Daily Business Report-Jan. 25, 2019
Erin Brockovich speaks to Paradise wildfire victims Victor Porter and Beth Hoffman on Jan. 22. (Photo by Judy Lin, for CALmatters)
PG&E just escaped blame for one huge disaster—
but it’s still the utility California loves to hate
By Judy Lin | CALmatters
Mention Pacific Gas & Electric to Victor Porter, and the response is nothing like the bland non-opinion most Americans have of the companies that provide their electricity.
“They have to pay,” said Porter, a 64-year-old artist who fled for his life with his partner and their dog when the towering Camp Fire swept down on their their newly renovated mobile home in Paradise. “They need to be accountable for what they’ve done here. They’ve ruined not just our lives, they’ve ruined a bunch of people who are worse off than we are.”
Investigators have not yet determined exactly who or what is to blame for the massive Camp Fire that razed Porter’s community and killed 86 people in November in Butte County. But PG&E—whose workers spotted smoke near a shorted-out utility tower above Poe Dam on the windy morning the fire started—is a prime suspect.
That could change. A prime suspect in the devastating Tubbs Fire in 2017 in California’s wine country, PG&E was exonerated on Thursday, as state fire investigators announced that the source was actually a private electrical system next to a residential structure and that no state laws had been broken. The utility’s stock price, which had tanked from about $43 a share last year at this time to about $7, perked up on the report, to about $14.
But as the state’s largest utility prepares to file for Chapter 11 reorganization in bankruptcy court in apparent anticipation of a less forgiving Camp Fire verdict, Californians haven’t had much of an appetite for “innocent until proven guilty.”
Gov. Gavin Newsom, who could call for a special legislative session to save the utility, has simply issued a statement in response to the bankruptcy announcement, promising to take care of consumers and fire victims and make sure that progress on renewable energy goals doesn’t falter.
State lawmakers, who bent over backwards last year to try to help PG&E, one of the nation’s largest gas and electricity providers, have assiduously stood by as its bond rating has dropped to junk bond status.
“Nobody in the Capitol wants to bail out PG&E, period, exclamation point, end of story, full stop,” Sen. Bob Hertzberg, a Los Angeles-area Democrat who was Assembly speaker when PG&E filed for bankruptcy in 2001, during the Enron-related energy crisis, told a local CBS affiliate earlier this week.
Meanwhile, PG&E customers at a recent Public Utilities Commission meeting stood in line to accuse the utility of “criminal negligence” and worse.
On Thursday, PG&E released a statement saying that while its facilities did not cause the Tubbs Fire, the utility remains in financial quicksand.
“Regardless of today’s announcement, PG&E still faces extensive litigation, significant potential liabilities and a deteriorating financial situation, which was further impaired by the recent credit agency downgrade to below investment grade,” the company stated.
PG&E spokeswoman Lynsey Paulo said PG&E is committed to providing safe gas and electric service. She noted the company has a wildfire prevention program to reduce risks in the face of extreme weather.
“We understand and recognize the serious concerns raised by customers and wildfire victims and we acknowledge that while we have made progress, we have more work to do,” Paulo said. “We’re open to a range of solutions that will help make the energy system safer.”
But PG&E’s critics—and they are legion in Northern California—aren’t buying. This week, in perhaps the most emblematic development for the embattled utility, Camp Fire victims rallied at the Capitol with legal activist Erin Brockovich, who was portrayed by Julia Roberts in the 2000 box office hit movie, demanding that the state keep PG&E out of bankruptcy court so victims wouldn’t end up being stiffed when they try to collect legal damages.
Brockovich, who helped build a class action lawsuit against PG&E over groundwater contamination in the town of Hinkley, characterized the utility as a “runaway monopoly” and called it deplorable for its history of deadly disasters.
“As you might be aware, PG&E and I have bumped into each other numerous times over the course of the past 28 years,” Brockovich said at the rally. “We should all be beyond frustrated. Every one of us should be good and mad.”
Though PG&E keeps the lights on for much of Northern California—and is integral to the state’s renewable energy goals through clean energy projects—Brockovich is just one in a long line of PG&E accusers. In her case, PG&E had to settle lawsuits worth hundreds of millions of dollars after investigations indicated it had contaminated the communities of Hinkley and Kettleman Hills.
But there was also the Christmas Eve 2008 explosion in a Sacramento suburb that killed one person and injured five others. State investigators later found that PG&E had installed an incorrect pipe and was slow in responding to reports of a natural gas leak before the tragedy occurred.
In 2010, eight people died and dozens more were injured when a natural gas transmission pipeline ruptured in San Bruno. The disaster was so egregious that a federal judge ordered PG&E to take out full-page ads in the San Francisco Chronicle and the Wall Street Journal describing its offenses and explaining what it would do to prevent future wrongdoing. The utility was also ordered to spend $3 million on television advertisements, the equivalent of 12,500 spots. It was later uncovered that gas pipeline records were falsified.
