other communities combined.

The fact that the school district chose not to build the school is not the developers fault nor did they have anything to do with the decision to not build it.

Your school district administration are the sole ones responsible for this debocle.


Posted by Mary, a resident of Alisal Elementary School
on Jun 12, 2008 at 9:44 am

Signature and Standard Pacific agreed to pay over two dollars less in school impact fees per square foot in exchange for the 8.5 million advance to the District to build Neal, which probably should have been part of the original Ruby Hill approval in the first place. In the school district's 'fraud/deceit' claim a few years back, you would wonder if the developer all along knew they weren't going to ever build this school.

Now the developers in town have a 'bait and switch' tactic going on with the public. For example, Ponderosa agrees to give the District an option to buy 20 acres on Busch for a school, the housing is approved around it, then the 20 acres goes away (to build more houses on the very land the public was promised as a school) as the school board in closed session passes on the 20 acres. Now the developer wants to build over 100 houses on the phantom school site.

The Vineyard Avenue stretch is promised a school, then the city council majority approves a bunch of houses along that roadway, then no school that was promised ever materializes.

The public gets duped by these developers over and over. Now all we have are overcrowded schools and a huge traffic mess where parents have to ricochet all over town to get their kids to and from school.

The city council approves megamansions up to 12,500 sq ft, but the school district doesn't get a dime for any square footage over a 7,000 sq ft house for any house. Developers pay anywhere from $5.61 to $8.72 per square foot for schools, but it is capped at 7,000 sq ft. See the fee schedule right here--- Web Link

Now the city council is approving or has in process a slew of so-called senior housing, but this only brings in a meager .47 cents per square foot to schools.

The city council is approving bad projects in the form of huge mansions where the developers are not paying their fair share to schools (they should have to pay the fee for *all* the square feet on their mansions).

Something is terribly wrong in this community for this to be happening time and time again. Those in office keep getting elected, but its time that the public do something and have people in there that we can trust.


Posted by No surprise here, a resident of Vineyard Avenue
on Jun 12, 2008 at 9:57 am

It is important to note that the square footage rates paid in Pleasanton are well above what the state calls out and part of a special agreement between developers and the district. I believe the going rate is $2.97 per square foot for residential.


Posted by jack, a resident of Downtown
on Jun 12, 2008 at 9:58 am

Mary, we're not getting duped by developers. We're getting duped by lightweight leadership...


Posted by Janet Pelletier, editor of the Pleasanton Weekly, a resident of Another Pleasanton neighborhood
on Jun 12, 2008 at 11:03 am

Frank, and to anyone else who is interested, we have fixed a linking problem on the story. You can now view the 15-page PDF file that is Judge Hernandez's tentative ruling. The link is at the end of the story.


Posted by sad, a resident of Kottinger Ranch
on Jun 12, 2008 at 11:33 am

The internet is a great communication tool but it also gives people the opportunity to say things they would never say in a letter or with their name attached to it. Instead, accusations get made with complete anonymity. Something is wrong with this.

I have followed this issue closely for years and asked a lot of questions. This was an issue between the school district and Signature - the City was not involved except to intervene for political reasons. As I have been told by staff and elected officials, the ex city manager did not attend a single meeting or discussion on this matter. She has more integrity than those who are writing in with wild accusations. She certainly had nothing to do with this school district contract.

While her husband was dying of cancer, with a little girl at home she worked helping our city - 7 days a week and late into the night. I lived in her neighborhood and watched this first hand. Keep in mind that happened about the time you are accusing her of things. She then moved on with her life and from the moment she had a new personal relationship she had nothing to do with any issue regarding Signature properties. Her integrity wouldn't allow it.

The City Attorney represented the City on this issue as he should have. It was a legal contract between the District and the developer. Eventually some of the politicians at the City wanted to tell the District what to do, so they had the City Attorney participate along with them. Seemed a reasonable and appropriate role for the City Attorney.

I simply went on line to see if there was an update of the case and found all of these hateful comments. When you have a problem with a decision that is being made, its appropriate to disagree. But the conversations should be focused on the facts. The personal attacks do not make the arguments stronger...they actually distract from them and discredit the writer. This web site asks that we be "respectful and truthful" in posting something. I have never posted before and will likely never post again. I just find all of the personal attacks sad and uncalled for. No wonder few decent, smart people want to be a politician or a government employee.

