A bizarre end to Scott Peters' eight years on the City Council is
unfolding. He is using his powers as Council President to finally ram an
unwanted 12,000 square foot student center, with a 17,000 square foot
garage, on a quiet single family residential neighborhood in La Jolla.
For some unknown reason he has pushed this project like a tiger for his
entire term in office.
Facing widespread opposition from his own constituents in La Jolla, he
managed to get his former law partner, Suzanne Varco, to represent the
City in a law suit filed by two La Jolla citizen groups: the
Taxpayers for Responsible Land Use and the La Jolla Shores
Association. On March 27, 2007 the City lost. Superior Court
Judge Linda B. Quinn
struck down the City of San Diego's decision to permit this totally
inappropriate project.
Peters and the City decided to ignore the court, saying:
"it was determined that the applicant would be
allowed to resubmit a new application addressing the
judge’s concerns, and process it through the City’s review process."
Peters docketed the project for a Council hearing on December 2,
2008, his last day on the City Council. Here is the
full documentation
for the Council Meeting on Tuesday afternoon. Note that the project has
been rejected numerous times by the City Planning Commission, the
La Jolla Community Planning Association and other local groups.
According to this Peters Doctrine of land use, if a citizen objector
sues the City and wins, the City simply invites the applicant to
resubmit substantially the same project and call it a new project. The
City will then decide what "addresses the judge's concerns", not the
judge. That is what Peters has placed before the City Council on
Tuesday. They should reject it.
But here is where it gets really bizarre: the City screwed up the
public notice regarding the vacation of a right of way that is part of
the project's application. Dr. Ross M. Starr, a Professor
of Economics at UCSD, sent
this email to the
City Clerk on November 19th. He noted that after inspecting the site on
November 18 "There
were no posted notices for the hearing currently docketed for December
2, 2008."
There was however a posted notice dated October 1, 2008 for a hearing
on October 16, 2008. Dr. Starr and his friends wisely took pictures of
the posted notice on front of a copy of the Union-Tribune for that day,
November 18, 2008.
Here it is
and another showing a wider view
of the site.
The City's response was to go out to the site and post this
Revised Notice,
announcing a special City Council meeting for December 5, 2008.
It explained in bold print: "This
Posted Notice is being provided in addition to the Posted Notice,
previously posted on November 19, 2008. The Hillel of San Diego Student
Center Public Right-of-Way Vacation has been noticed for the City
Council hearing of December 2, 2008. It is anticipated that this
item will be continued until Friday, December 5, 2008."
This means that Council President Scott Peters informed the City's
Development Services Department that
five Council
Members had
reached a "collective
concurrence", on or before November 21, 2008, to continue
Item 343 on the
City Council Agenda for Tuesday, December 2, 2008 to a special City
Council meeting on Friday
December 5,
2008. Such a "collective
concurrence" is illegal - in breach of the California Brown Act.
Yet that is exactly what Scott Peters is planning - one final act of
infamy on his very last day as a member of the City Council. I hope a
sufficient number of his former La Jolla constituents turn up at City
Hall on Tuesday December 2, 2008, to deny him this final abuse of
elected office.
Let's hope the
swearing in of a new City Council and a new City Attorney on
December 8, 2008, marks the beginning of a new era in San Diego.
Is DeMaio setting
himself up as the Mayor's hatchet man?
11/25/08
Just when we thought we had seen the end of nastiness on the City
Council with the departure of Jim Madaffer, along comes Carl DeMaio with
this:
Mild mannered, consensus-seeking Kevin Faulconer, DeMaio's sole
remaining Republican colleague on the City Council, must have been
dismayed at DeMaio's display on Monday. So too must Donna Frye who has
formed an alliance with DeMaio in her bid for Council President.
It was not even clear what DeMaio was upset about. It seemed he was
merely trying to win favor with the Mayor and his staff.
At the podium he turned to Jay Goldstone for reaffirmation that the Council had raided the City's
reserves in saving the libraries. That argument had been prominent
in the Mayor's failed attempt to close the libraries. But it
made no sense.
Goldstone had asserted that the $2 million
Transient Occupancy Tax Surplus, identified by Andrea Tevlin to offset
the cost of deferral, was a "reserve". It is not. In picking
up on this misrepresentation was DeMaio setting himself up as the
Mayor's hatchet man at City Council? These two men share a passion for
privatizing large chunks of the City's treasury.
Faulconer had been widely perceived as the Mayor's man on the City
Council, but he was never really comfortable in that role. Besides, to
get re-elected in 2010 he has to "reach out and touch" a growing number of
left-of-center younger voters in the coastal areas of his Council
District. At the same time he must maintain the trust and confidence of
his core support, the downtown business community. He may now be free to
pursue both.
The task ahead is not about busting city unions, as DeMaio seems to
think. It is about achieving
equity between city employees and taxpayers. The taxpayers are currently
burdened by the excesses of two over-aggressive union bosses, Judie Italiano
(MEA) and Ron Saathoff (Firefighters), who over-benefited their union
members to the point of a taxpayer revolt. That is the core of the
City's fiscal crisis. But union busting will not solve it.
City employees can provide better city services than private contractors.
Good faith labor negotiations, if needs be under the supervision of a
bankruptcy judge, is the only way out of our present difficulties. Seven
members of the incoming City Council appear to have the right
temperaments to tackle the job. But Sanders and DeMaio seem more
interested in exploiting the City's fiscal difficulties for their own agendas -
forced land
deals and lucrative outsource contracts. Semper Vigilans.
Are the library
closings really secret land deals?
11/22/08
Tevlin's
recommendation is: "keep these facilities open
until a more deliberate and comprehensive plan for facility closures is
developed and presented to Council." She notes that a number of
libraries are on Sanders' closure list and also on his expansion
list. Is this just incompetence or something else? If it is
incompetence it is really gross incompetence.
