The MENDOCINO COUNTRY Independent


News Updates: DDR INITIATIVEtoxicpadfarm.jpg

 DDR BONDS DOWNGRADED AGAIN ON NEGATIVE OUTLOOK 8/21/09
   Standard & Poor's Ratings Services downgraded Developers Diversified Realty Corp.'s unsecured debt to BB from BB+ on August 20.
    The service said the company's outlook is negative. DDR will face challenges with improving its currently constrained liquidity position and reducing its still-high leverage before its meaningful debt maturities in 2011 and 2012, when roughly 60% of the company's consolidated debt comes due, including its credit facility.


DDR SPENDS NEARLY $300,000.   8/10/09
DDR SPENDS NEARLY $300,000.
Campaign finance records filed with the County Clerk’s office show the campaign committee organzied by Developers Diversified Realty has raised a total of $262,565 since January and spent $296,720 accrding to its statement filed on July
31.
    The committee is called Yes on Measure A, Citizens to bring Jobs, Tax Dollars and Local Shopping to Mendocino County, a Coalition led by Mendocino County Tomorrow with Major Funding by DDR db Mendocino LP. There are two treasurers, one in Salt Lake City and another in San Rafael at the office of DDR's lawfirm. It lists another officer at Beachwood Ohio DDR headquarters, another address at PMB #125, 759 S. State, the Creative Workshop mailbox rental, and another at the former county firehouse on North State due west of Masonite at 1800 N. State.
    The committee which sponsored the initiative petition drive, Mendocino Count Tomorrow with Dave Clark, Robin Collier, Ken Marshall, Danny Rosales, Carol Myer and Katie Huerta was terminated by its San Rafael assistant treasurer in June, the day after supervisors accepted the county clerk's certification of sufficiency of the petitions. Some 10,700 were turned in, 50% more than were needed for a special election.
    The Yes on Measure A committee spent $259,356 this quarter, up from $37,363 spent as of the filing of the committee's May 1 campaign statement, which covered contributions and spending between Jan. 1 and March 31. DDR's cash contribution for the current reporting period is $70,000. Non-monetary contributions include $5,728 for employee time and expenses, and $1,800 for consulting. The Yes on Measure A committee paid $87,925 this quarter to Arno Political Consultants, Inc. of Carlsbad; $73,823 to the San Rafael law firm Nielsen, Merksamer, Parrinello, Mueller & Naylor, LLP; $22,374 to the Santa Rosa political consulting firm Muelrath Public Affairs, Inc.; and $11,932 to The Monaco Group, a Tustin printing and mailing firm.    Other expenses included $251 to Mendocino County Tomorrow Executive Director Dave Clark for literature, a $136 bank fee to the Bank of Marin and a $6,000 insurance payment to Mesirow Insurance Services, Inc.   
    The committee also has an outstanding balance of $22,750, owed to Dresner, Wickers & Associates, LLC, of San Francisco, which describes itself as "the go-to political consulting firm for Republican candidates, ballot initiatives and major trade organizations" in need of "strategic communication, media production and placement, polling and focus groups."
    DDR and Mendocino County Tomorrow have scheduled a Town Hall meeting at the Redwood Valley Grange on August  26 at 7pm. Jeff Adams local project manager for DDR will be the featured speaker.



