Hollister Developer Richard Ferreira testified in a civil case
Friday that former San Benito County Supervisor Bob Cruz told him
in 2002 he would support annexation of property into Hollister for
a 170-unit senior housing project in exchange for $1,000 a
unit.
Hollister Developer Richard Ferreira testified in a civil case Friday that former San Benito County Supervisor Bob Cruz told him in 2002 he would support annexation of property into Hollister for a 170-unit senior housing project in exchange for $1,000 a unit.
Friday’s testimony in a civil case against former San Benito County Supervisor Richard Scagliotti and the board of supervisors focused on a conversation Ferreira alleged he had with Cruz in the spring of 2002 over a 170-unit senior housing project, Ferreira confirmed to the Free Lance on Monday.
Ferreira on Monday recited the testimony he gave under oath and said Cruz had told him if the developer wanted his support that Cruz, in turn, wanted “$1,000 a unit” for use at his “discretion.” Ferreira said he rejected Cruz’s offer and told the former supervisor his project was strong enough on its own for approval.
Ferreira said he perceived it as a request for an “under-the-table deal.”
“That’s the way we took it,” he said Monday.
Ferreira in 2002 needed about 16 of the project’s 24 acres annexed into Hollister near Hazel Hawkins Memorial Hospital and he had to go through the San Benito County Local Agency Formation Commission. Cruz at the time was a member of the panel in his capacity as a supervisor.
Michael Serverian, the attorney representing Scagliotti and the board in the case, was present during Friday’s testimony and had the following to say:
“It’s very unusual that allegations as serious as these would only come to light six years later,” said the attorney, who declined to comment further.
A Free Lance reporter left a phone message with Cruz requesting comment and describing the allegation that he solicited $1,000 a unit on the 170-unit development. Cruz responded after the phone call with the following e-mail:
“Your (phone) message stated that Richard Ferreira, a developer, said I agreed to negotiate a reimbursement regarding a proposed development he was involved in. That stated (sic) is unfounded. The city at that time, was not able to provide sewer services to the development. When I told Mr. Ferreira this, he responded, ‘that’s not my problem.’ The discussion ended.”
Cruz did not return follow-up e-mail and phone messages asking for comment.
The Free Lance has requested the transcript from a court reporter for that portion of the five-day trial in which the testimony came out.
Ferreira was called to testify in the civil case stemming from the lawsuit orchestrated by attorney Mike Pekin and filed in 2003 by the anonymous group Los Valientes. It has been revised several times since then and now is filed with Pekin’s son, Patrick, as the petitioner. The suit alleges Scagliotti used his position to gain financially as a local developer.
After Pekin was done questioning Ferreira on Friday, Serverian did not have an opportunity to cross-examine the witness at the trial heard by Judge Alan Hedegard because the local developer had a time constraint going into the testimony and had to leave when Pekin was finished questioning him.
The case’s proceedings were put off until May 12, said Pekin, who declined to comment further on Friday’s development.
Ferreira on Monday said he stands by his testimony.
“I was subpoenaed to court. I believe in the justice system,” he said. “I’m not going to perjure myself. I told the truth.”
Pekin in court contended the testimony was relevant because Scagliotti also was on LAFCO at the same time. The panel ultimately rejected a portion of the annexation – and the project never happened – while contending the city did not have the services to support it.
District Attorney Candice Hooper said Monday she had heard rumors about the court testimony and that she had no further information or comments on it.
Highlights of the alleged bribe transcript
The following is the court transcript provided to South Valley Newspapers by Monterey Peninsula Court Reporters. The portion in which Ferreira alleges Cruz solicited a bribe is highlighted in red.
All references to Mr. Pekin is Michael Pekin, of the Salinas-based Law Offices of Michael Pekin, appearing on behalf of the plaintiff, Patrick Pekin. All questions marked by the letter Q are asked by Michael Pekin.
All references to Mr. Serverian are Michael Serverian, of San Jose-based Rankin, Landsness, Lahde, Serverian and Stock, appearing on behalf of the defendants – Scagliotti, the San Benito County Board of Supervisors and the San Benito County Financing Corporation
All answers marked by the letter A are provided by Ferreira.
