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How To Make The Most Powerful Job In Ventura Government More Accountable.

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Local Ventura Politics

“Those who do not remember the past are condemned to repeat it.”
—George Santayana

Here we go again. Ventura is hiring its fourth City Manager since 2000.

You’ve undoubtedly told our children or grandchildren, “Haste makes waste.” It’s sound advice; especially when you want to prevent them from making a mistake. The same advice holds true for Ventura’s City Council when hiring our next City Manager. A hasty decision now leads to adverse consequences in the future.

The City Manager is the most powerful role in Ventura’s city government. He controls millions of dollars and impacts Ventura for years to come. He does this with little oversight by a part-time City Council. And history shows the Council lacks sound financial judgment when overseeing him. Voters know even less about how the City Manager does his job.

A Chance For The Council To Start Fresh

This City Council faces its most important decision—selecting the next City Manager. It’s no easy task. The new manager will be responsible for healing Ventura after the Thomas Fire. No prior City Manager has faced such a daunting task.

The Council should act slowly, boldly and thoughtfully when hiring. They should think creatively and progressively as they make their selection.

Balancing these goals will not be easy. The Council will feel internal and external pressure to act quickly. They’ll want to fill the vacant position right away to provide leadership at City Hall. And, citizens will demand someone to manage the Thomas Fire recovery. The search firm Ventura hired will add to the external pressure, too. Ventura pays the search firm when the new City Manager accepts the job. Typically, the fee is three months of the City Manager’s starting salary. In this case, it’s $60,500. The search firm will want the City Council to act quickly, so it gets paid.

The Council must resist the urge to succumb to the pressure.

We Know Poor Choices Lead To Financial Disaster

 

The tenure of the past three city managers keeps getting shorter.

The City Council does a poor job overseeing the City Manager. Former City Manager Rick Cole moved $7.5 million from the Public Liability Fund, Workers’ Compensation Fund and Information Technology Fund to other areas in the budget to make it appear as if the city’s budget was balanced. Either the Council didn’t catch the manipulation or was unwilling to investigate further.

A city manager could confuse the city council in the past.

Former City Manager Donna Landeros reallocated $9 million earmarked for the proposed Convention Center for various city programs, and nobody knows what happened to the money.

And, most recently, retiring City Manager Mark Watkins acted as the chief cheerleader on Measure O. He touted the money was for city services when the truth is it will eventually go towards employees’ pensions.

Even the City Council’s most recent hiring decision costs taxpayers money. The Council erred in the transition to Mark Watkins from Rick Cole. Cole received total salary and benefits of $189,341 along with a housing allowance to move to the city. When Watkins came in, he didn’t need a housing allowance because he already lived in Ventura. Rather than save that money, the Council chose to increase his salary and bonus to $242,059. The $52,718 increase impacts the city’s future financial condition negatively. At the time, Councilmember Christy Weir claimed hiring Mr. Watkins would save the city more money than the rise in his salary. The figures don’t bear that out over the four years he served in the role.

What’s more, Mr. Watkins is to receive his retirement pension based on his highest salary. At 56 years old, Watkins will receive retirement pension based on his $242,059 salary.

Greater Transparency Is The Key

Past City Managers had a bureaucratic background. Some argue requiring bureaucratic experience makes sense. Bureaucrats are the antithesis of transparent, though. They operate out of sight of the voters. This lack of transparency was disastrous for Ventura. Here’s why.

The city manager would be more accountable with published standards of performance.

A bureaucrat measures success by how large a team he manages. He’s driven to increase budgets to protect that organization. A more massive government usually equates to increased regulation. Rarely is that beneficial to citizens.

Also, a bureaucrat that is friendly towards and advocates for the city staff is not impartial. He will be reluctant to reduce expenses, eliminate unnecessary work, redirect work to private entities or minimize long-term staff costs. Bloated staff costs taxpayers money.

