Is The City of Hermosa Beach Hiding Oil Related Expenses?

Howard Longacre Letter to City Council May 20, 2013 (Item 3) 

(Please excuse my typos below)

3)  Request for clarification as to where/how the City is specifically keep track of the accumulating city expenditures which are not being reimbursed by E&B Natural Resources as related to the likely 2014 oil ballot measure.  

When the settlement agreement between the parties was announced in March of 2012, it was indicated that E&B Natural Resources would be paying essentially all of the costs leading to an election for the purposed of determining if the people of Hermosa Beach would lift the City's ban on oil drilling.  

Later it was announced that city staff time utilized for all additional work related to preparation for an election would be reimbursed by E&B at an amount equal to 10% of the cost of the EIR preparation.  And further it was indicated that E&B would cover the costs of obtaining the EIR, and would pay not more than $50,000 of the actual election costs.  

Since then the Council has approved hiring (at the City expense) consultants to do such things as the City's own "Economic Study", and for a "Community Dialog" process (some or much of which "Community Dialogue" will be oil drilling related according to the RFP for that consultant.) 

There appears to be a significant amount of staff time being expended daily on various aspects of oil drilling.  Thus, if the EIR preparation costs amounted to $800,000 in total, that would mean E&B would only be reimbursing the City $80,000 for all of its cots for consultants, meetings, reports, attorney fees, staff time and on and on for the extraneous activities leading to the oil drilling election.  

The people were essentially told by the Council that the oil litigation was over and that their only costs going forward would be one of the following:  

• If the electorate approved oil drilling at an election then the City's obligation to E&B would be $3.5M, plus the City's own costs ongoing attorney and staff time indefinitely, plus essentially the giving over to E&B for their use of a parcel of City Yard land presently worth $11M or more.  In other words an approximate total city burden of $14.5M plus city expenditures of perhaps $500,000 indefinitely.  

• However, if the electorate maintains the ban on oil drilling they'd simply owe E&B $17.5M and that amount could be paid over a period of years, ie. 30 years at "mutually agreed terms". 

All need to be reminded that the settlement agreement requires an extremely valuable 1.3 acre city parcel, with a present value of $11M or more if properly zoned, to be handed over gratis to E&B, along with $3.5M cash, if the voters approve lifting the ban on oil drilling.  

Further, all need to be reminded that the city and the school district are to be receiving relatively poor share of the hypothetical oil revenue (it should be not less than 50% in total of direct oil and gas sales revenue).  This unfortunate fact indicates that past city councils really did give away the store to Macpherson.  Why they so stupidly did that is past history.  

3-a)  The question here is, how is the city keeping track of its expenses month by month, and where can the public and the Council view and be aware of the ongoing escalating expenses in a manner, ie via a spreadsheet tabulation?  Such tabulation should clearly indicate the ongoing costs being reimbursed by E&B from their deposits fund, along with the ongoing costs being reimbursed by E&B from their deposits fund, along with the ongoing city expenditures not being reimbursed by E&B from their deposits fund.

See Item 4 Brown Act

The Hermosa Beach Oil Settlement Agreement is Not Legal

Why has no one on the City Council read the Macpherson mock jury trial documents or transcript?  The threat of bankruptcy was the basis for was for a $17.5M settlement and extortion vote and no one has read the documents?

Before you read this you should review the contract agreement comments. In a properly negotiated & compromised settlement agreement, "neither party should be happy"with the outcome.  In this settlement agreement Hermosa Beach tax paying residents lost while the lawyers, City Council and oil won regardless of the outcome of the vote.  Here are some very important questions for our proud elected officials: Council Member Patrick (Kit) Bobko, Hermosa Beach City Attorney Michael Jenkins and Michael Divirgilio.

Drilling Down Article 

1)  If there was such a real likelihood that Macpherson Oil would win a court award for HUNDREDS OF MILLIONS OF DOLLARS ($750 million,), then why did Macpherson Oil settle for a mere $30 Million or 4% of his asking price?   Did Macpherson believe that, even if they won the jury trial, they would likely receive substantially less than $30M, or probably even NOTHING (see below)?  

