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Eliminate Inclusionary Housing Oridnance

The Inclusionary Housing Mirage

June 30, 2013/in Newsletters/by VREG Editors

Some People regard private enterprise as a predatory tiger to be shot. Others look on it as a cow they can milk. Not enough people see it as a healthy horse, pulling a sturdy wagon. —Winston Churchill

ELIMINATION OF THE INCLUSIONARY HOUSING ORDINANCE

[A PRO-GROWTH PROPOSAL ]

The Ventura City Council, at their meeting on Monday, July 15, 2013, will consider the recommendation of our new City Manager, Mark D. Watkins and Community Development Director, Jeffrey Lambert, “to eliminate (cancel) both the Citywide and Downtown Inclusionary Housing Ordinances (IHP)”.

This ordinance was adopted in August, 2006. The author was Councilman Brian Brennan. The idea was that there are people in the City who “need housing”, and cannot afford to buy or rent housing unless they received financial assistance. So, on a vote of 5 to 2 it was decided that if a person or company wanted to build 15 or more residential units “for sale” or “for rent” then that developer, at their expense, was required to donate a percentage of the living units to low income people. The units had to of the same quality and disbursed throughout the project.

“The adoption of an inclusionary housing requirement in conjunction with the Housing Approval Program, will provide a mechanism for all residential development containing 15 or more units to provide ‘their fair share’ of affordable housing…” Resolution No. 2006-058

Now, 7 years later, it is clear that the concept is not working. The “developers” have not stepped forward, they have declined to invest and build the projects in the City and new construction has stalled. Our new City Manager and the Community Development Director are recommending that this ordinance be cancelled. The full report can be read on line as agenda item 14 for the Council meeting of June 17, 2013.

“It is staff’s recommendation… based on the State Department of Housing and Community Developments conclusions that IHPs are a constraint to the development of housing. In addition, staff believes imposing this obligation to provide affordable housing units on market rate developments places an undue burden on these developments and increases the cost of market rate units…”

—Administrative Report, May 29, 2013

THE SOCIAL EQUITY ARGUMENT

[EVERYONE IS ENTITLED TO AFFORDABLE HOUSING]

Protesting Inclusionary Housing Ordinance

Some will protest eliminating the Inclusionary Housing Ordinance.

Opponents to the proposal to eliminate this ordinance will be very visible and vocal in their opposition at this City Council meeting. They will demand that the council reject the staff recommendation, because everyone is entitled to affordable housing, and that housing “for sale” or “for rent” can be provided to those in need without spending public money. Their logic is that tax payers will not have to pay anything because the developer will have to pay. Alternatively, they ask that if this is not acceptable then the developer should pay an “in lieu of fee” of $200,000 or more.

This argument will find a sympathetic ear in Councilman Brennan. No surprises. He authored the original concept, proselytizes “social equity”, and is strident in this view that affordable housing for all (free or pay what you can afford) is an unassailable truth – if you cannot afford housing then is somebody else will have to pay.

A READER’S VIEW

[THE BURDEN WILL FALL ON PROPERTY OWNERS]

A reader and property owner, who expressed a desire for anonymity, stridently supports the efforts of the City Council to abolish or severely restrict the current inclusionary housing program. In our view “we can think of no other program which so seriously restricts private developer efforts to build housing in Ventura as well as seriously impacting our revenue base of property tax”.

Affordable housing mandates have had an unintended consequence: they have discouraged home building, and the diminished supply of housing has driven prices up.

The opponents of the change ignore the fact that almost 40% of Ventura’s housing stock is already dedicated to some form of subsidy for affordable housing, leaving 60% to pay the bills of the City. Advocates of affordable housing seem to have no concept of economics, and feel that someone else should pay for their housing costs.

In 2008 the Independent Institute published an article on the subject http://www.independent.org/newsroom/article.asp?id=2225 which is instructive. Extracts from that article are quoted below.

“We recently analyzed how inclusionary zoning laws, requiring builders to set aside a given percentage of new construction for low- to moderate-income individuals, have affected both new home prices and the quantity of new homes over time.

We compared the changes in housing prices and supply in these cities to those without a similar ordinance. The cities that adopted inclusionary zoning laws saw a 20 percent jump in housing prices and a 10 percent decrease in the number of new units built. This is the basic law of supply and demand at work. Affordable housing mandates have had an unintended consequence: they have discouraged homebuilding, and the diminished supply of housing has driven prices up.

Despite the nice-sounding name, inclusionary zoning is still a price control that leads to a decrease in the amount of housing. Economic theory and evidence demonstrate that imposing price controls and taxes on housing is one of the worst ways of encouraging the production of housing.

The real problems causing the affordability crisis are regulations that prevent increases in the supply of homes. Eliminating restrictive zoning regulations will give consumers more choice and make housing more affordable. For those who truly care about making housing more affordable, price controls are not the answer.”

ANOTHER PERSPECTIVE – THE ARCHITECT/PLANNER[1]

One architect expresses concerns over the Inclusionary Housing Ordinance

The real challenges I encounter regarding inclusionary housing ordinances are around the issue of for-sale homes and financing. For the developer, inclusionary housing requires them to write down or subsidize the cost of the affordable units. The ordinance assumes that the project has enough profit margin to allow this to happen, but as demonstrated in the last several years, there is no guarantee that this will be the case.

From the low income buyer qualifying for a the low income housing is problematical. The IHP assumes that the low income home buyer can qualify for the loan, of even a subsidized amount. That is an enormous hurdle, but even if they can qualify such projects will have association fees of hundreds dollars per month. These costs cannot be written down as they must be paid by every member-owner of the association.

The intent of the IHP is positive – trying to keep new development from overwhelming existing smaller scale neighborhoods. But the matter of affordability works in direct opposition to this intent. The City has recently been trying to meet these challenges and has been moving to adjust interpretations to make the situation more workable. Not everyone knows or appreciates that effort.

Problems notwithstanding finding ways to provide affordable housing in the Downtown area, for both rental and purchase housing, is a laudable goal. To provide smaller more affordable market-rate dwellings, such as studio and loft-type apartments, ranging from 400 sq.ft. to 600 sq. ft. will meet a real need. These can be very nicely done and are popular dwelling-types for our younger Venturans, who are drawn to the downtown as a place of social and cultural interest. Many are employees of the variety of businesses – restaurants, retail shops, professional and service businesses.

Editors’ Comments

The State of California Department of Housing and Community Development, our City Manager and Community Development Director advise that this ordinance should be cancelled because it is not working. We should listen. This ordinance has not only failed in its stated objective, but has in effect stalled housing growth.

Your letters and comments on this issue are extremely important. Send emails to Ventura Mayor, Mike Tracy mike.tracy@cityofventura.net

Editors:

B. Alviani K. Corse T. Cook

J. Tingstrom R. McCord S. Doll

[1] Opinion provided by a longtime Ventura architect.

