The Sun, (San Bernardino, CA)

December 27, 2004

Who's got the power?
Author: GEORGE WATSON, Staff Writer

Editor's note: Because of an editing error, an incomplete version of this article entitled "Who's got the power" was posted to this Web site earlier this Monday morning. The full version follows and was last updated Monday, Dec. 27, 2004 at 3 p.m. PST:

A plum commercial real estate deal promoted by county Board of Supervisors Chairman Dennis Hansberger benefits a local businessman known for turning contenders into kings.

It started simply as shopping for a rental and escalated to the deal paying seller Martin Matich and his partners more than the county staff calculated the property is worth. For $4.6 million, the county got twice the real estate needed for a temporary home during renovation of the dilapidated Central Courthouse in downtown San Bernardino.

The sale illustrates the web of influence Hansberger spins among San Bernardino County's power players and the widespread impact those alliances have on everyday decisions. Many of the principals profit from a building boom in hazardous areas already whipsawed by natural disasters, which scientists know are predictable and sure to repeat with devastating force like the Dec. 25, 2003, flood that killed 16 people.

Through his corporation, Matich has poured more than $550,000 into local politicians' coffers. But that's only one strand in Hansberger's web that envelops the nation's largest county and extends north to Sacranlento and east to the nation's capital.

Hansberger crafted this network over four decades, weaving connections linked through friendships, business partnerships and his father's vast land development enterprises.

Over the years, developers' hefty contributions boosted Hansberger's campaign, replenishing the 63-year-old supervisor's war chest.
"What are they buying?" said Gary Negin, a Redlands professor who lost the 3rd District supervisor's election to Hansberger in 2000. "They're basically saying, 'You let us do our thing and we'll let you do yours.' "

Hansberger dismisses the claims, saying be found himself on the outside more often than not. He cited the real players as Supervisors Bill Postmus and Paul Biane, along with their staffs, newly elected 4th District Supervisor Gary Ovitt and his staff, and James H. Erwin, president of the San Bernardino County Safety Employees Benefit Association.

"I think there is a network, and I'm not part of it," Hansberger said. "The network at the moment is the local Republican Central Committee. The politicians in that are very active. If you want to look at where the good ol' boy network is taking place, it is there."

But the wealth of funds appears to have given Hansberger a solid grip on his 3rd District seat. No one bothered running against him in the March primary election. The sense of security enabled Hansberger to funnel more than $100,000 of his campaign money into campaigns of other county and local politicians, nearly all of whom won.

Thousands of Hansberger's campaign dollars helped elect Postmus and Biane, who, given his recent statements, now appear to be breaking away from him. In the November election, Hansberger reached out to Josie Gonzales in her successful bid for a seat on the Board of Supervisors from the 5th District. Gonzales ended up returning a $20,000 contribution she first called a loan.

Hansberger also contributed to the campaigns of Susan Peppler, the pro-growth mayor of historically slow-growth Redlands, District Attorney Michael A. Ramos and a longtime family ally, the influential Rep. Jerry Lewis, R-Redlands.

In a 1992 speech from the floor of the House, Lewis praised Matich and his firm saying, "...the Matich Corp. has constructed flood control projects in Southern Califomia and the Titan missile sites at Vandenberg Air Force Base, and emergency fire mobilization efforts for the Los Angeles and San Bernardino National Forests."

And in 2002, Hansberger married gynecologist~obstetrician Karen Gaia, the 38-year-old mayor of Loma Linda who, like him, is a Republican and is decidedly pro-growth. They serve as co-chairmen of the Inland Valley Development Agency, which is the redevelopment authority for much of the former Norton Air Force Base in San Bernardino.

'Indebted to each other'

The concen over what can appear to be incestuous behavior by politicians does not mean anything criminal is happening. But it does raise questions about whether they are ethically compromised, said an expert in campaign finance who authored many of California's laws on the subject.

"It's just that there can be a lack of public confidence in govemment decisions," said Bob Stem of the Los Angeles-based Center for Governmental Studies. "And it makes the public officials more concerned about campaign dollars than they are about getting votes."

Among recent key county elections, Hansberger's only failure was backing Linda Foster, the wife of his chief of statf, who lost her bid to be assessor by a slim margin to incumbent Donald E. Williamson.

That still leaves most every critical county position indebted to Hansberger, along with many elected posts on the municipal level. Hansberger is also tied closely to fonner Assemblyman Brett Granlund, R- Yucaipa, who sits on the California Board of Prison Terms.

"There's nothing illegal with what Hansberger does, as far as I know," said Bob Minick, a frequent critic of the Board of Supervisors who is a former staff member for the late Rep. George E. Brown Jr., D-San Bernardino.

