Thursday, May 31, 2012

What is an Environmental Impact Report (EIR)?

Hermosa Beach is about to begin the Environmental Impact Report (EIR) process and its important that you know what it is, the timing, costs, players, politics & process.  An EIR is the planning document which describes the environmental impacts associated with a oil drilling project.

17 Environmental Impacts

The EIR will analyze 17 different environmental impacts and will determine which ones are significant. Aesthetics, Agricultural resources, Air Quality, Biological resources, Geology and Soils, Greenhouse Gases, Hazards, Hazardous Materials, Hydrology and Water Quality, Land use and Planning, Mineral Resources, NoisePopulation, Real Estate, Public Services, Recreation, Transportation and Traffic, Utilities, Mandatory Findings.  It also describes mitigation measures to reduce the impacts to an appropriate or acceptable level.

Planning Commission & City Council

The information within an EIR allows the decision-makers (the Planning Commission and/or the City Council) to make an informed decision when considering whether or not to approve a project. The report also assists with deciding if approval conditions (entitlements) are necessary. The ultimate decision to approve a project, however, remains with the decision-makers. When the Planning Commmission or City Council approves an EIR, it is simply an acknowledgement that the EIR is true and accurate. It is only a step towards project approval, not a guarantee. The Planning Commmission or City Council may decide to instead decide to approve or deny the project based on overriding considerations. For example, the Planning Commission may find that a proposed project may provide monetary benefits to a community that don't outweigh a problems identified in the EIR, such as unsafe air quality, heavy truck traffic & real estate price decline that will negatively impact property tax revenue.

Public Review

There may also be one or more meetings about the report, either as a separate meeting or as an item in a Planning Commission agenda. Note that approval of the environmental impact report does not mean that the project is approved. Once the report is approved, decision-makers review the project, taking into account the information in the report and other considerations. The public has an opportunity to review and provide comments on a draft of an EIR by contacting, in writing, the planner listed on the EIR. Public input is then included in the EIR, and considered by the decision-makers along with other aspects of the report.

EIR Project Managers

The Hermoa Beach City Council approved a contract with Ed Almanza & Associates, a Laguna Beach firm, to serve as the project manager.  However, there is no public information on this firm available on the internet as of today which is concerning.  The firm will oversee the city’s review of the proposed project at large. The Council also approved a consulting contract with former City Manager Stephen R. Burrell.

Opinion:  "Can Voters Rely on an EIR to Make a Voting Decision?"

It is important for the entire South Bay to understand this will be the 4th time in 80 years that Hermosa Beach has been faced with an oil drilling ballot measure. Hermosa Beach overwhelmingly banned oil drilling in public votes in 1932, 1958 and 1995. An Environmental Impact Report (EIR) will address many aspects of this process, but it will never fully disclose all the damage that oil drilling will bring about in a town 1.3 miles square. Our position as a great area to live will be severely tarnished. These safety and environmental damage resulting from oil drilling will effect generations to come.

An EIR is supposed to be a thorough analysis of: Air quality, Biological resources, Geology and soils, Greenhouse gases, Hazards and hazardous materials, Hydrology and water quality, Land use and planning, Mineral resources, Noise impact, Population and housing, Public services, Recreation, Transportation and traffic, Utilities & any other Mandatory findings of significance like real estate values. Upon the completion of the EIR, a thorough examination of the safety risks will be necessary as it was in the previous MacPhearson oil drilling project. A report like Bircher Report (safety study), which was done in relation to the MacPhearson project, will need to be done.

Its too complicated for the voters to rely on an EIR alone.  Its too complicated and does not address safety to the residents.  An EIR is meant to simply figure out how a project could get approved. Don't be surprised to see this EIR analyzed and separated by parts to make the environmental impacts appear smaller and insignificant to residents. It’s very important that the City Council get a report similar to the Bircher Report to fully understand the risks these kind of project present.

Hermosa Beach has been down this road before and completed an Environmental Impact Report for Macpherson Oil in the 1990's at this exact location. The City Council elected at that time showed great care and diligence in their decision making. They commissioned the Bircher Report and reviewed the EIR and concluded that it was unsafe and the air quality impact would have been too harmful on residents. Three City Council members Sam Edgerton, Julie Oakes and John Bowler unanimously agreed that to not proceed with oil drilling after reviewing all the findings. They felt that the safety risks were too great to allow the oil drilling project to proceed.