Finally, a bureaucrat negotiates his retirement when negotiating for the staff because he participates in the same plan. Human nature being what it is, the City Manager will likely bargain less vigorously, creating a conflict of interest.

Transparency begins with knowing how the City Manager is performing. The city should use Standards of Performance (SOPs) to measure achievement. Currently, the City Manager doesn’t have SOPs listed on its website. The Council should prepare SOPs, and the city should post them for the public to review. What’s more, the City Manager’s accomplishments should be in the public record. Citizens deserve a yardstick to measure if the city is meeting the City Council’s directives.

How to be more transparent when selecting the next City Manager:

  • Publish the screening criteria the City Council gave to the search firm to select candidates
  • Reevaluate the job qualifications and look outside of municipal government.
  • Post the Standards of Performance. Establish measurable performance levels on a regular review schedule.
  • Establish a Blue-ribbon committee to provide the Council strict salary and bonus guidelines.
  • Verify a candidate’s financial management expertise. The candidate must provide clear and incontrovertible evidence.
  • Insist on community outreach success from the candidates. The job description doesn’t list this as one of the primary duties.

Editors’ Comments

Hiring the next City Manager is paramount, and citizen input is a must.

 

Tell The City Council Not To Act Hastily

Below you’ll find the photos of our current City Council. Click on any Councilmember’s photo and you’ll open your email program ready to write directly to that Councilmember.

Let them know what you’re thinking. Tell them what they’re doing right and what they could improve upon. Share your opinion. Not participating in government makes us worse because our city government isn’t working for all of us.

Neal Andrews, Mayor

Matt LaVere, Ventura City Council

Matt LaVere, Deputy Mayor

Cheryl Heitmann

Jim Monahan

Erik Nasarenko

Mike Tracy

Christy Weir

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Budget Manipulation Using Fiscal Sleight Of Hand

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Fair is foul, and foul is fair: Hover through the fog and filthy air”
—Shakespeare, Macbeth

STATE OF THE CITY TREASURY

[TRANSPARENCY THROUGH FOUL AND FILTHY AIR]

History continues to remind us that to get to the root of any act of wrongdoing, malfeasance or wrongdoing, you need only follow the money to find the culprit(s). Eventually the truth and they are revealed. That again proved true at the City Council meeting on March 11, 2013.

Shell game balanced budget

Balancing the budget through financial sleight of hand

Our acting City Manager, Johnnie Johnson, in collaboration with the Chief Financial Officer, informed the City Council that those in charge of the budget in our City had adjusted [manipulated?] the GENERAL BUDGET to make it appear that we had achieved a balanced budget. In fact just the opposite was true.

The previous City Manager, Rick Cole together with Mayor Bill Fulton continuously publicized the fact that “we were living within our means”, that “we had balanced our budget” and that our “financial affairs were transparent”. On this Monday night the Council learned otherwise.

What the Council learned is that the $12,000,000 in financial reserves, created in 1992, and still in existence as of 2007, was now in fact only worth $4,300,000. The explanation provided is that Internal Service Funds (noted below), which contained money budgeted and set aside to meet real and specific future costs and potential liabilities, had been reduced so as to make it appear as if the budget had been balanced:

  • ($2m) Unassigned.
  • ($2m) Unfunded Workers Compensation liability
  • ($3m) Potential liability claims reserve Information
  • ($700,000) Technology

The explanation offered is that this was a way to make it appear as if our budget was balanced. As stated by Mr. Johnson, “we have not borrowed it from strangers, but we did borrow it from ourselves… (and) if we do not fund this within five years we will be broke”.

Mayor Tracy, at the conclusion of the presentation stated:

“Based on the way I look on the information we received here tonight we have probably been deceiving ourselves and therefore the general public. There is nothing illegal done here, we did not participate in any conspiracy, but I don’t think it (this) was clear to us”.

—Mike Tracy, Mayor and Retired Chief of Police

He then added that that the Council needed to put more oversight controls in place to prevent this from happening in the future. A new budget will be presented to the Council on May 1, 2013.