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Budget Manipulation Using Fiscal Sleight Of Hand

February 1, 2013/in Newsletters/by VREG Editors

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.

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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$850,000 Players Club Loan by City

March 1, 2012/in Newsletters/by VREG Editors

It will be of little avail to the people that the laws are made by men of their choice,
if the laws are so voluminous that they cannot be read, or so incoherent that they cannot be understood; (or) if they…undergo such incessant changes that no man who knows what the law is today can guess what it will be tomorrow
—James Madison, Federalist Number 62

VENTURA THE ART CITY, OR IS IT THE GAMBLING CITY?

[The $2,000,000 bet on Players Club]

Ventura is financing Players Club Casino’s move to the Auto Mall.

The City Council has failed in their last two efforts to increase the taxes of the citizens of this community; however, our City Manager and the Council continue, facing another $2,000,000 shortfall in the next budget, are exploring new ways to raise money – without your vote but using your tax money.

The latest effort involves an $850,000 loan to The Players Poker Club, aka The Players Casino, now located at the old Volvo dealership in the auto mall area, at 8% interest.

The City is borrowing $850,000 from Rabobank at 4% interest, using tax revenue in our general fund as security for the loan.

The City is borrowing $850,000 from a foreign bank – Rabobank – at 4% interest, using tax revenue in our general fund as security for the loan.

The justification for this unusual step by a municipality is set forth in and administrative report authored by Jay Panzieka, the Chief financial officer for our City. You can view that report on the City of Ventura website by scrolling down, click on “public meetings”, and under City Council click the March 19 Council meeting. It is agenda item number 9. The Council approved the proposal. Here are the verbatim key points:

The City faces severe revenue constraints due to the lingering impact of the recession.
The Players Club pays a 15% tax on their revenue. This was approved by voters in 2005.
The Players Club wants to add two more gambling tables, a restaurant and lounge that will be serving beverage (alcohol).
In 2010 the Players Club was allowed to expand their operation from 6 tables to 18 tables.
Until the recent move the Club was paying $250,000 a year in taxes, however since the move to the new site in July, 2011, they have paid $261,066 and $262,696 in the first and second quarters respectively. They estimate they will pay a similar amount in taxes in the final two quarters.
This tax revenue of an estimated $1,053,773 per year is based on 16 tables. The addition of two more tables is estimated to return another $65,000 per year per table plus revenue from the sale of food and alcohol.
There is a risk of failure should the Players Club not meet their obligation; however because of their history of success during difficult economic times the benefits outweigh the risks.
The loan is to be paid off over a two year period during which time the City will earn $37,000 in interest. Payments to start May 1, 2012.

Players Club relocates to the Auto Mall.

So why did the City take this unusual step in financing a gambling casino? The arguments in favor of the loan goes as follows: the City has a monopoly on gambling tables until 2020, that it is the only gambling establishment in our county, and that due to the dismal prospects for new tax revenue this loan may result in more tax revenue. The entire model is predicated on the assumption that if they build it “they will come to gamble”.

Calwatchdog had this to say: “California redevelopment agencies may have been phased out. But cities are getting into the business of loan sharking to offset a decline in sales and property taxes.

This is a version of a “buy low” and “sell high” strategy. Only in this case it is “borrowing at a low interest rate” and “lending at a higher rate.” It’s called arbitraging in finance.

Arbitraging is expressly forbidden with tax-exempt bonds. That is because local government is a tax-exempt organization. It could potentially borrow cheap money at tax-exempt rates and re-invest it at a higher market rate. It thus could reap a profit with the public’s cheap money. All this is illegal under Regulation 1.148-0(a) of the I.R.S Code.

This explains why the city of Ventura used a private lender in the Netherlands to borrow money from instead of using bond funds. It is not illegal to arbitrage bank funds. The way the City of Ventura spins it: it is “restoring confidence and lending to a casino.” The city also denies that the city itself is a “bank.”

But if these loans are not a high risk why is the interest rate doubled? Interest rates serve as a substitute or indicator of risk. In fact, they are often called a “risk rate.” The higher the risk, the higher the interest rate and vice versa. A loan for double the normal interest rate would indicate a loan with double the risk. Eight (8%) percent would be a “junk bond” interest rate in the private sector today.

But if the risk in fact is low, as Mr. Panzieka and the City Council suggest, then the city is engaged in arbitrage, a form of speculative investing, and they are doing it with public money. Thus, it appears that City government, deprived of their redevelopment money and dismal tax revenues are venturing into very dangerous waters. Calwatchdog said – “redevelopment agencies are getting into the loan sharking business. A loan shark is informally defined as “one who lends money at exorbitant interest rates…”

But probably the bigger questions are:

Was the Players Club Casino not able to secure a loan of their own in the market place?
Should City Councils be doing the job of private enterprise using the public treasury as the guarantor?
Should the City be risking public funds as collateral for a loan to a gambling enterprise?

Given that at least 85% of the current budget is used to pay salaries, health care and pension to employees, of which 58% is devoted to police and fire, it is pretty obvious where these hoped for new sources of revenue will be spent.

Players Club represents a new revenue source for Ventura.

Now consider if you will the current proposal of Mayor Tracy to hire 6 more police officers and the City Council decision to pay $1 million dollar for a new fire truck, and it becomes crystal clear that the City is more interested in finding any and all sources for new revenue, fees and pursuing innovative revenue schemes rather than pursuing effective cost controls or reforming pension plans that are absolutely not sustainable.

This Council can talk about reforms and pretend that they made great strides in reforming the police and fire contracts, but the reality is that between 2008 and 2011, the unfunded obligations for police and fire alone increased from $43,496,873 to $68,385,380. That represents an increase of 57% over a 4 year period during which no officers or firemen were added.

Look for cities to start using their permitting powers together with loan arbitraging to create or enlarge more businesses that don’t create real wealth or increase overall productivity, but instead only generate short term tax revenue.

Editors Comments:

We do not share the view of CALWATCHDOG in its entirety. Mr. Panzieka has presented a logical means for increasing tax revenues. It is a legitimate function of our City to help, and encourage local business to grow even if it is gambling, however doubling the interest rate to 8% is troublesome, because it does reflects there is greater risk in the transaction, and it is in effect state sponsored and financed capitalism. If the Players Club succeeds, as we hope, then the gamble will have worked. If they fail then we will suffer a triple whammy – pay off the $850,000 loan to Rabobank, loss of $1,000,000 in tax revenue and then have to shop for someone else to acquire the gambling license. That is a $2,000,000 bet.

Editors:

B. Alviani K. Corse T. Cook

J. Tingstrom R. Mccord S. Doll

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Pension Spiking Approved in Police Retirement Contract

June 1, 2011/in Newsletters/by VREG Editors

” We Must Hand Together Or Surely We Shall Hang Separately” —Thomas Paine

COUNCIL APPROVES PENSION SPIKING

[Fleecing Time – Again!]