How sad! Pleasanton is better than this.... Aren't we?


Posted by anonymous, a resident of Ruby Hill
on Jun 12, 2008 at 1:46 pm

The city manager's name was all over the documents with the school district and Signature Properties. I believe she was even at the Council meeting recommending that the city accept the agreement.

I remember the approval meeting well as Kay Ayala pulled the agreement from the consent calendar (this was in September of 2001) so it could be discussed as she had some concerns. Here is what the Weekly wrote about that meeting in the September 21, 2001 issue about Pat Kernan scolded Ayala:

"Clearly angry, Kernan also said that as an attorney and an active representative of the district, he was insulted that Ayala had held up the agreement "under the guise of wanting to help the district."

"To the best of my knowledge, Kay is not an attorney," he said. "I don't believe she has a graduate degree, a doctorate in school administration or finance, but somehow she thinks she's smarter than us."


Well Pat, it seems she was smarter than you and the district's lawyers.


Posted by An Inconvenient Truth, a resident of Amador Valley High School
on Jun 12, 2008 at 1:52 pm

For the past 20 years, I have had an insider's view of school fees and facilities in Pleasanton. The simple truth is that Signature Properties has done far more for the Pleasanton Unified School District than could have ever been expected. In the early 1990"s they led the effort that resulted in the development community agreeing to pay a school fee that was twice the maximum fee permitted by State law. That agreement allowed Signature Properties to potentially receive a reimbursement from the State of California that grew to millions of dollars as the years passed. Signature Properties, in fact, did qualify for that reimbursement from the State. When Signature received the reimbursement, they donated the money to the District. Signature Properties was also instrumental in assisting the District to secure over $25 millon from the State for the construction of school facilities. The District would never have received this money without Signature using its resources and its influence at the State level. Signature then agreed to loan the District $8.5 million interest free for 2 years and to build them a school. The court decision made it clear that the only reason this did not occur, was the failure of the District to live up to the terms of the Agreement it had entered into. We should stop complaining about Signature Properties and focus on the real issues.

1. Where has all the money gone that the District has received from other Pleasanton developers for the construction of school facilities?

2. How can the Board have two lawyers (Kiernan and Polido) on it; hire a third (Harold Freiman) to write a contract; and a forth (Louis Leone)to litigate the issues and not be able to determine that they had no case? To me, the only answer is that the political pressure was so great that the lawyers were silenced or didn't have the backbone to tell the Board the truth.

3. Where is the money going to come from to pay what is owed to Signature Properties and Standard Pacific? Maybe the Board members could personally chip in to pay what is owed.

4. Who is leading the effort to settle this issue as painlessly as possible with Signature Properties and Standard Pacific? Hopefully it is not the same buffons who got us into this mess.


Posted by frank, a resident of Pleasanton Heights
on Jun 12, 2008 at 9:36 pm

Just did a quick read on the tentative ruling.

A poorly written (by PUSD lawyers) amended cooperative fee agreement (ACFA).

Rife with ambiguous language (this was written by lawyers?).

All principals present at the time expected a quick transition to the required "separate written agreement" (SWA) that was specified in the ACFA.

The SWA was required by the ACFA to proceed toward construction and to make what was agreed to in the ACFA meaningful and therefore enforceable.

And, guess, what. PUSD stopped the process, expecting that they had the CFDs (cooperative fee developers) on the hook for whatever the consequences the delay would produce.

Now we know the answer. WRONG!!!!

Typical greedy government bureaucrats. Under the umbrella of government they think they get away with anything.

Step back from the details and take note of the premise that has been in front of our faces throughout the whole time. The PUSD contends that the developers agreed to be on the hook for an open ended obligation to pay for the Neal school irrespective of what its cost rise to. Now, is it common sense to expect that to be the case?

Only in the minds of greedy bureaucrats. Thank goodness we have courts that enforce "common sense".

(Footnote: the CFDs did a good deed. They agreed to $8.5 MM, a sum that exceeded the state law mandated $1.94 per sq. ft. school subsidy. Another example of the rule that in politics no good deed goes unpunished!)


