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Pension Redux

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“Stupidity is also a gift of God but one mustn’t misuse it.”
—Pope John Paul II

PENSION OBLIGATIONS REVISITED

On March 11th the City Council was informed that the $12 million reserve that we have had since 1992 isn’t available as we had been led to believe. Although the General Fund has about $28 million, including this $12 million dollar reserve, by the end of the 2012-13 fiscal year had been “committed” or “promised” to someone or something. This includes such things as a $5.4 million dollar loan to the Ventura Redevelopment Agency or the $2.4 million set aside for the Jobs Investment Fund.

These promises are in fact liabilities, money we that we owe. If all of the promises are fulfilled and the RDA successor agency is unable to pay back their loan, the General Fund would only have $4.3 million. Not discussed or mentioned at this Council meeting were the other debts and liabilities, in particular the unfunded public pension debts. Those obligations have increased 97.4%. since our report to you 4 years ago.

The Comprehensive Annual Financial Report (CAFR) is an annual financial report detailing the financial condition of our City.

We start with the Comprehensive Annual Financial Report (CAFR). This is an annual financial report detailing the financial condition of our City. These numbers are accurate, but bear in mind that by the time we see the reports the data is 18 months after the fact. Further, you have to look in the footnotes to discover those debts which are “off the books” like the City pension program, which is administered by CALPERS.

What follows is an extract from the 2008 CAFR, as it related to the status of the City pension plan then. The third column reflected how much we owed to employees and retired employees as of the date of the report. The category of “safety” covers police and fire pensions and all other employees are carried in the “Miscellaneous Employees group”. Our unfunded liability totaled $48,673,594.

In the same year the revenue collected by the general fund totaled $88.7 million, of which $47.1 million (53.1%) was spent exclusively on police and fire departments. The percentage of our general budget paid to police and fire has increased dramatically whereas other employee costs have remained relatively stable. In 2009 59.9% of our total budget was allocated to public safety, 57.7% in 2010 and 53% in 2011. That did not include the “unfunded pension obligations”.

CalPERS increases unfunded pension liability costs to Ventura

In 4 years UNFUNDED PENSION OBLIGATIONS INCREASED 97.4% and now total $96,099,169.00.

These unfunded obligations accrued interest year after year, at the rate of 7.75%. CALPERS did not recover the substantial losses (reported by some news sources as 50% )as a result of the 2008 recession. They also did not earn the 7.75% annual projected investment returns until just recently. On the Legislative side efforts at the State and local level to move from a defined benefit plan to a 401(k) plan for new hires failed. Our City did try to address the problem by requiring current employees to contribute 4% of their compensation toward their own retirement plan, but it was piteously short. In 4 years UNFUNDED OBLIGATIONS INCREASED 97.4% and now total $96,099,169.00.

CALPERS is quick to point out that over a 20 year period the” return for each fiscal year ranged from -24% to +21.7%., and if we let them continue to manage our pension plan they “assume” we will get a return of 7.50%. But, if we want out and want to run our own program they use a 4.82% rate of return. We really owe $350,848,292. (See attached Hypothetical Termination liability for each plan).

 

PUBLIC PENSIONS OR BOND HOLDERS – AT RISK

[WHAT IS GOOD FOR THE GOOSE IS GOOD FOR THE GANDER]

Last year the Governor’s office and legislature announced that they had achieved “pension reform”. The reality is that they did not change any of the current pension benefits. They did this mainly for political reasons, but also because it is widely assumed that employees in the public pension system are protected by the constitutional ban on “impairing the obligations of contracts”.

Public employee unions have stridently asserted that they are different and thus bullet proof. This attitude was displayed clearly when the City of Stockton filed bankruptcy. That City told their bond holders and/or their insurers to take less, but refused to reduce the $29 million it pays each year to CALPERS for the employee benefits.

Assured Guaranty Ltd, which insured the Stockton bonds, stood to lose $100 million. They filed a complaint in the bankruptcy court claiming that Stockton had targeted the bondholders to take a loss, but continued to pay CALPERS without any reduction or did not seek any benefit reductions from the public labor unions.

Another insurer, National Public Finance, added their voice to the controversy, supported the Assured Guaranty position, but also alleged that the City of Stockton “rather than face the hard realities imposed by its unbearable liability to CALPERS (decided) to take a pass” – in short, that it was easier to sacrifice the bond holders than face the political wrath of the public employees or CALPERS.

So, the bond insurers asked the bankruptcy judge, Christopher Klein, to declare the City’s bankruptcy plan as inadequate because it ignores the pension debt, and they seek to compel the City to reduce its pension payments. The CALPERS reaction was to argue to Judge Klein that the pension payments have a higher priority over bonds. CALPERS lost.

In December, 2012, Judge Klein rejected the CALPERS constitutional inviolability of contract argument and ruled:

“While a state cannot make a law impairing the obligations of contract, Congress can…the goal of the bankruptcy code is adjusting the debtor-creditor relationship. Every discharge impairs contracts”.