We need the EIR to be interpreted by professionals who will take into account the same safety issues our 1990 City Council had to. Our current council chooses not to heed this previous unanimous vote of their predecessors. It is unknown if they even read the prior EIR and related safety reports before agreeing to this settlement arrangement. The current city council viewed the outcome of a jury trail too risky and unlike our 1998 city council they put the citizens at risk, or in this case obviated the due diligence of a complicated project into a political vote where safety arguments and facts might get lost in the rhetoric..

Friday, May 18, 2012

Former City Manager Steve Burrell Unretires to Manage Oil EIR

Steve Burrell's Retirement Party Two Months Ago April 5, 2012
At the May 22, 2012 City Council Meeting, City Officials are set to approve a Professional Services Agreements with Ed Almanza & Associates and Stephen R. Burrell for consulting services to augment staff in processing land use entitlements and an Environmental Impact Report in connection with an oil drilling project.

Here is a letter to the City Council regarding this consulting agreement from long time resident Barbara Guild who beat oil drilling in 1957.  Barbara Guild has also done an extensive review on the agreement signed by Hermosa Beach and suggest that you read her oil agreement comments here.
Barbara Guild's Letter to City Council of Hermosa Beach

Dear Mayor Duclos, Councilman Fishman, Councilman Tucker, Councilman DiVirgilio, Councilman Bobko,

STOP and THINK before you go forward tonight and inappropriately approve not one, but two of the following items:  “Agreements for Consulting Services to Augment Staff in processing Land Use Entitlements and an Environmental Impact Report in Connection with an Oil Drilling Project.” DO NOT VOTE FOR THESE TWO AGREEMENTS!!! 
I have lived in Hermosa Beach for 64 years, and I am very interested in maintaining the flavor as well as the environment of our city. I actively defeated the Shell Oil Co. in their proposal to drill for oil in our tidelands in 1957. And I spoke to the Council, March13th, following the signing of the current agreement with E & B, where I stated that we are now starting with a clean slate and must realize this fact. 
The people of Hermosa Beach should be allowed to know which firms are bidding for the opportunity of preparing the necessary Environmental Impact Report. It should not be given to the first group that comes along. Allow those of us who are most interested in protecting our environment to come up with suggestions of who to engage. We have many environmental issues that need addressing, and a two-man group from Orange County, with no office on record, only a P. O. Box, should not be signed up without further consideration and public input.

The Settlement Agreement you signed, March 2, 2012, limits, to $50,000, the amount of money E & B will provide to reimburse the City for only these THREE items from (Paragraph 4.4 a):
1) The EIR,
2) The CEQA 
3) The Election to rescind the Oil Drilling Ban.
Former City Manager, Steve Burrell could earn $168,000 for each fiscal year (plus expenses), and the preliminary estimate for Almanza & Associates is $138,000. This would leave nothing to pay for the election, if it’s ever called.   Do you really think that E & B is going to pay for the contracts you might sign tonight? Please seriously consider your vote!

Yours sincerely, Barbara Guild

P.S. Here is Paragraph 4.4 of the March 2, 2012 Agreement the City made with E & B:

4.4 a. E & B’s Obligations Following Closing a. Reimburse City for the cost of preparation of an environmental impact report or supplemental environmental impact report (EIR) pursuant to the California Environmental Quality Act (CEQA) based on a Project description provided by E & B, should such an EIR be prepared and the cost of conducting a special election NOT TO EXCEED $50,000 as provided in Paragraph 4.6 (a). (Emphasis added). We are concerned why the city staff would need "assistance with processing the development application and other necessary entitlements" since this is a technical and straightforward procedure that shouldn't require a specialist consultant to accomplish. Unfortunately, Mr. Burrell placed a political cloud over his head by choosing to retire when he did. Had he stayed on longer, this contract would not be necessary. Although the city is not paying for his services, it has the appearance of double-dipping. Those opposing oil development will make hay of this which may very well distract from the serious issues of determining the safety of this project and proposed financial return to the city.
We would like to hear some details on why these people were chosen and what their qualifications and expectations are.  This comes from City Officials like Michael Divirgilio who is sounding the horn on more public transparency which I think is good.  Some questions I have for these individuals:

1) What are the details of this consulting agreement?

2)  How much are they getting paid and by Hermosa Beach?