At the Ventura City Council meeting on Monday, May 16, 2011, on a vote of 5 to 2 the Council approved to an employment contract amendment to the Ventura Police Officers Association (VPOA) and Ventura Police Management Association (VPMA) employment contracts. Mayor Fulton and Councilmen Tracy, Brennan and Morehouse voted for the amendment. Councilwoman Weir and Councilman Andrews voted against the measure.

Ventura Police negotiate with City Council to get pension “spiking”

New employment contracts for the VPOA and VPMA were approved on January 16, 2011. However, in May it was pointed out that a correction (amendment) was needed because an important detail had not been treated. “They” forgot to include essential terms in the contract concerning who was going to pay the 4 ½% pension contributions.

Recall, good reader, that this contract was hailed as a masterful accomplishment, unique in California, and that it would save the community money in the long run (Mayor Fulton and City Manger Cole) because our policemen were now going to have to pay something toward their own pension just like everybody else in the private sector.

A Pension Deal Too Good To Be True

At first blush this step was positive, albeit anemic, because in past years this Council had entered into employment contracts with the policeman whereby they entire 9% pension contribution would be paid by the taxpayer. Our Mayor Fulton and City Manger Rick Cole extolled the virtues of this new employment contract because the City of Ventura had tilled new ground by requiring the policemen to pay something toward their own retirement – 4 ½% we were told. Councilman Andrews, Councilwoman Weir and fiscal conservatives in the community argued forcefully for a 9% contribution particularly in light of an unfunded pension liability of $250 million, but we digress.

Now we learn that with this amendment of the contract terms, unlike the SEIU employees contract, the VPOA and VPMA will be paying their 4 1/2% retirement contribution toward the employers’ portion (taxpayers portion) of that is sent to the CALPERS retirement plan. This accounting maneuver is specifically done to increase the total compensation of the employee, making the retirement payout amount higher for their lifetime.

The employee’s goal is to get one year of the highest possible salary so that his retirement for life is higher – called “spiking”.

Giving Context To The Problem The City Council Created With Police Pensions

To help put this into perspective, the employers’ portion of the total annual retirement payment paid to CALPERS by the city (taxpayer) is counted as income to the employee for purpose of calculating the employees retirement benefit when they retire. The employee’s goal is to get one year of the highest possible salary so that his retirement for life is higher – called “spiking”. Until now the city has been paying the taxpayers portion (100%) plus the employee’s portion (9%) toward the CALPERS retirement for a total of 109% yearly. Now, with this contract amendment, we learn that while the 4 ½ % will be contributed by the police officer, from his salary each year, but it will be shown as a payment made by the employer (taxpayer) to CALPERS. The reality is that the employee’s annual salary will be shown as higher by 4 ½ % for purposes of calculating that police officer’s gross salary when they retire. The policeman gives up 4 ½% as his contribution now but recovers it all at the time of retirement. The taxpayer is in effect still paying 109% of what is required to be paid.

Ventura Police Officers put one over on the City Council in pension negotiations.

While some may define “spiking” as adding benefits to salaries in the last year of employment to boost up the retirement amount, this additional 9% accomplishes the same results, an inflated income for retirement formula purposes. It will even compound to a higher amount, should a three highest years plan ever be adopted.

So, why was this fact not made known publicly 4 months ago? Why was it not questioned or challenged at the May 18^th meeting by any council member? Why was the CALPERS representative not questioned about the effect of this decision at the time of the January meeting? There were no questions and there was no discussion about the long-term impact to the city.

Specious Defense Of The Pension Contract

City Manager, Rick Cole, defends the contract amendment by saying that the payment by the employee into the employers’ portion of the retirement, which is then sent to CALPERS, was a non-negotiable item with the VPOA and VPMA. He also said it would make no difference because the current officers would receive retirement benefits based upon their “highest level” of compensation. That statement is true for the current workforce but what he failed to address, nor was he questioned, was how this would have affected officers hired in the future.

While the City Council remains concerned about the long-term effect of taking more general funds for street lighting, they continue to ignore the paying of 9% higher retirement benefits, which also comes from general funds in the form of payments to CALPERS, for years into the future. We can thank soon up for re-election Mayor Bill Fulton and Councilmember Carl Morehouse for this gracious contract approval.

EDITORS COMMENT

If the City Manger concedes that this 4 ½% contribution, paid through the employer’s contribution to CALPERS, was not negotiable with the police officer unions (his words not ours), then what about the taxpayer’s non-negotiable rights not to overpay and provide lavish retirement benefits to these public servants? Who then is protecting the interests of the taxpayer in this City when sitting at the negotiating table? Better to reach impasse and let these folks scramble for a new job then render the community hostage to the potential of bankruptcy. This unfunded obligation can and should be laid squarely at the feet of the council members who voted for this amendment; but, of course when it comes time to pay the bill they will be over the hill and the taxpayer will get the bill.

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CALPERS Increases on City Out of Control

January 1, 2011/in Newsletters/by VREG Editors

“Americans always get it right, after they have tried everything else”
—Winston Churchill

HMS TITANIC

[Moving Deck Chairs to Avoid a Disaster over Pensions]

The story of the sinking of the HMS Titanic and the causes are known to all. Had the ship not been traveling too fast, or had the officer on the bridge ordered a change of course earlier the collision with the iceberg would not have occurred The courses of action to avoid disaster were clear, but ordering the crew to move deck chairs to avoid a cataclysmic event was not one of them.

Police salary negotiation victory jacks CalPERS

Ventura Police unions extracted concessions to pay for CalPERS contributions.

So it was on Tuesday January 16, 2011, when the Ventura City Council approved new labor contracts with the Ventura Police Officers, Police Management and the employees represented by the SEIU. The City Council vote was 5-2 in favor of the agreements. Councilman Andrews and Councilwoman Weir voted against approval. The decision of the other five — Brennan, Fulton, Monahan, Morehouse and Tracy was in favor.

The agreement with the Fire Department union is not due for another 6 months, but results are likely to be similar. Recall that Mayor Fulton and Council members Brennan, Monahan and Summers were responsible for increasing the firefighter pension in the fall of 2008 so that these folks could retire with 3% at age 55[1], thus increasing our unfunded pension debt by $1.2 million or more annually. Mr. Summers is gone but Councilman Tracy (retired police chief) will predictably follow in his footsteps on this pension issue. (See Res Publica, August, 2008 for a complete summary)

The City Manager’s “Victory Lap” Over Pensions

Below is an email from City Manager, Rick Cole, recently proclaimed by Mayor Fulton, conveying the news of this purported accomplishment. The email is upbeat and congratulatory for their success of having the employees start to pay towards their own retirement and the establishment of a two-tier system, where new employees will have to be older before they may receive full retirement.

Active citizens,

This week the Ventura City Council approved new labor contracts with employee bargaining units that will move the City toward a more sustainable pension program. The agreements are expected to save a net of $250,000 during the remainder of this fiscal year, $1.0 million in fiscal year 2011/12 and $1.3 million in fiscal year 2012/13, for an estimated savings of $2.6 million over the three fiscal years.