"But that's not the end of it," Minick said. "It's a back-scratching thing, and they have to help each other. They become indebted to each other, and that breeds a lot of problems."

During Hansberger's 20 years over two stints as a county supervisor, his father, Leroy, has been his power base.

The 86-year-old developer has contributed large sums to his son's political campaigns, lending $100,000 and helping, along with Granlund, Pharaoh's Lost Kingdom builder James Braswell and a host of others, secure another $75,000 line of credit. At the same time, Leroy Hansberger has contributed to numerous other Republican politicians, either through his personal bank account or those he controlled through his enterprises.

For years, Dennis Hansberger's campaign office operated out of his father's nondescript two-story office building at 555 Cajon St. in Redlands. The supervisor's campaign wrote dozens of checks for clerical work, each for the arcane amount of $325 to his father's land development company, Emerich & Co., which developed many properties in the ecologically sensitive, fire-endangered area of Lake Arrowhead.

With his son's rise to power, Leroy Hansberger has stayed on top of a building boom that has literally put the Inland Empire on the map. More than 550 new residents move into the San Bernardino -Riverside area every day, placing the region's rate of growth in a league with those traditional megalopolises Los Angeles and New York.
               
 "Nick Coussoulis and Matich won't like to hear this but Leroy is still the most powerful  businessman in the  valley," said Fred Ford, a Redlands logger and longtime friend of Leroy Hansberger's.  Coussoulis is one of the county's top developers.

In 1967, Leroy Hansberger gave his son power of attoney over his business operations, a fact first publicly disclosed in a report by The Sun earlier this fall.

The authority empowered the elder Hansberger's two sons, Dennis and David, to act on behalf of Leroy Hansberger and his wife, Helen, because the couple sometimes vacationed outside ofthe United States, the land developer said.

Leroy Hansberger told The Sun that neither son exercised the power of attorney.

That document came under scrutiny earlier this year when The Sun revealed that Leroy Hansberger owned 15 lots overlooking the sky-blue waters of Lake Arrowhead. The properties border or are within 500 feet of the redevelopment zone created to rebuild wildfire-ravaged Cedar Glen, a project championed this year by the supervisor.

Dennis Hansberger recused himself from discussing or voting on the project after The Sun's report, and his father rescinded the power of attorney shortly afterward.

Courthouse deal questioned

For much of this nation's history, money has been fundamental to a candidate's success at the polls. Such threads stretch back more than a century. In 1895, Marcus Hanna, adviser to then-presidential hopeful William McKinley put it this way: "There are two things that are important in politics. "The first is money, and I can't remember what the second one is."
 
The notion of ties that bind through financial contributions comes into question here when examining the county's multimillion-dollar purchase from Matich of 303 W. Third St., San Bernardino. No one questioned the need for a temporary home for the Central Courthouse, but buying the site threw a whole new equation on the table for the cash-strapped county.

Before the concrete-block building erected in 1926 can be occupied, it must be retrofitted to protect it from earthquakes. Cnminal courtrooms are also being moved to a new wing because of space needs.

But county staff members struggled to make sense ofthe price when they analyzed the particulars of the deal for 303 W. Third, said Wally Hill, the county's former chief administrative officer, now an assistant county administrator in Florida. By phone and e-mail, HiIl said this about the deal:

First, the county needed only 40,000 square feet of office space. The 303 building came with 100,000 square feet.

 Second, the plan was to lease space, not buy a building.
 
And finally, a potentially better deal for space in the Carousel Mall, which is partly owned by the city of San Bernardino, was withheld from consideration because the city also held loans to Matich and others on the 303 building.

Former Supervisor Jerry Eaves led the early push for the deal with Matich, Hill said. But Eaves' career imploded in a corruption scandal that forced his resignation from the board. The maverick politician pleaded guilty to a conspiracy to violate state conflict-of-interest laws. He was the highest profile elected figure caught in the investigation of corruption that ended up tainting county contracts.

With Eaves gone, Supervisor Hansberger stepped in and drove the 303 deal to completion, Hill said.

"Dennis believed that this would be a good deal for the county, even if it meant we paid more than the staff appraised the building for," Hill said.

More troubling to Hill were the intricacies of the deal negotiated after he resigned in March. Hill questioned that the county chose to lease the property while Matich had it renovated. That meant no bothersome calling for public bids to get taxpayers the best deals on a general contractor, architect, engineer and construction manager, he said.

"That's probably legal (but) it raises doubts as to the reasonableness of the prices paid for those services," Hill wrote in an e-mail. "In an arrangement such as that, there are inadequate controls to prevent excessive charges or kickbacks to the owners or others."
Hill also said it is hard for him to see the justification for a $700,000 developer's fee the County paid to Matich.

