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

I’m Still Mad As Hell.

mad as hellLast week I shared a couple of issues I was having with how the City Attorney conducted themselves. Within moments of hitting the publish button two amazingly coincidental revelations were communicated to me.

Remarkably, after languishing on the bottom of the City Attorney’s in basket for over nine months, the Records Retention Schedule update miraculously was returned to the City Manager… done. Reviewed.

Now it can move on to Council for approval. Good news.

The other news, regarding amending the Brea Municipal Code, was unfortunately bad. Apparently, just two weeks ago, the Council reversed it’s majority support to revise the code to eliminate both unilateral dismissal by the appointing Council member and the inherent threat of violating the Constitutional rights of due process when dismissing Commissioner and Committee members.

Everything was on track since late January. The City Manager reconfirmed he was keeping pressure on the City Attorney… four times over five months. The goal: to remove portions of the BMC that violate the Constitutional right to due process of Commissioners and Committee members.

These coincidences are anything but.

This abrupt about face, I believe, is the result of heavy lobbying by the City Attorney not to “let that damned blogger tell us what to do.” After all, lawyers by their very nature are adversarial. They’re groomed to instantly take issue with every challenge. Their win-at-all-costs mentality causes them to spend far more time formulating their rebuttals than listening to the opposition.

I can just picture it. As soon as “Poking Holes In Markman & Flower” was published the behind-the-scenes battle to discredit and dismiss “that geezer on social media” went into overdrive.

The underlying theme to the City Attorney’s objection was expressed thus, “The odds this problem might ever occur again or that we would face due process litigation even in the distant future is so limited it’s a waste of time and energy to address Mr. Clark’s concerns.”

Really? Please explain to me when it is okay not to do the right thing because it’s too difficult or because the odds of getting caught are so slim.

When is due process not due process?

mad as hellNever. I believe the Constitutional protection of due process cannot be arbitrarily applied. The City Attorney also contends that due process only applies to city employees. If the founding fathers included a fair number of HR professionals, maybe that theory would hold water.

Well Mr. Markman, it doesn’t.

While there are due process issues associated with property rights, in this case retirement benefits, the violations I’m talking about have nothing to do with property.

I pointed out clearly to Council the procedural and substantive violations triggered by the BMC, specifically as it relates to prior notice, means of appeal and definition of duties. The BMC, in defining how a Commission or Committee member may be dismissed, does not include any provision for proper notice, a pathway for appeal nor does it define a single duty. No job description.

Here’s my challenge.

cityMy closing question to Mayor Hupp and MPT Parker, when we met on January 9, went something like this…

city“Are you telling me that, when I raised my hand and took the oath of office to support the Constitutions of the United States of America and the State of California (no mention of the Brea Municipal Code by the way) that in the same breath I gave up all rights they provide?”

I’m still waiting for an answer. I’d interpreted their willingness to task the City Attorney with drafting amendments confirmation of their rejection of the idea… that civically minded folks would even consider giving up their Constitutional rights.

I know more than a few Commissioners and Committee members who might not have been so quick to raise their hands… to volunteer their time and energy in community service. I suspect many other Breans, considering applying for an appointment, will reconsider.

We should care about process and the rule of law.

This is a request to Council to reject the adversarial nonsense coming from the City Attorney and to put the amendments recommended on the General Session agenda in the very near future. You knew it was the right thing to do before…

I’m Mad As Hell, And I’m Not Going To Take This Anymore.

Mad is an understatement. Having pressed for answers, reasonable explanations and an understanding of how local government works I’ve come to a conclusion. It doesn’t. At least not in a way that most voters have hoped it would.

Let me share again former City Manager Tim O’Donnell’s favorite definition of leadership, “Leadership is disappointing your constituents in increments they can absorb.” That made me mad as hell the moment I heard it. Hearing that launched Brea Matters and kept me going every time a door was slammed in my face as I sought the truth.

How many times have you been disappointed by something Council has decided, that a Commission or Committee has recommended or that staff has suggested? How many times have you let it slide only to find yourself disappointed about something else just days or weeks later?

See, it works. They know it works. They know they’re able to bend a rule, break a law or violate an ethical standard with little or no concern that they might be held accountable. That makes me mad. It should make you mad as well.

Maintaining public records.