2)  Was the 1995 “STOP OIL” ELECTION FLAWED because the “City Attorney (Jenkins) Impartial Analysis” in the election pamphlet failed to advise/warn voters of the real possibility of a Breach of Contract lawsuit to recover POTENTIAL LOST PROFITS? Were Hermosa Beach voters properly informed about the potential consequences, including tremendous financial liability, of the Proposition E vote in 1995? What law firm was providing City Attorney services to Hermosa Beach during this decade/period of time? Weren’t Bobko and Jenkins both employees of this same law firm - Bobko's current employer RWG Municipal Law Firm (of which he is now a Partner)?

3) Until 2001, Hermosa Beach City Attorney services were being provided by (Bobko’s & Jenkin’s) RWG Municipal Law Firm, represented by RWG Employee Michael Jenkins. From 2001 and onward, Michael Jenkins law firm began providing City attorney services to the City, including providing oversight services on the law firms defending the City from the MacPhersson lawsuit.  After the MacPherson lawsuit was filed, why didn’t RWG admit there had been and omission/error, and advise the City to hold a new election? (The 1995 measure passed by a mere 565 votes). Why didn’t Jenkins (after he/his law firm began providing City Attorney services to Hermosa)? Why didn’t Bobko (after being elected to the City Council)? 

4)  Could damages even be awarded to MacPherson by a jury (under directions provided by the presiding judge) due to failure of Macpherson Oil to make reasonable efforts to “mitigate damages” over the past 15+ years, as required under California law, by insisting on a new vote with a new proper City Attorney Impartial Analysis?  Did Macpherson sue because he could NEVER meet the TERMS & CONDITIONS of the LEASE imposed by the Coastal & State Lands Commission?  Did Hermosa Beach trial lawyers including Michael Jenkins purposely ignore evidence that could have won or minimized damages?  

5) Because of Bobko's associations with RWG Municipal Law Firm and Michael Jenkins, did Councilmen Bobko have a “CONFLICT OF INTEREST” in negotiating and voting on the settlement agreement? Shouldn’t Bobko have RECUSED himself, as required under California law from all such activities.  Has Bobko violated the Brown Act?  

6)  Are these the reasons the Settlement Agreement was negotiated by Bobko in secret, and voted upon behind closed doors without public participation? Was Bobko just protecting the reputation of this law firm, and his friend Jenkins, to the detriment of the City? Why was the settlement agreement not discussed in public BEFORE City Officials signed the contract with a new 3rd party E&B before the scheduled jury trial in April of 2012? Don't neighbors heavily impacted deserve "a say" in that their property and lives could be heavily impacted? - That seems to be normal business practice with Tattoo parlors or new bars, etc

7) Is this the reason that this behind the closed doors settlement includes a requirement that the 1995 "Stop Oil  election be held again"?  By wiping out all City reserve funds if not passed. Are there also other implications with regard to attorney "errors and omissions"insurance and possible reimbursement to the City for its approximately $4M in legal defense costs?

Continue to read a list of more questions that need answers.

Oil Companies Do NOT have to Disclose Fracking Sites in CA

Fracking is Still Highly Unregulated in California
See the Fracking Health Dangers of Gas Here


Baldwin Hills Oil Sink Hole in 1963 See (6 min 25 seconds)
Pressurized Oil Extraction Wells Caused This

Hydraulic Fracking Diagram

California Fracking Unregulated

E&B Oil Reveals Hydraulic Pumping Will Be Used

E&B further explains their hydraulic fracking technique using 27 oil wells and 3 water injection wells. The drilling rig will be 87 feet tall and will be temporarily on site for four months before it is removed. During that four month period three exploratory wells and one water injection well will be drilled. This will allow us to analyze the quality, along with the rate and flow, and other important factors of the produced oil, gas and water.

