Councilmember Carl DeMaio's "Roadmap
to Recovery", published today, says regarding the
pension problem:
"Until the city reforms its pension liability, no tax
increase will be big enough…no service cut will be deep
enough…to satisfy the skyrocketing debt service on the
city’s pension system. Like a bankruptcy reorganization
plan, the Roadmap to Recovery is committed to
restructuring and reducing our net liabilities in the
pension system through reform of benefits for both
existing and new city employees."
DeMaio's roadmap goes on to enumerate several
aspirational reforms that are very impressive on paper
but short on how they are to be implemented. Every San
Diegan knows that even the smallest pension concession
will have to be "pried from the cold dead hand" of the
unions, as Charlton Heston famously put it regarding gun
control. DeMaio has ruled out bankruptcy. How then does
he hope to do the prying?
Is Aguirre right? Is bankruptcy the only way? Mike has
recently reintroduced himself to the public as
the apostle of bankruptcy.
Unfortunately bankruptcy is a very blunt instrument that
would probably do irreparable damage to the city's image
as a tourist destination and to its borrowing
capability. In other words the cure would be worse than
the disease. Even as a cure it is far from certain that
it would have any effect on the pension debt. However,
it would be an attorney's gravy train.
There is another way to wrestle with that (figurative)
cold dead hand of the unions. It is called the
"Net Pension Obligation" (NPO)
account in the City's books. Read a blog I did on
this interesting subject on
April 7, 2009. The
NPO is not actually a City account but rather a
"calculation". It is how the City keeps track of
and discloses its
actuarial "net pension obligation". It was not
even required until GASP 27 became effective in 1998.
Here is
the GASP 27
Note
in the City's 2008 CAFR. It shows that the unpaid
balance of the ARC as of June 2008 was $173 million.
That is all that is required.
This minimal requirement of a mere "GASP 27 Note" in the
CAFR each year is positive proof that the retirees
cannot enforce payment. The ARC is not a bill. As
further proof, SDCERS does not
even enter it into their
books. Back in April 2009 I had SDCERS confirm in
writing that neither the ARC nor any unpaid balance
(NPO) are ever shown in the Pension Fund's books. The
ARC is simply an "actuarial" liability. The above $173
million is not shown as owing by the City on SDCERS'
books.
To further underline this fact that the ARC is merely an
"actuarial" liability, consider the nature
of that portion of the ARC that purports to amortize the
"Unfunded Actuarial Accrued Liability"
(UAAL).
The UAAL is based upon assumed life expectancies and
other actuarial assumptions. You cannot "amortize" an
assumption. We can stop paying it at any time. Yet it is
currently a substantial part of our annual pension
payment. The reason: Mayor Sanders is our First Retiree
not our First Citizen.
The fact is that the unions and retirees can only call
us nasty names or have Ann Smith stomp her dainty little foot
before City Council, if we simply "make a note" of the
Annual Required Contribution (ARC) each year and pay
what we can (rather like Counilmember-elect Lori Zapf's
loan modification "strategic default" on her mortgage.
It worked for her).
The citizens of San Diego need to know that there is
an alternative to the nuclear option of filing Chapter 9
municipal bankruptcy. We can simply pay what we can each
year and "keep a note" of our growing pension obligation,
a sort of "loan modification".
We are already doing just that in the NPO account. We can always catch up when the economy
improves or if we receive a windfall, just as we did
with the $103 million 2006 Tobacco Settlement.
But to continue the home mortgage analogy, there is an
inevitable "short sale" in the retirees' future.
The citizens of San Diego need to know that there is no
limit to how much the NPO can grow without paying a
dime. Unfortunately the current Mayor is the last person that will ever tell
them that because he is totally conflicted on this
issue. He retired at age 49 receiving a grossly inflated
illegal pension for the rest of his life. In his 25th
and final year the police pension "multiplier" was
increased from 2.5 to 3. Instead of receiving a pension
based on 2.5 times (final year's salary) for 24 years,
plus 3 times for his 25th year, he receives 3 times for all 25 years. His 24 year retroactive
payment is therefore illegal under the California
Constitution. No wonder he hates Aguirre.
The citizens of San Diego need to know that no
power on earth can force them to either pay taxes
or sell any asset to pay a debt. Anybody doing
business with an American city (including an employee)
is assumed to know that. A municipal corporation is not
subject to the same laws as a commercial corporation.
That is a powerful tool in "negotiating" away illegal
pension benefits. A city can simply refuse to pay them
and its assets cannot be seized.
When SDCERS runs out of money (it currently has assets
of several billion dollars) and the unions are ready to
do business, maybe, just maybe the Sovereign People will
talk to them through a negotiated ballot measure. In the
meantime the People made it perfectly clear in Prop D
that it's priorities are city services not illegal
pension benefits.
Unfortunately DeMaio's quixotic "Roadmap
to Recovery" is no
better than Aguirre's legal map to nowhere. Both are
"sound and fury signifying nothing". So long as "First
Retiree" Sanders holds the Mayor's Office there will be
no reform of city pensions.
DeMaio should have
written:
"Until the
city
reforms its pension
gets rid of Sanders, no tax increase will be big
enough…no service cut will be deep enough…to satisfy the
skyrocketing debt service on the city’s pension system".
The immediate budget solutions are there. We just need a Mayor
and City Council that will take them. As for the City's
credit rating, the days of easy municipal bonds are
over. The world is facing a "sovereign debt" crisis. The
collapse of the municipal bond market is the next
financial meltdown. It will be bigger and more
devastating than the mortgage crisis because the
municipal bond bubble is even bigger than the mortgage
bubble.
We don't need a bankruptcy judge. Our financial chickens
have come home to roost all on their own. The problem is
that public sector retirees have not even begun to
understand their situation - how are they going to live
if the citizens refuse to pay? That stark reality is
beginning to emerge in sovereign countries around the
world, resulting in civil disturbances.
Leadership, not denial, is what is urgently needed. So
far all we have seen in San Diego is the latter. By
refusing to pay illegal pension benefits the City of San
Diego may actually improve its credit rating. It may
even become known as "America's Smartest City".
"Beginning tonight, top city
officials will hold a series of town hall meetings to
discuss proposed impacts to the city’s budget.
Participants will include Chief Operating Officer Jay
Goldstone, Police Chief William Lansdowne, Fire Chief
Javier Mainar, Library Director Deborah Barrow, Park &
Recreation Director Stacey LoMedico, Deputy Chief
Operating Officer of Public Works Dave Jarrell and Chief
Financial Officer Mary Lewis."
Seduced by the
word "discuss" and taking my video camera so that I
could study the Mayor's proposals and the citizens'
reactions, I attended his first "town hall meeting" at
the University City High School Media Center at 6:00 PM.
I was not at all prepared for what I heard and saw.