DIRECT EXAMINATION BY MR. PEKIN
Q. Richard Ferreira, how long have you known the defendant in this — Richard Scagliotti in this case?
A. Approximately his whole life.
Q. Okay. And what has been the relationship of your family to his family approximately your whole life?
A. Our parents were very good friends.
Q. And did you know his parents?
A. Very well.
Q. And did your families all visit with each other?
A. Yes.
Q. Now, what is your occupation?
A. I’m a retired general contractor and also a developer. I still have one project that I’m working on.
Q. And your wife is a realtor in town.
A. Yes, that’s correct.
Q. That’s Marilyn Ferreira.
A. That’s correct.
Q. Now, in the — in the year 2001, were you a competitor in a project for low income senior or small projects in the City of Hollister along with other developers to obtain building permits?
A. That’s correct.
Q. At the time that you entered into the project to obtain building permits, how many permits did you need?
A. We were requesting 170.
Q. And what share of the possible building permits were those — was that?
A. Well, there was 191 units available.
Q. So you were going — if you were successful, you were going to yourself take almost 90 percent of the — of the permits, plus or minus.
A. That’s correct.
Q. At the time that you put your project — let’s give it a name. Estancia; correct?
A. That’s correct.
Q. At the time that you put your name in for the project, did you know who the other competitors for the permits were?
A. Some. We were aware of some of the competitors.
Q. Were you aware that property owned by Richard Scagliotti was property being used to obtain building permits?
A. I wasn’t aware of that at the time.
MR. SERVERIAN: I’m sorry. I just didn’t hear.
THE WITNESS: I wasn’t aware of that at that time.
MR. SERVERIAN: Was not.
THE WITNESS: I was not aware of it.
MR. SERVERIAN: Thank you.
BY MR. PEKIN:
Q. Is it the case that there were far more applicants for permits than there were permits?
A. Absolutely.
Q. Was it competitive?
A. Yes.
Q. What were the criteria?
A. The City had put out a big criteria that you had to meet. There was a point system. You had to submit your project in a large form, and then it was sent out, and they — they scored it, the staff scored it. Then it went to the Planning Commission, and everybody had a chance to talk before the Planning Commission, and then they made a decision on who got the allocations.
Q. Were the criteria fair?
A. Yes.
Q. Were the — were the — was the competition before the City of Hollister fair?
A. Yes.
MR. SERVERIAN: Objection. Calls for speculation.
THE COURT: Sustained.
BY MR. PEKIN:
Q. Did you observe in your entire process with the City of Hollister that there was any unfairness or preferential treatment in — in any of the competitors attempting to get building permits?
MR. SERVERIAN: Same objection.
THE COURT: What is the relevance?
MR. PEKIN: Well, because later on —
THE COURT: Are you alleging unfairness or are you trying to establish fairness?
MR. PEKIN: Fairness.
THE COURT: You’re trying to establish fairness. All right. Has anybody alleged unfairness?
MR. PEKIN: Okay. Now —
MR. SERVERIAN: Well, my objection is based on the fact — because I — based on the fact that he wasn’t — he testified that at the time he was not aware of my client’s property. So I guess the objection is simply based on his lack of familiarity with the entire system.
THE COURT: Well —
MR. SERVERIAN: I’ll withdraw it. Let’s —
THE COURT: All right.
MR. SERVERIAN: Let’s hear from the witness.
THE COURT: Let’s get to your point, Counsel.
BY MR. PEKIN:
Q. The next point. Once you had — once you were accepted — once you were successful in obtaining 150 building permits, was there a process that required approval by a Local Agency Formation Commission for the County of San Benito, commonly known as LAFCO?
A. Well, that wasn’t really part of the criteria, the allocation system. But in order for our project to proceed, a portion of it was not annexed into the City, so we had to get it annexed into the City in order for our project to proceed.
THE COURT: And the question presumed that you did receive 150 units. Did you receive approval for 150 units?
THE WITNESS: Well, we received — in the allocation process, the Planning Commission gave us 170 units.
THE COURT: 170.
THE WITNESS: Okay. There was an appeal by a number of other projects, and —
THE COURT: Okay.
THE WITNESS: — and —
THE COURT: All right. Next question.
THE WITNESS: Okay.
