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Blog Archives - 2005 Fourth Quarter


Auditor John Torell disappears into a black hole - 12/17/05


by Pat Flannery

Back at the end of October I asked the City Auditor John Torell to explain the information given to the City Council and to the public regarding the restructuring of a Bank of America loan for $152 million for sewer infrastructure. The Council were told that the City was paying interest on the $152 million calculated at 62.34% of the LIBOR rate (at that time 3.007%) plus 75 basis points i.e. a rate of 2.624%.

I asked Mr. Torrel the following questions on the telephone and by email:

"... the current 2.624% annual rate raises the following questions:

  1. what was the cost of issuance in this case? What was the role of Banc of America Securities LLC? Did they receive a broker’s commission and if so how was it paid? Is there a closing or settlement statement in existence showing the costs of the entire transaction? If so, may I see it?
  2. what was the cost of issuance in the other cases involving the BofA? Were there any companion or compensating deals?
  3. why are we paying Kroll to get us to the public bond markets where we will presumably pay more than 2.624%?
  4. why did we pay a higher (reported) rate on the Petco Park bond when we could presumably have placed it with the BofA?
  5. is the BofA willing to buy more of our bonds at this low rate? If so why all the concern about our credit rating and our audit?

It just doesn’t make sense John."

Mr. Torell agreed on the telephone that it did not make sense to him either. Accordingly he copied me with a request he sent  to Dennis Kahlie on November 2, 2005:

"Would you please (when you get a chance) in the next couple of days respond to his concerns and copy me on the response (I'd like to know the answers to some of these questions also. Thanks, in advance, for your help -John"

I have not heard another word from either gentlemen but in the meantime the matter went back before the City Council for a repeat approval because Scott Peter's wife had owned Bank of America stock at the time of its first approval. Kahlie again appeared before the City Council and again confirmed the above interest rate.

Yet nobody on the City Council questioned why we were not taking advantage of this very attractive interest rate from what Scott Lewis of the Voice (again without question) described as a very friendly source. If this rate was available why were we paying Arthur Levitt and his gang millions so we could pay a higher rate in the public bond market? Surely I'm not the only one in the world to whom that question occurs.

The fact is of course that I simply do not believe that the Bank of America did not receive some undisclosed "incentive" to make such an attractive loan and nobody (apparently now including John Torell) wants to open up that can of worms.

Torell neither appeared before the City Council nor to my knowledge uttered a single word about the concerns he shared with me on November 2, 2005. So what has happened to this honest man who replaced the former acting City Auditor Terri Webster who is now charged with a felony by the District Attorney? Has he too been swallowed up in the black hole of corruption that appears to be San Diego City Hall? He certainly has not responded to any of my repeated questions.

Either Kahlie and others have stalled Torell who is now reluctant to admit as much or he too has joined the pervasive web of deceit that seems to be our City Hall.

Torell made a great show of his commitment to honesty and transparency on several occasions before the City Council. But eagle eyed Mel Shapiro pointed out something interesting to me in an email on December 1, 2005:

"Today's U-T editorial gives City Auditor credit for bring financial reports to the council. The truth is that Donna insisted that this be done, since its required by the City Charter." Indeed she did Mel.

In any case Torell seems to have gone awful quiet. Maybe "Bowtie Bob" has shared with him why it is so important not to upset the apple cart with whatever is going on between Levitt and Kittle, which I totally believe is some kind of scheme. It certainly is a puzzler. The local newspaper opinion editor should not be a political "player". Not only is Kittle a "player", he sees himself as the preeminent "player"!

Or maybe the relationship between the U-T and Sanders is not as cozy as it seemed during the campaign when all the U-T cared about was stopping Frye (I think the U-T owners would have called up the Chicago Tribune and left town if she was elected).

Sanders/Froman certainly seem to have scant regard for Torell. "I wasn't aware until you just told me this instant that he was going to oversee the auditor's office" Torell told The Voice on December 14 when informed that Jay Goldstone from Pasadena had been hired by Sanders and Mayor Froman (well isn't that the truth of it?) at a salary of $194,500, to oversee Torell's job! And become the City's first CFO.

So much for Sanders' much promised streamlining of the City's bureaucracy! So far all we have seen is Froman finding very lucrative new positions for former colleagues from her Navy career and elsewhere. To the victor goes the spoils, is that it?

So what can I now expect from "honest John" Torell with regard to my B of A questioning? Not much it would seem. Perhaps he had a word with his wife and decided to do as all good civil servants do, keep their heads down and count the years until retirement when they can all go fishing together.

The black hole of City Hall seems to have swallowed Torell without trace. Now I see the wisdom of Donna Frye's call to make the City Auditor an elected office. But it is not likely to happen on the Sanders/Froman watch. They are going to consolidate power in their own hands and use it to do favors for their friends - that is their retirement plan.

Kittle is a strange individual - 12/14/05


by Pat Flannery

"Bowtie Bob" Kittle is a strange individual. He has it as wrong regarding Arthur Levitt and his bogus Audit Committee as he had regarding Randy Cunningham being a pillar of society. Yet we have not heard even a hint of regret let alone a retraction of all the glowing dribble Kittle wrote about Cunningham over the years. Now he expects us to be impressed  by his latest chain of pompous editorials extolling the virtues of another pompous old fake, the biggest conman ever to hit this town since the 1915 rain man.

The only explanation I can think of for his mad love affair with this old influence peddler is his all consuming hatred of Mike Aguirre. Kittle has blinded himself to the shameless extortion being perpetrated by a greedy old political pro from DC rather than accept the fact that Aguirre is the only one who will rid this city of corruption. Thank God we have Mike as only He knows where we would be right now if the establishment had got their puppet Leslie Devaney into the City Attorney's Office.

I often wonder if Kittle and the U-T really want this city cleaned up and rid of corrupt officials. Maybe they like it the old way. I say that because Arthur Levitt is about the last person on the planet that would be likely to banish the curse of corruption from this town, he would be far more likely to add to it from what we have seen of him so far.

"Bowtie Bob" Kittle has a lot to answer for his crazy support of Levitt and his "Audit Committee". His
editorial today is laden with hypocrisy and contradictions. Kittle is appalled that Sanders baulked at asking the City Council for another $11 million on top of the $7.8 million they already paid to this bandit without any guarantee that that would satisfy his insatiable appetite for easy money. And Kittle claims to care about the people of this city? What a strange individual he is indeed.

Maybe Sanders will turn around after Christmas and tell Kittle that it was the people of San Diego who elected him Mayor not the Union-Tribune. Now wouldn't that be nice.


The blame game has only just begun - 12/07/05


by Pat Flannery

Mike Aguirre is right to ask Scott Peters why he will not support his legal challenge to the 2002 employee pension enhancements. Peters should not be allowed to get away with calling Aguirre's legal challenge "silly and risky" when we all know that Peters is the unions' appointee to the Council Chair, which means that Peters is owned lock stock and barrel by those who have most to lose by the truth coming out. We should not forget that. Indeed as far as I am concerned his credibility is zero.

What will be interesting over the next few weeks and months will be whether Sanders will break towards Aguirre or towards Peters. Those two represent the opposing sides of the pension issue. Sanders will not be able to stay on the fence for very long.

What may force the issue on Sanders is if his Republican backers start to salivate over the city land sales the unions are demanding. Such a fire sale of city land would suit Sanders' developer backers just nicely. No doubt Peters will trot out a new effort before the City Council early in the new year and Sanders will have to weigh in on it.

But the Feds will have the final say in all this. This is more than a local issue. The nation's municipal bond system is at risk here. If cities like San Diego get away with lying to the markets about their finances the whole system is threatened. The Feds are not going to allow that, they will clean house and make an example of San Diego.

Sanders should keep that in mind and be aware that the Feds want Aguirre to succeed.  Aguirre knows that even if the U-T doesn't. They are backing Arthur Levitt whom the FBI must know is part of the problem not part of the solution. All Levitt is doing is shamelessly exploiting the San Diego situation for his own personal profit and prolonging the problem. Shame on the U-T for mollycoddling such a devious person at City expense. Sanders may yet prove wiser than Bowtie Bob. I certainly hope so.

The six accused by the DA and their various witnesses who have taken the Fifth, know that the Feds will have the final say. They know that Duke may not be the only one around here who may see the inside of a Federal prison. Lying about municipal bonds is a Federal crime. That is why they are taking the Fifth and it shows where their real fears lie. Their attorneys know who is the bigger threat.

