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Gregory Canyon landfill back on track?

By J. Harry Jones, October 17, 2014

PALA — The long-planned and controversial Gregory Canyon landfill, whose developer has been plagued by financial problems the past year, may be getting back on track.

The developer, Gregory Canyon Ltd., is working with a private equity firm that’s in the process of acquiring the company’s debt and equity interests, and intends to refinance the landfill project and restart the permitting processes, officials said.

Gregory Canyon spokeswoman Nancy Chase said the recent developments are a good thing.

“It’s essentially a reorganization,” she said. “Sovereign Capital Management Group specializes in buying distressed properties, reorganizing, restructuring the debt, and the entity will continue to be the same only they will be able to refinance it under a restructuring.”

She said the same legal, engineering and management team that has led Gregory Canyon Ltd. will stay in place.

Chase predicted that the permitting process could be completed by the end of 2015.

Phone calls to Sovereign officials were not returned this week, but the reorganization plan was affirmed in a letter that landfill Project Manager Jim Simmons sent to the county.

The letter says Sovereign Capital is partnering with Herzog Contracting Corp, which on Oct. 3 began foreclosure proceedings on the 1,700-acre Gregory Canyon property near Pala off state Route 76.

Simmons says in the letter that Sovereign would acquire all Gregory Canyon’s debt and equity, or foreclose on the property, with the goal of moving “the project forward to secure the necessary permits for the landfill with new funding from Sovereign.”

According to Sovereign Capital’s website, the company is a San Diego-based private equity real estate firm that has completed more than $5 billion in commercial real estate transaction over the past decade.

Everett DeLano, an environmental attorney who has been fighting the landfill plan for years, said Gregory Canyon’s persistence seems nonsensical.

“It’s been a bad project from the start and it hasn’t changed into a good one now,” DeLano said. “What they’re asking essentially is for some sort of debt restructuring. It really seems like a ‘good money after bad’ scenario. Do you really want to continue to throw money at this project after all these years?”

The North County landfill has been in the planning stages for more than two decades and would be built on land roughly 3 miles east of Interstate 15 and just south of state Route 76 in a canyon just west of the Pala Indian Reservation.

The project has encountered a storm of opposition from groups concerned about environmental fallout, ranging from the risk of pollution to the San Luis Rey River to the loss of endangered species habitat to the desecration of religious sites held sacred by local Native American tribes.

In January, the county stopped working on the project’s air quality permit application because Gregory Canyon owed roughly $350,000 in permit fees.

In April, the Army Corps of Engineers withdrew the project’s Clean Water Act permit application because the company failed to provide costly information the Corps had requested.

Officials say those permit applications can be reinstated if debts are paid off and information is received.

Records also show that Gregory Canyon hasn’t paid property taxes on the site since 2012, and that its corporate status was suspended in May.

Company representatives said earlier this year that investors had poured more than $62 million into the project since it was first proposed more than two decades ago.

Over the years, the landfill proposal has pitted environmental groups, the Pala tribe and several local municipalities against project developers who have argued the project is key to serving the region’s trash needs.

In 1994, voters approved Proposition C, a measure that amended the county’s general plan and zoning ordinance to allow a landfill without a major-use permit, thereby streamlining the project’s approval. Ten years later, the project withstood another major challenge when voters rejected a ballot initiative that would have invalidated Prop. C.

In both campaigns, millions of dollars were spent by both sides.

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