BHGC, An Unmitigated Disaster Waiting To Happen.

Today, Brea Matters again addresses the recent vote by Council to assume title of the BHGC (Brea Hills Golf Course).

Red DiceWhen I launched Brea Matters in October 2011, a key catalyst was former City Manager Tim O’Donnell’s favorite definition of leadership, “Leadership is disappointing your constituents in increments they can absorb.”

Long ago ingrained as the management mantra of Brea’s Council and Staff, it has proven to be sadly accurate in it’s premise.

How Much Have You Absorbed?

In ten years, I’ve lost track but in recent times we’ve “absorbed” the disappointments of the 1976 Paramedic’s Tax, the 1991 RDA bond refinancing that produced a $50 million unaudited slush fund, the loss of the Gateway Center – a prime city asset, loss of the Yorba Linda Police contract, reorganization of the Brea Fire Department.

Plus the mismanagement of Landscape, Lighting & Maintenance Districts (LL&MD) and Community Facilities Districts (CFD), Tiered Water Rates, and these self explanatory fiascos: Koreagate, Madrona, Rock Garden, unfunded pension debt and Brea Envisions

Council and staff count on our short memories and propensity to forgive. Next Tuesday they will once again rely upon their old mantra to get them off the hook one more time.

Misdirection, Misinformation and Misconceptions.

The first thing you’ll be fed is a litany of useless historical “facts” designed to lull you into a dull sense of inattention. Detailed descriptions of the “parties” involved, clarification of the original intent of the title exchange and justification of redesigning the course into substandard quality.

They’ll try to justify the ridiculous $80/yard excavation fee as a basis to project future mitigation fees. Everyone put your calculators away. We’re missing one important factor in the equation, without which no accurate projection is possible. They have no clue exactly what the remaining unmitigated condition of the BHGC is, how many acres… how many yards of “dirty dirt”… remain after the admitted partial mitigation done to save Chevron $13 million in additional costs.

The BHGC: Permitted Uses, Prohibited Uses.

We’re told, by the City Attorney, that permitted uses include a golf course or other outdoor recreational use, and the addition of a community or banquet facility. Prohibited uses include residential development, hospitals, clinics and medical offices.

So, does “permitted” mean legal and “prohibited” mean illegal? These terms have been tossed about as equivalents and they’re anything but!

City Attorney Boga stated that, with certain permissions, the city could do whatever they wished with the property. Permissions from OC Healthcare Agency, US EPA, Birch/Kraemer LLC and Union Oil.

He failed to mention that, assuming getting all of those permissions was even remotely possible, that Chevron would be absolved of their requirement to maintain the parking lot and the city would assume the responsibility.

Plus, changing the BHGC to a non-park use requires voter approval of Brea residents. Really?

When Is Our Voice, Our Vote Obligatory?

BHGCDid we get to vote on whether we were willing to trade the $8 million In Lieu Fees for the eventual title to a semi-toxic stripped down golf course worth, at best $5 million? No.

Did we ever get to vote on whether we believed the city, in addition to routine municipal responsibilities, should be free to commercially compete with all manner of local businesses? No.

Did we get to review the detailed legal documents and agreements required to effect this transfer of title and vote whether we supported the transfer with all of its complicated and fiscally threatening limitations? No.

One member of Council, for reasons I still find incomprehensible, was recused and the four remaining members of Council voted unanimously to take ownership of this white elephant.

Have You Absorbed Enough Yet?

I have! And if response to the prior blog and commentary on the Brea Buzz is any indication, many of you have reached total saturation as well.

You’ve got about two days to make your thoughts and concerns known to Council before they launch into their dog and pony show to justify the unsupportable vote they cast two weeks ago.

Juked out of simply putting their propaganda on the city website, thereby giving it the full weight and credibility of the interwebs, they’re stuck making it look like a formal report Tuesday evening.

Luckily Matters From The Audience follows this sugarcoated attempt to justify after the fact… so those of you with the chutspa are welcome to step up to the podium and give these folks a piece of your mind.

2016 In Review.

2016Brea bans ganjapreneurs.

2016 started off with a continuation of the medical cannabis debate, pitting the “Reefer Madness” crowd against those recognizing the rapidly increasing credibility of the medicinal values of cannabis.

This was triggered by a flaw in the language of Prop 215 which threw communities from Crescent City to Calexico into a frenzy to preserve local control.

Brea successfully prohibited cannabis dispensaries in 2008-09 but the passage of Prop 215 added another wrinkle… cultivation.

