Wednesday, September 30, 2015
Anaheim Mayor Tom Tait has refused to sign a rebuttal to an Orange County grand jury report critical of a scheme the city used to set up a funding stream for a $180-million convention center expansion.
The report, issued in June, takes aim at a joint powers authority (JPA) the city set up for the convention center expansion that is now $1.2 billion in debt. Specifically, the grand jurors were critical of the JPA's structure, which they said is similar to the JPA used by the infamous city of Bell officials to pay themselves exorbitant salaries and benefits.
JPAs like Anaheim’s “have the potential to use this organizational structure as a shell company to avoid other legal constraints on the controlling entity and to obfuscate taxpayer responsibility,” the grand jury found.
Earlier this month, the city crafted a strong response to the grand jury's findings, saying, among other things, that the $1.2 billion in debt isn’t excessive because the grand jury failed to account for annual revenue that will be available to pay down the debt over the long run, essentially making the debt “revenue/expense neutral.”
It went on to say that dissolving the JPA, which the grand jury recommends, would be “impractical, uneconomic, and, given the long-term nature of the financed assets, unfair to the city’s current residents, businesses and taxpayers.”
Tait, however, didn’t find the city’s arguments convincing. So he refused to sign the city’s response, which was approved in a 3-2 council vote, with Tait and Councilman James Vanderbilt dissenting. Council members Kris Murray, Lucille Kring and Jordan Brandman voted for it.
Grand jury responses from city councils in Anaheim and elsewhere are typically signed by the mayor. However, in this case, the signature block was reserved for the city manager and will likely be signed by the finance director, Tait said.
At the heart of the dispute is the way in which JPA's are formed. Essentially, two or more governing agencies can partner to create a JPA, which exists, at least in legal terms, as a completely separate and independent public agency.
One example of a JPA is the Orange County Fire Authority. The regional firefighting agency exists because of a partnership between the county and 23 cities, providing fire and paramedic services within the jurisdictions of its member agencies.
The grand jury had no qualms with these kinds of JPAs, which it labeled “horizontal.” They provide “real service” to the community and are accountable to their member agencies, according to the grand jury.
But the grand jury had a different take on what it called “vertical” JPAs. In theory, they’re comprised of two or more different public agencies. But in reality, a vertical JPA’s member agencies are controlled by a single governing body.
According to the grand jury, the city of Bell padded the salaries of city council and administrators by issuing debt through a vertical JPA. This allowed them to circumvent state requirements that the issuance of long-term debt has to go before voters.
In Anaheim’s case, the city circumvented a city charter requirement when it wanted to spend $180 million to expand its convention center by using a JPA called the Anaheim Public Financing Authority. The JPA is comprised of the city and the “successor agency” to its redevelopment agency.
The grand jury found that vertical JPAs are essentially shell companies with “the potential to cloak funds and accountability of those funds.” Also, the “opaque, layered structure” of vertical JPAs makes them difficult to hold accountable.
A group of Anaheim activists -- called the Coalition of Anaheim Taxpayers for Economic Responsibility (CATER) – alleged much of what the grand jury found in a lawsuit filed in 2014.
However, a superior court judge threw out the suit, ruling that city attorneys were correct in finding that state law allowed for creation of a new public agency (JPA) independent of legal restrictions governing its member agencies. A CATER appeal was also denied.
Tait has nonetheless continued to speak out against the financing plans. At this month's meeting he pointed out that the city essentially partnered with itself when it issued $200 million in new debt to pay for the convention center.
“So you have five people here forming a partnership I guess with the five people here to form an entity to then borrow the money, a complete end around the intent I believe of our charter and state law,” Tait said. “The grand jury says we shouldn’t do it. And I believe we shouldn’t do it.”
Murray pointed out that the Financing Authority also issued debt to pay for basic city infrastructure, including water, electric and sewer utilities. To “accelerate payments” to pay down the debts faster might result in higher interest rates than if the city had to wait for an election to issue debt, according to Finance Director Debbie Moreno in response to Murray’s questions.
Kring said following the grand jury’s response might impose “stumbling blocks” by making it more difficult to issue debt. She pointed out that the grand jury’s report was just advice and nothing more.
