These are my selections for the top stories from 2009 as reported by the Daily Press.

As in 2008 , the No. 1 story involves Bill Postmus, the political darling of the valley who apparently went so wrong.
  
 1. Embattled former San Bernardino County Assessor Bill Postmus was formally charged with nine felony counts as part of a wide-ranging corruption probe, which he pleaded innocent to. The former assessor and five of his former employees were sued in a civil lawsuit for allegedly using the Assessor’s office as a “personal political machine.”
 
  2.  Victorville’s financial woes: An audit shows the city is $150 million in the hole.
 
4. The foreclosure crisis hits the Victor Valley hard, with many homes falling in value to 50 percent — or even lower — of their previous highs.
   
5. General Electric terminated its contract with Victorville for $173 million in power plant equipment. The terms allow GE to keep Victorville’s $50 million deposit on the equipment and either demand a $108 million termination fee or take control of the Victorville 2 power plant.
 
8. and 9.  Crime: The FBI noted that the chances of being a victim of violent crime is actually higher in the High Desert than in Los Angeles.
 
The Dr Pepper Snapple Group plant is being built and is offering up to 200 jobs, and the Bright Source Energy’s Ivanpah Solar Electricity Generating System will offer between 850 to 1,000 construction jobs.
  
12. Victorville has already spent tens of millions of dollars doing design, environmental and engineering work to prepare for a 13,000-foot rail spur connecting BNSF’s track with SCLA. But Victorville’s two-year old agreement with rail giant BNSF has expired and there are no plans to renew it in the near future.
 
January

• Residents  of Victorville are more likely to become victims of violent crime than residents of Los Angeles, according to a recent study.

• The Hesperia Unified School District governing board approved $4.2 million in budget cuts in an attempt to rein in the district’s fiscal crisis. Among the cuts: 70 elementary school teachers.
 

• Former Adelanto Mayor Jim Nehmens and his wife, Kelly, have been ordered to pay more than double their previous monthly amount in restitution after being found guilty of stealing from the Adelanto Little League.
  

• Assessor Bill Postmus was arrested after investigators found methamphetamine in his home.
    

• Victorville has quietly loaned $200,000 to Victorville Motors to help keep the dealership afloat during what its owner calls unprecedented, desperate times.
    

• Jim Cox has stepped back into the position of Victorville city manager on an interim basis while the City Council recruits a full-time replacement for Jon Roberts.

February

• Amid an arrest for methamphetamine possession and two ongoing investigations, San Bernardino County’s embattled assessor, Bill Postmus, resigned.

Assemblyman Anthony Adams is one of three Republicans who provided the final votes to push the largest tax increase in the history of California, more than $12 billion in tax hikes.

March

Audit shows city in deep financial hole

Power play
$13 million to Inland Energy as power projects dim
March 14, 2009

BROOKE EDWARDS Staff Writer

VICTORVILLE • The city has paid more than $13 million to Inland Energy since August 2005, primarily to lay groundwork on energy projects — projects that may never happen.
By far the largest sum was $11.2 million toward the development of the $1.2 billion Victorville 2 power plant.
As developer of the project, Inland Energy has secured a permit from the California Energy Commission and an agreement with contractor Kiewit, retain investment banking firm Goldman Sachs and create an emission off-set plan — "all of the activities that make that project one that can be financed and constructed," Inland's Vice President Tom Barnett said.
The city hopes to get the project started and then sell it to a private developer to construct and operate, with a projected $7 million or so in annual revenue then coming to Victorville.
"To take a project to the point VV2 is now involves a whole array of activities that are all time consuming," he said. "But without that, a buyer couldn't decide whether to buy it or not."
Inland Energy president William Buck Johns said he's very confident that a buyer will be lined up, with 11 or 12 currently interested in the project.
However the city is four months past due paying General Electric $126 million for equipment for the plant, and risks losing a $50 million deposit and rights to build VV2 if another buyer can't be found soon.
The next largest expenditure was $1.1 million consulting for the Foxborough power project, which has now been abandoned by the city.
Inland has also been paid anywhere from $83,288 to $330,201 since 2006 to consult on projects including the city's hopes to become an inland port for Long Beach, building a facility to burn trash and the EB-5 Visa Program, exchanging green cards for an investment from foreign nationals.
"I have no idea what the city is getting for all the money other than consulting work," Councilwoman JoAnn Almond said. "We need to cut the ties, I think, until we find out where we stand and what we need as a city."
When asked to discuss the city's contract with Inland Energy and what services have been provided, Interim City Manager Jim Cox said he hadn't had time to go over that subject enough to give a response.
City spokeswoman Yvonne Hester also deferred back to Inland Energy, saying the only person who knew details of those dealings was former City Manager Jon Roberts.
Councilman Mike Rothschild declined to speak to the Daily Press, while Mayor Rudy Cabriales and Councilman Terry Caldwell couldn't be reached for comment.
However Johns said Caldwell has been instrumental in moving the vision of these projects forward.

