MOORLACH UPDATE — CSAC Shout Out — December 16, 2014

The day started with my farewell reception. Then I went directly into my final Board of Supervisors meeting. Two of my colleagues held open houses this afternoon, so I enjoyed visitors. I decided against holding an annual open house this year because saying good-byes has been emotionally draining on me. And this morning’s reception and Board presentation certainly met those expectations. Thank you to everyone who attended. I am most grateful for the opportunity to have served as an elected official for the County of Orange for these past nearly twenty years. And the kind words of affirmation can really make someone who is 6 feet, 5 inches tall cry. Photos are available on my office’s Facebook page.

Sheriff Sandra Hutchens shared the Letter to the Editor in the OC Register provided in the first piece below. Matt Cate has become a very special friend over the past few years (see his biography at the Stanford Law School website https://www.law.stanford.edu/profile/matthew-cate). You may have seen him in a television commercial this fall successfully opposing one of the statewide propositions. His unsolicited letter is greatly appreciated. Serving CSAC has been an important commitment over the majority of my years as a County Supervisor. Thank you, Matt, for the very kind shout out.

The second piece is from the Voice of OC and has been picked up by the Ventura County Star. It covers two ongoing internal investigations. I am re-quoted from a previous article on this topic, see MOORLACH UPDATE — No-Bid Contracts — September 5, 2014. I’m happy to clarify that contracts approved by County Departments that are below the threshold that requires approval by the Board of Supervisors are now posted on a regular basis on the County Procurement Office’s website. I’m hoping that these matters will be resolved before year end, so that there is closure before the official conclusion of my term.

LETTERS TO THE EDITOR

MOORLACH’S SERVICE

On behalf of the California State Association of Counties, I want to thank Orange County Supervisor John Moorlach for his two decades of public service. I also want to thank him for his significant contributions to CSAC as a member of our Board of Directors, Executive Committee and policy committees.

Supervisor Moorlach’s work ethic and financial acumen have made him an especially effective supervisor. Those same traits have been apparent throughout his many years of service to California’s other 57 counties as a leader in our association.

We have valued his insights and experience. We wish him well, and will miss his participation and contributions.

Matt Cate

Sacramento

executive director, California State Association of Counties

Outside Attorney Brought Into OC Parks Investigation

By NORBERTO SANTANA JR., writer

Orange County officials have engaged a private attorney to review the actions of Chief Operating Officer Mark Denny and other top officials to propose potential disciplinary measures following a scathing internal audit report that revealed nearly a million dollars in questionable, no-bid consulting contracts for professional services at OC Parks while Denny was agency director.

The review, by the firm of Reilly & Associates, comes just as Denny is poised to take over the reigns as CEO with the county’s current chief executive, Mike Giancola, slated to go out on medical leave in January.

It’s the second, known, ongoing probe of a top county official with Brian Probolsky -a top aide to supervisors and elected member of the Moulton Niguel Water District – still under review by internal human resources investigators for taking time off at his county job with Orange County Community Resources to attend water district meetings, but failing to the time-off on his time sheets.

Voice of OC revealed an internal HR review of Probolsky’s time cards over the past year showing numerous instances – virtually every month – where he attended water district subcommittee meetings in the morning on county time but didn’t document any time off.

His timecards also show that much of his workday is charged off to accounts that may be funded through state and federal funds for programs such as homelessness, community block grant funding, libraries, parks and veterans affairs.

Probolsky has reportedly pushed back against investigators since his summer transfer from OCCR into the office of County Supervisor Pat Bates, who hired him in the midst of the internal probe to head up the waning months of her term as supervisor.

Probolsky is now on the staff of County Supervisor Lisa Bartlett, who was sworn into office earlier this month, just after Bates left for a state senate seat.

Both Probolsky and Bartlett have declined comment.

The situation involving Denny started with an anonymous phone call to a county human resources manager back in March about more than $900,000 in questionable consulting contracts with BPM Advisors in the county parks department.

Just like the ongoing criminal case of former OC Public Works executive Carlos Bustamante – accused of a dozen felony sex crimes – an internal investigation cleared official actions. In this case more than a dozen contract authorizations intentionally split up to avoid board of supervisors’ public review and ultimately reaching nearly reached a million dollars over five years.

OC Community Resources Director Steve Franks, who supervises OC Parks, was credited for alerting the county Internal Audit department about the matter. But Franks also was criticized for having OC Parks Director Stacy Blackwood review the actions of her bosses (she concluded they were acceptable) before he reported it to Internal Audit.

From 2009 until 2014, OC Parks officials authorized 13 consecutive consulting contracts totaling $913,095 to BPM Advisors, which is owned by Ahmad Iqbal, a grad school friend of former OC Parks Deputy Director Michael Brajdic.

Both Brajdic and Iqbal refused to be interviewed by auditors.

In all, four OC Parks officials, including then-Director Denny, had a hand in approving the contracts, which were all for amounts under the $100,000 threshold for requiring a vote by the supervisors, according to an Aug. 13 report from the county’s Internal Audit Department to County Counsel Nicholas Chrisos obtained by Voice of OC.

The county paid 74 invoices totaling $642,696 to Iqbal’s BPM Advisors, which auditors describe as a "one man vendor," before cutting off payments in May. And while auditors stated that they didn’t review the actual work performed, they concluded it would be hard for anyone outside of OC Parks to justify those payouts.

"There was no indication that either BPM or OC Parks prepared any detailed time estimates or associated budgets for any of the stated deliverables or elements identified in the contracts’ scopes of work as a basis for setting the contract award amounts," internal auditors wrote in a 23-page report.

Both Giancola and Denny declined requests from Voice of OC for interviews about the audit report.

"I’m not amused by what we found," said County Supervisor John Moorlach about the audit back in September, highlighting the upside that a district attorney review didn’t find any criminal activity.

County Supervisors Chairman Shawn Nelson ordered the county human resources department to review the matter on Aug. 28.

Yet given that the audit pointed to questionable contracts at OC Parks while Denny was in charge, the matter was referred to outside attorneys to review to propose disciplinary measures.

Those kinds of referrals have mounted in recent years as the county government has been rocked by scandal after scandal.

In 2012, Bustamante, who was also a Santa Ana city councilman, was charged with a dozen felony sex crimes involving his female subordinates. Given that an internal HR probe initially cleared Bustamante, officials have began referring out investigations involving top executives and elected officials ever since.

"Consistent with our established process, please be assured that the above referenced issue will be referred to an independent outside investigator," wrote County CEO Mike Giancola to county supervisors on Sept. 5. – a day after a Voice of OC story reported Nelson’s communications to Giancola asking for a review.

"As always, any and all findings will be appropriately addressed per county policy and best practice," wrote Giancola in an email to county supervisors obtained by Voice of OC.

County Human Resources Director Steve Danley wrote back to Giancola the same day noting that "I was going to email you today and recommend the same thing: that we use outside investigator for personnel review of Iqbal case. Now I will proceed to hire an attorney from our established list."

Danley noted, "per County policy, we automatically use outside investigators for investigations that involve Executive Managers for EEO cases only. In non-EEO cases, such as the Iqbal contract case, we have option to use either outside investigators or do in-house with HRS staff."

During approval of the umbrella agreement with law firms to investigate top officials, County Supervisor Todd Spitzer insisted that that bar for the hiring of outside lawyers be set very high.

Reilly & Associates was formally hired on Oct. 1, 2014 to review the matter and suggest what disciplinary measures should be taken. The firm is one of several law firms hired to conduct personnel investigations of top officials. County Counsel Wanda Florence is supervising the work of the firm.

According to county records, since January 2013, the firm has been paid $108, 465.32.

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MOORLACH UPDATE — SSA Building — December 15, 2014

Although it has been on the Board of Supervisors agenda numerous times for the last six months, the Voice of OC piece below is the first article that I can recall on the topic. It will be on tomorrow’s agenda, as it has been in the past, as a Discussion Calendar item and a Closed Session item. Here is the Discussion Calendar Agenda Staff Report (ASR) heading:

39. Approve 15-year lease agreement CEO/ALS/SSA-13-047 with IX CW 500 Orange Tower, LP or relocation of SSA Administration Headquarters, Orange; and authorize the Chief Real Estate Officer to agree to minor non-monetary revisions and amendments to the lease terms as necessary to effectuate the action set out in this ASR and the build-out of the premises for the County; and make California Environmental Quality Act findings – District 3 (Continued from 7/15/14, Item 30; 8/5/14, Item 21; 8/12/14, Item 17; 8/19/14, Item 38; 9/9/14, Item 31; 9/16/14, Item 44; 9/30/14, Item 36; Previously heard on 10/21/14, Item 17 and continued on 11/25/14, heard on 11/18/14. Item 7)

As this has only been discussed in Closed Session, I was not able to make any comments. However, the piece does lay out the many concerns accompanying this matter. Tomorrow we will have a new Fifth District Supervisor and the First District Supervisorial seat, where the current building is located, is vacant. But, it would be nice to cast a vote. If number 39 is not continued, then expect me to be favorable to relocating to this facility.

County Social Services Workers Stuck in Deteriorating Building

By THY VO Voice of OC

Mold proliferates in the air vents.

Staff get stuck in elevators weekly.

The roof leaks when it rains, and a corroded plumbing system regularly releases sewage gases that float up the elevator shafts.

For years, employees at the Orange County Social Services Agency at 888 N. Main Street in Santa Ana have complained about the condition of the 10-story building, which was first constructed in the 1960s and has yet to be retrofitted with modern mechanical, electrical and plumbing systems.

"If this were a County facility, it would be a difficult choice to decide whether to invest the capital in the facility or to relocate the agency," wrote OC Public Works Deputy Director Tom Corbett in a July 28 memo describing the building’s condition.

"Since this is not a County facility and we do not have the burden of ownership it would be unreasonable to subject the staff and agency to this environment," Corbett said, adding that relocation "could be accomplished within weeks."

Yet since a proposal to relocate the agency and lease a property in Orange on State College Boulevard first came before the county Board of Supervisors on July 15, negotiations have dragged on in closed session and the item has been delayed week after week.

With a Dec. 31 expiration date set for the Main Street property’s lease approaching, county supervisors will again consider on Tuesday whether to renew the lease or relocate the agency.

Asked why the situation has gone on so long, County Supervisor John Moorlach said, "you’ve asked an incredible question," adding that he could not discuss closed session negotiations.

"[The State College lessor] has been patiently waiting for this Board to make a decision," Moorlach said.

Orange County Employees Association spokeswoman Jennifer Muir said the union has received many complaints from members about the building in the past several months, as well as members who are concerned about the new building being too far from the Civic Center in downtown Santa Ana.

"We’ve communicated those concerns to the Board…and now it’s time for them to make a decision about what’s best for the county," Muir said.

The Social Services Agency has occupied the building since 1996, when the county signed a 15-year, fixed rent lease with Eastcom Corp., a company owned by local developer Michael F. Harrah.

Harrah, who is one of the largest property owners in downtown Santa Ana, also owns the building and property that houses the District Attorney’s Office, according to the county’s press office.

Harrah is now offering a long-term lease extension that would include major repairs, including renovation of elevators and replacement of the air conditioning system.

At an Oct. 21 board of supervisors’ meeting, Harrah told supervisors that he would make all repairs necessary to make sure "the building will be in perfect condition" for the county.

"We are ready, willing and able to do any modernization. We’re looking for a long-term commitment. Not only for 15 years, but for many years to come," Harrah said.

SSA officials and the county real estate office say that remaining in the Main Street building would be impractical and disruptive, as staff would need to be relocated temporarily during building upgrades.

Staff has proposed a 15-year lease at a new building on State College Blvd. in Orange, further from the Civic Center but closer to other SSA facilities, according to a staff report.

At the October meeting, Harrah requested a 30-day continuance on the item so that he could determine what repairs were necessary on the building before supervisors moved forward on the lease.

He said county staff had not provided him with a list of specific renovations for the building. Because negotiations over the relocation and current property are ongoing, assessments of the building are being kept confidential.

"It’s difficult for me to figure out what they want…if they hire someone to figure out what the building needs but they can’t give it to me," Harrah said.

Chief Real Estate Officer Scott Mayer, the county’s lead negotiator, said conducting a survey of the building to create a list for Harrah would require significant county resources.

"I pointed out that we are a tenant of the building and would think it was not our obligation to conduct destructive testing of his building to determine each and every instance where there might be an issue with plumbing," Mayer said.

A Deteriorating Building

Memos and county-commissioned reports obtained by Voice of OC show unpleasant and even dangerous conditions for the more than 300 county employees who work at 888 N. Main Street.

A 10-page list of tenant improvements requested by the county shows the building would require extensive renovations and major replacement of mechanical, electrical and plumbing systems that do not comply with existing codes and have not been upgraded since the 1960s.

Corbett’s July memo notes that the building is "in great decay, potentially exposing SSA staff and patrons to serious air quality concerns."

Air circulation units are operational but "badly deteriorated," with rusted interiors that are harbors for mold, Corbett writes. The steel duct on the roof has rusted through, opening the system to rain and dirt.

The building’s sewage and water piping are also showing significant signs of rust and corrosion, leading to leaking water that has exposed asbestos insulation to open air.

A lack of efficient water and air circulation means some rooms are too hot, while on cold days, employees on the first three floors rely on space heaters, according to Corbett’s memo.

Another report on the building’s electrical system by IBI, a firm hired by the county, noted it would cost at least $5.8 million to reconstruct and repair the building’s "obsolete" electrical system, not including the cost of relocating employees temporarily during the construction.

The building also lacks a number of basic safety features.