The new employee contracts require employees to pay 4.5% of CalPERS pension costs, resulting in a higher percentage saving for Ventura taxpayers than any other city or county labor agreement in Ventura or Santa Barbara County since the beginning of the economic crisis.

The agreements will also implement a second tier CalPERS retirement formula, based on a later retirement age for newly hired employees. Ventura is the first to do so in the two County regions for either safety or miscellaneous employees. The agreements approved by the City Council cover both.

Concessions were made on both sides to reach agreements that safeguard the delivery of quality services to our community. For the first time in several years, employees will receive additional employer contribution to optional benefits to cover a portion of the rapid rise in health care costs. A key part of the package was an increase of three days in paid leave time for employees who have been forced to take unpaid leave time during the City’s winter shutdown. Executives and managers are not eligible for the additional leave time.

Pension reform has been the subject of public debate across the State and beyond. Last year, the City Council set the goal of raising the retirement age for new employees and returning to employees paying their share of pension costs. Both goals were achieved in the agreements ratified by the Council this week.

Respectfully,

—Rick Cole, City Manager

Our City Manger and Mayor Fulton hail their accomplishment as a milestone and enormous accomplishment. Or was it? Councilwoman Christy Weir did not think so. She rejected the proposal and stated “Fiscally, the city needs more than this right now.” Council Member Neil Andrews said the agreements “simply don’t go far enough.”

“Fiscally, the city needs more than this right now.”—Christy Weir, Councilmember

New police salaries will cost Ventura taxpayers piles of money.

Here are some extracts from the reports of CALPERS, the folks who manage our pension money (or losses) dated October 10, 2010, based on data as of June 30, 2009. The Council members had these reports when they voted on these pension contracts.

First, the “employer contribution rate”, which is the percentage of total payroll that must be paid yearly to fund the pension plans. The rate for police and fire for example must be paid for policemen and firemen yearly in addition to their pay and medical costs:

FISCAL YEAR EMPLOYER CONTRIBUTION RATE (Police & Fire only)

2011/2012 35.190%

2012/2013 36.4%

2013/2014 40.6%

“The estimated rate for 2012/2014 uses the valuation assumption of 7.75% as the investment return. Member contributions are in addition to the above rates”.

CALPERS, report of 10-10-10

We next turned to page 5 of the CALPERS report which provides the following data about the police and fire retirement:

Funded Status	June 30, 2008	June 30, 2009
Present Value of Projected Benefits	$ 270,877,057	$303,536,023
Entry Age Normal Accrued Liability	$ 223,938,241	$248,929,746
Actuarial Value of Assets	$177,314,177	$184,660,390
Unfunded Liability	$ 46,624,064	$ 64,269,356

An identical report was provided for all other employees with the following results:

Funded Status	June 30, 2008	June 30, 2009
Present Value of Projected Benefits	$ 205,128,033	$217,940,958
Entry Age Normal Accrued Liability	$ 167,837,616	$184,806,501
Actuarial Value of Assets	$157,529,148	$165,040,339
Unfunded Liability	$ 10,308,468	$ 19,766,162

A 47.6% increase in unfunded liabilities in one year.

What is to be gleaned from these statistics is that as of June 30, 2008, we as a City owed $ 56,932,532, and that as of June 30, 2009, we owed $84,035,518. This represents an increase of $27,102,986 or 47.6%. The data however gets worse when you look at the projected employer contribution rate between 2011 and 2013. Apply those percentages against the current police and fire payroll of $48,000,000 and the losses are staggering. In 2014 for example we will have to pay CALPERS another $19,488,000 on top of a payroll cost of $48,000,000, for a total of $67,488,000.

Discrepancy Between What CalPERS Reports And What The City Manager Reports On Pensions

Compare those numbers to the City Manager’s email about how much we will save in the same period. The opportunity to achieve true reform and to attain a sustainable pension plan was now. The City Council was negotiating from a position of “impasse”. This means that if no agreement were reached, the Council would have been able to insist upon more reasonable terms to correct the lavish and excessive benefits conferred upon the public employees in the last ten years and achieve sustainability. The advantage was in the City Council’s favor of getting a “three year average salary” as the basis for calculating the amount of retirement, or lowering the percentage of retirement and/or increasing the age of retirement, or moving from a defined benefit to a defined contribution plan. Instead, the management team and the City Council settled for far less than what was fair to the taxpayers of this City. The SEIU contract was a good step forward.

The management team and the City Council settled for far less than what was fair to the taxpayers of this City.

A spreadsheet is attached to allow you to evaluate the decision. These are real numbers. Please note that the pension entitlements and amounts are fixed, but that the General Fund Revenue is not. The income projection is based solely upon educated “guesses” by City officials. The other assumption is that CALPERS is correct in projecting that the investment of City of Ventura pension dollars will yield 7.75%. If our investment does not yield that return on our investment the losses get far worse. If you want to determine how certain entries were calculated, such as percentage calculations, place your cursor over the number and left click once. The formula for the calculation will appear at the top of the form. For those who want the bottom line here you go:

In 2008 income was $94,100,000 and the City sent CALPERS a check for $11,948,759. This was 12% of our total income on top of the payroll cost of $48,087,281. Total spent on people and pension benefits totaled $60,036,040 or 63% of our actual income.
In 2011 income is budgeted at $80,400,000 and the City will send CALPERS a check for $13,142,936. This is 16% of our total income on top of a payroll of $47,056,848. Total that will be spent on payroll and pension benefits will total $70,199,784, or 87% of our budgeted income.
In 2013 income is budgeted at $82,000,000 and the City will send CALPERS a check for $13,929,524. This is 16.9% of our total income (*) on top of a payroll of $47,056,848. Total that will be spent on payroll and pension benefits will total $70,199,784, or 85.6%% of our budgeted income.

*The budgeted income (projected) for the City in 2012 is $80,800,000 and in 2013 $82,000,000. If their guess at income is wrong then the percentage of payroll and benefits gets larger.

EDITORS COMMENT:

Bad negotiating increases CalPERS contributions

Bad salary negotiating increases Ventura’s CalPERS contributions

Had all of the agreements mirrored the SEIU contract this might have been a positive step toward solvency. Instead Councilmen Fulton, Brennan, Morehouse, Monahan and Tracy decided to move the deck chairs on our ship of state in a token effort to avoid a looming financial disaster. Such votes cause one to reflect and ask how this simple majority can continue to float above economic reality. Are these five elected officials reading the financial reports? Do they truly believe and hope our local economy will rise out of the ashes like a phoenix in a nation with $15 trillion in Federal debt and a State that is broke?

Do not mistake, the SEIU contract was a positive step, however the police unions and this council majority used lavish benefits and entitlements as their starting point in negotiations rather than economic reality.

