Dismantling of the decommissioned South Bay Power Plant “could be a big gain for the South Bay and specifically Chula Vista.”
  • Dismantling of the decommissioned South Bay Power Plant “could be a big gain for the South Bay and specifically Chula Vista.”
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Clandestine negotiations, fueled by the prospect of a pot of gold set aside for cleaning up the South Bay Power Plant, have become a concern to some city council members and residents of Chula Vista. In late February, Councilmember Rudy Ramirez called for more daylight on the subject; more recently, the council called for a public hearing on the negotiations at the March 22 council meeting.

The South Bay Power Plant has long been a source of pollution and an impediment to Chula Vista’s efforts to develop its bayfront. Dedicated in 1960, the plant was owned and operated by San Diego Gas and Electric until 1999, when it was sold to the Port of San Diego. Duke Energy, the port’s first tenant, leased the plant and the land it sat on for seven years; the plant’s current operator is Dynegy. The plant was shut down on December 31, 2010. Dynegy is obligated to dismantle the plant and clean up the toxic waste on the site.

The first that many people knew of the city’s plan to take on responsibility for the cleanup was an editorial in the Union-Tribune. “[S]ecret talks have led to a potential arrangement under which Dynegy would turn the entire problem over to Chula Vista along with accumulated funds of $72 million to pay for the work,” the November 21 editorial read. “The potential arrangement was brokered by David Malcolm at the request of Chula Vista Mayor Cheryl Cox.”

This peephole into remediation negotiations generated concerns expressed privately, in letters to the editor, and on the council dais. Was the city of Chula Vista capable of doing the cleanup without taking on huge liabilities? If there was money left over, how should it be spent? Why were some members of the council kept in the dark? But for many, the main concern was, what part did Malcolm play in these sensitive negotiations that involved the cleanup of port land?

Malcolm, a former Chula Vista city councilman, was appointed to the Port Commission in 1995, and he served until 2002, when he resigned. During his tenure, he took a leading role in the port’s acquisition of the South Bay Power Plant and in the lease agreement with Duke. Months after Malcolm’s resignation, he pled guilty to a felony conflict-of-interest charge in San Diego Superior Court. While he’d been a port commissioner, he’d also been paid $20,000 a month by Duke Energy to represent its interests. (The conviction was later expunged from his record.)

Fast-forward to February 6, 2011, when Malcolm jumped into an email conversation about the power plant that was taking place between members and friends of a Chula Vista community group called Crossroads II. Malcolm’s email laid out his driving concern that Dynegy was about to be taken over by a hedge fund, which might not share the city of Chula Vista’s sense of urgency to tear down the power plant or remediate the site.

Malcolm wrote: “…I told Mayor Cox and Councilwoman Bensoussan we need to make a deal with Dynergy [Dynegy] before Carl Ichan/Hedge Fund get[s] control of the plant. You read a little about the agreement to pay the City of CV $72,000,000.00 upfront to take their clean up responsibilities. This was an OPTION for 120 days for free!... Unfortunately, Steve Padilla gave a copy of the agreement I made with Dynergy to the Port. Well guess what…..The Port wanted the money [the rent paid by Dynegy] and worked the press to kill the deal the City had with Dynergy.… I almost called Peter [a Crossroad’s member] and briefed him on what we were doing because I didn’t trust Padilla.…”

Steve Padilla was the city of Chula Vista’s representative on the port commission on October 18, when he gave the agreement to the port. Padilla was abruptly replaced in early January. On February 18, Icahn’s attempted buyout failed, and on March 8, Dynegy announced that it may be forced into bankruptcy.

The day following his email, on February 7, I interviewed Malcolm. Malcolm said he stood by everything he had written. He elaborated on who made up the team that had been negotiating with Dynegy. He said the team consisted of himself, Chula Vista mayor Cheryl Cox, Councilmember Pam Bensoussan, Laura Hunter from the Environmental Health Coalition, and former California senator Steve Peace. Peace is best known as the author of energy deregulation in California, which set the stage for San Diego Gas and Electric’s sale of the South Bay Power Plant to the port.