Pressurized Hydraulic Oil Extraction Wells Caused This
Redondo Beach Wins $2.5M Law Suit From Oil Companies in 1997

Eight oil companies named in the lawsuit were required to replace the oil they had taken with pressurized water. He said that because they did not, the surface under the water sank up to four feet in some areas. The subsidence led the breakwater to sink four feet below its designed height of 22 feet, Goddard said, and caused storm-generated waves to crash over the protective wall. He said the storm caused more than $8 million in damage to local businesses, a cost absorbed by the city. Several major oil companies were named in the suit, including Texaco, Exxon, Trident and Phillips Petroleum, Goddard said. 

How Can Hermosa Beach Pay For The $17.5M Settlement?

Hermosa Beach Self Storage Worth Approx. $7M ($180K Annual Tax Revenue)

City Yard in Hermosa Beach Worth Approx. $15M ($0 Tax Revenue).  Are we just giving E&B a $15M property? Here is why it might be more expensive to vote yes.  $3.5M loan repayment + $15M Property for voting Yes = $18.5M vs 17.5M for Voting No.  

Noble Park in Hermosa Beach Worth Approx. $20M ($0 Tax Revenue)

Hermosa Beach Breezeway Lot Worth Approx. $1.5M+  ($12K Tax Revenue)

Old Prospect Ave School Building Lot Worth Approx. $800K (No Tax Revenue)

Public Parking Facility Worth Approx. $20M ($360K Annual Revenue)

The biggest question that voters need to understand when going to the polls is how is Hermosa Beach going to pay for the $17.5M upon a "No" vote.  There has been some speculation that the vote might not happen until 2013 or 2014 which doesn't surprise me.  In the contract, it states that E&B can ask the city to put the measure on the ballot at any time and the city has 6 months to do it.  When do you think it will be in the best interest of E&B to put the measure on the ballot?  

I think Hermosa Beach should be financially prepared for another recession and have the cash in the bank or a bond measure approved to pay for $17.5M NOW!  Current macroeconomic headlines could easily affect our ability to finance a bond offering or sell real estate in the coming years:  1)  inflated bond market, 2) massive U.S. government debt and 3) European Union debt restructuring recession.  Its been over 4 years since the 2008 financial crisis and you never know when the next downward cycle will hit our economy.  

The City of Hermosa Beach has plenty of liquid and semi-liquid assets that it can use to cover the costs.  There is no need to do a parcel tax or an assessment on residents.  There is no need to believe the oil propaganda and rumors about the going bankrupt over the oil settlement.  We can afford to pay it and it won't affect our budgets or our valuable schools.  The City owns a lot of valuable property and the last time I checked we are not in the "property management" business.  The City has a number of assets that do not generate any tax revenue for the city and should be considered for sale.  

The City of Hermosa Beach likely owns over $100+ million in real estate assets and has over $25+ million in working capital in the bank available to pay for the settlement.  The City also has the ability to get a $10M "Judgement Bond" from the State of California at 3% and service loan which will cost the city $300,000 per year which is nothing out of the budget.  Why not also float another bond for $7.5M as well since boring money is so cheap these days.  So there are lots of ways we can solve the problem of paying for the settlement if we have to.   

The Storage facility was purchased by the City years ago for around $4M.  Its likely worth about $7M today if you put 14 multifamily units on the lot and zone if for residential purposes.   It generates $180K per year for a property the city paid $4M.  Is rent revenue worth the annual yield for tax payers?  The City is not in the property management business and thus we should sell it.  See lease agreement. 

The City Public Works Yard on 6th Street has 8-10 employees and unfortunately they would have to relocate if oil drilling came into town.  The city could outsource the public works functions to a private company which would save money on employee salaries and pensions, etc.  This lot is likely worth $10M  zoned as commercial and might be close to $15M as residential.  17-20 multifamily units could likely fit onto this lot if a developer buy it.  Also, has the city has not factored into the E&B Oil drilling deal that the we are practically giving E&B oil a $15M property.  So in reality, it might be cheaper to pay the $17.5M and vote NO vs paying $3M+ giving a $15M property to E&B for voting Yes. 