3)  What is their history with the project, E&B, oil or lawsuit?

4)  What is their professional experience managing processes like this?

5)  Do Steve Burrell or Ed Almanza have any conflicts of interest?

6)  How will this facilitate the promise from City Council about making the EIR process public?

7)  Are any city residents involved in the EIR process?

8) Why are the we, the citizens, paying for this? Why isn't this cost being underwritten by the oil company? Or are we concerned that if they pay for it we won't get legitimate answers?

Please add your comments here

Michael Divirgilio's Beach Reporter Letter

Michael Divirgilio's Letter to Beach Reporter & Easy Reader
Transparency Needed

Michael Divirgilio
As a public entity, the City of Hermosa Beach goes to great lengths to publicize its decision making process whenever outside vendors are hired or public money is spent. We do everything possible to demonstrate what we are doing and have public discussions about why we are doing it. We did this for Pier Avenue street repairs and before building beach restrooms. We did it before hiring a website designer and we’re doing it now as we hire a waste hauler. We do it every time.

During last week’s City Council meeting I proposed implementing the same process as we begin hiring a new bank. Of all the things we should evaluate publicly, this seems like the most obvious since our banks will hold millions of dollars of the city’s money.

Only Councilman Kit Bobko thought this was a wise idea, keenly suggesting that what we needed in this process was “transparency.” Alarmingly, none of my other colleagues on the City Council were interested in public review or debate on this issue.

No doubt, we should have instituted this level of oversight a long time ago. But nonetheless, now that my proposal failed, it means our next bank will be evaluated and hired by one person: our new city treasurer, behind closed doors, without public input, without City Council oversight. The city’s funds will move from bank to bank without any oversight or public review at all. This is not how we do business in Hermosa Beach.

This is public money. A city treasurer is a public official, acting on the public’s behalf. No matter who the person, it is neither prudent nor responsible for a single individual to make financially driven decisions like this. The public and City Council should be involved at every step.

As your city councilman I will do everything possible to bring these background details to light and create standard operating procedures moving forward.

I was recently inspired by a Hermosa resident and Los Angeles Times reporter who won the Pulitzer Prize for breaking the Bell, California, salary scandal. He set a new standard for government transparency across the country.

Let’s show the same kind of leadership by setting a new standard for transparency in Hermosa Beach.

Michael DiVirgilio

Tuesday, May 15, 2012

Dangers to Hermosa Beach Residents if Oil Drilling is Permitted

Toxic Pollutants Released During Oil & Gas Drilling

Here are just some of the risks sited by the California Coastal Commission in 1992 for the proposed Macpherson slant oil drilling project that was blocked by a resident revolt.  Read the summary of the seven major risks addressed by the full California Coastal Commission detailed report.  Its important to note that none of these issues can be fully mitigated by new technology as E&B Oil will likely claim.  There are other risks associated with the project. 

E&B Natural Resources Sign at Site in Long Beach
#1)  This is an actual sign from E&B's drilling site in Long Beach, CA.  The previous applicant (Macpherson Oil) proposes to locate a hazardous oil and gas industrial development in a fully developed urban area with nearby residences.  Commission staff did not believe the applicant  had fully analyzed the potential worst-case accidental release of hydrogen sulfide (see Wikipedia definition) that might occur. In addition, some nearby wells have historically produced significant amounts of hydrogen sulfide. As a result, the applicant agreed to fund an independent, third party review of its hazard risk analysis. The consultant, Arthur D. Little, Inc., working under the direction of Commission staff, determined that hydrogen sulfide, an acutely toxic gas, could be encountered during drilling and/or production and could pose a significant safety risk to offsite populations. Hydrogen sulfide is lethal within a few breaths at concentrations of 1,000 parts per million (ppm), and kills within ½-hour at concentrations of 300 ppm. Injuries may occur at lower concentrations and occupational safety standards are triggered at 10 ppm.  

#2) The project poses a risk of fire and explosion. 

#3) Methane Gas Leaks & Explosions - Cause of BP Oil Spill

#4)  Withdrawal of reservoir fluids and associated changes in reservoir pressures may lead to subsidence. Subsidence of the nearshore area could lead to changes in beach profiles and result in loss of sandy beach. Subsidence can also cause increase seismic activity. 

#5) Re-injection of produced fluids poses a remote risk of increased earthquake activity.

