ML021130332

Declaration of Michael Schonherr in Support of Motion for Order Authorizing PG&E to Incur & Pay Certain Land-Related Expenses

ML021130332
Person / Time
Site:	Diablo Canyon
Issue date:	04/12/2002
From:	Schonherr M Howard, Rice, Nemerovski, Canady, Falk & Rabkin, Pacific Gas & Electric Co
To:	Office of Nuclear Reactor Regulation, US Federal Judiciary, Bankruptcy Court, Northern District of California
References
01-30923 DM, 94-0742640
Download: ML021130332 (5)

Text

1 JAMES L. LOPES (No. 63678)

JANET A. NEXON (No. 104747) 2 JULIE B. LANDAU (No. 162038)

HOWARD, RICE, NEMEROVSKI, CANADY, 3 FALK & RABKIN A Professional Corporation 2.75 4 Three Embarcadero Center, 7th Floor 32.3 San Francisco, California 94111-4065 5 Telephone: 415/434-1600 Facsimile: 415/217-5910 6

Attorneys for Debtor and Debtor in Possession 7 PACIFIC GAS AND ELECTRIC COMPANY 8

9 UNITED STATES BANKRUPTCY COURT 10 NORTHERN DISTRICT OF CALIFORNIA 11 SAN FRANCISCO DIVISION 12 In re Case No. 01-30923 DM 13 PACIFIC GAS AND ELECTRIC Chapter 11 Case RKE COMPANY, a California corporation, ovD 14 Date: May 9, 2002

&RAIH(IN Debtor. Time: 1:30 p.m.

. ., 15 Place: 235 Pine Street, 22nd Floor Federal I.D. No. 94-0742640 San Francisco, California 16 17 DECLARATION OF MICHAEL SCHONHERR IN SUPPORT OF 18 MOTION FOR ORDER AUTHORIZING PG&E TO INCUR AND PAY CERTAIN LAND-RELATED EXPENSES 19 20 21 22 23 24 25 26 27 06J P 28 DECLARATION OF MICHAEL SCHONHERR /kxu

1 I, Michael Schonherr, declare:

2 1. I am a Manager in the Building and Land Services Department for Pacific 3 Gas and Electric Company ("PG&E"), a position I have held since September 2001. I am 4 responsible for, among other things, the separation of the Land and Land Rights (as defined 5 below) necessary to implement PG&E's proposed Second Amended Plan of Reorganization 6 (the "Plan"). I have worked in various managerial capacities for the Building and Land 7 Services Department for over 14 years. I make this declaration in support of the Motion for 8 Order Authorizing PG&E to Incur and Pay Certain Land-Related Expenses (the "Motion").

9 This Declaration is based on my personal knowledge, except where indicated otherwise. If 10 called as a witness, I could and would testify competently to the facts stated herein.

11 2. PG&E is requesting authority to pay certain contractors who will assist with 12 the preparation required for the transfer of PG&E's existing Land and Land Rights to the HVM13 new entities ("New Entities") created under the Plan (the "Land Work"). The Land Work is m 14 necessary as PG&E holds a large portfolio of real estate assets, including approximately

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• 15 250,000 acres of land, more than six million square feet of support service space (service 16 centers, offices and warehouses) and hundreds of real property leases (collectively, the 17 "Land"), along with thousands of related real property rights, including: rights-of-way and 18 easements, prescriptive rights, possessory interests, unrecorded rights and other land-related 19 agreements, and associated maps and drawings (collectively, the "Land Rights").

20 3. The Land Work relates to the ultimate transfer to the New Entities of the 21 Land and Land Rights necessary for the New Entities to conduct their operations in full 22 compliance with relevant laws, rules and regulations. Much of the Land Work to be 23 performed, however, is also for general business purposes, including the maintenance and 24 reconciliation of PG&E's real estate rights and records. Land rights analysis and 25 reconciliation work is constant for a company such as PG&E with substantial real estate 26 holdings and such work has been ongoing both pre-petition and post-petition. The transfer 27 of the Land and Land Rights in connection with the Plan now requires an accelerated pace 28 for this work.

DECLARATION OF MICHAEL SCHONHERR 1 4. PG&E has historically utilized real estate specialists to assist its internal real 2 estate staff, such as title and survey specialists. Most of the contractors listed below have 3 worked for PG&E and are familiar with PG&E's unique Land and Land Rights' issues; 4 consequently, PG&E believes that these contractors are well qualified to perform the 5 services necessary to assist with the Land Work. The following is a description of the two 6 categories of Land Work to be performed and each contractor currently under contract with 7 PG&E to perform the applicable Land Work (collectively, the "Contractors").' All of the 8 Contractors will perform the work described at the direction of and under the supervision of 9 PG&E.

10 5. Land and Land Rights Analysis and Reconciliation: This category of work 11 includes contractors performing title work in connection with the review, analysis and 12 reconciliation of all Land Rights, including field verification of information, assignment of HOWARD 13 the Land and Land Rights to the New Entities, and analyzing new and modified rights to be PIKE acquired. Contractors performing this work are as follows:

. . 15 "* EDB DataResources

"* PhillipLongo 16 "* Charles McClue

"* ParagonPartners,Ltd.