It was like the "shock and awe" that preceded the U.S.
invasions of Iraq and Afghanistan or a pre-game
Haka by New Zealand's All Blacks rugby team. I could
almost hear Sanders and his top officials whooping the
ancient
Māori war cry of "Ka Mate! Ka Mate! Ka ora! Ka ora!
Hae-haea! Ha!" as do the All Blacks to terrify their
foes before a rugby encounter.
But for Sanders & Co. this is no game. This is a
declaration of war on any and every citizen who might complain about taxes
or other measures to pay for city
pensions. That became abundantly clear throughout the
evening. These people will sell off everything this city
owns to pay for their personal pensions, parks, golf
courses, whatever. This is only the beginning.
Sanders started by enumerating the cuts he claims to
have made since taking office and in so doing made a
startling admission: "The layoff
of 50 vacant firefighter positions is the reason
we have the rolling brownouts". Vacant
positions! There was no real reason for the brownouts!
It was sheer political terrorism!
A little Mira Mesa boy had to die so that Sanders could
demonstrate his raw political power.
The brownouts are totally unnecessary. It was clear that
he meant exactly that. This is a totally ruthless man. I remembered how as SWAT Commander on July 18,
1984, for over an hour he withheld the "green light" to
kill the shooter at San Ysidro, while over a dozen
children died. SWAT Commander Sanders wanted to be
present to take credit on TV. To disprove that widely
believed charge he could easily release the police tapes
of that day. He never has.
Now he was dismissing any charge that his
proposed cuts are mere scare tactics:
"A scare tactic is something you
are doing because you don't intend to do it".
I believed him. Prop D is only part of
it. Whether it passes or not he intends to make whatever
cuts are necessary to pay for his pension. And the
entire city staff fully support him. They have
always known he is one of them.
CEO Jay Goldstone took over and dropped a marker for the
five department heads - they were to lay blame
exclusively on the revenue side of the Budget. There was
to be no question of administrative inefficiencies.
Goldstone all but admitted what everybody knows, that
these "town hall meetings" are campaign rallies for Prop
D: "The City Council has placed on
the ballot a temporary half-cent sales tax that could
generate $102 million. If that passes it could help
eliminate the need for some of these potential cuts as
well as begin the restoration of services".
The message was clear: vote Yes on Prop D or people will
die.
Police Chief Lansdowne delivered his swaggering contribution with
manly vigor. Wearing a sidearm
and more badges and stars than Panama's dictator Manuel
Noriega in his heyday, he laid his control of our
personal safety clearly on the line. Our lives are in
his hands.
"In order to maintain some police services in the
city" he would eliminate only 160 sworn police
positions, close only two of his ten Divisions,
eliminate only 36 civilian positions,
"5 of whom would be 911 dispatchers", eliminate
two DNA lab people, "who are
central to our ability to do our job", close
police store fronts, eliminate the abandoned vehicle
unit and close the multi-cultural center,
"that is central to our ability"
to build a relationship with "a
first generation (of immigrants)
who come without a built-in trust for public safety".
Was he suggesting that they may now revert to their
"native" savagery?
He said he wanted to "put it really
succinctly". He certainly did, about as
succinctly as a blow to the head from his night stick. He finished
by saying that he was "here to
answer all our questions", which of course he was
not. He was here to demonstrate his raw power over us.
This was becoming truly scary. These guys are in deadly
earnest.
Next up was the Fire Chief, Javier Mainar. He reminded
us of the dangers to our personal safety in his current
brownout policy. He offered no explanation as to why. I
guess he figured we already knew. He simply announced
his intention to add 5 more engines to his brownout for
a total of 13 engines, representing 22% of the City's
entire fire protection resources.
In case we didn't get it, he made it very personal for
us: "minutes make a big difference
in your survivability". Now that's personal. Like
the police chief he was making it perfectly clear that
they have the power of life and death over all of us.
Then he
ratcheted up the fear rhetoric by warning that his next
5 brownout engines will "impact
single engine fire stations".
By deliberately choosing 5 single-engine stations he
showed his chilling power to deprive 5 communities of
100% of their fire protection! Dripping with calculated
cynicism he described how he had coined a new word for
this cruel power - he calls it a "blackout". What could be clearer?
For his finale
he announced that he will (arbitrarily) take the
"second helicopter completely out
of service". He gave no reason why. How did we
give these guys such power?
I am still reeling from the reality of what three men,
Sanders, Lansdowne and Mainer can do to us. Like
generals in a savage war, they are willing to sacrifice
our lives to achieve their personal goals. Nobody should
doubt their power. Like generals, they don't think like
you and I.
Speaking for the lifeguard service, he outlined a litany
of cuts that will leave San Diego beaches little better
than the coast of Baja. What will this do to our tourism
industry? They may as well keep on going south.
At this point one citizen had enough. The Fire Chief had
posed what he thought would be a rhetorical question:
"is this a scare tactic?"
Yes, came an immediate reply from the floor.
"You said there are no other
options, there are a lot of other options" cried
the frustrated heckler, for which he received mild audience applause. Manier said
"why don't you let me finish". Amazingly the
heckler politely said "go ahead".
Mainer resumed with his prepared
coups
de
grâce:
"Folks, it's eventually going to catch up to you; it's
not a matter of if somebody dies as a result of
public safety, it's a matter of when it's going
to happen". No wonder he wanted to finish. Again,
amazingly, the heckler kept quiet. Mainer then obscenely
predicted that he would be going before the City
Council's Public Safety and Neighborhood Services
Committee "a lot more often
answering whether deaths were the result of brownouts".
Unbelievable!
San Diegans are such a docile lot. Those present just
sat silently through this arrogant tirade from their own
fire chief. I can't imagine it happening anywhere else
in the world, at least not in so-called developed
countries.
Park & Recreation Director Stacey LoMedico was next with
a well-prepared litany of "59
individual proposed reductions" that will
decimate our city parks. Grim-faced, she listed several
permanent closings: 9 recreation centers, 2
visitor centers, 2 gymnasiums, all pools (except
for one in Mira Mesa on which the City has a long-term
lease with the community College District), 5
after-school playgrounds and 12 teen centers, affecting
she said, 600 to 750 children per day.
She went on to enumerate service reductions that would
impact the City's therapeutic services (for people with
mental and physical disabilities), reductions in senior
citizen services including the permanent closing of one
senior citizen center, the closing of Mission Trails
Regional Park overnight camp ground, reduction of hours
at Balboa Park's Balboa Club and the Santa Fe Room.
Lastly she said she will eliminate 6 Park Ranger
positions.
This, she emphasized, "was just a
small list of the 59 proposals". One wondered if
it would not have been easier to list what services
remain. If she was told by Sanders to "make it hurt" she
sure did her job.
Library Director Deborah Barrow then took the podium to
offer a similar list of draconian cuts representing she
said, 24% of all library services. She would achieve
this by the permanent closing of 2, yet to be decided,
libraries and severely cutting opening hours across the
board. She would institute "roving blackouts" by moving
library staff from one library to another on alternate
days. This she said, will result in most libraries being
open about every other day.