#6)  Project-related operations could result in an accidental oil spill from the production facility/drilling site (a maximum 2,800-barrel spill), a tanker truck (a maximum 175-barrel spill), and/or a pipeline (a maximum 141-barrel spill).

#7)  I think this signs from E&B Oil explains our spilling concerns. 

#8) Reduction of clean air to breath.  Don't believe the lies that it won't stink.  

#9)  Drilling and well work-over activities require a  75 to 135-foot tall drilling rig which (a) contrasts sharply with existing neighborhood building heights, (b) will be somewhat visible from several coastal public viewing areas, and (c) isincompatible with the low-profile visual character of this beach community.  Apparently E&B Natural Resources will be proposing a smaller drilling rig. 

#10)  The applicant proposes to remove 12 parking spaces, six of which are Public Access currently available to the public on weekends for beach access.

Sunday, May 6, 2012

Beverly Hills Bans Oil Drilling

The City of Beverly Hills recently passed a ban on drilling. Read the story in the Beverly Hills Patch, January 26th, 2011.

The amendment to the municipal code bans oil, gas and hydrocarbon extraction from surface rigs, but not wells located beneath Beverly Hills that are connected to sites outside the city. The law also prevents the leasing and construction of new hydrocarbon sites effective immediately.

“The Beverly Hills City Council on Tuesday unanimously approved an interim ordinance banning oil and gas drilling. Council members used the legislative action as an opportunity to reaffirm a united, long-held stance that Beverly Hills is no place for surface oil rigs. Councilwoman, Krasne chose to potentially "err on the side of caution" to protect children when she voted "happily, yes" on the ordinance.

"I'm going to say, right now, as I sit at home with a child who has lymphoma, that if there is just a small instance of cancer caused by an oil well on the school campus, then I'm going to err on the side of caution and put this ordinance in place," Krasne said. "If it can be proved to me that this is not the case, then at that time I will gladly lift the ordinance and have no problem."

Thursday, May 3, 2012

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.  Please send changes and suggestions to 

Tuesday, May 1, 2012

What Does the California Coastal Commission Do?

In 1972, alarmed that private development was cutting off public access to the shore, Californians rallied to “Save Our Coast.” They declared by voter initiative that “it is the policy of the State to preserve, protect, and where possible, to restore the resources of the coastal zone for the enjoyment of the current and succeeding generations.” The initiative created the California Coastal Commission to make land use decisions in the Coastal Zone while additional planning occurred.

In 1976, the Legislature enacted the California Coastal Act, which established a farreaching coastal protection program and made permanent the California Coastal Commission as it exists today. The Commission plans and regulates development and natural resource use along the coast in partnership with local governments and in keeping with the requirements of the Coastal Act.

What does the California Coastal Commission do? The Commission’s authority under the Coastal Act is comprehensive. The Commission makes coastal development permit decisions and reviews local coastal programs Local Coastal Programs (LCPs) prepared by local governments and submitted for Commission approval. It also reviews federal activities that affect the Coastal Zone.

What is Hermosa Beach's Coastal Zone? Our Coastal Zone reaches from three miles our to sea and stretches to an inland boundary. This zone applies to anything above the surface of the ground and below.

Does the Commission have authority over oil and gas development?  Yes. The Commission has permitting jurisdiction over all oil and gas development within the State’s three-mile range.

What standards does the Commission use in its permit and land use planning decisions?

The Commission carries out Coastal Act policies, which seek to:
• Provide for environmentally sound expansion of industrial ports and electric power plants and for siting of coastal dependent industries.
• Protect against loss of life and property from coastal hazards
• Protect and expand public shoreline access and recreational opportunities
• Protect scenic landscapes and views of the sea
• Establish stable urban-rural boundaries and guide new development into areas with adequate services

Who are the Coastal Commission members? 
The California Coastal Commission has 12 voting members and 3 non-voting members. Southern California representatives include:  Elected to Coastal Commission in 1997 Brian Brennan (Ventura City Council and former President of Surfrider Foundation) Richard Bloom (Santa Monica City Council).  Read here other bios of Coastal Commissioners.  Watch this video with Brian Brennan and learn about his history and environmental sustainability priorities.

Local District Offices
South Coast Los Angeles - 200 Oceangate, 10th Floor Long Beach, CA 90802 (562) 590-5071

comments powered by Disqus