“The grand jury did not say that we couldn’t, they just said that we shouldn’t,” Kring said, and then quoted former Councilwoman Gail Eastman. “'If everything went to the vote of the people, why would we be here?'”
September 29, 2015
Voice of OC
By Adam Elmahrek
Tuesday, September 29, 2015
Sutter County is denying conclusions of a grand jury investigation claiming to have uncovered evidence of abuses of power, management by intimidation and favoritism at a county department.
In a draft response to the grand jury's findings, the Board of Supervisors said it found no evidence to support the more critical findings of the report.
The response, which the Board will vote to approve this evening, was submitted by County Administrator Jim Arkens.
The final report on the investigation into the Welfare and Social Services Division painted a picture of a workplace where management practices have deteriorated employee morale to the point of potentially impacting services to the public.
"Favoritism and preferential treatment of employees have adversely affected employee morale of the (division)," the report stated. "These practices by management staff involved work schedules, promotion, assignments and discipline. Evidence has shown promotional practices within the division are not solely based on merit."
"Division managers give special assignments and promotions to those who seemingly curry personal favor," the report continued. "In addition, evidence has also shown disciplinary actions are not applied fairly and consistently to all employees."
But Arkens said the county did not discover any such evidence.
"At this point, we've found absolutely nothing," Arkens said. "I asked the grand jury to send people to me or give me cases or names, but they had nothing, and I've received nothing."
During the 2014-15 fiscal year, the county received three complaints from three employees in the department. The complaints were independently investigated by Vida Thomas, a lawyer at Weintraub Tobin, a Sacramento-based law firm.
None of the allegations were sustained by evidence, according to the Board's response.
Arkens also noted the grand jury's foreperson, Rebecca Askins, is an employee of the Welfare and Social Services Division. At the time of Askins' appointment, the Sutter County Taxpayers Association and Arkens expressed concern that a county employee serving on a grand jury represented a conflict of interest.
September 28, 2015
By Andrew Creasey
Blog note: one of the committee members is the foreperson of 2014-15 Grand Jury, which produced a 2014 report on the county’s efforts to curb rising pension costs.
Sonoma County supervisors have named seven people to a new citizens’ oversight committee to tackle an ambitious set of goals related to employee pensions — some of which supervisors themselves have been unable to accomplish.
Over the next nine months, the new fiscal watchdog team is charged with reviewing the county’s accounting practices on pension matters, helping to identify ways of lowering total pension costs — now at $105 million per year — and drafting an easy-to-grasp message for the public on pension reforms county supervisors have enacted since 2011.
Supervisor David Rabbitt, who also sits on the Sonoma County Employees’ Retirement Association board, said part of the problem is that the public largely does not understand how the county’s pension system functions or the actions officials have taken to reduce costs, which are up more than 500 percent since 2000.
“I believe that what we want out of the committee is to verify what we’ve done to date,” Rabbitt said. “And to make recommendations if there’s anything left uncovered . . . to bring our pension costs in line.”
By 2024, Sonoma County wants to have reduced its pension-related costs by half, to 10 percent of its $550 million payroll for salaries and benefits.
The Board of Supervisors in April approved spending $150,000 to form a pension oversight committee to increase accountability and transparency on pension matters — a recommendation first made by the board in 2011.
Rabbitt and Supervisor Susan Gorin, the board chair, said they sifted through 28 applications and interviewed candidates before naming seven Sonoma County residents with diverse backgrounds in finance and accounting to the committee earlier this month.
The selections, including taxpayer advocates, fiscal analysts and Santa Rosa’s chief financial officer, have drawn some concern from pension critics, who say supervisors did not choose people who have enough familiarity with the county’s pension woes.
“I’m disappointed; there were very good people who submitted applications but were not selected or even interviewed,” said Ken Churchill, an outspoken commentator on the county’s pension spending who said he wished he’d been chosen. “For three years, I’ve been critical of the pension system and trying to shine light on it.”