No deal in Venezuela
City left scrambling for another solution
March 16, 2009

BROOKE EDWARDS Staff Writer

VICTORVILLE • No deal came out of his recent trip to Venezuela, Mayor Rudy Cabriales said Monday. Now the city is still scrambling to find a way out of the $126 million payment it owes to General Electric on equipment for the planned Victorville 2 power plant.

“Obviously we’re disappointed in the outcome,” Cabriales said. “The commitment I was hoping to secure ... was not forthcoming.”

The trip was arranged by the city’s broker on the equipment — David Hartzell with ITMA Associates — and the hope was that the South American country’s government would buy the power stations for a project in the Venezuelan state of Sucre.

Cabriales said he was asked to join the ITMA team “to bring legitimacy to the city’s commitment” to sell the equipment. His wife Vickie Cabriales went with him “as a matter of international protocol,” he said, in order to attend a dinner with the governor of Caracas and his wife — a dinner later canceled due to the governor’s schedule.

“Hurry up and wait” was the theme of his days down south, Cabriales said, adding it was far from a pleasure trip.

The trip cost roughly $5,000, Cabriales estimated — a fee that would’ve been well worth it if it got Victorville out of the bind it’s in.

The city is four months past-due on the GE payment and risks losing a $50 million deposit and rights to build VV2 if another buyer can’t be found soon.
A special meeting has been called at 5 p.m. Tuesday in City Hall to hear a presentation from a potential buyer. Cabriales said the Council will also explore other options during closed session after the meeting, since the late payment poses a very real legal threat from the power giant.
 

• Victorville has already spent tens of millions of dollars doing design, environmental and engineering work to prepare for a 13,000-foot rail spur connecting BNSF’s track with SCLA. But Victorville’s two-year-old agreement with rail giant BNSF has expired and there are no plans to renew it in the near future.
   
• Victorville’s assets are worth $203 million less than previously reported, it is in default on two major bonds and it’s posting $159 million in deficits for two major funds.

 • The county unemployment rate hits 11.5 percent.

• The Apple Valley Unified School District unanimously voted to issue pink slips to 48 teachers and counselors.

April

• Victorville is in default on its contract with General Electric for Victorville 2 power plant equipment, according to documents from the company, with a $126 million payment now almost five months overdue.

 General Electric terminated its contract with Victorville for $173 million in power plant equipment. The terms allow GE to keep Victorville’s $50 million deposit on the equipment plus either demand a $108 million termination fee or take control of the Victorville 2 power plant.

Background on city's contract with GE
April 03, 2009

BROOKE EDWARDS Staff Writer

In 2007, Victorville put $50 million down on $183 million worth of equipment being built by General Electric for the planned Victorville 2 power plant, with the balance due in November.

Councilman Terry Caldwell said the city knew it didn’t have the means to pay the $123 million balance to GE, with plans to sell rights to development the entire $1.2 billion power plant before that payment was due. But so far every deal has fallen through, with officials blaming the economic downturn.

GE has given Victorville several extensions and the city has been scrambling to find someone to at least buy out the remaining $126 million contract for the power station, which now includes an extra $3 million in penalty fees.