Take the Ocean Beach Library for instances. Is Sanders aware that:
"In 2005, the City purchased land adjacent to the Ocean Beach Library
for an expansion. According to Council reports at the time, this
property is collateral for a HUD Section 108 loan of $2.0 million
garnered for the Ocean Beach Library. Loan payments are approximately
$223,000 annually through FY 2017 and are being paid from District 2
CDBG allocations."
Here is
the public record,
from the
Tax Assessor. It confirms the IBA's findings but does not reveal the
sale price from attorney Thomas Bryan to the City. It would take a
little more digging to get that. The fact that the City later borrowed
$2 million against the property tells nothing of the sale price or the
value of the property. The important point is that the City is on the
hook for $223,000 per year for that property. They have probably used
the $2 million elsewhere by now. They move such money around all the
time.
It seems to me that this whole library and park closure business has
more to do with secret land deals than balancing the 2008/09 Budget. If
Sanders is about anything he is about land deals. It is my guess that
somebody wants that OB site. The library lot together with the lot next
door would make a perfect mixed-use development. How many of the other
library lots chosen for closure would make excellent development
opportunities? Here are aerial
pictures of the seven properties, all prime developable lots.
It would explain why Sanders is so sore at Andrea Tevlin. Is she
spoiling a well-laid plan? Her recommendations make all the sense in the
world. She says: "we are recommending a
comprehensive facility planaddressing proposed closures
along with proposed openings be brought to Council by February
2009 in order to prepare for the future." Sanders was very scathing
about that suggestion. Why? His demeaning remarks about Tevlin brought public
protests from Councilmembers Atkins and Young.
Sanders argues that because of an implementation delay, Tevlin's
recommendations will result
in a "cost". He failed to mention that she has offset this "cost" by raiding two of his pet projects: a BPR
(outsourcing) surplus and his reallocation of a Transient Occupancy Tax
surplus (he wants to use it for promotional expenditure on his hotel
friends). Look at the
attachment to
her Report to Council. Sanders has a very weak argument.
The best thing that came out of the new "Strong Mayor" form of
government was IBA Andrea Tevlin. We are immensely lucky to have her.
Let's hope the City Council votes to support her sensible
recommendations over the very suspicious proposals of Sanders on Monday
November 24, 2008.
The pension party
is over - now comes the "rush to the door".
11/21/08
Ron Saathoff today warned the Pension Board that there would be "a rush
to the door" if the Board reduced the DROP creditable interest rate from
its current 8% to the assumed rate of return rate of 7.75% effective
January 1, 2009. He recommended waiting until June 30, 2009, the fiscal
year end.
There would of course be "a rush to the door" for a June 30, 2009
deadline, but more DROP people would make it to that exit door. What a
rush there would be if the interest rate dropped to 5%! A stampede.
Here is the DROP
Report for October 31, 2008. Note that there are 226 police and 166
Firefighters in Active Drop as of that date. How many of those will
"rush for the door" before December 31, 2008? Maybe Sanders won't have
to make any budget cuts after all.
This shows how fragile a system we have here in San Diego. Up to 1,028
City employees (they have already technically retired) could "rush to
the door" at short notice if the Pension Board stopped paying those
ridiculously high interest rates on their five year DROP accounts.
The reason the 1,028 with the $159,983,398 in Active DROP accounts would
"rush to the door" to join the 718 with the $164,070,764 in Retired DROP
accounts, is because the interest on their Retired DROP accounts would
be set at 8% for up to 20 years as they withdrew it on an annuity.
It is clear to me that Saathoff was simply attempting to create exiting
room for a larger number of his former colleagues to exit while the
exiting is good. It is also clear to me that all but the most junior
staff know that the party is over. All the senior staff think of now is
the timing of their exit. There is at least some protection in being
actually retired - your claim on whatever pension assets that may be
left takes precedence over those still working.
They all know that there are not going to be any pension obligation
bonds (POBs), despite what Scott Peters may be spinning to them about
selling the people a bill of goods that POBs would save the City money.
In fact his spurious argument can be turned against him: yes, POBs would
probably cost the City less than 5%, which means that that is all the
taxpayer should be paying the pension fund as an assumed rate of return!
Either way the party is over. The crunch will come when the present
value of future benefits of retirees is so far beyond the market value
of the pension system's assets that the retirees will be the ones
clamoring for "reorganization". To paraphrase Steve Erie: hell will
freeze over before the taxpayers bailout Ron Saathoff and his
millionaire retiree colleagues.
That may be the biggest question facing San Diego's politicians over the
next few years. Municipal bankruptcies are governed by
Chapter 9 of the U.S. Bankruptcy Code.
Chapter 1, Section 109 (C) of that Code defines the conditions that
must apply before a city can qualify for bankruptcy:
"§109 (c)
An entity may be a debtor under Chapter 9 of this title if and only
if such entity
(1)is a municipality;
(2)is specifically authorized, in
its capacity as a municipality or by name, to be a debtor
under such chapter by State law, or by a governmental
officer or organization empowered by State law to authorize such
entity to be a debtor under such chapter;
(3)is insolvent;
(4)desires to effect a plan to adjust such debts;
and
(5) (A)has obtained the agreement of creditors
holding at least a majority in amount of the claims of each
class that such entity intends to impair under a plan in a case
under such chapter;
(B)has negotiated in good faith
with creditors and has failed to obtain the agreement of
creditors holding at least a majority in amount of the claims of
each class that such entity intends to impair under a plan in a
case under such chapter;
(C)is unable to negotiate with
creditors because such negotiation is impracticable; or
(D)
reasonably believes that a creditor may attempt to obtain a
transfer that is avoidable under section
547 of
this title."
First hurdle:
permission to file
for relief in Federal Bankruptcy Court must be obtained from the
State. That usually comes in the form of a signature from the
Secretary of State. In California it would be pretty well
automatic as this State has never questioned municipal
bankruptcy filings in the past. Most states take the view that
such permission is given in aid of, not in derogation of, their
sovereign powers. States' rights are thus preserved.
Federal and state constitutions restrict the "impairment of
contracts" - U.S. Constitution
Article 1, Section 10.