Barrow's predecessor as Library Director now gets
$227,249 annual retirement benefits and will cost the
City $6,084,998 if she lives the average life span for
an American woman, more if she lives longer.
Finally, the Deputy Chief Operating Officer of Public
Works Dave Jarrell, announced that he
"will be doing almost 10,000 less
(sic) pothole repairs
across the city". Again, if he was told to "make
it hurt", he was pressing all the right buttons.
He told us he will "do 1,400 less
(Jarrell needs an English lesson on the use of
"less" and "fewer") streetlight repairs", eliminate all weed
abatement on city streets, eliminate all non-emergency
tree trimming and even reduce those caused by
emergencies such as storms. He would do
"700 less sidewalk repairs".
I think I actually saw him smile as he announced that
"there will be a lot more broken
sidewalks out there".
This was getting almost unbearable, but he droned on
about doing "less street signs and
traffic markings", reducing street sweeping to
"the minimum amount required by
law" i.e. "from once a
month to once a year for 80% of the streets"; he
will delay community plan updates,
"stop refuse collection for 15,000 residents who live on
private streets".
What was that? Rich folks in gated communities were
getting free pick up? Who knew! They will now have to
hire poor people to empty their well-filled trash cans.
Apparently 6,500 lucky private companies have also been
getting their trash picked up at our expense.
Goldstone took the microphone from Jarrell but before
handing it back to Sanders, he darkly offered:
"this is very close to the reality
we will be seeing in the coming months". He
wanted to make sure that we had gotten the message. I
think we had, at least I had.
Sanders then got to pick the written questions he would
answer and those he would not. To my surprise he picked
mine. It read "Apart from Scott
Kessler, how many full time employees were let go for
budgetary reasons as distinct from the elimination of
unfilled budgetary positions?".
In reading it out he omitted the part about Scott
Kessler, perhaps because Kessler has sued him for
wrongful dismissal and a judge has decided that Sanders
will have to face him in court. Don Bauder of the The
Reader is the only journalist who has been covering
the case. It now appears that J.W. August of Channel 10
has secured the
Judge's permission to air video of Sanders being
deposed in the case. That may explain why Sanders showed
great irritation with J.W. at a recent unrelated press
conference.
Unfortunately Sanders answered my question with:
"I don't know that answer".
I doubt that he has ever laid off a single city employee
purely for budgetary reasons. He keeps it as a sword
hanging over everybody's head while publicly he waffles on and on
about all the unfilled positions he has eliminated, as
he did throughout his 2008 re-election campaign.
He has
gotten away with this deception so far. Perhaps we will
learn more when we see his Kessler deposition, if he
doesn't fsettle the case at our expense beforehand.
Then the heckler was back. I have put it on
YouTube. It shows the real Sanders, the hard man
behind the smile. My video clip also includes him answering a
pension question that allowed him to hammer home the
central theme of these "town hall meetings": that city
pensions are beyond the reach of us citizens and we must
pay up by taxation. Thus he has made it a civil war between the
citizens and the city employees.
Sanders, who retired from the City at the age of 49 with
a pension of over $90,000, most of which was retroactive
and therefore illegal whether the courts agree or not,
is just another city retiree protecting his personal
pension.
This is probably the real reason why he ran for
Mayor. He may well be the only person in San Diego who
both fully understood the danger to his pension and had
the political ability to take defensive action. Nobody
can deny his mastery of politics, how he cleverly crafted a
coalition of support between city unions and developers.
Frye never had a chance.
To Mayor Sanders, the citizens are just a bunch
of hecklers like the one in the video, who can either
shut up or leave town. But Prop D may yet unmask him. It
may prompt a sufficient number of angry citizens
to call for real town hall meetings, to discuss the real
problem - the sheer illegality, the sheer unfairness and the
budgetary un-sustainability of Sanders' pension
and that of hundreds of other retired city millionaires.
This deadly game of chicken has hardly begun. A civilian
population is slow to rouse, but once aroused, it packs an
awesome power. If I were Sanders & Co I would tread
very carefully. It has yet to be decided who may be forced
to leave town.
Today, the U-T editorial staff printed this "We
have a Dream" opinion. If this is the best our only
daily "news" paper can come up with, then, like Apollo
13 said to Houston, "San Diego, we have a problem".
Let's examine this U-T "vision for
the future of San Diego".
It starts by giving top billing to
"a landmark new downtown central library as the hub for
branch libraries". That, of course, is a logical
contradiction. A downtown central library will come at
the expense of our branch library system. According to
Mayor Sanders we cannot afford the branch libraries
we've got, let alone a central library boondoggle.
Then they "see an expanded
convention center that lures many thousands of visitors
here with credit cards in hand". I wonder how
many of those credit-card-wielding visitors will stay in
Motel Barrio Logan? Or venture a bus ride over potholes
to East San Diego? A few waterfront hotels and downtown
restaurants will be the only ones to swipe that highly
volatile plastic.
Next they "see a Balboa Park that
is rejuvenated for its next 100 years". What they
are referring to is Irwin Jacob's "visionary" plan for a
Balboa Park multi-level parking garage that will rival
Jerry Sanders' "visionary" cruise ship shed on Broadway
Pier for its ugliness.
They see "smaller parks and public
pools, tennis courts and playgrounds throughout the city
that are open and well-maintained". This despite
the fact that Sanders refused to fund 186 highly popular
and inexpensive fire pits for Mission Bay, La Jolla
Shores, and Ocean Beach.
They "see a vibrant arts community
that partners with City Hall on public projects".
I have no idea what they are thinking of here. Perhaps
they mean more civic statues like the one of Pete Wilson
at Horton Plaza. Perhaps one of Jerry Sanders on
Broadway Pier? That would be appropriate, right in front
of his "visionary" shed.
They see "better streets and a
better sewer system".
Whatever happened to that other
$103 million, the
"General Fund
Deferred Maintenance Capital Improvement Projects
Financing" (yes, that's what they called it) that
Sanders last year (illegally) borrowed against the
downtown Police Headquarters to fix our potholes? He
staged a "news" event of him, shovel-in-hand, fixing our
potholes. The TV stations dutifully carried it as "news"
that evening, our one and only daily "news" paper
printed it the following day and that was the last we
heard of that other
$103 million. No wonder "we have a problem".
I wonder what the U-T Dream Team mean by
"a better sewer system".
Will this $103 million Prop D money pay for a secondary
treatment plant, so we don't have to pump our raw sewage
into the Pacific as in the Dark Ages? Not even the
Romans did that. Certainly not the Greeks.
They "see a police department that
is not nearly so strained in its heroic daily efforts to
keep crime rates low, and a fire department that
actually exceeds national emergency response standards
and that won’t be overmatched from the start when the
next big firestorm hits." Wow!