BY MR. PEKIN:
Q. I’m trying to leave the topic of the City.
Did you leave the City bidding process with a sufficient number of building permits to do your project?
A. Correct.
Q. Then we’re going to move on to LAFCO, if that’s fair, if that’s a fair progression. Is it?
A. It’s fair.
Q. Now, carefully explain to the judge what LAFCO needed to do for you to go on with your project.
A. Well, we needed approval for LAFCO to be annexed into the City so then the project could continue.
Q. How many total acres was your project?
A. The project consists of 24 point I think it’s 5 or 6.
Q. We’re going to say 24.
A. 24 and a half.
Q. We’ll say 24 to make everything easy today.
A. Yeah.
Q. I understand that there’s graphs and —
A. That’s acceptable.
Q. Now, of the 24 acres, how many acres total did you need for LAFCO to annex into the City of Hollister?
A. Approximately 16.
Q. And tell the Court, if you will, the nature of this project that you had for the 170 units, with respect to the City of Hollister’s participation in the project itself. Explain that.
A. The project is a senior project for seniors only, age restricted. It — there was quite a following of local seniors that wanted the project. The City really wanted the project, and as a result that’s why we came out on top of the allocation process. And the City wanted the project — everybody was — it was the first project I’ve ever been associated with that I had no problem going through any of the process up until LAFCO. And everybody wanted to proceed, and the way the law states, the City is the one that applies for the annexation.
Q. So was the City, as a portion of this project, in some ways your partner for the community?
A. Yeah, you could say that.
Q. Now, when the City made application, was it explained — you were receiving professional assistance, you didn’t try to make this project yourself; is that a fair statement? Engineers, architects, attorneys.
A. That’s correct.
Q. We’re talking a great sum of money.
A. That’s correct.
Q. Now, as the City advanced into LAFCO, what was the City’s information to you regarding your perspective how strong your LAFCO materials were for annexation?
A. Well, very strong. If you use the LAFCO guidelines, one of the things they state is if it is substantially surrounded by a city, then they automatically are supposed to bring it into annexation.
Q. Through your expert — your engineers, your architects, on a project this size, are you literally looking at your plot maps, looking at LAFCO regulation, talking to the experts, writing your project with the words that are used for the LAFCO definition and so forth?
A. Correct.
Q. You write literally your project for the LAFCO situation?
A. Yes.
Q. Now, did the City go to LAFCO with you?
A. Yes.
Q. Now, in the LAFCO — in the LAFCO that you went to, our records indicate that you were on the agenda sometime in April and — and May of 2002, just to move things along here. Is that consistent with your memory that maybe a half a year after you got your permits you were at LAFCO?
A. Yeah, that’s about when it was.
Q. Did — at the time did you observe who the executive director of LAFCO was?
A. Yes.
Q. And who did you observe the executive director was?
A. Rob Mendiola.
Q. And did Rob Mendiola have other functions for the government in addition to being the executive director for LAFCO?
A. Yeah. He was head of the planning department at the County of San Benito.
Q. And as the executive director of LAFCO, did he have discretion over the pace at which your project progressed?
A. Yes, I would assume so.
Q. Well, did you observe that he — were you going to Mr. Rob Mendiola with requests and so forth?
A. Absolutely. Any applications or anything that we did, we had to go through Rob Mendiola.
Q. Now, as you — as you went through Rob Mendiola, what was it that you were asking Mr. Mendiola to do?
A. Well, we asked him to put — put the project on the agenda, put us before LAFCO so we could annex the remaining 16 acres.
Q. And did that go smoothly or was that hindered?
MR. SERVERIAN: Objection. Relevance.
MR. PEKIN: Your Honor, I am going to at this point in time explore whether there is — there is influence that more than one —
THE COURT: Sustained as to compound question. Ask what happened, don’t offer two limited alternatives.
BY MR. PEKIN:
Q. What happened when you tried to agendize your matter?
A. Well, initially it was delayed because the County of San Benito and the City of Hollister did not have a tax sharing agreement.
Q. And as you studied this with your experts and as you looked at your responsibilities and you looked at what you had to do, was this a reasonable correlation to hold your project up?