Posted by E.K. Hornbeck, a resident of Foothill High School
on Jun 12, 2008 at 9:45 pm

Thanks to all the people who provided more of the background in this Titanic-sized fiasco. I got a new and deeper perspective on PUSD's legal problems and how badly-managed the district's financial and legal affairs are (as well as those of the city).

As for paying the millions in legal fees and so forth ensuing from this mess...well, the district's annual budget is a bit over $159 million annually.

Here's the bill so far:

$2 million in legal fees incurred by PUSD
$2.5 million in legal fees by Signature Properties (they're trying to get PUSD to pay for these fees)

And then there's the cost of an appeal. Apparently, PUSD and Signature both pay their developers in gold bullion, so an appeal could be hundreds of thousands or even millions of dollars more, all thrown down a rathole.

I'm sure there are some other costs involved, so let's just say the price tag for Operation Titanic is $5 million or so. That's not going to drive the district into bankruptcy all by itself, but I wonder what programs, facilities, and services the district could have bought with $5 million? That's a lot of new computers for the students in our schools, for example.

What's really lost in all of this is public confidence in the management of our school district and our city. If people aren't mad about the outcome of this lawsuit they're just not paying attention.

For the record, I think the folks at Signature Properties are a bit too sharp for their own good. They may be legally in the right, but the way they do business leaves a bad taste in my mouth.


Posted by Sam, a resident of Vintage Hills Elementary School
on Jun 13, 2008 at 12:19 am

A grab bag of stupidity is what the entire mess is. However, the one thing out of all of this is that Kay Ayala proves again that she is indeed smarter and has more common sense than all involved with this.

I appreciate my memory being refreshed from the poster earlier. I found the old Weekly articles with some of Kernan's gems when Kay Ayala wanted to hold a hearing at the City Council meeting and ended up voting against the agreement: "To the best of my knowledge, Kay is not an attorney," he said. "I don't believe she has a graduate degree, a doctorate in school administration or finance, but somehow she thinks she's smarter than us."

Now the entire community knows she's smarter than everyone connected to this fiasco !! If only the school board and city council had listened to Kay, this entire mess would not have occurred.


Posted by Are you kidding?, a resident of Beratlis Place
on Jun 13, 2008 at 2:34 am

Are you kidding? Kay voted no on everything. When you vote no on everything - it doesn't make you smart - it just means eventually you get lucky - after the fact.... There was nothing wrong with the agreement. It just wasn't followed. The school could have been built - if it was built on time and the District would have had to pay only whatever cost was over 8.5 million...if there was a cost over 8.5 million.

History is amazing when it's rewritten. This was a long time ago. This was during Mary Frances and Buster McCurtain days. This was when Cindy McGovern, Pat Kernan, Chris Weaver, Juanita Haugin were Board members...


Posted by Just a fact, a resident of Another Pleasanton neighborhood
on Jun 13, 2008 at 7:16 am


I was there for every meeting and had inside knowledge, Jim Guilmetti and Jim Mckeehan, of Signature, were playing everyone for fools. They had refused to honor the previous 1992 agreement that had provided them with the $2 sqft discount but had a much greater financial obligation for them. They said if the City/PUSD tried to hold them to it they would just tie it up in court for ten years and nothing would get built.
When they offered this agreement everyone in good faith wanted to believe they were willing to actually honor it. Everyone except Kay, she said the first agreement was enforceable and we should not enter into a new one. She said they were setting us up and they would never honor the new agreement either. Kay was also the only reason that the city manager who was newly married to Jim Mckeehan was eventually forced (not willingly) to recuse herself.

Deborah Kleffman was the fifth trustee. She was the only trustee that would not support the agreement. She stood strong with Kay.


Everyone else was wrong!!!! Kay was dead on right!!!!


Pat Kernan is now shown for what he is, he needs to resign.






Posted by Rick, a resident of Vintage Hills Elementary School
on Jun 13, 2008 at 8:15 am

PUSD's Legal Council: Dewey, Cheatum and Howe


Posted by Cheryl, a resident of Downtown
on Jun 13, 2008 at 9:55 am

Sounds like Lozano Smith has just been keeping the meter running on their billable hours.