Editors:

B. Alviani K. Corse T. Cook

J. Tingstrom R. McCord S. Doll

CALPERS	2008	2009	2010	2011	2012	2013	3 year net gain from employee contribution to CalPers increase
*Total Employee Payroll	48,087,281	51,240,487	48,940,168	47,056,848	46,685,947	47,287,512
* Percentage of Contribution by Employer	17.08%	17.88%	18.65%	21.31%	22.61%	25.78%
* Dollars of Contribution by Employer	8,211,264	9,162,430	9,128,522	10,026,168	10,555,745	12,190,178
* Percentage of Contribution for Employee Portion paid by City	7.77%	7.74%	7.89%	6.62%	4.57%	3.68%
* Dollars of Contribution for Employee Portion paid by City	3,737,495	3,967,333	3,863,616	3,116,768	2,131,282	1,739,346
* Percentage of Contribution by Employee				1.04%	3.16%	3.97%
*Dollars of Contribution by Employee				488,063	1,477,236	1,877,308
*Total General Fund Revenue	94,100,000	94,100,000	85,100,000	80,400,000	80,800,000	82,000,000

*Source is City of Ventura Finance Staff



Percentage of CalPers to Total General Fund	12.70%	13.95%	15.27%	16.95%	17.53%	19.28%
Total of CalPers Payment	11,948,759	13,129,763	12,992,138	13,630,999	14,164,263	15,806,832
Percentage of City’s payment to CalPers	100	100	100	96.42%	89.57%	88.12%

Dollar Increase, year over year, to CalPers		1,181,003	(137,625)	638,861	533,264	1,642,569
$ of Contribution by Employee				488,063	1,477,236	1,877,308

Employee Portion over City’s increase				(150,798)	943,972	234,739	1,027,913

[1] 3% at age 55 means 3% of a policeman’s or firefighter’s highest annual salary times the number years of employment. For example, a 20year old works 35 years and in his last year his salary is raised to $80,000. He will be paid $84,000 a year for the rest of his life.

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A Little Here. A Little There. Pretty Soon It Adds Up To Real Money.

July 1, 2010/in Newsletters/by VREG Editors

Bellwether: “A male sheep which leads the flock, with a bell on its neck. A leader of a thoughtless crowd” —Webster’s New Collegiate Dictionary

THE SOUND OF THE BELL

[SHEARING TIME?]

Three years ago nobody in city government would pay attention to the voices of caution who warned the City Council about the money excessive public employee salaries cost and the unfunded pensions of public employees. Now, thanks to the City of Bell perhaps the citizens of this community will pay attention to their role in government, and the need for serious and drastic reform.

Everything went wrong in Bell. It was greed in all of its glory, and it illustrated what is wrong with the arcane public pension system in this State, and in every city in this state, including Ventura. Bell City Manager, Robert Rizzo, resigned after it was revealed he was being paid $800,000 to oversee a town with a population of 40,000. Now the LA Times reports that the records actually show that he was paid $1,500,000 a year. Included in that was 28 weeks of vacation and sick time at a cost of $386,000. Well he is gone but he is not out because he will collect $600,000 yearly from his pension benefits with CALPERS.

Ventura taxpayers get fleeced in Bell disaster. We will pay money to Randy Adams for life.

This example however is even closer to home. Two people in the City of Bell used to work for the City of Ventura. Angela Spaccia, Assistant City Manger for Bell was paid $376,000 a year before she quit, and moved over to work for the City of Maywood. She used to work for the City of Ventura. Then there is Officer Randy Adams who worked in Ventura for 23 years as a police officer. He then gravitated through various jobs until he became the Chief of Police for the City of Bell. He too resigned after it was revealed that he was earning $457,000 a year. He can retire, as will Ms. Spaccia eventually, but whose money pays the pension?

Not the City of Bell. They escape nearly all the costs of Chief Adams $411,300-a-year pension. Under CALPERS rules, the city is responsible for just 3% of that because he only worked there for one year. Taxpayers in Glendale, Simi Valley and Ventura would have to pick up the tab.

This happened because Bell hired Adams at more than double the money he was making as Chief in the City Glendale. That salary spike doubled his eligible pension amount under CALPERS, the state’s public employee retirement plan. Add the state’s permissive pension laws and a host of variables that can dramatically affect retirement pay and we find a system that leaves you in a bleary daze

Other cities will be on the hook for Adams’ pensions costs even though their salaries were relatively modest. until he landed in Bell. When he resigned Chief Adams was making $457,000. He will now get approximately 90% of that sum. Glendale will have to pay around 16% of Simi Valley 18%, and Ventura 63%. Ventura alone will have to pay this guy $259,119 per year for life. Remember, none of this has ever been funded.

CITY OF VENTURA’S RESPONSE

Ventura’s mayor, Bill Fulton, has written several articles on the subject. You can go view the articles here. He, like everybody else, condemns the excesses by employees and officials in the City of Bell. His articles are well written and deserve a read, but how transparent is our city government? Mayor Fulton answered this question in one article:

“…democracy only works, even in small cities, if people pay attention, and oftentimes people aren’t paying attention. But one of the most disturbing aspects of the Bell situation … is how hard it is to figure out what’s happening even if you are paying attention. In spite of the state’s vaunted Brown Act open-meetings law, California governments are still not particularly transparent”.

HOW MUCH MONEY DOES THE COUNCIL MAKE?

The City Charter limits council members to $600 per month and the mayor to $700 per month, plus members are paid for participating on certain boards and commissions. Here is the yearly total:

Councilmember	Salary	Boards	Travel
Fulton, Mayor	$ 8,800	$2,000	$1,200
Monahan	$7,200	$3,800	$1,200
Tracy	$7,200	$0	$1,200
Morehouse	$7,200	$1,440	$1,200
Weir	$7,200	$0	$1,200
Brennan	$7,200	$0	$1,200
Andrews	$7,200	$0	$1,200

CITY EMPLOYEE COMPENSATION

Employee	Salary	Medical	Pension Contribution	Car
Ken Corney, Police Chief	$195,153
Quinn Fenwick, Asst. Police Chief	$160,012
Kevin Rennie, Fire Chief	$187,000
Don McPherson, Asst. Fire Chief	$170,014
Ron Calkins, Public Works Director	$175,547
Jay Panzica, Chief Financial Officer	$171,265
Rick Cole, City Manager	$174,158
Mary Walsh, Asst. City Manager	$171,265
Ariel Colonne, City Attorney	$194,909
Jeff Lambert, Community Dev. Dir.	$171,265
Elena Brokaw, Director, Parks & Rec.	$167,088
Jenny Romey, Human Resources Dir.	$159,037
Total	$2,096,713

*In response to a VREG request for the full cost of each of these employees the City Manager, on August 10, 2010, provided the following response:

“Within the next few days, we (will) have calculations on the cost of employees over and above regular salary (we’ve just posted those earning over $100,000 including gross pay and overtime) to be followed by the Box 5 W2 calculations (which also includes city paid deferred comp and the value of life insurance) to be followed by a total all-in of that plus city paid benefits and CalPERS contributions”—Rick Cole, City Manager

Editor’s note:

For detailed information on past or present Ventura city employees’ salaries, visit transparentCalifornia.com.