Throughout the building, electrical panels are missing doors or and dead fronts on breaker slots. Only the first floor has automatic fire sprinklers. The building does not have a standby emergency electric generator system, which would regulate elevators, smoke evacuation and lighting in the event of an emergency.

A 2011 assessment also concluded that the facility is a "high seismic risk," according to Corbett’s memo.

A Good Deal for the County?

Since the original lease for the Main Street property was signed in 1996, the county has paid a fixed rent of $1.27 per square foot, per month, or $137,453.37 monthly.

Under the proposed 15-year lease with IX CW 500 Orange Tower LP, the company that owns the building at 500 N. State College, the county would pay $1.05 per square foot per month in the first year, with increases each year after, or an effective rental rate of $2.38 per square foot per month.

The company would also pay the county a $619,555 commission for the lease and $1.2 million in moving expenses.

Over the life of the lease for the State College property, the county would pay $59.5 million in rent, more than twice the amount the county has paid to Harrah in rent since 1996.

But the county has clashed with Harrah in the past over his obligations to the Main Street building.

According to the original contract, when the lease expired Jan. 31, 2012 the county had the option of purchasing the property for $100.

In September 2011, the county signed an agreement with Harrah to purchase the property. But that December, the county filed a lawsuit against Harrah, alleging that he did not complete repairs to the building’s parking lot and failed to provide all the free parking spots promised in the original contract.

Harrah disputed the county’s interpretation of the contract and claimed the county never properly executed the purchase agreement. He also claimed the county did unauthorized construction on the parking lot itself, withholding $75,155 in other payments to recoup losses from the construction, according to court documents.

The case was ultimately dismissed. The county dropped its plans to purchase the property and signed another 2-year extension of the lease.

Board Chairman Shawn Nelson declined to comment on the negotiations and whether the county is considering extending the lease on the Main Street facility, citing confidentiality of ongoing negotiations.

Asked about safety concerns and whether the county should extend the lease, Nelson hung up on a reporter.

Supervisors Todd Spitzer and Lisa Bartlett, the latter who was sworn in this month and has yet to participate in any closed sessions on the item, did not respond to requests for comment.

Contact the writer at thyanhvo or follow her on Twitter, @thyanhvo.

Disclaimer: You have been added to my MOORLACH UPDATE communication e-mail tree. In lieu of a weekly newsletter, you will receive occasional media updates, some with commentary to explain the situation, whenever I appear in the media (unless it is a duplication of a previous story).

I have two thoughts for you to consider: (1) my office does not usually issue press releases to get into the newspapers (only in rare cases); and (2) I do not write the articles, opinions or letters to the editor.

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MOORLACH UPDATE — Thank You Newport Beach — December 12, 2014

It’s been another fun and busy week. The Newport Beach Independent provides the details of Tuesday night’s Newport Beach City Council meeting in the first piece below. I had the privilege of thanking the four city council members that I had the honor to serve with these past four and eight years. Every city in the Second District is unique and has different issues and interactions with the County. For Newport Beach, unique issues included John Wayne Airport, in particular the lengthy process for achieving a successful extension of the settlement agreement and the building of the Terminal C and parking improvements. Other matters included the Orange County Sheriff’s Department’s Harbor Patrol and the Upper Newport Bay Watershed. The annexation of West Santa Ana Heights was momentous, and it included the wind down of the Santa Ana Heights Redevelopment Agency (long before redevelopment agencies were terminated), debates over a potential horse trail on Mesa Drive, the opening of a new park and fire station, the paving of Kline Drive, and the improvements to Irvine Boulevard. The annexation of the Emerson Island. I could go on, but I’ll spare you from the voluminous links to previous MOORLACH UPDATES covering these and other activities over the past eight years. It is safe to say that I had a number of fun interactions with the City’s two city managers and its council members during my tenure.

I want to thank Rush Hill, Nancy Gardner, Michael Henn, and Leslie Daigle for their friendship and professionalism in our mutual activities. It was an honor to serve with them. I also want to congratulate the incoming councilmembers, Kevin Muldoon, Marshall Duffield, Scott Peotter, and Diane Dixon. Congratulations also go to Ed Selich, on his selection as the new Mayor. And I want to thank Keith Curry and Tony Petros for their past and future leadership roles for this amazing city. I apologize to the new city council for not being able to stay for the entire meeting, as I had another commitment at the Balboa Bay Club, where I was very kindly recognized for my twenty years of public service by the Lincoln Club of Orange County.

The second piece is from the OC Register and it covers an item that was continued from Tuesday’s Board of Supervisors meeting. The reason given in the article for the continuance is not correct. There is a provision that requires the Clerk of the Board to notice certain parties when a particular topic is going to be covered by the Board of Supervisors. Apparently, this required courtesy was overlooked by the Clerk of the Board and it was determined that the matter should be continued in order to provide the required notification. Since the two items were automatically continued and could not be addressed, I mentioned in my Board Comments that I had attended the September meeting of the Audit Oversight Committee and had to observe the Director of OC Public Works explain why he had not followed up with the audit recommendations concerning the Department’s fee structure. I believe it was the first time that I observed this committee call a Department Head on the carpet for not correcting an Internal Audit Department audit report observation. Director Shane Silsby was brave enough to state to the committee that it is difficult to bring fee increases to the Board of Supervisors. So I challenged next year’s Board to address this odd conundrum in order to give staff some guidance on whether to reduce taxpayer subsidies for certain services by raising fees, leave them in place just as they are in perpetuity (some not having been increased since 1985), or strike a balance. Such are the joys of being elected to an executive, and not necessarily a legislative, position.

New City Council Takes Office

By Sara Hall

The new City Council members got down to business quickly at Tuesday’s City Council meeting, each one calling for some kind of action, just moments after they were individually sworn in.

The new council team also unanimously voted Ed Selich in as mayor and new member Diane Dixon as mayor pro tem.

“I pledge to lead this council in openness, respect and equanimity,” Selich said.

The four newbies on the dais, self-dubbed “Team Newport” during the campaign, each directed staff on several different issues during council announcements to be placed on the agenda for the next meeting on Jan. 13.

Councilman Kevin Muldoon directed staff to examine the options to repeal the fee increase for residential docks, including the seizing of property without just compensation and restrictions on the transfer of ownership.

He also asked staff to return with a proposed scope of an audit for the tidelands fund to be sent to RFP. It should include the source of funds and expenditures by area, like beach versus harbor, for the past 10 years.

Councilman Marshall Duffield proposed a tidelands audit of all the income and expenses.

“This is not a witch hunt,” Duffield said. “It’s just to inform me, all of us, better to discuss the various sources of revenue that comes into the harbor and expenses.”

Councilman Scott Peotter asked staff to look into bringing back wood burning fire rings, eliciting some applause.

“Coming up with a scheme that will keep the [California) Coastal Commission happy and AQMD [Air Quality Management District] happy at the same time,” Peotter said.

He also suggested replacing the finance committee with a seven member finance commission and an updated resolution about what can and can’t be said in an invocation.

Dixon asked for a project completion close out audit on the civic center.

“So that we may identify lessons learned and put this matter to rest to the satisfaction of the voters,” Dixon said.

She also proposed a resolution that would recognize state senator Mimi Walters for her service and congratulate her on her election to the U.S. House of Representatives.

All eight incoming and outgoing council members said a few words about their time on council or their election to council, thanking supporters and the state of the city.

Exiting councilman Mike Henn called the moment “bittersweet.” He is proud of what the council had accomplished over the past eight years, he said.

They’ve tackled every tough issue that needed to be tackled, Henn said.

“We never kicked the can down the road on a single problem to leave a mess for somebody else,” he said.

“We have honored the long tradition in Newport Beach of all of the councils that have preceded us that we have left the city in a better state than we inherited it,” Henn said.

“I leave office, at this time, with gratitude and appreciation for the privilege to serve the people of this great city,” said outgoing Councilwoman Leslie Daigle.

Departing Councilwoman Nancy Gardner kept it short and sweet. She will miss the people the most: Residents, staff, and her colleagues.

“And now it’s on to my next excellent adventure, whatever that may be,” she said.

Outgoing Mayor Rush Hill agreed with Gardner.

“It is the city family that I will miss most as I leave the council,” Hill said. “My fellow council members and the dedicated and loyal staff from top down that collectively delivers what may each define slightly differently, but consistently, as our quality of life.”

Hill choked up as he thanked his family, among many others, who supported him during his time on council.

“It’s been a privilege to serve with this council,” Hill said. “It’s been an honor to serve as your mayor.”

Several of the council members mentioned projects or plans completed during their time on council, including Oasis Senior Center, Bicycle master Plan, AAA credit rating, several parks and more.

“I think together we have made a difference in a positive direction for the benefit of our 87,000 residents,” Hill said.

“New leadership is ready to take over,” Hill said. “The decision will be theirs to either continue the momentum that exists through well thought-out strategic plans or risk disrupting the delicate balance of funding that produces a high quality of life and losing a highly motivated and productive delivery team. The burden is now theirs to perform for the good of us all ”

The civic center was at one point compared to the Eiffel Tower by Councilman Keith Curry.

Hill has been a tremendous leader who made tremendous accomplishments, including the Newport Dividend, Curry said.

Through Hill’s leadership, the civic center became something that people from around the world come to see and marvel at, Curry continued.

“You took a little bit of heat for that in this election,” he said to Hill.

About 125 years ago Charles Garnier represented the Committee of 300, he said.

“This was sort of the reform resident’s group of his time,’ Curry explained.

They protested against the “useless and monstrous” Eiffel Tower, Curry noted.

There are many other iconic structures have “short-sighted” critics, he added.

“Everybody in this room tonight knows who Gustave Eiffel was, but until I mentioned his name not a single person had ever heard of Charles Garnier and by the time they get home tonight nobody will remember him again,” Curry said as the audience chuckled. “That’s the way it is with the critics and that’s the way it’s always been. Such as the legacy you leave for future generations here in Newport Beach.”

Presentations, congratulations and awards were also handed out by city staff, Supervisor John Moorlach, Assemblyman Don Wagner, on behalf of Assemblyman Allan Mansoor, on behalf of Congressman Dana Rohrabacher, and more.

Later, during the Newport Beach Chamber of Commerce hosted Mayor’s Reception at Back Bay Bistro, all of the outgoing and incoming council members spoke again.

The chamber event also honored a few award winners.

Ambassador of the Year Award was given to Shani Moslehi from Shani Moslehi Productions, and Sabrina Little from First Team Estates.

The Silver Anchor Award was presented to Sheldon Singleton from Social Zing, Kay Walker from Kay Walker, Esq., and Chandler Bell from Hornblower Cruises & Events.

The new members of council also got an opportunity to speak during the council meeting.

Dixon thanked everyone who voted “for change, transparency, fiscal restraint, civility in our city government.”

“You spoke, the city listened,” Dixon said.

It’s fun to be up on the dais for the first time in the “Taj Ma-City-Hall,” with all the bunnies watching, Peotter said.

Although the city is in good shape, there is still work to be done, he said.

“We’ve got some areas that we need to tweak and turn around,” Peotter noted.

“The city is quite daunting,” Duffield said. It’s very complex, he added. “I will do my best.”

It’s an honor, Muldoon added. He looks forward to serving the people by protecting private property rights, strengthen public safety and reduce local taxes and fees.

“I hope that we’re able to work together in a collaborative way to put the city first,” Muldoon said.

Selich also said a few words after being elected mayor.

He took a moment to thank the outgoing council members, part of what he called the “Dream Team.”

Now the remains of the “Dream Team” will merge with “Team Newport,” Selich said.

He predicts great success for the council and sees some group hugs in the future, he said.

After the contentious campaign season, that had some “spirited and lively” debates, the voters have spoken, Selich noted.

“It’s now time to get down to the business of governing our city,” Selich said. “Although there may be different points of views on some issues, I believe that all of us up here have the best interest of our city and its residents at heart. I believe we will do, as Newport Beach city councils past have always done, and that is come together to make our city even better.”

County delays building fee increases

Industry leaders warn that the proposed hike could have dire economic consequences.

BY MEGHANN M. CUNIFF

Strong outcry from homebuilders prompted Orange County leaders on Tuesday to postpone considering a major fee increase that housing industry leaders warn could have dire economic consequences.

The Board of Supervisors now is set to consider the fees on Feb. 3. But it’s unclear if the proposed increases will match what was initially planned for Tuesday’s meeting: OC Public Works officials requested the delay so they could talk with the developers who have outlined the potential catastrophe of substantial fee increases.

The delay came after housing industry officials described their surprise and fear over the timing and size of the proposed increases in letters submitted to the board.

Tim Kane, president of MBK Homes, wrote that his company recently committed to purchasing property from Rancho Mission Viejo, where 14,000 new homes are to be built, without knowing about the proposed increases. He warned that increases “will greatly impact the viability of this project.”

It was enough to sway county staff: They’ll be meeting with housing industry officials to prepare a new proposal for the February meeting.

The swift outcry from housing officials highlights what Supervisor John Moorlach described as “an interesting conundrum.” He and Chairman Shawn Nelson cited a report from the Audit Oversight Committee that described the Public Works fees as not covering the cost of services.

“That oversight committee is a hammer that was put together to keep us all awake and prevent what happened 20-plus years ago during the bankruptcy,” Nelson said. “To not vote to support full-cost recovery puts our financial status in jeopardy, and it’s a real problem.”

CONTACT THE WRITER: 949-492-5122 or mcuniff@ocregister.com  .

Disclaimer: You have been added to my MOORLACH UPDATE communication e-mail tree. In lieu of a weekly newsletter, you will receive occasional media updates, some with commentary to explain the situation, whenever I appear in the media (unless it is a duplication of a previous story).