The group’s members include Jack Atkin, former president of the Sonoma County Taxpayers’ Association, who has advocated strongly for reducing total spending on retirement benefits; Martin Jones, last year’s civil grand jury foreman, who helped produce a 2014 report on the county’s efforts to curb rising pension costs; and Deborah Lauchner, who helped bring Vallejo out of bankruptcy and was hired in 2014 as Santa Rosa’s top finance official.
“There is some concern, politically, that because I’m the CFO of Santa Rosa, people would view my participation as an inside job,” Lauchner said. “But my motivation is really driven as a Cotati resident. I was able to make some huge changes in Vallejo, bringing that city out of bankruptcy, saving a little over $100 million in their long-term liabilities and balancing the first balanced budget Vallejo had seen in over a decade.
“I’d love to be able to use my experience and make some positive changes in the community I grew up in.”
The other members of the committee include Bob Likins, a retired actuary; Richard Tracy, who previously served on the Governmental Accounting Standards Board, an independent agency that sets accounting standards for public sector financial reporting; Lawrence Heiges, with 26 years of experience in commercial and investment banking; and Rebecca Jones, who said she has 40 years of experience in accounting and financial analysis.
Rabbitt and Gorin said the selection process was “challenging.”
“I think we’ve found them to be fair and open-minded, with no preset agenda,” Rabbitt said. “They really want to learn and understand what the system is all about.”
The committee will meet twice a month and its meetings will be open to the public. The first meeting is scheduled for Friday, and details will be posted on the county’s web site, www.sonomacounty.ca.gov.
Supervisors said they expect a final report from the committee by June.
September 27, 2015
Santa Rosa Press Democrat
By Angela Hart
Sunday, September 27, 2015
HUMBOLDT – The Board of Supervisors has again discussed the controversial idea of creating a Housing Trust Fund for affordable housing projects as the Grand Jury has recommended it as a means of addressing homelessness.
But most supervisors were wary of heeding the Grand Jury’s advice to form a multi-jurisdictional agency to manage housing funds.
At the Sept. 8 meeting, supervisors approved responses to the 2014 to 2015 Grand Jury report. A section on addressing homelessness includes a recommendation to create a Housing Trust Fund that would be overseen by a Joint Powers Authority (JPA) made up of the county and the City of Eureka.
A draft response from the County Administrator’s Office describes the formation of a JPA as being too costly for a county like Humboldt to handle. The office’s draft response states that “redirecting funding or staff time towards the development of a JPA to oversee a housing trust is not viewed as an efficient use of our extremely limited resources.”
The response adds that a housing trust fund has “potential future merit,” however.
Supervisor Mark Lovelace pointed out that the county’s Housing Element includes an implementation measure to establish a Housing Trust Fund and to reach an initial funding goal of $500,000 by Aug. 31, 2017.
Lovelace said that should be mentioned in the response and he described the homelessness situation as one that needs to be worked on collaboratively.
“I would much rather see a response that expresses a willingness to explore some of these relationships and to recognize that we don’t just have the county’s homeless population and the City of Eureka’s homeless population and the City of Arcata’s homeless population – we have a regional homeless population,” Lovelace said.
He added that the draft response “misses the target.”
But other supervisors had doubts about embarking on a JPA process. Supervisor Ryan Sundberg warned against endorsing a method that could obligate the county.
“I don’t know if we’re at the point yet to where we have to formalize something through this process,” he said. “Down the road, we can do something more formal and propose that through the board but I would be hesitant to put something into writing here and force us into something where we don’t know what we’re getting into yet.”
Lovelace reiterated the Housing Element’s directive for a Housing Trust Fund. He made a motion to mention it in the response along with indicating that the county is willing to explore the establishment of a JPA.
Funding a Housing Trust Fund is controversial because it is often achieved through charging developer fees and taxes.
Supervisor Virginia Bass said the idea of forming a JPA is more problematic, however, since a trust fund can be set up without funding it right away.
“A trust fund does not mean you put money in [it] – it means you have a fund that eventually you find money for, you establish the way to make that happen,” she continued.
Seeing that other supervisors were not willing to support his original motion, Lovelace subtracted the content on exploring JPA formation. The modified motion was unanimously approved.
September 25, 2015
Mad River Union
By Daniel Mintz