Election 2018: Process Of Elimination.

election 2018I thought I would keep my Election 2018 choices to myself… but have found that to be impossible. Every voters choice this year is more critical than ever.

There are two candidates, one for Council and one for BOUSD School Board who have struck me as complete non-starters. In both cases it boils down to money though for distinctly different reasons. Let me share…

Bill Hall – Election 2018 Council Candidate

Bill Hall voted to slam Brea residents with $108 million in property tax increases in 2012 (bond value was $54 million) for Measure E. Bill Hall voted to spend $127,340 with Lew Edwards Group for bond consulting for Measure K in 2016. Bill Hall voted to crush Brea residents with $296 million in property tax increases. Couldn’t explain why BOUSD would only net half, $148 million from Measure K.

election 2018Even though he’s a part time volunteer, Bill Hall has received over $200,000 in compensation during his 12 years on the School Board yet consistently rejects transparency of School Board meetings for public’s home viewing at a minimal cost of $800 per meeting.

Bill Hall has repeatedly, for 12 years, demonstrated a willingness to burden Brea property owners with massive taxes. This is fiscally an extremely critical time in Brea. We don’t need a Council member willing to have a fire sale with valuable legacy properties or to tax residents to the brink of poverty.

Bill Hall only seems to respect the value of the dollar… when it’s destined for his wallet.

Bill Hall gave away millions to Hines.

Backed into a condition of critical underfunding following the failure of two bond measures to attract public support, the Board was bullied into selling off it’s greatest legacy asset, the former Brea Olinda High School site, in exchange for a quick infusion of cash.

The district ignored the probability of a higher return from a public bid process in exchange for the quick cash provided from a negotiated sale. They were sued for abandoning a public auction.

Fooled by the inaccuracy of an appraisal from an inexperienced Anaheim residential real estate broker, the district accepted a bid from Hines LLC of $25 million plus an additional non-refundable deposit of $1 million.

Hines subsequently had the property re-entitled for residential development and increased the property’s appraised value by $82 million. (Editor’s Note: My entitlement error has been corrected in the Comments by Mr. Manley. Please read his explanation.) Millions of dollars were left on the table by an over eager uninformed board bullied into submission by Bill Hall.

election 2018This fiscal rubbish has gone on far too long to be the product of incompetence.

It is unprecedented that several members of the BOUSD Board of Directors are actively opposing Bill Hall for City Council.

Keri Kropke: Election 2018 BOUSD School Board Candidate.

Candidates for public office who form a campaign committee and expect to spend over $2000 on their campaign must file a Form 460 Recipient Committee Campaign Statement.

Keri Kropke reported on her 09/27 filing that she has amassed a war chest of $38,400 in contributions!

Here is a copy you can look over for yourself.

The other candidates report: Joseph Covey – $4,545 contributed/$2,249 spent, Jo Aceves – $7,374 contributed/$3,592 spent and Steve Sewell has zero contributions, will not spend over $2000 and as a result, doesn’t have to file with the Registrar of Voters.

The unions are out in full force.

election 2018I hope you did look at Keri’s statement. $34,500 of her contributions include $5,000 from Democratic LA County Board of Supervisors, Mark Ridley-Thomas.

$29,500 came from various trade unions – IBEW, Unite Here (the folks who have carried out the downtown protests at Royce’s office), SC Pipe Trades, State Building & Construction Trades Council of California PAC, FTP Power LLC – Salt Lake City (largest private owner of operating solar assets in the United States) and other firms profiting from doing business with school districts.

This raised a red flag the size of Texas, so I called Keri to understand why so much union money for the two year remainder of a board seat. She was quick with answers and because I wasn’t sure I would characterize them here clearly and fairly enough, I invited her to prepare her own statement.

Keri states, “My platform addresses many goals that will improve educational and emotional outcomes for every student. After walking to 1,603 doors parents have made clear to me that they want vocational trade options so students have access to high paying middle class jobs.

I have worked hard to develop relationships with labor organizations and others that want to partner in this vision. Every donor supports me for my talent, leadership, and tenacity and I am proud to have earned their support. People that are invested in helping our students is a good thing.”

I also promised Keri that I would not belittle or dissect her statement. I’ll leave it to you readers to come to your own conclusions and move on to other areas of question or concern.

Nordstrom VISA to pay campaign expenses?