I have two thoughts for you to consider: (1) my office does not usually issue press releases to get into the newspapers (only in rare cases); and (2) I do not write the articles, opinions or letters to the editor.

This message should appear at the bottom of every e-mail you receive. If these e-mails should stop arriving in your mail box, it will be because your address has changed and you did not provide a new one. If you do not wish to receive these e-mails, then please e-mail back and request to unsubscribe.

Posted in California

MOORLACH UPDATE — First Dutch American — December 11, 2014

In the first piece below the Voice of OC provides its take on the recent ambulance RFP process (see MOORLACH UPDATE — Boondoggle — December 10, 2014 and MOORLACH UPDATE — Ambulance RFP Termination — November 4, 2014). The article also provides exciting news concerning a proposal being offered by the Orange County Fire Authority’s new Chief, Jeffrey Bowman, to streamline paramedic services (also see MOORLACH UPDATE — Privatizing Paramedics — March 28, 2013 and MOORLACH UPDATE — Private Paramedics — February 24, 2011). I applaud Chief Bowman for his courage to challenge the current paradigm. There is one clarification that should be made or corroborated. It is my recollection that Chair Nelson voted in the affirmative at Tuesday’s Board meeting on this item, allowing it to pass with the necessary three votes.

The second piece is a segment of a personal profile provided by Public Sector Inc. In my public speeches after my June, 2006 election victory, I provided fifteen pension reforms that I was hoping to pursue as a County Supervisor. I felt it was a good time to evaluate how I have done.

The third piece provides a fun photo in the Los Angeles Japanese Daily News making note that Supervisor Bartlett is the first Japanese American Orange County Supervisor (see MOORLACH UPDATE — Supervisor Bartlett — December 3, 2014). So I reviewed the names of the previous Orange County Supervisors and could not find one with a distinctive Dutch name. Am I the first Supervisor of Dutch descent to serve? Well, we did a little checking around during the morning with OC Archives, which contacted noted OC historian, Stan Oftelie. It looks like I am the only Supervisor over the last 125 years to be of Dutch descent! So I researched a little more trivia. It turns out that Martin Van Buren, our nation’s eight President, was the first not to have spoken English as a first language, having spoken only Dutch growing up (which applies to the first 4-and-one-half years of my life). Go, Oranje!

This is followed by an invitation to next Tuesday’s reception before my last scheduled Board of Supervisors meeting. Please feel welcome to attend.

Fire Authority to Try Private Paramedics

By REX DALTON and THY VO Voice of OC

The Orange County Fire Authority is planning a groundbreaking pilot study in which private paramedics will for the first time be used on 911 rescue calls.

Currently, when Fire Authority paramedics respond to the most critical cases they get into the private ambulances and treat the patients as they are being taken to the hospital, with fire truck following. When this happens, both the truck and firefighters can be out of service for a considerable period of time.

Under the pilot program, the private paramedics would staff the private ambulances that transport Fire Authority patients in its 23 cities to hospitals — thereby keeping the public agency’s paramedics and engines more readily available for other calls.

New Fire Authority Chief Jeffrey Bowman outlined the plan during an interview Tuesday. He’s been presenting it in recent weeks to his board, the agency’s union, and other interested parties.

“The word is out,” he said.

Orange County is the only county in the state without private paramedics. Local fire chiefs and unions have objected to them for a host of reasons, ranging from concerns that private paramedics would not have the same level of experience and training as public paramedics to fears that Wall Street would dictate the standard of care.

But Bowman, who’s served as chief of the Anaheim and San Diego fire departments, said the current system is inefficient and at times needlessly takes the Fire Authority’s highly trained paramedics out of action.

“The goal is to reduce the number of times a Fire Authority paramedic has to get in an ambulance for transport to a hospital,” said Bowman. “I have a big concern” about the current delivery model, he added, “it is not the best.”

Bowman is making a concerted effort to keep union leaders informed of his plans as part of an overall effort to improve management-union relations, which had soured during the tenure of his predecessor, Keith Richter.

Joe Kerr, spokesman for the Orange County Professional Firefighters Association, confirmed that union leaders have been informed of the plan and will take it up in January.

“The issue was broached,” said Kerr. “The department [Fire Authority] brought it up about a week ago.”

At various times since the Fire Authority was created, some form of redeployment change has come up every few years, said Kerr, declining to say this concept was any different.

Union leaders and other regional fire chiefs have remained adamant for years that staffing first- responding engines or trucks with two paramedics is best for patients. And Bowman agrees.

While it is too early to describe a system that may come out of the pilot study, Bowman anticipated it may be budget neutral for the Fire Authority.

This is because one of the advantages of a public system using private ambulance firms for transports is that those companies bear responsibility for the transport costs.

By the spring, Bowman said, he hoped to get agreement from the various parties to start the pilot — or pilots, as two areas may be tried initially, depending on the areas tested.

However, whenever it starts, he says it should be after the county Health Care Agency has completed the selection process for the new ambulance providers for 17 of the Fire Authority’s cities.

Tuesday, the county Board of Supervisors approved its latest effort to try to select the private ambulances that will serve five zones encompassing those cities.

Last February, the state forced the Fire Authority to relinquish the ambulance selection process, turning it over to the Health Care Agency, for having delegated too much authority.

Health Care Agency officials reluctantly conducted a request for proposals for ambulances; but then moved to cancel the process early last month after objections were raised by losing firms about the rating methods. Agency officials then said they would conduct a new request for proposals, but it had to be done by a March 3 state deadline.

At the lead of Supervisor Todd Spitzer [who represents the county on the independent Fire Authority’s 25-person board], the supervisors approved a new plan, whereby:

Proposals from the previous request process would be used, new evaluating panels and some methods would be applied, and boilerplate language would be added to protect against any legal challenges from losing ambulance firms. This would allow the process to be simplified to meet the deadline.

The state Emergency Medical Services Authority near Sacramento, which oversees such county emergency plans, only had a few issues with the plan and appears likely to approve it.

“Personally, I think what the Board of Supervisors did was in the best interest of the county,” said Bowman; “It’s a terrific idea.”

With a second proposal request, Bowman said, the competitive nature of the process would be diminished as the various bidders already have shown their individual plans.

The vote was 3-1.

Publicly, Spitzer based his concerns on the state deadline. “We’re under a real time constraint,” he said. But privately, some observers saw Spitzer has aligned with the Fire Authority’s union.

Moorlach abstained, saying afterwards he was uncomfortable voting on an issue about which he had unanswered legal questions. He declined comment on Bowman’s plans, which some observers would see as in line with the supervisor’s past pronouncements.

Supervisor Shawn Nelson voted no.

At the board meeting, Nelson couched his objections in concerns over a possible lawsuit against the county.

“There is going to be legal action,” he said

Some observers saw this as Nelson fearing that a new evaluation could threaten the bidding position of Emergency Services Inc. of Brea, which has served Placentia and Yorba Linda for years.

In the first bid for a northern zone, Emergency Services Inc. edged out its closest competitor, Care Ambulance Services Inc. of Orange, by less than one rating point.

Care Ambulance, a large, European-based firm, won three of the five zones covering the 17 cities — making it the proposed dominate winner in the region.

Rex Dalton is a San Diego-based journalist who has worked for the San Diego Union-Tribune and the journal Nature. You can reach him directly at rexdalton

Moorlach takes stock: looking back on two decades of fiscal reform

HEIDI CUDA

John Moorlach owes it all to Half Dome.

The outgoing Orange County Supervisor, who has spent the past two decades reforming his county’s finances, might’ve been just some CPA with a habit of kvetching about politics.

“I went on a hike in Yosemite Valley with a friend, and he said, ‘You’ve been complaining about things the whole trip,’” says Moorlach. “Why don’t you consider running for Treasurer.”

So he did.

It was 1994, and he didn’t have a prayer.

“I knew full well I would not win,” he says. “Incumbents win 90 percent of the time, but I thought it was a perfect way to raise awareness about what was going on, how they were borrowing to invest, using derivatives, and everyone was comfortable because the treasurer was making a lot of money.

“I was telling anyone who would listen that if interest rates rise, that portfolio would implode.”

The Los Angeles Times endorsed the incumbent. “The reporter said what I was saying was just a bum rap.”

The rest, of course, is history. Moorlach lost the race, interest rates shot up, County Treasurer Robert Citron resigned in disgrace and on Dec. 6 of 1994, Orange County declared bankruptcy. Three months later, Moorlach was appointed treasurer, a position to which he was repeatedly reelected over the next decade.

And then came the pension wars.

“In 2004, the Board of Supervisors passed another pension increase, this time for general members,” he says. “I went to the podium and said, ‘You shouldn’t do this for obvious reasons.’ It’s like a lobster trap, once you’re in it, you’re in it.”

So the Holland born accountant says, he got angry and decided it was time to run for Supervisor.

“I wanted to fix the pension problem,” he says.

Upon his election in 2006, he drew up a list of 15 things he wanted to accomplish. Eight years later, he won some, he lost some, but overall, the Republican supervisor had a few grand slams.

Moorlach’s Little List

Here’s what the list looked like and how he faired:

Number One: “Make government employees pay for their fat pensions.”

“That’s a quote from a Long Beach Press Telegram article from 2005,” says Moorlach. “We’ve accomplished that. We’ve just completed our negotiations with every bargaining unit. We have one unit that we’re still dealing with, the attorney’s association–it’s a long story–but overall management and employees are responsible for paying for their share of pensions.”

Number Two: “Implement two-tiered plans.”

“We negotiated that back in 2009,” he says. “Governor Brown did it with his pension reform, but what we did in ’09 was we made it optional. The younger kids would take the lower formula.”

Number Three: “Start replacing government workers with contract employees.”

“I tried to put that in the charter for the November ballot,” says Moorlach. “My colleagues didn’t give me the third vote. Two were running for additional office. I put this one in the ‘fail’ column.”

Number Four: “Require voters to approve retroactive pension increases.”

“We called this Measure J, and it was wholeheartedly passed by the voters in 2008,” he says.

Number Five: “Put caps on COLAs (cost of living increases).”

“I tried to do it,” he says. “I just didn’t get traction.”

Number Six: “Attempt another ballot proposition that pursues paycheck protection.”

“We tried this with Prop. 32, but the unions just went ballistic. This was a fail.”

Number Seven: “Have the board of supervisors members or an independent third party negotiate employee bargaining union agreements and not rely on staff to do it for you. Employee unions are to be business partners and not buddies to further your political careers.”

“It’s just one of the abuses that I observed,” says Moorlach. “So what I did when I got here, I required an outside legal firm to be our negotiators… we got that taken care of.”

Number Eight: “Increase the retirement age.”

“That was done in ’09, it’s now 65 here at the county,” he says. “That was part of the two-tier change.”

Number Nine: “Add a charter amendment that requires immediate payment of actuarially unfunded benefits the day they become effective.”

“I got this from the state of Georgia,” he says. “If you’re gonna negotiate a pension benefit increase that creates an immediate liability, you got to pay for it immediately. Because we did Measure J, I felt like we got it covered. For more than 25 years, it wasn’t required to put the real cost of pension increases on the ballot sheets. It was in the shadows.”

Number Ten: “Pursue a statewide ballot measure requiring a two-tier system.”

“This was accomplished by PEPRA (Governor Brown’s reform),” he says.

Number Eleven: “Establish a blue ribbon committee from local industry to review personnel costs.”

“I just didn’t get to it,” he says.

Number Twelve: “The state constitution forbids cities, counties, and other public entities to spend money more than they make in one year unless two thirds of the voters in that locality approve that overflowing cost.”

“That’s a quote from the Voice of San Diego in 2006,” says Moorlach. “We took this to trial, filing a lawsuit against the Deputy Sheriffs for getting three percent at 50.”

But he says, even though it was technically illegal according to the state constitution, politics got in the way and pension debt was made exempt. In 2011, the California Supreme Court chose not to hear the lawsuit.

“It put blood on the hands of the legislature, on the Governor and the state judges,” he says. “We tried real hard but failed.”

Number Thirteen: “Pension reform bill.”

“This was about the acquisition of life insurance contracts using the pooling technique,” he says. “If you insure your employees, when they pass away, you could pay off part of the pensions. This was too hard a sell. If you can’t explain something to the public sector in 30 seconds, forget about it.”

Number Fourteen: “Labor negotiations could be done in public.”

“We adopted (this) and we got it,” he says. “It’s nice for the public to see the crazy offers that they put on the first round. It changes the whole dynamic.”

Number Fifteen: “Gradually lower the rate of return and invest accordingly.”

“This idea came from a Wall Street Journal article in 2006,” he says. “We’ve gotten the assumed rate down just by influencing members of the board. This was a win.”

First JA on OC Board of Supervisors Sworn In

Orange County Supervisor Lisa Bartlett is administered the oath of office by former Supervisor Marian Bergeson. Also pictured are (from left) Supervisors Todd Spitzer (vice chair), John Moorlach, and Shawn Nelson (chair).

SANTA ANA — Lisa Bartlett was sworn in last week to the District 5 seat on the Orange County Board of Supervisors, becoming the first Japanese American to serve on the board.

Disclaimer: You have been added to my MOORLACH UPDATE communication e-mail tree. In lieu of a weekly newsletter, you will receive occasional media updates, some with commentary to explain the situation, whenever I appear in the media (unless it is a duplication of a previous story).

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MOORLACH UPDATE — Boondoggle — December 10, 2014

My News LA, in the first piece below, provides an update on the ambulance RFP un-termination (see MOORLACH UPDATE — Ambulance RFP Termination — November 4, 2014). Because there were several legal concerns that I did not believe should be shared in open session, I decided to abstain on the proposed solution. I can’t remember my last abstention, but felt that the motion was close to what I was comfortable with, but not precisely.