Mayor Rudy Cabriales even traveled to Venezuela in March to try and sell the equipment without success.

The city is still trying to sell the plant with several potential buyers — most notably a power company run by the Chinese government.

If a deal isn’t struck by April 16, GE can choose to keep Victorville’s $50 million deposit and take development rights to VV2 — which could mean an additional $50 million or so lost on land, permitting and other start-up costs.

Victorville braces for more bad news
$100 million deadline passes; City expects lawsuit over default to GE
April 16, 2009

BROOKE EDWARDS Staff Writer

VICTORVILLE • The fifth deadline to pay General Electric $126 million for Victorville 2 power plant equipment passed Thursday — and the city’s not saying a word about the outcome.

Victorville had until 2 p.m. Thursday (5 p.m. EST) to pay the balance for equipment purchased from GE in 2007. Otherwise, the city faced losing the $50 million deposit it put on the power stations and possibly signing over development rights for VV2, with another $50 million or so lost in development and permitting fees.

Deputy City Manager Doug Robertson and City Attorney Andre de Bortnowsky did a turn-around trip to New York Wednesday, trying to secure another extension to the contract.

As of 1 p.m. Thursday, after city staff met behind closed doors all morning, spokeswoman Yvonne Hester said, “We still don’t know anything yet. What GE told us is that they could not even look at an extension until the deadline passes ... So we’re waiting.”

At 3 p.m., Hester said de Bortnowsky sent an e-mail to city staff and council telling them he anticipates litigation over the GE contract and recommending they not talk to the public or the press.

De Bortnowsky did not return a request for further comment, and other city officials said they’d been instructed not to talk about the late payment.



• Defaults, too much debt, a depleted general fund and too many interfund loans led Standard & Poor to suspend credit ratings for several Victorville bonds.

The San Bernardino County grand jury is investigating the city of Victorville over its finances, officials confirmed.

Silverado High School’s newly completed $44 million ninth-grade campus will remain closed for at least 15 more months.


May

The San Bernardino County Board of Supervisors filed a civil lawsuit against former Assessor Bill Postmus and five of his former employees for allegedly using the Assessor’s office as a “personal political machine.”

Victorville is looking to close a $109 million gap between how much it planned to take in this year and how much has actually flowed into city coffers.

Victorville has pledged $65 million in loans from its water district to cover deficits from a failed electricity project and to move its latest venture — a wastewater treatment plant — forward on schedule. However the water district only has $33 million in its account.

• More than a quarter of the city’s water and sanitation customers, or 11,422 people, were recently sent notices warning them that a lien could be placed on their home for past-due bills.

June

• Victorville has filed a counter-suit against design firm Carter & Burgess Inc., hoping to recoup some of the $120 million or more it sunk into the abandoned Foxborough power plant.

• City Manager Jim Cox is proposing to layoff between 120 and 140 employees, slash all salaries by nearly 8 percent and cut a slew of other benefits in order to close a $13 million gap in Victorville’s budget.

July

VV2 comes with slew of ‘land mine' entanglements
Potential buyers: We want Inland Energy out
July 04, 2009