DDR Continues Harassment of LAFCO 8/4/09
    Developers Diversified Realty of Beachwood, Ohio has hired local attorneys to continue its harassment of the Mendocino County Local Agency Formation Commission. Daniella Pavoni of Carter Momsen was in the LAFCO office on August 3 cataloging documents in connection with director McnMichael's service impact report on the Mixed Use Masonite project. The survey may indicate the company contemplates subpoenaing the documents.
      On May 18 the Local Agency Formation Commission executive director Frank McMichael gave a verbal report, later published, then withdrawn, that detailed numerous prospective impacts on local sewer, water and other districts resulting from any eventual buildout of the project. This report, quoted extensively in Johnson's suit, is available exclusively online at www.mendocinocountry.com/
    LAFCO took the report off its website after DDR's Sacaramento attorney Margarite Mary Leoni wrote a letter May 28 accusing McMichael of illegal use of public funds in distributing the report, and threatening to sue to recover costs from the executive director personally and demanding the commission disown the report and reprimand him.
    On June 17, LAFCO directors on advice of county counsel Jeanine Nadel ordered McMichael to revise and augment the report. They also authorized Nadel to answer Leoni's letter which she did on June 26.
    The county counsel's response to DDR demurred to Leoni's legal reasoning in that the proposal was not yet on the ballot when McMichael's report was issued. In addition, she pointed out the cases cited by Leoni justified the publication of a factual report by a government agency, and the right of public bodies to take positions on ballot measures and inform the public of their positions as long as such activities do not include campaigning in their content and form.
    In addition, Nadel warned Leoni that if the company made any more efforts to restrain LAFCO from investigating and reporting on the potential impacts of a project to be built under the initiative, she would institute anti-SLAPP proceedings agains the company.
    Leoni told this reporter that her client's decision whether to sue LAFCO would depend on the content of the revised report, which will be vetted by county counsel and the commission.
    During the dramatic June meeting, commission members politely ignored Leoni, and seemed to warmly support the executive director in the tone, if not the substance of their remarks. Chairman Jere Melo of the Fort Bragg City Council gave a favorable reading from Mike Sweeney in which the director of the county's Solid Waste Management Authority and former campaign manager of Measure B supported McMichael's report as an exercise in free speech required by LAFCO's fiduciary responsibilty to defend the interests of local agencies and districts, and adhering to recent court decisions to define the limits of proper public body statements concerning ballot intiatives.
    On June 3, the Ukiah City Council passed a unanymous resolution -- also available at www.mendocinocountry.com -- "strongly opposing" the initiative yet they have not received a simlarly threatening letter, according to councilman Benj Thomas who was also present at the meeting.
    The Willits City Council took a similar position by 3-2 vote on July 22. The Vote was Stranske, Madrigal and Kanne for the resolution of opposition and Burton and Hansen oppposed.
    The LAFCO commission held its regular meeting August 3 and after a 45 minute closed session reported out that McMichael had been given instructions. He reported he would have a revised report out by August 15.
   
Second Quarter Losses  (7/25/09)
Developers Diversified Realty reported a second quarter loss of $226 million in the end of July. The sources were $240 million in balance sheet charges, including depreciations of assets, discontinued operations and the elimination of a gain on the repurchases of notes.
Chief executive Scott Wolstein put a happy face on, claiming it wasn't as bad as first believed and the ratio of leasted to total space was "stable." Wolstein recently put up his $2 million Chicago area home for sale.
    Retail real estate investment trusts have been hurt by the drop in consumer spending, and have seen some tenants go out of business. Developers Diversified, which owns more than 700 shopping centers worldwide, has sold assets and stock and slashed its capital spending. All three major rating agencies cut the company's ratings to junk status this spring.
    Developers Diversified plans to raise $600 million through two bond sales, which are to be the first major offerings of commercial mortgage-backed securities to take advantage of the Term Asset-Backed Securities Loan Facility, or TALF, program.
    The REIT reported a loss of $226.6 million, or $1.64 a share, compared with a profit of $36.7 million, or 22 cents a share, a year earlier.
Funds from operations, a key financial measurement for REITs, showed a loss of $1.15 a share compared with earnings of 82 cents a year earlier. FFO excluding items was 51 cents.
    Revenue dropped 8.2%, to $204.3 million.
    Analysts' estimates were for FFO of 50 cents and revenue of $202.1 million, according to a poll by Thomson Reuters.
    Charges included a $107 million write-down of assets under contract to be sold and assets formerly occupied by Mervyns, which declared bankruptcy; an $80 million loss on equity derivative instruments; a $61.1 million write-down on the loss of sales from discontinued operations; and a loss of $45.9 million on notes repurchases.
    During the quarter, the company executed 147 new leases and 259 renewals, totaling 3.1 million square feet. Rental rates decreased 4.7% overall.
    The core portfolio was 90.7% leased as of June 30, compared with 95.5% a year earlier.