In the second piece, the LA Times asked my thoughts on the new ARTIC station in Anaheim. You can see from my previous posts, see MOORLACH UPDATE — ARTIC — February 15, 2011 and MOORLACH UPDATE — ARTIC — January 14, 2011, that I stayed consistent with my position.

O.C. supervisors restart hiring process for ambulance service providers

Posted by John Schreiber

Orange County supervisors on Tuesday approved a do-over on the process of hiring ambulance service providers, overturning a decision by the Health Care Agency director to junk a batch of requests for proposals.

County attorneys warned officials that starting the process all over again would present legal issues, so the supervisors opted instead to recruit a new panel of experts to pick ambulance companies from a batch of RFPs instead of seeking new bids.

Orange County Supervisor Todd Spitzer said it wouldn’t be fair to let the ambulance companies submit new bids because they would be able to look at what their competitors submitted in the first round of RFPs and adjust their new proposals accordingly.

County officials had recommended “starting from scratch,” but Spitzer led the effort to keep the original RFPs, which are under protest by some ambulance providers because the process was considered tainted.

“I think there was a panelist trying to skew the outcome” on which companies would be hired for emergency transport to hospitals, Spitzer told City News Service. “I think there was a plant, if you will, among the panelists. The scoring presented such an outlier statistically that it couldn’t withstand scrutiny.”

Health Care Agency Director Mark Refowitz recently tossed all of the bids, but the board voted 3-0, with Supervisor John Moorlach abstaining, to rescind that order.

Supervisor Lisa Bartlett suggested eliminating any of the original members of a panel evaluating and scoring the RFP in favor of a new set of experts to review the bids. Bartlett also recommended letting the new panel get a chance to ask questions of the bidders about their proposals.

Bartlett also convinced her fellow supervisors to go along with putting city representatives on the panel reviewing the bids, which would quell complaints from some quarters that cities weren’t being represented in the hiring of ambulance companies in five zones. The city representatives, however, would not be allowed to vote on contracts for service affecting the towns in which they reside or work.

“This is a way to put it back to square one while protecting the sanctity of the original process,” Spitzer said after today’s board meeting.

City News Service

Gleaming new transportation hub reflects O.C.’s embrace of public transit

Orange County’s new transportation center is designed to unite previously scattered transportation services

A Metrolink commuter train pulls into the Anaheim Regional Transportation Intermodal Center, which opened Dec. 6. (Allen J. Schaben / Los Angeles Times)

By Emily FoxhalL

While Los Angeles over the last decade has invested heavily in new rail systems, Orange County has largely kept its eyes on the road — widening freeways, improving traffic flow, building better interchanges.

But this week, commuters got their first view of an enormous, airy transportation hub that reflects Orange County’s growing embrace of public transit.

The $188-million transportation center in the heart of Anaheim, not far from Disneyland, is designed as a central hub where trains, buses, cars and bicycles will converge. Officials hope it ultimately will be the final stop for the state’s proposed high-speed bullet train.

A statement about future

Backers say the aim wasn’t just to create a train station but to also make a statement about the future. They wanted a central station to unite previously scattered transportation services, said Curt Pringle, the former mayor of Anaheim and once board chairman of the California High-Speed Rail Authority.

"It’s planned to be a part of a vibrant community that’s going to grow up around it for a long time," he said.

The 67,000-square-foot station was two decades in the planning, long enough that the ambitious plans for a countywide light-rail system were drawn up and then shelved. But plans for what was to be Orange County’s premier transportation hub never lost momentum.

The Anaheim Regional Transportation Intermodal Center — ARTIC, for short — sits next to the 57 Freeway, adjacent to the Honda Center and Angel Stadium and a short distance from Disney Resort and the Anaheim Convention Center.

Bus stops for Orange County Transportation Authority routes and private carriers surround the station, while Amtrak and Metrolink trains pick up and drop off passengers on two tracks that passengers reach via a sky bridge.

There are 1,082 parking spaces, a wide circular drive that invites car drop-offs and a dozen bicycle lockers plus additional bike racks.

Progress or ‘boondoggle’

Critics, though, can’t help but point out a missing component. Despite the boasting, the hub so far has no bullet train platform — just a space allocated for it.

ARTIC: Anaheim’s transportation hub

The $188-million Anaheim Regional Transportation Intermodal Center (ARTIC) in Anaheim will serve as Orange County’s multi-modal transportation hub.

"It’s a boondoggle," said John Moorlach, a county supervisor and an OCTA board member. "It’s just too much building for too little service."

Although the station is expected to have more than 10,000 daily boardings, the old one-room train depot, tucked in a parking lot beyond center field in Angel Stadium, was only lightly used.

According to OCTA records, the depot had an average of 510 weekday boardings last fiscal year, ranking it seventh among 10 Orange County Metrolink stops. The busiest, Irvine and Fullerton, had three times as many boardings.

The station also ranked third among six Amtrak Pacific Surfliner stops in the county, with 389 average weekday boardings.

All of which causes Supervisor Shawn Nelson, who chairs OCTA’s board of directors, to wonder how the cavernous building will get more people involved in transit.

"There’s a little delusional sort of behavior with this," he said. "They wanted this so bad they refused to look at some of the realities."

A soaring design

The station itself is a stunning crisscross of steel pipes that form a rounded skeleton that seems to hover above the ground like a cloud.

A commuter walks through the 67,000-square-foot Anaheim Regional Transportation Intermodal Center. (Allen J. Schaben / Los Angeles Times)

Translucent pillows of Teflon-impregnated plastic — the same material used in Beijing’s National Aquatics Center, or Water Cube, and Fisht Olympic Stadium in Sochi, Russia — fill each diamond of the frame, allowing the sun to light 75% of the public space in the building, which is also powered by solar panels.

More than 600 strips of LED lights will turn the pipes red for Angels games and orange when the Ducks play. The teams will have pre- and post-game shows oriented toward the center.

Inside, a large open area faces a main staircase that soars up the building’s three levels, each one recessed from the next. Hot and cold water piped through the floors controls the temperature on each level.

On the ground floor, ticket counters with information on scrolling digital strips await passengers. A "progressive convenience store" and a kiosk offering organic coffee are planned.

Upstairs, restaurants are scheduled to open next year that will offer passengers opportunity to grab a bowl of quinoa and super veggies, watch oysters be shucked, or sip a hand-crafted cocktail at a bar.

Need directions?

Travelers on Monday evening said they were still taking in the spaceship-like building.

"We’re all confused!" said Judith Smith, 61, a rail commuter for 28 years. "I thought I was going into, maybe, the airport."

Socorro Velasco, 42, who takes the train several times a week from L.A. to her job in Anaheim, said she now has to walk a little farther to get to the depot.

Waiting on a bench outside, she said she thought commuters would like the building once they got used to it. But she wasn’t quite ready to go inside just yet.

"I didn’t want to get lost in there!" she said.

emily.foxhall

Disclaimer: You have been added to my MOORLACH UPDATE communication e-mail tree. In lieu of a weekly newsletter, you will receive occasional media updates, some with commentary to explain the situation, whenever I appear in the media (unless it is a duplication of a previous story).

I have two thoughts for you to consider: (1) my office does not usually issue press releases to get into the newspapers (only in rare cases); and (2) I do not write the articles, opinions or letters to the editor.

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MOORLACH UPDATE — Christina Koslosky — December 8, 2014

For a little background on today’s topic in the Voice of OC piece below, please go to MOORLACH UPDATE — Mahesh Patel — February 13, 2014. After serving as Interim CIO, Christina Koslosky has been selected to replace Mahesh Patel. I believe this is an excellent decision by the County’s CEO.

The vendor selection for the County’s Information Technology (IT) outsourcing has been an interesting and prolonged effort. The previous vendor was ACS (Affiliated Computer Services), which was acquired by Xerox. The new contract was split into two components, IT and telephone. ACS was unsuccessful in maintaining the IT portion, but was successful in its bid for the telephone contract. The Board addressed this matter at its November 13, 2012, meeting. Supervisor Campbell and I voted for the higher-priced vendor, Verizon, believing that this firm had provided a realistic bid. We were on the losing end of a 2-to-3 vote. Then Xerox was approved with a unanimous vote. It was not until September 10, 2013, that their overall contract bid was approved, with Supervisor Nelson voting in opposition. Over a year later, we are waiting for this successful vendor to get up to speed and meet target dates. I have met with County IT staff on this matter and with a key representative of Xerox.

Xerox was not my first choice, but here we are. It’s now up to Xerox to meet expectations. Xerox, when it was ACS, had an excellent track record with the County. Attacking a key IT manager on her promotion, one who has done a very competent job and has to live with the decisions made by the Board of Supervisors, is no way to vent frustrations with this vendor. Consequently, I want to wish CIO Christina Koslosky all the best in this critical, but difficult, management position.

County IT Director Appointed Amid Cost Overrun Concerns

By NICK GERDA

Amidst months-long delays and millions in potential cost overruns for critical technology upgrades, the county’s acting IT director has been appointed to the post permanently.

The appointment of Christina Koslosky as the county’s Chief Information Officer is drawing praise from official corridors but scorn from the county’s main union that represents most of the county’s IT workers.

“Christina has my full confidence in her proven abilities, expertise and agility to address our existing IT challenges as we tackle some complex and dynamic projects, wrote county CEO Mike Giancola in a Dec. 3 memo to county supervisors.

"She has been a tremendous asset to the CEO executive team,” Giancola wrote.

County Supervisor John Moorlach also supports Koslosky.

“I think Christina is very competent and will do a great job for the county,” said Moorlach.

However, the county’s main employees union sees things differently, pointing to Koslosky’s presiding over a critical project that the county itself warns is likely to go over $13 million over budget.

“This is a program that’s drowning in six feet of water,” said Nick Berardino, general manager of the Orange County Employees Association, referring to the Xerox-contracted project to upgrade and operate the county’s phone and computer networks.

“To appoint the executive that has overseen contracts costing taxpayers millions and millions in cost overruns to the chief [technology] executive not only reflects badly on the county, but puts into question the judgement of the current CEO. It’s absolutely disgusting.”

Koslosky, meanwhile, said Friday that the county will be reducing its payments to Xerox, but wouldn’t say by how much.

“We have had some areas where they have not met performance, and there will be a deduction,” Koslosky told Voice of OC last Friday.

That lack of performance by Xerox has led to several problems for the county, she said.

Some key county offices – like for the Health Care Agency – are moving locations, and the delays caused by Xerox mean that new buildings will have to be connected to an old phone system – only to be converted to the newer system at a later date, Koslosky said.

The county is also now obligated to extend other technology contracts that relied on Xerox finishing its work, Koslosky added.

“These costs were due to a delay on” Xerox’s part, she said. “I don’t expect that I should have to pick up the cost if the delay is at your cost.”

Xerox has also not provided a final schedule for its project and some new equipment purchases are being delayed, Koslosky said.

“It’s just, quite frankly, a lot more work than we had hoped for,” Koslosky said.

The county will hold Xerox accountable, she added.

“The contracts are very clear" about roles and responsibilities for Xerox and the county, Koslosky said.

The county government has a long trail of cost overruns and schedule delays on such outsourced IT contracts.

In one of the most stark examples, a previous chief technology officer, Reza Khayyami, was charged in 2006 with taking bribes from a software contractor.

Many of the department’s issues were supposed to be fixed by a 2006 task force. But that panel waited years to begin reviewing the very problem that prompted its creation — the delivery of a $6-million mainframe system before county supervisors had a chance to approve it.

The county also filed a lawsuit last year alleging that IT vendor Tata Consultancy Services misled and defrauded the county into spending millions of public dollars on property tax software that failed.

Satish Ajmani, another former IT director, retired in 2010 after a series of scathing audits from the county performance auditor found problems with the management of IT contractors.

One 2009 report identified more than $45 million in no-bid IT contracts. A 2010 follow-up audit found fault with an $800,000 strategic IT plan because it fell short of guiding policy makers effectively.

And this spring, the county’s technology chief, Mahesh Patel, suddenly announced his retirement, which came as a surprise to Moorlach.

Meanwhile, the county’s technology contractors have become major political donors to county supervisors, who approve large county IT contracts.

In Xerox’s case, the firm and its lobbyists have steered considerable sums to county supervisors, often times in a less than obvious way.

A quick survey of campaign finance data found more than $12,000 in contributions between mid-2010 and mid-2012, though much of additional funding is obscured through intermediaries.

Now, with Xerox one year into a five-year contract, county managers say the project’s problematic and expensive delays were caused by the firm.

According to a September report by Koslosky’s office, Xerox gave incorrect information on power demands for its new equipment, causing a four-month delay in installing them. The project is also at a high risk of cost overruns that exceed $13 million, according to the report.

Union leaders sent Koslosky a letter in September asking how the county will hold Xerox accountable. Berardino said the county still hasn’t specified how much of the overrun will be covered by taxpayers versus Xerox.

“They continue to play hide-the-ball, and it’s obvious they don’t want the public to know that the CEO-IT department continues to be a floating shipwreck,” said Berardino.

Asked about Berardino’s characterization, Koslosky replied: “Nick’s free to express his opinion. I’ve heard him use that phrase quite frequently.”

County officials say they’re negotiating with Xerox on the exact amount of compensation from the firm.

Under its five-year contract, Xerox is set to run the networks for nearly all of the county government’s 17,000 desktop computers and 17,125 land line phones, and update phones to voice-over-IP technology.

The networks are critical to the effective functioning of the county government, which is responsible for numerous law enforcement, public health and infrastructure services for Orange County’s 3.1 million residents.