The fact is that somebody down at City Hall lied on the bond forms. If any attorney told them to do so then that attorney is just as guilty and should fear more than the civil complaint for negligence and breach of contract the City has already filed. Therefore pleading that their attorneys told them to do it will not save them.

That is why Sanders should be careful which side he takes on the pension issue. At least one of his predecessors may well be heading for jail over it, one Richard (Dick) Murphy and Dick may have Peters for company. The blame game has only just begun.


Diann Shipione, the new Erin Brokovitch - 12/01/05


by Pat Flannery

Today, the citizens of San Diego begin to fight back and hold professionals responsible for their significant roles in creating and covering up financial irregularities”.

So says nationally-recognized malpractice attorney, Dan L. Stanford and his San Diego associate attorney Bryan C. Vess who yesterday filed a civil lawsuit in the San Diego Superior Court on behalf of the City of San Diego
against various lawyers and accountants who acted as professionals for the City in connection with bond offerings between 1996 and 2003. The City is
seeking more than $100 million in damages for professional negligence, breach of fiduciary duty and breach of contract.

Here is the
press release and here is the full complaint. It speaks for itself and once again tells the whole sordid story of the greed and lies of high officials and the lawyers they hired to protect them from their lies.

But you know the old saying "if they'll do it with you they'll do it to you". If you marry somebody who cheated to be with you, don't be surprised when they cheat on you. Lawyers should not now be surprised when their former clients sue them for doing what they were earlier hired to do - lie. Now Council Members Madaffer, Maienschein, Peters and Atkins are suing the lawyers they once hired to lie for them.

It is also ironic that six of the city officials most directly concerned with the financial shenanigans for which they needed expensive rear-covering attorneys are, these very days, in front of a judge arguing (through their attorneys and rolling their eyes) that Diann Shipione (the only one who told us the truth about what was going on at City Hall) didn't know what she was talking about and that these very city officials were right to trust these knowledgeable attorneys now being sued by the City for lying, oops I mean "negligence".

Nicola Hanna, attorney for one of the accused six officials, asked Shipione yesterday in the pension case "Did any of them stand up at any time and say if you vote on this you are committing a felony?" "No" replied Shipione.

One day they will make a movie about Diann Shipione. One lone honest girl pitting her wits against a City Hall full of corrupt officials in America's seventh largest city aided and abetted by the nation's best attorneys. It will make Erin Brokovitch look tame.


The city unions run City Hall - 11/24/05


by Pat Flannery

Have you wondered how everybody on the City Council came to be in full agreement as to who should be their Council President? Just watch the video (go to 0:30 minutes) of Scott Peters' appointment to that position on Tuesday.

Watch the parade of city union leaders taking the microphone in support of him and you have your answer - the city unions are running this city.

They picked Peters as its Council President as they picked Murphy and Sanders before him. Make no mistake Sanders is their man just as Murphy was. That's where he learned his politics, he was a police union politician first.

So we have a city that is run by a coalition of city unions and city developers. The city unions give the developers what they want and the developers give the unions what they want while the rest us, including the non-city unions, get squeezed in the middle.


Attorney-client privilege is really taking the Fifth - 11/21/05


by Pat Flannery

I watched Mel Shapiro's presentation to the City Council last Tuesday asking how much we are paying criminal lawyers to represent four City Councilors who are being investigated by the FBI. Mel made an excellent point: invoking attorney-client privilege is really taking the Fifth. The City Council now have it down to a science.

By routing everything through lawyers they can hide the whole business of government behind attorney-client privilege! A perfect example is the trick the pension board has pulled on us by having their lawyers, Reish, Luftman Reicher & Cohen, appoint Navigant Consulting as their "Audit Committee" similar to Kroll & Co. at the City. Thus they don't have to tell us anything about the Committee's activities. They just invoke attorney-client privilege, a blatant use of City money for a cover-up.

We wouldn't even know about this trick if Diann Shipione had not refused to talk to Navigant unless they showed her their engagement letter and their work scope. They refused, claiming attorney-client privilege. And so it goes on.


But who will put the leash on Bob Kittle at the U-T? - 11/15/05


by Pat Flannery

Bob Kittle's editorial on Sunday made it clear that he and Sanders' handlers want him to put the muzzle on our elected City Attorney. This makes Sanders a stooge of the city's power brokers. They paid for his election to keep a lid on the scandal powder keg.

Personally I had to (temporarily) leave town to get away from the sound of kissing up. Even Aguirre was puckering.

But it doesn't matter. If San Diegans had elected Pope John Paul II or Mother Teresa the fact is that the city is like a haunted house with spidery closets brim full of skeletons - our "
special relationship" with the Bank of America being one of the more interesting ones (whose side is Scott Lewis on?)

I am still waiting for the City Auditor to get back to me with the cost of placement of the BofA loans. We all know that there are closing costs involved in arranging a loan or in refinancing one, but according to the City Manager's Office there were none by the BofA. I just don't believe it. They are also telling us that the interest rate is lower than the LIBOR rate. If that is the case why will they not show us the closing statements?

No wonder Kittle and his power-broker friends want Sanders to keep us mushrooms in the dark and feed us "you know what" through his "newspaper".


Did Sanders get a free ride? - 11/08/05


by Pat Flannery

Here is a letter from a concerned San Diegan to the local editors that did not quite make it past the censor, I wonder why? The writer seems to make a very valid point. If Sanders is such a business genius why is he not talking about the company he has headed as President since he left the Red Cross and the United Way?

Here is the letter:

What has Donna Frye's competitor, Jerry Sanders, been doing for the past 3 years? Answer: Although Sanders never mentions it, and is never asked by local media, for the past 3 years he was COO and President of a "technology start-up" company. As proof, admire Sanders partying with other corporate leaders, now his mayoral campaign contributors, at the Corporate Directors Forum in 2003.

What Sanders "did" for Virtual Capital of California (VCC) is unknown. Sanders does not include VCC among the organizations that he constantly touts as having "turned around." In any case , Sanders' tenure with United Way and the Red Cross was LONG ago; why won't anyone ask Sanders how successful he was in his recent role as "executive"? Because he probably wasn't successful: he was given the "executive" position by a local wealthy Republican, Thomas Stickel; Sanders, lacking any academic credentials in technology, was probably used as a nice face and pleasant do-gooder to drum up business for Stickels' start-up (other "officers" in Virtual Capital of California had to divvy up money; Sanders' contribution is unknown). Was Sanders successful? Will he apply the same successful approach as Mayor?

Who would want to hire a person who couldn't talk about their most recent, and possibly most pertinent, experience?

Why would the "mainstream" media refuse to publish such a letter? The author of this one just happened to send it to me, are there others? Raising similar issues, being suppressed by the editors? Who is really running this town? Arthur Levitt flies in from Washington DC last week to meet with the editorial board of the San Diego Union-Tribune, at enormous taxpayers' expense, but he does not have time to meet with the City Council! Nobody questions it. And nobody questions Sanders' resumé. Strange.


Now all we can do is pray - 11/07/05


by Pat Flannery

Just in case there are any un-decideds out there (I hope not) who read my blog, I would remind them that the single most telling difference between Sanders and Frye is their intentions regarding the illegally granted pension benefits. How can anybody be unsure about something as illegal as driving on the wrong side of the road? Why would anybody insist that such a thing is legal until a judge rules it illegal? Yet that's what Sanders is saying about the illegally granted pension benefits.

To me there is a basic dishonesty about such talk. But then just about everything about Sanders is basically dishonest.

Personally I can never forgive him for using a massacre-in-progress as an opportunity for self promotion. I remember that
1984 day very well. When the powers-that-be in San Diego (through Republican Mayor Susan Golding) appointed him Police Chief I was shocked. Now he is being foisted on us as mayor by the same Republican Party power elite (according to the Datamar polls). This time I am beyond shocked, I am disgusted. I am a long-time San Diegan and love this town as if I were born here.

Not only has our beautiful city become a national embarrassment financially under successive Republican regimes but "electing" Sanders (if the people fall for it tomorrow) will demonstrate a huge moral black hole at our core. The fact that this guy let 22 people die while he went home and changed into his dress uniform to preen for the TV cameras, allowing the killing to go on until he arrived, does not seem to bother many of my fellow San Diegans (nobody even wants to talk about it).