Editors Comments

Mayor Tracy and Councilman Heitmann were not on the City Council when these budget “adjustments” were made. For those council members and supporters of the former City Manager, this should be a lesson that the public was deceived and there was not total transparency during Mr. Cole’s administration. To have an interim City Manager, in 6 months time, bring to light that the $12.0M reserve was really $4.3M shows how gullible our leadership has been.

THE NEW CITY MANAGER BUSTS THE BUDGET

Mark Watkins’ higher salary and benefits strain Ventrua’s budget

On March 4, 20013, the City Council met to consider the employment contract for the new City Manager, Mark Watkins. On a vote of 4 to 3 the Council approved the employment contract. He will receive the following salary and benefits plus 6 weeks paid leave:

Base Salary $222,000.00
Annual Cost of Living Increases (1/2% of annual CPI)
Annual Performance Bonuses (3%-7%) $15,540.00
Auto Allowance $6,000.00
City Contribution to 401(K) $12,000.00
Employer Pension Pickup (2.5%) $5,500.00
Total Before Benefits $261,090.00

When invitations for applicants were first published the City Council set the salary rate range of $160,000 to $214,000. The previous City Manager received a salary of $174,000.

The Ventura County Taxpayers Association spoke against approval of the contract because the starting salary was simply too high for an entry level Manager, that the salary should be started lower and then increased to provide performance incentives and the contract provided automatic annual Cost of Living Adjustments (COLA) during the 3 year term of the contract. They also warned against the COLA adjustment because of the precedent it would set when other public union contracts came up for renewal.

Mayor Tracy, Councilman Monahan, Councilwomen Weir and Heitmann approved the contract. They stated that Mr. Watkins was a long time resident of Ventura, that he had worked in the City during his career, that he was an Assistant City Manager in Thousand Oaks and that this was what needed to be paid to attract a qualified City Manager who would focus on the basics of operations of city government. Councilwoman Weir commented that any increase in the salary level could also be justified because “that we have already found savings in the City Manager’s budget to make up the difference”.

Our present acting City Manager commented that Mr. Watkins was a good choice, that this pay increase really only involved “pennies” in the total scheme of things, and that if he did not work out he could just be terminated and given a severance package.

Councilmen Andrews voted against the contract. Councilmen Brennan and Morehouse, after extolling the virtues and accomplishments of the former City Manager, Rick Cole, also voted no.

Editors Comments

Mr. Watkins will cost us an additional 26,102,700 pennies per year. He will earn all of that in dealing with our budgetary issues. We hope that the majority of the Council is right in saying that the additional expense can be justified by the savings that this new Manager will bring to our City.

In the meantime we must be diligent and continue to remind our elected representatives that if they we do not watch how they spend our pennies “we” will have no dollars left.

Editors:


R. Alviani K. Corse T. Cook J. Tingstrom R. McCord S. Doll

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WAV Condos in Ventura

A WAV Of Financial Trouble Traps Ventura

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“When everybody owns something, nobody owns it, and nobody has a direct interest in maintaining or improving its condition. That is why buildings in the Soviet Union — like public housing in the United States — look decrepit within a year or two of their construction…”
—Milton Friedman, Nobel Peace Prize economist

 

THE WAV CONDOS – A FAILED PIPE DREAM

[The Proof is in the Pudding]

Our former City Manager, Rick Cole and former Mayor, Bill Fulton, sought to implement their visions for Ventura. They have moved on but they left the citizens of Ventura with financial problems.

Each arrived from the LA area with populist visions, advocating for a community with less cars, more public transportation, more public housing all driven by the concepts outlined by the New Urban Congress. Their visions were embraced by a vocal minority – the art community, architects and low income housing advocates and special interest builders and planners that could live off the Redevelopment Agency dole. Their visions were a financial disaster. Mr. Cole’s contract was not renewed. Mr. Fulton packed his suit case and moved to Washington. Most citizens “waved” goodbye. A few are still awaiting Mr. Fulton’s new book on how the New Urban experiment worked in the City of Ventura, particularly the 69 residents of this subsidized housing units in this project that has cost taxpayers $985,072 per living unit.