Union leaders say Xerox has failed to adequately staff the project, leading to county workers taking care of Xerox’s work.

“County employees are having to bail out the contractor, who’s making money hand over fist, laughing all the way to the bank with pockets chock full of taxpayer dollars,” said Berardino.

Xerox has yet to comment publicly on the allegations against their firm.

Before the contract was approved last September, union leaders and line-level county IT workers told county supervisors that part of the contract’s work could be handled with existing staff and warned of significant problems in the contract’s terms.

“We stood before the board of supervisors in public testimony and predicted exactly what has happened. And the only one who didn’t ignore us was [supervisors’ Chairman] Shawn Nelson,” said Berardino, noting that Nelson was the sole vote against the contract.

Asked about the union’s warnings, Moorlach said county IT staff did what they could to understand the concerns.

“It was my understanding that it [was] followed up on” by county staff, he said.

Most of the supervisors in office at the time of the contract approval – Todd Spitzer, Pat Bates, Janet Nguyen, Shawn Nelson – didn’t return messages seeking comment, nor did newly sworn-in Supervisor Lisa Bartlett.

Before coming to the county in 2008, Koslosky worked for 17 years working at the Santa Ana-based tech giant Ingram Micro.

She started at the county as director of finance and contracts in the central IT department, eventually becoming the second-in-command in Feb. 2012.

After the top IT director Mahesh Patel retired in the spring, Koslosky served as the interim, before her appointment as the permanent chief information officer this week.

You can reach Nick Gerda at ngerda, and follow him on Twitter: @nicholasgerda.

BONUS: Last month I invited you to a plaque dedication at the Diego Sepulveda Adobe Estancia in Costa Mesa (see MOORLACH UPDATE — Seal Beach — November 14, 2014). For those who were unable to attend, here is a photo of the new plaque:

Disclaimer: You have been added to my MOORLACH UPDATE communication e-mail tree. In lieu of a weekly newsletter, you will receive occasional media updates, some with commentary to explain the situation, whenever I appear in the media (unless it is a duplication of a previous story).

I have two thoughts for you to consider: (1) my office does not usually issue press releases to get into the newspapers (only in rare cases); and (2) I do not write the articles, opinions or letters to the editor.

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Posted in California

MOORLACH UPDATE — Carpool Christmas — December 6, 2014

The construction of the carpool flyovers for the Garden Grove, San Diego and San Gabriel Freeways has been occurring during my entire second term. A few days before I leave office, the carpool lanes will be available for commuters using this stretch of highways to get to work and to other destinations. Merry Christmas!!

Eileen Frere of ABC Channel 7 joined the media tour and her piece is the first below, with a link to her broadcast. The LA Times had a photo in yesterday’s edition, but I was unable to locate it on their website. The OC Register gives the announcement front-page coverage in the second piece below. My Policy Advisor and Deputy Chief of Staff, Pamela Newcomb, ably covers the Orange County Transportation Authority for me and joined me on the tour. My thanks go to Pamela for her outstanding service, not only to the Second District, but to the entire County of Orange.

It will be interesting to monitor how much the flow of traffic improves at this intersection once commuters become adjusted to the improvements. Next comes the addition of one lane on both sides of the San Diego Freeway. It would also be nice to see what this improvement will do to traffic flow. Of course, I would prefer to add two lanes on both sides of the I-405, but I lost that vote. But, adding four lanes in total and then monitoring traffic would be the next best move. If this does not alleviate traffic enough, then, and only then, should our transportation planners publicly discuss other options, like converting free lanes to toll lanes (see MOORLACH UPDATE — Troubling Toll Lanes — September 23, 2104).

The third piece below is an editorial submission in the OC Register on the twentieth anniversary of the County’s filing for Chapter 9 bankruptcy protection. This event changed the entire course of my life. Consequently, December 6 is a big day on my personal calendar. Twenty years later, the County is nearing the conclusion of paying off the bankruptcy-related debt, has implemented a broad array of proper fiscal stewardship tools, and is ready to handle the difficult financial pressures that still lie ahead in the County’s future. With that, my final in a series of LOOK BACKS is also provided below.

LOOK BACKS

• 2014 – Adopted Civic Openness In Negotiations (COIN) (see MOORLACH UPDATE — CRONEY Comedy — September 2, 2014)

• 2014 – California State University Long Beach College of Business Administration Distinguished Alumnus of the Year (see MOORLACH UPDATE — Distinguished Alumni — April 5, 2014)

• 2014 – Adopted Laura’s Law—the second County in twelve years to do so (see MOORLACH UPDATE — Laura’s Law Journey — August 11, 2014)

• 2014 – Cypress Chamber of Commerce’s Man of the Year (see MOORLACH UPDATE — Cypress Reminiscences — June 20, 2014)

• 2014 – Approved a fifteen-year extension of the John Wayne Airport Settlement Agreement (see MOORLACH UPDATE — 2014 Bucket List — October 3, 2014)

• 2014 – 20th anniversary of Chapter 9 filing – December 6 (see below)

OC driving may get easier as carpool construction ends

http://abc7.com/traffic/oc-driving-may-get-easier-as-carpool-construction-ends/424241/

By Eileen Frere

SEAL BEACH, Calif. (KABC) — Years of carpool lane construction in Orange County are about to come to an end.

For four years, drivers have endured construction detours. But workers are just about finished.

Next week, new bridges linking the carpool lanes on the 405 with the 22 and 605 freeways will open, and carpoolers will no longer have to leave the HOV lanes to change freeways.

The project cost nearly $300 million. It also adds a second carpool lane on the 405 in both directions between the 22 and the 605.

Schedule for opening the connectors:

· Tuesday morning, Dec. 9, the southbound I-605 to southbound I-405 carpool connector

· Wednesday, Dec. 10, the northbound I-405 to northbound I-605 carpool connector

· Thursday, Dec. 11, the westbound SR-22 to northbound I-405 carpool connector

· The southbound I-405 to eastbound SR-22 carpool connector opened in November
For more information about the closures and detours, visit www.octa.net/wccdetourmap.

Fly-over carpool lanes for 22, I-405, I-605 start opening on Sunday

BY KELLIE MEJDRICH / STAFF WRITER

Second District Orange County Supervisor John Moorlach looks at westbound traffic on the 22 as he stands on the carpool connector of the 22 to the northbound I-405.

MARK RIGHTMIRE, STAFF PHOTOGRAPHER

Second District Orange County Supervisor John Moorlach waves to an eastbound car as he stands on the westbound carpool connector of the SR-22 to the northbound I-405 on Thursday, December 4th during a media preview tour. The connector is scheduled to open on Thursday, December 11th.

MARK RIGHTMIRE, STAFF PHOTOGRAPHER

Second District Orange County Supervisor John Moorlach, left, and Gary Miller, director of the Orange County Transportation Authority talk as they stand on the westbound carpool connector of the SR-22 to the northbound I-405 on Thursday, December 4th during a media preview tour. The connector is scheduled to open on Thursday, December 11th.

MARK RIGHTMIRE, STAFF PHOTOGRAPHER

Frustrated by that perfectly good lane blocked off on the westbound 22 freeway? The end of your aggravation is near – carpoolers will get to zip through unencumbered in the next few days.

First the lane openings were delayed by rain, now they’re being sped up to avoid more rain. Just know that Sunday marks the start of openings for three fly-over carpool lanes linking up the 22, I-405 and I-605.

The lanes will allow carpool drivers to soar above regular traffic and link up with freeways through a special left exit, something Orange County Transportation Authority spokesman Joel Zlotnik said will “eliminate all the merging and weaving” caused by carpoolers trying to switch freeways.

Opening these connectors marks the end of major work on the West County Connectors project, which cost $297 million – $15 million of which came from the county’s half-cent sales tax known as Measure M. Construction took four years.

Not all the construction is over, though – watch out for intermittent overnight closures of the freeways through February, Zlotnik said, as workers put the “finishing touches” on the project.

Originally, officials estimated the openings would come earlier, but this week’s drenching meant two nights of work lost, according to Bill Gilchrist, a Caltrans engineer who worked on the 405/605 portion of the project.

But with another rainstorm predicted Thursday – one that, according to a National Weather Service forecast, could be colder and stronger than this week’s downpour – transportation officials want to get everything open.

Starting Sunday at 7 a.m., carpool lane drivers on the southbound I-605 can take their own left exit onto the southbound I-405. Drivers will take a left exit and be able to shoot above traffic in the regular lanes on a 2,900-foot-long bridge.

The other side of that bridge, linking up the northbound I-405 carpool lane with the northbound I-605 carpool lane, opens at 5 a.m. Tuesday. The project’s final carpool connector opening is scheduled for 5 a.m. Wednesday with the link-up of the westbound 22 with the northbound I-405.

The other side of that 1,100-foot connector bridge, which links the southbound 405 carpool lane with the eastbound 22 carpool lane, opened last month.

Both bridges have specially grooved concrete designed to reduce noise impact on surrounding communities, which include areas of Garden Grove, Westminster, Seal Beach, Los Alamitos, Long Beach and Rossmoor.

Curious why the bridges have what kind of looks like long legs?

Those are called “outriggers,” Gilchrist explained, and it’s necessary “since the space is so precious underneath.”

In addition to carpool link-ups, the project also added 6 miles of carpool lane to I-405 from the 22 to I-605, nearly doubled the size of the Seal Beach Boulevard bridge, and reconstructed the Valley View Street bridge.

Drivers might wonder if the new connectors might cause some to cheat the carpool lane, using the connector lane as a cut-through.

“That is a concern, but people just have to know and follow the overhead sign,” Gilchrist said.

Caltrans spokesman David Richardson added that unsafe behavior on the road is subject to enforcement by the California Highway Patrol.

“It’s more of an education,” Richardson said. “Caltrans has designed the freeway with the appropriate signs.”

BY THE NUMBERS

$297 million

Total cost

of project

$15 million

Amount of Measure M funds used for project

1,100 feet

Length of the 22/405 connector bridge

2,900 feet

Length of the

405/605 connector bridge

Contact the writer: 714-796-7922 or kmejdrich

How transparency and good fiscal stewardship came to O.C.

By JOHN MOORLACH / Contributing Writer

Twenty years ago, to learn what the Orange County treasurer’s investment portfolio really looked like, one had to file a California Public Records Act request, pay $10, and wait 10 days. Or you could wait six months for a quarterly report. Like mushrooms, the pool participants and the voters were kept in the dark.

The Orange County treasurer-tax collector at that time, Robert L. “Bob” Citron, was shy and an awkward public speaker, so the Board of Supervisors decided that they did not need to receive oral reports on the status of the county’s investments. Instead, annual letters were provided about how much interest income was being generated above and beyond any and all competitors. Almost no one in elected leadership positions asked questions, as the treasurer’s portfolio was generating so much income that it helped balance the county’s budget during a recessionary period.

In the spring of 1994, when asked about Citron, then-Board Chairman Tom Riley told a reporter, “I don’t know how the hell he does it, but he makes us all look good.”

Really? That Dec. 6, Riley voted to put the county into Chapter 9 bankruptcy protection. It was the largest municipal bankruptcy in United States history. This record stood for 17 years, when it was eclipsed by Jefferson County, Ala., and then followed by the city of Detroit.

Orange County exited bankruptcy with an approved plan of adjustment within 18 months. Today, the related debt issued to cover the losses is anticipated to be completely paid off within the next year or two.

The county made a number of financial management and reporting improvements:

• The county treasurer began issuing monthly reports;

• The reports are posted immediately online;

• The investments are reported at fair market value (following GASB 31 long before it was issued);

• The portfolio eliminated the use of leverage and exotic derivatives.

• The investment policy statement mirrors that of a money market fund and garnered a certificate of appreciation from a national municipal treasurers association;

• The investment pools received the highest ratings possible from two of the three major rating agencies;

• County departments submitted annual business plans that contained measureable metrics on how the departmental goals were achieved, using a results-oriented-government approach;

• A five- and 10-year strategic financial plan was instituted and utilized every year;

• The business plans, the strategic financial plan, and the annual budget were integrated;

• A treasury oversight committee was established and meets quarterly;

• An audit oversight committee was established and meets quarterly;

• The Internal Audit Department was segregated from the Auditor-Controller’s office (a strategy that is now receiving a fresh review for its efficacy and/or improvement);

• A “strong” CEO corporate governance structure was instituted to promote more accountability and efficiency from county agency and department heads;

• The Performance Audit Department was recently established to review management efficiencies well beyond just the monitoring of internal controls.

These initiatives seem simple, but the annual budget and audit is usually the fiscal depth of many municipalities. The county of Orange goes into much more detail and carefully scrutinizes itself in order to constantly make improvements to provide additional transparency and cost savings.

The taxpayers of Orange County will never again see a hedge-fund-type implosion of the treasurer’s investment pools. But, there are other fiscal pressures to be concerned about.

Incurring nearly $1.7 billion in investment losses and professional bankruptcy-related fees took a major toll on the county’s bottom line. Based on per capita unrestricted net assets for governmental activities, O.C. is in the bottom 20 percent of the state’s counties.

Out of 58 counties, Orange County receives the lowest percentage of every property tax dollar collected. It is a significant donor county, subsidizing Sacramento and the other 57 counties. This inequity still needs to be rectified.

Along with restricted revenues, Orange County, like many California municipalities, will face rising expenditures due to prior decisions made to increase defined benefit pension plan formulas. Fortunately, the financial management tools currently in place will assist the county’s senior fiscal officers with managing these vice-gripping constraints.