There really does seem to be a moral black hole at the very heart of public life in this city. All you have to do is read Mike Aguirre's Interim Reports (which I went to the trouble of translating from PDF format to the more searchable HTML format and put them here on my site) to realize how deeply morally comprised this City has become.

I experienced this personally for three years from February 2002 to April 2005 as I fought (with some success) to frustrate Mayor Murphy's international money-laundering scheme disguised as a sister city partnership with
a development company.

The only one who paid any attention to me was Donna Frye. As with Diann Shipione she was the only one who had the moral compass to listen to what we were saying. All the others on the City Council, including in my case Tony Young, could care less about morality or a clearly fraudulent sister city organization, despite my full explanation as to what was going on. They just voted for it anyway. That was the culture in this city and that is what has brought it to almost certain bankruptcy and deep, deep national and international embarrassment. What a shame. What a shame.

So if there is anybody out there who has still not made up their mind or who intends to vote for Jerry Sanders and have bought into the false image the Union-Tribune has created for him, think again. It will be too late to save this city after tomorrow.

Donna has been the lone voice of conscience for these last four agonizing years. She is the only one that can be trusted with the keys to what is left of this city. Sanders is only interested in the keys to what is left in the cash box. He knows the city is doomed and only wants to grab what he can. His reign, if he wins, will be short and final.

Mike Aguirre will get his wish. After the great Republican raid there will be a new City Charter created on the ruins of the old one. It could so easily be different. Donna and honesty could still win. Now all we can do is wait (and if you pray, please pray).


The Sanders "Mythodology" - 11/05/05


by Pat Flannery

I received the following press release this morning. I put it up here in full because I doubt it will be printed by the San Diego Union-Tribune (I wonder why). It seems the Sanders methodology is to create a myth  based on lies - a "mythodology".

Livable Communities Network - Nov. 6, 2005 8:30 pm
Contact:  Tom Mullaney Cell:  619-296-8231
Press Release Mayoral Election

Mayoral candidate Jerry Sanders has stated that he cut expenses and “turned around” United Way while he was CEO from 1999 to 2002.
A review of financial statements just completed shows this is not true! 
Claim #1.  Jerry Sanders “decreased overhead costs” at United Way.
The truth:  The expenses were not reduced while Jerry Sanders was in charge at United Way.    In fact, Total Expenses were about $10 million when he took over in 1999, and about $10 million when he left in 2002.    
Claim #2.  Jerry Sanders “dramatically increased fundraising”.
The truth:  The "Available Campaign Revenue" went down by  one and one-half million dollars in the year that Sanders joined United Way, 1999, and had not increased to its previous level  by the time he left in 2002. This key revenue figure was $9.5 million in 1998, before Sanders took over as CEO, and was $9 million when he left United Way in 2002. 
As a public interest project, Livable Communities Network analyzed the United Way financial statements from 1997 to 2004.   
This allows us to put Jerry Sanders' results in perspective, including two years before he joined and two years after he left. He was President and CEO of United Way from April 1999 until mid-2002.  Then he served in fall 2002 as fundraising chair.   

The claims from Jerry Sanders were taken from his website, 
1.  Expense details:   Total Expenses were $10,372,267 for the year ending June 30, 1999, which was Sanders’ first year.    Total Expenses were $10,097,647 for the year ending June 30, 2002, Sanders’ last year.  So expenses were reduced only 2.6% over the three years.  The only significant improvement in expenses was a temporary decrease for one year, 2000.  
2.  Fundraising details:  "Gross campaign revenues" were increased from 1999 to 2002, but the increase was due to "Designated funds" which are immediately paid out to specific agencies at the direction of the donor. These "Designated funds" are not available for United Way to pay out to its member agencies as allocations, or to use for expenses. The other factor that inflated the gross figure was an increase of $1 million in “uncollectible pledges”.   After adjusting for these two factors, the financial statements show that the “Campaign Revenue Available for allocation and expenses” decreased from $9,537,398 in 1998 to $9,004,063 in 2002.  
A one-page summary of figures and a graph showing the 1997-2004 figures are available by email.  Contact or Tom Mullaney, 619-296-8231.
Copies of the complete United Way financial statements can be obtained from the following sources:
1.  Livable Communities Network. 1997-2004.  Hard copy.
2.  United Way website.  2001-2004 only.  Pdf format.

I also received these
Financials and a statement from a former CFO of the United Way. They seem to bear out what Mr. Mullaney is reporting above. Does anybody care? It seems not. I understand all of this has been made available to the press at large. Is everybody scared of Jerry now that he may have all this power?


A vote for the chicken or the fox - 11/05/05


by Pat Flannery

Just when I thought I understood democracy along come lawyers for Inzunza and Zucchet (and they should know, they are lawyers) telling us in the Union-Tribune that these two nice lads "were unfairly convicted by a jury that failed to comprehend how democracy works and was swayed by ongoing turmoil at City Hall".

It turns out that I am just as stupid as the jury. It has nothing to do with you and I and our votes, it has to do with business lobbyists stuffing wads of dollar bills into politicians' whatever in return for government favors. That's how it works. Didn't you know? It is rather like a strip club, Cheetah's for example, the performers "perform" and their clients stuff dollar bills wherever they will fit. Now I understand. Finally.

The "ongoing turmoil at City Hall" they are referring to is the ruckus my kind of  democracy has been making in trying to reassert itself in the persons of Mike Aguirre and Donna Frye. It is the kind of ruckus you would hear when a fox is raiding the chicken coop. That would not be a good time for a fox trial. Chicken coop owners on the jury might be "swayed by ongoing turmoil" at the chicken coop.

Next week is going to be a big week for democracy in San Diego. On Tuesday we the voters will get to vote for either the chicken or the fox. On Wednesday Judge Miller gets to decide whether or not a jury understood how democracy works. In any case we the voters will get a lesson on how the legal system works and whether our own moral compass still works or if it got lost in the ruckus.

If we vote for the fox (Sanders) it will be because somehow we all secretly want to be foxes or pirates. We would all love to get into the Aladdin's Cave that is City Hall. We would all like to shriek like crazed buccaneers bathing ourselves in the City's treasury.

If we vote for the chicken (Donna) perhaps there is still hope for us - we haven't all joined the pirate ship the Republican Party (to which I once belonged) has become.


The town we loved so well - 11/04/05


by Pat Flannery

The Labor Council's TV ad for Donna Frye sums up the people's choice succinctly: "honest, open, different" vs. "same-old-same-old". I like the final shot of Donna looking out over the blue Pacific Ocean - both are San Diegans' pride and joy.

This election boils down to who gets to choose our mayor, the people or developers.

There is no doubt that Donna is the people's choice, she has proven it over and over again, and there is no doubt that Sanders is the developers' choice, every construction site in San Diego is festooned with Sanders' signs. If he gets elected it will be open season on the environment and affordable housing.

While San Diego will become developers' heaven, we the people who have to live with their handiwork will be excluded from all land use decisions. The Chargers will get to cram Mission Valley with thousands of condos on city-donated land, the Padres will get to develop downtown and get to keep the property tax from it for forty years.

Donna will be relegated to the lone dissenting voice on the City Council again and pretty soon even she will give up and go home to her husband. I will be singing Phil Coulter's lovely Irish song about a lovely Irish city, Derry "The Town I loved so well", with that plaintive line "my God what have they done to the town I loved so well".

The circumstances are different but the results will be the same. In the case of Derry it was the British Army "with their tanks and their guns" that destroyed the city, in San Diego it will be the Republican Party with their money and their lies.

Let us just pray that Tuesday November 8, 2005 will be remembered as "Good Tuesday" not "Bloody Tuesday". Those familiar with the British-Irish conflict over the last thirty years will understand the parallel. It really is a watershed. Let's hope this is not the end of the town we all "loved so well". It need not be, it is up to us.

I have great faith in the people of San Diego. I have great faith they will choose to keep the city they love so well, not turn it over to greedy developers who care nothing about our quality of life or our families' future. It must be Donna as after her the deluge.


Oh Lord it's hard to be patient - 11/03/05


by Pat Flannery

Apparently the powers-that-be at City Hall want this BofA $152 million sewer bond refinanced real bad. Trouble is it requires all six votes on the Council. Scott Peters "forgot" that his wife owned $175,000 in Bank of America stock when he cast his vote on October 24th. I wish my wife (if I had a wife) had so many investments that I could "forget" about a little thing like $175,000 in Bank of America stock. I guess if you live in La Jolla and are a City Councilman you don't have to worry about such trivia.