More recent calamities have had to do with mega wildfires in which PG&E’s electrical equipment has been the prime suspect. With the utility still on federal probation for six felonies related to the San Bruno explosion, Cal Fire has linked PG&E to 17 major wildfires in 2017.
Investigators said the utility broke a law in a dozen of those cases. Meanwhile, PG&E’s response to a couple of those 2017 fires has gotten the utility into trouble in federal court.
A U.S. District Court judge in San Francisco ordered PG&E to come to court next week to answer charges that the company violated the terms of its probation by failing to notify its probation officer that it had settled with Butte County over its role in three 2017 fires there, including one in which the county was criminally investigating PG&E for failing to trim trees near power lines. Those charges were later dropped.
The Tubbs Fire in Napa and Sonoma counties, which killed 22 people and destroyed more than 5,600 structures, was traced by Cal Fire to privately-owned electrical equipment. That verdict, in theory, should have tempered some animosity, but it didn’t.
“It’s not the end of the story,” said Noreen Evans, a former state legislator now with Watts Guerra LLP representing more than 4,000 wildfire victims.
Evans said she believes PG&E is still liable for the Tubbs Fire because private investigators and witnesses have come to different conclusions than Cal Fire, and she cited a 2015 audit by the California Public Utilities Commission that found PG&E was behind in vegetation and equipment management in the region where the Tubbs Fire started.
“PG&E seems to be an outlier as far as public safety is concerned,” Evans said. “It seems to have a culture that doesn’t prioritize public safety and it should. That needs to change.”
Newsom acknowledged that he, like most Californians, was surprised that PG&E wasn’t blamed for the Tubbs Fire, if only because the belief that the utility was responsible “was sort baked into the narrative.” The main impact of the report, he said, was that making those fire victims whole would now become harder. And, he noted, about $17 billion of the $30 billion in fire liability PG&E had cited as a reason for bankruptcy might now be off the table.
But after an intense round of negotiations last year, lawmakers appear to have given up on trying to avert bankruptcy, Erin Brockovich notwithstanding.
“Look, I’m not sure what we can do to avoid it,” Democratic Assemblyman Chris Holden, who chairs the Assembly’s utilities and energy committee, said earlier this week. “PG&E is dealing with an avalanche coming down on top of them. It’s the impact of the 2017 fires. It’s the impact of the 2018 fires. It’s also what they are having to deal with under the San Bruno case. Their stock has tanked. They’ve got a lot of issues to navigate through, and I’m not even sure what the Legislature can do to help them solve their circumstances right at this moment.”
So fire victims like Porter are left with their losses and their frustration—and the cold comfort that even PG&E’s major shareholders were demanding this week that its entire board of directors be ousted.
Porter’s partner, 54-year-old Beth Hoffman, said she’d never seen such public hostility to a utility when she was growing up in Southern California, neither toward Southern California Edison nor toward San Diego Gas and Electric.
Near her, Somerset resident Cheyenne Ehler, 23, wielded a poster depicting red handprints and bloodstains with a message for PG&E, her electricity provider: “CAN’T BACK OUT WITH BLOOD ON YOUR HANDS.”
CALmatters.org is a nonprofit, nonpartisan media venture explaining California policies and politics.
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HFF announces $155 million financing
for development of two oceanfront hotels
Working on behalf of the developer, S. D. Malkin Properties, HFF placed construction financing with Bank OZK and an East Coast-based institutional investor for development of two oceanfront hotels in Oceanside.
The two hotels will be developed over a 2.75-acre, two-block site located along Mission Avenue and North Pacific Street. Both properties will have immediate access to the beach and, combined, feature 387 rooms, 85 percent of which will have water views.
One of the hotels will be operated by Destination Resorts and the other by Joie de Vivre Both brands are owned by Hyatt.
The hotel operated by Destination Resort will have 226 rooms, a signature restaurant, indoor/outdoor lounge, pool with ocean views, luxury spa and more than 20,000 square feet of meeting and event space. The hotel operated by Joie de Vivre hotel will have 161 guest rooms, a rooftop pool and bar, world class restaurant, public garden and 3,000 square feet of retail space and feature the historic circa 1887 Graves House, a local icon commonly known as the “Top Gun” house, which will be completely renovated and opened to the public.
The HFF team representing the borrower included senior managing directors Timothy Wright and Scott Hall, director Olga Walsh and analyst Aaron Lapping.
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Ware Malcomb finishes renovations
at 525 B St. in Downtown San Diego
Ware Malcomb, an international design firm, announced construction is complete on the exterior, lobby and amenity renovations of 525 B Street in Downtown San Diego. Ware Malcomb provided architecture, interior design and branding services for the project.