Only the United States Congress has the power to override those
restrictions through the bankruptcy powers
conferred upon it by
Article1,
Section 8 of the United States Constitution.
When a state gives permission to one of its municipalities to invoke the
powers of the U.S. bankruptcy courts (to cancel debts and/or modify
contracts that would otherwise be irrevocable) it is actually coming to
the aid of a municipality, because states do not have bankruptcy powers.
Second hurdle: a municipality must be insolvent. San Diego would
need to demonstrate that it is unable to pay its debts "as
they become due" - the legal definition of insolvency. Would our
City be able to pay its debts as they become due if the Pension Board
insisted upon an 80% or higher unfunded liability ratio? Would our City
be able to pay its debts as they became due if the Pension Board used a
straight line amortization of the accumulated unfunded liability as
provided in the Charter? Probably not.
The Pension Board has long kept the City out of bankruptcy by setting the
Annual Required Contribution (ARC) artificially low. That tactic got previous
board members into trouble. The present Board is repeating the
tragic mistake of 2002 - it is helping the City balance its books by
underfunding the pension system. The UAAL is about to plummet past the
60% mark.
The gap between the present value of future benefits (PVFB) and the
market value of pension assets is exploding and will not be "smoothed"
by actuarial magic, as David Wescoe (the hand-picked-by-the-unions
pension administrator) is assuring the Board. At what stage will the
Board finally take action? When the UAAL plummets past 50%? Past 40%?
Right now there is nothing to arrest its downward spiral.
Doug McCalla, (the long-time City employee who after 22 years
became the hand-picked-by-the-unions
pension system's investment manager)
pulled the ripcord on his golden parachute today. He bailed out of an
airplane fast running out of fuel. Board members now need to decide
whether they are pilots or passengers. Either way they will be blamed when it
crashes and burns. Pleading ignorance is no longer an option.
Each member of the Board knows that the present unsustainable 7.75%
assumed rate of return is showing up as a rapid buildup of UAAL - the
investment shortfall is simply being debited to the taxpayer. In
choosing between twin evils (a high assumed rate of return or a high
ARC) they are being subjected to massive pressure from the City unions.
The unions know that by far the biggest threat facing their bloated
entitlements is
municipal bankruptcy. They also know that the
Meyers Millias Brown Act (MMBA) will not save them. The MMBA is a
California labor law mainly concerned with
"the establishment of uniform and orderly methods of communication
between employees and the public agencies by which they are employed",
commonly known as "meet and confer".
No amount of MMBA "meet and confer" or union stalling can prevent a Federal
Bankruptcy Judge from deciding whether excessive pension benefits, (acquired through collective bargaining agreements deemed sacred by the
unions) are in fact a "severe burden" on the City's taxpayers.
A bankruptcy judge would have the power to order the unilateral
rejection or impairment of such benefits, by applying the "balance of
equities" principle. The fundamental question is whether San
Diego's ballooning pension burden is "equitable" or not. If it
drives the City into bankruptcy it is hardly "equitable". That is why
the City unions fear bankruptcy above all else.
Finally, for those of you who fear that developers would reap a bonanza
of City properties at a bankruptcy fire sale, relax, it can't happen.
Subchapter 1, Section 904 of the U.S. Bankruptcy Code specifically
forbids the forced sale of municipality assets. That is the main
difference between a municipal bankruptcy and that of a commercial
corporation.
Here is what the Municipal Bankruptcy Code actually says:
"Notwithstanding any power of the court,
unless the debtor consents or the plan so provides, the court
may not, by any stay, order, or decree, in the case or
otherwise, interfere with —
(1)any of the political or governmental powers of
the debtor;
(2)any of the property or revenues of the
debtor; or
(3)the debtor’s use or enjoyment of any
income-producing property."
It means there is no such thing as forced municipal liquidation. That
is why municipal bankruptcy is called "reorganization". Our parks and
libraries are safer with a bankruptcy judge than with Sanders and his
developer friends.
Expel the
Lobbyists from City Hall, as Obama is doing in Washington.
11/15/08
Your weekly YouTube address
from your President-elect, Barack Obama.
On November 11, 2008 the Obama Transition
Co-Chair John Podesta announced the strictest, and most
far reaching ethics rules of any transition team in
history. They are:
Federal
Lobbyists cannot contribute financially to the
transition.
Federal
lobbyists are prohibited from any lobbying during
their work with the transition.
If someone has
lobbied in the last 12 months, they are prohibited
from working in the fields of policy on which they
lobbied.
If someone
becomes a lobbyist after working on the Transition,
they are prohibited from lobbying the Administration
for 12 months on matters on which they worked.
A gift ban that
is aggressive in reducing the influence of special
interests.
How about our new City Councilmembers adopting similar rules? They
have each run on a "clean up City Hall" platform in one form or another.
Such rules would keep union and developer special interests out of City
Hall, for at least a year. Everybody knows that senior union staff have
"special" seats in the Council Chamber. God help any ordinary citizen
who might dare sit in any of these "special" seats. It is an unspoken
rule at City Hall.
No other special interest group enjoys the lobbying privileges City
unions have arrogated to themselves. They wander the corridors of power
at will.
What we need in San Diego is a "Citizen Surge".
It was the citizens who elected the eight City Councilmembers, not
unions or developers. We need to stake our claim to the power they
represent - it is called citizen power.
Marti Emerald
extends her winning lead in District 7.
11/14/08
Marti Emerald received 876 of the
1,671
provisional votes counted this week and added to the previous tally
of 52,082 in Council District 7 for a total of 53,753. April Boling
received 795 of that 1,671. The margin is consistent with the original
vote. Emerald moves up from 50.43% to 50.50% while Boling moves down
from 49.57% to 49.50%.
Congratulations to Marti Emerald, it looks like she will win by 1% of
the vote.
Is that a mandate? In a democracy 50% plus one is a mandate. I attended
the post-election Republican forum at the Town and Country Hotel Monday
evening. April was not a happy camper. She said Marti Emerald "does not
represent us". I assume she meant those in District 7 who voted for
April.