Anyway she dutifully
sold her little BofA investment last Monday so her husband Scott can vote on this thing again on November 14th just to make sure there is no problem.

Meanwhile I am still waiting for Dennis Kahlie (with a little help from John Torell the City Auditor) to get back to me as to why this particular bond needs to be refinanced right now instead of waiting until we get back into the public bond market or if its just because the BofA are offering us such cheap money (2.624%) we can't refuse. If so then why are we not taking more advantage of it to fix potholes and mend broken sewer pipes? Are we waiting for Ronne Froman to tell us that 2.624% is a good deal?

I will be patient and wait until Kahlie enlightens me. But sometimes, Oh Lord it's hard to be patient and I'm doing the best that I can.


Mike Aguirre's "escrow" - 11/03/05


by Pat Flannery

As a longtime realtor and mortgage broker, but mainly as a longtime male, I am following Mike Aguirre's romantic "symbolic gesture" of a red rose wrapped in a notarized quitclaim deed for half ownership of his house with professional curiosity but mainly with dismayed amusement at the sometimes stupidity of my gender when it comes to getting former lovers back into our bedrooms. I have done some stupid things in that department over the years myself but I guess I am not quite as "romantic" as Mike. I would have just stuck with the red rose.

You have to love the guy though, he never does anything in moderation. But a quitclaim deed? Was she that good? But she was smart. She knew the difference between a quitclaim deed and a rose - the County Recorder doesn't record roses.

Will he be doing a refi one of these days and paying her a few hundred grand? I'm not a lawyer but I have handled a lot more quitclaim deeds than red roses. It will all hinge on "delivery". It was signed, sealed and ..... but was it "delivered"? If she removed it from his bedroom without his permission it was not delivered. He should keep the judge's focus in the bedroom. It is well known (especially to women) that men don't think too clearly in the bedroom. Hopefully the judge will know a little about that.

In real estate we draw and notarize title deeds, both "grant" and "quitclaim", all the time and hold them for "delivery". It is called an escrow. When certain things are completed, payment received for example, the deed gets "delivered" i.e. recorded. Unauthorized recording is unauthorized "delivery". If an escrow holder recorded (i.e. delivered) a title deed before a contingent event had taken place (usually a whole lot of events in a typical escrow) that escrow holder would be drummed out of the business.

So Mike has to contend that he opened escrow in the bedroom and that certain "contingent events" needed to take place before "delivery", mainly that she needed to move back in with him. The only way I can see him losing his case is if the judge rules that a rather less romantic event took place in the bedroom, which I understand usually involves payment in advance. So the case may well revolve around whether she hung anything in the closet and thus moved in or whether it was a more brief encounter in which case half ownership in a house seems rather steep.


"Sick"ophant City - 11/02/05


by Pat Flannery

Is the Kroll investigation genuine or is it a City Hall cover up? That is the question that haunts most thinking San Diegans. John Torell, our City Auditor, feels there is no practical alternative but to stick with Kroll. He may well be right, but this is San Diego and he is new to our fair city and is a trusting kind of guy.

At yesterday's Council meeting Mr. Torell, a CPA himself, explained that only an unqualified audit report from KPMG will clear the way for the City to get back into the public municipal bond market. A qualified report is not possible he says, because KPMG does not know what the "exception" might be. So it is a Catch 22 situation.

Meantime I continue to pose the question: why do we need access to the public bond market if we can borrow money from the Bank of America at 2.624%? Or alternatively: what is the real cost of our borrowings from BofA?

Mr. Aguirre's
questioning of the Kroll Co. (go to 4:20 mins.) and representatives from the San Diego Data Processing Corp. clearly demonstrated that the "technical problems" cited by Kroll as the reason for further delay was not only fixable but was known as early as January 2005. Is Kroll acting in good faith?

Why is the editorial board of the San Diego Union-Tribune, the City Manager's Office and four City Councilors, being so protective of Kroll & Co.? What do they know that is being withheld from the rest of us, including our City Auditor Mr. Torell?

There seems to be a cadre or inner circle of power brokers, entirely unaccountable to the people of San Diego, running this city. Clearly Bob Kittle, the editor of the editorial board of the Union-Tribune, belongs to this elite group. It was revealed yesterday that Kroll & Co. have been meeting and reporting to him regularly and billing the City!

It seems the way to get on in this town is to suck up to Kittle and the rest of these guys whoever they are. Is that what Jerry Sanders has done?

If so we are in deep trouble. Last year these behind-the-scenes-power-brokers very nearly succeeded in getting their hand-picked sycophant Leslie Devaney elected City Attorney. Instead they got their worst nightmare: Mike Aguirre.

They are taking no chances in the mayoral race. They have pulled out all the stops to get Sanders into the office of Strong Mayor they created through a well financed ballot proposition. Their second worst nightmare would be to let Donna Frye have it.

If elected, Sanders' first job will be to shut down Mike Aguirre and in so doing shut down open and accountable government  in this city. We will have a one-party city - the Republican Party, with its own party newspaper the San Diego Pravda otherwise known as the San Diego Union-Tribune. That is classic Third World - government by the rich for the rich, through corrupt politicians whose honor and incorruptibility is trumpeted daily by their party-controlled media while the rich live on hillsides throwing their trash over the walls of their gated communities onto the great unwashed.

Have you driven through East San Diego lately? We are already Third World in large areas of this city. You need a four-wheel drive vehicle to navigate through the potholes! And Sanders is going to "cut" the fat out of our city services! I wonder if he has picked out his new home in Rancho Santa Fe yet.

Toni Atkins knows that these guys are not fooling around and she intends to be on the winning side. Aguirre is adroitly pushing her to more and more show her hand and it aint pretty. She has already passed the point of no return in protecting Kroll.

The stakes in this mayoral race could hardly be higher, not only is the financial health of our city at stake our very democracy is on the line.

But there is one bright spot on the horizon, the
Hispanic Community. It is time they were acknowledged for what they are, the future of this city. Like the Irish on the East Coast they will take over city government all up and down the West Coast and chase away the corrupt old guard. It is inevitable and very welcome. Bowtie Bob and his stuffy old colonial friends should take the plane back with Prince Charles, into oblivion.


City finances are a strange thing to be sure - 10/26/05


by Pat Flannery

My suspicions deepen. My repeated requests for clarification of the interest rate being charged by the Bank of America on the $152 million sewer bond, even though I had correctly identified the actual person at the bank who is dealing with it, went unanswered for two days until today I got a call from a media relations guy telling me that they do not give out information on such matters. Why a media relations person?

Dennis Kahlie confirmed to me on the telephone prior to the City Council meeting on Monday that I was correct that the interest rate being paid by the City on the $152 million sewer bonds was a combination of an index, the LIBOR rate, together with a margin (defined as 62.34% of that LIBOR rate) plus variable basis points to be reflective of the perceived risk to the Bank at any particular time.

Referring to the "
First Supplemental Subordinated Indenture" (page 3) attached to the Report I therefore calculated the actual interest rate charged by the Bank as follows: the LIBOR index plus the margin (calculated as 62.34% of the LIBOR index) plus 150 basis points - 62.34% of 3.007 = 1.874 + 1.500 = 3.374 + 3.007 = 6.381%.

He agreed with my calculations with one correction. He pointed out that the basis points "hit" do not go to 150 until March 17, 2007
and only if by then the City has still failed to provide audited financial statements for fiscal years 2003 and 2004. He said the basis points will remain at 75 until December 15, 2005.

That would revise my calculation as follows: the LIBOR index plus
the margin (calculated as 62.34% of the LIBOR index) plus 75 basis points - 62.34% of 3.007 = 1.874 + 0.750 = 2.624 + 3.007 = 5.631% (tax free as all municipal bonds are).

After the Council meeting I called him and asked why he represented to the Council that the interest rate was in the 3% to 3.25% range. He repeated what he had told the Council and asked me to talk to the Bank of America for any further clarification. I asked him if the Bank of America had charged any "frontloaded" points or fees to enable them to settle for such a low interest rate. He assured there had been none.

Well, the BofA is not talking. At this stage the only thing that would clear this up for me is sight of the transaction Settlement Statement from June 1, 2004, showing the interest rate, how it is calculated and the net proceeds received by the City at that time. There are just too many outstanding questions regarding any hidden costs and actual interest rate charged which neither the City nor the Bank of America seem anxious to clear up. If everything is above board there should be no problem with making full disclosure.