Perhaps we should start thinking of this Prop D as "The
Miracle of the Loaves and Fishes". It will feed the
multitudes and banish cost from public works. It is
right up there with Joseph Smith's discovery of the
miraculous Gold Plates on a hill near Palmyra in upstate
New York on September
21,1823, that became the Book of Mormon.
Truly, according to Jerry Sanders and his Scribes at the
U-T, this Prop D will change San Diego into the Promised
Land for Christian, Jew and Mormon alike and its fame
will live forever. I was becoming a believer.
But then the U-T Dream Team jolted me awake by seeing in
their phony glass ball "a
state-of-the-art new stadium downtown where the Chargers
can bring home a Super Bowl trophy or two". It
was like a Mormon discovering that Joseph Smith had
accidently dropped the Golden Plates into the Montezuma
Swamp, or a Christian discovering that Jesus had charged
everybody for his loaves and fishes.
Too bad. I was really getting into the U-T Dream until
they started "fumbling in the greasy till", as Ireland's
W. B. Yeats poetically described the age-old "auri
sacra fames", that "cursed greed for gold" Virgil so
lamented in the Aeneid.
Alas, this was only
the greed-dream of a Greek-American billionaire named
Alexander Gus Spanos, who happens to own the San Diego
Chargers, the keeping of which in San Diego is
existential for the U-T. Its sports page is about the
only page anybody reads anymore.
All you need to know about this man Spanos is at
this
link. You will see that he has learned a thing or
two about "fumbling in the greasy till" in an unending
effort to satisfy his "cursed greed for gold". He now holds the very existence
of U-T in the palm of his hand. Hence the Dream.
The
U-T Dream Team then concluded its reverie with
"We have come to accept that this
proposition, flawed as it is, is the best opportunity
for real reform". Ah yes, "Reform". That
heady religion for which Sanders raised over $1 million,
the Messiah-ship of which got him elected Mayor - twice!
His Promised Land of "Reform" is the core belief on
which all his followers' dreams are based. His faithful
dare not abandon it or they will surely commence
enjoying the amenities of Hades.
But it must be getting harder and harder to stay on the
straight and narrow, even for the most steadfast Sanders
believers like the U-T editorial board. His promises are
wearing awful thin. Is he a prophet or a con-man? Maybe
he is "speaking in
tongues" or about the after-life.
In this life however, the U-T Dream is only a dream, a "wet
dream". When they awake from their Sanders-induced
slumber, they will realize that their carnal bliss was
all but a dream, a pleasant dream, but a dream
nevertheless.
Hopefully the people are wide awake this time. We will
know on November 2. They have been seduced by the siren
call of Sanders' "Reform" promise before. Surely this
time they will see it for what it is - as empty as his
promise not to raise taxes.
Here is the full SB 863
that sparked the outrage.
Section 7 was inserted in the dead of night by Mayor
Sanders and his developer friends without the knowledge
of either the San Diego City Council or the San Diego
City Attorney. It was then voted as part of the State Budget.
The
core provision of Section 7 is: "Notwithstanding
any other law to the contrary or any redevelopment plan
previously adopted by the City of San Diego .....the
dollar limit on the receipt of tax increment for the
Centre City Redevelopment Project is eliminated ".
This means that as regards CCDC revenue, the
powers of the San Diego City Council, sitting as the
Redevelopment Agency, are forever preempted.
At City Council on Tuesday, President Hueso opened the
defense of the Sanders move by parroting what was to
emerge as a well coordinated line from each developer
lobbyist: "don't look this gift horse in the mouth".
But is it a "gift horse" or a "Trojan horse"?
In Homer's epic story of the
destruction of Troy it was an elite
group of Greek soldiers who sprang
forth from the Wooden Horse and opened
the gates of Troy for the main Greek
army who then destroyed the city. Was
it an elite group of Spanos
lawyers that concocted SB 863? Was
it our own misguided King Priam, Mayor Sanders, who
opened the city gates for them? If so they will destroy San Diego as surely as the
Greeks destroyed Troy.
The primary mission of any city is
to provide municipal services
through taxation. First claim on this taxation has
now been ceded to the Spanos
family. They and an army of
mercenary politicians, led by a smiling Jerry Sanders, have
deified "public entertainment"
in the form of a $1 billion Chargers Stadium and dare to
call it "public
infrastructure".
A downtown stadium would rob the General
Fund to the extent that San Diegans
would drive through potholed
streets to get to it, they would forego police and fire protection in
their neighborhoods and sacrifice their
children's education to pay for it.
To this end, Sanders secretly arranged for the unlimited
diversion of downtown tax revenue away from our schools
and city services into the pockets of politically
powerful developers.
Neither the citizens nor City
Council were given any say in the matter. It was a
breathtaking power grab. This alarming reality sparked
an
acrimonious
debate at City Council on Tuesday. It gave us a rare
glimpse into the ugly political underpinnings of San
Diego politics. Jagged political rocks were exposed as during an unusually
low tide.
It started when Donna Frye used Councilmember Non-Agenda Public Comment
to seek a two-thirds vote of the
City Council for "an exemption to notice" under the
Brown Act to place an emergency motion on the Docket for
immediate consideration. Her stated motion was to send
the Governor a letter of opposition requesting that he
veto SB 863.
Faulconer and Young voted to kill the motion
as, sadly, Marti Emerald was at that very moment
"tucking in" her husband in a hospice. But Marti bravely
attended the afternoon session and made one of the most
memorable contributions to San Diego civic life I have
ever seen.
Ironically, the City Council revisited the CCDC revenue
cap issue following a 4-4
failure to approve a Homeless Emergency Winter Shelter. Faulconer, DeMaio, Young and Hueso
had voted
down the homeless shelter. Hueso's fear was that "the
news would get out that San Diego was providing free
housing for people". They preferred unlimited tax
revenue diversion to CCDC for the benefit of downtown
developers.
Councilmember DeMaio started by pointing out that the Mayor is the
Executive Director of the Redevelopment Agency and is
appointed by the City Council sitting as the
Redevelopment Agency. What bothered DeMaio was not
raising the cap, but, by advocating and secretly guiding
SB 863 through Sacramento, Sanders had ignored and disobeyed
the legislative body, the Redevelopment
Agency. DeMaio found that "outrageous and
unprecedented".
Councilmember Emerald went further and called it a
"firing offense". The people had been betrayed, she
said. Choking back emotion as she thanked her colleagues
for excusing her while she "tucked in her husband" at
the local hospice in the morning, she complained of
those "who snuck around behind our backs ... to sneak
this piece of legislation through as part of the State
Budget", adding that it was "all about
building a football stadium".
Councilmember Faulconer followed, saying that he is a strong
supporter of lifting the CCDC tax revenue cap because he
believes that public investment spurs
private investment. While he was "not pleased" with what
took place in Sacramento he could not support
overturning it.