I was hoping that the mean old days of Madaffer's
entitlement-of-the-right politics was over. It is - but only just. We
had a narrow escape. It seems Boling still believes in some form of
divine-right-of-the-right. Marti Emerald, the trouble-shooter, will be a
welcome breath of fresh air - Obama style.
How about some
"pro-citizen" government - for a change?
11/14/08
In
its editorial today, the Union-Tribune blames
the City's financial problems solely on the City's pension system:
"The latest actuarial figures make it glaringly
plain yet again that San Diego's staggering pension costs are simply
unsustainable." It goes on to say: "On the
current trajectory, pension costs for city retirees will soon devour 25
cents of every tax dollar, forcing cuts in everything from police and
fire protection to libraries and parks."
The U-T analysis leaves out the other culprit of the City's financial
meltdown - the $150 million being diverted each year to pork-barrel
"redevelopment" projects. Here again is the "culprit" chart I
published last week:
Interest per year on DROP
$25 million
Interest per year on the old $1.2
billion Unfunded Liability
$96 million
Interest per year on the new, most
recent pension losses
$68 million
Annual subsidies to
developers for "redevelopment"
$150 million
Total
$339 million
Those numbers actually understate the problem. The pension
cancer is much worse. CCDC alone owes the City hundreds of millions of
dollars. For Sanders to step up to the plate Wednesday only to protect
his two sacred cows, public employees (of which he is one himself) and
developers (who elected him), is troubling enough, but for our "watchdog
newspaper" to take such a one-sided view of the City's financial problem
is extremely troubling.
It is time we heard from the citizens. Our "pro-business" City fathers
are meeting in their penthouse clubhouses right now divvying up the
prime lots our libraries currently stand upon.
Jim
Barwick has probably already accepted offers on the Ocean Beach lot
and the two Clairemont library lots.
How about some "pro-citizen" government for a change? Where are the real
"reformers"? Where are the real "watchdogs"? Was there an Obama surge?
No. The tsunami of real change hasn't reached San Diego
yet. Maybe a change of ownership at the U-T (and its editorial bias)
will help.
As for Sanders, I doubt he has the intestinal fortitude to stick it out
until 2012. He didn't sign up to preside over America's first big-city
bankruptcy. I suspect his wife and daughters are already nagging at him
to seek some respectable Schwarzenegger fig leaf appointment - for
health reasons.
It must have been
tough on the Mayor to make these cuts.
11/13/08
I sat through five hours of budget "hearings" at City Hall yesterday. It
was an uneven contest - powerful City staff vs. powerless citizenry.
Occupying almost every seat in the Council Chamber, the City's
department heads, with dozens of stern-faced, immaculately-dressed City aides
by their sides, taxpayer-provided Blackberries silently relaying
play-by-play instructions to the next City soldier at the podium, the City
staff successfully pulled off a "save our pensions - cut your libraries
"
raid on our parks and libraries that Blackwater would be proud
of. It was a military-style operation carried out to perfection, leaving
devastated services in its wake.
At 9:00 A.M. Colonel Sanders stepped forward to let loose the dogs of
this war by announcing that he had delegated his citizen-given authority
to all City department heads, with a stern warning to whining complainers - us.
Long-time City employee, ex-cop Gerry Sanders told how he turned to
the City department heads and "accepted their honest advice about where
cuts could be taken". Surprisingly these public-minded City department
heads advised the Mayor that they and their senior Blackberry-bearing
City staff should feel no pain, that all the pain should fall on
complainers - us citizens.
San Diego's axis
of greed - developers and unions.
11/09/08
While Sanders cuts our libraries and parks, his sacred cows,
developers and unions, continue to thrive. First, the hallowed pension
fund. According to the actuary's report there was $318 million left in
the DROP account
as
of September 30, 2008. DROP accounts are credited with 8% interest,
compounded quarterly. Try that on your 401(k). The cost to the City for
this one pension benefit is $25 million per year, over $2
million per month.
Some months ago the San Diego City Employees' Retirement
System (SDCERS) asked its actuary, Cheiron, to do an
"experience study" for the period July 1, 2004 to June
30, 2007.
Here is the complete report.
While the entire document makes interesting reading I
would like to focus on DROP because a key decision will
be made by the SDCERS Board at the next monthly meeting
on Friday November 21, 2008.
Table II-1 shows that during the study period a total of
705 "General" employees and 339 "Safety" employees
retired. Table II-2 shows the split of DROP versus
normal retirements for all General and Safety retirees.
It shows that 66% of all General retirees entered DROP,
with 70% of them between the age of 50 and 59. For Safety
employees it was even higher. 80% of Safety retirees
entered DROP, 85% between the age of 50 and 54.
The Report explains that the higher the DROP
interest rate the greater the incentive to retire early.
This means that the City is losing its best employees in
their early fifties. The Report also explains that the
earlier an employee retires the higher the cost of their
retirement to the City. A person who
retires at 50 will probably draw a pension for 15 years
longer than a person who retires at 65.
The politically powerful
City unions have over-benefited
themselves to the point where most City employees need
only work into their 50s to receive what they should
normally receive in their 60s. In other words, the unions have been
enormously successful in shortening the time it takes to
retire.
Below, Ron Saathoff, with a little gloating, gives a
history lesson on how it was all achieved and why it
should continue, as a matter of right. It is clear that
the City unions intend to hold us to our "promises".
Saathoff defends a 7.75% interest rate for DROP by
defending the overall "assumed rate of return"
(currently at 7.75%, it was lowered from 8% this last
September).
All this while pension assets drop precipitously.
Here are the notes of
a San Diego Retired Employees Association (SDREA) meeting, taken by
SDREA note taker, Patti Karnes, on the morning of October 14, 2008. Doug
McCalla, the pension fund's investment manager, informed the gathered
retirees that the assets backing their pensions had dropped by $859
million to $3.92 billion.
