RDA 2.0 – A Really Bad Idea!

On Friday morning, August 2nd, the Development Committee met with only one real item on their agenda. “Enhanced Infrastructure Financing Districts (EFIDs) with presentation by Staff and Larry Kosmont, Kosmont Companies. The presentation from Kosmont, centered around “How do you capture vitality and quality of life in a digital economy?” However a good dose of “state mandates fear” formed the foundation upon which the presentation was built.

Let’s get to the heart of the matter.

There appears to be a growing interest in rejuvenating an old idea, redevelopment. This new… call it RDA 2.0… is a rebirth of tax increment financing for local/regional projects.

Managed by Brea’s Public Financing Authority, new redevelopment districts would be created, property taxes frozen and new “redevelopment” bonds issued to finance some sort of infrastructure projects.

No public vote is required to create these new “enhanced infrastructure financing” districts!

The mantra “no new taxes” is repeated over and over as if that will lull us into a false sense of trust and comfort.

Look, when the property values are reassessed and the taxes unfrozen, the properties will be paying at a much higher rate and the difference will be used to retire the bond debt.

What about this suggests no new taxes?

So, where are these new EIFDs?

The report listed: Central Park Village, Brea Place (Hines), Aera Energy Brea 265, 2830 East Orbiter (adjacent property owned by firm of Planning Commissioner James McGrade), Embassy Retail Court, Brea Mall, Brea Plaza, Former Improv, Gaslight Square, Regal Theatres, Mercury Lane Residential, Downtown hotel, Brea Community Center, Brea Library, and Suzuki Motor of America.

To me, 90% of these properties are either doing quite well as is or they’re in various stages of development… not even yet completed. And the United States Bankruptcy Court confirmed American Suzuki’s plan of liquidation (Chapter 11) on February 28, 2013.

The first city/county EIFD tax increment partnership is the Placentia Old Town district. Over 300 acres with taxes frozen at $365 million and anticipated to be unfrozen at $460 million. For what?

Kosmont lists the following: $22M net fiscal impact to City; $15M to County; 1,600+ housing units; 3,900+ construction jobs; $800M+ construction period economic output; 1,150+ permanent jobs; $164M+ in annual ongoing economic output.

Prove it.

Here is what Kosmont proposes to do in Brea: Kosmont to evaluate: Project and land use review; EIFD boundary alternatives; infrastructure improvements required; Tax increment funding capacity / complementary sources; Orange County cooperation; Implementation strategy and roadmap.

Kosmont proposed timing: Feasibility evaluation – 2 to 3 months; District formation activities – 6 to 12 months.

Stop the madness!

Not a whisper about seeking public review or approval.

In December 2011, the California Supreme Court upheld the complete elimination of redevelopment agencies and TIF along with it. The legal wrangling that followed is complicated and not worth going into detail here.

Suffice it to say Redevelopment was terminated for good reasons. Why, just 8 years later, has it suddenly become a good idea again?

Nothing in life is free.

They try and seduce us with parks and community projects. But where’s the money come from? From schools and our pockets!

From the mid-seventies through 2011 Brea built a boatload of RDA projects. Some were on private land and made reasonable use of the tax increment. Many, like the Civic Center, Community Center, Senior Center, Sports Park and Rails-to-Trails were on public land for which no tax increment existed!

District borders were repeatedly expanded, bonds were repeatedly refinanced and cash was created at every opportunity. Hell, they even tricked us into passing the Paramedic’s Tax, almost half of which never paid for a single thing related to emergency medical services.

No one in city hall can give you an accurate price for one single project. The web of financing hijinks was so complicated they’ve lost all comprehension of what they pulled off for over 40 years. Millions upon millions.

You know what really hurts? We still owe $193,871,104 million dollars which we’ll be paying off all the way through June 2036.

Revenue is down, expenses are ever on the increase, we’re hovering on the edge of unbalanced budgets for several years to come.

Now is not the time to start some fiscal boondoggle, proven to be a failure years ago. Especially if it does little more than provide job security to a handful of city planners having a tough time justifying their jobs anymore.

Tax increment financing (TIF) is no way to defray the cost of urban revitalization… assuming that’s what we want to do in the first place.

Matters From Don Parker.

Last Tuesday, at Matters From The Audience, Brea Deputy City Treasurer Don Parker dropped a bombshell on Council and staff. There seems to have been yet another case of “less than best practices” on the part of staff and there could be a cost to approaching a million bucks.

Emerging from a nine year series of amendments (six actually) to a professional services agreement with Ninyo & Moore for their work on the Rails-To-Trails project that increased their cost from $24,500 to $1,034,777.30 – 42.3X the original estimate.

Don’s Report To Council.

I said I would review the contracting done when the City auditors questioned costs and I am here to comment on that. As background, the contracting for soil testing and services on the Tracks project was questioned because the file(s) “could not be located” but I looked at the contracting.