From the PUSD's Legal Council (Lozano Smith) website. Web Link

"Developer Fees/Developer Built Schools
Lozano Smith has long been a leader in the areas of developer fees and developer built schools. We have negotiated numerous developer fee agreements throughout the State. We have also defended challenges to both "Level 1" and "Level 2" impact fees, including through litigation. Lozano Smith has literally written the book on developer fees, publishing the Developer Fee Handbook for School Facilities, which is updated annually.

A growing trend in the area of developer fees is agreements for developers to build, rather that just fund, new schools. Lozano Smith has been at the forefront of that trend, having negotiated developer-built school agreements throughout the State, including in the San Ramon Valley Unified School District where developers are building seven new schools, including a comprehensive high school that, with land included, has a value approaching $200 million. We also negotiated a developer agreement in Westside Union School District that has involved potential developer built schools, and have recently worked the Keppel School District in the Antelope Valley area towards a potential developer-built school there."



Posted by JT, a resident of Another Pleasanton neighborhood
on Jun 13, 2008 at 10:21 am


Dewey, Cheatum and Howe....I get it...LOL!!!


When I paid 20K in school fees to Buster McCurtains office there was a $25 charge that I questioned. There was no explanation for the fee so I did not want to pay it, but then they would not give me my permit. I had no choice so I paid it but requested that someone find out what it was for. I was later told it was a voluntary donation to Signature Properties legal fund, absolute fact! The district was collecting money from unknowing homebuilders on Signature Properties behalf for their legal fund. This had been going on for many years and was only stopped when I called them out on it.
The district should calculate how much had been collected and get a credit from Signature.

The public should also ask for an explanation of 36? homes that Signature Properties built in the nineties that fees were never paid for. Members of the public demanded that a bill be sent belatedly to them but the fees were still never paid. The public has never been given an answer of why.
Perhaps there is a credit owed there as well.

Did Signature ever pay their share of the Vineyard road?




Posted by Joan, a resident of Another Pleasanton neighborhood
on Jun 13, 2008 at 12:00 pm

"An Inconvenient Truth", You sound like Deborah Alcosta writing some spin on what happened. Deborah did have an insider's view. The information given is not correct. Signatured never did help the district in any of that stuff based on my insider's view.

To JT, Signature never has paid for the road. The city has been unable to collect on that. I also heard that Signature did not pay their water bill for a few years and that has not been collected either.

It does not appear that Signature acted in good faith in any of their dealings. They would sign anything to get approval with no intention of paying. If they thought these agreements were invalid, they should have challenged them at the time. Instead they gave the false pretense that they would pay and then later on litigate the matter after all of the development is done and they don't need city approval for anything. It almost looks like a conspiracy where they have all these agreements they are not paying up on all while their legal council marries the City Manager. I am sure she has been a great help to Signature Properties on how to avoid payment.


Posted by Not Kidding, a resident of Amador Valley High School
on Jun 13, 2008 at 6:01 pm

Are you kidding, Are you kidding?
Kay Ayala was a rock star at the joint meeting in Oct, 2001. Deborah Kleffman as well. This was not just a lucky "no" vote by any stretch of the imagination. They both stood up to Cindy McGovern's tears, Pat Kernan's "this amended cooperative fee agreement is air tight and I know it because I'm an attorney" nonsense, and the now laughable advice from PUSD attorneys Harold Friedman and City of Pleasanton General Council Michael Rousch (Pat, Cindy, Harold and Michael are still plugging away for the taxpayers by the way!).
After meeting with Signature Properties in joint district/city impact fee meetings Kay and Deborah realized that there was absolutely no advantage in signing a new "amended" agreement with them (PUSD trustees minus Deborah had signed it in June of 2001) as they knew the district was not yet ready to build Neal (the site had not even been improved-water, power etc). They could also see the distinct disadvantage to throwing out the previous 1992 contract which would have provided the district needed cash for a shortfall declaration.
Signature Properties should in no way be absolved in this matter either. Their threats to litigate the first agreement along with their empty promises to build Neal School pushed the district into the shaky second contract.

And I agree, Pat Kernan should resign.