Tony Young openly welcomed Sanders midnight ride to Sacramento
because he felt it would "expedite the process"!
It would save
the City $500,000 he said. He challenged the City Attorney Jan
Goldsmith, to say that there was anything illegal
about the midnight coup. He said that they do it all the
time and that it was fine with him. The Building Industry Association
has invested
wisely in Tony since 2002. He has never let it down.
Goldsmith said that he had only learned of this
legislation on Friday when he read a report online and
that his office was not consulted. He
added that he would "have liked to have been consulted
in advance" because he could see several potential
legal problems such as the "single issue rule". Young was
showing signs of being sorry he had asked and tried to
cut Goldsmith off, but Goldsmith managed to make his point.
Hueso offered to support Frye's motion "for discussion
purposes only" warning that it did not imply that he would
vote one way or another. Those of us who watch Hueso
closely, recognized that he was perching himself firmly
on the fence on this one. It only remained to see how he would
succeed in actually ducking the vote. We soon found out.
Frye's initial motion for immediate docketing was passed 6-2
with Faulconer and Young voting No. She then made her
motion to send a letter to the Governor disapproving the
cap waiver legislation. DeMaio seconded it. Frye
assured Young that far from saving the City $500,000, it
would cost the City plenty because there would
undoubtedly be lawsuits.
She urged her Council colleagues to keep their word to the
public and stick to the promised process. She
warned those who liked what Sanders had done,
that someday they would find themselves in her position if
they allowed his latest usurpation of their powers to stand.
DeMaio then made a very good point: "what do we do if
the Governor signs the legislation?" It showed how
clearly he thinks on his feet, not merely
obeying instructions from special interests as others do.
In response, Hueso donned the flimsy mantle of
defender of the
City against lawsuits. The State, he claimed, had
accepted sole liability by unilaterally lifting the CCDC cap.
He challenged
Goldsmith to say he was wrong. Jan countered that if, upon studying SB 863, his office found that it was
legally flawed, the City would be required to follow
Redevelopment Law as it was before SB 863. That drove Hueso crazy.
He tried to brow beat Goldsmith into giving the
"right" legal advise but Jan was unmoved. The
ultimate politician, Hueso then
tried to turn
defeat to advantage by pretending he was now totally
confused and unable to make up his mind which way to
vote. Nice move. Running for the State Assembly
he has campaign contributors on both sides of the cap
issue and desperately needed to punt. What an
unprincipled menace he will become at State level if he
is elected in November to the 79th Assembly District.
Next came one of the most memorable moments in the
history of the Council Chamber - Marti Emerald grilling CCDC's Frank Alessi. CFO Alessi had the misfortune of being the senior CCDC
official in the Chamber. Fred Maas was in Syracuse NY.
She started by telling Alessi that she would have great
difficulty believing anything he or his staff ever told
her again.
The Mayor's staff had by now abandoned the room, leaving
Alessi no choice but to "Take the Fifth". He kept saying
"I don't have an answer to that question". He admitted
to having heard of the Sacramento caper about two
weeks earlier. Emerald asked him if he was instructed by
the Mayor to keep it a secret. He declined to answer. Marti wanted to know "who hatched this idea and why it was
kept from us"?
Finally, Emerald said "if you are not willing to answer
our questions, somebody will and we will have to have
some serious discussions down the road about the future
of this agency, serious discussions". You could cut
the tension.
Then a parade of special interest
lobbyists repeated the clearly agree-upon "gift horse"
theme. Mike Aguirre challenged the Mayor to
come up to the Chamber and face the City Council.
Aguirre told Hueso that far from shifting legal
liability to the State, the Mayor, by his involvement in
this midnight coup, had made the City liable for
undermining its elected legislative body.
From his uncomfortable perch on the fence, Hueso waffled
on about what he could and could not support. DeMaio saw
an opening. To accommodate Hueso he would split the
motion into two parts, to be voted upon separately.
DeMaio saw that a letter to the Governor would fail so
he decided to move against the Mayor in a different way.
Hueso saw the trap and suddenly called a two minute
break. He had obeyed the lobbyists' instructions to the
letter, but their game plan was now unraveling. I
noticed that he delayed to collect all his paperwork
before leaving the Chair. That was a sure sign that he
was not coming back for the vote. His true allegiance was laid bare
in the low tide of money politics. Like Young, he has
remained a faithful puppet of the special interests that
control him.
Councilmember Faulconer now took the Chair. DeMaio resumed
explaining his amendment that apparently had spooked
Hueso. DeMaio would require City staff to do what they
had been instructed to do before the Mayor's coup. He
wanted a staff study of the effects on the General Fund
of lifting the tax increment cap. He wanted it in the
form of a written report to the Agency.
In his eagerness to serve his builder/developer
bosses, Young then flat out lied about redevelopment
dollars. He repeated the old lie that if the City does
not divert property taxes to the Redevelopment Agency,
those dollars, instead of going to the General Fund and
Schools, go to other cities such as Los Angeles and San
Francisco. Young has shamefully inherited that Madaffer/BIA lying mantra.
Those familiar with Todd Gloria's campaign contribution
lists would not have to ask how he was going to
vote. Like Hueso, Young and Faulconer he is tied hand
and foot by builder/developer dollars. He is just a
little more silver-tongued about hiding it. His clever mantra
is always the legal requirement of redevelopment to
build affordable housing, while knowing that the
developers are allowed to get away without fulfilling
that obligation.
Gloria was the swing vote in not sending a letter to the
Governor opposing SB 863. Faulconer and Young had
already made their intentions clear. The four Yes votes
of Lightner, DeMaio, Frye and Emerald fell short. By
ducking the vote at the last moment, Hueso had ensured the
measure's defeat while being able to claim to be both
for and against it, depending on which of his campaign
contributors he is speaking to. Hueso is the
quintessential politician.
The second part of Frye's motion is what will make
Tuesday historic. In view of Alessi's evasiveness, she amended her motion to require
that, within thirty days, CCDC's Executive Director Fred
Maas must "appear before this body to answer any and all
questions related to how this event occurred" and she
wants his written report to the Redevelopment Agency.
DeMaio cleverly added (and Frye agreed) that in addition
to a written report from Fred Maas of CCDC, the
Executive Director of the Redevelopment Agency itself,
i.e. Jerry Sanders, also submit a written report to the
Redevelopment Agency and appear before that body within
thirty days. Amazingly that motion carried unanimously.
I can imagine the scene in Sanders' office as they all
sat glued to City TV. No doubt Sanders dropped the "F"
bomb liberally.
He will now need the collective skills of his expansive
team of ex-UT spinmeisters. Alex Roth in particular will
be tested. Roth mercilessly pursued Mike Aguirre while
he was in possession of a powerful U-T reporter's pen.