The problem is that, unlike a 401(k), the taxpayer kicks in and makes up
any loss to the (privileged) City pension system to the extent of 8% per
annum. The cost of this particular loss of $859 million is $68
million per year. The taxpayer is already paying 8% on the
carried forward deficit of $1.2 billion. That annual interest on $1.2
billion at 8% is $96 million.
These interest payments are hollowing out our city in the form of closed
libraries, deteriorating park facilities and a growing infrastructure
deficit.
Now for the developer sacred cow in this axis of greed.
Look at this
tax revenue summary for FY 2006-07, published by the San Diego
County Tax Assessor. It shows that the developer community received $150
million as "redevelopment" subsidies during that year and that figure
has gone up considerably since then. CCDC alone took in $104 million
in FY 2006-07.
So let's add up this "axis of greed" money:
Interest per year on DROP
$25 million
Interest per year on the $1.2
billion Unfunded Liability
$96 million
Interest per year on the most
recent losses
$68 million
Annual subsidies to
developers through redevelopment
$150 million
Total
$339 million
You might want to reflect on that $339 million per year figure next time you hit a pothole,
visit a closed library or explain to your kids why you can't take them
to the park today. It clearly indicates Mayor Sanders' priorities.
The Council Presidency is their first big decision.
11/06/08
The three newly-elected City Councilors, Sherri Lightner,
Marti Emerald and Todd Gloria will be called upon on
December 8, 2008 to show their true political colors.
They will cast their first vote (perhaps the most
important of their four year term) for a new Council
President.
On Thursday October 30, 2008 I attended a public forum
at City Hall organized by Donna Frye and Carl DeMaio.
Here is their
Reform Report prepared for that evening's event. It
is essentially a plea for more open government:
- "the City Council
should strive to provide maximum access to the people to
participate in their local government."
On the other side of this high-stakes battle is Ben
Hueso and the City employee unions. They want to control
City Hall and run the City for the benefit of City
employees. They see themselves, not the citizens, as the
real shareholders of this $3.5 billion corporation. As a
life-long City employee himself, Mayor Gerry Sanders,
tends to agree with them.
The new City Attorney, Jan Goldsmith, was heavily backed
by City employee unions. Jan's very first act, the
morning after the election, was to appoint Andrew
Jones, president of the Deputy City Attorneys
Association, to the powerful position of head of the
City's civil litigation division, Don McGrath's old job.
To the winner goes the spoils.
According to
the U-T lead editorial today:
"Gloria,
Lightner and Emerald all owe their victories to union
financial backing. They are not likely to cross their
union patrons on any substantive issue." So
that's it then? This giant $3.5 billion
corporation we call the City of San Diego is really a
giant welfare system for 10,000 individuals we happen to
call City employees?
It all depends on Lightner and Emerald. If the U-T is
right and they go with Hueso and the City employee
unions, we may as well all move into gated communities
(like Saathoff) and send our kids to private schools. The idea of a
public-servicing municipal corporation called a City
will be abandoned.
We will officially have embraced the Third World concept
of government: build a high wall around your home and
throw your garbage out over it for the poor and their
dogs to fight over. Those of you who have ever ventured
away from the Holiday Inn or Marriott, in Lagos or any such teeming city
around the world, know what I am talking about. There,
city officials drive Mercedes and live in mansions. Is
that where we are headed?
Somehow, I think (certainly hope) that the U-T has it
wrong. I don't think "Lightner and
Emerald owe their victories to union backing".
Yes, some City unions, particularly the firefighters,
endorsed and put money into the Lightner and Emerald
campaigns. But to say that they "owe their victories to union backing" is very
unfair to these two aspiring public servants.
Both Sherri and Marti wore out multiple pairs of shoes
knocking on every door in their respective Council
Districts. Union money cannot claim credit for their
victories and the people of their District's know it.
I have no doubt that both Sherri and Marti will do what
they believe is right for the people of this city as a
whole, not for any narrow special interest, union or
otherwise. If they believe that Ben Hueso is better
qualified to be Council President than Donna Frye I for
one will defer to their better judgment because I know
it will be formed in good faith.
As a long-time supporter of Donna Frye I would like to
see her have the opportunity to practice her
open-government style of public representation as
Council President. But Sherri Lighter and Marti Emerald
(on their own!) have earned the right to make that
decision, not me. I wish them luck.
Is the Ethics Commission part of the "insider" game?
10/30/08
As a downtown establishment "team player", Ethics
Commission Executive Director, Stacey Fulhorst, may be
pushing the envelope of her extensive powers. It now
looks like she may have used those, perhaps too
extensive, powers on behalf of two long-term insiders,
April Boling and Tom Story.
First the April Boling Story. Marti Emerald contacted me
telling how she is very frustrated with what appears to
be an insider protective wall around April Boling.
Apparently Emerald complained to the Ethics Commission
that Boling continues to receive approximately $1,750
per month from the Lincoln Club while it makes
expenditures as an Independent Expenditure Committee on
behalf of Boling's campaign for San Diego City Council.
So I called the Ethics Commission for verification. They
told me they were unable to confirm or deny any
particular complaint. Fair enough, so we talked
extensively about hypothetical's. Here is what I found
out.
First there is a "preliminary review" by the
Executive Director. Here is the Municipal Code governing
such a Preliminary Review.
But the Ordinance seems to present a "catch 22"
situation for a complainant at that point. It states
that in order to make a preliminary determination "the Commission
will not be investigating
any facts alleged in your complaint, but will
simply be making a determination regarding whether or
not ..... (d) the complaint consists of opinions or
frivolous accusations."
This
gives Stacey Fulhorst enormous power. She can simply
rule that a complaint is "frivolous" and that is the end
of it. On the other hand she can pursue a complaint that
really is frivolous e.g. against an "outsider" candidate
like Carl DiMaio for inadvertently including a few city
employees in a mass email. That is too much power for one person. It
sure has Marti Emerald hopping mad.
While the Ethics Commission staff would not discuss April
Boling's relationship with the Lincoln Club, they were
willing to discuss hypothetical's.