Schedule F – Pages 13-15 of the 460 report expenses paid via Keri’s Nordstrom VISA in the amount of $4,962 and Keri suggested her total expenses would easily top $15,000.

election 2018I don’t have credit cards, haven’t for almost 20 years. But I see the ads and know there are points or benefits for using these cards.

Why use the Nordstrom’s VISA instead of the debit card the campaign committee’s bank surely provided her? How will the $300 to $400+ in benefits find their way back into the campaign funds?

My concerns don’t stop there.

If Keri’s contributions top out at $40,000 through the balance of the campaign and she’s able to keep expenses capped at $15,000 – that will leave $25,000 sitting in the campaign account… for what?

I’ll do a Shirley MacLaine here and go out on a broken limb.

Christine Marick and Marty Simonoff have neither divulged any plans for 2020 but I’ll wager the balance in Keri’s account is probably pointed in that direction.

In a similar vein, I’ll risk my record for political divination. The other Carrie on the BOUSD Board is actively campaigning for Bill Hall – what’s the chance he’s promised to bring her onboard in 2020 if she helps him win in 2018?

Okay, conspiracy theory. But you’ll have to admit that logic is so much in my favor that I’m more likely to be right than wrong.

I’ll put it in plain English.

Candidates should be running to serve, not fill a seat. Any ass can fill a seat and I’ll dodge the urge to drop names.

Also, seeking public office isn’t the twelfth step in a program to overcome psychological deficits.

I said I wouldn’t… I changed my mind.

I said I’d keep my selections to myself, but 2018 elections are just too important to be diffident. Here are my choices… use your own powers of deduction and come up with your own list…

 

election 2018

Gateway Center: Kiss Your Assets Goodbye.

In October 1991 the Gateway Center at Brea Blvd. and Imperial was launched as one of Brea’s first RDA projects. On March 7, 2017 the City Council, acting as the Successor Agency, terminated 100% of the city’s interests in the center in exchange for a check in the amount of $7.8 million dollars.

But wait… there’s more. Brea had to pass this revenue on to the Orange County Auditor-Controller to pay off all taxing entities (other agencies having a right to a portion of the proceeds). The City netted only $1.2 million. I’ll explain later where it went.

Not such a good deal.

In simple terms, staff provided Council with their recommendations, backed by just a 5 page Memorandum by Keyser-Marston, extolling what a great deal this was.

Since 2012 we’ve received an average of $354K annually from rental income (subject to the same pay off to all taxing entities). This one time payout would generate around 3.5 years income.

Instead, why didn’t we opt to continue collecting annual rent? Our participation agreement ran another 30 years… until 2048. Rents would have more than doubled by then but Keyser-Marston left that out.

What staff and Keyser-Marston also failed to disclose to Council was that we had a 25% equity stake in the Gateway Center. It would be triggered by either a refinancing or a sale (full or partial) of the property.

In 2005 Watt-Craig Associates Limited Partnership, per the timeline provided by staff, “sold majority stake in ownership to AFL-CIO Building Investment Trust (AFL-CIO) but continues to retain a small portion of the partnership interest.”

Staff’s claim, when pressed on the matter, is that only a 100% sale would trigger a payout to the city. Watt-Craig retained a 1% stake in Gateway. Who was the rocket scientist that thought this was okay and that we should walk away from around $16.2 million?

Conservatively, the Gateway Center is worth about $80 million… you do the math. Termination of the city’s interest robbed us of $20 million if the property sold today.

Who knows how much our equity would be worth if we simply let it ride?

You can fool some of the people…

Did no one on Council see these red flags? No, because they assumed staff had provided the full scoop. The deception of Council was anchored in their belief that the property owner, Watt-Craig Associates LP, had opened the discussion of a termination agreement.

Not so, even though the staff report, the Keyser-Marston memorandum, the fancy always to be trusted PowerPoint presentation and the Successor Agency Resolution SA 2017-02 all stated otherwise, “The Owner is proposing the buyout of the Successor Agency’s interest…”

It was disclosed, early last week, that this process was initiated by our Director of Development, David Crabtree, presumably at the suggestion of City Manager Bill Gallardo. It was also disclosed that protracted negotiations followed which lead to staff’s recommendations.

From where I sit, this smacks of premeditation and reinforces the notion that this was all fabricated to generate the revenue needed to balance an otherwise upside-down budget (see below).

I’ve made a series of thorough CPRA requests for all communications and documents relating to the termination of our participation in the Gateway Center project. The City’s initial response last week overlooked numerous responsive documents and the City Clerk, Lillian Harris-Neal, has promised to provide them as quickly as she can.

gatewayFollow the money.