In 2010, an agreement was approved with Converse Consultants for a soil remediation plan. The report indicated their bid was $46,100 and the high bid of Ninyo & Moore was $55,200. A consent item approved their contract for $55,200. No I have not misspoken, the low bidder was given the high bid price with no explanation as to why. In my 40 plus years of municipal auditing and accounting I have never seen this done and no one questioned it. What was done with this difference is unknown.

(Burying items like this on the Consent Calendar has become de rigueur for city business whenever they prefer to keep the public in the dark. More on this later.)

In 2012, Ninyo & Moore, prior high bid, proposed $19,500 for a soil remediation plan and a contract was prepared for $24,500. Again I have not misspoken as this was $5,000 more than their proposal with no explanation. Since this was under $25,000 “policy limit” our prior City Manager approved it. Where that $5,000 went is unknown.

(Hot button number two – City Manager purchasing authority. Are you serious? It was purported to be $25,000 back then (2012 and prior) but no one could establish when or even if this was approved by Council!

Today the rumor has doubled to $50,000, with no indication as to how many times a year the City Manager can exercise this authority. I’ve filed a CPRA request to document details of this. We’ll see what the City Clerk can dig up.)

In 2013 through 2015, the first through third amendments were done and approved on consent for $200,000, $70,000 and $40,000, respectively. Supposedly because original estimates of soil depth, etc. were in error.

(Note: As a part of soil remediation work, a separate contractor is required to provide oversight to ensure that the cleanup meets the standards of both the City and the local regulatory agency, which is the Orange County Health Care Agency.

So, this exponentially escalating cost is only part of the expense. This is for analysis and oversight. Another contractor had to dig up the arsenic laced soil and properly dispose of it. When I mentioned this to a friend they chuckled, “Maybe ‘the roads are paved with gold’ didn’t come from Dick Whittington and his Cat after all.”)

In 2016, the fourth amendment was approved on consent for $60,700 again for additional soil testing services. However, now in the staff report it was stated that Council approved the original agreement with Ninyo & Moore in 2012. As I have indicated, and as confirmed by your City Clerk, the original agreement in 2012 was never approved by Council. This misinformation started after our current City Manager took his position and I believe this was added to justify using this vendor

In 2017, the fifth and sixth amendments were approved by consent for $218,144.30 and $421,433, respectively for segments 2, 3 and 4 of the project. Each of these segments should have been bid separately. Instead, they were just given to the existing firm. Repeatedly in these staff reports it was stated that Council approved the 2012 original agreement which was a lie.

(Not unlike the lie that the Paramedic Tax was for the sole purpose of developing and maintaining a mobile intensive care paramedic service. Now we know it was just another honey pot. Anyone but me starting to see a pattern here?)

In summary, we have contracts awarded for amounts in excess of the proposals received with no explanations of why or where those monies went. A contract which started at $24,500, approved by our prior City Manager, which was increased to $1,034,777.30 with no additional bids to protect the public’s money. Staff reports repeatedly misled readers into thinking the original agreement was Council approved but it never was. Community Development staff, management and our prior and current City Managers cut corners, prepared false staff reports and possibly enriched themselves or others to the detriment of our City.

Our auditors did not comment on these situations so we are lucky they did not follow through. However, it is possible we still could have to repay these monies. In any event these situations occurred and they do time and time again. When is Council going to say enough is enough and start holding City management accountable and protecting our monies? I guess just approving false staff reports is easier.

D.P.

So, where do we go with this? How about starting to hold Council accountable to do what we elected them to do. I think the popular term today is ‘community driven governance’ – something I’ve been advocating for many years.

So, What Have We Learned?

We’ve learned that our Records Retention Schedule allows critical records and important public documents to be routinely dumped every 90 days. Stuck in the sixties, the City Clerk has no control over electronic communications… the IT department has their servers set on auto-purge.

We’ve learned that a deceptive plan to do an end run around Prop 13 gave us the Paramedic Tax. Millions of dollars, almost half of what has been collected since 1978, has been diverted to pay for development debt and other obligations not even remotely related to the paramedic services Brea voters believed they were creating.

We’ve learned that, for decades, the Consent Calendar has been used as a bureaucratic black hole to hide everything Council and staff wanted to keep from public view. Thankfully, in recent years, several Breans have become quite talented at spotting the big fat checks disguised as routine expenses.

We’ve learned that the City Manager has a huge treasure chest he can dip into at will without Council’s knowledge, oversight or approval… and we’re about to find out if it’s even legal.

We discovered that our appointed Cal Domestic Board Members unanimously approved combined stipends from Cal Domestic and their for profit subsidiary Cadway totaling a potential $24,000 a year income. That’s 3 or 4 times Council’s base stipend.

Council has been requested to require these public servants to file the annual CA Form 700 Statement of Economic Interests and Council is balking. Unless they call a special meeting, which they won’t, they’ll miss the deadline and face a formal complaint being filed with the FPPC.

 

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