MOORLACH UPDATES — OC Register — December 3, 2009

I’ll be in a Strategic Planning Board meeting for CalOptima most of tomorrow, so I’m sending out my Update a few hours early (OK, the night before).

Frank Mickadeit’s column is very accurate.  If he gets any better, he should consider a career in law.

Here are the priorities:  Round One — Rescind the sale; Round Two – Bid; and Round Three — Finance.

We are working with our lobbyist in Sacramento to put on a full-court press to stop the sale.

Assemblyman Jose Solorio introduced legislation on Wednesday in this regard with AB 1590.

We are having excellent communications with the city of Costa Mesa.

Working together to provide a bid, should the state continue the sale, is on track.

We have internal funding for a short-term loan and have several fun ideas for a long-term borrowing solution.

 

City, county edge closer to joint bid on Fairgrounds

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By FRANK MICKADEIT

COLUMNIST

Columnist

fmickadeit@ocregister.com

She said it at the very start of the Costa Mesa City Council meeting while people were still adjusting themselves in their seats, and she spoke at such low volume that I couldn’t really catch it all, so I had to get it clarified at meeting’s end. Yet what City Attorney Kimberly Hall Barlow announced Tuesday night in such a perfunctory and low-key manner was the most significant public utterance yet indicating how far down the road Costa Mesa and the county are toward partnering to purchase the Fairgrounds from the state.

What she said was: Moments before, in a closed session, the City Council had directed the Planning Commission to consider making a technical finding that is legally required before the city or the county can purchase the Fairgrounds. Under the state’s open-meetings law, discussions about real estate purchases can be held in closed session; the city attorney merely has to report any actions taken.

Neither the city’s or county’s negotiators are discussing this stuff in public, and one has to read the meaning of any scraps of information that do emerge from closed chambers. Barlow’s announcement was one of those scraps. The Planning Commission will meet Dec. 14 to make this technical finding – that the city’s General Plan would allow either the city or the county to purchase the Fairgrounds – and the City Council is poised to hold a special meeting the next day, presumably to ratify the finding and do whatever else needs to be done to submit a bid by the Jan. 8 deadline.

New issues in negotiations between the city and county to jointly purchase the Fairgrounds are coming up "daily," as they head into the home stretch, Councilman Gary Monahan told me after the meeting. But "so far, so good," he said. "Everybody seems to be on the same page." That was as far as he and the other city negotiator, Mayor Allan Mansoor, were willing to go, and I get the same vibe from the county. They are fast-tracking this. There are fundamental issues to be sorted, but they basically are of one mind.

One can only guess at the issues – but one has to be: What type of legal arrangement between the city and county has to be in place – and can be in place – within the month? A joint powers authority? A memorandum of understanding? Both have implications that can be long-lasting.

Other than the snippets one can get out of public officials, you can look at concerns they have expressed when writing to the state. The state took questions from all potential bidders and said it will answer them by Friday. I don’t have the complete list, but I know that one of the questions the city asked was: What happens to the existing Fair Board and the official state entity it oversees, the 32nd Agricultural District?

Because consider this: What’s for sale is the Fairgrounds. The state-sanctioned and supported Fair is something else entirely. What if you bought the grounds, but the Agricultural District – either through the Fair Board of the Governor’s Office – decided the Fair was going to be moved to, say, the Great Park? The state’s for-sale document is silent on this issue, although it clearly states that the Fairgrounds is only committed to hosting the Fair through 2010.

Another question the city asked the state: What’s to happen to the 80-plus state employees at the Fairgrounds? Are they going to be transferred to other state jobs? Are they expected to reapply with the new owner?

This question gets to the essence of another issue the city and the county are trying to work out: Who would run the Fairgrounds? I doubt either wants day-to-day management at a time governments are trying to shrink their payrolls and liability. Plus, it’s just not in the free-market DNA of John Moorlach, one of the county’s negotiators.

The state has been strangely silent on the whole thing since it threatened the city with legal action a month or so back. It’s already thrice postponed an information update it was supposed to release to everyone on Oct. 7. The state now says only that release has been "postponed indefinitely."

I’ll be surprised if all the bidders have their individual questions answered Friday. And it won’t surprise me if the Jan. 8 bid deadline and Jan. 14 sale dates are postponed. This is all happening way too fast and is way too fluid for a bureaucracy as moribund as Sacramento’s.