So, what will happen to the benefits of the public pension contracts or the bond holders? CALPERS, those in the Stockton pension plan and the bond holders may both lose. This chapter is soon to be written.

EDITORS’ COMMENTS:

A 97.4% increase in unfunded liabilities over a 4 year period is setting Ventura up for failure. Most citizens don’t realize that Ventura will pay $13.3 million to CALPERS for 2012-2013. This is over and above salaries and other benefits. As more employees choose to retire early (50-60 years of age) this only gets worse.

Call it what you will, but the City Council thus far has adopted a profligate fiscal plan of doing nothing to pay this unfunded obligation. Hoping that the economy will rev up, that inflation will chip away at the obligation, or that somehow our pension assets will produce magnificent returns is foolish.

When the Council considers its new budget in June we urge them to set aside a percentage of our annual revenue to add to our reserve and/or apply to the unfunded pension obligations, and to release some of the commitments it has made to the General fund cash balance.

 

Editors:

B. Alviani         K. Corse             T. Cook

J. Tingstrom    R. McCord        S. Doll

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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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Ventura City Council Ignores Practical Issues. Instead Focuses On Trivial Matters.

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William Ellery Channing

“The office of Government is not to confer happiness,
but to give men opportunity to work out happiness for themselves”
—William Ellery Channing, 1780-1842

VENTURA CITY COUNCIL– CREATING A BIOSWALE BY THE SEA

[WILL SOMEONE GIVE US $400,000,000?]

Our City Council has many practical and immediate things with which to be concerned, but with so many planners they are not known to miss an opportunity to “visualize”. The latest project is to direct city staff to prepare a corridor down California Street and across Highway 101 – to connect the City and the beach.

Capping Highway 101 occupies Ventura’s City Council.

The City Council’s “design team” envisions a project of “covering or ‘capping’ the freeway to connect the downtown area with the promenade along the ocean. Here it is in their words.

“Due to the lack of connection to the beach area for so many years, development has been limited to one parking structure, one hotel and a bunch of parking lots adjacent to an un-activated waterfront promenade.

         In attempt to correct the lack of historical vision for the use of this area the design team has studied the possibilities of extending the current city grid all the way to the beach, thus taking the ‘urban experience’ from the foothills to the shore and also capital­izing on opportunities to improve connections with the natural environment. With the potential reloca­tion of the existing parking structure and removing cars, from parking lots with ocean views to new on-street parking, the development potential of the beach front could be dramatically increased. With a reconsideration of current beach-wall and storm water drainage strategies, new development could create beach-friendly dune-based bios wales to soften the transition from building edge to natural beach and also naturally treat storm water.”

 

 “If we don’t dream, we’ll never get there.”

—Jeff Lambert, Ventura Community Development Director

 

Click here to see the plans and artists rendition.

 

A CITIZEN’S VIEW ABOUT THE CITY COUNCIL’S PLAN

[How About a Monorail?]

Forgive me for my simple approach to a very complex project but let me get this straight.

City Council fixates on connecting the beach to downtown.

The major reasons to covering the 101 freeway, is connecting the beach community to the downtown and making Ventura more pedestrian friendly. Estimated costs are in the neighborhood of $400 million. I am told that Ventura is going to “lobby” the state to find funding for this project. When you talk about funding, state, Federal, county or city, you are talking about yours and my “wallet”. Just because it is State or Federal funds does not change the fact that it is not “free money”, and it is yours.

Then balance a $400 million project with the benefits. How long will it take to generate $400 million in NEW (tourist, sales tax, etc.) revenue to cover the costs? Other than the Crown Plaza and downtown merchants, does the harbor, Pierpont, midtown or east end really benefit? Does the state even have the funding to build this project? We understand that limited city resources have gone into this project and Southern California Association of Governments funded a $160,000 study but once this is spent, the community will continue to feel committed to continue this project.

So, how many more resources and money will continue to be committed? Will it really be a tourism draw or just another “feel good” pipe dream that someone wants to place their name on a dedication plaque? Will it become another “beautiful downtown golden mall” project that Burbank built in the 60s and demolished 22 years later?

If you really want to be a visionary, build a monorail from the Harbor to Pierpont to downtown. Improve the transportation over a much larger area, become a tourist attraction, generate new permanent jobs and save millions in the process. Just look at Seattle. Built in 1962, the monorail draws over 2 million riders a year. Truly, if you want to spend millions, bring in something that will cover a much wider area of Ventura, something that will attract visitors and something that will add jobs.

 

THE BLUE BELCH

[THE DOG POLICE STRIKE –WHERE ARE YOUR PAPERS ?]

 

Ventura City Council is more concerned with dog licenses than it is with fixing roads.

A local radio station, AM 1520, recently went on the air concerning the subject of “chickens, Planning Commission and the City Council”. During the program a Ventura citizen called in to report his animal experience. The report is noted below. The folks at Ventura Animal Control earn the coveted BLUE BELCH AWARD from VREG.