17 "* Kenneth Sorensen

"* Willbanks Resources Corporation 18 Specifically, the work to be performed by each of the foregoing contractors will 19 include: (1) reviewing Land and Land Rights documents to determine: (a) the grantor and 20 grantee information; (b) identifying the facility for which the Land or Land Right was 21 obtained; (c) determining document dates and recording information, if applicable; (d) 22 determining whether documents contain assignability provisions; and (e) determining 23 whether documents contain any non-standard provisions; (2) evaluating the chain of title 24 with respect to Land Rights in order to facilitate a complete and clear understanding of the 25 26 1PG&E also utilizes certain employees of Corestaff Services, Inc., a staffing agency, to assist its internal staff with project planning and coordination, data gathering and analysis, 27 and database development and management in connection with the Land Work. The expenses for these services are also included in the Budget set forth in Paragraph 7 below.

28 DECLARATION OF MICHAEL SCHONHERR 1 Land Rights; and (3) generating pictorial records (on existing PG&E line drawings) by 2 highlighting the specific locations of the Land and Land Rights covered by each document 3 reviewed.

4 6. Land Surveying. This category of work includes land surveys, preparation 5 of the deeds and maps related to the possible subdivision, lot line adjustments, and/or 6 transfer of fee properties to the New Entities, performing the work necessary to ensure 7 compliance with local rules and regulations, and preparation of easement reservations and 8 new easement grants. More specifically, this work will include: (1) reviewing PG&E's 9 records to ascertain the information required to develop recordable legal descriptions for all 10 deeds and easements to be conveyed to the New Entities or to be reserved by PG&E; 11 (2) evaluating the chain of title with respect to the Land (fee interests) in order to prepare 12 clear descriptions, free from defects, for the conveyance of PG&E's interests in the Land; H~kVAM 13 (3) generating exhibit drawings (maps) that delineate property and easement locations; c 14 (4) performing land surveys to collect the information necessary to subdivide or perform lot

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,.*., 15 line adjustments for properties that will be divided between PG&E and the New Entities; and 16 (5) preparing deeds and "Record of Survey Maps" pursuant to the California Subdivision 17 Map Act, reflecting the proposed subdivision or lot line adjustments with respect to divided 18 properties. The contractor performing this work is Towill, Inc.

19 7. PG&E is requesting approval to pay the Contractors for the Land Work in 20 the amount of approximately $5.5 million (the "Budget"), beginning April 2002 and 21 continuing to the Effective Date (as defined in the Plan) or such earlier date on which the 22 transfers contemplated to the New Entities have been completed. Payments would be made 23 by PG&E to the Contractors on a monthly basis as work is completed, based on monthly 24 billings by the Contractors.

25 8. The Land Work is essential to the implementation of the Plan. Although the 26 Plan is not yet confirmed, PG&E estimates that it will take up to 12 months to complete the 27 Land Work necessary to transfer PG&E's extensive Land and Land Rights to the New 28 Entities, as contemplated by the Plan. Therefore, given the volume of work and level of DECLARATION OF MICHAEL SCHONHERR I detail and accuracy needed to satisfy recording and other requirements, the Land Work must 2 be accelerated well in advance of confirmation of the Plan in order to assure a timely 3 consummation.

4 9. In developing its strategy for handling the Land Work, PG&E has adopted a 5 moderate approach in terms of balancing risks and costs. Specifically, PG&E contemplates 6 undertaking a complete review of title and land rights only for those properties and 7 entitlements that may become assets of the New Entities. PG&E does not intend to obtain 8 title insurance in connection with any of the transfers to the New Entities. Thus, the goal is 9 to handle the transactions in a manner that will effectively transfer the Land and Land Rights 10 to the New Entities, thereby minimizing the potential for disputes and uncertainties arising 11 post-separation, but without the certainty and costs associated with title insurance.

12 10. The Land Work will also provide value to PG&E whether or not the Plan is HC*WMD 13 implemented. PG&E will benefit from the accelerated review and audit of its real property RKM C 14 portfolio as this work will enable it to manage its Land and Land Rights more efficiently BUK Af*.- 15 through enhanced understanding and improved organization of its records.

16 11. To the extent that subsequent events demonstrate that the transfers to the 17 New Entities will not be necessary, the associated Land Work can be terminated 18 immediately. PG&E's standard contractual provisions in place with the various contractors 19 do not guarantee future work or any minimum amount of revenue. PG&E also maintains the 20 right to terminate the contracts at any time without cause, in which case PG&E is liable only 21 for work performed to the date of termination plus costs reasonably incurred by the 22 contractor in terminating any work in progress.

23 I declare under penalty of perjury under the laws of the United States of America 24 that the foregoing is true and correct and that this Declaration is executed this 12th day of 25 April, 2002, at San Francisco, California.

26 L 27 CHAE HONHERR WD 041202/1-1419905/987625/vl 28 DECLARATION OF MICHAEL SCHONHERR