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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.

For more information like this, subscribe to our newsletter, Res Publica. Click here to enter your name and email address.

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

For more information like this, subscribe to our newsletter, Res Publica. Click here to enter your name and email address.

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

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” 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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Volunteer fire depertment may help Ventura's pension costs

Time To Consider A Volunteer Fire Department For Ventura

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“Politicians in America exploit economic illiteracy” —Walter Williams, Professor Economics

PUBLIC EMPLOYEE PENSION TRANSPARENCY ACT

We previously reported that there is a bill is currently pending in Congress (HR567) and the Senate (S347) encouraging governments at all levels to switch from a “defined benefit” plan to a “defined contribution” plan by requiring public entities to reveal to the voters the true magnitude of the unfunded liabilities of the public pension plans.

In California CALPERS continues to portray a rosy investment return.  The staff at CALPERS recommended a change in the assumption of how much our City pensions investments will make in the future from 7.75% to 7.5%.  This went to committee on March 15, 2011.  This new direction, had it been adopted would have moved the pension fund on a path to solvency and economic reality. It didn’t happen. The CALPERS committee did not want to pass on the annual increased expenses to the cities that such a modification would cause given their current budget strains.  Ventura is of course content to ignore this. You know, “What is a poor mother to do”. In the City of Ventura we owe $67,488,000.  Twice that if a more realistic investment return of 3.50% is used.

These Federal bills, called the PUBLIC EMPLOYEE PENSION TRANSPARENCY ACT, would require States and municipalities to report their liabilities to the United States Treasury. The HR bill was sponsored by Representative Darin Nunes, Darrell Issa, and Paul Ryan with Congressman Elton Gallegly acting as a co-sponsor.

If adopted state and local governments will be “encouraged” to switch to defined contribution plans.  While they are being “encouraged” they will have to reveal the true magnitude of their unfunded liabilities to their citizens. No more off the balance sheet reporting.  This new legislation will require that they report liabilities to the U.S. Treasury using their own glowing investment forecasts as well as a more realistic Treasury bond rate.  If the City of Ventura is forced to use a Treasury bond rate of 3.5% our unfunded pension obligation would double to $134,976,000.

THE FIREFIGHTER BENEFITS CONTRACT

Volunteer fire fighters may help Ventura's pension problem

Considering a volunteer fire department hybrid may help Ventura’s rising pension costs.

In the fall of 2008 that Ventura fire fighter benefits and pension contract was modified by the City Council.  This was treated in our September, 2008 issue. 

  “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 yeas were Councilmen Fulton, Brennan, Summers and Monahan.  The neighs were Mayor Weir, Councilmen Andrews and Morehouse.  It should be of grave concern to all when one councilman says, before he cast 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”.

Mayor Fulton and Councilmembers Brennan, Monahan and Summers were thus responsible for increasing the firefighter pension in the fall of 2008 so that these folks could retire with 3% at age 55[1]. Their actions increase our unfunded pension debt by $1.2 million or more annually.

Since then the pension contracts for all City employees have come up for renewal.  On Tuesday January 16, 2011, the Ventura City Council approved new labor contracts with the Ventura Police Officers, Police Management and the employees represented by the SEIU. The 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 still in closed negotiations, which, of course, are not made public.  Many criticized the past decision of the Council in approving the employment contracts for the Ventura Police Officers and Police Management, not the least of which was Council Member Weir, who rejected the proposal and stated “Fiscally, the city needs more than this right now.” and  Council Member Neil Andrews said the agreements “simply don’t go far enough.”  The SEIU, who agreed to a lower 2nd tier retirement plan (2% @ 60) also agreed to a salary average of the three highest years in calculating their pension entitlement for all new hires.  The Ventura Police Officers and Police Management stuck to 3% @ 55 and the single highest year for all new hires.

ANOTHER POINT OF VIEW

[The case for a volunteer Fire Department program]

Due to the present Firefighter negotiations, this next article is timely and worth greater consideration.