The caller reported that the dog police knocked on his door early Sunday morning and demanded to see a license and rabies vaccine papers for his pooch.  The dog owner was shocked and taken by surprise.  So he allowed the official to come inside and see the papers.  As it turned out, the dog owner had the rabies vaccine papers but not a license and he bought one on the spot.  The dog owner did not say that the enforcement officer advised him of his 4th amendment rights.  When the officer left the home, the dog owner said “You know, this reminds me of pre-war Germany, people knocking on doors and demanding papers”.

 

Editors’ Comments

To state the proposition that our City might find a stray $400,000,000 from a bankrupt state government is to demonstrate its absurdity.

 

Editors:

R. Alviani            K. Corse             T. Cook

J. Tingstrom       R. McCord         S. Doll

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Grand Jury and City Code Enforcement Abuse

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John Locke talks about code enforcement tyranny

WHEREVER LAW ENDS TYRANNY BEGINS
—John Locke, 1632-1704

CODE ENFORCEMENT AS A REVENUE STRATEGY FOR VENTURA

This edition of Res Publica is not a typical VREG topic on City finances because it pertains to a recently published Grand Jury report; however, since the report addresses the aggressive collection of fees and charges by Code Enforcement, motivated by the need to raise more revenue, it is important to bring the details of that report to your attention as a citizen.  It is also extremely important for all of our citizens to know how others in our community are treated by the City Manager staff, who constantly remind us of their transparency, fairness and a sense of partnership with all citizens.

GRAND JURY INVESTIGATES CITY OF VENTURA

[THE SHERIFF OF NOTTINGHAM IS BACK]

Bully is the byword of Ventura Code Enforcement officers.

The 2011-2012 Ventura County Grand Jury opened an inquiry into the practices and fee policies of the City of Ventura and its Code Enforcement group regarding second dwelling units and non-dwelling structures for the period of 2009 through the present time, and have issued a report condemning the Code Enforcement practices.

 

The investigation started numerous citizens complained of:

  1. Aggressive enforcement actions
  2. verbal threats from code enforcement officers
  3. unauthorized searches
  4. threatening documents
  5. preferential treatment
  6. unfair appellate system
  7. arbitrary enforcement decisions holding current or successive property owners responsible  for permits not obtained for work done prior to their ownership
  8. City Council and City Manager trying to raise more revenue through fines and higher permit fees to balance their budget

CODE ENFORCEMENT HISTORY

The backdrop for this started in 2008-2009, when the City began experiencing the financial impact of declining revenue, including revenue losses in Building & Safety and Planning.   Faced with reductions in sales tax revenue, like all cities, this council compounded our revenue problem with a spending problem.  Those spending decisions have come back to haunt us.  As a reminder here are a few examples:

  • $1,000,000 for a study to narrow Victoria Avenue
  • Council enacting a 911 tax that had to be reversed
  • A failed election effort to raise sales taxes
  • Council’s waiver of $1.5 million in payment of permit fees, which should have been paid to Building & Safety for the WAV construction project
  • Lending $2.5000,000 to the WAV developer, and then subordinating that loan to a CHASE loan on the same property. If CHASE elects not to extend their note again and forecloses on the 13 condos in this project that money is gone
  • Unfunded pension liabilities for police and fire of $42,288,412. That does not include the cost of the unfunded benefits for all other employees, which is approximately $20,000,000
  • In 2014 the City will have to pay CALPERS another $19,488,000, on top of payroll costs of $48,000,000, for a total of $67,488,000. That is 80% of our total annual general fund income

CODE ENFORCEMENT – A SYSTEM OUT OF CONTROL

Intimidation is code enforcement's tool in Ventura

Ventura Code Enforcement officers use intimidation, according to the Grand Jury.

The Grand Jury pursued an active investigation of interviewing citizens, government employees and reviewing historical documents.  The evidence and testimony of witnesses in such investigations is, by law, privileged and cannot be disclosed.  This report is an indictment of a system out of control. Here is an even dozen out of 44 facts which the Grand Jury found to be true:

  1. The Code Enforcement officers were aggressive and used intimidation to gain authorized and unauthorized access to properties in the City
  2. Code Enforcement badges are designed to look similar to the Ventura Police Department badges. Code Enforcement officers are not peace officers
  3. Code enforcement bullies Ventura residents

    Ventura Code Enforcement officers intimidate and bully property owners

    Code Enforcement officers claim to have more power than police officers relative to property matters

  4. Code Enforcement has acted on complaints that appear to be retaliatory in nature against neighbors
  5. The Chief Building Officer made recommendations and reports to the City Council to increase inspections, adopt regulations and programs to increase fees
  6. The City Community Development Department (Jeff Lambert) and Code Enforcement (Herr Stauffler) hold current property owners liable when no permit is found, for any work performed, even for work prior to ownership
  7. City permit and inspection record keeping responsibility is placed on the property owner by Code Enforcement staff.  There is no legal requirement for property owners to retain such permits or maintain records
  8. The City lost and/or misfiled permit(s) and inspection records
  9. The City has some damaged and unreadable permits
  10. The previous Code Enforcement fees are arbitrary and have little monetary relationship to the cost of services
  11. The City considers the new code enforcement fees are not a tax.  The Building & Safety Department permit and inspection process had been funded by the General Fund.  The same inspection activities are now performed, except the funding comes from the new permit fees — charged to property owners that build or modify structures
  12. The City stated that finding more code violations does not have a direct financial impact on the Code Enforcement group, but does significantly raise the permit fees for Building & Safety, and likely saves Code Enforcement jobs

Read the full text of the Ventura Grand Jury report here. For more, click here.