Tossing the matter to the Planning Commission, Council sought to block all cultivation through a land use amendment of the zoning code.

Today the Bureau of Medical Marijuana Regulation is no closer to being operative than it was a year ago, the passage of Prop 64 Marijuana Legalization Initiative further muddied the waters and the Federal government still classifies pot as a Schedule 1 drug.

Look for the cannabis debate to light up again in the first quarter as the “Reefer Madness” crowd seeks to keep a tight rein on cultivation and sales in Brea.

2016Brea First becomes part of the solution.

Founded by a grassroots group of longstanding Brea residents and facilitated by Director Chris Gaarder, Brea First hosted several public events down at the Brea Museum.

Created to provide Breans with information on and analyses of important local issues, with input from local and outside experts, Brea First subscribes to the notion that is it better to be informed than merely opinionated.

At the top of the list of hot topics was Brea’s unfunded pension liability but other issues emerged as well, like term limits and the school bond issue. Look to Brea First to continue their mission into 2017.

2016Brea Envisions launches, stumbles and takes a nose dive.

Initiated by Council with the best of intentions, Brea Envisions was to set a new high water mark for public engagement.

Taking a hands-off approach, Council passed the project to the Planning Department to establish a citizen’s committee to create, oversee and report opinions of Breans on a wide variety of topics.

A steering committee was established but without leadership, facilitation was closely held by Planning staff instead. A commercially developed generic website template became the Envisions gateway to the public, supported by a medley of misused social media accounts.

A less than successful survey gleaned from a handful of folks willing to take the time to wade through it, less than 800 responded. Fewer still completed the entire survey.

The raw data produced was extremely difficult to interpret and required substantial speculation to form comprehensible results.

A second volley of a half dozen additional mini-surveys, created using a web based app called Survey Monkey, produced almost zero response.

Phase three? A phone survey. Is about to be launched to validate their findings. What findings? Where is even an interim report to help guide the process?

Brea Envisions is already over three months behind schedule, the odds that a final report will truly reflect Breans’ opinions is virtually nil and Council continues to take a hands-off approach.

2016Vargas seeks to put term limits on the ballot.

A discussion more academic than urgent turned ugly when Council member Vargas broke his promise to Council and independently embarked on an effort to gather signatures for his own term limits initiative.

The effort seemed more designed as an attempt to thwart Council member Simonoff’s run for a sixth term than than it was to give voice to voter concerns.

The threat of a possible incursion by an out-of-town PAC, Council member Vargas’s audacity to ignore public input and his callous blindside of fellow Council members cost him serious political capital and likely foreshadowed another clean sweep in 2018.

Council held a public hearing on June 7 and all hell broke loose. Folks lined up at the podium to vent their feelings, most opposing term limits. Council hashed out their various positions, with more than a little shouting and finger pointing, and eventually hit an impasse.

Thankfully the “Vargas Initiative” fell well short of obtaining the required number of signatures. Council member Vargas learned the meaning of an extinction level event and came face-to-face with his failure as a consensus builder and a man of the people.

20162016 election, winners and losers.

As if the national election weren’t contentious enough, the BOUSD Measure K pitted friend against friend, neighbor against neighbor and candidate against candidate.

Seeking an unprecedented $148,000,000 ($300,000,000 with vigorish) with an initiative that lacked any public input and failed to define how the money would be spent, it was doomed from the start.

An independent PAC solicited, received and spent nearly $75,000 in an attempt to push Measure K into the win column, then it was discovered that most of the money came from companies that would substantially benefit from Measure K winning.

Meanwhile, a handful of residents seeing through the smokescreen, reached into their own pockets to shed a little light on the truth. None came close to legal spending limits yet they prevailed at the ballot box.

Paul Ruiz, winning by a landslide, joined the BOUSD Board… clearly a mandate from Brea voters. Gail Lyons and Kevin Hobby retained their seats while Rod Todd was finally vanquished.

At least he was until Joe Rollino dropped the bombshell that he was resigning and the reorganized board relied on little more than cronyism to let Todd finish Rollino’s term.

Adding insult to injury, the board snubbed new member Ruiz, refusing to second his nomination of Jason Kraft… clearly the most qualified applicant to fill the vacancy.

What will 2017 hold?

The reorganized Council, with Cecilia Hupp moving up as Mayor and Glenn Parker as MPT, will be facing an interesting array of potentially contentious issues in the coming year.