Voters Union Lawsuit  (6/18/09)
    On June 18, Mendocino County superior court judge Ronald LaCasse denied the Voters Union petition for a Temporary Restraining Order barring supervisors from putting the Developers Diversified Realty (DDR) initiative on the ballot next Tuesday.
    He said pro per plaintiff and VU general secretary Richard Johnson had failed three tests:
    1) To show he would prevail at trial;
    2) That he would suffer irreparable harm;
    3) That the TRO would be consistent with public policy.
    The judge reiterated arguments made by deputy county counsel Terry Gross and DDR attorney Margarite Mary Leoni that courts generally do not allow constitutional objections to the content of initiatives to bar their placement before voters because the powers of initiative and referendum are reserved in the electorate and must not be lightly disturbed.
    Johnson had raised three constitutional objections to the DDR initiative:
    • That it granted governmental powers to the developer in that the lack of specificity in the Specific Plan amounted to a carte blanche exemption from zoning;
    • That it amounted to a gift of public funds in that it externalizes costs of environmental and service impacts onto other communities, ratepayers and landowners that absence of CEQA review obviates lead agency review, public comment and mitigations under an environmental impact report.
    • And therefore it denies due process and equal protection of the law to those other individuals and agencies.
    Judges have broad discretion to decide what constitutes a "clear showing of irreparable harm." Johnson referred to his experience in his 2008 lawsuit to stop Measure B going on the ballot. After judge Behke declined to grant a TRO and scheduled a hearing, the county printed the ballots before the hearing took place.
    There is also a distinction between a constitutional objection which is preferably heard by courts after approval of a ballot measure, and pre-election review of a proposal that is not properly the subject of an initiative.
    Johnson argued that the DDR iniative was an illegal attempt to allow Mendocino County voters to amend or revise the state constitution in regard to these specific parcels.
    Because Johnson only asked for one remedy -- a prohibition on supervisors placing the matter on the ballot -- no further hearing was scheduled in this action.
    Neilsen Merksamer lawyer Ms. Leoni appearing on behalf of DDR's local front group Mendocino County Tomorrow also argued that Johnson had misjoined real parties by not naming Developers Diversified Realty in his suit.
    In addition to her well taylored $300 per hour presence, project developer Jeff Adams was also there along with attorney Daniela Pavone of Carter Momsen, showing the seriousness with which they viewed the emergence of the first visible opposition to their initiative.
    The court hearing was covered by two video crews and a Ukiah Daily Journal reporter who Johnson told his lawsuit was "just fireworks" to announce the opening of a Voters Union campaign to defeat the DDR initiative.

Board of Supervisors 6/16/09
    On June 9, 2009, the board of supervisors accepted the County Clerk’s certification of the initiative petition titled "GENERAL PLAN AND ZONING CODE AMENDMENT, AND MIXED-USE SPECIFIC PLAN FOR THE FORMER SITE OF THE MASONITE FACILITY" finding the petition to contain the required number of signatures to qualify for the November 3, 2009 regular election.
    On June 16, the board got first glimpse of the staff report on the initiative's impacts prepared under section 9111 of the Elections Code. At that time, they continued discussion of the 166-page report until June 23 around 10am.     
    The board ordered further questions be studied concerning whether the applicant would pay their fair share of traffic mitigations; about the impact to timber company ability to use Haul Road east of North State Street, concerning Caltrans’ statements regarding the widening of North State Street to six (6) lanes (a $15-20 million impact), and the impacts to the Ukiah Valley Area Plan (UVAP);  
    In addition, there was a request the City of Ukiah review the Ukiah Valley Sanitation District (UVSD) General Manager’s comments regarding sewer impacts, and to offer their own opinion to either support or provide additional information;  
    In addition the impacts from potential Pinoleville Gaming project and Terrace Mining project were requested.
    While the 9111 report answered many quesions posed by supervisors, most of those answers were unspecific due to the many disclamers in the custom made Specific Plan that the renderings, specifications and standards were only conceptual, and that eventual roads, layout, buildings and amenities would depend on the applicant developer's discretion and market conditions
     Elections Code § 9116 requires the board to either adopt the ordinance without alteration at the regular meeting at which the certification petition is presented, or within ten days after it is presented submit the ordinance without alteration to the voters pursuant to Elections Code §1405;
    But since they ordered a report pursuant to Elections Code § 9111, it is required they either adopt the ordinance within ten days after the report is presented or order an election to be held at the next regular election.
`    On June 16, supervisors ordered the text of the proposed initiative ordinance be submitted to a vote of the qualified electors of Mendocino County on the November 3, 2009 regular election ballot.
   
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