Chevron Makes Offer to Drop Lawsuit Over Large Fullerton Tract

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Tuesday, April 19, 2011 | The long-running battle between the city of Fullerton and oil giant Chevron over the city’s last, large undeveloped tract of land is taking a new turn with the company offering to back away from a $1 million lawsuit it filed last year after the city turned down a 760-home development on the tract.

But the offer comes with quite a few strings attached.

First, to rid itself of the lawsuit, the City Council must go back and approve the housing development project, and any changes to the project must meet with Chevron’s approval.

Furthermore, if opponents of the project get it on the ballot and voters reject the development, Chevron will resurrect its suit.

The City Council will consider Chevron’s offer at its Tuesday meeting.

The Fullerton Observer, is reporting that three of the five council members received campaign contributions from Chevron during last fall’s campaign.

Mayor F. Richard Jones and Mayor Pro Tem Don Bankhead were the two council members who supported Chevron’s park plans when three other council members rejected the project last May.

Bankhead, who received $2,700 last fall from Chevron, said Monday that he supports the settlement agreement.

“The lawsuit has to be settled before we would consider the project itself,” he said. “We have to deal with the lawsuit first.”

The two newest council members, former Fullerton police chief Pat McKinley and Bruce Whitaker, an aide to Assemblyman Chris Norby (R-Fullerton) did not respond to requests to be interviewed on the issue. McKinley received $4,700 from Chevron in the last election and Whitaker $1,500.

Chevron has been working directly with the city on the project since 1998.

The company argues the housing development on 510 acres of former oil fields should be approved, saying that the plans dedicate more than 300 acres to open space and trails. Others say much of the open space is on hillsides too steep for other uses.

For years, volunteer groups have opposed Chevron’s plans and urged the City Council to reject the development because of additional traffic, school and environmental issues.

The Orange County Transportation Authority offered to include the Chevron property in land it plans to buy and maintain as open space to offset the environmental impact of freeways. But Chevron declined, in part because it didn’t think the transportation authority had enough money to pay fair market value for the land.

Funds for transportation authority projects, including land purchases, come from a half cent gasoline tax. Due to the Great Recession, gasoline purchases have been down.

According to a Feb. 14 letter that Chevron sent to the transportation authority, the drop in gasoline tax revenue “has resulted in the mitigation program lacking sufficient funds to purchase WCH (West Coyote Hills), especially considering that numerous more worthy projects are competing for funding throughout Orange County.”

Settlement Terms

In a report to the city council, lawyer Jeffrey M. Oderman with Rutan & Tucker, the firm representing the city on the issue, said Chevron’s housing development subsidiary, Pacific Coast Homes, offered the settlement.

The proposal requires the city to keep terms of the project exactly as they were when the council voted against the project last May.

In a memo to the city council, Oderman said “if after the public hearing the Council were to reverse its previous action and approve the project PCH (Pacific Coast Homes) would dismiss its pending lawsuit with prejudice as soon as the Council’s action becomes final and agree to fully indemnify, defend, and hold the City harmless from all third party lawsuits and claims challenging the project approval …”

But, he said, if the council upholds its earlier vote and again denies approval for the project “(or if the Council were to approve the project subject to new or changed conditions that are not acceptable to PCH) the Settlement Agreement would terminate and each party would reserve all of its rights and defenses in the pending lawsuit.”

Last May, when the five-member council rejected the development, then-city council member Shawn Nelson was the swing vote. At the time, he was running for a seat on the County Board of Supervisors.

After he won the election and before being sworn in, he offered to attend one last special city council meeting to reconsider the project. But other council members declined to call a special meeting.

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