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Supervisors reject referee clause to correct Herlong property sale error

Tuesday, March 11, 2014 — In a 4 to 1 vote, the supervisors struck down a motion to invoke the referee clause for the wrong sale of a Herlong parcel the county had intended to keep.

If any controversy, breach or dispute arises out of the agreement, the referee clause allows an appointed person to decide the issues of fact and law and to report a decision and issue all of the legal and equitable relief appropriate.

Supervisor Aaron Albaugh, who requested the matter be placed on the board’s agenda for discussion, said, “The lawyers who wrote the sales agreement had the foresight and intuition to include the referee clause to protect the county. It would totally be unfair to all of the citizens of Lassen County not to use this tool that was provided.”

To the other board members, Albaugh said, "Gentlemen, we all took an oath of office. If we walk away from this without utilizing all of the options then shame on us."

Zone V2, which includes the chapel, the Family Resource Center and One Stop was “erroneously” included in an exhibit when a request for proposal was issued for the sale of the Local Reuse Authority property. Due to the error, the property now belongs to the buyers Pezzullo, Smith and Hayes, LLC.

The error was discovered in November 2013, shortly after a quitclaim deed was signed between the buyer and seller on Oct. 31, 2013.

An interim rental agreement was negotiated in late January and the county is now renting the facility for $ 1 a month, as well as the costs of maintaining the facility, insurance, taxes and utilities.

Albaugh requested the matter be placed on the board’s Feb. 18 agenda, but the matter was continued to Feb. 25 after supervisor Bob Pyle said he refused to discuss the matter without county counsel Rhetta VanderPloeg in attendance.

After he made his request, Albaugh said he received more positive comments than he ever did about a community swimming pool.

During the Feb. 18 meeting, Albaugh said, "I waited until now to bring this up because of the voice from the community of Herlong on their need to continue services at a convenient location out there in Herlong. So I waited until we got the contract signed so that we would have a secure location down there for the clients and the staff of (health and social services). I know this is going to be a difficult topic because of the close friendships and relationships with the winners of the bid.”

According to Albaugh, he, along with former county administrative officer Martin Nichols, VanderPloeg, newly hired county executive officer Richard Egan and other county staff were the only ones to recommend a referee clause be entered into back in November and December.

“At that time when it came up, it was an emotionally charged issue, potentially (a) political nightmare for the board and for majority of the board, it was not a palatable issue to bring forward," Albaugh said. 

" The public's faith, trust and confidence of the county was shaken by this error. Let's not make it worse by doing nothing to reclaim this error. No one should try to get anything free and then try to stick it to the man. In this case, the man's the county,” he said.

Supervisor Larry Wosick said, "Personally, I don't think it is prudent, or a good reaction for us as a board to disrupt or damage or put in a negative way the community that is being served for a $1 a month (rent) I might add. I think invoking the referee clause might certainly jeopardize the use of the building.”

Wosick said Albaugh’s statement that he waited until the building was secure to bring the issue up was a testament to his feelings.

“There was an error and the people purchased exactly what the county sold,” he said.

Resident Iona McCain said she had been giving the issue a lot of thought and a lot of people were hurt with the wrong sale of the property.

She asked why the board can't work with the buyers and come up with something that is workable for everyone. She suggested a co-ownership, although it might not be 50-50, and the county could use the building and re-model it and receive grant money for it.

Wosick reiterated it was a dollar deal and a short-term solution. He said if the relationship continued in the future that would be a good point the supervisors should make note of and certainly explore.

 Supervisor Jim Chapman said it is an issue the board moved on from weeks ago, if not months ago.

"Still, I think it generates a sufficient amount of interest from the community …" he said and explained people felt the building was obtained in an ill-gotten fashion with the process being an issue more than maybe the content.

He prefaced what he said by explaining he and Pezzullo have an adversarial relationship as Pezzullo ran against Chapman in the 2012 election.

"To be honest with you, he doesn't respect me as much as I don't respect him," he said and added he doesn’t want anything to do with Pezzullo, period.

"He's made that clear to me and likewise, and that's the relationship we have," Chapman said.

According to Chapman, when the county obtained the properties from the Army, it wasn't intended for the county to go into long-term property management.

"Here it is 10 years later and we are still holding onto property. That property should have been disposed of in 2004 and 2005 …" he said.

Chapman said, “To me, even if a mistake was made, if that's how it was perceived, I could see my adversary coming back and wanting to sue us for having tricked him for taking on a building that has a whole host of issues. So, I'm of the opinion I don't want anything to do with those buildings and the fact they are no longer on our asset list is what the original intent was and it makes me happy …"

Even if the process was defective and a referee determined a mistake was made and the property was awarded back to the county, Chapman said he would be in favor of disposing it to somebody and some point.

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