So, I posed a hypothetical question: if I as an
accountant (which I happen to be) were running for
elective office and one of my long-standing clients, a
well funded Political Action Committee, wanted to
support me financially, would I need to break that
client relationship? Apparently not. At least not in the
case of April Boling.
The San Diego Ethics Commission advised Marti Emerald
that candidate Boling can continue to provide financial services, for
compensation, to the Lincoln Club provided she is not actually its designated treasurer
(perhaps forewarned, Boling had shed that official
designation in the lead up to the campaign). Furthermore,
according to the Commission, a complainant would need to prove that
Boling actively participated in the Lincoln Club's specific
activities promoting Boling.
Now that seems like a protective wall to me - even
if
a complainant got to present evidence showing
a candidate's "participation" in support activity.
This city is well and truly controlled by insiders. It
is locked up tight.
Now for the Tom Story story which tends to confirm that
perception. Here is
Fulhorst's letter giving him the all clear on
Sunroad. On page 5 it says:
"In sum, the Commission determined that the “project
ban” did not apply to your activities as an employee of
Sunroad, and that you were not precluded from assisting
Sunroad with respect to the Centrum project during your
twelve month post-employment period."
Fulhorst informed Story of the Commission's finding
that "the development changed so
substantially that the “project” you worked on in 1997
for the City was not the same “project” you worked on in
2006 for Sunroad."
It was not the same project because Story's
post-employment activities had substantially improved
the project for Sunroad. A "catch-22" in reverse. Is it
any wonder people no longer trust City government? To
them it is a game, with the deck firmly stacked against
the citizen, who gets to pay for it all in reduced city
services and (impending?) tax increases.
Will it change after November 4th? It is starting to
look like it will get worse.
The new exciting world of politics and its young
practitioners.
10/28/08
Politics has dominated Americans' lives for months now.
It has even eclipsed sports. And like sports, everybody
has a favorite team. There is no middle ground, you
can't be a Raiders' fan and a Chargers fan at the same
time. You can't even occupy the same side of the room at
some cocktail parties. It's "them" and "us". Even the Hollywood
moguls are perplexed. What they would not give for the
star power of a Barack Obama or a Sarah Palin. These
political superstars are bigger than movie
stars.
Who are the practitioners in this glamorous new world?
We know they are there, we see their handiwork
everywhere. Who are the thinkers and creators behind those slick TV
ads and those glossy mass mailers? All that money must
be attracting the best and brightest. I decided to
investigate.
Using the sports world as my guide I looked for a
campaign manager that might have brought a previously
losing Proposition to the election Super Bowl with a
chance to win. California's Proposition 4,
the
statewide ballot measure that requires parental
notification prior to a minor's abortion, fitted
the bill perfectly. This ballot measure looked like a
sure three-time loser, it had both the pro-life and
pro-choice armies lined up against it.
I interviewed
its Chief Strategist and
Campaign Manager, Charles P. Gallagher, a 34 year
old veteran of statewide politics. I asked him
what he saw that others may have missed?
"Just as in
sports" he said, "you identify your strengths and
concentrate on the outcome".
It all begins, explained Gallagher, with a thorough analysis
of the issue and reliable polling data. His analysis of the
parental notification issue convinced
him: (1) that the differences between the
pro-life camp and the pro-choice camp do not extend to
parental notification and (2) that Latino and Asian voters
have deep family values that put the health and
safety of their daughters above all else.
Armed with this analysis he enticed activists from the
pro-life camp and the pro-choice camp into the same room
to discuss it. That was a major breakthrough in itself.
As Gallagher had predicted, both camps quickly found
that they could put their philosophical and religious
differences about abortion to one side and concentrate
on the health and safety of their respective daughters.
It was a revelation to both sides.
Gallagher calls this his
"Doctrine of Inclusion". I see
it as a tool with far-reaching potential in conflict
resolution throughout the whole political arena. If it
will work in the most divisive arena of all, abortion,
it would work anywhere. Conflict resolution is, or
should be, what politics is all about.
In the case of Prop. 4 it was sufficient to discover
just one area of agreement: that the health and safety
of a teenage daughter is the primary concern of any
parent, that it transcends a position on the abortion
issue.
Amazingly, Gallagher was able to thus unite both
pro-life parents and pro-choice parents in support of
his parental notification ballot measure. What parent
could withhold their love and support from a daughter at
such a dreadful time in a young girl's life? This
recognition became a major milestone in his uphill journey
to the November 4th election Super Bowl.
Next he turned
to the practical problem of reaching the millions of Latino and
Asian families he knew would be the core support of his ballot measure.
But how does one get such an important
message to such a vast and diverse population? He reasoned
that sooner or later they all have to come to the
grocery store - the common watering hole of modern life.
He placed hundreds of thousands of "Yes on Proposition
4" flyers at grocery checkouts all up and down the state
of California. It turned out that store managers and
store clerks, many of whom were themselves Latino or
Asians with teenage daughters, were not only cooperative,
they were downright enthusiastic. They became
Gallagher's army for family values.
It now appears that not only will Proposition 4 benefit
from the much talked about "Obama factor" (an increase
in voter registration and voter turnout among Latinos,
African-Americans and Asians), Gallagher's grocery leaflet
campaign will be responsible for much of it. Californians of all colors,
races and backgrounds, with strong
family values, now have two powerful incentives to
register and vote: Barack Obama and Prop. 4.
With just seven days to go before
Election Day, Prop. 4 is ahead in the polls. Thus, its Chief
Strategist and Campaign Manager, Charles Gallagher, has
answered my question: who are the architects of
this new political awareness that seems to be sweeping the
country?
They are young, they are bright. They are deserting Reality TV for Reality Politics. They
apply lessons from
baseball to the field of politics. I wish
them well. I hope they play the
political game better than we did.
It may be too late for San Diego,
but it is not too late for Coronado.