If Mr. Kahlie can borrow $152 million from the Bank of America at 62.34% of the LIBOR rate (currently 3.007%) plus 75 basis points i.e. 2.624% without any upfront deductions to boost the yield, he should be taking a bow and accepting our applause.

I don't know what the going rate in the municipal bond market is right now but if it is more than 2.624% why in the world would we want access to it when we have the Bank of America pushing cheap money at us? Maybe that is why we are paying $900 per hour to Arthur Levitt: to keep us out of the bond market for as long as possible.

I wonder why Mr. Kahlie has not refinanced the Petco Park bond with the Bank of America. We are paying over 8% on that one. Maybe Kahlie should be running for mayor. It seems he could finance Donna Frye's $250 million hole in the General Fund a lot less painlessly than her half percent sales tax hike. I must ask her to talk to him.


Somebody at City Hall made a lot of money today - 10/24/05


by Pat Flannery

The justification for "restructuring" the $152 million Sewer Revenue Bond, placed with the Bank of America in 2004, just did not stand up in City Council today. Refinancing to “better manage near to medium term cash flows” made no sense.

The Bond in question requires a $19 million principle payment in March 2006 and another in June but the MWWD director Scott Tulloch told me over the telephone that he has no problem meeting the principle and interest payments every quarter and that neither he nor his department were the initiators of this refinance. It is certainly not a staff thing that's for sure. City Manager Lamont Ewell did not even sit in the Manager's seat today, so he doesn't care. Then who does?

Jim Madaffer led the City Manager's staff person, Dennis Kahlie, through "explaining" why this refinance must be done at this time and Madaffer was the maker of the Council motion. Madaffer led Kahlie through a routine of glowing reports about the Bank of America and how kind they have been to the City to the extent where Kahlie lied outright about the interest rate. He told the Council that the original rate was 1.75% when in fact it was over 6% tax free to the lender. Madaffer knew better but did not correct him. Did the others believe that or are they just naive?

Somebody is making a lot of money brokering this deal. A $152 million refinance is every broker's dream. In his anxiety to sell the deal for Madaffer Mr. Kahlie repeatedly misrepresented the interest rate as the LIBOR rate without mentioning the added margin. Anybody who ever refinanced their home with an ARM knows that there is a "margin" added to an "index". Kahlie talked about the current "interest rate" being 3% to 3.25% when he really meant the LIBOR index rate.

When asked if he had shopped the loan in 2004 he said Bank of America was "light-years less expensive" than other proposals. He sounded like a BofA salesman.

He then "explained" (after I raised it in public comment) that the actual lender was not the Bank of America but the "Banc" of America Securities LLC, "a subsidiary of Bank of America Corporation, a full-service U.S. investment bank and brokerage firm with principal offices in San Francisco, New York, and Charlotte"  according to their web site. Kahlie always referred to the Bank of America never to the Banc of America Securities LLC.

Banc of America Securities LLC is a Delaware limited liability company, 100% owned by NationsBanc Montgomery Holdings Corporation, a wholly owned subsidiary of NB Holdings Corporation and NB Holdings Corporation is wholly owned by Bank of America Corporation. It is therefore a gross misrepresentation by Kahlie to constantly refer to the Bank of America as the lender.

Kahlie told me that Banc of America could not sell the loan. I wondered why he offered that piece of information and whether it is accurate. I found their their current un-audited financial statements on the web, but it has since disappeared!

Kahlie said Banc of America
are holding the San Diego $152 million in their portfolio yet there is no trace of it and nothing of that size. It is clear they are brokers and pay finders' fees out of their "yield adjustment premium" when they place a loan. I wonder who was the "finder" for this sweetheart deal. Why did Kahlie tell us that the loan was not resold, when clearly it was, at least to the real Bank of America. What were the upfront fees? How much of the $152 million did the City actually receive? Did it pay out fees after receiving a gross amount? So many questions.

The fact that the lender was the Banc of America, not the Bank of America answered my question on Friday about possible Federal regulations barring the real Bank of America from lending to or dealing in municipal bonds from a city unable to produce financial statements.
Page 4 of its financial statement (which has since disappeared off the web) says: "The Company is not a bank. Securities sold by the Company are not bank deposits and, accordingly, are not insured by the Federal Deposit Insurance Corporation."

A by-product of today's session was that the Council and City Manager's Office obviously do not expect to gain access to the public bond market anytime soon. None of the Council Members seemed very surprised at that. That's not what they have been telling the people when they vote to approve all those fees to Kroll and KPMG.

Somebody is positioning themselves to make a lot of money out of "placing" San Diego City borrowings for years to come. Has Murphy's background with the Bank of America and his close association with Madaffer anything to do with this?

The fact is that the "Banc" of America is receiving 6.381% TAX FREE on Bonds that have zero possibility of default. These are SECURED bonds. The 2.5% "hit" they have "restructured" into this re-write is just to pretend that there is an added risk to the "Banc". This "insolvency event" is a red herring to justify doing this refinance.

The "Banc" of America like this loan so much they do not want it paid off for as long as possible. $152,000,000 gold-plated, secured, tax free, at over 6% is a great loan for the lender. Somebody could retire for life on that brokerage fee. I expect somebody will (City pensions are not as reliable as they once were). Somebody knows something that they are not telling. There is a strong smell of corruption here but nobody on the City Council seems to care.


How do you "restructure"  a bad loan? - 10/21/05


by Pat Flannery

The City Council are being asked on Monday (page 29) to approve and authorize the "restructuring" of a "presently outstanding, privately placed, $152 million Non-Transferable Subordinated Sewer Revenue Bonds, Series 2004". The City Manager has issued this report "explaining" what this is all about. The trouble is that it raises more questions than it explains.

To add to the confusion Jennifer Vigil
wrote this in today's Union-Tribune which raises even more questions and includes inaccuracies e.g. - did acting City Treasurer Chuck Mueller Jr. really say that "spending it on the debt would almost certainly force severe cutbacks"? Either Jennifer or Mueller got that one wrong. Any overage or underage at waste water is not transferable to the General Fund, besides no cuts would be required at waste water according its director.

The City Manager's report explains that "in June, 2004 by means of a privately placed interim, or “bridge” financing in the amount of $152 million, placed by the Public Facilities Financing Authority of the City of San Diego (the Authority) with Bank of America, N. A. (the Bank), which was intended to be retired by a subsequent public offering of long term debt, which at that time was expected to occur prior to the end of calendar year 2004" [emphasis added].

This action was required to address "near-term cash flow pressures" caused by "several regulatory obligations which require the construction and renovation of numerous capital facilities on an established schedule" - in other words they were being threatened with sever financial sanctions if they did not immediately bring the City into compliance with the Clean Water Act, the Ocean Pollution Reduction Act and several other Federal Regulations.

Unable to raise money in the normal way, through municipal bonds, they went to an ordinary commercial bank, the Bank of America in San Francisco for a loan. But the BofA couldn't make a loan because Federal Banking rules require that any corporate borrower must have current audited financial statements and as we all know our fair city was having a little problem in that department at the time. So what did the Bank of America do? They bought specially prepared Sewer Bonds and "portfolioed" them!

I guess the Bank of America are allowed under Federal banking rules to invest in stuff they are barred from lending on. I wonder who figured that one out, Dick Murphy? He used to work for the Bank of America.

If you read the "explanation" in the
Report (page 3) about interest on the $152 million loan you would be forgiven for getting the impression that our fair city are paying something called a LIBOR rate which they say is currently 3.007% and no more.

The Report says: "interest on the Bonds is computed at a variable rate indexed to" the LIBOR rate, but they forget to mention a thing called "the margin" which is the number added by the lender as their cut. The "
First Supplemental Subordinated Indenture" (page 3) attached to the Report says that it is 62.34% of the applicable LIBOR plus 150 basis points i.e. 62.34% of 3.007 = 1.874 + 1.500 = 3.374. Therefore the full interest rate on the Bonds is currently 3.007 + 3.374 = 6.381%.

The Report refers to a "bond purchase agreement" (page 3) having referred earlier to a "privately placed interim, or “bridge” financing" (page 2). This confuses the fact that the City did not get a "loan" from the Bank of America (because no FDIC insured lender could lend to a city without financial statements) but that instead Murphy had arranged for the BofA to buy his junk Sewer Bond and put it somewhere in the Bank's investment portfolio. I didn't know the BofA invested in junk municipal bonds.