Recently, Planning Staff admitted to deleting documents, a consultant’s proposal that pointed out an error in Staff’s thinking. It wasn’t what they wanted to hear or felt the Planning Commission had a right to hear. The City Attorney said they were within their authority and the matter was swept under the rug.

When this loophole in the city’s Records Retention Schedule was pointed out by Brea Matters, members of Council demanded that the loophole be closed. Then another discovery was made.

The Records Retention Schedule, unchanged since the last millennium, was updated by the City Clerk last year and submitted to the City Attorney for review. It had sat there collecting dust until Council’s demand brought it to the top of the pile.

Still, nothing has been done. “Leadership is disappointing your constituents in increments they can absorb.” Dammit, I’m mad as hell.

Amending municipal code.

On September 28, Councilmember Vargas invoked an obscure, never before used, piece of the Brea Municipal Code and, without warning or prior notice, “fired” me from the Planning Commission (see details here). He citied causes not included in the municipal code.

Several months of haggling with the City Manager and City Attorney finally got me a face-to-face with the Mayor and Mayor Pro Tem on January 9 where I laid out my “case” that Brea Municipal Code inadvertently violated my Constitutional due process rights.

I had no interest in litigation. None. Still don’t. All I hoped for was to help initiate a change in the BMC that would protect the Constitutional rights of my friends and neighbors who might one day consider volunteering for a Commission or Committee… that would protect them from the sort of incompetent conduct I was subjected to.

A month later I was informed by the City Manager that the City Attorney had been instructed to draft amendments to the BMC, eliminating the due process issues, and that the amendments would be given to Council to approve within the month. That was February, this is June.

On three subsequent occasions I was told that the amendments would be on the agenda in the next meeting or two. I fully expected to see the item on this week’s agenda. Nope. Nothing. “Leadership is disappointing your constituents in increments they can absorb.” Again, I’m mad as hell.

City Hall priorities.

On April 7 I published a blog headlined “Corruption’s Partner Is Our Own Indifference.” The admonition expressed was clearly made towards Brea Matters readers with the reminder that our continued indifference to what goes on in city hall is the catalyst from which corruption is born. The word corruption never again appears in the piece.

The City Attorney, I’ve been told, read that word and went ballistic.

Over the next six days, the City Attorney and staff conducted legal research, wrote an eight page memo to the City Manager, City Council and others (more like a manifesto obviously pointed directly at Brea Matters) and engaged the city’s Marketing Department to see that it was circulated on social media to the broadest extent possible.

Six days. Not six months… six days! They’ve been sitting on the Records Retention Schedule for almost nine months, on the BMC amendments for five months but they can somehow fire off a memo attacking Brea Matters in six days?

Who’s setting priorities down at city hall? “Leadership is disappointing your constituents in increments they can absorb.” I think I have every right to be mad as hell.

A call to action.

Council reads Brea Matters. Faithfully if not supportively. So I’ll take this opportunity to make a couple of suggestions.

Please, with all the authority you can muster, instruct the City Manager … once again, to tell the City Attorney to get off his ass (sorry Gramma). Obviously unable to determine which assignments should take precedence over others, it’s time to step in and retake control.

Please, take a look at how long it’s been since Council and the City Manager made any attempt to confirm that Richards, Watson, Gershon (RWG), and more specifically James Markman, are Brea’s best choice as City Attorney. Maybe it’s time we sent out an RFP for City Attorney to see if there might not be better choices for Brea.

Still mad as hell.

One more time, let me remind everyone. Leadership IS NOT disappointing your constituents in increments they can absorb. Here are a few thoughts that do a better job of defining leadership.

“If your actions inspire others to dream more, learn more, do more and become more, you are a leader.” — John Quincy Adams

“Leadership: The capacity and will to rally people to a common purpose together with the character that inspires confidence and trust.” — Bernard Montgomery

“Leadership defines what the future should look like, aligns people with that vision, and inspires them to make it happen, despite the obstacles.” — John Kotter

“Leadership is about service to others and a commitment to developing more servants as leaders. It involves co-creation of a commitment to a mission.” — Robert Greenleaf

What sort of leader do we want?

I believe we want leaders who create an inspiring vision of the future, who motivate and inspire us to engage with that vision and who have the skills to deliver that vision.

Write that down in big bold easy-to-read letters. Stick it on your fridge where you will see it every day. When election day rolls around again… remember it.