Posted by Not Kidding, a resident of Amador Valley High School
on Jun 13, 2008 at 6:01 pm

Are you kidding, Are you kidding?
Kay Ayala was a rock star at the joint meeting in Oct, 2001. Deborah Kleffman as well. This was not just a lucky "no" vote by any stretch of the imagination. They both stood up to Cindy McGovern's tears, Pat Kernan's "this amended cooperative fee agreement is air tight and I know it because I'm an attorney" nonsense, and the now laughable advice from PUSD attorneys Harold Friedman and City of Pleasanton General Council Michael Rousch (Pat, Cindy, Harold and Michael are still plugging away for the taxpayers by the way!).
After meeting with Signature Properties in joint district/city impact fee meetings Kay and Deborah realized that there was absolutely no advantage in signing a new "amended" agreement with them (PUSD trustees minus Deborah had signed it in June of 2001) as they knew the district was not yet ready to build Neal (the site had not even been improved-water, power etc). They could also see the distinct disadvantage to throwing out the previous 1992 contract which would have provided the district needed cash for a shortfall declaration.
Signature Properties should in no way be absolved in this matter either. Their threats to litigate the first agreement along with their empty promises to build Neal School pushed the district into the shaky second contract.

And I agree, Pat Kernan should resign.


Posted by Anonymous, a resident of Another Pleasanton neighborhood
on Jun 13, 2008 at 9:23 pm

Before continuing to call for Pat Kernan's resignation, you may want to read an article in today's PW: "DA finds school board member within law"
Web Link

All board members should be held accountable for this mess, as well as others like the city manager.


Posted by frank, a resident of Pleasanton Heights
on Jun 13, 2008 at 9:38 pm

It's funny to read about how Ayala supporters are trying to make her a hero. It was not the basic agreement that caused the problem, even though it was poorly written. Things went south when PUSD did not follow through and tried to delay and then stick the developer with the consequences. This is clearly described in the judge's tentative ruling. PUSD contended that the basic agreement obligated the developer in perpetuity to pay for the school whatever it cost. The judge said "NOT". All of this happened after Ayala's NAY vote.

If PUSD proceeded to a separate written agreement as specified in the agreement that was the center of the present litigation, Ayala's nay vote would today make her look "stupid". So, the bureaucrats greed now make her look like a hero! As if she were prescient.

Penso che lei ha saputo nessuna.

Let's be clear here. The basic agreement if followed by PUSD would have served its purpose. The "separate written agreement" would have been finalized by both parties and school construction with its final costs would have proceeded. Today there would be a Neal School. The PUSD reneged and then tried to use the first agreement as the forever binding agreement. It was not to be.


Posted by julie Testa, a resident of Foothill High School
on Jun 13, 2008 at 10:38 pm

Response to Anonymous:

The DA's decision to not to pursue a criminal investigation against Pat Kernan is in no way conclusive regarding a residency violation.

Criminal misconduct would only apply if it could be proven that Pat Kernan committed perjury when he signed his statement to run for office. If his residency status changed after that point it is a non-criminal violation out of the jurisdiction of the DA's office. The remedy being the Quo Warranto process through the Attorney General's office.

The question of a residency violation is not yet answered but you can look at the facts and determined whether you think the spirit of the law has been violated.


Posted by Not Kidding, a resident of Amador Valley High School
on Jun 13, 2008 at 11:30 pm

Frank, You aren't quite getting it. The first agreement with the cooperative fee developers as written would have covered a cash deficit for the district which meant they could have had cash for whatever-including possibly Neal Elementary. Sig Properties threatened litigation when the PUSD gave their one year notice to declare the shortfall. They successfully talked themselves out of that contract-as it would have cost them $$$$$-by promising to build Neal.
Kay recognized the stupidity of that decision as it allowed no wiggle room for cash for any other projects, or other goodies in that first, fairy decent contract, and, as there was NO infrastructure on the Neal site she knew there couldn't be a school there any time soon (which would, and indeed did, make that agreement worthless to the district).
Recognizing that the PUSD would lose millions in development fees for nothing didn't make Kay a mind reader dear, she WAS just smarter than the rest.


Posted by Just Wondering, a resident of Del Prado
on Jun 14, 2008 at 12:00 am

So did Kernan also know the agreement was worthless to the District? And that is why he went 'postal' when Ayala tried to question it? Of course, it now seems as if Kay Ayala was smarter than everyone. But my question is that was there a whole conspiracy where several knew the document was not worth the paper it was written on, including Kernan?