CITY OF VENTURA RESPONSE TO GRAND JURY REPORT ON CODE ENFORCEMENT

[LET THEM EAT CAKE]

The City administration published the following response:

“The City of Ventura and its City Code Enforcement staff are committed to preserving and promoting the safety of all who live, work and visit our community. City Manager Rick Cole has reviewed the Grand Jury’s report and acknowledges their suggested policy recommendations.

It should be noted that the report includes no specific example of the problems cited, nor any new information beyond the complaints publicly aired before the City Council and the Safe Housing Collaborative going back several years. Those concerns have been the subject of extensive Council and staff discussion and action, which have already resulted in changes to the City’s approach in promoting and enforcing the health, safety and zoning codes. It should also be noted that despite the public play of a few complaints, the City’s approach to code compliance is compassionate and patient in working with property owners.”

 

Editors Comments:

The response by the City to this report clearly demonstrates their lack of understanding, or constitutes a brazen and irresponsible attempt to obfuscate the truth when they state “the report includes no specific example of the problems cited” –  in other words it is ”vague”.

  A grand jury’s historic function, serving as a quasi-judicial body is to determine if there is probable cause to believe a crime has been committed and to protect citizens, including the obligation to “investigate and report on the operations, accounts, and records of a city’s officers, departments and functions…”   They also have the duty to “inquire into the willful or corrupt misconduct in office of public officers of every description”.

Code Enforcement Sheriff of Notingham

Alan Rickman as the Sheriff on Notingham

The specific evidence and the identity and testimony of witnesses during a Grand Jury investigation are privileged and cannot by law be disclosed to anyone unless and until an indictment is issued.  Their proceedings are conducted in private, and their reports are reviewed by County Counsel, or the District Attorney.  For the City to now suggest that the report is without merit because it does not mention specific examples of wrongdoing or names of witnesses interviewed is ludicrous.  Does the City staff really believe they are entitled to know the names of the people they are accused of intimidating, or whose properties were the subject of an illegal search?

City government and Code Enforcement officers serve a valuable and important service to our community, until they start acting like the infamous Sheriff of Nottingham, of Robin Hood fame, who was notorious for his use of force, intimidation, abuse of power and excessive punishment of the citizenry.

Editors:

B. Alviani          K. Corse          T. Cook

J. Tingstrom    R. McCord       S. Doll

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$850,000 Players Club Loan by City

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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:

  1. Was the Players Club Casino not able to secure a loan of their own in the market place?
  2. Should City Councils be doing the job of private enterprise using the public treasury as the guarantor?
  3. 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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WAV Condos in Ventura

Water Funds Diverted to WAV Project

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“I am not a crook”[1]
—Richard Nixon

“There are no direct (City) tax dollars in the WAV” —Bill Fulton, former mayor (5-13-2011)

 

 

 

 

 

THE WAV REVISITED

In August, 2011 we suggested that you take a walk and visit the WAV, located at 175 South Ventura Avenue, Ventura.  If not, take a virtual tour by clicking here.

This is a subsidized housing project consisting of 54 residential units for low income artists, 15 units for the homeless, 13 market rate condominiums and 6,000 square feet of commercial space.  The projected cost was $57,000,000, but when it was completed in October, 2009, the real cost was $65,000,000 — all tax payer money in one form or another.

Chase holds the note on Ventura’s WAV Condos. The city stands to lose $2.0 million if the WAV condos do not sell by 2016

The 13 condominiums, at the corner of Thompson Boulevard and the Avenue, did not sell and the commercial space along Ventura Avenue remains vacant to this date.  The condos and the commercial side of this development failed.  Last year, to avoid a foreclosure by CHASE of their senior construction loan of $4,000,000 the  Ventura Redevelopment Agency, which holds a promissory note of $2,000,000, secured by a second trust deed on the condo portion of this project, received a reprieve and dodged a bullet by obtaining a 5-year extension of the CHASE  loan.  If the condominiums do not sell by 2016 the probability is that this $2,000,000 will be lost.  In the meantime the 13 condos have been leased.  It is unknown if these leases are producing a profit, or not, since operating statements have not been provided by the company operating the units.

Our former Mayor, Bill Fulton, at every opportunity proudly announced that this project would “produce 25,000 visitors a year and would stimulate the local economy, resulting in $75,000,000 in new investments”.  We do not know the basis for his prediction, but there is scant evidence, if any, to support such prognostication.   As for the sources of funds here is what he said about the use of general fund tax money at a public event:

“…city invested a mere $1.5 million in affordable housing set-aside funds–funds that could only be used for affordable housing (there are no direct tax dollars in the WĀV).”

