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.

 

Tiered Water Rates – Part 1.

For almost two weeks before Brea Council’s August 20 meeting, I had been trying to find out if the San Juan Capistrano suit regarding tiered water rates and their non-compliance with Proposition 218 would impact Brea. I even emailed City Attorney Markman, who cut his teeth on water issues and enjoys quite a reputation in that area, for his opinion… and got no response.

Instead, at the end of last Tuesday’s meeting (when most people had been bored to tears and turned channel 3 off), Markman casually tossed out this “opinion” in an effort to wave off any possible inquiry from residents.

Capistrano Taxpayers challenge the city’s tiered water rates.

Markman, did acknowledge a “significant lawsuit” potentially effecting Brea and many California cities who have implemented tiered water rates. On Friday July 29, 2013 the Capistrano Taxpayers Association (CTA) and the City of San Juan Capistrano faced-off in Superior Court to decide whether the City of San Juan Capistrano was out of compliance with the restrictions imposed by Proposition 218 (passed in 1996).

As with most laws, Proposition 218 is mired down in legalese and, especially for the layman, is difficult to whittle down to the basic facts. Suffice it to say, Prop 218 was an effort to curtail bureaucrats looking for ways to raise revenues while avoiding Proposition 13’s restrictions. Shut off one faucet and the bureaucrats find another one to open… in this case tiered water rates.

Using conservation as an excuse to impose another tax.

jmarkman_bMarkman suggests that it was Brea’s intention to increase the per unit cost of water in an attempt to discourage users from squandering water. Prop 218 prohibits this, requiring rates to be tied directly to the cost of delivery.

His hinting at the silly notion of having to create 15,000 individual rates and the possible loss of Lifeline and Senior Citizen subsidies is worse than a smokescreen. It struck me as wholly unfounded gibberish designed to scare Brean’s away from sticking around to hear the truth when it finally emerges.

In 2006, Brea’s initial two tiered rate structure was concocted by a consultant; in 2009 Brea adopted a three tiered rate structure, again dreamed up by a consultant.

I’m still trying to determine if we’re talking about one or two consultant firms here. I have a somewhat complex CPRA request submitted, hoping to pull a few facts out from under the rug at city hall. Do stay tuned.

A few serious questions from the policy wonk in me.

In 2006, 10 years after Prop 218 became law, how many of those involved in implementing Brea’s non-complying water rates understood they were breaking the law?

Did the City Attorney, who’s professional resume is likely unequaled in the state when it comes to water issues, forget to mention to Council that their vote for tiered water rates may come back to haunt them one day?

Did the consulting firms accidentally or conveniently exclude any mention of Prop 218 in their recommendations to staff and Council? If so, would this lift the “intellectual property” protection on their calculations and other work property making them available through the California Public Records Act?

Did staff have knowledge of Prop 218 and it’s limitations? Were their reports remiss in giving Council a full and complete set of facts upon which to make their decision?

Wouldn’t be the first time. Remember when Council accidentally gave themselves raises only having to rescind them later due to public pressure? Remember, just a couple of weeks ago, when Council had to retroactively approve a $3.4 million purchase of water rights made by staff without proper authorization?

Will the swallows come back to Capistrano?

I’ve made inquiry to the Capistrano Taxpayers Association for their assessment of whatever appellate actions may still be in process. Their own communications indicate taking a wait-and-see attitude, though their spirits seem quite high. They believe that, sooner or later, the Appellate Court will uphold their claims.

Tonto_1Still, I would like to get to the bottom of Markman’s rather cryptic comment, “We’ve been waiting for this for a long time.”

What do you mean “we” Kemosabe?

Are you including Council? The consultants? Who has known that this could blow up in our faces and for how long?

Was there really a conscious disregard for the law or are Brea taxpayers, once again, witnessing wholesale corporate stupidity in action?

 

Silence Isn’t Golden.

matter

(Thanks to Hugh MacLeod for his insightful doodle and thought for today.)

Assuming that Council does the right thing about Koreagate, that those who screwed up are held accountable and that the door is permanently closed to that sort of shenanigans, we have plenty on our plate that deserves close attention and it’s time for the folks that call Brea home to speak up.

The 560 Fund.

bigdump_aThe 560 Fund is Brea’s payback from Orange County for keeping the Olinda Alpha landfill open through December of 2021 and these monies were to mitigate the traffic, noise, road damage and provide other “community benefits.”

This purposefully nebulous phrase was slipped into the contract language to ensure there was virtually no limit on the number or type of boondoggles that could be foisted on an unsuspecting public.