The City owns 13 parks some of them are more useful than others.  I am not proposing to go around the City to sell parks but if you compare a price per square foot and the lack of tax revenue to the city.  Noble Park is probably the most valuable asset we have that could be sold.  The Beach House next door to this large lot pays Hermosa Beach $800,000 per year in bed tax revenue.  I know there are a lot of people that use the park to walk their dogs but that is a debate for a separate discussion.  However, most people would not let their kids play in the grass because of the amount of dog waste.  You might be able to classify this as one of the most valuable dog walking park in the U.S.  It might be worth $25M depending on the zoning. 

The Fat Face Fenner's breezeway is likely worth $1.5M.  Currently the city leases the above air space for $1K per month for the right to have a restaurant above the walkway space.  $12K per year is not a lot that is worth $1.5.   I don't know many people who currently use the walkway and don't know how much value it has to lower pier any longer.   A full scale Fat Face Fenner's restaurant might make sense here if constructed from the ground up. 

The Old Prospect School is next to the Fort Lots of Fun park might be worth $800K.  It has been a storage facility for old city lights for years and does not serve as a tax generator for the City. 

The City of Hermosa Beach has parking garage which it shares revenue with LA County on a 50/50 split.  What is a property like this worth that generates $300,000 per year?  Could it be worth $20M and is it worth it to sell half of our stake for $10M?  Again we are not in the property management business and it might be in our best interest to divest this property.  See LA County agreement & annual parking structure revenue / expense financial statement. 

As you can see, we have lots of choices of assets that the City can sell.  Its up to the citizens to come up with a plan to sell one or a few smaller parcels because we know our officials wont take the initiative.  Just look at what Redondo Beach City Council is doing to their residents if you need any proof.  Real estate has recovered from the 2008 lows and it looks like another good time to sell some assets.  I hope this makes everyone more comfortable about voting "NO". 

This is work in progress and we would like your feedback on our theoretical pricing.  If you have commercial real estate experience please contact us or comment below.  Please check back frequently for changes.  I apologize for any errors.  

More Questions That Need Answers

Continued from Questions That Need Answers:

Below is an ongoing list of questions I am compiling from Hb residents on this issue.  Email me if you would like to add something.

8)  Many former City officials including former councilmen Sam Edgerton questioned in 2008 whether the city’s lawyers have ignored a line of attack that he believes could turn the legal tide back in Hermosa’s favor. Why was this never done and why are many of these officials furious of the current settlement? Why are current City Officials telling residents they will not take a position for or against oil drilling in the current settlement? Are they working for HB residents or their own interest? Read Easy Reader Article from 2008

9)  Do the deal leads Jenkins, Bobko & Divirgilo have any ‘skin in the game’? Do they have property value to protect or do they just simply rent temporarily in Hermopsa?  They have demonstrated that they are interested in higher levels of public service (above the City). Do they anticipate receiving future financial support from the Oil Companies to assist them in achieving their political ambitions? Kit Bobko, ran for Congress in 2011 to fill Jane Harman’s seat in a special election and finished in 7th place with 3.6% of the vote.  Michael Divirgilio was a Congressional Staffer for Rep. Jane Harman.  

10)  Why is Hermosa Beach spending money on a PR Firm,  Fiona Hutton & Associates  and how much is the city spending on this new endeavor? Don't we have elected officials on the City Council who do PR as a profession? Why aren't all Council members speaking for themselves, rather than just "going with the flow"? Why did the CIty hire a PR agency? What is their exact role? What is the cost of the PR agency? 

11) Why did you settle at $17.5 million & $3 million? What was the magic number and why?

12) Did you have a plan in place to pay the $17.5 million or 3 million? At what price did you have a plan in place to pay the settlement?

13) With the 6th street Yard being used for oil drilling it would be lost to the city for use.  What would the city do without this lot for city use?

14)  What is the City Yard lot worth? Could we sell it to help cover the 17.5 million?