By Brooke Edwards


VICTORVILLE • Some of the very "milestones" toward the development of the Victorville 2 power plant that the city and its consultant Inland Energy boasted about over the last year have become roadblocks to interested buyers, according to those involved.
Now buyers say the city could face hefty termination fees in order to make the project viable, plus a challenge to find its way out of a contract that guarantees Inland Energy $5 million annually in perpetuity.
Last spring the council unanimously approved a recommendation from Inland Energy to enter into contracts with Goldman Sachs to finance the plant's development and with Kiewet to design and build it.
With developers now saying they'll only consider the plant if it's free and clear - with their own builders and financing mechanisms in place - the city could be asked to cover $9 million in termination fees to buy out the Goldman Sachs and Kiewet contracts.
"It's hard to believe that the city attorney and city council accepted those contracts as being beneficial to the city," said one consultant for an international client seriously interested in the plant. "They're basically gifts to friends and family, as far as we can see."
However city insiders and potential buyers (who spoke on the condition of anonymity because of confidentiality agreements and deals still in the works) have said the biggest obstacle to a sale is the project's obligations to Inland Energy itself.
A contract signed by then-Mayor Mike Rothschild in 2005 guarantees Newport Beach-based Inland Energy 5 percent of annual profits, projected to equal $5 million each year.
The payment is "in recognition of the unique value of the experience and expertise" Inland brings to the project, the contract says, plus "ongoing management services which
Inland may perform after the project has begun operation."
When asked to comment on the $5 million fee and how it's affected potential sales, Miguel Gonzalez, spokesman for Inland Energy, e-mailed over a statement about how the company will continue to work on developing VV2 in the best interest of the city.
Tom Barnett, Inland Energy's vice president and point person on the project, declined to respond in more detail because of the delicate nature of the ongoing negotiations.
"It's unclear why a company like Inland would be entitled to a fee like that," said an attorney who evaluated the project for an energy client who eventually walked away.
The attorney, who has a number of municipal power projects under his belt, said he's never seen anything remotely close to that type of guaranteed, never-ending payment.
"The numerous people that I have spoken to - and some of them very substantial in the energy circles - specifically state that with a $5 million obligation to the consultant, Inland Energy, that they would never take on the development," said Dan Tate, a local developer who's been involved with meetings to help broker a deal on the plant.
"When I broached this with the city, I was told that the city had requested Inland Energy to make the city an offer to buy them out of their contract."
But with no termination fee written into the contract and the life of power plants established at around 30 years, that would put the value of the Inland Energy obligation at around $150 million. Even if Inland Energy agrees to a termination fee at a fraction of that amount, it's money the struggling city simply doesn't have.
The consultant for the potential international buyer insists that it was ready to make the city an offer for the plant last year, long before the city fell into default over a late $126 million payment to General Electric for the plant's equipment. But, he said, when his clients indicated the annual payment to Inland Energy could be a deal-killer, Inland officials pushed their proposal aside and sought out other prospects - a "conflict of interest" claim raised by representatives for three potential buyers.
"That is a major issue," the consultant said. "If a bidder has an issue with the 5 percent participation fee that Inland is claiming, the city should hear about that directly and not through Inland. ... It's highly usual that Inland would be involved in the vetting process or the review process at all."
Now, the consultant said, his client is looking elsewhere to develop a plant, with prospects in Kern and Riverside counties or elsewhere in San Bernardino County.
"It's actually hard for us to read the stories about the GE situation and the layoffs that are coming," the consultant said, "because the city probably wouldn't be facing any of those issues had our deal gone through."



 • Former Assistant Assessor Adam Aleman pleaded no contest to four felony counts and agreed to cooperate in the public corruption investigation into the San Bernardino County Assessor’s office.
  
• Victorville made the list of the 25 fastest growing cities in the nation.

 • Against the recommendation of a brand new superintendent, the Victor Valley Union High School Board approved $ 15 milli on toward Excelsior Education Center’s new campus.
 
Supervisors selected Dennis Draeger as new county assessor.

A total of 47 city employees were handed layoff notices to help Victorville begin to close a $13.4 million budget deficit.    

Six months after his arrest for drug possession, embattled former San Bernardino County Assessor Bill Postmus was formally charged on nine felony counts as part of a wide-ranging corruption probe, which he pleaded innocent to.

August

California raided more than $30 million from Victor Valley cities and redevelopment agencies.

The Quan family from the Hunan Province of China committed to investing $500,000 into the city of Victorville in exchange for American visas under the federal EB-5 program. 

 • Victor Valley College laid off 12 and cuts services to students with learning disabilities, low incomes, childcare needs and more.

• After placing three top county managers on paid administrative leave, San Bernardino County officials said they discovered a multi-million dollar deficit in the Land Use Services Department.
 
• The state named Hesperia one of five new enterprise zones, which will allow businesses to generate millions of dollars in tax credits.