Mickadeit writes Mon.-Fri. Contact him at 714-796-4994 or fmickadeit@ocregister.com

FIVE-YEAR LOOK BACKS

December 3

1994

Today’s theme is “ironies.”

The front-page headlines continued on Saturday.  The LA Times had the headline “O.C. Fund Plunge Draws Increasing Concern, Scrutiny – County treasury officials still reeling from $1.5-billion loss.  Investors, Congress, federal regulators and Wall Street move to tighten oversight on investment pool.”  The piece was by Mark Platte and Matt Lait and included a center-of-the-page sidebar titled “What Went Wrong.”  The team of staff writers contributing to the article was a mile long.

In California, Assemblyman Curt Pringle (R – Garden Grove) said he planned to introduce a bill when the Legislature convenes Monday to help thwart such a crisis in the future.  Pringle said he began crafting the legislation in June with the help of John M. W. Moorlach, the accountant who predicted Orange County’s current problem but was defeated by Citron in the race for treasurer in the June primary.

The New York Times had the OC on the front page, top-of-the-fold, on their Business Day section.  “California Fund Woes Worsening—Rating May Be Cut For Orange County” was written by Sallie Hofmeister.  And during the campaign, my detractors said I would jeopardize the County’s ratings.  You’ll see plenty of ironies in these Look Backs.  Speaking of ironies, Richard Larkin and I touch bases almost every December to commemorate this most amazing experience that occurred in our lives.

                “What is disturbing is how many municipalities borrowed to get into the pool,” said John Moorlach, a certified public accountant who ran and lost in June against the county treasurer, Robert Citron.  Mr. Citron runs the troubled investment fund.

                “Borrowing to invest is immoral for government,” Mr. Moorlach added.  County treasury officials were not available for comment.

                The high rate of return achieved by Mr. Citron, averaging more than 10.1 percent annually over the last 15 years, encouraged districts to take such risks, Mr. Moorlach said.

Nonetheless, it is highly unusual, Standard and Poor’s officials said, to see municipalities borrow so heavily to speculate with their extra cash.  “It’s not normal,” said Richard P. Larkin, managing director of public finance at S&P.  But he added, “We were aware of it and they were doing it in a manageable way.”

Tina Borgatta of the Daily Pilot had a front-page article on the topic of “Moorlach mum as Citron recall rumors swirl.” 

                Some high-ranking officials are screaming for County Treasurer Robert Citron’s resignation and some are even talking of a recall.  But, the man who predicted Thursday’s $1.5 billion bond loss while campaigning for the seat in June, said he won’t be joining in the cries.

                “I’m not going to dance on his grave,” Moorlach, a Costa Mesa resident and CPA, said Friday.  “He’s a human being, and I’m not going to beat him up.  Right now, I’m feeling sorry for him.

                “I’m also feeling kind of glad that I wasn’t elected.  Then I’d be stuck with this mess for the next four years.”

                Moorlach said his office was flooded with calls from news agencies from across the nation and messages from friends and supporters – many of whom wanted to know if he would consider a second bid for treasurer.

                “I’m not thinking about that right now,” Moorlach said.  “If they ask for my help, I’d be more than happy to assist in any way possible.  But, it would be a little presumptuous for me to think about becoming treasurer.”

The OC Register’s front-page headline started to provide a relevant and intriguing point of interest with “Fund:  Water agency opened floodgate – Irvine water district wanted its money, forcing the freezing of deposits to prevent bond collapse,” written by Chris Knap.

                A $100 million withdrawal last month by a major investor in Orange County’s investment fund forced officials to admit a $1.5 billion loss and clamp down on remaining deposits to prevent a full-scale crash.

                “Sometimes you have to hit these guys on the head with a 2-by-4,” said Peer Swan, president of Irvine Ranch Water District.  The district began pulling out $50 million a week, Swan said, after Treasurer Robert L. Citron refused his request to create an advisory board of investors.

                Without that freeze, a run of withdrawals would have forced the county to sell billions worth of investments at a loss, creating huge losses of principal.

                Ironically, Swan had been a defender of Citron and the fund’s stability when political opponent John Moorlach criticized them in April.  But, all Swan could see was the possibility that his agency’s money would be locked up for years with low or negative returns.

INVITATION

Please come to our Third Annual Christmas Open House on December 16th, from 3 to 5 p.m.

10 Civic Center Plaza

333 West Santa Ana Boulevard

Fifth Floor, Second District

(Park in the lot off of Ross Street)

To RSVP, please call Margaret Chang at 714-834-3220

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