Let’s hope that Sacramento grants a more equitable tax sharing arrangement in Orange County’s future. Let’s also hope that the pension system achieves its annual earnings assumptions and doesn’t become an even larger fiscal burden to the county’s annual budget.

With diligent management, the cataclysmic event that scarred the county will only be recalled on milestone anniversaries. We are no longer mushrooms, and we know what the treasurer and other county managers are doing. This course of proper fiscal stewardship will continue, and it should protect the taxpayers of Orange County.

John Moorlach is a Republican member of the Orange County Board of Supervisors and represents the 2nd District on the board.

Disclaimer: You have been added to my MOORLACH UPDATE communication e-mail tree. In lieu of a weekly newsletter, you will receive occasional media updates, some with commentary to explain the situation, whenever I appear in the media (unless it is a duplication of a previous story).

I have two thoughts for you to consider: (1) my office does not usually issue press releases to get into the newspapers (only in rare cases); and (2) I do not write the articles, opinions or letters to the editor.

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Posted in California

MOORLACH UPDATE — Twentieth Anniversary — December 5, 2014

The OC Register provides its perspective on the twentieth anniversary of the County’s filing of Chapter 9 Bankruptcy on December 6, 1994, below.  It’s a thorough piece and I only have one clarification.

 

In 2004, the OC Register contacted an independent actuary, not an auditor, to opine on the efficacy of “2.7% @ 55.”  During the years 1999-2013, I provided Five-Year Look Backs on articles that I was mentioned in.  It was a way to catch up my three adult children on articles that occurred while they were busy focusing on school work and the other fun things involved with keeping young people occupied.  Here is the LOOK BACK related to the actuary, from MOORLACH UPDATE — OC Register — August 25, 2009:

 

The OC Register’s Tony Saavedra and Norberto Santana, Jr. did an amazing thing for their story.  They hired an actuary.  They did some heavy lifting!  Oh, if only one decent expert would have been hired by one of the dailies when I was running against Bob Citron!  Their story, “Actuary questions O.C. pension plan—Independent analysis of proposed county contract says cost assumptions may be wrong,” was an award winner!  With the benefit of hindsight, the actuary was spot on.

 

The review by actuary Pamela Morris for The Orange County Register concluded that the county’s cost analysis is based on a potentially wrong assumption that the retirement rates will stay the same.  The new plan gives huge incentives to retire early.

 

The pension fund already is underfunded by $1 billion, and county Treasurer John Moorlach has said the new contract could sink it further.

 

The warnings that I conveyed in August 2004 are provided below.  I was arguing against an agenda item where the Current and Annual Cost summary boxes were filled in with the term “N/A.”  Once again, I was telling the truth, and regretfully, my concerns have been borne out.  A $1 billion unfunded actuarial accrued liability has jumped more than five-fold in the last ten years, thus eclipsing the $1.7 billion net losses incurred when the County’s Investment Pool was liquidated in 1994.  It was this 2004 Board of Supervisors vote that motivated me to run for County Supervisor in 2006.  It’s been an amazing “financial” adventure for this Certified Public Accountant and Certified Financial Planner, as you can see from the current LOOK BACKS series segment directly below.

 

 

LOOK BACKS (see MOORLACH UPDATE — Supervisor Bartlett — December 3, 2014 for the last segment)

 

  • 2012 – Working with the Los Angeles County Board of Supervisors and both county’s LAFCOs, we were able to clean up selected parcels on our common border along Coyote Creek
  • 2012 – Kermore Island was annexed into the city of Stanton
  • 2012 – GASB 67 and 68 were issued, which require the reporting of municipal pension liabilities on the annual audited balance sheets; this is something I’ve advocated for many years and will become effective next year
  • 2012 – Gov. Brown signs the Public Employee Pension Reform Act (PEPRA) into law – It contains a provision that Gov. Brown and I discussed:  No granting of retroactive benefits
  • 2012 – Removed 19th Street Bridge from the Master Plan of Arterial Highways
  • 2013 – Annexed Emerson Island into the city of Newport Beach

 

 

 

 

 

 

 

Watchdog: 20 years after O.C. went bankrupt, changes prevent a repeat

County’s investments are in the top tier, but problems persist.

 

BY TERI SFORZA / STAFF COLUMNIST

 

Robert Citron, self-proclaimed “master of the ship at the helm” and former Orange County treasurer, consulted psychics and a $4.50 star chart as he managed the county’s highly leveraged, multibillion-dollar investment pool.

Citron vowed to furnish a stunning chunk of Orange County’s budget – some 11 percent of its general fund – from interest earnings, taking greater and greater risks with public dollars in his attempt to make good.

But it all came to a screeching halt on Dec. 6, 1994, when Citron’s wrong-way bets on interest rates imploded. The County of Orange fled into federal bankruptcy court, the largest municipality ever to seek such protection at the time. The investment pool lost $1.64 billion.

Twenty years later, Orange County has forked over nearly $1.6 billion to repay its bankruptcy debts and added a host of safeguards to prevent a repeat performance.

But the financial illiteracy that led local officials down the garden path persists, as evidenced by municipal bankruptcies in Detroit, Stockton and San Bernardino.

Take heart, though. In stark contrast to the 11 percent promised in 1994, Orange County now gets an anemic pittance of its budget from investment earnings: Just 0.9 percent in 2014, according to figures from the state controller’s office.

Still, that gives Orange County the third-best ranking among California’s 58 counties.

“When I look at the percentage of the budget that interest was providing in 1994 versus today, it’s just amazing,” said Supervisor John Moorlach, who foretold the coming crisis when he ran against Citron for the treasurer’s job in 1994. Moorlach wasn’t just ignored back then; he was vilified.

In the years before Orange County went bankrupt, Citron’s aggressive investing earned two and three times more than other public money managers. That was extremely attractive to local schools, cities and special districts, which had been squeezed by the tax-limiting fallout of Proposition 13.

Attempting to boost their coffers, they flocked to Citron’s pool by the dozens. Warnings that it was all a sham were branded as traitorous, and Moorlach was dubbed “Chicken Little” for crying that the sky was falling.

RECIPE FOR DISASTER

How did Citron do it? By taking billions of public dollars, persuading elected officials to borrow against it, and then essentially persuading Wall Street to lend O.C. money on the loaned money. All of it went into the investment pool, dramatically increasing earnings.

That’s called “leverage.” Shortly before implosion, Citron had managed to leverage $7.6 billion in public funds into a $20.6 billion investment pool. Earnings had grown so astronomically high that the treasurer’s office was skimming money off the top and reporting lower-than-actual returns to cities, schools and special districts so as not to alarm them and trigger a run on the bank.

The skimmed money – $89 million, to be exact – did not go into any person’s pockets. It went, instead, into an account just for the county’s use.

This false accounting was the source of the criminal charges to which Citron ultimately pleaded guilty.

There was no shortage of blame to go around: the rogue treasurer making risky investments; the auditor who noted problems but didn’t ensure they were taken seriously; managers who delighted that more than one-third of their discretionary spending was pouring in from interest income, even though that should have raised eyebrows; elected supervisors who unquestioningly borrowed hundreds of millions of dollars for the sole purpose of boosting those interest earnings; and citizens who ignored warnings that the whole scheme was going south, voting the rogue treasurer back into office anyway.
STEEP PRICE

In the end, Orange County vowed to repay agencies most of what they lost in Citron’s pool, issuing debt of $1 billion to do so.

We have been paying off that debt ever since, averaging $69 million a year over the 23 years of repayment – money that could have funded better roads, libraries, health care and myriad other services for Joe Citizen.

But soon, that will all be over. The first batch of refinanced “Bankruptcy Recovery Bonds” is slated to be paid off in June, freeing up millions for the county’s general fund. The second batch will be retired in 2017.

Total principal and interest costs of repaying O.C.’s bankruptcy debt: $1.6 billion, according to Frank Kim, chief operating officer. That includes about $544 million in interest and related costs.

Much has changed for the better. Back then, simply getting a copy of Citron’s portfolio was an act of sheer will, involving Public Records Act requests, paper copies and attendant charges. Now, it’s posted online, for free, available to anyone who cares to look.

Now, public treasurers and auditor-controllers must possess some basic qualifications before they can get those jobs. An oversight committee with citizen-experts peers over the treasurer’s shoulder (and has been beefed up by current Treasurer-Tax Collector Shari L. Freidenrich). There’s monthly reporting on the portfolio’s health and an annual audit of the treasury’s assets.

“These are important checks and balances to ensure the protection of public funds,” Freidenrich said.

Public agencies can’t borrow just to invest the proceeds and reap the rewards anymore; many exotic investments are verboten, and treasurers must “mark to market,” a gift Orange County has given public treasuries everywhere.

Rather than tallying what a portfolio was worth when investments were purchased or mature, public treasurers must disclose precisely what those investments are worth now, in today’s dollars.

That lays bare paper gains – and losses. If mark-to-market had been in place during Citron’s reign, Orange County’s story may well have turned out quite differently.

‘SPECTACULAR’

Other changes: A beefed up in-house watchdog (the internal auditor, whose occasionally scathing reports have caused some friction over the years); term limits for county supervisors (most on the board during Citron’s reign had been there for decades); and, locally, “more of a watchdog mentality around public spending,” said Mark Baldassare, president and CEO of the Public Policy Institute of California.

“We’ve seen some other very spectacular municipal bankruptcies, and what they have in common is a certain short-sightedness,” Baldassare said. “Not all public officials have a deep knowledge about budgeting issues, and they’re not always looking at the big picture, the long-term consequences of the financial decisions being made.”

Moorlach – the “Chicken Little” whose license plate now reads “SKY FELL” – will argue that’s precisely what led Detroit, Stockton, San Bernardino and others into municipal bankruptcy. During flush times, officials granted big pay and pension boosts to workers, without really understanding what they would cost down the line, when times weren’t so flush.

“That will always be going on,” Moorlach said. “In August 2004, the Board of Supervisors approved pension enhancements on a 3-2 vote, even though an independent auditor consulted by your paper called it crazy. One of those yes votes was from a graduate of the Harvard Business School.”

Still, the county is in solid financial shape. It has negotiated changes to retiree medical plans with its unions that will save more than $1 billion, is pre-paying to get the pension situation under better control, and has seen its credit ratings go from the toilet in 1994 to double-A today.

But while its financial woes have been greatly eclipsed by the woes of others, Orange County remains wedged in the public consciousness as a most spectacular example of financial failure.

“That’s because it was so surprising,” Baldassare said, “that this wealthy, fiscal conservative place could go bankrupt was so unexpected. If it could happen in Orange County, maybe it could happen anywhere.”

Contact the writer: tsforza@ocregister.comTwitter: @ocwatchdog

 

 

BIGGEST MUNICIPAL BANKRUPTCIES IN U.S. HISTORY

  1. Detroit, 2013: $18.5 billion
  2. Jefferson County (Alabama), 2011: $4 billion
  3. Orange County, 1994: $1.64 billion
  4. Stockton, 2012: $1 billion
  5. San Bernardino, 2012: $500 million

Sources: Cities and counties, bankruptcy filings, Forbes

COSTS OF O.C.’S BANKRUPTCY

Investment pool losses: $1.64 billion

Fees to the county’s bankruptcy law firm, Hennigan, Mercer & Bennett: $29 million

Cost of repaying $1 billion borrowed to repay pool investors: $1.585 billion

Recovered through litigation against investment banks, auditors, et al.: $847.1 million

 

 

 

 

FIVE-YEAR LOOK BACKS

 

August 4

 

2004

 

The OC Register’s Norberto Santana, Jr. addressed the proposed pension plan negotiations in “County workers voting on contract—Union plan calls for employees to accept wage freeze, pay part of health insurance in exchange for more access to pension.”  In retrospect, it is safe to say that we have experienced a “market dip” and it will have a dramatic impact on employer and employee contributions in the future.  As Supervisor Norby alludes, it will not have a financial impact on those who retired in the last five years, as they are no longer required to make contributions.

 

As to the multi-year requirement for employees to fund the retirement system’s unfunded liability created by this contract, I have tasked our Internal Auditor to verify that this commitment has been satisfactorily addressed on an annual basis.  The last thing our work force needs is to find out that they are behind on their commitment and will be subject to even higher payroll deductions in order to honor this major financial commitment.

 

Orange County Treasurer John Moorlach has expressed concerns about adding further strain to the pension fund.

 

County officials are basing their calculations of the financial impact of the added pension benefits on a 7.5 percent rate of return on the investments made by pension-fund managers.  Moorlach said he’s concerned about how a market dip might impact those calculations.

 

He also expressed concern that supervisors are making what could be a 30-year commitment on pension payouts in a contract that stretches for only three years.  The question,Moorlach said, is what happens to the pension deal after the three years are up?

 

At this point, few have concrete answers.

 

Supervisor Bill Campbell said he hopes to see final language locking in the self-financing pension commitment from employees, describing that as “critical” to any deal.

 

There are also generational impacts to such a deal, Moorlach said.  Younger workers are being asked to take on a larger portion of funding their own pensions and health insurance without pay increases.

 

“I hope they have an open and frank discussion among their members because the issue of higher wages versus richer retirements affects workers differently depending on their age,” Supervisor Chris Norby said.

 

August 8

 

The lead editorial in the Sunday Commentary Section of the OC Register had the headline of “Union label’s on new pension horror.”  It addressed the proposed pension deal that was being negotiated between the Board of Supervisors and the unions.

 

It is amazing that we were raising these concerns five years ago.  Now, it seems that we cannot go a week or two without an article in our local papers addressing the pension liabilities that local governments have to pay.

 

Here are selected paragraphs from the editorial.

