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.

When Is A Law Not A Law?

Well, it seems a law isn’t a law unless City Attorney Markman decides to give it his blessing and Councilman Vargas likes it.

At the March 20 meeting of City Council, the Consent calendar item amending the City Manager’s employment contract triggered a strong public objection to the unsupported dismissal of Measure T, passed by a majority of Brea voters in 2012 and limiting Council and senior staff compensation.

The law matters.

A half dozen or so residents decided to address Council during Matters from the Audience.

Three folks, all admittedly candidates for Council this year, addressed a Consent item about park maintenance, the homeless situation in Brea and Senator Moorlach’s recent study that put Brea fiscally next to last in OC cities.

Measure T and the City Manager contract wasn’t on the radar of any candidate for Council. Thee red flags!

The other speakers all focused in on the law, the contract, the damned good reasons the law should be upheld and the contract pulled from the Consent calendar… subjected to public hearing.

Let’s talk about the initiative process.

The initiative process is a form of direct democracy. Citizens draft a “measure” which they then propose by petition; if the petition receives sufficient popular support, the measure is placed on the ballot and can be enacted into law by a direct vote of citizens.

Unless Measure T can be shown to be in conflict with Constitutional law, it is law in Brea and enforceable.

Again, I suggest that the law is the law. Write the contract accordingly. Through negotiation, Mr. Gallardo can agree to it’s stipulations or reject them. He may also challenge them in court.

So, what the hell happened?

Let’s start here then I’ll give you a rundown of events. The rule of law is the principle that law should govern a nation, as opposed to being governed by decisions of individual government officials.

lawDuring the “Response to Public Inquiries” Mayor Parker, rather than pulling the City Manager Contract from the Consent calendar (Item 18) as had been requested by several residents, allowed the City Manager to defer to comments from the City Attorney.

First came a brief and mostly unintelligible description of the amendment to the City Manager Employment Contract Agreement, which had received substantial objections, mostly centering around the restrictions imposed by Measure T. Then Mr. Markman jumped into a rationalization of why the law approved by Brea voters in 2012 has been largely ignored.

“(The speakers) are blasting something that was done very carefully, in public… you will recall that when Measure T was adopted it was our obligation to analyze it because some parts of it we saw were obviously valid and had to be implemented… like the health benefits being deprived from the Council… some of the other provisions we didn’t think, for various reasons, were enforceable or valid…”

Let me stop you right there Mr. Markman. As you pointed out, Measure T was adopted. A majority of Brea voters passed Measure T with the intent that it become law. Not unlike when they voted to establish a paramedic service… and we know what a fiasco that has turned out to be.

Your obligation, Mr. Markman was to implement the wishes of the voters, NOT analyze it. Who is the “we” you mention that decided some “provisions we didn’t think… were enforceable or valid” – you and Tim O’Donnell?

Because another unnamed city has let a similar initiative languish without implementation is not a good reason why Brea should mirror the same groundless behavior. They, whoever that is, were wrong… ergo you were wrong.

Mr. Vodhanel, during “Matters,” clearly described the history of unsound counsel that cost Brea nearly a million dollars in unnecessary legal expenses… half of which ended up in the RGW coffers.

Any chance you’ll be giving that back?

I don’t care what “thoroughgoing presentation with PowerPoint” you gave Counsel in 2013. If it’s intent was to dismiss a law demanded by Brea voters it was just one more sample of unsound counsel.

I don’t care that you attempted and failed to “negotiated with Mr. Vodhanel directly to try to get some sort of compromise resolution.” Once Brea voters made their wishes known, the original proponent placing the measure on the ballot was no longer in the gunner’s seat… amending the law should be done in a manner that, again, gave Brea voters a voice.

Arguing on behalf of the amended contract.

Now Mr. Markman’s comments, having successfully dismissed any relevance of Measure T or the Brea voters who approved it, turned to yet another prattling of legalese, the sole purpose to rebuff the law and dismantle every objection to Mr. Gallardo’s amended contract.

At what point did the City Attorney’s job description add the responsibility of playing agent for the City Manager? Take your “show me the money” propaganda Mr. Markman and stick to your job description.

Vargas jumps in… puts both feet in his mouth.

lawCouncilman Vargas interrupted the normal flow of the meeting to interject comments relative to Item 18, without objection from Mayor Parker. Totally inappropriate.