—Former Mayor Bill Fulton, As quoted by Liveworkworld. com  (5-13-2011)

When Res Publica suggested that money from the general fund of the City of Ventura was used on this project the Mayor stridently asserted that the only money used to build this project was from the Federal Government, the State of California and the Ventura Redevelopment Agency.  The City Manager, noted for his numerous blogs to “clarify matters” or to achieve “transparency”, was silent.  Well, it turns out that City funds were in fact used to the tune of $2,581,858.

First there is the $2,000,000 referenced above.  One-half of that money came from the RDA; however the other $1,000,000 was taken from the Capital Improvement Fund of the Water Department, transferred to the Public Art Fund then loaned to the RDA to make up the $2,000,000 loan.  That promissory note says – “Holder (the City) does not currently need the funds which are unencumbered.  The Loan proceeds will be used by the Borrower (RDA) to help facilitate the construction of the Working Artists Ventura (“WAV”) development in the City of Ventura”.

The city Council approved this loan on February 4, 2008.  The loan was to have been repaid and placed back in the Water Department funds on January 26, 2010.  That did not happen.  What the Council did do however is extend the due date twice with the result that the loan is not due to be paid back until March 1, 2016.

City Councilmembers approving money for WAV building conflicts with their role on the RDA.

This was a major mistake. The folks on the City Council are the same people that act as the RDA.  This transaction was not arms length and drips of conflict of interest.  Who was watching out for the interests of all of the citizens of this community in making the loan and/or obtaining payment of this loan?  It certainly wasn’t the City Council because they, acting as the RDA wanted to claim fame and create their dream public housing (art?) project.  Now it is too late to obtain payment.  The RDA has no money, it is defunct and all we can do now is list this loan on a long list of other RDA loans that the State of California may or may not pay someday.  Just remember this transaction when the City Council asks to increase your water rates claiming that “we” do not have enough money.

Another twist in this Byzantine financing scheme centers on the Planning Department and Building and Safety.  When a builder or homeowner wants to build anything they must obtain permits, which are only issued after scheduled fees are paid for the project.  These permit fees are used to pay for the salaries and benefits of the personnel in these two departments, and are a major budget line item.  In the case of the WAV however the City Council, on August 2, 2007, voted to defer payment of $1,581,858 in permit fees to be paid over a period of 55 years bearing interest of 3%.  Having foolishly given public funds to accomplish their pet project it is little wonder that the City Council found it necessary in the last four years to impose greater and greater planning fees and costs on anyone who wants to develop or build in this City.

USE OF PUBLIC WORKS MONEY, WATER RATES, “ART”AND WAV PROJECT

[“How many legs does a dog have if you call its tail a leg?—A. Lincoln]

Using public works money for the WAV building violates Prop 218

Government Code § 5499.7 [Proposition 218] requires that in providing water and wastewater services to the citizens of any community the amount billed for those services may not exceed the funds required to provide the service, and that the fee may not exceed the proportional cost of the service provided to the individual owner upon which the fees is imposed.

Seems clear.

During a series of hearings before a Citizens Rate Advisory Committee, conducted between October 12, 2011 and January 25, 2012, to consider a City staff proposal to raise water and waste water rates to fund $265,000,000 in new projects over a ten (10) year period, what was discovered is that the City staff, under the direction of the City Manger, interprets Proposition 218 in a most liberal manner.

First, there is the $1,000,000 taken from the Water Department and channeled through the RDA.  This money came from the homeowners and property owners who pay their water bills and waste water bills.  That should not have happened and is ostensibly contrary to the provisions of the Government Code.  We can thank the Howard Jarvis Taxpayer Association for having obtained a court ruling on what this money (utility charges) can and cannot be used for, and public housing projects are not one of them.

“…the fee or charge revenues may not exceed what it costs to provide fee or charge services…the key is that the revenues derived from the fee or charge are required to provide the service, and may be used only for the service…”

—Howard Jarvis Taxpayers Ass’n v. City of Roseville (2002) 97 Cal. App. 4th 637, 647-648.

This committee next learned that not only had this loan been made to the RDA, but that the City Council had taken the position that the water and waste water funds were fair game for any “art project”, and that they were entitled to extract 2% of any money used for capital projects to provide the citizens with water and waste water services.

As of January 2012 the accounting department set aside (extracted) $3,145,620 for the Public Art Program from the water and waste water money collected through water bills.  They reported the following:

VENTURA WATER

PUBLIC ART PROGRAM STATUS JANUARY 2012

Budget for Administration $   432,207.94
Budget for Art Projects $2,713,413.03
Total Sums set Aside for Art $3,145,620.97
Sums spent for Administration $   432,207.94
Art Projects completed – spent $   581,351.86
Total Sums spent for Art Projects $1,013,559.80
Cash in the Bank for Future Art Projects $2,132,061.17
WAV Loan – receivable $1,000,000.00

 

The City Attorney, Ariel Calonne, provided a written opinion to the Citizens Rate Advisory Committee, that the Ventura City Charter, Section 1406, provides the legal basis for the City Council allocation of 2% of all money used for water projects to art.  He further argued that “as the City’s ratemaking authority, (the Council) has determined that the public art program constitutes a reasonable cost of service for capital improvements attributable to Ventura Water”.  The Citizens Advisory Rate Committee did not agree.   On January 25, 2012, this citizen committee rejected the 2% for art allocation as part of any water rate increases, stating “It is time to rethink all public funding and priorities.  This is an opportunity to effect some needed change”.