 

Anyone who has paid attention to the political and fiscal situation in California in the past year should be aware of a cascading financial crisis that threatens to push one city after another to the brink of financial ruin.  We’ve previously called it the “pension tsunami”—a tidal wave of taxpayer-backed promises to public employee unions that cannot be afforded by the government bodies that had made the promises.

 

Orange County Treasurer John Moorlach, who has good credentials for predicting fiscal meltdown after predicting the 1994 county bankruptcy, argues that the pension tsunami could eventually rival the bankruptcy.

 

August 10

 

Stuart Pfeifer of the LA Times covered “the” topic of the month in “O.C. Workers Union OKs Pension-Boosting Pact:  Government employees to skip raises, pay more into retirement.  Deal now goes to supervisors.”  The prophetic observations continued.

 

County Treasurer-Tax Collector John M. W. Moorlach also questioned the wisdom of the contract, noting that it puts the county retirement system, already underfunded by $1 billion, another $300 million in debt.

 

The Board of Supervisors is scheduled to vote on the pact at its Aug. 24 meeting.

 

Moorlach said he was not surprised that workers approved the pact, noting that the median age of county workers is 43 and within sight of the new retirement benefits.

 

“All the employees are going to be so excited to get this gift.  You increase your benefits and you didn’t pay for it.  Well, someone is going to,” he said.  “If you’re close to retirement age, you’re elated.  If you’re new and you’re young, you’re going to be burdened.”

 

August 15

 

The OC Register’s Steven Greenhut made me the subject of his Sunday column, “Bankruptcy, Part II?  John Moorlach, the prophet of Orange County’s fiscal meltdown 10 years ago, has some really bad news about the cost of public-employee pensions.”

 

Here are a few segments to make one ponder five years later with the help of hindsight:

 

For the plan to work, the stock market must perform at levels Moorlach describes as “irrational exuberance.”  Remember when Gov. Gray Davis went on a spending spree, promising that the new programs wouldn’t harm taxpayers – provided the economy kept providing record levels of revenue, year after year?  We know how that panned out.  Would you incur debt based on the prediction that your house will continue to appreciate for the next 30 years at the same rate it has appreciated over the past five years?

 

I didn’t think so.

 

“It’s always an up escalator, there is no down escalator,” said Moorlach.  “After three years, employees come and complain that they haven’t had a raise for three years.”

 

That’s what unions do.  But Moorlach believes that the unions eventually will collapse on their own success, but not until taxpayers are up to their ears in debt and higher taxes to pay for decades-long commitments made by city councils and supervisors too gutless to do the right thing and just say no.

 

August 16

 

The Orange County Business Journal’s Rick Reiff, in his “OC Insider” column provided the following insight:

 

The plan by a majority of county supes to increase public employee pensions in lieu of hiking wages has OC Treasurer John Moorlach predicting another financial train wreck.  “The claim that it will be cost-neutral is an obvious fallacy.  The immediate up-front cost is $300 million,” says the man whose warnings of the OC bankruptcy went unheeded.  “It’s ironic that while the private sector is eliminating defined benefit plans, the public sector is piling on massive benefits.”  Adds taxpayer watchdog Reed Royalty, “This contract doesn’t make sense.”

 

LA Times reporter Stuart Pfeifer stayed on topic with “O.C. Treasurer Warns County of Pension Risk—John M. W. Moorlach says plans to raise benefits for retirees put voters at risk of having to bail out the fund if investments fall short.”  At a luncheon speech today, one guest asked me if it felt good to finally be in vogue on the topic of public employee pensions.  The following selections from the article should confirm his observation.

 

Now, a decade later and still the county treasurer, Moorlach is sounding the voice of caution again, this time focusing on the county’s pension system and plans to increase retirement benefits for county employees.

 

Moorlach said he is concerned that the proposal to have employees pay for the increased retirement pay is based on an assumption that the pension fund’s investments – primarily stocks, bonds and real estate – will return 7.5% on average over the next 30 years.  If the fund, now at $5 billion, fails to meet those expectations, then the county would have to make up the difference, Moorlach said.

 

“Somebody is going to have to guarantee it, and it’s going to be the taxpayers,” Moorlach said.  “For a county that was so badly burned to get this close to that kind of fire again is a little unnerving to me.”

 

“What’s forcing us to be so generous?” Moorlach asked.

In a worst-case scenario, the county could be forced to raise taxes to make good on its promises to workers, Moorlach said.

 

“You’ll probably see something on the ballot, ‘We’re going to cut our sheriff and fire services in half unless you pay for this parcel tax,’ obfuscating what the real issue is,”Moorlach said.

 

“As a member of the county team, my concern is the county does not suffer from inappropriate financial decisions,” Moorlach said.  “Why give away everything in one fell swoop and then leave it to another board or two or three down the road to figure out how to fix it?”

 

August 21

 

The Long Beach Press Telegram had the following editorial for their Sunday edition, titled “Political self-service:  Improving pensions is a direct conflict of interest.”

 

But, as County Treasurer John M. W. Moorlach points out, if pension-fund investments were to tank, taxpayers would have to make up the difference.  (Moorlach, by the way, also has a conflict of interest, but unlike most politicians, he opposes the pension increases.)

 

August 24

 

The OC Register’s lead editorial, “A pension spike to the county’s heart—The Board of Supervisors seems intent on approving costly retirement benefits,” started off with a bang.  It is below, along with a few selected clips.

 

Orange County Treasurer John Moorlach, who was vilified by county leaders when in 1994 he predicted, correctly, dire financial consequences from the county’s investment policies, is once again being vilified by county leaders for pointing out the shaky financial situation underlying a retirement plan proposed for county employees.

 

Mr. Moorlach is standing virtually alone against the tide within county government.  The result has been as predictable this time around as it was in 1994.  The union’s leader told the Register the union would unleash the “hounds of hell” if supervisors didn’t agree to this pension enhancement.  Chairman Tom Wilson, a reliable supporter of organized labor, last week unleashed his own intemperate, ad hominem attack on Mr. Moorlach in a memo that pretends to tell the “truth” about the retirement spike.

 

“These commentators have adopted a ‘sky is falling’ position absent real information,” Mr. Wilson wrote in his memo.

 

Mr. Moorlach is not uninformed, nor is he a political opportunist.

 

As Mr. Moorlach notes, virtually everyone bargaining for this deal (on both sides of the table), giving advice on it and voting on it stands to gain financially from the increased pensions because they are all covered by the county retirement system.  No one has an interest in saying “no” and looking out for the taxpayer.

 

In the final analysis, this adds up to one more sad example of current leaders pleasing a powerful voting bloc and pushing a problem off to the future, burdening younger employees for the benefit of older employees and showering long-term employees – who are at the bargaining table – with a windfall.

 

The board can still do the right thing, listen to Mr. Moorlach and put the interests of the county’s taxpayers above the interests of the government bureaucracy and make the financially prudent choice.  We remember 1994 all too well, when board members rationalized their earlier bad decisions with the phrase, “we were responsible, but we weren’t irresponsible.”

 

Sorry, folks, leadership that chooses to ignore salient information regarding important decisions of the day is . . .  irresponsible.

 

August 25

 

You know the results of that historic Board of Supervisors vote on August 25.  Here is some of the coverage.

 

You’ll see an emphasis here on a 7.5 percent interest rate assumption.  If you lower this assumption, you increase your annual employer contributions.  Ironically, not too long after this vote, the retirement board voted to raise the interest rate assumption to 7.75 percent, with my dissenting vote in the minority, thus lowering the county’s annual employer contribution.  (And, thus, deferring a much larger train wreck into the future.)

 

Stuart Pfeifer of the LA Times had this headline:  “O.C. Workers Win on Pensions—Supervisors’ 3-2 vote lets employees sacrifice now to gain later.  But some see a fiscal danger.”

               

Moorlach’s concern was that the employees’ contributions into the retirement system are based on the assumption that the system’s investments earn an average of 7.5% over the next 30 years.  If the system fails to meet that goal, he fears, the county could be on the hook for millions.

 

Norberto Santana, Jr., of the OC Register had a similar headline:  “Board approves county workers’ contract—Workers accept a 2-year wage freeze in exchange for better benefits in retirement.  Critics cite long-term risk.”

 

Union members who packed the supervisors’ chambers for four hours stood after the vote, giving supervisors a standing ovation.  In a nearby building, county Treasurer-Tax Collector John Moorlach said the decision made the hair stand on the back of his neck because of its long-term implications.

 

Moorlach, who also serves on the retirement board, believes the deal poses ominous risks.

 

Moorlach notes that the contract’s investment return assumption of 7.5 percent could cause the $300 million debt estimate to spiral if the retirement board votes to lower it next May to reflect recent lax investment performance.  Such an action would require additional contributions from either the county or employees to make up any added liability because the retirement benefits are now permanently expanded.

 

“It’s a lobster trap,” Moorlach said.  “You’re in, but you can’t extricate yourself.”

 

The OC Register’s lead editorial, “Union politics trumps taxpayers’ interests—By a 3-2 vote, the Board of Supervisors approves a costly new retirement benefit,” had this to say:

 

Three supervisors cast aside the critical data from an independent actuary report and dismissed warnings by Treasurer John M. W. Moorlach and others who are concerned about county taxpayers and not simply about placating the union workers who filled the supervisors’ chambers Tuesday.

 

Even Daily Pilot reporter Deirdre Newman got into the act with “Treasurer balks at county pension decision—John Moorlach questions whether an increase in benefits will incite city workers to want the same.”

 

In voting 3 to 2, the board agreed to significantly raise retirement benefits for most of the county’s 17,000 workers.  The decision is retroactive, so these employees will get their retirement benefits increased using the new formula for the entire time having served the county, County Treasurer John Moorlach said.

               

                The change means workers with a salary of $100,000 will get $81,000 a year starting in July 2005, Moorlach said.  Under the old plan, they would have gotten $50,100, Moorlach added.

 

“That’s an increase overnight of [about 62%],” said Moorlach.

 

“[Employees] in the local cities are going to say, ‘We work for the planning department; why don’t we work for the county instead?’” Moorlach said.  “You’re not being competitive, so everyone has to increase their pension benefits, and that could be really detrimental, especially if the market doesn’t give the returns that CalPERS is trying to achieve.”

 

 

 

 

 

Disclaimer:  You have been added to my MOORLACH UPDATE communication e-mail tree.  In lieu of a weekly newsletter, you will receive occasional media updates, some with commentary to explain the situation, whenever I appear in the media (unless it is a duplication of a previous story).

 

I have two thoughts for you to consider:  (1) my office does not usually issue press releases to get into the newspapers (only in rare cases); and (2) I do not write the articles, opinions or letters to the editor.

 

This message should appear at the bottom of every e-mail you receive.  If these e-mails should stop arriving in your mail box, it will be because your address has changed and you did not provide a new one.  If you do not wish to receive these e-mails, then please e-mail back and request to unsubscribe.

 

 

 

 

 

 

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MOORLACH UPDATE — Supervisor Bartlett — December 3, 2014

The OC Register provides the news of Supervisor Lisa Bartlett’s swearing in at yesterday’s Special Board meeting in the first piece below. As I was sworn in a month early, as my predecessor went on to the State Assembly, I will have had the privilege of serving with three Fifth District Supervisors.

The Voice of OC provides the discussion held at last week’s Board meeting on the proposal to move the Internal Audit Department back into the independently elected Auditor-Controller’s office in the second piece below. I could debate this from both sides, as I attempted to do this early in my tenure. But, this time I felt that it should go through a process where the recommendation is thoroughly vetted by professionals in the accounting industry. And, the Audit Oversight Committee has public members who are very familiar with the history of County and its bankruptcy (for a brief review, see MOORLACH UPDATE — ORANGE COUNTIANA — A Journal of Local History — November 9, 2012).

New OC supervisor joins the fold

By MEGHANN M. CUNIFF / STAFF WRITER

Lisa Bartlett was sworn in Tuesday as the newest member of the Orange County Board of Supervisors, the first in a series of changes for the county’s leadership.

Bartlett, an eight-year Dana Point city councilwoman who most recently served as mayor, represents the 5th District, which includes Aliso Viejo, Laguna Niguel, Dana Point, San Clemente, San Juan Capistrano and unincorporated areas like Ladera Ranch.

“I will continue to have that open-door policy, just like I did as a councilwoman,” Bartlett said to a standing-room only crowd at the Hall of Administration. “So you can give me a call: I’m available 24-7.”

Bartlett, the first Japanese American elected to the Board of Supervisors, replaces Pat Bates, who took office in Sacramento Monday as a Republican state senator after being termed out as supervisor.

Bartlett, a Republican, was one of two new supervisors elected Nov. 4. Michelle Steele will take office Jan. 5 to represent the 2nd District, which includes Newport Beach, Costa Mesa and Huntington Beach. Steele will replace Supervisor John Moorlach, who is termed out and is considering a bid for state Senate.

On Jan. 27, voters in the 1st District, which includes Westminster, Garden Grove, Fountain Valley and Santa Ana, will pick a replacement for former Supervisor Janet Nguyen, a Republican who was sworn in Monday in Sacramento as a state senator.

Hopefuls have until Dec. 15 to file their candidacy. No one had done so as of Tuesday afternoon, said Neal Kelley, Orange County’s registrar of voters, but state Sen. Lou Correa, a Democrat who is termed out, announced his plans to run last month. Chris Phan, a Republican councilman from Garden Grove, also has said he’ll run, as has Andrew Do, Nguyen’s chief of staff.

Contact the writer: mcuniff or 949-492-5122. Twitter: @meghanncuniff.

20 Years Later, Supervisors Might Rollback Key Reform From Bankruptcy

By NORBERTO SANTANA JR. Voice of OC

As the 20th anniversary of Orange County’s municipal bankruptcy approaches, county supervisors are on the verge of reversing the centerpiece reform that emerged from the $1.5-billion financial disaster.