Now our City Manager is placing a request for the "restructuring" of this dubious financing package before the City Council on Monday. The so-called "restructuring" of this "loan" consists mainly of redrawing the Trustee papers whereby Wells Fargo will act as stakeholder in case the City defaults or goes into bankruptcy.

If I were a City Councilor I would have many, many questions on Monday. What if a BofA shareholder complained about the Bank making such high risk loans or what if a Federal regulator found that the BofA was barred by law from dealing in municipal bonds from a city unable to produce financial statements. I would want to know.


Why did Donna take her "tax gamble"? - 10/19/05


Phil LaVelle, a very professional reporter, seems as puzzled as the rest of us as to why a savvy politician like Donna Frye would put her head on the block in such an obvious way with what he calls her “tax gamble”. Why in the world did she do it?

This whole pension mess will be settled out of court sooner rather than later - neither side wants to risk it all in court. Therefore whoever gets elected Mayor will have to sit down with Mike Aguirre on one side and the union representatives on the other and work out a deal. Now take another look at Donna’s “tax gamble” in that light.

What would be the point in Donna getting herself elected the dealmaker if she ruled out the key ingredient in advance? A tax increase has to be part of any deal. It is more than dishonest to say otherwise, it is self-defeating. Police, fire and general city services cannot be maintained in this city for one day following a court decision stripping city employees of all they thought was theirs. An out of court deal has to be struck.

Sanders has reduced himself to saying “go to court and let me know who won”. He has ruled out the one thing both parties agree is absolutely necessary for a solution. Even Aguirre concedes that the city dodged the tax bullet too many times in the past. The simple fact is there can be no pension solution with the unions without a tax increase and we can’t run the city without them.
Donna showed her political skill tonight - 10/18/05

The art of the deal. Tonight in City Hall it was Brian Maienschein's turn to leave hurriedly in disgust while his buddy Jim Madaffer got a big hug from Donna Frye. The Ballpark Village project was a 5 to 1 vote with Brian Maienschein the only hold out for the traditional planning "process", which has now been partially violated.

I have no doubt it was Donna who brokered tonight's final deal. Madaffer is taking out insurance against the growing likelihood that she will become Mayor on November 8. Her classic political deal was a compromise solution to a problem that has bedeviled the Ballpark Village project all year: where to put the inclusionary housing.

65% of the inclusionary housing will now go "offsite" as rental units, probably to Father Joe Carroll's Village, while 35% will stay "onsite" as condo units under the control of CCDC. The traditional "process" that gives considerable power to community planning groups is preserved (somewhat) in the 35% portion while the new concept of "Community Benefits Agreements" has been introduced in the 65% part of the deal.

The Labor Council, which is backing Donna Frye for Mayor, is the driving force behind the new CBA concept that is spreading around the country. It gives the unions much of the powers that were formerly exercised by community planning groups. They now get to do part of the negotiating with the developers on behalf of the community.

If Donna Frye had not gotten Jerry Berkowitz, Secretary-Treasurer of the San Diego/Imperial Counties' Labor Council, at least part of his Ballpark CBA tonight the Labor Council would have withdrawn their support at a critical moment in the mayoral race. So Labor got their monies worth and Donna retained a vital part of her support.

It shows Donna's political acumen. Getting Madaffer to break with his Republican colleague Maienschein was a monumental political achievement. This is the kind of political skill that will stand her in good stead in the Mayor's Office. It will also reassure the various constituencies, left and right, that she will broker a fair political deal with those who will work with her. It's the stuff of politics - the art of the possible.
Sanders and his Halloween mask - 10/18/05

"The City’s financial mess requires a shared solution, meaning everybody has to be in the deal: the city, the pension system, the employees, retirees, unions, business AND the voters/taxpayers of San Diego." That is the ONLY reference in Donna Frye's financial plan to anything resembling a tax increase yet here is what the Union-Tribune printed today:

"Thus a key element of Frye's plan is a $1.1 billion tax increase over 10 years, in the form of a half-cent hike in the sales levy, to pay for the rapidly escalating retirement checks of city workers."

Sanders is the one proposing Pension Obligation Bonds and selling off City property while reassuring his former union colleagues that he will continue to pay theirs and his own illegal pension benefits while by his own admission "laying off hundreds of workers, for example, would likely mean some reductions in services".

Under Sanders we may no longer have a General Fund to provide any services. But his rich supporters are not in the service business. To them city government exists to service business: city government exists for the sole purpose of granting friends like John Moores sole "development rights" to large swathes of our city.

Bob Kittle spun Donna Frye's Financial Plan into a monster mask for Sanders to wear at Halloween. He has thus made this election into a very real trick-or-treat. Let's hope the San Diego voters are smart enough to recognize the candidate wearing the mask and the one who is telling the truth, unpopular as it may be.

Thanks Kittle, you have shown us just how scary Sanders really is.
Will Murphy pay to defend his pension? - 10/17/05


On today's Council Agenda there was a request that the City pay for the defense of Murphy, Inzunza and Zucchet in Superior Court Case GIC 854373 where the City by action of Mike Aguirre is the complainant. It was bound to be interesting and it was.

Aguirre filed the case on September 23, 2005 to test the legality of the retirement benefits these former elected officials voted themselves on January 8, 2002 (page 12). Aguirre contends that the vote was in violation of the San Diego City Charter. If the court agrees Aguirre will have taken a giant step towards rolling back hundreds of millions of illegal pension benefits, if he loses he has other cases pending.

Today’s victory must have been particularly sweet for Aguirre. It left Madaffer stunned. Maienschein and Frye provided the two "No" votes. Maienschein had a tough time with it but finally opted for "No". Peters added to Madaffer’s chagrin by proposing a “finding” that the three defendants had a “conflict of interest” on January 8, 2002. (Read Mike Aguirre's Interim Report No. 5, "Legal Status of the Elected Officer's Retirement Program" for an outline of the factual basis for this legal action.)

On that day in January 2002 the rest of the Council, including Peters, voted exactly the same as Murphy, Inzunza and Zucchet , a fact that was not lost on Donna Frye, who wisely suggested today that they seek the City Attorney’s advice regarding a "finding". She understands that Aguirre is not going after Murphy, Inzunza or Zucchet personally, just their pensions.

None of the City Council would have voted "Yes" on that day if Mike Aguirre had been City Attorney. In fact none of the pension mess would have happened if during that time the City Attorney had not accepted his share of the illegal pension benefits and was not a willing tool of the City Manager by telling him whatever he wanted to hear.

But it gets even more interesting. Murphy and his two young friends are now in the position of having to find their own money to defend their ill-gotten pension benefits against the power and might of the City of San Diego or just let Aguirre win. I don’t know about Murphy but I suspect the other two ex-Councilmen are about tapped out on legal fees and are more afraid of the hardened jail mates who will shortly be introducing themselves with a leer to two nice ex-Councilmen.

I suspect Mrs. Murphy will advise old Dick to quit while he is ahead, to forget the illegal pension benefits and stay the heck out of Mike Aguirre’s way or he may end up like pretty boy Zucchett and laughing boy Inzunza. The sooner these children-of-the-past realize that it was all over when Mike Aguirre got elected, the better. Now i
f we can only prevent what happened under an ex-judge from happening under an ex-cop.

Honesty is the key qualification for mayor - 10/16/05

I haven't seen all the TV debates but Donna won today's Union-Tribune debate.

Sanders came across exactly as Donna described him: "the official greeter while somebody else (Ronnie Froman) runs the city".  For me that said it all. That is exactly what Jerry Sanders wants out of this job. He wants to be off gallivanting in the best Washington and New York hotels, living high on the hog on a city credit card while his unelected hirelings run the City and his cronies help themselves to whatever they can.

Donna made the point that City bureaucrats will no longer be able to lie to her as Bruce Herring, Cathy Lexin, Michael Uberuaga and Lamont Ewell frequently did. As mayor it is she who will hire and fire them, which is why personal honesty should be the deciding factor in the voters' minds when choosing a mayor. An honest mayor will choose honest employees while a dishonest mayor will choose dishonest ones - the latter having a lot to do with why we are in the mess we are in today.

Sanders' plan is riddled with dishonesty. He throws out fanciful numbers that he hopes the ordinary voter will be unable to refute - but Donna can! She is an expert on city finances. She has been famous for carrying home large quantities of city papers and sitting up late studying them. It showed in her responses today.