Malcolm detailed the way the negotiations with Dynegy had unfolded. He said that he became involved when a Dynegy consultant expressed frustration about the failure of the port to negotiate the closure of the power plant with the state agency, the Independent System Operator. While he talked, Malcolm pulled up a timeline on his computer and said the first team negotiations took place on August 28, 2010. He was in Texas at the time and had to participate via telephone.

The mayor gives a different account of how and when Malcolm became involved in the negotiations. On February 6, following Malcolm’s jumping into the email conversation with the Crossroads group, Mayor Cox also unexpectedly joined the online conversation: “When the California Independent System Operator…informed me in October that they removed Reliability Must Run status from the South Bay Power Plant, their action triggered a response from the Regional Water Quality Control Board and the State Water Quality Control Board.… That weekend, I called David Malcolm, the author of the agreement that in l998/99 that called for the Plant’s demolition, removal, and remediation by February 2010, in order to learn more about the terms of the agreement from its author.”

The mayor repeated her account of the timeline at a March 1 council meeting. Councilmember Patricia Aguilar asked the council, “How did David Malcolm become involved in the negotiations and to what extent is he involved?” Cox reiterated that she had called him in October. She added that she saw his role not as a negotiator but rather as being available should anybody want to contact him for information. City manager Jim Sandoval said he had never received any direction one way or another about whether Malcolm was authorized to negotiate for the city.

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Comments

ElProfeLoco March 16, 2011 @ 1:37 p.m.

I happen to know a bit about the SB Power Plant on the CV bayfront (I was on the Chula Vista City environmental commission (RCC) and Bayfront Citizens Advisory Committee, plus a degree in environmental engineering and another in mechanical engineering specializing in power generation).

But most important is the cast of characters mentioned, many of whom I know personally and all of whom I know about: - Bensoussan: ignorant and uninformed on these matters; a lap dog for Mayor Cox - Padilla: bright, but overly ambitious and two-faced and untrustworthy - Cox: also ignorant on these matters and a complete fool for involving David Malcolm (already convicted once for selling out the Port re this power plant) - David Malcolm: a convicted felon, graft tainted politico, completely self centered and not to be trusted on anything - but has the gift of gab (like Padilla) and can chase a buck as long as it ends up in his own pocket - Ramirez: usually asleep at the switch as a CV Councilman; nice guy but not all that bright - Sandoval, CV City Mgr.: a loyal "soldier" which means he'd do most anything Mayor Cox wanted

So out of almost everyone mentioned, this is a Ship of Fools and ego driven people out for their own interests and not necessarily the interests of the public and their constituency. The contract(s) with Dynergy passed muster with Port, and later City of CV, staff and attorneys and apparently none were bright enough to include usual contract provisions for liability and responsibility (for cleanup) - especially in the event of bankruptcy. Our tax dollars at work. What a mess.

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cvres March 16, 2011 @ 5:58 p.m.

I read here that David Malcolm thinks leftover money could go to the Wildlife Refuge. I read somewhere else that the leftover money might have gone to infrastructure. But doesn't some of that money (apparently $32 mil) come from the ratepayers? If there is any leftover it should be returned to us.

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VigilantinCV March 16, 2011 @ 6:44 p.m.

I never voted for David Malcolm nor Laura Hunter. I regret I ever voted for Cheryl Cox and Pamela Bensoussan. Yet because they somehow know what is best they acted as though the end justifies the means. NEVER! Our young men and women are dying in distant lands in the name of our democracy, our freedom. How dare they betray the public trust by cloaking what they are up to in secrecy!

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ElProfeLoco March 17, 2011 @ 6:18 a.m.

Sorry, I inadvertently left out Laura Hunter of the Environmental Health Coalition (EHC), and she deserves much recognition.

Ms. Hunter was very active and proactive in the last failed attempt to develop the Chula Vista bayfront. In fact, EHC with fellow travelers from the SD Labor Council (Jerry Butkiewicz, et al) can claim full credit for sabotaging a desirable deal with Gaylord to develop the CV bayfront by demanding a sweetheart labor deal.

