Doing the deal
Negotiations that led to Friday’s settlement began in early February, with a call from the oil company seeking DiVirgilio and Bobko.
“The first phone call was from Don Macpherson to us, suggesting we speak to E&B,” Bobko said.
“We met with E&B a few days later, and within days we were briefing the rest of the council,” he said.
Bobko and DiVirgilio said Macpherson sought them out because he felt he knew them better than other council members. The two had been prominently involved in earlier talks with the oil company, either as members of council subcommittees or as holders of the city’s rotating mayoralty.
“We consulted with our colleagues on the council at every turn, and advised them of the status of the negotiations,” Bobko said. “It was always a 5-0 vote.”
“Today is a momentous day for us. It’s a red letter day, it’s a fabulous day for Hermosa Beach,” DiVirgilio said.
“This news is possible because of Don Macpherson’s willingness to settle,” with the help of an imaginative approach of E&B Resources, he said.
DiVirgilio said the costs to Hermosa are “reduced and capped.”
“It’s never going to be over $17.5 million,” he said, comparing that to the potential of a $100 million to $700 million court judgment against the city.
The city had spent more than $3 million preparing for the trial.
“We were burning about $200,000 to $300,000 a month on trial preparation, and it was going to spike. The burn rate was pretty substantial for both sides,” Bobko said.
“Everybody was spending a tremendous amount of money to get ready for trial, in what was a potentially apocalyptic lawsuit,” Bobko said.
“The city is not taking any money out of its hide to fund the settlement,” Bobko said. “E&B was generous enough to put $30 million on the table.”
A similar settlement could not be reached with Macpherson because “the city does not have enough money to pay Macpherson what he wanted,” DiVirgilio said.