As for Ventura’s exposure to the Randy Adams pension claims, purportedly the City has sent a letter of protest and/or legal challenge to CalPERS to try and stop payment. Good luck with that one! Even Chief Adams will lawyer-up and argue we are a nation of laws and not men.

Editors’ Comments:

How many more Randy Adams types do we have out there? How much more do we owe, over the amount funded through CalPERS, to those who are retired or about to retire in the future? It is time for government to become proactive instead of reactive in the management of our tax money and find out before we end up in the shearing shed. Stop listening to the bellwether !

Editors:

B. Alviani S. Doll

J. Tingstrom K. Corse

B. McCord T. Cook

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City Council Lacks Expertise On Pension And Budget Matters

May 1, 2010/in Newsletters/by VREG Editors

Insanity: doing the same thing over and over again and expecting different results.
—Albert Einstein,

THE FIREFIGHERS PENSION INCREASE – A CONTRACT?

[ NOT!]

In previous editions we informed you that in 2008 the City Council, on a vote of 4 to 3, increased the Firefighters salary and retirement benefits. They voted to increase those benefits from 2% to 3% even though they knew (were told) they did not have the money to fund it. The vote resulted in an approval of a Memorandum of Understanding (MOU) with the union.

City Council approves an 11% increase in firefighters’ pension.

The issue had to be revisited because of the failure of the City Council to obtain an actuarial report from CALPERS on what it would cost to increase these benefits. To “try” to fix the problem the Council, at their regular meeting on April 26, 2010, was presented with a report from the CALPERS actuary, Bill Karch. He informed the council that the “present value” of the cost of the increased benefits (in addition to what we are already obligated to pay) would be $5,047,760, that the city would have to pay $548,271 this year, and a sum yearly thereafter to fund the $5.4 million increase. He didn’t say how much we would have to pay beyond 2010.

An actuary is a specialized, mathematical expert trained to compute values for present and future events. Actuarial “present value” calculations convert future occurrences, such as retirement payments, to a present dollar value. The “present value” of benefits represents the total dollars needed today at an estimated investment rate of return to fund future benefits for members of the pension plan. The lower the rate of return (say 4.5%) the more you have to pay up front now to meet the future payment demands. The higher the rate of return (say 7.75%) the less you have to pay now.

The CALPERS actuary used a rate of return of 7.75%. Interesting choice given that CALPERS lost $55.2 billion (25% of its value) in 2008-09, and just billed the State of California f $600,000,000 this year to pay for unfunded pension liabilities, but we digress. None of the Council members asked about the investment rate of return that was used to make his calculations and/or whether the 7.75% rate of return of interest was a reliable dollar estimate in today’s market, and/or whether we should use a lower rate of return, to predict how much our present pension obligations would have to be increased in order to fund and pay future pension obligations.

Subsequent to the Council meeting Mr. Karch was asked in an email from VREG if he could calculate what the present value of the increased obligation if 4.50% was used, and how much more Ventura would have to pay this year. That number was selected because actuaries today conservatively use 3% to 5% as the investment rate of return in making such calculations. Mr. Karch declined. His response was that we could get that the data if VREG made a Freedom of Information Act request through formal channels; and, by-the-by send a large check to pay for the voluminous computerized report. Well Bubba I guess we know who that fella works for!

So in a state of blissful ignorance Council members Fulton, Brennan, Monahan and Tracy voted yes. Council members Andrews, Morehouse and Weir voted no. The deciding vote was that of Deputy Mayor Tracy, who in casting his yes vote stated:

“…what is clear tonight is that we are not deciding on whether or not we give our firefighters an enhanced retirement program. That decision was made two years ago. We have received (a) very competent legal opinion that frankly we have no choice but to honor that contract…”

City Council negotiates questionable contract with Ventura firefighters.

What the Deputy Mayor was referring to was a letter from a law firm named Liebert Cassidy Whitmore of San Francisco, attached to the Administrative report for Agenda item #8, which concluded – “Once approved by the City Council, the memoranda of understanding (MOU) between the City and the Association (firefighters) became a binding and legally enforceable agreement…”.

Just prior to the vote the City Manger, Rick Cole, advised the Council that the reason for the public hearing on the actuarial valuation was to let the public know about the cost of the increase, referring everyone to Government Code section 7507. Connect this reference with the Deputy Mayor Tracy’s statement and we arrive at the crux of the problem — was there a valid contract?

Read Government Code § 7507 and you decide. That code provides:

“The legislature and local legislative bodies shall secure the services of an enrolled actuary to provide a statement of the actuarial impact upon future annual costs before authorizing increases in public retirement plan benefits…”

The future annual costs as determined by the actuary shall be made public at a public meeting at least two weeks prior to the adoption of any increases in public retirement plan benefits”.

The letter written by the San Francisco attorneys, LIEBERT, CASSIDY WHITMORE does not address this error. For reasons that are not apparent, these high priced legal types did not even discuss this issue.

A mutual mistake of law and/or fact is always a good defense to breach of contract action. If both parties to a contract operate under a mutual mistake of fact that there has been compliance with the law, and in fact there has been no compliance with the law, there is no contract

Questions for our readers:

Why a letter, bearing the legend “CONFIDENTIAL—ATTORNEY CLIENT PRIVILEGED”, which does not discuss a critical legal defense, would be attached to a public document?
Why not a single firefighter asked to speak in support of the measure when the room was packed with the fire folk, who were straining at the bit to get more benefits?

Curious that , but we leave “that” to your speculation.

Editors Comments:

An actuary report was NOT presented prior to the decision to increase benefits in August and October of 2009, thus was not enacted as required by the California Government Code. The attempt to finesse this critical error, by pretending it could be presented after the fact, on April 26, 2010, ignores the underlying issue – THE RIGHT OF THE CITIZENS OF THIS CITY TO KNOW IN ADVANCE WHAT AN INCREASED PENSION BENEFIT WILL COST BEFORE THE CITY COUNCIL MAKES A DECISION. The firefighters’ will of course dismiss this as a mere formality. This contract should be rescinded and an accurate and reliable actuarial report provided to the citizens of this community.

FROM READERS OF THE MARCH EDITION OF RES PUBLICA

[THE PIPER WOULD PLAY A FAR DIFFERENT TUNE IF THREATENED WITH THE LOSS OF HIS PIPE]

This regarding the Pension Reform Committee appointed by the Ventura City Council:

“Very interesting news letter this time as always. Only one public member appointed to the “ad hoc” committee. All the rest have a vested interested in the system. What would happen if the no guts council just plain and simple told the unions that from now on the fire and police will have to pay at least 1/2 of their contribution. Would the fire and police walk off? If so I am sure they can replace the lot. The problem as I see it is that all the cities have to ban together so that there will be a closed door to bouncing around of personnel.”