Ware Malcomb worked with Hines, the building’s property management company, on common area renovations of the Class A, 22-story office building. The project included a renovation of the main building lobby and a 3,100 square foot gym renovation featuring a state-of-the-art fitness center, spa-like showers and lockers.
525 B Street is certified LEED Gold by the U.S. Green Building Council and has earned the Environmental Protection Agency’s Energy Star Premier certification.
The General Contractor for the project is Bycor.
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PSAR Realtors group hosts
2019 housing market forecast
The Pacific Southwest Association of Realtors (PSAR) will host its 2019 Housing Forecast with Oscar Wei, senior economist, California Association of Realtors (CAR), from 11:30 a.m. to 1 p.m., Wednesday, Feb. 6, at PSAR’s East County Service Center, 1150 Broadway, El Cajon. Wei, with a bachelor’s and masters degrees in economics, oversees CAR’s data mining and analyzing housing market statistics released to the public on a regular basis. He contributes frequently to CAR market analysis articles and other articles on such topics as housing supply, distressed sales, housing tax policy, housing affordability and other subjects relevant to the real estate industry. At the PSAR event, he will share CAR’s forecast, as well as consumer trends behavior and public policy issues affecting the housing market. Cost to attend is $5 for PSAR members, $10 for nonmembers. Lunch will be served starting at 11:30 a.m. To RSVP, call (619) 579-0333 or visit www.psar.org.
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More than 94,000 Students Apply to SDSU for Fall
San Diego State University has set a new record for the number of students seeking admission to the school with 94,142 undergraduate applications received for fall 2019. This topples last year’s record-breaking total of more than 93,600.
While the application period typically ends in November, this year the application period was extended to Dec. 15 due to the wildfires that tore across the state last fall. Prospective students can expect to be notified of their admission status in March.
This year’s record-breaking number includes more than 69,360 first-time freshman and more than 24,500 new transfer students.
SDSU also received more than 4,330 graduate applications. This number is expected to grow as different graduate programs accept applications at different times.
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USD expands and enhances Torero Promise Program
The University of San Diego (USD) announced today that it has expanded its signature Torero Promise program beyond San Diego County to include three more Catholic high schools located in Riverside and San Bernardino counties: Xavier High School in Palm Desert, Aquinas High School in San Bernardino, and Notre Dame High School in Riverside. Additionally, the Torero Promise program will now meet 100 percent of the federally demonstrated financial need for these students beginning with the 2019 incoming class.
To be eligible for participation in the Torero Promise program, graduating seniors must have a grade point average of 3.75 or above. There are no entrance exam requirements. The program launched in 2017 with five local Catholic high schools, including the Academy of Our Lady of Peace, St. Augustine, Mater Dei, Cathedral Catholic, and Vincent Memorial. The matriculation of students from these schools to USD has increased by 75 percent.
For the USD incoming Class of 2018, USD received 295 applications from students attending the five participating schools. Among the 295 who applied, 60 enrolled into USD.
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In life and death, Alzheimer’s Disease
looks different among Hispanic patients
Autopsy study of Hispanics with neurological condition suggests greater difficulty diagnosing living Hispanics with disease
Researchers at Shiley-Marcos Alzheimer’s Disease Research Center (ADRC), part of University of California San Diego School of Medicine, report that autopsies of patients diagnosed with Alzheimer’s disease (AD) when they were alive — and confirmed by autopsy — indicate many cognitive issues symptomatic of the condition are less noticeable in living Hispanic patients.
The findings, produced in collaboration with colleagues at the University of Southern California, are published in the January 2019 issue of the Journal of Alzheimer’s Disease.
Authors say the data suggests it may be more difficult for clinicians to detect AD in its mild to moderate stages among living Hispanic patients compared to non-Hispanic patients. As a result, intervention and treatment could be delayed and less effective.
The study involved autopsies of 14 Hispanic and 20 non-Hispanic persons, all with autopsy-confirmed physiological evidence of AD and an equal number of autopsies of cognitively healthy Hispanic and non-Hispanic individuals without an AD finding.
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Peter Doody honored as Defense Lawyer of the Year
More than 400 attorneys in San Diego are honoring Higgs Fletcher & Mack Attorney Peter Doody as San Diego Defense Lawyer of the Year on January 26 at the Omni Hotel.
These 400 attorneys are members of the San Diego Defense Lawyers Association. The group is focused on advancing the education and professional conduct of its members who focus on civil litigation and tort defense work.
Each year, the association honors a member for their advancement of the profession. Doody served as president of the association in 2003 and continues to advance the profession with volunteer work, exceptional client representation and educating others via speaking engagements and mentoring.
“It’s such an honor to be recognized by my peers for work I’m passionate about,” said Peter. “I’m humbled by the recognition and look forward to continuing to further our profession in San Diego County.”