15) What is it going to cost for extra emergency services personnel, equipment, and training? - Who is paying for it? Do we have to raise salaries for specific certifications of emergency services?

16) The tower is going to be over 135 feet tall. It is going to be in the line offsite of many residents. This devalues homes. Can the city be sued for the devaluation of their home?
The oil wells will cause issues with:

• The beautiful views from homes
• Air Quality (So much for the No Smoking signs along the strand) 
• Noise pollution 

17) The 2008 Chatsworth train crash happened when the conductor was texting while managing the train. 25 people were killed, 135 were injured with 46 being critical! My friends mother was in this accident. She was seriously injured. There is a cap on the amount of payout for the lawsuit at $200 million. She cannot even get her medical bills paid. With that said you are saying we would have had to pay $750 million no matter what while a train wreck that killed 25 people and injured 135 others cannot get more than 200 million!

18) What happens if there is an oil leak in the bay?  Is the City of Hermosa Beach on the hook for anything? How would this devalue not only Hermosa Beach homes but all of the homes in the bay?  Could there be a civil suit?

19) There is talk of "revenue share" from the oil wells.  Can we not pay the money and have the money go towards the $3 million first then take the revenue sharing?  What are the projections of the revenue sharing?  This should have been done long before any settlement happened! The biggest question is what can the money legally be able to be used for! There have been many statements that the money cannot actually go towards the school systems. This is something your lawyers should have advised you of before any settlement happened. The lawsuit has been going on long enough someone should have known and or have an answer.

20) Who is auditing the revenue coming in from the oil?  Do we now have to pay people to manage this and at what cost?

21) What happens if there is a disaster and or someone is killed?  Is the contract null and void immediately?

22) How safe is this type of oil drilling in case of an earthquake or tsunami? At what size of earthquake or tsunami do we run into an additional disaster?

23) The homes they drill under do they get revenue from the drilling and who has mineral rights? What happens if their foundation and or other issues appear in years to come from the earth under them moving?

24) Is the oil company using funds to get the votes to drill in Hermosa? If so did you know they would put money into the City of Hermosa to promote oil drilling?  What businesses in the city stand to benefit from oil drilling?

25) Kit Bobko and Michael Divirgilio are not home owners in Hermosa Beach. You do not directly pay taxes for the homes in Hermosa Beach. If you owned a home nest to 6th street before the settlement how would you feel? Would you sell your home? Why haven't you bought a home in Hermosa Beach?

26) If we vote no to the oil drilling your letter states: "$17.5 million equates to a liability of $2,500 per parcel." Are you going to bill the citizens this amount if the drilling is not approved? What if I moved into the area after the lawsuit and was not notified about the lawsuit? Do I still have to pay? The bigger question is as renters are YOU personally going to pay $2500 towards the liability you have committed to the citizens of Hermosa Beach?

27) What are the solutions to pay $17.5 million? How much money do we have in the bank? What assets does Hermosa Beach own? Can we get a bond from the state of California? What research have you done to figure out how to pay back any amount let alone the $17.5 million?

28) Now that you have settled the lawsuit what side are you on? I feel that you have drawn a line in the sand and now you should state whether you are for drilling or against drilling. This is only fair to the citizens of the city. What are the pro's and con's from each of your perspectives?

29) How late can drilling take place? Is it 24/7/365? How noisy is it? I can hear the Redondo Power Plant at 4am release steam that practically shakes my windows. Will we have any noise at all and if so how loud and at what times?

Email me if you would like to add or change something to this list. 

Settlement Agreement Comments

Below is a draft of our settlement agreement comments we are compiling from residents.  We welcome your comments so please email us with your comment structured similar to below.  If you want to read the full 45 page agreement you can download it on the HermosaBCH.org or at Google Docs.

Recitals, Page 1, A
Macpherson also obtained all of the necessary Permits to Construct for the Oil Project from the South Coast Air Quality Management District In November 1995 the residents of the City passed City Measure E an initiative measure that banned oil drilling in the City. 
Comment- South Coast Air Quality Permit ran out or cancelled March 30, 2000. 