September

VV 'very close' to deal with VV2 buyer September 25, 2009 10:08 AM

BROOKE EDWARDS Staff Writer

VICTORVILLE • In spite of this week’s buzz that “a big announcement” was forthcoming about a buyer for the planned Victorville 2 power plant — a move that could help edge the city away from the possibility of bankruptcy — no such buyer has been announced.
However city officials say that much-anticipated news is coming soon.
“I would just simply say I think we’re very close to the end of this process,” said Councilman Terry Caldwell, who’s serving on a committee to review the bids along with Councilman Ryan McEachron. “These are very delicate discussions with multiple parties, and it’s just a process that you can’t run a risk of saying something that scares anybody away.”

• A private prison operator plans to build a 2,200-bed detention center that holds illegal immigrants on 51 acres near two other local prisons in Adelanto.

San Bernardino County supervisors approved just over $1 million in federal stimulus funds for the High Desert Domestic Violence Program.

State officials have approved Adelanto’s request to end its prison contract early, paving the way for a private operator to buy the city-owned prison for $28 million.

October

 • County supervisors approved nearly $10 million for local road projects slated for construction by summer — with paving two dirt roads surrounding Oak Hills High School among the top priorities.
 

• The San Bernardino County Board of Supervisors agreed to borrow $37.1 million to make up for property taxes withheld by the state.
  

 • Hesperia acquired the right-of-way on 40 out of 52 pieces of property needed to begin Ranchero Road Underpass construction.

November  

• In a stunning move, the San Bernardino County Board of Supervisors fired County Administrative Officer Mark Uffer “ for no cause.”

• After reviewing a sampling of 1,839 petition signatures to unseat Assemblyman Anthony Adams, the California secretary of state rejected the recall attempt and ruled that 46 percent of the signatures sampled are invalid.
 

• After more than a year of fielding complaints over inaccurate water bills, the Victorville City Council voted to spend $1.5 million to purchase a new computer system to handle accounts for its water department.

December

 • The San Bernardino County grand jury stepped up its investigation into the city of Victorville, with all five council members and senior city staff recently questioned under oath.
   
• In a move that caught even the homeowners by surprise, Mojave Water Agency heard the outcry from a group of residents and shifted plans that otherwise would’ve landed two giant water tanks in their backyard.

The Apple Valley Town Council voted to stop working on plans to build a stadium along Bear Valley Road and possibly move the High Desert Mavericks to town.

Snowline Joint Unified School District board members killed a proposed $250 parcel tax measure aimed at plugging a multi-million deficit without deeper cuts to classrooms.

Victorville has two versions of its Water District audit done by two different firms for the 2007-08 fiscal year — and the reports show the same $51 million used two different ways.

 • Rep. Jerry Lewis secured funds for the High Desert on several local projects through his additions to the newly approved $447 billion federal omnibus spending bill.