Sanders rewarded him with a well-paid City job. Aguirre
will relish the opportunity of a more level playing
field. For good reason, Aguirre detests Roth almost as
much as he detests Sanders.
To return to the ancient Troy analogy, Sanders has now been
summoned before the legislative body to give an
account of himself. Other than the Hector vs. Achilles
epic battle to the death before the walls of Troy, there
is nothing I would rather witness than Sanders facing
Marti Emerald.
While I doubt that Marti will drag the dead body of
Sanders behind her chariot around the walls of the city,
as the victorious Achilles did with the slain Hector at
Troy, I intend
to have my video camera in the Chamber on that historic day to
record it for the ages.
Have you ever had a sickening feeling that someone is
lying to you but you can't quite put your finger on how they are
doing it? That's how some members of the City Council must
be feeling regarding the Mayor's contentious $185 million
"lease-lease" bond issue - those who are not in on the
lie, that is.
At Tuesday's adoption hearing
Carl DeMaio expressed frustration at Chief Financial
Officer Mary Lewis and
Debt Management Director Lakshmi Kommi. He then changed his vote to a
"No" from the "Yes" he cast on March 9, 2010 at its
introduction.
It now has two votes against it. It will need 6 votes
on April 26/27 to approve its Preliminary
Official Statement (POS), the final step before
issuance.
I am hoping that either Sherri Lightner, Tony Young or
Marti Emerald will yet take the moral high road on this
deeply flawed refinance deal and say "No" to
the Mayor and his Wall Street cronies.
Here is the big lie that is being told to
the City Council by Mary Lewis and Lakshmi Kommi: they
keep saying that the City is obligated to take out
the Bank of America's $103 million 2009 loan by June
2010 (they prefer to use "refund" rather than
"refinance").
I am not sure that even Carl DeMaio gets the cunning of
what Lewis and Kommi are doing to him, but at least,
unlike most of his colleagues, he actually cares. He
keeps asking Lewis and Kommi for an economic justification for
refinancing a 5.2% interest rate to a 5.7%, as required by City
policy. In response, Lewis and Kommi draw a distinction between an "economic" refunding and a
"non-economic" refunding. A "non-economic" funding
would be a bit
like a "force" in baseball.
But has this (financial) batter, the City, really become
a (financially) forced runner? I did
a thorough examination of the paperwork to test the
Lewis/Kommi contention, that the City really has no choice but to
"take out" B of A's $103 million loan with another
lender. If so, Lewis and Kommi would be right, the
refinance would not be an "economic refunding", it would
be a "force play". If not, Lewis and Kommi are
lying.
Here is the Independent Budget Analyst's (IBA)
Report from when this bond was first introduced on April
1, 2008 (the irony of that date will not be lost on
anybody who watched the Item being heard at City Hall on
Tuesday and
this - more about that
incident later).
Note that on page 4 of the IBA Report, its author, Jeff Kawar, wrote:
"The 2008A Bonds (it started out as 2008A but
because of a delay it became 2009A) have been
structured with a two-tiered pricing that
establishes a fixed rate for the first two years
(estimated to be approximately 3.46%) and, if necessary,
resets the fixed rate for years 3 through
10 at 2.25% above a specified Bank of America cost of
funds rate. If the fixed rate for years 3 through 10
were to have been reset earlier this
month, it would have been approximately 4.45%".
In his Conclusion, on page 5, he wrote:
"The proposed 2008A Bonds are effectively a two-year
financing with a firm obligation to refund or
re-price the debt in June of 2010".
Here is an
Executive Summary given to City Council on April 1,
2008 by Lewis and Kommi themselves. They confirm the
above IBA Report.
On page one they wrote:
"Therefore, instead of fixing an interest rate for the
full 10 year borrowing term which would be higher than
for a borrowing term for 2 years, working with the
Purchaser, a two-tier pricing (described
below) was structured: a lower fixed interest rate
(based on a 2-year index plus fixed spread) for the
first two year period and if the City is unable to
refund the 2008A Bonds by 2010, a higher interest rate
(based on an 8-year index plus fixed spread) for years
3-10."
But Lewis and Kommi are now telling
the City Council that the City is obligated
to "take out" Bank of America in June 2010 with another
lender, while in 2008 they told the City Council
exactly the opposite, that all the City was obligated to do
was reset
the loan with Bank of America.
Were
they lying then or are they lying now?
Here you see them repeatedly
telling the City Council that the City has an obligation to "take out" Bank of
America with a new loan on the open bond market.
Unless they were lying in 2008 the truth is that the City negotiated a low "teaser" rate for the first
2 years of a 10-year loan with Bank of America,
which is still good.
In June 2010 the loan automatically resets to a slightly higher fixed
rate for the remaining 8 years, until 2019. That
rate is currently 5.2%. Not a bad deal, better than what they
can get on the open bond market right now. We are
NOT being forced to go to the open market for
another 8 years.
Yet Sanders wants to wipe out this bought-and-paid-for $103 million loan, fixed at 5.2% for 8 years.
He wants to refinance it
at 5.7%. Why? He wants to pay Wall Street $1.8 million in
fees for the privilege. If we cannot get one more City Councilmember to oppose this madness
on April 26 we deserve what we get from City Hall. Surely
one of the other six will join DeMaio and Frye
to defeat this obscene waste of public money.
So, why on earth is Sanders pushing this $185 million "bond-doggle"?
His CFO assured City Council that he doesn't need to do
it for budget reasons. Nor can he do it for policy
reasons as this "refunding" would not comply with the
City's strict policy requiring an
"economic saving". The proposed "take out"
refunding would increase the interest rate by a half percent, not
decrease it. That is a huge Good Government issue - it is
a disgraceful waste of public money.
Lewis has told City Council that this is not being done to
save the City a short term $3 million in annual debt service
(principle and interest). Besides, only the interest
portion of that $3 million "savings" would be charged to
the General Fund, the principle on these type loans is
charged to various capital funds. It seems Sanders wants
this "refunding" deal pretty badly and Lewis is willing
to lie for him to get it. Why?
First he tells us that he has no choice but to incur
$100 million extra long term interest on the $103
million B of A loan, for virtually no short term
gain. Then he tells us that, as part of this $185
million, he wants to refinance the Qualcomm loan, which
according to Lewis: "As of the date of this report, the
outstanding principal amount of the bonds is $54,670,000
and the final maturity is February 1, 2027." It has 17
years to run. As with the B of A loan, he is inventing
bogus reasons to pay it off.
Maybe he is just a sucker for slick Wall Street
salesmen, but my guess is that it is something else,
like an elaborate
smoke-screen to free the Chargers from their Qualcomm
bond debt. The B of A loan is merely cover.
Debt-free the Chargers would get a clean bill of
health from the NFL to go wherever they please.
Remember, they are governed by their NFL franchise -
they will go wherever the NFL want them.