You can’t. As is the custom, the revenue was dumped into the General fund where it vanished into thin air. Well, sort of.

It had been determined that the FY2016-17 budget, thanks to declining sales tax revenue, was coming up short somewhere between $800K and $1M – an alarming dilemma for a city that had “always” balanced it’s budget.

Subsequently, unanticipated revenue miraculously offset the shortfall and… voila, the budget was balanced after all. I can’t help but wonder how many preceding “balanced” budgets benefitted from similar fiscal skullduggery.

A couple more scary thoughts.

Not one of Brea’s commissions or committees has a resident member with expertise in commercial real estate or the taxing authorities.

Staff has been careful to keep City Treasurer Rios, Planning Commissioners McGrade and Ullrich (both with deep experience in commercial real estate and the taxing authorities) as much in the dark as they have Council.

We own Embassy Suites and lease land. Staff is contemplating to sell off another “legacy “ asset!

Where does this leave us today?

In deep shite. We have a new budget about to be proposed in the face of continued revenue decline.

Cuts have been made, without clear validation as to how and where considering that the city’s “soft cost” approach to accounting fails to consider labor as a cost.

Many fees have been increased thanks to the city’s ability to calculate labor and overhead down to an hourly rate.

Hang on… am I the only one who sees the contradiction? The city needs to convert to a true cost accounting system and to stop trying to solve the reduced income situation by handing is off to taxpayers to pony up even more.

Time to put on the brakes!

A FY2018-19 operating budget would go into effect in about 47 days. I’ve seen no report from that new fancy special strategic budget oversight committee.

The City Treasurer, Rick Rios, who has leveraged California statutes governing the authority and scope of responsibilities of an elected City Treasurer to reconstitute the office’s role as fiscal watchdog, has yet to see a single page of a proposed budget.

It’s time to put a halt to City Staff’s Ready-Fire-Aim approach to managing city business.

I suggest that Council approves a 30 day emergency stay by employing the proposed operating budget for the month of June only.

This breathing room will allow for Council to give staff more finite instruction, for the Budget Oversight Committee to actually do some oversight and give the City Treasurer the time and opportunity to do the job we elected him to do.

rock the boat

Malfeasance: Brea’s Status Quo?

In the weeks ahead, breaking news regarding several cases of fiscal misconduct will be finding their way into public discussion. The egregious nature of several will likely lead to widespread use of the term malfeasance.

Let’s take caution in our choice of words to be certain we characterize people and their actions clearly and fairly. An exact definition of malfeasance (in office) is difficult: there is no single legal consensus definition.

Malfeasance is generally defined as “a wrongful act which the actor has no legal right to do.” Many courts find malfeasance (in office) where there is “ignorance, inattention, or malice”, which implies no intent or knowledge is required.

Much of what we’ll hear, however, will probably trigger accusations of malfeasance.

Truth: the final frontier.

I’ve invested literally hundreds of hours pouring over a vast array of communications, agendas, minutes, resolutions, staff and consultant’s reports, spreadsheets and financial records from both the city and from Orange County.

I’m not alone. Several others, equally curious about Brea’s past fiscal practices and current fiscal policies, have invested similar time and energy… and come to similar conclusions.

What has been common practice in the past has cost Brea the loss of significant assets and revenue sources and has placed an undue burden upon tax payers to meet unconscionably large financial obligations well into the future.

There is clear evidence, going back several decades, of both ignorance and inattention to detail contributing to the failure of Council members to exercise the full due diligence their office and those who’ve elected them demand.

Malfeasance… I believe so. Malice… not so much. Let me explain.

I’ll point the finger…

Repeatedly it has been found that Council member’s information packets come up well short of including a full set of facts. Consistently, the missing information helps lead Council to forgone conclusions staff has predetermined are preferable.

Again and again it appears that staff has usurped the visionary role and authority of Council. While the evidence of malfeasance is frighteningly clear, at least to me and those digging into these matters, a couple of critical questions remain unanswered.

Obviously staff has the means and opportunity to play fast and loose with Brea’s financial future. What’s missing is motive. Why would our city staff, highly educated… the best and the brightest, do what they’ve done and to what end?

What’s next?

We may never find any answer to why and what for but we can cast a bright light upon this nightmare in the hopes that today’s Council will find the courage to challenge history and change the future.

malfeasance