DumptruckTotal income is expected to exceed $30 million dollars, and to date we’ve received $10.5 million and have less than $3 million left.  The 560 Fund has evolved into an obvious slush fund to avoid having to use the General Fund money to pay for the project du jour.

Again, the 560 Fund was never meant to be a slush fund but that is precisely what it’s becoming.  So… let’s play follow the money.

No return on our energy investment.

solarStaff tricked Council into making the first bond payments for the Solar Energy project, totaling over $1.7 million dollars, using the 560 Fund.  In case you forgot, that’s the green project staff sole sourced from Chevron Energy Solutions by duping Council into believing the project would pay for itself.

Though I don’t believe it’s been conducted yet, Chevron get’s to audit themselves, which our Finance Director characterizes as a cost saving effort.  Really?  Do you think for a minute they’ll admit to cutting down the cherry tree?

Judging a book by it’s cover.

libraryThere are those that would like to tap the 560 Fund to give a gift to the County of Orange by buying and remodeling the old Tower Records building, turning it into a new library.  Without question, this library idea is a project easily in the umpteen million dollar range.

The RDA already blew the chance to build a multilevel parking structure on Super Block 1.  Does anyone really think the city would take a property the scale of the Tower Records building off of the tax roles and then give it away?

Where do you plan to be in 2030?

engagementStaff wants to dig into the 560 Fund to pay nearly $300,000 dollars to some outside consultants to create public engagement opportunities under the guise of “Envision Brea 2030.”  The ruse is to get input from Breans, across all demographics, to help guide Council and staff as they plan their Brea of tomorrow.

Were you at the Community Center for the budget workshop to help set priorities for the Budget Strategic Planning (BSP) group?  Did you attend the public meeting to give input on reorganizing Brea’s Fire Department?  Did you participate in the group asked to suggest how to develop Rails to Trails and the community building on the Birch Street Golf Course? Were you able to let the city know what we might need for affordable and senior housing in the future?  Probably not, most people weren’t

Staff has made it quite clear that, unless you’re lucky enough to be one of Good Ol’ Brea’s pet special interest groups, you can keep your thoughts and ideas to yourself.

How about starting a savings account?

Wouldn’t it make more sense to set whatever is left of this 560 Fund aside, invest it, let it grow and have it available if and when we should get blindsided with some crisis?

We need to put a stop to their, “If we’ve got it, we’ve gotta spend it.” mentality.  What’s wrong with demanding that staff live within their means?  It’s what you teach your kids!

But wait… there’s more!

Under the single label of fiscal responsibility, we have an almost unending list of serious issues to keep an eye on.  In addition to Brea’s growing unfunded pension liability, now there’s rumored to be an OPEB (Other Postemployment Benefits – medical retirement) shortfall currently $17.3 million dollars and growing at nearly 30% each year. To make matters worse, Brea is totally unfunded for this liability.

We’re still trying to maintain a high functioning Fire Department with oversight by Fullerton and rebuild a Brea Only Police Department after getting dumped by Yorba Linda – neither situation having been properly reviewed by Council or a status report to the community provided.  What’s really working, and what isn’t?

You can also put CFD’s (Community Facilities Districts) on the watch list too.  Hamstrung by Prop 13’s capping property tax increases to no more than a limited inflation factor, CFD’s are a way to dodge Prop 13 and generate uncapped revenue.

When is a CFD not like Mello-Roos?

housingWhen it double taxes citizens, making them pay twice for the same infrastructure (police, fire, paramedics, etc.), all without a sunset clause when the costs have been recouped.

Even though they publicly admitted having reservations about double taxation and equity issues, Council members Moore and Marick joined with Garcia and Murdock last night (05/21) to approve CFD’s for Central Park Brea and Taylor Morrison developments – without having the broad discussion promised by staff, as Council member Simonoff reminded everyone, or conducting the public hearing (slated for 06/04).

At the public hearing, only the developers, as “property owners” will add their vote of approval, largely because they’ve had their feet held to the fire and just want to get on with things.  Who speaks for the almost 600 ultimate property owners that, through their CFD fees, will be stuck paying the bill… not until everything is paid off, but forever?  Where is their vote in this matter?

Isn’t it generally understood that the creation of new taxes requires a vote of the people?Don’t use the excuse that this is a fee when it’s obviously a tax.

How much longer can we afford a silent majority?

citizenTime’s up I’m afraid.  If you think you can continue to sit idly by, keeping your opinions to yourself, and everything will work out fine in the end… you’re wrong.  We can’t avoid confrontation any longer.  It’s never been more important than right now for everyone to step up and be heard.

Remember, if you’re not part of the solution…