Recitals, Page 1, A
In early 1998 and notwithstanding the passage of Measure E the California Coastal Commission authorized issuance of Coastal Development Permit No 29E86 to Macpherson far the Oil Project subject to conditions
Comment - Coastal Developmental Permit No. 29E86 never issued. 

Recitals, Page 2, D
Substantial revenue stream to be generated for City and the Hermosa Beach School District as a result of the payment to City and School District of royalties in association with the production of oil and gas reserves by E&B
Comment - How can School benefit from tidelands trust?

Definitions, Page 3, 2.10
School Lease means the lease between Macpherson and the Hermosa Beach School District
Comment - No lease on School property found. Where is this?

The Closing, Page 4, 3.2
Confidentiality Agreement previously signed on behalf of each of the Parties on February 17 2012
Comment -  Where is a copy of this?

Macpherson's Obligations At Closing: Page 5, 4.1 

1031 exchange as provided in Article X hereof all of Macpherson the School Lease and any other leases releases set forth in paragraph VI
Comments - Like-kind exchange, what's Macpherson doing here?  What other leases are involved in this agreement?

E&B's Obligations At Closing: Page 5, 4.3a 
Said assignment reserves to Macpherson from E B and its successors and assigns an overriding royalty of 1.5% of one hundred 100% of gross hydrocarbon production but otherwise
Comment - Macpherson keeps part of this going here.

E&B's Obligations At Closing: Page 6, 4.3c 

constitutes the E&B Loan of $17,500,000

Comment - Note this loan and how it's to be repaid by the city.

E&B's Obligations At Closing: Page 6, 4.4b 
Upon issuance of the drilling permit or in the event the City cannot issue the drilling permit as the sole result of action or inaction undertaken by and under the control of E&B (including without limitation) the failure of the California Coast Commission to issue a coast development permit. immediately

thereafter forgive $14,000,000 of the E&B Loan

Comment - Failure to meet conditions and most of loan is forgiven?  Where does the fact we are giving E&B a $15M property factor into the cost?  Total costs is more like $18.5M and more cheaper to vote no. 

City's Obligations Following Closing: Page 7, 4.6a 

Place on the ballot at a special municipal election in a manner that comports with all applicable law within six 6 months of a request to do so by E&B
Comment - Within 6 months call election!!!! "....notwithstanding inconsistent change in City's Municipal Code." ????

City's Obligations Following Closing: Page 7, 4.6b 

Vacate and make the City maintenance yard available for the construction of the Project as when and in the manner and subject to the conditions provided for in the Lease and repay Three Million Five Hundred Thousand Dollars of the E&B Loan through a deduction of royalties equal to 1.5% of gross proceeds. 
Comment - Vacate and make the City maintenance yard available? And where in the world is the city going to put it. Steve Burrell could never find another location for it, here or in Redondo Beach. Let's get real. this is an important issue.  This property is worth $15M and we are paying them $3M on top?  Total deal looks like $18.5M to vote yes.  

City's Obligations Following Closing: Page 8, 4.6d 

Grant as reasonably required by E&B all necessary rights of way 
easements franchises and other rights as necessary for subsurface pipelines < and other facilities and appurtenances in order for E&B to drill for produce market transport and sell all oil and gas produced from the subject lease 
Comment - Whoa Ho! Check out this demand. Dig up the streets or the greenbelt? And where will it terminate in Redondo Beach or AES?

City's Obligations Following Closing: Page 9, 5.4 

The parties recognize that Macpherson is materially changing its legal position and rights and property holdings in reliance upon the final and binding effect of this Agreement and any rescission of this Agreement would be a wholly inadequate remedy for Macpherson because rescission cannot possibly return to Macpherson the legal position and rights it held prior to the consummation of this Agreement
Comment - We need an attorney to explain this paragraph. It's legalese is convoluted.