Doody earned his Juris Doctor degree from the University of San Francisco School of Law and his bachelor’s degree from the University of Colorado.
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Jeremy Gabe becomes newest faculty member
at Burnham-Moores Center for Real Estate
Corrected from Thursday
The Burnham-Moores Center for Real Estate at University of San Diego School of Business has added Jeremy Gabe, assistant professor of real estate, as the newest faculty member of the School of Business real estate program.
Prior to joining USD, Gabe served as a lecturer in real estate at the University of Auckland, where he specialized in research at the intersection of urban economics, environmental economics and urban planning. His research is published in leading journals, including the Journal of Property Finance and Investment and in Building Research and Information.
He was awarded research grants from government agencies and industry clients in New Zealand to explore methods and strategies of assessing green buildings and infrastructure. Gabe has served as a reviewer for a wide variety of academic journals and is a frequent consultant to the real estate industry. He is also a co-founder of the Future Leaders of the American Real Estate Society (FLARES) and serves on the board of the International Real Estate Society (IRES).
Gabe earned his degrees in civil and environmental engineering, architecture and real estate from Northwestern University and the University of Auckland.
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Personnel Announcements
Christopher Kennedy and Vinod Peris
join AttackIQ management team
AttackIQ, a leader in the emerging market of continuous security validation, announced Christopher Kennedy has joined the AttackIQ executive team as its chief information security officer and vice president of customer success. The company also announced the appointment of Vinod Peris as the vice president of engineering.
Christopher Kennedy will be responsible for managing all aspects of customer relations and success, as well as AttackIQ’s internal information security strategy. He joins AttackIQ from Bridgewater Associates where he was head of security for infrastructure technology and controls engineering and brings more than 20 years of cybersecurity risk and operations practitioner experience. Previously, Kennedy led the development of the U.S. Department of Treasury’s and the U.S. Marine Corps’ cybersecurity operations programs, defense and federal contracting for Northrop Grumman, and is a former Marine Corps officer and Operation Iraqi Freedom veteran.
Vinod Peris will be leading the AttackIQ development team to ensure the technology meets enterprise-level requirements to continuously measure and validate the effectiveness of an organization’s security controls and processes. He joins AttackIQ from CA Technologies, where his most recent role was senior vice president of the central software group, responsible for the company’s analytics and telemetry platform and core engineering services. Prior to CA Technologies, Peris held a number of engineering leadership roles at Cisco Systems, including heading Cisco’s engineering group responsible for optical, cable and router product lines. He also served as head of engineering of Cisco’s entire enterprise wireless product portfolio including access points, controllers, network management and mobility services.
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Tim Flood named VP of administrative services
at MiraCosta Community College District
Tim Flood, a community college leader who has held several top administrative posts in San Diego County, is the new vice president, administrative services at the MiraCosta Community College District. This is a newly created cabinet position to better align the district’s organizational structure with other California Community Colleges. Separate from human resources, it allows for a vice president to manage fiscal services, investments, contracting, purchasing, capital construction, and facilities/infrastructure planning, and maintenance.
Flood, who has been vice president of business and financial affairs at Southwestern College since January 2016, steps into his new post pending approval from MiraCosta College’s Board of Trustees. He will be playing a critical role in managing MiraCosta College’s $455-million Measure MM bond that voters approved in 2016 to modernize facilities, improve veterans’ services, and boost access for students with disabilities.
Flood embodies the success of the California Community Colleges system. He was working as a groundskeeper at Granite Hills High School in El Cajon when he decided to enroll at Grossmont College in his late 1930s. After earning an associate degree at Grossmont, he went on to earn a bachelor’s degree in accounting and a master’s degree in public administration from National University.
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Jase Hamilton promoted to Surety Department
manager at Cavignac & Associates
Cavignac & Associates has promoted Jase Hamilton to the position of Surety Department manager. Hamilton joined Cavignac & Associates in 2013 as surety account manager, charged with processing new account setups, analyzing and maintaining financial information, obtaining carrier approvals and communicating conditions of those approvals to clients, assisting with client meeting agendas, updating bid schedules, and preparing lines of credit and specific bond submissions.
In his new role as Surety Department manager, Jase will oversee the department’s operations, set standard operating procedures, lead and manage all servicing and processing of department personnel, and maintain and continue to grow insurance carrier relationships. His focus is on both contract and commercial surety bonds, including performance and payment (labor & material), licensing and permitting, fidelity, court, subdivision and miscellaneous.
Prior to his years with Cavignac & Associates, Hamilton was a surety underwriter for the Insurance Company of the West in San Diego.
Hamilton is an active member of multiple associations, including Surety Association of San Diego and Construction Financial Management Association of San Diego, the later for which he serves as a board member.