The county’s Internal Audit Division – which uncovers some of the most politically sensitive cases of fraud, waste and abuse – was originally housed under the county Auditor-Controller, as in most California counties.

But after the 1994 bankruptcy, Orange County District Attorney’s office investigators concluded that internal auditors were too close to their colleagues at the Treasurer-Tax Collectors’ office and did a poor job of overseeing their questionable investment purchases.

As a result of a task force, numerous revisions were suggested to avoid the conditions that triggered Orange County’s financial meltdown. Yet the only one adopted was to move Internal Audit under the supervision of county supervisors along with the establishment of an audit oversight committee.

The idea was simple: having the five supervisors as bosses could ensure that internal auditors would be politically liberated to conduct tough audits.

Yet today, following a series of scathing audits that have uncovered fraud and waste at the highest levels, internal auditors are under heavy political fire and it looks like county supervisors are considering turning back the clock on Internal Audit.

After internal auditors dived into the accounts of then-Clerk Recorder Tom Daly, who is now a state assemblyman, they produced an audit concluding Daly had used reserve accounts as a slush fund of sorts. They battled with Daly over the audit of account 12D, and he was able to delay the final audit until well after his election to the state assembly in 2012.

After being elected, Daly secured legislation targeting the Internal Audit division and slated it to be moved back to the Auditor-Controller – arguing that internal auditors had become a tool of Republican supervisors bent on targeting a Democrat.

When Daly’s legislation was first passed, supervisors blasted it and declared they would ignore it.

Yet after internal auditors completed a recent critical audit that found more than $1 million in questionable parks contracts involving high-ranking county executives, and human resources auditors looked into a senior aide working for Supervisor Pat Bates, the move to transfer auditors seemed to be back on track.

Last month, in a public showdown, two supervisors – John Moorlach and Todd Spitzer – openly questioned the move.

Bates said she made the motion to transfer the department based on her extensive discussions with Interim Auditor Controller Jan Grimes and incoming Auditor Controller Eric Woolery, who assumes office next month.

And it was clear that Bates – now moving to the State Senate – wanted the transfer done before she left office as supervisor. Supervisor Janet Nguyen, who also is moving to the state senate, also supported the move.

“I think it’s important to hear their statements on why it’s good to approve this today,” Bates said referring to the public debate that ensued between Grimes and Woolery and Internal Auditor Peter Hughes, who is fighting the transfer.

Both audit teams wrote competing position papers on the move that were presented to county supervisors.

Yet a majority of supervisors balked.

“I’m having some anxiety,” Moorlach said. “I’ll be opposed,” saying he wanted the matter referred to the county’s audit oversight committee for analysis before action.

Spitzer also called for caution.

“We are unwinding one of the most significant actions the board took after the bankruptcy,” Spitzer said. “If we get it wrong, we may go back to our pre-bankruptcy days.”

Spitzer noted that two supervisors were prosecuted by the district attorney in the wake of the bankruptcy for failing to properly supervise then-Treasurer Tax Collector Bob Citron.

Woolery argued that giving him back auditing powers was crucial.

“It gives me back the second half of my office,” Woolery told supervisors.

“I’ve been elected Auditor Controller…but I’m just a controller,” he said, adding that giving him auditing control “increases the independence and objectivity of the process.”

Yet former-Auditor Controller Steven Lewis drew intense fire from prosecutors and county supervisors for his role in the bankruptcy for his lack of independence and oversight.

“The Treasurer embezzled interest income from the participants of the commingled pool without any detection by the Auditor-Controller. The lack of detection was due to the cursory nature of the accounting methods used and supervised by the Orange County Auditor Controller,” was one of many conclusions of a confidential 75-page investigative summary on the bankruptcy produced by the Orange County District Attorney’s Bureau of Investigation in 1997.

“Had Lewis performed his supervisory duties, it would have been obvious that the interest being reported as being earned by the Specific Investments actually included interest being skimmed from the commingled pool,” read the conclusions of district attorney investigators.

Investigators found that “if the auditor controller had a method in place by which to supervise the treasurer’s method of valuing these securities, those loses would not have occurred.”

From the report:

Although the Auditor Controller was aware of the dangers of Reverse Repurchase Agreements as early as 1988, he failed to take action necessary to assure that the accounting methods of the Treasurer would accurately reveal that status of Treasurer investments. This lack of supervision eventually resulted in a liquidity crisis when the county was unable to produce the necessary cash to meet its obligations to broker-dealers demanding collateral under their reverse repurchase agreements.

Even though Steve Lewis was not a certified public accountant, he supervised a large staff. Many of those staff members had functions, which included review and supervision of the Orange County Treasurer’s Office functions. That staff did not function efficiently or adequately in fulfilling the mandate of the Auditor Controller.

County Counsel Nick Chrisos publicly told supervisors last month they did not have to heed the mandate of Daly’s legislation.

“Either the current model or the proposed model are perfectly legal. It’s strictly a board call,” Chrisos said.

Internal Audit Director Hughes told the board that having internal auditors report to them was important.

“The audit function is the eyes and ears of the board,” Hughes warned. “If it’s not broken why fix it?”

Ultimately, supervisors voted 3-2 for a temporary delay moving the issue back to the audit oversight committee, as suggested by Moorlach, for a full debate at it’s next monthly meeting in January.

One stark warning from the 1997 district attorney’s report on the importance of accountability is particularly relevant to today’s debate.

“The Orange County bankruptcy was the result of a tragic failure of county government. The loss of public confidence in the ability of elected and appointed management officials to properly manage the affairs of Orange County was devastating to the region of the state and nation, which had enjoyed a very high degree of confidence. During the course of the investigation, the investigators noted a lack of willingness on the part of most county officials to take responsibility for their actions or to accept responsibility for their failure to act.”

LOOK BACKS (Also see MOORLACH UPDATE — Growing Up In OC — December 2, 2014)

• 2009 – Appointed to the Orange County Vector Control Board, where a number of reforms were implemented to address the governance of this small municipality

• 2009 – Negotiated new tier for new hires, being one of the first municipalities to do so

• 2009 – Negotiated new tier for current hires, only to be stymied by I.R.S. Rev. Rul. 2006-43

• 2009 – Eliminated Project Labor Agreements requirement for County public works projects

• 2009 – Required identification of subcontractors for all Board agenda items

• 2010 – Annexed south island into city of Fountain Valley

• 2010 – Initial Chair for the Commission to End Homelessness

• 2010 – Voted to accept the receipt of 20,000 acres of new park land from Donald Bren and The Irvine Company

• 2011 – Successfully annexed Sunset Beach into the city of Huntington Beach

Disclaimer: You have been added to my MOORLACH UPDATE communication e-mail tree. In lieu of a weekly newsletter, you will receive occasional media updates, some with commentary to explain the situation, whenever I appear in the media (unless it is a duplication of a previous story).

I have two thoughts for you to consider: (1) my office does not usually issue press releases to get into the newspapers (only in rare cases); and (2) I do not write the articles, opinions or letters to the editor.

This message should appear at the bottom of every e-mail you receive. If these e-mails should stop arriving in your mail box, it will be because your address has changed and you did not provide a new one. If you do not wish to receive these e-mails, then please e-mail back and request to unsubscribe.

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MOORLACH UPDATE — Growing Up In OC — December 2, 2014

The December issue of Orange Coast Magazine focuses on the topic of:

The cover story is on John Stamos, b. 1963, raised in Cypress, actor, producer, musician. I’ve never met John Stamos, but I did see him play with the Beach Boys at a recent concert in Coto de Caza as guests of Lisa and Bruce Hughes a couple of years ago. My sister brags that John Stamos asked her out while she was in college (and I have to believe that this is true as my three younger siblings were all incrementally better looking, with my sister arriving last). The John Stamos feature is followed by vignettes on the following individuals (and don’t ask me how I was selected to be included in this fine group of Orange Countians):

Janet Evans, b. 1971, raised in Placentia, 1988 and ’92 Olympic gold-medal swimmer

Penelope Spheeris, b. 1945, raised in Westminster, director, producer, screenwriter; known for the movie “Wayne’s World”

Marisa Wayne, b. 1966, raised in Newport Harbor, Businesswoman, daughter of Oscar-winner John Wayne

Will Ferrell, b. 1967, raised in Irvine, Actor, comedian, writer, and producer

Joyce Hoffman, b. 1947, lived in Capistrano Beach, 1965 and ’66 surfing world champion

John Moorlach, b. 1955, raised in Cypress and Buena Park, Orange County supervisor

Steve Martin, b. 1945, lived in Garden Grove, Actor, comedian, screenwriter, author, musician

Gwen Stefani, b. 1965, raised in Anaheim, No Doubt lead singer, fashion designer, reality-TV judge

Lloyd Weinstein, b. 1947, lived in Santa Ana, owner of Benjie’s Delicatessen in Santa Ana

Mark McGrath, b. 1968, raised in Newport Beach, Sugar Ray lead singer, actor, TV host, and grand marshal (with Leslie Mann) of the 2014 Newport Beach Christmas Boat Parade

Jeanne Tran, b. 1990, raised in Anaheim, associate director of state and community relations, Cal State Fullerton

Linda Emond, b. 1959, raised in Anaheim, Stage, film, and television actress; known for her Tony-nominated performance in “Death of a Salesman”

Ted McGinley, b. 1958, raised in Newport Beach, Actor, known for roles in “Happy Days” and “Married . . . With Children”

Loretta Sanchez, b. 1960, raised in Anaheim, member, U.S. House of Representatives

Don Craig, b. 1948, raised in Hermosa Beach and Newport Beach, founder of the Old Guys Rule clothing line, former team rider for Jacobs Surfboard and others, former surfwear sales rep

Molly Lynch, b. 1955, raised in Corona del Mar, associate professor of dance, UC Irvine; best known as artistic director of the National Choreographers Initiative

Jason Lee, b. 1970, raised in Huntington Beach, Star of “My Name Is Earl,” former pro skateboarder

Here’s the narrative:

My Dad did a little real estate. Then he got into insurance – property and life and casualty. His market was the Dutch community [the family emigrated from the Netherlands] in Norwalk, Cypress, Bellflower, which had some of the biggest dairy industries in the country. I can remember my mom saying, “We’ve got to pray for dad today because he’s got to drive to Chino.”

Our Comet was a trusty car for most of my growing-up years. It was the car I learned to drive in. It had a three-speed stick on the column. Six cylinders, real simple Ford Mercury construction. I think even my young brother had if for high school. It hit a tree and died a sad, tragic death. I won’t go further.

John Moorlach, right, and younger brother Edward admire dad Kent’s ’62 Mercury Comet.

LOOK BACKS (Also see MOORLACH UPDATE — Incoming Supervisors — November 29, 2014,MOORLACH UPDATE — Homeless Shelter at Depot — November 21, 2014 and MOORLACH UPDATE — Venezia & Me — November 15, 2014):

• 2006 – Constructed a short-term structured note (matching the regular biweekly payroll schedule) for an Orange County Employees Retirement System contribution prepayment, where the County Treasurer (or another investor) purchases Investment Policy Statement approved debt issued by the County; the prepayment discounts have saved the County more than $100 million since this first issuance (also see MOORLACH UPDATE — Venezia & Me — November 15, 2014)

• 2006 – Ran successfully for the Board of Supervisors

• 2006 – Refused campaign contributions from public employee unions

• 2006 – Restructured retiree medical health care with Supervisor Campbell, reducing the unfunded actuarial accrued liability by more than $1 billion and reducing the annual required contribution by more than $100 million per year (see MOORLACH UPDATE — Retiree Medical Reform — March 3, 2014)

• 2007 – Pursued unconstitutionality of the granting of retroactive defined benefit pension plan benefits, which was rejected by the Superior and Appellate Courts and would not be heard by the State Supreme Court, thus making pension debt exempt from the State’s Constitutional restrictions (see MOORLACH UPDATE — OIR/Retroactive Anniversary — July 20, 2012

• 2007 – Approved wind-down of the Santa Ana Heights Redevelopment Agency, well in advance of the legislation and court rulings forcing the elimination of redevelopment agencies (see MOORLACH UPDATE — County Executive Officer — July 26, 2012)

• 2007 – Assisted in the creation of Mesa-Birch Park in Newport Beach

• 2007 – Annexed West Santa Ana Heights into city of Newport Beach (effective 1/1/08)

• 2008 – Established Office of Independent Review, a watch dog overseeing the Sheriff’s Department and its three jails (see MOORLACH UPDATE — OIR/Retroactive Anniversary — July 20, 2012)

• 2008 – Successfully passed Measure J, requiring voter approval of any new pension benefit liability increase resulting from bargaining unit contract negotiations (see MOORLACH UPDATE — Social Host Ordinance — November 6, 2013)

BONUS: I have a vacancy on the Housing and Community Development Commission (see Cammy.Danciu, as soon as possible.

DOUBLE BONUS:

Disclaimer: You have been added to my MOORLACH UPDATE communication e-mail tree. In lieu of a weekly newsletter, you will receive occasional media updates, some with commentary to explain the situation, whenever I appear in the media (unless it is a duplication of a previous story).

I have two thoughts for you to consider: (1) my office does not usually issue press releases to get into the newspapers (only in rare cases); and (2) I do not write the articles, opinions or letters to the editor.

This message should appear at the bottom of every e-mail you receive. If these e-mails should stop arriving in your mail box, it will be because your address has changed and you did not provide a new one. If you do not wish to receive these e-mails, then please e-mail back and request to unsubscribe.

Posted in California