What's in it for Sanders? A nice job with the NFL? They
would be very grateful to him if what they really want
is for the Chargers to go to LA.
Sanders likes those Red Cross, United Way, type of jobs,
where he doesn't have to go to work every day. With the
NFL he could have an apartment in New York, near Wall
Street, near where his wife comes from. Our Jerry is no
fool
The City Council has docketed its final approval of the $185
million "lease-lease" bond issue for this Tuesday as
Item 50 on the Consent Agenda. That's right the
"Consent" Agenda. I intend to go down and "pull" this
Item from the Consent Agenda so that Council Members may
reconsider.
"No real property belonging to the City shall be leased
except in pursuance of a resolution passed by a majority
vote of all members of the Council, which shall contain
the following:
(1) The reason for leasing such real
estate;
(2) A description of the real estate to be
leased;
(3) A statement of the market value of such real estate
as appraised by an independent fee appraiser or City
staff."
Here is the
Resolution the City Council is being asked to approve. It
does not fulfill basic legal requirements for leasing
City property.
The Municipal Code does not allow the
City Council to merely approve: “All actions heretofore taken
by any officers, employees or agents of the City with
respect to: (i) the issuance, delivery, or sale of the
Series 2010A Bonds; (ii) the Purchase Agreement or any
of the documents authorized in the Bond Ordinance, are
hereby approved, confirmed and ratified”.
The Municipal Code does not allow the
City Council to merely approve: “The form and content of the
Site Lease, pursuant to which the City leases the Leased
Property to the Authority” .
The San Diego Municipal Code requires the above specific
approvals by the City Council as a condition
precedent of a Master Site Lease.
“WHEREAS, all acts, conditions and things
required by law to exist, to have happened and to have
been performed precedent to and in connection with the
execution and entering into of this Site Lease do exist,
have happened and have been performed in regular and due
time, form and manner as required by law, and the
parties hereto are now duly authorized to
execute and enter into this Site Lease.”
Unfortunately all of the required
conditions precedent have not been fulfilled.
Therefore the Resolution and the Master Site Lease are inadequate and any bonds
issued pursuant to that Resolution would be null and void.
Last Tuesday, March 9, 2009, San Diego City staff from
the Debt Management Department and from our City
Attorney's office acted as salespeople for J. P. Morgan,
Bank of America Merrill Lynch and other Wall Street
moneylenders, arguing before City Council for a bogus
financial instrument called a municipal "lease-lease"
that would put the worst excesses of the real estate
borrowing bubble to shame.
Is this Wall Street's next raid on our pocket books? Now
that they have drowned the nation's homeowners in debt
are they turning to our municipalities? It sure looks
that way. Consider what they did to San Diego on
Tuesday.
Exactly one day after the City cashiered its $1.8
million SEC-imposed "Independent Consultant", popularly
known as the SEC Monitor, the Mayor's staff, armed with
suitably crafted advice from the City Attorney's office,
all but shouted down the City Council to get a phony
"lease revenue bond" of $185 million approved.
Watch
as Deputy City Attorney Tim Fitzpatrick shows his
impatience with Councilmember Donna Frye for daring to
express concern about the legality of this form of
municipal financing. Obviously it was all well planned
in advance with the City Council expected to act as a
mere rubber stamp, which unfortunately it did.
Council President Hueso ended Council discussion with
his characteristic smirk and sneer, this time at his
colleague Councilmember Frye. He turned to Fitzpatrick
after the vote and said: "That means that we all agree
with you Sir".
What will we do when Donna Frye is no longer there to
challenge this groupthink? Faulconer will probably
replace Hueso and so it will go on. Who will challenge
these "cost of issuance" corporate leeches with their
$357,000 bond counsel fees and $55,000 each to three
rating agencies for a total "cost of issuance" of $1.9
million? This, to refinance $105 million of our current
debt, bearing interest at 5.2%, up to 5.63%. Which one
of them would do such a private refinance? Certainly not
Lakshmi Kommi.
Lakshmi Kommi is the City's Debt Manager. We pay her and
senior Deputy City Attorney Jim Fitzpatrick big salaries
and Cadillac pensions so that they can strip us of our
power and deliver us bound and gagged to the
moneylenders of Wall Street.
Watch
Kommi and her Debt Management staff clearly admit that
the interest on the new $185 million will be 5.63% while
we have 8 years remaining on our present $105 million
loan contract with Bank of America at 5.2%.
Councilmember DeMaio asked the right question clarifying
the lower interest rate on the $105 million being
refinanced but still voted for the refinance at a higher
rate. Classic Groupthink. He was afraid to disagree with
the crowd for fear of getting mocked, as Council
President Hueso mocked Councilmember Frye for her vote
at the end.
I did a thorough analysis of the paperwork presented to
City Council by City staff. I discovered that the City
Attorney did not draft and did not present a City
Council Resolution, as required by law, authorizing all
leases of City land according to
San Diego Municipal Code §22.090.
Watch
Deputy City Attorney Tim Fitzpatrick explain how he
thinks he fulfilled his role as legal advisor to the
Debt Management Department. He lists the authorizations
in the only
Resolution presented to the City Council. It lacks
any mention of the specific properties that are the
subject of the
Master Site Lease as required by the San Diego
Municipal Code, together with three required findings by
the City Council as follows:
(1) The reason for leasing such real
estate;
(2) A description of the real estate to be leased;
(3) A statement of the market value of such real estate
as appraised by an independent fee appraiser or City
staff.
I suggested that because of his oversight City
Management may have to reintroduce the Item to City
Council. He shunted me off to Gina Coburn,
Communications Director for the Office of the City
Attorney. He probably thought he could fob me off with
the usual tripe they feed reporters. That is why I
became an independent blogger. I do not want to join the
media's own "groupthink".
So the City Councilmembers may get
another chance to properly evaluate what they were
clearly railroaded into approving on March 9, 2009.
Watch
bond counsel Bob Olson explain this "technique" by which
cities can borrow money from Wall Street based upon
bogus revenue created out of thin air by these cities
renting their police stations back to themselves.
But he assures us that everybody is doing it so it is
ok. It reminds me of when everybody was refinancing
their home with Wall Street twice a year at 110%
of its value and that was ok.
Watch him explain with a straight face how this bogus
bond makes "this type of financing not constitute
indebtedness within the meaning of the California
Constitution or the City Charter." And "because it is
not indebtedness" he assures us, "it does not require a
vote of the citizens for the City to enter into the
transaction."
Our City is paying Wall Street lawyers, in this case Bob
Olson, $357,000 to teach it how to tax its citizens
against their will. Remember a fee is something I agree
to pay, a tax is something I am forced to pay.
The question in my mind is: are the staff involved saps
or are they in on this? How could such senior people
stoop to sell us such forgeries? How could a senior
Deputy City Attorney like Tim Fitzpatrick not know about
the City Municipal Code governing the leasing of
property when that is exactly the area of law on which
he advises the City?