Of course there is the matter of shoring up our city limits against the onslaught of ganjapreneurs and rogue developers, greedy pensioners and presumptuous public servants.

Then there’s that long awaited Centennial year celebration that seems to lack funding, focus and public fervor. With events promised as early as February still in the early planning stage I wonder just how memorable this Centennial celebration will actually be?

Nevertheless, Happy New Year.

Brea First: Unfunded Pension Liability

unfunded liabilityUnfunded pension liability was the topic at last night’s Brea First meeting. A very detailed description and analysis was presented by Pete Constant and Truong Bui from the Reason Foundation. When I say detailed, I’m mean deep into the numbers, tiered water rates, where did you get your PhD. sort of detailed.

To their credit, and thanks to a stream of astute and probing questions from the audience, the details provided a backdrop upon which some very down-to-earth discussion emerged. While understanding how we ended up in this hole isn’t without value, finding a way out is the real issue.

A brief history lesson.

In 1999 Council adopted an enhancement of the city’s defined benefit retirement program providing Public Safety personnel with a guaranteed 90% retirement at 30 years of service (Simonoff, Perry, Moore, Daucher yes; Vargas no). This greatly exacerbated Brea’s unfunded liability. Had Brea chosen a defined contribution plan instead we wouldn’t be having this conversation.

In 2000 Brea was overfunded to the tune of $15 million. I’ll let that sink in for a minute. We were ahead of the game by $15 million bucks! Expressed in 2016 dollars, that would be $17+ million – almost three times what we just deposited into our PARS account (Public Agency Retirement Services).

It was downhill from there.

pension liabilityIn 2001 and 2009, coinciding with the two recessions, funding rate for retirement had dropped from an enviable 133% in 2000 to 60% in 2009. Today’s unfunded pension liability, conservatively, is $85 million dollars and market value assets are only 74.9% of what is required.

The $85 million relies upon an overly generous assumed Rate of Return that CalPERS projects to be 7.5%. The average Rate of Return earned by CalPERS investments over the last 15 years is 5.2%. I’m not sure who they’re trying to fool, participants or themselves or both?

Staff has suggested to Council that maintaining an 80% funded level is sufficient. It is not.

That assumption puts all Brea services in jeopardy, including public safety. Further, the $6 million transferred from year end surplus into the PARS account is barely a drop in the bucket. The road to hell is paved with good intentions.

If you’ve ever tried to pay off a credit card relying on making minimum payments, you know exactly how ludicrous this is.

Where the state comes in.

The decades old dinosaur that is CalPERS operates using a very complex set of calculations to determine Rate of Return and Discount Rate. I’ll save you the rocket science, you can find the full reports here if you’re so inclined.

Suffice it to say that CalPERS is systemically malfunctioning and in dire need of a major overhaul. This is the other half of the problem/solution formula. Literally thousands of agencies state wide share in this multi-billion dollar unfunded liability. Public employee pensions are constitutionally guaranteed.

So, no matter what Brea decides to do to fulfill our local responsibility, funding our pension plan, we also have to bring pressure to bear on Sacramento to adopt the constitutional amendments that govern how public pensions are managed.

Joining forces.

I suppose it isn’t out of the question to think cities might band together to lobby Sacramento. Brea keeps a high priced lobbying firm on retainer, other cities must do the same. There is strength in numbers.

League of California CitiesOh, and as longstanding members of the League of California Cities I would think we could turn to them for assistance too. After all, that’s what they do… right, they advocate on behalf of member cities.

But wait, their employees pension plan is CalPERS. Is it possible there is a conflict of interest here?

Where does Brea start?

pension liabilityWe’re in a hole. A deep hole. We need to stop digging and find a way out.

Finding that way out must start with the Council. They need to create a plan to raise our pension funding level from 74.9% to 100%. Not over some protracted length of time. Now. Anything less than 100% adds to our unfunded liability.

Council must commit to a vigorous debt reduction plan, eliminating our unfunded liability.

It’s not as simple as tacking on another half a percent or so sales tax targeted only to pay off the debt. That’s illegal. And we’re not likely to stumble across some windfall and miraculously escape. It will take sacrifice.

City services will be seriously impacted. Public health and safety services will be effected as well. If you thought coping with the drought has been tough, you ain’t seen nothin’ yet.

pension liabilityOkay Council, the ball is in your court. It looks like Brea First is committed to holding you accountable… so am I.

Download PDFs of the Reason Foundation Brea Unfunded Pension Liability Presentation and Report by clicking on the blue links.