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Blog Archives - 2005
John Torell disappears into a black hole -
by Pat Flannery
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
"... the current 2.624% annual rate raises the
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?
what was the cost of issuance in
the other cases involving the BofA? Were there
any companion or compensating deals?
why are we paying Kroll to get us
to the public bond markets where we will
presumably pay more than 2.624%?
why did we pay a higher
(reported) rate on the Petco Park bond when we
could presumably have placed it with the BofA?
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."
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
"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.
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
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:
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
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
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).
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.
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
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.
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
is a strange individual -
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
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.
Therefore "Bowtie Bob" Kittle has a lot to answer
for his crazy support of Levitt and his "Audit
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
blame game has only just begun -
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
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
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
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
by Pat Flannery
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
and here is the
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"
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
unions run City Hall -
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?
(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 -
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.
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
will put the leash on Bob Kittle at the U-T? -
by Pat Flannery
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
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
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
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".
Sanders get a free ride? -
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:
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,
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'
we can do is pray
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
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.
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
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
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.
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).
Sanders "Mythodology" -
by Pat Flannery
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".
Communities Network - Nov. 6, 2005 8:30 pm
Tom Mullaney Cell: 619-296-8231
SANDERS CLAIMS ABOUT MANAGEMENT
HE DID NOT “TURN AROUND” UNITED WAY
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.
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
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
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
LivableComm@aol.com 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
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?
for the chicken or the fox -
by Pat Flannery
when I thought I understood democracy along come lawyers
for Inzunza and Zucchet (and they should know, they are
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
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.
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
town we loved so well -
by Pat Flannery
The Labor Council's
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
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
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
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
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
it's hard to be patient - 11/03/05
by Pat Flannery
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
Anyway she dutifully
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.
Aguirre's "escrow" -
by Pat Flannery
As a longtime realtor and mortgage
broker, but mainly as a longtime male, I am
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
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 -
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.
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?
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?
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
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.
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
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.
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
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.
finances are a strange thing to be sure -
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
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
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,
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
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
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.
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 -
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.
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?
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
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
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!
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.
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."
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
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.
you "restructure" a bad loan? -
by Pat Flannery
The City Council are being
(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
"explaining" what this is all about. The trouble is that
it raises more questions than it explains.
add to the confusion Jennifer Vigil
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
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.
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"
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
If you read the "explanation" in the
(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.
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
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%.
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"? -
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
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
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
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
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 -
"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
"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
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? -
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
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
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 if we can only prevent what happened under an ex-judge from happening
under an ex-cop.
Honesty is the key qualification for mayor -
I haven't seen all the TV debates but Donna won today's Union-Tribune
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
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
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 -
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
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
So where does Sanders think he is going to cut all this "liberal" spending?
His Plan (Item 3) says:
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
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.
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 -
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
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
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
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 -
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
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 -
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
It's the General Fund
stupid - 10/09/05
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
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
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
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
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
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 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
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
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.
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
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
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
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
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
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"
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
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
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.
Copyright "San Diego Today"
November, 2004 -