Mutual Releases: Page 9, 6.1 

Effective upon the successful completion of the Closing in accordance with the conditions described in paragraph 3
Comment - What are these conditions in 3.3 

Mutual Releases: Page 10, 6.1 

the City hereby fully and finally waives releases and  permanently discharges Macpherson and its respective partners officers employees agents representatives and attorneys the Releases from any claims arising under the Lease any continuation extension amendment restatement or replacement of the Lease
Comment - Whoa Ho! What's this? What about compensation due the city for the past  Environmental reports, attorneys fees due the city, etc?

Mutual Releases: Page 10, 6.4 

Except as may be provided in this Agreement each of the Parties waives any and all claims for the recovery of any costs expenses or fees including attorney fees associated with the matters and claims released in this Agreement
Comment - Attorneys fees from earlier court cases? Have they been paid?

Defense of Litigation:  Page 11, VII
In the event that one or more lawsuits are filed challenging this Agreement and/or the actions implementing or contemplated by this Agreement the Parties to the extent named as parties defendant in the lawsuit will cooperate in good faith in the defense of the litigation and shall initially bear their respective attorneys fees and costs With the exception of a lawsuit challenging the approval of this Agreement itself should the Ballot Measure described in paragraph 46a pass E&B shall indemnify the City for all attorneys fees and costs incurred by City in the defense of litigation encompassed by this paragraph and also for any attorney fees and costs awarded to a plaintiff against City if any in such litigation
Comment - Does this mean the city can collect attorney fees if sued for this agreement?

Representations & Warranties:  Page 11, 8.1c
They acknowledge that the Stinnett Well has been plugged and abandoned and agree that Csity inability to convey the Stinnett Well to E B shall not constitute a breach of this Agreement or the Lease. 
Comment - Dave Lucero, what was the result of your looking into this well on the City's Yard?

Representations &Warranties:  Page 12, 8.2c

The force majeure provisions in paragraph 30 of the Lease apply and have applied during the pendency of the Action and the CUP remains valid. 

Comment - CUP is for a "Conditional" Use Permit. The  Use Permit itself was never issued, or was it? Wasn't the Fire Code in doubt?  In the CUP it states, "All CUP required studies and reports must be submitted to the City and approved before permit issuance."

Representations &Warranties By All Parties  Page 12, 8.3a
The Parties have received all corporate and other approvals necessary to enter into this Agreement on their behalf and that the persons signing this Agreement on their behalf are fully authorized to commit and bind the Parties to each and all of the commitments terms and conditions hereof and to release the claims described herein and that all documents and instruments relating thereto are or upon execution and delivery will be valid and binding obligations enforceable
Comment - Not so! The California Coastal Commission issued "approval with a long list of conditions" but never issued a "Permit" for Macpherson to drill in Hermosa Beach. So how does this affect this Settlement Agreement? Is Macpherson claiming to have abided by all the requirements of 15 b. of Lease No. 2 (it has with the City), i.e. "The Lessee shall also apply for and obtain all necessary permits from the City of Hermosa Beach...The Lessee shall also be responsible, at its sole expense, for alI necessary permits and approvals to be obtained from the California Coastal Commission...."
Representations &Warranties By All Parties  Page 12, 8.3d
The Parties have prior to the execution of this Agreement obtained the advice of independent legal counsel of their own selection regarding the substance of this Agreement and the claims released herein
Comment - Was the advice "independent"?
Representations &Warranties By All Parties  Page 13, 9.2
This Agreement and the Confidentiality Agreement discussed in Paragraphs 32 and 3 are an integrated contract and sets forth the entire agreement between the Parties hereto with respect to the subject matter contained herein 

Comment - If the Confidentiality Agreement is part of this, please, let's have a look at it.

Representations &Warranties By All Parties  Page 13, 9.5
This Agreement shall be binding upon and inure to the benefit of each of the Parties and their respective representatives partners officers employees agents heirs devisees successors and assigns
Comment - How about to the benefit of the people of Hermosa Beach?

(stay tuned more to come)

Stop Oil Drilling in Hermosa Q&A

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