Will the voters be able to tell the difference? I sure hope so. A Sanders City Hall will be staffed with Lincoln Club nominees, developers' lackeys and other hangers-on.

A Frye City Hall on the other hand will be staffed by citizens hand picked by Donna for their impeccable honesty and desire to serve the public, not exactly the kind of people the Moores/Manchester penthouse/yacht set are noted for.
To cut or not to cut, that is the question - 10/12/05

Sanders and his business cronies are beginning to discover that this campaign isn't about cutting the General Fund, it is about defending it.

Sanders' plan is starting to worry those business people who have belatedly come to understand the role of city services in attracting businesses and that tourists don't flock to a city riddled with potholes. Hard-nosed business people who bought into Sanders' slogan of "leadership for a change" are having doubts about the "change" he would bring about. They are beginning to understand that inferior services is bad for business.

Defending the world against tax-and-spend liberals is the traditional war cry of the Republican faithful, but even die-hard San Diego Republicans cannot avoid the realities of this City's General Fund where total expenditure is $857,659,472, where police is $335,076,416 and fire is $158,135,342. Together these "safeties" total $493,211,758 leaving only $364,447,714 for everything else! That's the harsh reality.

So where does Sanders think he is going to cut all this "liberal" spending?

His Plan (Item 3) says:
The Sanders Plan includes the contingency of laying-off up to 10% of General Fund-supported city employees. This contingency would be scaled back if public employee unions return to the bargaining table and make additional concessions."

But "General Fund-supported city employees" includes police and fire. Is he promising to cut those? We are the most under-policed city in the country and glaring firefighting deficiencies became all too apparent in the great San Diego fire of 2003.

It turns out that he knew all along his "cuts" were phony. Donna Frye pointed this out to him today. At least she is honest and tells the people that if they want even minimal services after fixing the financial mess, they will have to tax themselves to pay for them. And more importantly she will ask the people to decide at the ballot box.

Jerry is promising to amortize his Pension Obligation Bonds out of the $364 million available for all non-safety services and will continue to recognize the $700 million in illegal pension benefits pending court action. That is "leadership for a change"?

Mad Madaffer and shameful Maienschein - 10/11/05

Maienschein reversed his August 4th vote today He is now in favor of the City paying for the defense of those who lied to the SEC. I am glad I did not send him that "thank you" email back in August. I had a feeling he might do this when they came after him.

After one ignominious vote in the morning we were treated in the afternoon to a "discussion" which was more reminiscent of Waco or Ruby Ridge than City Hall - four City Council Members barricading themselves behind an army of legal attack dogs hurling abuse at lawman Mike Aguirre. It is the Feds they are really terrified of.

Madaffer has sworn not be taken alive. He will burn down City Hall and see the whole city razed to the ground rather than go to the pokey for John Moores. Yes, that's what this is all about, the Petco Park bond issue. They phonied up the loan documents.

There is a concept in criminal law known as a "consciousness of guilt". Innocent people come out with their hands up and co-operate. These four City Councilors are not only not coming out with their hands up, they are going to fight to the death.

How else can one explain the mad behavior of Madaffer today? He attacked the lawman who is threatening to charge him with fraud. Then he hired a criminal lawyer at City expense to demonize Aguirre. A criminal lawyer! Very interesting.

Levitt has deserted them and Aguirre is closing in. So their first line of defense is to shoot the messenger. They try to demonize the City Attorney the people elected.

The sooner Madaffer, Maienschein, Peters and Atkins follow Murphy into ignominious obscurity the better for San Diego. This City deserves better.
Some City officials will go to jail - 10/11/05

The City Council are beginning to look like cornered animals. They are lashing out as if they know the end is near. They have organized a Star Chamber for 2:00 PM today in a last ditch effort to discredit Mike Aguirre. They tried that with Diann Shipione and failed miserably. Diann is now a revered figure in San Diego as will Mike be.

Jim Madaffer seems to be the most "cornered". The reality of jail is looming by the day. Yesterday he lashed out by publishing a scurrilous letter about Aguirre from a Los Angeles shyster attorney, paid for by Madaffer with $12,000 of our money, on the very day he voted for further cuts in our essential city services!

The letter is scurrilous in the extreme, thirteen pages of lies and distortions about Mike Aguirre, about our elected City Attorney, by a Los Angeles private attorney, ordered by Jim Madaffer, a San Diego City Councilor, at our expense! Yes, Madaffer must be already seeing that jail cell in his nightmares. If it can happen to Inzunza and Zucchett it can happen to him and his old buddy Dick Murphy.

Aguirre and Frye killed two birds with one stone yesterday. Aguirre gave those he is about to sue (and send to the pokey) a last chance to 'fess up and Frye sent her Final Notice to the unions that their benefits are toast. Ann Smith roared like a lioness.

It is becoming clearer and clearer exactly what our City Councilors are afraid of. They are afraid of being convicted of securities fraud. That is why they don't want Aguirre representing them. That is what Levitt was all about, and now this LA guy.

An article in the Wall Street Journal yesterday must have really spooked them. They are being compared to those corporate executives who misrepresented corporate financial filings and went to jail. The Journal was just making the point that city officials are not immune to the same punishment. Madaffer & Co have good reason to be worried.
Halliburton by the Sea - 10/10/05

Scott Peters is widely tipped to be the Presiding Officer of the new 8 Member City Council after January 1, 2006. He will have many of the powers of former mayors, particularly the power to control the Council Docket.

The frontrunners in District 2 and 8, Faulconer and Acle, are both Republicans. La Jolla resident Scott Peters is nominally a Democrat (he hails from Minnesota where everybody is Democrat) but votes as a Republican and is a close ally of Republican Council Member Jim Madaffer.

If Sanders wins the Mayor's Office, the Republicans will own this town. Redevelopment projects will proliferate and the General Fund will be unable to sustain even basic services. "Enron by the Sea" will become "Halliburton by the Sea".
It's the General Fund stupid - 10/09/05

To paraphrase Bill Clinton - it's the General Fund stupid.

Over the years successive City Councils have gradually voted to relinquish control of two-thirds of the City's revenues, to various autonomous redevelopment projects such as CCDC. This has left all city services to be paid out of the remaining one-third of the City's revenues, called the General Fund.

Redevelopment projects are growing at such a pace that we are actually in the process of squeezing this General Fund out of existence. In tax year 2003/4 the City of San Diego "diverted" $70,038,647 of property tax revenue into 16 redevelopment projects. This means that properties valued at $7,857,891,697 ($7.8 billion and growing) will remain beyond the reach of the City for tax purposes. You can't run a city this way. 

I examined the
County Tax Assessor's figures and found that 97% of all property taxes collected in downtown San Diego is diverted into five redevelopment projects with no contribution towards police, fire or infrastructure. The actual amount of 2003/4 tax diverted from the General Fund  for Columbia, Gaslamp, Horton Plaza, Marina and Center City was $38,887,318. What in the world are they doing with all that money? Why are they not paying for police and fire at the very least?

Why is this not being screamed from the rooftops?

Ask the Union-Tribune would they have a sports page without the Padres and the Chargers. These national sports franchises would not stay in San Diego without Petco Park and Qualcom Stadium, creatures of redevelopment dollars. Without a sports page would there even be a San Diego Union-Tribune? Yet we rely on this single daily newspaper for "fair and balanced" commentary on San Diego issues.

Then there are the politicians. Why do politicians love redevelopment projects? Easy, campaign contributions. Try running for office without such a sure money source.

Somehow this unholy alliance between political and commercial interests must be broken. How can we do it in a free enterprise society? We have strict campaign contribution laws but they don't seem to be doing the job. Money interests win every time. Somehow we have to make these money interests see that their interests are identical to ours. Neither can have a healthy city without a healthy General Fund.

We could start by making the General Fund the central issue in the current mayoral race. Amid all the rhetoric and hot air each candidate should be asked to show a four year projection of the General Fund under their stewardship. After all, this is the job for which we are hiring them. How exactly are they going to Save our General Fund?
What if Sanders is not lying? - 10/08/05

"Given the magnitude of the city's financial problems, any candidate who tells voters he's taking options off the table; such as no new taxes or fees or no consideration of bankruptcy under any circumstances, is insulting the intelligence of his or her constituents." Donna Frye, right? Nope, Jerry Sanders, in the primary - still on his web site.