A. At the time, yes, because it held up everybody’s projects.
Q. All right. Now, at a certain point in time did that delay become discretionary on Mendiola’s part as you continued to try to put materials before him?
A. We were limited what we could do until the City and the County got together.
Q. Now, as a — as an additional preparation, did you — who was on the LAFCO board that you knew?
A. We were familiar with all the board members. Representing the County was Supervisors Scagliotti and Cruz. Representing San Juan was Priscilla. Jose Alvarez was the at large member. And representing the City at the time I believe it was Councilman Scattini.
Q. At —
MR. SERVERIAN: Is Priscilla — can I just clarify.
MR. PEKIN: Please.
MR. SERVERIAN: Is Priscilla a first name or last name?
THE WITNESS: It’s her first name.
MR. SERVERIAN: Do you know her last name, sir?
THE WITNESS: Top of my head right now I have brain fade and I can’t remember.
MR. SERVERIAN: And her —
THE WITNESS: She was a councilperson for the City of San Juan Bautista.
MR. SERVERIAN: Okay. Thank you.
BY MR. PEKIN:
Q. When you interviewed with Supervisor Bob Cruz, did you encounter difficulty?
A. Yes, we did.
Q. And that was —
A. Well, our standard when we would do – you know, prior to the meeting, we would meet on a — on an informal basis with each one of the members, we would try to. That was normally what you would do. And tried to sell them or let them — get them familiar with your project, in case there’s any questions you could review it and not under the stress of being at an open meeting.
Q. And what occurred?
A. Well, I was kind of taken aback because Supervisor Cruz asked us in order to get his vote he was requesting that we give him $1,000 per unit.
MR. SERVERIAN: Objection. Move to strike. Non-responsive. Relevance.
THE COURT: What is the relevance?
MR. PEKIN: I’m continuing to — I am continuing to show action in concert, Your Honor. I am making a representation to the Court that there are three people on the same board, Rob Mendiola, Bob Cruz and Richard Scagliotti, and I’m going to continue to pursue with this witness whether he observed them acting in concert. So in order to do that, I have to ask what they did.
THE COURT: I’ll take the objection under submission. Are we going to get there before 9:45?
BY MR. PEKIN:
Q. And how was this thousand dollars — by the way, how many units did you have?
A. 170.
Q. And how much — that was — the mathematical was going to be $170,000?
That’s correct.
Q. And where was the $170,000 going to go, according to Mr. Cruz?
A. It was at his discretion.
Q. Now, was there any governmental purpose for that — for that thousand dollars per unit or $170,000 that you could determine?
A. Not that we were aware of.
Q. And so then you were finally agendized; is that correct?
A. That’s correct.
Q. Now, at the meeting when you were agendized the first time, in April of 2002, what did the City’s — what was the City’s expectation for your joint process?
A. That we would be approved.
Q. And what actually happened — what did you observe happen when you went into the meeting in – in April 2002?
A. LAFCO said they would act – annex approximately 8 acres of the 16, and they refused to annex the — the additional 8 acres because they said it did not fall within the urban service area.
Q. Did — when the 8 acres were not annexed, was that a deal breaker?
A. Well, yeah. Because we needed total annexation before we could go ahead with the project.
Q. Did you feel you were fairly treated?
A. No.
Q. Did you — did you observe that your unwillingness to pay the thousand dollars per unit to Mr. Cruz stopped your project with his vote?
MR. SERVERIAN: Objection. Calls for speculation.
THE COURT: Sustained.
MR. PEKIN: Let me change it. Let me change the question.
BY MR. PEKIN:
Q. Did you observe Mr. Cruz to vote against your project?
A. Yes. He voted no.
Q. And he told you that he would vote yes if he had the 170,000.
A. That’s what he kind of — that’s what I was understanding at the time we had the private meeting.
MR. SERVERIAN: Move to strike as non-responsive to the question.
BY MR. PEKIN:
Q. You have to tell us —
THE COURT: Sustained.
MR. PEKIN: Excuse me. I’ll rephrase the question.
BY MR. PEKIN:
Q. You have to tell us exactly what happened at the meeting. You can’t tell us your summation, you have to tell us what happened.
THE COURT: So your question is what?
MR. PEKIN: Well, the question is what was said.