10/27/08
Here is what Coronado's three-term Mayor, Tom
Smisek, has to say about the 2008 Coronado
mayoral race: "I want to share my thoughts with you as to
why I will
be voting for Tom Stickel to be our next Mayor of
Coronado.
Most of our major public projects have been completed
during the 12 years I have served as your Mayor, and new
development standards are already in place to take care
of those currently in progress. We are fortunate to have
a healthy and well financed city budget, so that is not
an issue either.
Your new Mayor will be spending a much higher percentage
of time dealing with external issues such as: more
intense negotiations with the Navy in Washington D.C.
about the increasing presence of the Navy at North
Island and the Amphibious Base; working with Caltrans
concerning southbound traffic through our city; engaging
the Governor and state legislators over budgetary
takeaways; and working with San Diego and the region to
ensure that smart transportation plans protect Coronado.
It is therefore much more important than it has ever
been to have a Mayor with talents and the experience to
tackle these important challenges.
We need a Mayor who has proven himself to be a strong
leader, is principled, and has the moral courage and
temperament to make tough decisions, to do what is right
for our community. He must be consistent and decisive in
the way he governs.
There is one candidate that fulfills these requirements
- Tom Stickel - and I endorse him to be our best choice
as the next Mayor of Coronado.
Tom Smisek 619-435-3710"
That is a powerful endorsement of Tom Stickel.
Smisek,
who has been Mayor of Coronado since 1996, flew combat
missions over Vietnam and was a TOPGUN instructor. That,
together with his long experience as a Delta Airlines
captain, probably makes him a good judge of men.
If "keeping Coronado's village
atmosphere and not allowing it to become overdeveloped",
is truly one of the reasons he has picked Stickel,
then I want to add my enthusiastic
endorsement.
Coronado is one of the last remaining jewels on the
Pacific Rim. But the San Diego developers are now eyeing
it greedily as they run out of land across the Bay.
Coronado residents fought to keep their
Village Theatre and their Coronado
Hospital. They also fought to preserve their many
historic buildings. But mostly, they do not
want more traffic congestion.
Stickel
would carry on Smisek's conservative fiscal
policies, that have kept Coronado's fees low while
building up its reserves - the opposite to what has
happened across the Bay at San Diego's City Hall. With a
continuation of such policies Coronado could become a
model for the rest of the region.
The fact is that the San Diego area as a whole is the
last remaining jewel on the Pacific Rim and we are
losing it fast through overdevelopment.
If the voters of Coronado become the final cave-in to
the insatiable appetite of developers, through the
super-aggressive promotion of hand-picked
developer-friendly candidates for mayor in each of our
region's cities, the beauty of this area we all call
home, as Ken Kramer so lovingly describes it on his NBC
7/39 TV show
"About San Diego", could be lost forever.
Stickel's
stated priorities are keeping Coronado's hospital and
its emergency room in Coronado and preventing Orange
Avenue "from becoming a freeway". Other candidates want
to emulate San Diego's failed attempt to regionalize
medical services and want to imitate San Diego's failed
General Plan that refuses to acknowledge a link between
development and infrastructure.
It may be too late for San Diego, but it is not too late
for Coronado. Let's hope the Coronado voters are as wise
in 2008 as they were in electing and re-electing
Tom Smisek
three times. He is a good judge of men. His pick is
Tom Stickel.
Can revenue from predicted assessed property increases bail out
San Diego Schools' and San Diego City's deficit spending?
10/21/08
How many people really understand Proposition S, the
San Diego School District's $2.1 billion bond measure on the
November ballot? I would venture to say, very few. I
spoke to some of those "very few", at the
Financial and Management Advisors firm of
Gardner, Underwood &
Bacon
in Los Angeles today, who advise the School
District on bond issuance. They were very
courteous and very helpful and provided me with
detailed graphs and tables on Prop. S which I will share
with you.
But first let's look at some
new information I have
extracted from a presentation made by the County to the
rating agencies on September 10, 2008 (by the way, the
County was successful in obtaining a AAA rating, one of
the very few counties in California to be able to do
so).
The chart
shows the median home prices
declining sharply in 2007 and 2008. But the County
believes that the decline will stop at the end of 2008.
It believes it will flatten out at the 2004 level,
thereafter showing a straight line as during the '90s. There
is however, some evidence to suggest that it will settle down at
the 2003 level. In some market areas it already has.
In any case a substantial amount of the
County's AV will become trapped inside a "bubble", that
hump in values between 2004 and 2008. The County says:
"Less than 28% of parcels
would likely be subject to reassessment given current
market conditions". Yes but how big is that
"hump" in terms of AV? Not just in terms of parcels?
That hump contains the highest assessed valuations because those
sales were at "bubble" prices. I
suspect that in terms of AV it is much greater than 28%.
How much will the deflation of this hump impact the
future growth in overall AV? In its forecasts, the
County relies heavily on the built-in 2% increase
mandated by Prop. 13. It believes that this 2% increase in
the 72% that will not change ownership, will offset
the 28% that will.
The County is thereby telling its taxing agencies, both
cities and school districts, that the evaporation of the
"bubble" will have "negligible" impact on the growth of
AV. The School
District has embraced this optimistic view and
projects a continuous growth rate of 5% in its AV
all the way to 2044.
In column 8
of its financial forecast the District predicts a
continuous AV growth of 5%. The
debt service projection shows it has chosen to use "deferred capital" bonds.
They are similar to getting a 25 year
mortgage and paying it all off, principal plus
accumulated interest, in the 25th year.
By 2019 the School District would have issued all of its
$2.1 billion Prop. S authorization.
All of the District's revenue available for debt service
in 2044, $457 million, and all of its revenue available
for debt service in 2043, $436 million, a total of $893
million, would be required to pay the final balloon
payment for that 2019 bond. That is very
expensive borrowing.
I believe the basic problem lies in
this County pie chart. I blame the School Board for
NOT
blowing the whistle on those who are stealing the
financial resources
that should be going to our children's education.