I remember at the time that Kernan, a land use attorney who represents developers in Pleasanton, was in hot water by using Jim McKeehan on Kernan's campaign letterhead as a supporter. When Kay Ayala pulled the cooperative fee agreement from the City Council 'consent' portion to have a public hearing, Kernan's wife blasted her and compared her terrorists, which also hit the papers.

"Has Kay acquired that much control over the rest of you that she can single-handedly destroy the whole of Pleasanton?...Are we now seeing the beginnings of a Pleasiban led by 'Ayala bin Laden'?" wrote Marcia Kernan. She noted that the e-mail expressed her personal dismay and her husband knew nothing about it.

Ayala's only comment was, "She may want to take a look at the community character traits that were adopted by the school district."

Go to the web link below to read the whole article Web Link

Publication Date: Friday, October 05, 2001

Memos draw attention to Kernan campaign
Supporter list, school fee agreement cause concern
by Dolores Fox Ciardelli


Two memos sent to the Pleasanton City Council have raised questions about school board Trustee Patrick Kernan's bid seeking re-election to another four-year term in the Nov. 6 election.
One memo, sent to the mayor and City Council members by City Manager Deborah Acosta McKeehan, stated that Kernan had included her husband, Jim McKeehan, as a supporter on his campaign letterhead. She said her husband had not agreed to have his name listed as a supporter.

"While my husband's name appears on the letter, permission was not given for this to occur," Acosta McKeehan wrote. "Jim has taken no position in the School Board election and does not intend to do so."

She stated that she makes it a practice to remain totally apolitical and this has not changed since she has remarried and changed her name. Jim McKeehan is vice president of Signature Properties, which has done extensive development in Pleasanton and has committed to fronting the costs and building Neal Elementary School on Vineyard Avenue.

"It is our decision and intent that our family name not be used in elections in any manner," she said in the memo dated Sept. 26.

Kernan explained Tuesday, "I work a lot with Jim and know him and he's a good friend. I left a message awhile back and when I didn't hear from him I assumed I could use his name."

Kernan said he offered to send out another explanatory letter but Jim McKeehan told him that was not necessary. Kernan's Web site at www.kernan4schoolboard.com does not include McKeehan as a supporter.

Also an e-mail was sent to the City Council on Sept. 20 by Kernan's wife Marcia, blasting Councilwoman Kay Ayala for delaying the school fee agreement that involves developers, the school district and the city.

"Has Kay acquired that much control over the rest of you that she can single-handedly destroy the whole of Pleasanton?...Are we now seeing the beginnings of a Pleasiban led by 'Ayala bin Laden'?" wrote Marcia Kernan. She noted that the e-mail expressed her personal dismay and her husband knew nothing about it.

Ayala's only comment was, "She may want to take a look at the community character traits that were adopted by the school district."

At the City Council meeting Sept. 18, Ayala removed an item from the routine consent calendar to OK the school fee agreement, which meant it was postponed until the next meeting. Any one council member can remove an item, in order to study an issue further. Trustee Kernan accused Ayala at the Sept. 18 meeting of holding up school construction.

At the Oct. 2 meeting, after two hours of public hearing and discussion, the council authorized the mayor to sign the Cooperative Fee Agreement by a 4-1 vote, with Ayala dissenting. Many speakers supported Ayala's decision to delay the item.

"I want to commend Councilwoman Ayala for her courage," said Mayor Tom Pico. "It was totally appropriate to make sure her questions were answered."


Posted by Julie, a resident of Foothill High School
on Jun 14, 2008 at 9:00 am


Kernan explained Tuesday, "I work a lot with Jim and know him and he's a good friend. I left a message awhile back and when I didn't hear from him I assumed I could use his name."

Kernan insisted that he be the board member representing PUSD in the negotiations with Signature Properties. When I questioned, at a televised school board meeting, if Kernan had a conflict of interest because of his close business relationships with developers, he was enraged and denied any conflict of interest.
At the break he told me I would hear from his wife. His wife then made multiple calls to my home leaving harassing messages on my answering machine, I still have the tape.