Additionally, Ms. Hunter got a bogus over-paid CV City position for her protegee Alison Rolfe (ex-Audobon Society tout) with then CV Mayor Padilla, reputedly in exchange for Padilla's support of some the EHC agenda (often different from the citizen agenda) on the CV bayfront. Ms. Rolfe went on to peddle her services, at inflated prices, to Pacifica Corp. the wannabee developer of the CV bayfront.

Further, part of that quid pro quo, scratch-my-back, back room deal was the subsequent appointment of Padilla to the Calif. Coastal Commission (brokered by EHC) after his Mayoral term expired.

Despite their usual under the table shenanigans, occasionally (not often enough!) EHC does some public good. In the case of the South Bay Power Plant, they DID play a part in removing the eyesore power lines from the SB Power Plant. EHC also has some credible research and reports on the SB Power Plant. Too bad EHC can't desist from maneuvering in the shadows and political chicanery long enough to focus on positive environmental resources.

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joepublic March 17, 2011 @ 9:29 a.m.

In the last paragraph, David Malcom says: " …what I don’t want is the Chula Vista City Council deciding it, and I don’t want the port commissioners deciding it. I want these world-class brains to get together and tell us what they think, and you know what — something’s gonna resonate out of it.” How can anyone, especially in these times, put forth such oligarchal type thinking. The members of the Chula Vista City Council that went along with this unacceptable model of government should be called down for their undemocratic behavior. Hopefully the public hearing on this matter, called for March 22, will be the beginning of the end of this elitist (and illegal?) way of doing the public's business.

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Susan Luzzaro March 17, 2011 @ 6:31 p.m.

Profe,

You make some very good points. Regarding Gaylord being sabotaged by Laura Hunter & unions-- if I recall correctly the sticking point was hiring local workers--it wasn't that they had to be union. But you sound like someone who was very close to the situation. At any rate, my guess is there were other people not in favor of Gaylord. Mr. Malcolm said in the February interview that he never cared for Gaylord, that they were not world class.

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ElProfeLoco March 18, 2011 @ 5:58 a.m.

The (minor) correction re the unions, EHC and Gaylord is correct. It was the union and EHC folks that demanded the local labor clause, and this WAS a primary reason Gaylord pulled out of the CV bayfront deal - so the net result WAS that EHC/unions killed the deal. EHC and the unions are not located in CV and have miniscule (hardly any) voter representation in CV.

Why anyone cares what David Malcolm thinks about CV or Port matters is beyond me. He is a convicted corrupt official who keeps meddling and offering opinions when he should be hiding in shame elsewhere instead of slinking around and offering press interviews. Mayor Cox should be recalled for involving this criminal in matters in the same place where his thievery took place some years ago. No shame (nor common sense) is apparent in either of these people.

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laplayaheritage March 18, 2011 @ 7:08 a.m.

http://www.blogofsandiego.com/Elections/Prop-G/Gaylord-to-unions.pdf

The above linked letter from Pat Flannery's Blog of San Diego documents Gaylord position in regard to the Labor, Building and Construction Councils that they are discontinuing their project because they could not find "a mutually beneficial way to fund the infrastructure."

http://www.blogofsandiego.com/Elections.htm#06/07/10

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Arrowstarlet April 30, 2011 @ 4:55 p.m.

I grew up in Orange County. In fact, my father was one of the top landscape architects that developed all of Orange County. I got married eight years ago and moved here, into my husband's childhood home. I can't believe how this city is ran! I can't believe how slow it takes to develop anything here! If this bay front project was in the Orange County, it would have been developed by now! One reason why it hasn‘t - - we have a bunch of greedy politicians and citizens running the show. And nothing is getting done! Gaylord, a first class hospitality company, left because they realized they are dealing with a second rate city! If we want our bay front developed, we need new leadership that will get the job done. It’s sad! Chula Vista has so many possibilities and could be a first rate city. But, at this rate, I don’t see it happening! It is frustrating to watch!

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