On Monday, February 27, 2012, at 6 P.M. the City Council will take up the matter of increasing water and waste water rates.

Editors Comments:    

Diverting funds from public works for housing borders on unethical

A plain reading of Proposition 218 and common sense dictates that water and waste water funds should not serve as the slush fund to pay city administration costs or building costs unrelated to the costs of operating our water and waste water departments.  So when your water rates are increased by 30-40%, or another tax increase is placed on the ballot, remember that here is another $2,581,858, squandered.

Actions by our City Manager are not without approval and acceptance by our City Council. If our elected representatives lack the understanding, the capacity to ask the deeper questions or political will to stop these types of actions, we need to make fundamental changes.

Editors:

B. Alviani          K. Corse          T. Cook

J. Tingstrom    R. Mccord       S. Doll

[1] Nixon denied that any of his re-election campaign funds were used to pay   the Watergate burglars, or that a  slush fund has been created for this purpose. In July 1973 Nixon admitted he had attempted to cover up the break-in to hide the fact that funds were diverted from one source to another for an  illegal use.

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Election Reform

City Council and Referendum for Election Reform

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Sad commentary on Ventura's City Council election

A Democracy Will Continue To Exist Up Until The Time The Voters Discover That They Can Vote Themselves Generous Gifts From The Public Treasury.
—ALEXANDER TYLER (1887) Scottish history professor

How Ventura is Really Governed

[Look to the right, look to the left, blame your Neighbor!]

In August we provided our readers information about the November City Council elections, listed the candidates and urged our citizens to vote.  This was an important election but your neighbors did not vote.  Why?  What do the statistics tell us?

Interpreting The Election Results

There are 67,807 eligible voters in the city of Ventura, but 18,945 (28%) of the registered voters voted. There were three open seats so each voter would potentially case three votes in this election. The Ventura County Elections division reported that 47, 062 votes were cast.   This would mean the average voter voted for 2.48 candidates.

If we start with  the total vote count for the 3 winning candidates (20,398), then subtract that number from the total number of votes  cast(47,062), a higher percentage (26,664 or 57%) of voters wanted someone other than those who were elected.

If we extrapolate, using the total of 67,807 registered voters times 3 votes per ballot; the potential number of votes that could be cast would total 203,421. If we then compare the total number of votes received by the three winning candidates to that number it means that these new council members were put into office receiving only 10% (20,398) of the potential vote.

One incumbent proclaimed that his reelection was a resounding approval of his and the City Council’s past performance. Perhaps to his 6,793 supporters, but before we consider the election results as a barometer of public opinion, or that this vote represents a mandate, it should be observed that 72% of the registered voters did not care enough to even vote, and of the voters that did vote 57% of them did not support those who were elected.

Incumbents re-elected. Everyone loses when 72% don’t vote in an election.

Another way to look at this is by adding 48,862 of those who did not vote to the 56.66% (10,734) who did not support the winners; it would mean that 59,596 or 88% of the eligible registered voters did not support these candidates.

The first issue this election exemplifies is that too many candidates provide an advantage for the incumbents to be reelected. When 57% of the voters wanted change but did not get it, it would indicate a need to consider a run off election as part of the Ventura election process of the top 5-6 candidates.

The second issue is that the “special interest” groups are likely controlling how we are governed because they are getting the “Vote Out” for the candidates that support their agenda, while 72% of the eligible registered voters in Ventura did nothing.

NOVEMBER ELECTION STATISTICS

Registration & Turnout
67,807 Voters

 

Vote Count Percent
Precinct Turnout 6,254 9.22%
Vote By Mail Turnout 12,691 18.72%
Total 18,945 27.94%

 

SAN BUENAVENTURA City Council
56/56 100.00%

 

Vote Count Percent
BILL KNOX 4,912 10.44%
KENNETH M. COZZENS 5,564 11.82%
DANNY CARRILLO 4,138 8.79%
CHERYL HEITMANN 7,090 15.07%
CARLA J. BONNEY 3,981 8.46%
MELODY JOY BAKER 952 2.02%
ED ALAMILLO 2,360 5.01%
MARTIN A. ARMSTRONG 1,377 2.93%
CHRISTY WEIR 6,515 13.84%
BRIAN LEE RENCHER 3,307 7.03%
CARL E. MOREHOUSE 6,793 14.43%
WRITE-IN 73 0.16%
Total 47,062 100.00%

 

EDITORS COMMENT

To a large extent, we are preaching to the choir when we say that one of the issues is getting the vote out because we believe MOST of our readers do vote. However, statistical analysis shows that too many are still on the sidelines.