Did Wall Street want an open ended authority so it can
add and subtract lease properties at will? Was that why
Fitzpatrick "forgot" to seek specific approval, property
by property, for each lease?
This guy is the most senior financial attorney Jan
Goldsmith has got. Jan admits that finance is his weak
area so he has to rely on Deputy Fitzpatrick, who
represents the City Attorney on the Disclosure Practices
Working Group (DPWG), the most important City organ with
regard to public bond issuance.
All I know is that if we do not chase these Wall Street
bandits away from our city gates right now, they will
hollow out our city like they did the country of Greece
and are now pressuring the European Union to bail it out
of its Wall Street debt. That was the plan.
Wall Street already owns, for the next 50 years, just
about every source of public income Greece can produce.
They own the entire revenue at Athens airport and just
about every source of revenue in that city including its
parking meters. Are American cities next?
Now that they have utterly destroyed our once legitimate
mortgage-backed securities market, our primary source of
real estate finance for years, the Wall Street bandits
are zeroing in on what they have dubbed "sovereign debt"
i.e. any debt that is created directly by a government,
local or national, and backed directly by tax payers.
They destroyed real estate financing and brought about
the current recession by corrupting the management and
staff of large real estate brokerage firms, title
companies and appraisers. Are they now corrupting the
management and staff of our municipal agencies?
We know they own Washington. Tim Geithner is living
proof of that. How many state and local officials do
they own? To Wall Street, bribery is a legitimate
business expense. That's how they ensnared Greece. I
hope that last week's City Council vote was mere
stupidity on the part of our local officials, not
something else.
We will soon know - when this matter comes before City
Council for final approval. Will Hueso sneer at Donna
Frye again?
Back in 2006 I opposed
Proposition C, the
ballot measure that allowed the City to employ
outside contractors when the Mayor determined, subject
to City Council approval, that private parties could
provide City services more
efficiently and
economically than City staff. I believed at the time
that it was a cop out (pardon the pun) by Mayor Sanders,
who thought that
"Managed Competition" would do
his reform job for him as City Manager.
Background: the City Council had received a
Report
from the Mayor's office on July 12, 2006 resulting in
the Council passing a "Business Process
Reengineering"
(BPR)
Ordinance
as part of the implementation of
Prop F,
the ballot measure that created the "Strong
Mayor"
form of government in November 2004.
The Ordinance described BPR as
"designed to change practices and
procedures in City departments to streamline operations
in order to more efficiently and cost effectively
deliver services to the citizens of the City".
The City Council was very specific:
"in order to implement the BPR the
Mayor will be required to restructure and
reorganize City departments and offices, and to move
personnel between such departments and offices".
There is not one mention of Managed Competition in
either the BPR Report or the BPR Ordinance. That is
important because nothing in the BPR Ordinance required
consultation with unions, while Managed Competition
required "meet and confer" consultation with the unions.
So, the unions set about to create a link. If they could
do so they could use California labor laws to impose a
veto on BPR.
And so it turned out. The whole reform movement has been
stalled for over 3 years. As I predicted, the unions
used Prop C to strangle BPR at birth and Sanders was not
up to the job of countering them. Deep down he was still
one of them.
He did not have the foresight or management skills to
see it coming. BPR made him the Strong Mayor voters
intended, but he allowed the unions to take it right
back from him. He was a better politician than City
manager. Managed Competition was hailed by his
supporters as a hit on the unions. It brought in
huge
right wing political contributions
for his campaign. But that is all it did.
Here
is a video of how the unions and their political allies
have left Sanders looking like an incompetent bumbler.
They are now firmly in charge of "Reform".
Watch how the unions have linked BPR to Managed
Competition. As a result the Mayor's entire "Reform City
Hall" movement is dying on the vine.
More importantly the taxpayers are stuck with the bill.
Sanders allowed the City's employees to acquire a veto.
They have taken ownership of the reform process he was
elected to implement. They call any ideas for
efficiencies and economies their "trade secrets".
Instead of a Strong Mayor form of government we got a
Strong Union form of government. Sanders handed it to
them on a plate.
Why locate a "Central Library" in this part of town?
Because John Moores wants to enhance the attractiveness
of the East Village to which he has been given sole
development rights by the City of San Diego. Moores
agreed to Project Labor Agreements (PLAs) to get his
Ballpark built, now the labor unions are pushing to give
his development district a Library.
Even the union-controlled School Board
has offered to chip in $20 million of its precious
Prop-S bond money to help build this "Moores Folly". Its
over-compliant legal counsel wrote a convoluted,
contradictory legal opinion purporting to justify the
pre-payment of 40 years rent on two upper floors for an
un-wanted Charter School. This so-called pre-paid rent
is nothing more than a cash gift to Moores and is
totally inconsistent with any school needs. It is a
repeat of the infamous Ballpark deal, a diversion of
public money for private use - but with jobs for union
labor.
What makes it even worse is that the School Board is
behaving like it has the $20 million sitting in its bank
account. In its rush to serve a union-friendly
developer, it wants to borrow $20 million using "zero
coupon" bond financing, the most expensive form of
borrowing imaginable.
"Zero coupon" means that a bond issuer pays no interest
over a period of years with principle and accrued
interest-on-interest payable at the end. Most Prop-S
bond borrowing will be done using this method. The
School District has no other choice because the prior
Prop MM bonds will not be paid off until 2029 and there
are legal limits on annual bond servicing payments in
the form of a maximum percentage of assessed valuation
(AV). In the case of Prop MM it is $66.67 per $100,000
AV and $60.00 per $100,000 AV for Prop-S.
Thus, Prop MM bond servicing crowds out Prop-S bond
servicing until 2029. Even then, because of the annual
servicing cap, it is heavily deferred until 2044. The
final payment in
that
year is almost a half billion dollars, mainly
interest-on-interest. It may be much worse because
this payment schedule is predicated on assessed
valuations
going up by 5% year-on-year, the reverse of what we
know is happening. The truth is that Prop-S bonds are
little better than junk bonds, a very poor way to
finance school repair, let alone a "Moores Folly"
Library.
Borrowing $20 million in these circumstances is like an
indulgent parent, who is broke, putting $20,000 on a
credit card at 20% in order to buy a wastrel son a
sports car he will surely wreck his first night out on
the town. If the School Board approves this folly today,
it will rank as one of the worst examples of corrupt
government in San Diego's sorry history.
At
10:45 P.M. this evening the City Council reconvened to
impose the Mayor's "last, best and final offer" on the
Police Officers'
Association (POA) and on the city's blue collar
workers' union, AFCSME
Local 127.
The Council deferred voting on the tentative agreements
reached with MEA,
DCAA and
Firefighters' Local 145 until Monday April 21, 2009
to allow full details to be worked out.
This means that the whole business of wage agreements
went surprisingly smoothly this year. We await
publication of the full details.