—K. Weber

THE COUNCIL ACCEPTS VENTURA’S NEW BUDGET

[A SORRY EXCUSE, AT BEST]

Another letter concerning the current budget format mandated by the City Manger for use in 2009-2001 (called a Budget Book). We mentioned in our last issue that the current “Budget Book” looked useless and appealed to you for help.

“Regarding the City’s budgeting process and the budget document itself, I spent some time looking at it after reading your latest publication and you hit the nail right on the head. It is most assuredly not a decipherable budget document. It lacks clarity and the detail required for the average lay person to begin to understand it, much less a person with a financial background. I’m not even sure that it meets the minimum legal requirements, as promulgated by the State Controller’s Office.

I am a C.P.A., have a Masters degree in Public Administration, and have worked in government finance and budgeting for the past 29 years and, without a doubt, this is the most sorry excuse for a budget document that I have seen in my life.

In Santa Barbara County, we have developed a true program/performance-based budget that actually links dollar amounts with stated goals and performance measures. Not only can you clearly and easily see the amount of money, staffing, and other resources allocated to each program area within each department of the County, but you can also see the performance and outcome measures associated with each individual program area. In other words, as a taxpayer, you can actually see what you’re getting for your dollars.

The firefighter pension increase is just another example of the arrogance and disconnect with reality coming out of City Hall these days. I certainly hope we can make some changes in the next election. We definitely cannot continue down this path or bankruptcy becomes an inevitability”

—M. Gibson, CPA and 2009 candidate for Ventura City Council

EDITORS’ CORRECTION

Last month we reported that the Firefighters pension increase was 50% (2% to 3%). The City Manager corrected us and pointed out that it was ONLY 11%. . After his response we received the CALPERS actuary report and confirmed that our report was in error. Under the current pension plan it is a 20% increase if the Firefighter retires at age 50, and an 11% increase if the Firefighter retires at 55. That aside, this correction does not excuse the ridiculous statement by former Councilmember Ed Summers that it was only a 1% increase. It is still hard to believe he wants to be the County Treasurer.

EDITORIAL

The City Council is called upon to make many difficult and complex decisions concerning the financial welfare of this community, but one of the greatest decisions they will have to make concern the pension contracts with the public employee unions now and in the future. Except for members of the public employee unions there is not a single informed individual in this society that would disagree with the conclusion that our pension system is bankrupt and unsustainable. The collective decisions of our City Council are costing the citizen’s of Ventura for decades in the future. Not to ask the hard questions, when asked to approve a new liability of $5.4 million dollars, such as the interest rate used for the assumptions of a pension increase, or to discuss if the right questions were asked and answered in a legal opinion statement, borders on malfeasance. It is not enough to say, “the report was too lengthy” or “we didn’t have enough time”. If decisions need to be delayed and other opinions sought, the City Council needs to control that process and remember the admonition of Jean-Jacques Rousseau to ”keep your experts on tap and not on top”.

Editors:

B. Alviani S. Doll J. Tingstrom

K. Corse B. McCord T. Cook

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City Government Clueless About What Citizens Need

December 1, 2009/in Newsletters/by VREG Editors

“The characteristic complaint of our time seems to be not that government provides no reasons, but that its reasons seem remote from human beings who must live with the consequences”—William Brennan, U.S. Supreme Court Justice

THE END OF THE FIRST DECADE

It is the end of the first decade of the 21^st century. This first ten years have been marred by war, scandal, fraud, economic failure and government malfeasance at all levels. Venturans will also be happy to turn the page and try to rebuild. The questions is whether local government can provide the insight and leadership to achieve prosperity, or will be mired in the failed policies and decisions of the past.

THE NOVEMBER 3RD ELECTION – BEFORE AND AFTER

[THOSE WITH INTEGRITY AND THOSE WITHOUT]

We start with glimpse of the events leading to the last election. It was not pretty and hopefully is not an indicator of how the politics of city government will perform in the next ten years.

Police Association Smears Candidate Andrews

Prior to the last election the Ventura Police Association commissioned a telephone poll (push poll) for the specific purpose of trying to eliminate Councilman Neil Andrews. A push pole is a seemingly unbiased telephone survey that is actually conducted by opponents of a particular candidate in order to smear or disseminate negative information about that candidate.

Police Association interjects itself into city government

Then immediately prior to the election came the mother of all polished and salacious brochures. You know, the one about Neal Andrews taking public money to the tune of $20,000. None of it was true, but the policemen in charge didn’t care about that. They too have a right of free speech, even rotten speech and fraudulent utterances.

It didn’t work. The voters wisely returned Mr. Andrews to office. He was elected to his third term of office, and was the next highest vote getter [9,246] next to our newbie retired chief Mike Tracy [9,777].

Councilman Andrews. of course, was punished for his position when the majority of the Council at their December meeting. The Council refused to elect him as the mayor of this fine city or even the position of Deputy Mayor. Councilmen Andrews and Morehouse were in the minority. The Ventura County Star published an editorial castigating the members of the council who condoned this miserable spectacle.

THE UNFUNDED PENSION PROBLEM PLAGUES GOVERNMENT

The unfunded pension liability of this city is the biggest problem facing this community, and will be the focus of VREG in the first quarter of 2010.

Councilmember Andrews believes city government should bear all the cost of police and fire pensions.

Councilman Andrews is the only elected official who has not lost focus on this enormous issue. His public position, and one that he has espoused for years, is that the benefits of the members of the public unions, particularly police and fire, are excessive and must be changed from a defined benefit plan to a defined contribution plan. That of course is not to the benefit of the union members because they want all they can get — FROM YOU.

This is real. If you do not believe this City has a serious debt problem you are not paying attention. Attached is a letter which VREG published in April 2009, titled “THE SPECTRE OF BANKRUPTCY”. The unfunded liability for the City of Ventura, as of June, 2007, totaled $294,673,595. We believe the 2008 Comprehensive Annual Financial Report will reveal that the debt picture has improved somewhat and will report on that analysis in our next issue. VREG will also sponsor a public forum and speaker on this issue in the first quarter of 2010. We will announce the time and place.

A MESSAGE FROM A CITIZEN

[WHAT OUR CITIZENS WANT FROM GOVERNMENT— PAY ATTENTION CITY COUNCIL]

Just before Christmas the Ventura County Star published a letter from one of our citizens. With his permission we publish that letter as a message to start the new year:

WHAT CITIZENS WANT

Re: Your Dec. 12 editorial, “Council’s Action a slight to voters”:

I concur with the editorial that called the selection of Mike Tracy as deputy mayor as a slight to voters. I have no problem with Tracy and feel he will do a great job, but as a brand-new, untested councilman he hardly deserves to be appointed deputy mayor.

Skipping the popular, at least with the public, not electing Neal Andrews [as Deputy Mayor] is truly an insult to the people who voted. What the City Council and city manger do not understand is that there’s a reason no new tax measures have been passed. The voters are unhappy with the way things are going.