Municipal governments in other states are beginning to come to grips with bloated payroll and pension demands of public employee — fire unions and have handed these folks their walking papers in favor of a volunteer fire department.  There is a persuasive argument to be made in favor of such a step, or some hybrid of that concept so that the community becomes more involved and vested in community safety.  The following is summary of study performed by Bill Knox, former candidate for the Ventura City Council.  The complete 10-page report, complete with comparison charts and footnote links, is available upon request. (Simply email vregventura@gmail.com)

Solutions for Ventura’s Fire Department

[The Case For A Volunteer Fire Department]

Ventura is in the midst of an unprecedented reduction in public safety services.  Mounting overtime costs, enormous pension liabilities and shrinking revenue streams have resulted in the closing of a fire station and elimination of firefighter positions.  Using volunteer firefighters to assist professionals could save the city millions annually and dramatically improve public safety.

Response Times

Understaffing at Ventura’s fire stations has resulted in substandard emergency response times.  According to national standards, firefighters should respond to emergency calls within five minutes.  This time frame is critical in that resuscitation from cardiac arrest after five minutes typically results in brain injury, coma or death.  As a result of inadequate staffing, the department fails, on average, to meet the response standard over 62% of the time.  With the elimination of three firefighter positions and the fire’s department’s plan aimed at reducing sworn staff positions by nine, response times are anticipated to increase by an additional 30%.

As a result of inadequate staffing, the department fails, on average, to meet the response standard over 62% of the time.

Lack of Funds

The fire department’s budget for 2010-2011 is $14.5 million.  The city closed station No. 4 in hopes of reducing costly overtime pay. In 2009, the city paid $1,700,000, (nearly 12% of this year’s budget) in overtime payments.  Employees with one year of experience receive a compensation package well in excess of $98,000.  Senior-level employees cost exponentially more.  In addition, the city of Ventura has an unfunded pension obligation of more than $50,000,000.  Taken together, the fire department’s budget is stretched to the limit and the city simply cannot afford to maintain, much less expand, the professional force.

Volunteers

Volunteer fire department similar to Volunteers in Police

Ventura should consider a volunteer fire department program similar to Volunteer policing.

The Ventura Police Department uses 44 volunteers to supplement the professional force.  Volunteers have donated over 40,000 hours of their time to serve the city.  If 44 volunteers each donated 48 hours per month to the fire department the city could save more than $1.06 million in basic compensation costs.  If overtime was eliminated, the savings would amount to nearly $3 million annually!  If law enforcement supplements its professional force with volunteers to improve public safety, reduce costs and partially compensate for reductions in its budget, there is no reason that the fire department cannot achieve similar if not better results with a well crafted and executed plan.

If law enforcement supplements its professional force with volunteers why can’t the fire department achieve similar results?

Most US Fire Departments Use Volunteer Fire Fighters

According to the Federal Emergency Management Agency (FEMA), over 92% of fire departments in the United States use volunteer firefighters, either exclusively or on a supplemental basis.  California cities such as Chico, Fillmore, Santa Ana, Santa Clara, Santa Paula, Stockton, Compton, Rohnert Park, Turlock and many more successfully use volunteers to supplement their professional forces.  These communities receive outstanding results and substantial cost savings with their highly trained and dedicated volunteer forces.  If Ventura created a supplemental volunteer fire fighting force modeled after any one of these communities, it would save between $2.5 and $3 million annually. 

If Ventura created a supplemental volunteer fire fighting force, it would save between $2.5 and $3 million annually. 

Volunteer firefighters do come with a minor cost, but not a salary or massive pension obligation. The city would still need to cover costs of training and equipment; costs already incurred by the city for its professional firefighters.  To protect the city’s investment, the volunteer should be required to serve a minimum term or pay back the costs associated with certification and training.

Volunteers are a viable option to ensure a timely response to emergency calls, to reopen station No. 4 and possibly staff additional stations, like a much need station in Ventura’s harbor. Volunteers, like professionals, must complete mandatory training comparable to beginning professional firefighters.  Having more well trained first responders in our community will provide a broader measure of safety to the population in times of emergency. Furthermore, a well trained volunteer force will provide a quality pool of applicants from which to pick when the time comes to add additional professionals to our force.  By training and utilizing volunteers now, the professional department would have in-depth personal knowledge of a person’s character and fitness to serve as a member of our truly honorable and professional force.

The use of a volunteer force will help alleviate some of the burden on our professionals and allow them to reduce the amount of overtime currently required.  In addition, creating a volunteer force would provide adequate staffing and help reduce response times to emergency calls.  Not only will this help save lives but it may increase Ventura’s ISO rating (a figure used to determine the cost of homeowner’s insurance).  This could help lower the cost of homeowner’s insurance citywide.  A supplemental volunteer force is the right answer for Ventura.