Posted by Stan, a resident of Amador Estates
on Jun 16, 2008 at 6:29 pm

You think the City Attorney is costing us money now, just wait until Kay Ayala's hillside protection initiative passes (god forbid). That thing is so poorly written it should be called the Land Use Lawyer Full Employment Initiative. The City is going to get is rear-end handed to them when the Developer's lawyers get done litigating that horribly drafted document.


Posted by Stacey, a resident of Amberwood/Wood Meadows
on Jun 16, 2008 at 7:11 pm

Stan, I just finished reading the staff report for that thing. It should be required reading if the initiative gets to the ballot box.


Posted by Help, a resident of Another Pleasanton neighborhood
on Jun 16, 2008 at 9:06 pm

Could someone provide a link to the staff report?


Posted by Bob, a resident of Downtown
on Jun 16, 2008 at 9:14 pm

These last messages are off-topic but I had to comment on them.

I read the initiative report. The Council majority is fighting this so they can get another 114 mega-mansions of at least 7,000 square feet in the hills and they will be able to approve another 2,000 homes in Pleasanton. I thought we had a council that was concerned on congestion in Pleasanton, on our roads and in our schools, but now I see that they are greedy and want money from the developers.

Also, anything the Council does not agree with they call "poorly written" or at least that is the message that their paid consultant tells them (one of her messages was accidentally passed on to me). The Council majority that wants more development in Pleasanton is all organized by Angela Ramirez who works for James Tong. If you want to see a Tong development, you only need to look at the Dublin hills. Angela has committed all the Council Members great campaign financial support from the developers if they keep saying her mantra.

If this Council majority gets their way, Pleasanton will be looking just like Dublin.


Posted by Stacey, a resident of Amberwood/Wood Meadows
on Jun 16, 2008 at 9:45 pm

Help,

This is the link for the report "analyzing the impacts and effects of the Initiative" from the City's website: Web Link

Bob,

Let's start a new thread if you want to discuss it.


Posted by aghast, a resident of Another Pleasanton neighborhood
on Jun 16, 2008 at 9:49 pm

Bob,

Have you read the report? The initiative is poorly written and politically motivated! And what is this conspiracy theory? How can one person influence a council to such a degree? Besides she does not work for Jim Tong. Get your facts straight. Do you know any of the council members? Have you talked to them? Why don't you try that instead of unfounded speculation?


Posted by Eco Doc, a resident of Downtown
on Jun 16, 2008 at 10:48 pm

If the same City lawyers who gave the thumbs-up on the three party Signature contract wrote the staff report mentioned above, it is better used to make paper airplanes than voting decisions.

Read the initiative document and think for yourself! Don't let incompetent lawyers with a bad track record do your thinking for you. That leads to "Titanic II!" Makes you wonder how the lawyers involved passed the bar exam.

Back to the subject at hand. How about some actions to prevent this multi-million dollar disaster from happening again instead of just complaining about it? We need the truth out, "lessons learned" sessions in public hearings and replacement of the people who made the expensive wrong decisions (or gave bad advice) in the first place and along the way.

Any ideas out there other than fire the lawyers and replace the poor decision makers?


Posted by Bob, a resident of Downtown
on Jun 17, 2008 at 10:02 am

aghast,
Yes I read the initiative. It is short and to the point. It is just as clear and precise as the other recent initiatives in the city (Bernal Park, Bernal Sports Fields, Bernal Right to Vote). Anybody who is as smart as a 5th grader can read this and figure it out. Developers are investing a lot now to confuse the voters as they want to build a lot more in Pleasanton. Angela does work for Jim Tong on the Oak Grove development and Angela was hired by Hosterman to be her campaign and PR manager and Angela was Cheryl's campaign manager. This is all public information in the campaign filings. This is not "unfounded speculation" but is fact. And yes, I know the Council members; thank you.


Posted by Stacey, a resident of Amberwood/Wood Meadows
on Jun 17, 2008 at 10:39 am

Wasn't the question "did you read the report?" not "did you read the initiative"?


Posted by Stacey, a resident of Amberwood/Wood Meadows
on Jun 17, 2008 at 10:40 am

P.S. Lawyers do not write the City staff reports.


