Nestande Assailed on Traffic Role

A Costa Mesa city councilwoman has called into question the role of state Transportation Commissioner Bruce Nestande in seeking changes in a city traffic improvement program that could save money for his employer.

Councilwoman Sandra L. Genis said that, beginning in 1987, Nestande “lobbied” city officials to create a community facilities district that would allow his employer, Costa Mesa-based Arnel Development Co., and other developers to spread their fees for traffic improvements to the city over 20 or 30 years.

Genis said Nestande also urged city officials to more aggressively seek state funding of some traffic improvements that Arnel had agreed to pay for to reduce the traffic relief fees owed by the firm. The city is now seeking state transportation money that would pay for a portion of two new freeway ramps and improvements to a third.

Genis was elected to the council in November, 1988, after discussions involving Arnel’s development agreement with the city already had occurred. She added that she knew of no specific instance where Nestande has even tried to block state funding for Costa Mesa projects or pressured city officials on behalf of his employer.

But such actions by a state transportation commissioner amount to the use of “undue influence,” Genis said, because the commission has some authority over funding for state highway projects in Costa Mesa.

“I’m sure that in his contacts with the city he has done what his employer wanted,” she said. “I’m uncomfortable with that because he’s a state transportation commissioner who has some political leverage.”

But Nestande and other city officials disagreed with Genis that there was even an appearance of a conflict of interest on Nestande’s part.

Nestande acknowledged recommending creation of a community facilities district to collect developer fees that Arnel and other firms owe the city of Costa Mesa. However, he said he never discussed the fees and had no knowledge of what savings might accrue to his employer.

And when he urged city officials to seek state funding, he said he never thought about how that could benefit his company. He also denied taking any steps to help the city get those funds, which are awarded by Caltrans, not the commission.

“At one or two meetings I merely offered my expertise as a former county supervisor who had some experience with setting up benefit assessment districts. . . . That’s my total involvement.”

As for urging the city to be aggressive about seeking state funds, he added: “I say that to every city. . . .”

The projects involved in Arnel’s development agreement have never come before the California Transportation Commission, so there’s no conflict, said Nestande.

“I’m totally confounded by such criticism,” Nestande said. “Nothing happened like that at all . . . Arnel’s development agreement with the city occurred before I ever joined the company.”

Nestande and Genis were on opposite sides of Measure M, the half-cent sales tax for transportation projects that was defeated Tuesday in countywide balloting, 53% to 47%. Nestande chaired the campaign for the measure while Genis helped lead the opposition.

Former Costa Mesa City Councilman David Wheeler said he remembers attending City Council study sessions with Nestande in 1987 and early 1988 at which Nestande urged the city to seek state funds for the road improvements that Arnel Development Co. had agreed to finance.

“As I recall, Arnel wanted a new freeway off-ramp but wanted the state to pay for it,” Wheeler said. “I didn’t feel any pressure. But Arnel’s lawyers put language in the developer fee agreement that reduces their fees by whatever state money becomes available.”

City Councilman Orville Amburgey, however, said it was his idea to let state funds substitute for developer fees where possible, and that Wheeler endorsed the idea.

The city recently applied for state road improvement funds which could pay up to 50% of the cost of the projects Arnel and three other north Costa Mesa developers are scheduled to finance with developer fees.

Altogether, city officials estimate that these and other road improvements will cost about $100 million, to be collected from the developers.