It is a sad commentary on our community when the citizens do not vote, do not care to vote, make no effort to participate in their government, nor do anything to monitor the government bureaucracy that governs our everyday lives.

We also believe that there must be a movement to change the election process, allowing a runoff, to allow voters to voice their true feelings and not have their vote diluted among a field of 11-14 candidates.

The apathy of the non-voting public in this community is disheartening. We at VREG are encouraged by the people of other nations who are willing to stake their lives just to earn the freedom to vote.

Editors:

B. Alviani           K. Corse          T. Cook

J. Tingstrom      R. Mccord      S. Doll

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WAV Building subject of article

The WAV Project & 2011 City Council Candidates Forum

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Sad commentary on Ventura's City Council election

A DEMOCRACY WILL CONTINUE TO EXIST UP UNTIL THE TIME THE VOTERS DISCOVER THAT THEY CAN VOTE THEMSELVES GENEROUS GIFTS FROM THE PUBLIC TREASURY. FROM THAT MOMENT ON, THE MAJORITY WILL ALWAYS VOTE FOR THE CANDIDATES WHO PROMISE THE MOST BENEFITS FROM THE PUBLIC TREASURY, AND EVENTUALLY THIS DEMOCRACY BECOMES A DICTATORSHIP
—ALEXANDER TYLER (1887) Scottish history professor

CANDIDATES FORUM

NOVEMBER COUNCIL ELECTION

(MARRIOTT HOTEL – THURSDAY, AUGUST 25, 2011, 6 P.M.)

The Political Action Committee (PAC) of the Ventura Chamber of Commerce will present a candidates forum to the citizens of Ventura, at the Marriott Beach Hotel, located at 2055 East Harbor Boulevard, Ventura, commencing at 7 P.M.

A City Council election is set for November 8, 2011.  Three council seats will be open in this election.  The council members up for reelection are Councilwoman Christy Weir and Councilman Carl Morehouse.  Mayor Bill Fulton has announced that he will not stand for election.

The candidates for this election, and who will be appearing at this forum to speak and answer a series of questions are:

START CANDIDATE START CANDIDATE
6:00 Melody Baker 7:00 15-minute Break
6:10 Brian Lee Rencher 7:15 Martin Armstrong
6:20 Danny Carrillo 7:25 William Knox
6:30 Ed Alamillo 7:35 Cheryl Heitmann
6:40 Ken Cozzens 7:45 Carl Morehouse
6:50 Carla Bonney 7:55 Christy Weir

This is the second time that the Chamber PAC has presented this event, and all citizens are encouraged to attend.  It is probably the only time when you will be able to compare the candidates and compare their answers to set questions about their platform.

THE WAV

[HORNSWOGGELED  AND  SKINNED AGAIN ?]

“Hornswoggle”, slang circa 1829.  A word to describe one who has been bamboozled.  Synonyms: beguile, bluff, buffalo, burn, catch, con, cozen, delude, dupe, fake out, fool, gaff, gammon, gull, have, have on [chiefly British], hoax, hoodwink, deceive, humbug, juggle, misguide, misinform, mislead, snooker, snow, spoof, string along, sucker, suck in, take in, trick

Were Ventura taxpayers hornswoggeled by the WAV Building?

On your next walk go to the corner of Thompson boulevard and Ventura Avenue to view the WAV, a Ventura City Redevelopment project located at 175 S. Ventura Avenue.  You can also go on line and conduct a virtual tour by going here.

The advertisements from the City folks, and its developer, is that this WAV project  represents “the vanguard of innovative, sustainable, cultural facilities.  The Working Artists of Ventura will be a $57 million, state-of-the-art community designed for artists and creative businesses”.  This project, according to Mayor Fulton and the City Council, acting as the Redevelopment Agency, was built without the use of taxpayer money, would produce 25,000 visitors a year and would stimulate the local economy resulting in  $75,000,000 in new investments.

WAV Building History

The WAV Building has convoluted financing that puts Ventura taxpayers at risk.

The project planning began in 2005, and was completed in October, 2009.  It was built on a 1.62 acre site at the corner of Thompson Boulevard and Ventura.  The land was purchased by the City RDA at a cost of $1.5 million using tax (RDA) money.  The concept was the “revitalization of underutilized sites and the construction of  affordable housing” through the Ventura Redevelopment Agency.  The project was to consist of 54 residential units for low income artists, 15 units for the homeless, 13 market rate condominiums and 6,000 square feet of commercial space determined by the developer to be “arts-friendly”.   In addition to the land cost of $1.5 million the City loaned the “developer” $1.5.  The total project ended up costing $ 68,000,000.

Planning started with a $400,000 loan to a company called Arts Space Inc.  A person named Chris Velasco was the project manager for that company, however he left that company and formed his own Minnesota corporation called Projects Linking Arts, Community and Environment (PLACE), with himself as the owner.  The other stockholders in that company have not been determined.