Some council members out of the loop
BY BROOKE EDWARDS 
STAFF WRITER  12-13-09
    VICTORVILLE
When one or two council members have a meal with a private developer to discuss a potential project, some chalk it up to being active, pro-growth representatives for the city.
    Others say it’s symptomatic of the way business has been conducted in Victorville for some time, meeting at the local watering hole and leaving some council members out of the loop.
    Developers of the private DesertXpress train fro m Victorville to Las Vegas recently held a meeting in the Grumpy Golfer restaurant at Greentree Golf Course.
    Tom Stone, president of DesertXpress, said they’ve been hosting delegations for the six worldwide teams interested in providing some equity investment , com - pleting the design and construction, and operating the high-speed train.
    “Last week was team Italy and this week was team China,” Stone said.
    Only three council members were invited by representatives from DesertXpress partner Inland Energy to attend the Dec. 5 luncheon with “team China:” Mayor Pro Tem Mike Rothschild, Councilman Terry Caldwell and Councilman Ryan McEachron.
    “I don’t know anything about a meeting that happened there,” Mayor Rudy Cabriales said, when questioned about the lunch on Thursday. “If city officials were there, we weren’t notified.”
    Councilwoman JoAnn Almond echoed this sentiment, particularly surprised she’d been left out of the loop since she was at the Grumpy Golfer that same morning to prepare for the city’s Christmas Parade along with the three invited members.
    “The team of Inland Energy and DesertXpress decided to invite the council members who have shown the most interest in the DesertXpress project,” Inland spokesman Miguel Gonzalez said in an e-mail.
    McEachron said he had a scheduling conflict and couldn’t attend — which turned out to be fortuitous, as attendance by three council members could’ve been a potential conflict with the state’s open meetings law, the Brown Act.
    “I don’t think there’s any conflict at all,” Caldwell said. “First off, it wasn’t a city meeting.”
    Caldwell said from his standpoint the luncheon was a “social gathering,” and no more a violation of the Brown Act than council members having been together at the Christmas Parade that morning or at a Chamber of Commerce breakfast.
    Caldwell, Stone and Gonzalez all said there was no discussion during the Dec. 5 meeting of the Desert Gateway Specific Plan, which guides development for the 10,000 acres surrounding the train’s terminus in northern Victorville — a controversial plan that’s before the City Council on Tuesday for approval.
    “The Desert Gateway plan was not discussed, at least when I was around,” Caldwell said. “We talked about the train. We talked specifically about the train.”
    Rothschild did not return a request for comment on the meeting.
    While the city isn’t directly involved in the train itself, McEachron said, DesertXpress is the “focal point” of the Desert Gateway plan.
    Concern was also raised over the location of the meeting.
    The Grumpy Golfer is actually mentioned in a lawsuit pending against the city — and Caldwell personally — with CMB investment group questioning the fact that its initial meeting with Victorville officials took place there.
    And so, because of “speculation in the community of what things were happening there,” Cabriales said when he took the office of mayor in December he asked that any meetings involving official city business happen at City Hall.
    “I do not see any reason for anybody to be concerned about the fact that we had lunch at the Grumpy Golfer,” Caldwell said. “You can’t have lunch at City Hall.”
    In response to the issue of public perception, Caldwell said, “Of course everybody’s entitled to their own perception. It’s like looking at a work of art — it’s all in the eyes of the beholder.”

VVEDA audit uncovers error
$376,741 Victorville accounting error to be split between local cities
BY BROOKE EDWARDS 
STAFF WRITER  12-27-09
    Victorville has agreed to pay a total of $376,741 back to the members of Victor Valley Economic Development Authority after an independent audit uncovered an accounting error from more than two years ago.
    Roughly half of that total will actually go back to Victorville per the VVEDA distribution policy, with the rest split between Apple Valley, Hesperia, Adelanto and San Bernardino County.
    The error was found when Brad Mitzelfelt, 1st District supervisor for the county and chairman of the agency created to redevelop the area surrounding the former George Air Force Base, called for transferring the treasury function for VVEDA from Victorville to Apple Valley. The board approved the move, with concern over Victorville having received no opinion on its 2007 audit, and Apple Valley then hired an independent auditor to ensure everything was accurately transferred.
    Local accountant Jennifer Starbuck performed the audit back to July 1, 2006, and found a few errors during that fiscal year in how Victorville had reported losses on investments and interest credited to the member agencies.
    The majority of the discrepancy — or $309,447 worth — resulted from Victorville backdating transactions and therefore short-changing all of the member agencies out of nearly five months’ interest income on some $21 million.
    Starbuck said the error would’ve been easier to catch and trace had the VVEDA cash funds been segregated from Victorville’s other pooled accounts. Since the cash accounts were comingled, she said it was a little more complicated to unravel. However, she said the dating error was caught and fixed by Victorville’s finance team for the 2007-08 fiscal year.
    William Pattison , finance director for Apple Valley and the new treasurer for VVEDA, said there are no plans to go back and see if that same error took place in VVEDA’s previous 13 years as an agency with more money potentially owed to the member cities.
    “I’m not really worried about it,” Pattison said, instead comfortable with relying on the fact that Victorville had clean audits of its own finances prior to the 2006-07 fiscal year.
Brooke Edwards may be reached at (760) 955-5358 or at bed wards@VVDailyPress.com.