I was particularly irked by Councilman Brian Brennan’s comments after Measure A failed. He basically said the public wants more city services, but doesn’t want to pay for them. I think he is wrong. I believe the public wants basic services and is willing to pay for them. Those services, in my opinion are:

Well-maintained streets and storm drainage.

Library services at the Helen Wright Library.

Adequate police and fire protection.

Safe neighborhood parks.

Being able to move about the city without harassment by professional bums.

A city that encourages a Walmart, which would provide tax revenue and jobs.

One reader wants city government to stop wasting money.

What I believe citizens do not want are:

Large, expensive sports complexes.

Expensive housing projects for “struggling artists”.

Worthless and expensive bus-stop art at the mall.

Exorbitant pensions.

City leadership that seems to enjoy punishing the public for not going along with their agenda.

And, finally, a city leadership that thinks residents who do not agree with them are just ignorant.

I feel better now.

—Ray Holzer

Editors’ comments:

Thank you Mr. Holzer. Could not have said it any better.

Editors:

B. Alviani S. Doll J. Tingstrom

K. Corse B. McCord T. Cook

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Grand Jury Exposes City Pension Out of Control

August 1, 2009/in Newsletters/by VREG Editors

“The democracy will cease to exist when you take away from those who are willing to work and give to those who would not” —Thomas Jefferson

THE FLEECING OF VENTURA

The Ventura County Star reports the Grand Jury finds Ventura’s Pension Out Of Control

On July 26^th the Ventura County Star published an article about the deplorable conditions of the public pension plans in Ventura. The Ventura Grand Jury labeled these city pension plans as headed for disaster — an out of control cost [They actually said “uncontrollable cost”]. To see how out of control the one in Ventura is see the October, 2008 issue of Res Publica, which provided an in depth analysis of just how much unfunded debt exists because of the lavish pension plans given to public employees by the City Council. We republish some of that article here as a reminder to our citizens when they go to the polls in November.

(c) THE FIREFIGHTER PENSION

In a vote of 4 to 3 the council approved the Memorandum of Agreement and the new pension contract with the firefighters of this city giving them a pension equal to 3% of their highest salary times the number of years in service plus all medical, dental, the same plan received by policemen. The yeas were Councilmen Fulton, Brennan, Summers and Monahan. The neighs were Mayor Weir, Councilmen Andrews and Morehouse who stated just before his “NO” vote — “I HAVE GRAVE CONCERNS TO COMMIT WHEN WE DON’T KNOW WHERE THE FUNDS WILL COME FROM”.

I have grave concerns to commit when we don’t know where the funds will come from.

In our August 2008 letter and postscript letter titled “IN THE SHADOW OF VALLEJO”. We posed a hypothetical retirement scenario — a fireman goes to work for the department at age 20, works 35 years and retires at the age of 55 earning a salary of $100,000 per year. The adopted increase now provides that he/she will receive 3% of their salary in their last year of employment multiplied by the number of years of service. So he/she will retire earning $105,000. [$100,000 x 3% = $3,000 x. 35 = $105,000].

Councilmember Ed Summers voted for pension increase because city employees only live 7 years past retirement.

Since that publication Councilman Summers, who is up for reelection in November, pointed out that we need to make some “minor corrections”. We quote from his letter:

In the example it indicates that an employee has the ability to retire and receive 105% of their annual salary. Regardless of the time of service and age at retirement, the program is capped at 90% of the eligible salary. The example also includes add-back for accrued sick leave and vacation. The City’s formula does not include any add backs, the formula uses only the base salary. It is the County’s formula that includes add backs…(in addition)…unfortunately the assumption of a 30-year future obligation per employee is incorrect, the average life expectancy of a public safety employee is 7 years from retirement”.

We do not know what source Councilman Summers uses for this remarkable revelation that firefighters retiring at age 55 are projected to live only 7 years. His assertion is nonsense and not supported by any credible source. Further, when he and the other profligate four argued that “the increase was only 1%, it in fact was an increase from 2% to 3%, which is a 33 1/3% increase in the retirement plan. So what is the reality? We have less money now than we did in October, 2008. This City Council has led us into a sea of red ink — $294,673,595 as of April, 2009, yet our Council and the public safety unions ask us to pretend that this not a problem. Instead they want more money in the form of new taxes. Here is an example of what we now have to pay just 15 retired folks yearly for the rest of their lives — $1,707,086.

Mike Tracy*	$ 186,902
Gary McCaskill	$140,602
Neil Gedney	$129,856
Brian Gordon	$132,548
Carl Handy	$122,022
Douglas Aldridge	$124,396
Bill Rigg	$121,333
Robert Boehm	$120,494
Donald Davis	$112,735
Jim Walker	$ 110,570
Everett Millais	$105,245
Shelley Jones	$105,013
Roger Nustad	$101,836
Gail Bogner	$100,515
* Retired Chief of Police. Running for City Council

Police Chief, Pat Miller

Fire Chief Mike Lavery

More recently we learned that our present Chief of Police, Pat Miller and Fire Chief Mike Lavery would retire. Why did they push so hard for an increase in the retirement benefits in October, 2008 ? Well Duhh ! Thank you Councilmen Fulton, Brennan, Summers and Monahan.

More recently Councilman Fulton announced that the City was going to appoint a committee to examine the public pension plan. Let us hope against hope that they don’t pack it with FOCs like they did the Blue Ribbon Committee, and that they read the Res Publica analysis of April 2009, which concluded that the pension plan is headed on the same path as the City of Vallejo – Federal Bankruptcy.

Councilman Neal Andrews has advocated for a change. in this area, and has published a lengthy memo on the subject:

“Immediately abandon the compensation formula that essentially forces us to mimic the weakest and most incompetent policymakers in other communities. Today we promise to compensate our employees at approximately the average level of other communities, though we sometimes count the highest paid three times as heavily as others. This is an artificial and arbitrary benchmark. We should instead adopt a clear policy of compensating at a level adequate to provide a sufficient workforce with the high level of competence we want in them.

Adopt a two-tier retirement system that provides a guaranteed contribution to the retirement plan for all new employees, instead of the current guaranteed benefit program. This would not change a thing for current employees, but over time it would significantly reduce the volatility of our budgets by stabilizing a major element of our financial liability. This is the same type of retirement program offered today by most of the private sector.”

—Neal Andrews

Editors’ Comments:

Councilmembers FULTON and MONAHAN deflect any criticism and defend the retirement plan by saying the decision to raise pension benefits was deferred. When questioned, they cannot recall when the motion or official action was made, do not recall who recommended delaying the firefighters retirement plan increase or just what happened. They act as if this is a non-issue. For your information councilmen, the pension increase which you approved in October 2008, has NOT been rescinded or modified.

Editors:

B. Alviani S. Doll J. Tingstrom

K. Corse B. McCord T. Cook

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