The Convoluted Path That Started the WAV Project

The first step was the preparation of a Disposition and Development Agreement, which was executed by PLACE and the Redevelopment Agency of the City of San Buenaventura (RDA) on November 20, 2006.  This contract was amended on October 4, 2007 and again on February 1, 2008.  To start the project the RDA committed to give and/or loan the Developer $4,358,000.  A summary of the financial details of that contract is as follows:

  1. The RDA agreed to sell the land they purchased at a cost of $1,500,000 to the developer for $1.
  2. The RDA would loan the Developer (PLACE) $1,500,000 (including the $400,000 originally loaned to Arts Space) for development costs.
  3. The RDA would loan another $1,358,000 to the Developer so that they could  pay the RDA rent to itself for a parking facility adjacent to the WAV project. A  lease was then executed providing for a 35-year lease at a rental value of $1  per year.
  4. The Developer was to start the project by March 31, 2008.
  5. The City agreed to transfer the transfer of the 13 condominiums from PLACE to WAV CONDOMINIUMS, a California Limited Liability Company, whose  members are Crest of WAV Partners LLC and JSCO WAV Homes LLC .

*  The San Buenaventura Redevelopment (RDA) agency is a political entity separate and apart from the City of San Buena Ventura.  The City Council and the people who run the City are the same people that run the RDA.

PLACE is a Minnesota corporation, owned by Chris Velasco, with an address at 300 Lumber Exchange 10 South 5th, Minneapolis, Minnesota.  WAV CONDOMINIUMS LLC and WAV APARTMENTS, a limited partnership owned by WAV CONDOMINIUMS LLC are all located at the same address and are operated by Chris Velasco.   The other partner in this is JSCO VENTURA, LLC, a California limited liability company operated by John Stewart Company, another California Corporation,  with offices in San Francisco.

WAV Building Repayment Plan, As We Know It Now

The identity of these various business entities becomes relevant because to get some of our tax money back the RDA obtained a promissory note for $2,858,000 dated February 1, 2008, by the terms of which WAV PARTNERS and JSCO VENTURA, LLC, would pay the money back in 55 years and bear 3% simple interest.  Of course the ability to recover that money depends upon the ability of these new  business entities to pay the debt.

The principal and accrued interest on this loan is to be paid by 2063, but the amount to be paid depends on whether these companies have any “surplus cash” as that is defined in the contract.  That sum consists of all of the income these companies receive for the WAV housing project less their operating costs annually, a property management fee of $30,000 a year, which will  increase annually by 3%, reasonable developer fees and any principal and interest payments approved by the RDA.  This promissory note was not signed by Chris Velasco as an individual nor by The John Stewart Company.   There are no individuals responsible for this note, nor any company, such as John Stewart Company ( a potential  deep pocket) to guarantee repayment.  What money will be paid in 55 years, if any, is impossible to predict.  If there is no profit they do not have to pay the money back.

Still Much To Be Uncovered

The list of principal contributors to the WAV Building. It’s political spin to think these groups financed it all.

RES PUBLICA is in the process of trying to obtain a current income and expense statement in order to determine if the low income housing project is working financially. What is known at this stage is: (1) none of the 6000 square foot  business space has been leased; (2) none of the 13 condominiums have been sold; (3) the RDA loan of $2.4 million, secured by a second trust deed on the condominium part of the project only, had to be renegotiated with JP MORGAN CHASE and CITI BANK last month because the banks’ $4.2 million construction loans, secured by a 1st trust deed, which are senior to the RDA loan, were about to be foreclosed. That did not happen fortunately because the banks’ agreed to extend the loan for another 5 years. The RDA is still in a second trust deed position and will lose this money through foreclosure if the condominiums do not sell.

As for the claim that this project was built without using tax money it is political spinning at best. All that can be said is that the money spent by the RDA  (our City Council and City Manger) did not come from the City general fund. For those who prefer “plain-speak”,  the reality is that with the exception of the bank loans, all of this money came from money paid by the citizens to  Federal, State and local governments,  and from a $25,000,000 Federal tax credit purchased  by Union Bank of California.

EDITORS COMMENT

The City Manger, City Council and people at City Hall running this project might argue that it is very easy to “Monday morning quarterback” on a project that began 6 years ago, or wring their hands and despair that nobody could have anticipated the situation with this economy? 

The answer is that even in a good economy, this situation was bad from the beginning. It was predicable, regardless of the timing, that citizens would not spend over $1.0 million for a condominium with a view of the freeway to the South, the Strong Steel building to the East and located on the top floor of a low income housing project.  The cost per unit was too great and the desirability was questionable.  The City Manger and members of city council acting as the RDA were either grossly negligent or they were hornswoggeled.  The taxpayers were skinned.

In the private sector, when a so-called “good deal” goes bad, people lose their jobs. In the public sector, nobody is held accountable and elected officials either choose not to  run again, or they run but blame their fellow council members. 

CHOOSE YOUR NEW COUNCIL MEMBERS CAREFULLY !

Editors:

B. Alviani          K. Corse        T. Cook

J. Tingstrom    R. Mccord     S. Doll

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Ventura Police pension mistake

Pension Spiking Approved in Police Retirement Contract

/in /by

” 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 pension mistake

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 18th 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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