With no motion on the floor to approve the Consent calendar or to pull Item 18 for individual consideration… this was little more that grandstanding.

“I would like to make a couple of additional comments on Item 18 without pulling it as I’m prepared to support this Consent calendar.” Vargas said. No objection from anyone on Council. Wimps. Are you really that susceptible to being bullied by someone you all know is in way over their head?

After claiming to be the biggest and most vocal proponent of Measures T and U, Councilman Vargas cites some piece of correspondence from an anonymous woman to allow him to springboard into putting his two cents in without challenge. Anonymous? Put this mystery letter into the public record so we can all see it. No need to redact anything… it’s anonymous!

First, he squashed the four mile limit claiming the city would have to spend large sums for moving expenses and the provision of a silent second. Whoa Mr. Vargas!

A silent second is a type of second mortgage loan that is part of a home sale transaction without the knowledge of the first lender. In most instances, silent second home financing is a form of fraud and thus highly illegal.

Right, wrong or otherwise… Councilman Vargas seems to have dismissed any possibility for further negotiation with the City Manager.

But wait… there’s more!

Councilman Vargas then addresses the limitations to the contract imposed by Measure T and Council’s amending the term from three to five years… which requires explanation, to be sure.

Vargas points out that the City Manager is waiving a 3.2% salary increase, driven by a provision in Measure T for an automatic adjustment of 10% higher than the next highest employee. “I never liked that provision… it was put in long ago and I don’t like it.”

Your use of the unilateral dismissal strikes me the same way,” it was put in long ago and I don’t like it.” Okay Mr. Vargas, you’ve used up all of your unilateral overrides and embarrassed this community enough. What you like or don’t like has no bearing on the law or it’s enforcement. What a preposterous idea.

If, one day, you decide you don’t like the speed limit on Birch Street will we be dodging your big red pickup? If you decide you don’t like laws prohibiting driving under the influence can we expect to see that big red pickup weaving in and out of traffic… putting lives at risk?

You may say that’s just silly… but your rejection of a law adopted by Brea voters on a whim is just as silly. Maybe even more so.

Badda-bing… badda-boom.

With that, Councilman Vargas moves to approve the entire Consent Calendar, someone mumbled a second (we’ll need to see the minutes to determine who it was), there was no additional discussion from any Council member and the whole list was approved – badda-bing… badda-boom.

If that weren’t enough, fast forward to Council Announcements and the only one to speak is Mayor Parker. Unwilling to quash the inappropriate remarks of Mr. Vargas earlier, he launches into his own remarks after the horse is well out of the barn.

Citing that Council is only capable of doing the great job they do because they’re able to hire the very best employees to support them. He continues suggesting it’s Brea’s ability to be salary competitive that brings us “competent and effective” staff we have.

How’s that been working for you Mayor Parker?

Mayor Parker concludes his four minute unsolicited, unnecessary and unwanted comments with an effusive back patting and rationalization session.

Please… don’t let me see his name on the ballot ever again. Not even for dog catcher.

 

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Final Thoughts For 2017.

In the summer of 2011, then City Manager Tim O’Donnell told me that his favorite definition of leadership was, “Leadership is disappointing your constituents in increments they can absorb.” The implication was heinous and has proven to be the underlying rationale of countless decisions made by Council over the seven years I’ve written this blog. Here are a few of the most obvious:

  • Raising Council’s stipend and flex benefits.
  • Burying key decisions and large capital expenditures in the Consent Calendar.
  • Commission and Committee appointees are predominantly political payback.
  • Now defunct Redevelopment Agency created over $200 million in bond debt, most building or refurbishing city property for which there is no property tax which pays off the bond debt.
  • Brett Murdock tacitly appointed to lead opposition to The Brea Open Governance Act and The Brea Accountability Act. Murdock failed to disclose his leadership of the Breans Against Measures T & U PAC and was fined $2,000 by the FPPC.
  • City Clerk, under direction from City Manager and City Attorney violates election law resulting in litigation that was lost on appeal and cost taxpayers almost $1 million dollars.
  • Mayor, Mayor Pro Tem and City Manager take an ill-advised two week junket to Korea and Japan, sticking Brea taxpayers with the bill (Koreagate).
  • Mount a weak attempt to retain the Police Services contract with Yorba Linda.
  • Reorganize Brea FD rather than seriously entertaining the possibility that contracting out the services could save Brea taxpayers a bundle.
  • “Green Brea 2012” was a disaster but continues to be touted by city propagandists as a success. “Greenwashing” at it’s finest.
  • Staff recommends Council pay annual pension obligation at less than 100%, adding to the mounting debt. Brea had a surplus of $21.9 million in 2001, what happened?
  • 560 Fund (OC Landfill) earmarked to mitigate the traffic, noise, road damage and provide other “community benefits” is tapped twice to pay for the solar project – several million dollars. Remember, the one that would pay for itself.
  • Create Landscape, Lighting & Maintenance Districts (LL&MD) and Community Facilities Districts (CFD) to dodge Prop 13 and generate uncapped revenue. Promises made to “revisit” these for possible double taxation and to add sunset clauses has never found it’s way to the agenda.
  • Implement and repeat use of tiered water rates as a means of social engineering (deemed illegal in Capistrano Taxpayers Association, Inc. v. City of San Juan Capistrano – 2015).
  • Cal Domestic. Need I say more? If the FPPC, State DOJ and/or OCDA would get off their asses maybe we would finally get to the truth.
  • The perpetual appearance of collusion, backroom dealings and Brown Act violations every time Council reorganizes – never challenged, never proven but always questioned.
  • Madrona. Self-explanatory.
  • A “Civic & Cultural Center Demonstration Garden” proposed as a means of defraying costs of routine maintenance of Civic Center parking structure. Resoundingly rejected by residents.
  • City budget deemed to be balanced for the last 17 years yet Pension and OPEB debt soars to over $100 million.
  • Brea Envisions. Self-explanatory.
  • Originally proposed in January 1999, the just completed downtown parking structure could have been built for $5 million dollars with Redevelopment money without disruption to existing businesses.
  • Apprised of Constitutional due process issues buried within the Brea Municipal Code, triggered by the unilateral dismissal provision in Section 2.16.050, Council dawdles for 16 months without resolution. Will show up on agenda again soon.
  • $73,069,750 spent since 1977 for a “mobile intensive care” Paramedic Program appears to be nothing more than a subsidy for the Brea FD. (This will likely add fuel to the fiscal fires in 2018 as the truth becomes known.)

How the hell does this happen?

It’s become increasingly clear, as I read dozens upon dozens of staff reports that, more often than not, we’re getting only a fraction of the truth. Having reached the conclusion that Council, Commission and Committee members and the voting public in general lack the vision and intelligence to manage their community — staff has gradually hijacked all authority.

At best, only one or two senior city staff actually live in Brea. They have no local roots, no family history, no personal investment or emotional ties to the community. They are here to achieve their personal professional best, as dictated purely by academia and tweaked in a never ending array of seminars and symposiums. That their “product” ever actually benefits Brea is purely serendipitous.

They are here to put in their time, to receive salary and benefits well beyond that offered for comparable work in the private sector and to retire with six figure pensions.

From time to time they make mistakes, we all do. These blunders are the product of bad judgment, ignorance or inattention. These gaffes are committed with our money and are often magnitudes greater than the day-to-day mistakes we make.

Our city’s cancerous corporate culture.

To preserve their lucrative but fragile existence they are inclined to cover up the truth rather than admitting to failure. A corporate culture develops around them that renders them incapable of providing the whole truth. Staff seems to operate in a perpetual state of circling the wagons.

It is an endemic condition that can only be overcome by stripping them of the authority they have stolen and return it to those we elected to do the job in the first place.

And here’s the problem. As this bureaucratic shadow management culture has grown, their influence and power have as well and this creates a vacuum that eventually sucks in our elected representatives and blinds them to their complicity in the improprieties going on right under their noses.

Where do we take our city from here?

Revive “Clean Sweep” and put strong willed candidates into office who will not bow to the corporate mentality infesting those managing city business.

Candidates must give you a true sense of trust and confidence that accountability and transparency are not simply campaign rhetoric, that they will set aside any and all personal agendas (and bloated egos) – keeping a single focus upon what truly serves the people of Brea. Otherwise, they have not earned your vote.

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