Hopes were high at the start of Tuesday’s Hermosa Beach City Council meeting that that an agreement would be reach on the ballot language for the vote on lifting the city’s ban on oil drilling. The city has until December 2 to submit the language for the March 3, 2015 ballot.
At the previous meeting, the council directed staff and council members Michael DiVirgilio and Hany Fangary to negotiate the final language with E&B Natural Resources, which hopes to drill from the city’s maintenance yard.
“I’m here for one reason. To work as hard as we can to resolve our outstanding issues and finalize this ballot measure tonight,” E&B president Steve Layton told the council at the start of the meeting.
Four hours later, the council meeting ended without the ballot language having been discussed. Instead, the meeting was spent in an unsuccessful effort to negotiate the terms of the development agreement, a supplemental document that voters must also approve for the oil drilling ban to be lifted.
E&B wanted the agreement to mention its offer of a one percent royalty to the schools, estimated by E&B to be $37 million. E&B also wanted the agreement to mention its offer of $30 million in matching funds to the city to underground utilities.
The council majority — Mayor Pete Tucker, and councilmembers Nanette Barragan and Hany Fangary — did not want either offer in the development agreement.
“The elephant in the room is the school issue,” Layton told the council. “I understand it’s a hot button issue, but I hope you understand this issue didn’t just pop up.”
Layton recalled that in the mid 1980s, when the current oil drilling project was first proposed, wells were to be placed on the former South School property, as well as on the city maintenance yard. The current proposal does not include oil wells on school property.
“Now the schools are on the short end of the stick. We are committed to bringing some balance back to the equation… to provide benefits to the schools,” Layton said.
Tucker suggested E&B take its offer to the school district directly. The council was not comfortable negotiating on the school district’s behalf, he explained.
Layton expanded on his “elephant in the room” analogy.
“We reached out to the schools superintendent and members of the school board and had a few discussions,” he said. “But as the political climate heated up, it became more difficult to have those discussions.”
“Would you accept a development agreement if there was nothing in it relating to school funding? Councilwoman Barragan asked. “Is this a make or break provision?”
“It is very important to us,” Layton answered, “And we do not have an alternative today that is acceptable. School benefits are explicit in the settlement agreement.”
Councilwoman Carolyn Petty asked Layton to consider donating the one percent he proposed for the schools to city youth programs.
“Or a new library. That would have an education component to it,” Petty said.
Layton declined to respond to Petty’s proposal.
Council members presented a different argument for opposing the undergrounding funds in the development agreement.
They didn’t think $30 million in matching funds was enough money to underground all of the town and to underground only part of the town would be divisive, Tucker said.
Petty proposed E&B commit the undergrounding money to fixing the city’s sewers and storm drains. She asked Layton if he would agree to that.
“I’ve been listening carefully the last 30 minutes,” Layton responded. “It is my belief, based on what I have heard, that you are unilaterally deciding what bits and pieces of the development agreement to include…
“Am I understanding you to say you have the right to choose which bits and pieces you want to bind us to? Maybe there are things you’d like to add that we also would be bound to?”
“Is that’s whats going on here?” Layton asked.
Barragan responded.
“You are correct,” she said. “If you are offering something we don’t agree with we can strike it from the development agreement.”
Barragan then made a motion to strike from the development agreement mention of school royalties, undergrounding funds and E & B’s projections of the city’s royalties.
The measure passed three to two, with DiVirgilio and Petty voting no.
Petty called her colleagues’ vote “irresponsible.”
“People who oppose the project don’t want anything of value in the agreement… People could vote yes and we’d lose [E & B’s offer of] $6 million to relocate the city yard, $3.5 million in debt forgiveness, $25 million in trust funds [for property value compensation]…”
“That is a massive breach of our fiduciary responsibility… and is repugnant to me.”
“I am so dismayed that we are walking down this path, toward breach of the agreement. This dais needs to be more flexible,” Petty said.
“No one up here is opposed to continuing negotiations,” Tucker responded. “We have until the end of November. We can negotiate until the drop dead date. Let E&B propose other changes.”
Barragan was less conciliatory.
“If we are going back to negotiations, no schools, no undergrounding, no more spinning our wheels. We have the option of just giving them the vested right [to drill] to fulfill the settlement agreement.”
City manager Tom Bakaly ended the discussion shortly before midnight by advising the council to continue the negotiations with E&B over the wording of the development agreement “in a public session at the next city council meeting.”
The ballot measure language, which is limited to 75 words, will also be on the agenda.
The next city council meeting is November 13.