THE COURT: By —
MR. PEKIN: By Mr. Cruz.
THE COURT: By Mr. Cruz.
MR. SERVERIAN: At which meeting?
MR. PEKIN: At the meeting for the thousand dollars per unit.
MR. SERVERIAN: Can we clarify if that was the April or the May or both meetings.
MR. PEKIN: No.
MR. SERVERIAN: Or neither.
MR. PEKIN: Withdraw it.
BY MR. PEKIN:
Q. I need to talk — I am questioning you about the private meeting, the private meeting before either of the public meetings. At the private meeting before either of the two public meetings, what was said about the thousand dollars and Cruz’s vote and your project?
A. Well, he basically said that for his vote he was — you know, if we gave him the thousand dollars, he would vote for the project. At that time I told him that there was no way we were going to do it, that we had a strong project, there was plenty of public support, and that the project would stand on its own. At that time I felt it would.
Q. How long had you known Bob Cruz?
A. Probably since I was in the first grade.
Q. When your project was voted down, were you — did you observe that you had been unfairly treated?
THE COURT: Wait.
MR. SERVERIAN: Calls for —
THE COURT: Observe or believe?
MR. PEKIN: Okay. When you — I’ll rephrase that.
BY MR. PEKIN:
Q. When your project was voted down, did you believe that you had been unfairly treated?
THE COURT: And the relevance would be what, Counsel?
MR. PEKIN: Because I’m going to go right into the next question, if he was unfairly treated, which I expect the answer is yes, I’m going to ask if he did anything. That’s the next two series.
THE COURT: Okay. Go ahead.
BY MR. PEKIN:
Q. Did you — did you —
THE COURT: Did you feel you were treated fairly? Yes or no.
THE WITNESS: No.
THE COURT: Next question.
BY MR. PEKIN:
Q. When you did not feel that you were treated fairly, why did you not do anything?
THE COURT: That assumes that he didn’t do anything.
BY MR. PEKIN:
Q. Did you do anything — did you —
MR. SERVERIAN: Assumes facts not in evidence.
MR. PEKIN: I’ll rephrase the question. Yes, you’re correct. I’ll rephrase the question.
BY MR. PEKIN:
Q. When you felt you were unfairly treated, did you do anything?
A. Well, part of the discussion with the City, because the City was actually the applicant for the — that’s the process, the City discussing with the LAFCO members, you know, said, “Well, what can we do to get over this?” And their whole stand for rejection was that the portion they were rejecting was not in the urban service area. And the City said if we can get a property owner within the urban service area that’s already been — you know, that could be annexed, if we could get them to take their — their property out of the urban service area in exchange, would they accept that. And they said yes.
Q. Did the board say that?
A. The board said yes.
Q. So you got a commitment from the City and the board to go on with the project?
A. If the City could find a property owner to exchange property.
Q. Was the City able to do that?
A. Yes, they were.
Q. And then what did LAFCO do?
A. When we — when we went back to LAFCO and the City did find something, which was very unusual that any property owner would give up that right, but they were able to find someone, and then they still wouldn’t accept it. And at that time we argued — we wanted to argue the LAFCO guidelines about being substantially surrounded, and they wouldn’t even discuss it, they just denied us.
Q. Did Richard Scagliotti vote on the second denial?
A. Yes. He was the chair at the time.
Q. Did he play an active part in the denial?
A. He was the lead in the denial.
Q. Did Bob Cruz play an active part in the denial?
A. Yes, he did.
Q. Did you feel you had been unfairly treated?
MR. SERVERIAN: Objection. Relevance.
THE COURT: I don’t understand what active leader — I don’t understand the question, and therefore the answer is not helpful to me.
BY MR. PEKIN:
Q. Describe what Mr. Scagliotti did, what you observed Mr. Scagliotti do, at the second meeting.
THE COURT: Do or say?
BY MR. PEKIN:
Q. What did Mr. Scagliotti say at the second meeting?
A. Judge, if I may try to make it more understandable. Mr. Scagliotti was the chair at the time, and the majority of the discussion between the board members was mostly between Mr. Scagliotti and Mr. Cruz, and others kind of just sat there and then went along with the vote. That’s about the best way I could describe it.
This is the end of the portion of the court transcript.