By his own definition Sanders is insulting our intelligence - he has taken taxes off the table. He is lying to us, right? Telling us what we want to hear in order to get elected? Donna believes so. She could have done the same but chose the moral high road.

What if he is not lying to us. What if he is the new Steve Francis. Did he do a "no tax" deal with the Republican Party to get their endorsement? Remember that in the primary they endorsed Steve Francis, the millionaire from Rancho Santa Fe, who gave the absolute "no taxes" pledge which evoked the above response from Sanders.

Sanders may be a nice guy, I don't know. But that's not the point. If he didn't know before he knows now that if he wants to be the Republicans' Mayor he must promise and deliver "no taxes". His rich backers don't care about city services, most of them live in affluent neighborhoods and can afford their own security systems and libraries.

The essence of a third world country is the rich do not pay taxes. That is where we are headed if Sanders gets elected. He will cater to the same "no tax" constituency as Golding and Murphy. The reason we got into this pension mess in the first place is because Jack McGrory, Susan Golding and Dick Murphy bribed union representatives on the Pension Board with bloated personal benefits in order to balance the city budget without increasing taxes. Their Republicans backers would not allow it.

Listening to the chatter around the tables at the San Diego County Taxpayers Association (another name for the Republican Party) at the Town and Country Club yesterday morning brought it all into focus for me. I could see them looking at Donna's podium and seeing "taxes" and looking at Jerry's podium and seeing "no taxes". Do any of them care about city services? Of course not.

If their guy Sanders becomes Mayor we may get much worse than a false promise, we may get third world level city services, resulting in businesses and tourists avoiding us like the plague. There may be only one thing worse than Sanders lying to us and that is Sanders not lying to us.

So there it is: vote for Sanders if you live in a gated community; vote for Donna if you need a livable city for us ordinary folks. In a democracy everybody should pay their fair share for the services that made this city great and can do so again.
Michael Congers sends in his resume to Sanders - 10/07/05

When I wrote earlier that events were well orchestrated this morning I didn't realize just how well orchestrated they really were.

No sooner was the "debate" over at the Town and Country Hotel than Jerry Sanders' web site had this Michael Congers' hit piece posted on it. I am now more convinced than ever that Sanders was given the questions and was reading well prepared responses this morning. These guys will make Murphy and his cronies look like Boy Scouts, and Congers (who lives in Rancho Santa Fe and made his money suing the City of San Diego) now seems to have joined the pack. With friends like Congers this City needs no enemies.

Here is a link to the Blue Ribbon Committee Report Mr. Congers used as the basis of his hit on Donna. He starts by referring to a quote from Donna in the San Diego Union-Tribune on 10/5/05 where she said "you have to remember that everybody was saying that nothing was wrong". Congers then bellows: "This is a false statement because the Mayor's Blue Ribbon Committee of experts said it was 'very concerned' (page 6 of their 2002 report) and that the problems must be 'publicly recognized and dealt with' (page 10 of the 2002 report)."

Well if this is Congers' smoking gun, if this is Donna acquiescing in illegal pension increases, Aguirre should hire him to prosecute the real culprits. If this is the mote in Donna's eye then he should have no trouble with the beams in the eyes of the 8 Council Members who voted for MPII in 2002, with Donna the only No vote.

The Sanders' camp must be getting desperate, this is just too much of a stretch.
Bob Kittle needs an honesty check - 10/07/05


The mayoral debate this morning at the Town & Country Hotel hosted by the San Diego Taxpayers Association, (complete with photocopies of today’s Union-Tribune editorial placed on every chair) was a well-orchestrated event by the San Diego Republican power elite eager for power.

Jerry Sanders seemed so self-assured throughout that I could not help wondering if he did not know in advance exactly what the questions were and was just reading the answers. In any case “well orchestrated” was certainly the order of the day with Donna the sacrificial lamb at a ritual slaughter.

In the Republicans' rush for power, their unofficial spokesperson Bob Kittle, editor of the Union-Tribune editorial page, lied in his editorial today. His most egregious lie: “
This is precisely the measure demanded by the city's politically powerful public employee unions, which long have called on the City Council to raise taxes and sell off public property in order to cover the pension fund shortfall
.” This is not an editorial, it is a campaign hit-piece.

Donna has not proposed a pension tax - Kittle knows that. Her ballot initiative will not require a two-thirds majority - Kittle knows that. How does he know? Donna told him face to face! Kittle needs an honesty check.

What Donna has actually proposed (don’t take my word for it, read her Plan) is anything but what Kittle alleges.

Over and over she stresses the importance of protecting the General Fund as the only means of “providing the basic services of government”. Note that in paragraph 21g she separates out "discretionary items (pension obligations, retiree health, debt service on bonds, contractual obligations etc) that require public support for separate funding". What could be clearer than that Mr. Kittle?

She is being punished because she has been honest enough to tell the people that even after refusing to recognize the illegal benefits and the massive rollbacks, the General Fund will still require $255 million in order to maintain basic city services. This at a time when honesty and the need to build trust is exactly what this city is in desperate need of. Shame on you Bob Kittle. Is having your man in power worth lying for?

If anybody knows how to fill that gap without a tax increase she would love to hear from you. Of course we have already heard from Sanders and Kittle: they will cut services to third world levels. Why should they care? They live in gated communities and play golf in Rancho Santa Fe Country Club.

But this morning Donna had a word of warning for those denizens of the free enterprise and business clubs. How long do they think they can attract companies to San Diego or retain the ones they have if they do not fix the potholes? Over to you Jerry and Bob.

Is Sanders saying "read my lips"? - 10/06/05

Here is the latest Datamar poll. What strikes me most is that while "middle of the road" people support Sanders on political and social issues, the same "middle of the road" people support Donna with regard to fiscal issues.

That could be the key to Donna winning the "undecideds" and even stealing some of Sanders' conservative support. Somehow his conservative base is uncertain about his fiscal policy. Perhaps they remember George Bush's "read my lips" promise.
Elected officials are not above the law - 10/05/05

Dueling press conferences yesterday by Toni Atkins and Mike Aguirre tells us the battle is not yet over. Atkins is the establishment defender and Aguirre is the rebel at the gate.

The now infamous March 5, 2003 memo has changed everything. This is the same memo that
only a few days ago the Audit Committee told us was not relevant to its inquiry! Why doesn't Toni Atkins add Levitt and his Audit Committee to the three individuals (Grissom, Chapin and Preovolos) she would "throw to the wolves" as Aguirre so aptly put it? Because she is still in cover up mode, that's why.

Scott Peters' excuse is
that "the council was following the legal advice of the prior city attorney when it approved the 2002 pension-funding arrangement".

How is Mr. Peters going to defend himself against not following the legal advice of the City Attorney when that City Attorney brings charges against him for knowingly (against clear advice and on several occasions) breaking the law, or does Mr. Peters think he is immune from the law when acting in his official capacity?

Peters is demonstrating a fundamental misunderstanding of the role of the City Attorney when he asserts that "Aguirre has a conflict of interest that prevents him from bringing any charges against the city or its officials".

The people of San Diego elected Mike Aguirre to enforce the law and protect the City from all lawbreakers. There is no conflict of interest there. Aguirre is duty bound to pursue all city officials, elected or appointed, who break the law. If Mr. Peters has broken any law he will be prosecuted like everybody else and so will Ms. Atkins.

That principle must be the rock upon which our recovery from this mess will take place. It has been sadly lacking in the past. Peters would be an excellent place to start, Attorney though he may be he needs to be taught a lesson in the law.
What these people tried to get away with puts bank robbers in the shade - 10/04/05

Mike Aguirre now thinks he underestimated the pension conspiracy! The March 5, 2003 memo to the Pension Board from their attorney's Seltzer, Kaplan & Vitek has shocked even Aguirre. The greed of these people is mind boggling.

Michael Conger, the plaintiffs' attorney in the Gleason suit, was also shocked. He  said "They were fighting us tooth and nail on this lawsuit. After receiving this advice -- from their own lawyers -- they spent millions of dollars trying to protect their own individual benefits that were part of the deal."

Now we know why they all fought "tooth and nail" behind attorney-client privilege to keep the memo from seeing the light of day. It looks like Mike Aguirre is going to be a busy man. Inzunza and Zucchett are going to have lots of company. I wonder how Dick Murphy will like sharing digs with some of those he sent to the pokey when he was a judge. The law is a wonderful thing, it does not care how big you think you are.

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