 Editors’ Comments:

We all need to consider viable alternatives to what we have been doing in the past. Ventura’s police department has its Volunteers in Policing program.  It is time we gave a much needed hand to our fire department and help them to do what they do best: serve the public interest through ensuring public safety.

Editors:

B. Alviani           K. Corse        T. Cook

J. Tingstrom     R. McCord    S. Doll

[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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CalPERS costs Ventura piles of cash

CALPERS Increases on City Out of Control

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Winston Churchill

“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

CalPERS extracts piles of money

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:

  1. 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.
  2. 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.
  3. 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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2011 Election Results

The 2011 Election Brought Mixed Outcomes for Ventura

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It’s an Ill Wind That Blows Nobody Any Good
—English Proverb

THE VENTURA UNIFIED SCHOOL TAX MEASURE

[MEASURE H – SOUR GRAPES IN BUNCHES]

In the November 2, 2010 election, voters in the City of Ventura were asked by the Ventura Unified School District (VUSD) to approve Measure H, a parcel tax, which if approved, would have imposed a cost of $96 per year per single family residence — unless you were over 60 and claimed an exemption.  Those with multiple housing units faced paying far more with no exemption.

The tax proposal failed to receive the 66.67% (2/3rds) majority required for passage.  There were 24,491 in favor (59.3%), and 16,767 opposed (40.6%).  The VUSD Board of Trustees might want to reflect on this result because the outcome was predictable.

Measure H For Against
Votes 24,491 (59.3%) 16,767 (40.6%)

On May 25, 2010, the Dale Scott & Company presented their commissioned survey results for a Parcel Tax Measure to the VUSD Board. The reported poll results were that the Parcel Tax Measure would receive 56.5% support. It was further reported that after a “push/pull” series of 15 more questions with this captive audience, the approval percentage rose to 62%, still 5% short of passage.

The Superintendent’s and proponents cry of foul amounts to sour grapes.

There are many positive steps this board can take notwithstanding this result:

  1. Negotiate to have the VUSD employees pay a portion of their health care cost(s).
  2. Reduce non-classroom personnel as much as possible.
  3. Reflect true health care cost in the annual budget, not costs padded by 11.5%.

The proponents now cry foul about the system .The VUSD superintendent and proponents were quick to point out that the vote was 59.3% for passage, indicating support from a majority of the voters, and from this result feel that the 2/3rds majority vote requirement is unfair and should be changed. That conclusion is ill conceived and would amount to an unreeling budget crisis that would make these current economic times appear minor. The Superintendent’s and proponents cry of foul amounts to sour grapes.

The public reaction to this result should be heard.  A letter to the Ventura County Star Editor on Nov. 5 suggested that the 24,491 who voted yes should donate the $96, thus giving the VUSD $2,351,136.

Editors’ Comment: 

The idea posited by the November 5th letter writer is a super idea and that should be where the VUSD should focus its next campaign.  The question remains—would those same voters contribute to an educational trust fund for defined purposes?  Hard not to be cynical and suggest that it is easy to vote for something when you are spending someone else’s hard earned money.

MORE ELECTION STUFF

[TYRANNY OF THE MAJORITY?]

California voters went rogue on November 2nd, bucking the national and Ventura trend toward electing fiscally responsible candidates.  Sadly, those working under the Sacramento Capitol dome will behave very much as those who preceded them.

In the Legislature, three-fifths of the members will continue to dance to the tune of their government employee union sponsors.  California government workers have become the highest paid in all 50 states, without much effort in electing candidates who will support their requests for ever higher pay and benefits.  This will spill over onto the City of Ventura.  Count on the Sacramento types to pursue all manner of fiscal mischief.

First the “Ill Wind” for Ventura citizens.  The passage of the government employee union sponsored Proposition 25 will have negative consequences for those who pay our state’s bills.  Proposition 25 lowers the threshold to approve a budget to a simple majority, down from the two-thirds vote requirement that has been in place since 1933.  Now it remains to be seen whether or not lawmakers will try to take the next step and try to impose a myriad of new taxes in the state budget with a simple 51% majority vote.  If history is any indicator they will try. Senate President Pro Tem Darrell Steinberg as well as government employee union leaders have stated that reducing the two-thirds vote for the budget is the first of a one-two punch that is designed to soften up taxpayers on the issue of the current requirement or two-thirds vote before taxes can be raised.