"He is being paid profit and overhead as the general contractor," Hill wrote. "So, what's the basis for this additional compensation?"

Hansberger said he is perplexed by Hill's assertions, saying Hill supported the purchase of 303 W. Third St.

The deal makes sense to Hansberger. He said Matich only received a portion of the sale money, with the remainder going to other owner-partners of the 303 property.

"As a county supervisor, I have being saying for years, instead of moving to Hospitality Lane or new, undeveloped neighborhoods, we have to get back to downtown San Bemardino," Hansberger said. "This project tumed out to be the best project when judged by the ultimate users."

Jim Foster stands guard

For six decades, Jim Foster has stood guard over Hansberger family enterprises. The relationship began when Dennis Hansberger was 12 as the pair became friends. Years later, in the second of his three marriages, Hansberger wedded Foster's sister, Ann.

Foster was bom in Texas and served with the Army's vaunted 82nd Airborne Division. Before assuming the role of top aide and political confederate of Dennis Hansberger, Foster worked as a real estate agent for Emerich & Co., Leroy Hansberger's land development operation.

Foster is renowned among county employees for his forceful, no-nonsense approach, Hill said, adding he is even known by some as "the 6th District," a nickname indicating his influence because San Bernardino County is split into five supervisorial districts.

"The truth is, I vote and he doesn't," Dennis Hansberger said. "Jim has a very, very strong sense of what is right and what's wrong. He expresses that privately in the hallway, and a lot of people there don't like it."

In the 1990s, Dennis Hansberger, Foster and Richard Larsen, now the county's tax collector, formed Ohio Investments, a land development company that bought and sold property in the area. All three are listed as directors.

The three arc also part of a prominent group that at one time or another used 555 Cajon St. in Redlands as an address. Records show Jim and Linda Foster and Richard Larsen and his then-wife, Janine Engevik, have all listed the address. Engevik is the "E" in H & E La Cresta, a company run and co-owned by Leroy Hansberger that develops properties in Loma Linda.

Another mailing address, P.O. Box 386, which Leroy Hansberger has used for years for at least one of his companies, also has been used by Dennis Hansberger, the Fosters, Emerichs and Engeviks. Zanja Investments, another land development company is owned by Dennis Hansberger, his second wife, Walta Su Hansberger, and the Fosters, records show.

The ties spin out from there. Longtime contributors to Dennis Hansberger and others in his web include:

 Pat Meyer, whose Redlands consulting finn, Urban Environs, is considered critical for pushing projects through planning agencies.

Robertson's Ready Mix, the concrete merchant. Dennis Troesh, president of the company, and other members of his family have actively supported the supervisor.

The Building Industry Association of Southern California and Frank Williams, executive officer of the association's Baldy View chapter.

Majestic Realty, its owner, multimillionaire Ed Roski, and his local attorney, John Mirau.


Few developments in the Inland Empire received as much ink, or as much criticism, as that involving Majestic and Roski. Together, they pumped thousands of dollars into the campaigns of those supporting the Citrus Plaza project in the so-called "doughnut hole" in northwest Redlands.

The campaign coffers of Hansberger, Peppler and Granlund, all of whom pushed vociferously to prevent Redlands from annexing the property, each received ample funding.

But none compared with that of former Gov. Gray Davis, who vetoed a bill in 1999 backed by Granlund, then-state Sen. Joe Baca, D-Rialto, and fonner Assemblyman Thomas Calderon, D-Montebello, to remove the doughnut hole from Redlands' control. A year later, Majestic gave $81,000 to Davis' campaign, and shortly afterward, the governor signed a new version of the bill he had vetoed.

"The question here isn't about development, per se," said Bill Cunningham, a former Redlands mayor who led the city's slow-growth movement and has faced off against Hansberger numerous times. "It's the character of development, and it's the timing. How is it done? Is it adequately paid for and is it adequately contributing to the community it is in?"

Perhaps the purist benefit of Hansberger's web is something that cannot be seen or heard, some critics argue.

With so many politicians linked together on a county level, rarely do they enter into public debate. Sometimes, county supervisors approve agenda items that authorize spending millions of tax dollars often without a single word of discussion.

"Nobody asks any questions," Minick said. "There's just not anyone who seems interested at all"

Hansberger, who chairs the Board of Supervisors meetings, said he, too, would like more debate.

"The thought process is you are not supposed to vote against something, just ask for something you want," Hansberger said. "I don't agree with that. I believe debate should occur."

It's an intriguing development when looking at something Hansberger said nine years ago when Foster, then a Redlands councilman who clashed with other politicians, announced he would not run again.

"I admire his courage and willingness to take positions on controversial issues," Hansberger said in August 1995. "They may gain a harmonious council. . . but maybe doing the public's business deserves a little arm-wrestling sometimes."