Prime
among those agencies stealing from our children is the San Diego City Redevelopment Agency,
particularly the bloated, developer-managed CCDC, which alone diverts more
city tax revenue to itself than would pay all the
bond debt the San Diego Unified School District would
ever need.
For example, the total School District's projected debt
service for 2010, including the projected debt service
on the first issuance of Prop. S, is
$99,484,785, while the total
amount of property tax revenue diverted to the San Diego
City Redevelopment Agency in 2007-08 (the most recent
figures available) was $167 million. The 2010 figure
will be much higher.
Proposition S would cover up this massive diversion of
funds by seizing all the bonding capacity of the School
District right up until 2044.
Why is the Girl Scouts organization actively promoting
the School District's $2.1 billion Bond measure?
10/13/08
School
Superintendent Terry Grier, the School District Board
and political consultant Larry Remer, have
recruited Jo
Dee Jacob, Chief Executive Officer of
Girl Scouts San Diego-Imperial Council Inc., in
their drive to get Proposition S passed by the voters.
Ms. Jacob is a retired Navy Captain who left the Navy
after 27 years to become the Girl Scouts CEO in 2001.
Apparently she donated the use of the Girl Scouts'
extensive facilities at Upas Street, Balboa Park to
Grier and Remer for a Proposition S campaign event on
the morning of Tuesday, October 7, 2008.
There were two media reports of the event, one in the
Union-Tribune and another in the
Voice of San Diego. Both raise serious political questions. But first, a little background to the story.
John Stump is a well-known City Heights attorney and
civic activist. He has been a leading opponent of
Proposition S since it was first mooted. On Thursday,
October 10, 2008 he sent
a series of
emails to Maureen Magee at the U-T, to Emily Alpert
at the Voice of San Diego and to me here at the Blog of
San Diego. Mr. Stump then provided us with copies of the
relevant law and legal opinions. Here they are:
First, the relevant section from the California
Education Code,
Section
7054. Next Government Code
Section 8314.
The Education Code Section seems to be the most
restrictive. It specifically refers to "any
ballot measure", whereas the Government Code Section
8314 merely says "a campaign activity".
Robert Stern, president of the
Center for Governmental
Studies (CGS) in Los Angeles, with whom I spoke at
length about this situation last week, makes a big
distinction between the rules governing "a campaign" and
"a ballot measure". He said you "lobby" for a ballot
measure but "campaign" for a campaign. He told
me that his non-profit organization (CGS) frequently
"lobbies" for state-wide ballot measures.
Perhaps he has a soft spot for "non-profits".
Before joining CGS, Mr. Stern was
General Counsel to the California Fair Political Practices Commission for
nine years. In dealing with my question regarding the
Girl Scouts/School Board issue, he attached great importance to the legal concept
of "materiality" or de minimis as it is known in
the law.
As a London-trained accountant (albeit forty
years ago) I am familiar with the accounting concept of
"materiality", a principle whereby accountants disregard
trivial matters in their reports to decision makers. It
was Mr.
Stern's opinion that the money
involved in the School District's activities promoting
Proposition S, or in the Girl Scouts helping it, could not have amounted to much more
than $100 each.
But should we measure the value of the event by
adding up the cost of the coffee and doughnuts, or
should we measure its value in terms of the effect it
will have on the Proposition S campaign (or the
"lobbying" for it)? Neither Grier, the School Board
nor consultant Remer would have imposed on the Girl
Scouts or arranged the event if they did not think it
would make a very valuable contribution to the "Yes"
campaign.
There is
a
City
Council Policy prohibiting the use of city-owned
land being used by non-profit lessees, such as the Girl
Scouts, for political activities. It specifically
prohibits the promotion of a ballot measure such as the
School Districts Proposition S. Will the City Council
ignore that breach?
I have placed a number of phone calls to the Girl
Scouts' CEO, Jo Dee Jacob, to discuss this whole matter
but so far she has not returned my calls, despite
assurances from her administrative assistant,
Karoline Jones.
So, this School Board/Girl Scouts episode raises serious
questions about how the political process works in San
Diego. Many non-profit organizations around the county
play key political roles. Many have carefully chosen
"team players" (often retired high-ranking Navy officers
such as Ronne Froman or Jo Dee Jacob) as CEOs.
"Non-profits", such as the so-called "San Diego County
Tax Payers Association" are the main cheerleaders for
the various business
Tevlin's
recommendation is: "keep these facilities open
until a more deliberate and comprehensive plan for facility closures is
developed and presented to Council." She notes that a number of
libraries are on Sanders' closure list and also on his expansion
list. Is this just incompetence or something else? If it is
incompetence it is really gross incompetence.
This
gives Stacey Fulhorst enormous power. She can simply
rule that a complaint is "frivolous" and that is the end
of it. On the other hand she can pursue a complaint that
really is frivolous e.g. against an "outsider" candidate
like Carl DiMaio for inadvertently including a few city
employees in a mass email. That is too much power for one person. It
sure has Marti Emerald hopping mad.
I interviewed
its Chief Strategist and
Campaign Manager, Charles P. Gallagher, a 34 year
old veteran of statewide politics. I asked him
what he saw that others may have missed? 
"I want to share my thoughts with you as to
why I will
be voting for Tom Stickel to be our next Mayor of
Coronado.
Smisek,
who has been Mayor of Coronado since 1996, flew combat
missions over Vietnam and was a TOPGUN instructor. That,
together with his long experience as a Delta Airlines
captain, probably makes him a good judge of men.
Stickel
would carry on Smisek's conservative fiscal
policies, that have kept Coronado's fees low while
building up its reserves - the opposite to what has
happened across the Bay at San Diego's City Hall. With a
continuation of such policies Coronado could become a
model for the rest of the region.
School
Superintendent Terry Grier, the School District Board
and political consultant Larry Remer, have
recruited Jo
Dee Jacob, Chief Executive Officer of
John Stump is a well-known City Heights attorney and
civic activist. He has been a leading opponent of
Proposition S since it was first mooted. On Thursday,
October 10, 2008 he sent
Robert Stern, president of the