Proposition 22 For Against
Votes 5,709,050 (60.7%) 3,709,292 (39.3%)

But for Ventura and other municipalities this election has blown in a “lot of good”.  Proposition 22, the measure to stop Sacramento from taking City funds and tax revenue in the guise of “borrowing” passed  with a yes vote of 5,709,050 (60.7%) and no vote of 3,709,292 (39.3%). This taking by an out of control state bureaucracy has been stopped thanks to the efforts of our City Council, as a member of the California League of Cities, and in particular our own City Councilman, Neal Andrews.

 

Editors:

B. Alviani           K. Corse     T. Cook

J. Tingstrom     R. McCord

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Parcel tax arguments

What Will The Parcel Tax Do? Both Sides Of The Argument.

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For and Against the Parcel Tax

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 VENTURA UNIFIED SCHOOL TAX MEASURE

[MEASURE H—A PARCEL TAX]

On November 2, 2010, voters in the City of Ventura will be asked to approve Measure H.  That measure, adopted by the Ventura Unified School Board, proposes to place a special parcel tax upon each parcel of real property in the City of Ventura.  This parcel tax, if approved, will impose a cost of $96 per year per parcel of real property for a period of four (4) years.  Seniors are allowed to claim an exemption.  If approved it is projected that this will raise $4.5 million.

The proponents argue in support of the measure:

  • Funding will be locally controlled, not state controlled
  • Money will be used for academic programs like math, science, reading and writing, music, technology and art. Allows the District to improve art and music programs, and fund computers and other classroom technology.
  • Class sizes will be smaller
  • It is limited to four years.
  • Senior citizens can claim an exemption.

The opponents urge rejection of this parcel tax measure and argue:

  • This parcel tax is being used to replace State of California revenue so that the schools can continue to pay 100% of employee health benefits, or inflated salaries of principals and administrators.
  • Over the last two years, the staff reductions have been more in the lower paid teaching positions and fewer in the higher cost administrative positions. The average teacher is paid $70,000 per year whereas the average administrator is paid $127,000 per year.
  • Class sizes will not be reduced. In the last two years 68 teachers have been let go but only 3.9 staff position have been terminated. We need teachers, not high paid administrators.
  • The school district pays 100% of employee health benefits. These employees resist any effort to require them to contribute to their own health benefits because they believe it is an entitlement. The budget is currently at $12 million, or 8.5% of the entire budget.
  • The School District has budgeted for zero cost increases for health benefits over the next 3 years. Health care costs are, in fact, projected to increase 20 -30%. The reality is that any new tax money will be used to meet these increased costs.
  • This new parcel tax is being sought at a time when Federal and State taxes are also increasing.
  • In 2009-2010 the School District reduced programs, increased class size and eliminated 45 positions. At the same time, only 1 administrative position was lost.
  • The citizens should not have to pay for more administration, more health benefits and less in the classroom.
  • A parcel tax is not deductible and many larger homes and business have more than 1 parcel. Some are on 5-6 parcels alone.
  • Many renters with children in school will never pay a penny of this new tax.

The Economic Facts Behind The Parcel Tax

So, what are the economic facts? Do they need more tax money, or not?  Here is economic and demographic data as published by the Ventura Unified School District.

BUT YOU BE THE JUDGE. Based upon the Ventura Unified School District’s own records, below are their numbers and our comments on what the numbers show.

 

Ventura Unified School District
Teacher Information – Number of Teachers
  2007-08 2008-09 2009-10
FTE
Unrestricted 656.284 659.372 612.369
Categorical 156.128 157.354 184.836
Total FTE 812.412 816.726 *797.205
* 19.521 fewer teachers 2007-10
Salary Cost 57,438,502 57,909,537 56,612,029
Retirement 4,677,014 4,714,642 4,621,021
Health Benefits 7,746,829 7,954,965 8,073,226
Other Statutory Benefits 3,435,244 3,160,245 2,845,827
Total Cost 73,297,589 73,739,389 72,152,103
1FTE= I person
1.5 FTE = 1 full time and 1 part timer at 20 hours a week

Highlighted added: with a reduction of 19.521 teachers (816 minus 797), Health Benefits increased 4%.