Posted by Concerned dad of two PUSD students, a resident of Harvest Park Middle School
on Jun 19, 2008 at 3:46 pm

What an absolute colossal failure on the part of our school board and superintendant. Let's do some quick math. $2M for current legal fees plus $2.5M for the builder attorney fees and court costs, not to mention at least $400k for design drawings. Oh, don't forget the $1M to remove the two traffic calming circles and how much do you think those circles cost us in the first place, hmm, let's just low-ball it and say $250k. Well , what does this simple addition problem add up to? That's correct, tax payers of Pleasanton, over $6,000, 000! I bet we could have paid for that school after all, if we would have agreed to work with the developers instead of trying to strong arm them. $6M + $8.5M would have built a nice school.






This is real money we're talking about -- accountability is called for. The thought that our board and superintendant would even think of appealing this ruling is beyond reason. Hmm, or is it simply insane!




Insanity: doing the same thing over and over again and expecting different results.


Albert Einstein (1879 - 1955)






Developer Jim McKeehan said it best: "This is a classic example of what happens when small-minded politicians attempt to micromanage an issue that they don't understand or comprehend and run roughshod over the people on staff who do have the experience and knowledge to properly address the issue".

We're flat-out lucky McKeehan and Jim Ghielmetti don't plan to sue the district for slander.

Maybe it's time for Superintendant Casey to pack his bags and head back to Watsonville. He's clearly out of his league here. And I'm not seeing leadership from other board members either. Thanks for the lack of quality legal advise, Pat Kernan. Pat, you need to give up your seat and head back to the Sierra foothills, where your primary residence is. Now is a good time to make the move, Pat.

One more thing: What Next? You got all bent out of shape about the $2 per square foot tax discount. First, it's a developer fee. Second, who do you think pays for the fee? It's the home buyer, not the developer. All fees are always passed right along to the end user. Econ 101.


Posted by Dad, a resident of Oak Hill
on Jun 19, 2008 at 6:49 pm

Dear Concerned Dad.
It appears in your post you have more "insider" information about our Board Members and Superintendent than you're willing to admit and a bone to pick...so that's leads one to believe you are closer to the situation than you're willing to admit....come on out from behind the screen and admit who you are and what your agenda is....it's really that simple. Honesty. Really, a core value...I'd hope you'd honor it.

Dad




Posted by What Next?, a resident of Mission Park
on Jun 19, 2008 at 6:58 pm

Concerned Dad,

I don't care who pays it but it should be paid. Signature pulled all kinds of fancy legal tricks to avoid paying the fee that every other developer and homeowner pays BEFORE permits are issued. I know because I just payed 3,000+ to the school district in another county BEFORE they would even look at my plans. How does the homebuyer of a home not yet built or bought pay for a fee that is assessed BEFORE permits are even issued? They don't. Its paid by the developers, you see. You and "An Inconvienent Truth" are spreading disinformation to make it look like the tax cheats are the good guys. This whole fiasco is a classic con. The con men (Signature) appeal to the greed of the district in making them think they are getting something for nothing. Otherwise why would the district even consider a decrease in the fee? Then the con men switch the envelopes and disappear with the money. Would you enter into such an legal agreement with Signature now? I think most people would just have them pay their fair share.


Posted by Concerned dad of two PUSD students, a resident of Amador Valley High School
on Jun 19, 2008 at 8:05 pm

Dad: I'm not an insider. I don't know any board members, administrators or city council members or staff. I don't work for any government agency. My only axe to grind is that I'm a law abiding, tax paying citizen of Pleasanton and hate to see our hard earned tax dollars wasted. We hire intelligent people. We, the voting public, should put pressure on those not up to the job to leave. If they don't, we need to vote them out of office and vote out those that fail to remove underperforming administrators. This is not personal – it's like running a business. You perform or you move on (I've been on both sides of the performance equation).

What's Next?: It's important to know who pays the fees and taxes when it comes to businesses. The game, from a politician's perspective, is to have the public believe that there will be no cost to the common person. Don't believe it. If you run a business and the local, county, state or federal government charges you r business a fee or a tax, you can bet that that fee or tax will be paid for by the end user. This is basic business knowledge. Don't get caught up in confusing scenarios. Keep it simple and watch your wallet.


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