The WAV Condos. Ventura’s attempt to build an “arts” city.

In January 2012, we treated one aspect of this project – the 13 market rate condominiums and 6,100 sq.ft. of commercial space along Ventura Avenue at the corner of Thompson Boulevard. The sale of these units and the lease of the commercial spaces were supposed to provide a source for repayment of construction loans to CHASE and the City of Ventura.

Chase holds the note on Ventura’s WAV Condos. The city stands to lose $2.5 million if the WAV condos do not sell by 2016

To make the market rate condos and commercial space development work, the City loaned $2,000,000 to the developer ($2.5 million now due with interest), and subordinated that loan to a first trust deed in favor of CHASE in the sum of $4,000,000.  Those loans were scheduled to be paid on the sale of the 13 condos, or by March 1, 2012. They did not sell and the commercial space did not lease. Facing foreclosure, and loss of our money, the City entered into a contract with CHASE to extend the due date to December 1, 2016.

This was not the result the City planned when this project was started. The City selected a person named Chris Velasco to “develop” the project, using our taxpayer dollars of course. Mr. Velasco signed the contracts, operating as a Minnesota non-profit company called PLACE. He gushed about the project. Here is one example:

“WAV’s market rate condominiums (priced from $625,000 to $875,000) are now for sale…WAV’s forward thinking configuration comes with an up market price tag. The average price per square foot for condominiums in the same zip code is $274; WAV’s pricing is $368 per square foot; however, buyers will be living green and helping underwrite WAV’s community. Besides the artists, and the public who flock to Ventura’s Art Walks and galleries, it includes those at 15 section 8 apartments”

So how reliable was the original plan? Not, by all accounts. The realtor involved with trying to sell the WAV units and lease the space recently shared his thoughts with us:

“These condos could only be sold for cash, or with a portfolio lender, due to Fannie Mae guidelines restricting the lending side. Its what I was up against for the three years. I had the listing together but was faced with the fact that the City refused to recognize that the condos were priced almost 1/3 higher than the market would bear. They would not entertain lowering them to market value.

“The condos were never worth $850K, at the most somewhere in the mid-$600s But even then the economy was turning down with buyers running for the hills. Add to THAT the fact they let my listing run out because I didn’t sell any. They said they wanted to take ‘another direction’.

“Now, perhaps they’re worth $479 tops – but you can’t use a traditional bank. Portfolio lender rates are usually at least 2 points higher, but a cash is the only way. Once one sale exists, there is a comp. Until then, its a big guessing game…”

            —Jerry Breiner, Realtor

 

Editors Comment:

Dump the WAV Condos as fast as possible.

Our City stands to lose $2.5 million if the WAV condos do not sell by 2016. It is likely they will not sell. An objective person cannot avoid the obvious problem in marketing these condos — bad views (freeway), bad location, no parking, low income neighbors and bad design. Our goal should now be to sell them for what we can to avoid a potential total loss through the foreclosure process. In other words, forget the cheese and just get out of the trap.

 

BANKRUPTCY LOOMS FOR CITIES

[The Good, The Bad and The Ugly]

The election is over but the business prospects for California cities remains dismal. Moody’s, a business rating service has placed the debt of 30 California cities, under review for downgrade. With the rating downgrade each of these cities will have great difficulty in raising money to operate essential government functions by borrowing municipal bonds.

THE BAD

On the list for downgrade are Oakland, Fresno, Sacramento, Azusa, Berkeley, Colma, Danville, Downey, Fresno, Glendale, Huntington Beach, Inglewood, Long Beach, Los Gatos, Martinez ,Monterey, Oakland, Oceanside, Palmdale, Petaluma, Rancho Mirage, Redondo Beach, Sacramento, San Leandro, Santa Ana, Santa Barbara, Santa Clara, Santa Maria, Santa Monica, Santa Rosa, Sunnyvale, Torrance and Woodland.