Now we’ll examine the administrators  (i.e. management):

Ventura Unified School District
Administrators & Confidential
  2007-08 2008-09 2009-10
FTE
Unrestricted 65.500 68.200 70.150
Categorical 32.350 32.968 30.000
Other Funds 7.900 8.000 8.000
Total FTE 105.750 109.168 108.150
Salary Cost 9,757,307 10,276,704 10,253,454
Retirement 904,152 955,303 952,694
Health Benefits 962,361 1,053,959 1,077,469
Other Statutory Benefits 698,092 679,990 686,978
Total Cost 12,321,912 12,965,957 12,970,594
Note: FTE means Full Time Equivalent.  
1FTE= I person  
1.5 FTE = 1 full time and 1 part timer at 20 hours a week.

 

Now we examine the data concerning Administrative personnel.  The number changed from 109 to 108, a decrease of one person in the same 2008-2010 period.  Health benefits for the administrative employees increased 3%.

 

Ventura Unified School District
Clerical
  2007-08 2008-09 2009-10
FTE
Unrestricted 115.029 118.450 124.138
Categorical 39.468 40.910 28.355
Other Funds 12.863 13.000 10.750
Total FTE 167.360 172.360 163.243
Salary Cost 7,101,778 7,285,435 7,070,254
Retirement 854,782 887,268 874,119
Health Benefits 1,406,694 1,461,656 1,486,686
Other Statutory Benefits 858,682 839,742 786,094
Total Cost 10,221,937 10,474,101 10,217,153
Note: FTE means Full Time Equivalent.  
1FTE= I person  
1.5 FTE = 1 full time and 1 part timer at 20 hours a week.

 

In the period of 2008 to date Clerical personnel was reduced by 9 people, from 172 to 163 people.  Health Benefits increased 7%.

The Ventura Unified School District balanced their budget for 2009-10, and with the reductions listed below balanced their budget for the fiscal year 2010-11.

 

Ventura Unified School District
 
2010-11 Budget Presentation
June 8, 2010
Staffing Changes – reductions
2010/00   FTEs Cost Saving  
Elementary K-3 from 21.44 to 23.44 (15.00)            (963,700)
Secondary Eliminate 9th Gr.Math & Eng. CSR (6.40)            (483,200)
Certificated, Other (3.50)            (309,800)
Classified Staff (12.50)            (269,000)
Administrative Staff (2.80)            (356,100)
(40.20)         (2,381,800)

 

To assist in interpreting this chart the highlights have been added to illustrate the results of the proposal. Yellow indicates the teachers that have or will be dismissed.  Pink indicates the number of administrative positions eliminated.

APPOINTMENT OF A LOCAL CITIZEN OVERSIGHT COMMITTEE

The appointment of the oversight committee would be made by the School Board.  Presumably, members of the board of the school administration would select candidates for the panel.  Once appointed this citizen committee will meet once a year, after the fact, to review how the money was spent.   This new parcel tax money, if approved by the voters, will go into a general fund.  It is not clear what this citizen committee is to do after the money has been allocated and spent?   There are no provisions in this tax proposal that tells us what the powers of this committee would be, or how they would take the School Board to task for an improper expenditure, or how they would recover the money if not spent properly.

EDITORS COMMENT:

The trend of local legislative bodies is to “appoint a citizen oversight committee” to act as a watchdog whenever a tax increase is sought.   On the face of it this provides our citizen-voter with the comfort of being told that their neighbor will be watching how the money is to be spent.  But is that the reality? Will the money to be used for the kids and the class room, as promised by the proponents? Or will the money be used to pay salaries and retirement benefits of highly paid school administrators as the opponents to this measure argue?  You must decide.

Misleading voters by local government in an effort to obtain approval for increased taxes from our citizens is not without historical example.  The promises  to use tax money for one purpose in order to get your vote,  and then switching to use the money for another purpose smacks of chicanery, at best.  In 2004 the Oxnard Union High School District Board of trustees promised Camarillo voters that if they would support Measure H to raise $135,000,000 the new tax  money would be used to build a new high school in Camarillo.  Not only did this not happen the Board reneged on their promise, and this week voted to use the money to build a school in Oxnard.  No wonder folks in Camarillo support their Measure U in the November 2nd election to separate from the Oxnard Union High School District.  Such antics are disgraceful, and does nothing more than further add to the dismal view of our government.

Editors:

B. Alviani           K. Corse     T. Cook

J. Tingstrom     R. McCord

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Fleecing taxpayers costs Ventura money

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

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For and Against the Parcel Tax

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.

fleecing taxpayers costs Ventura money

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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