The rating examinations will potentially affect $14.3 billion in lease-backed and general obligation debt on the books of these cities. Why? Because these cities did not address their internal cost structures, did not reduce personnel costs in the face of looming debt and used accounting gimmicks in the hopes that the economy would change. It has not changed. Add their unfunded pension and debt obligations to their itemized costs and they are in trouble.

THE UGLY

The cities of Vallejo, Stockton, San Bernardino and Mammoth Lakes filed for bankruptcy. Their revenues from real property taxes and sales taxes dropped precipitously while fixed costs, such as public safety pensions remained high.   Public safety personnel refused to modify their benefits to help with the budget issues of their city. The fight between public safety unions, who refuse to modify their pension contracts, and the bond holders who loaned the cities money, looms large.

THE GOOD

 At the beginning of the recession the City of Ventura lost $5 million when Washington Mutual (WAMU) collapsed and $5 million when Lehman tanked. Tax revenues plummeted from $100 million to $82 million currently (estimated).   The City has tried to adjust for this 18% revenue reduction but the unfunded pension benefits for police and fire departments increased from $43,496,873 in 2008 to $68,385,380 in 2011. That is an increase of 57% for public safety. Add to that the $21,327,225 in unfunded benefits for all other City employees and we owe $89,712,605.

The positive news is that in the last four years is that the City has recovered $1.5 million of the WAMU investment. The City Council has also been trying hard to adjust their expenses and live within their means. Standard and Poor provided our City with a rating of AA.

One of the key individuals in achieving the S&P rating and urging fiscal restraint is our Chief Financial Officer, Jay Panzica. He has been instrumental in guiding the City through this difficult economic period. He was the driving force behind the Budgeting for Outcomes.

Chief Financial Officer, Jay Panzica, wasinstrumental in guiding the Ventura through this difficult economic period.

Mr. Panzica was also instrumental in setting the stage to help refinance the bonds owed for past water and waste water building projects. The first step was to seek an increase of water rates. This step, reviewed by a citizens committee in the fall of 2011, resulted in increased rates for all water users. The counsel prudently adopted those rates, on the recommendation of the citizens committee, thus setting the stage for a major refinance effort in 2012. Increased rate (revenue) by users provides the security for payment of the bond premiums in the future.

To take advantage of today’s lower interest rates, to refinance existing debt for Water and Wastewater projects and to obtain new money for new projects he asked our interim City Manager, Johnny Johnston, to seek approval from the City Council authorizing the issuance of $52 million in Water Revenue Bonds and $23 million in taxable Series A and tax-exempt Series B Waste Water bonds.

On October 8, 2012, the Council approved the request to:

  1. Refinance the existing water bonds ($27,410,000 issued in 2004)) and issue new bonds for additional $25,000,000 for future projects.
  2. Refinance the existing waste water bonds ($25,075,000 issued in 2004) for $23,000,000.

The bonds sold. As a result of a substantially reduced interest rate our City will save $1.8 million on the old water bonds and $2.3 million on the waste water bonds that we otherwise would have had to pay under the terms of the 2004 bond issue. A savings of $4.1 million plus financing costs, and another $25 million in new money for future water improvements is a very positive step forward.

Editors’ Comments:

Good is a relative concept. Creating a basis from which we can build infrastructure and thus create a solid foundation for future economic growth is the right course for government.

“If you put the Federal government in charge of the Sahara Desert in 5 years there’d be a shortage of Sand”

As for government trying to engage in business and compete with private enterprise the words of Milton Friedman says it all “If you put the Federal government in charge of the Sahara Desert in 5 years there’d be a shortage of Sand”

 

Editors:

B. Alviani           K. Corse             T. Cook

J. Tingstrom      R. Mccord         S. Doll

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