MOORLACH UPDATE — Harbor Patrol — December 12, 2009

Among the many projects we are working on, we have finally completed our analysis of the three county harbors and how the OC Sheriff’s Department is providing its harbor patrol services.  The report that was prepared provides the historical context of how we arrived to where we are today, how and why the funding sources were determined, and how the current model is probably the most appropriate one under the circumstances.  The report was prepared by my office based on input and consensus by the Working Group.  We released the report on Wednesday to my colleagues for their policy staff to review, digest and provide any and all viable alternatives to the current structure.  Once this occurs, we will be happy to agendize their recommendations and enjoy a necessary and long overdue policy debate.  Hopefully, the data provided in the report will allow for discussions based on the facts available.

The report is a culmination of numerous meetings with all of the impacted parties and it was compiled by Professor Mainero of my staff.  In fact, the first footnote in the report provides the composition of the Working Group:  Prof. Mario Mainero (Second District); Rick Francis (Second District); Chip Monaco (Fifth District); Ray Grangoff (Fifth District); Alisa Drakodaidis (CEO); Frank Kim (CEO); Michelle Aguirre (CEO); Steve Franks (OC Community Resources); Anna Peters (OC Community Resources); Mark Denny (OC Parks); Brad Gross (OC Dana Point Harbor); Lisa Smith (OC Dana Point Harbor); Lieutenant Mark Long (Harbor Master/OCSD); Captain Tim Board (OCSD); Captain Brian Wilkerson (OCSD); Sergeant Steve McCormick (OCSD); Executive Director Rick Dostal (OCSD); and Tricia Bello (OCSD).

If you wish to have a copy of the report, please let me know and I will provide it as an attachment in my responding e-mail.

Jennifer Muir of the OC Register posted her piece on the Watch Dog website and it hit the dead tree version today.  Below is the Watch Dog electronic version.

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Who should pay for OC Harbor Patrol?

Jennifer Muir

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The cost of operating Orange County’s Harbor Patrol has increased nearly 22 percent over the past six years, driven largely by growing retirement costs, according to an analysis released today by Supervisor John Moorlach’s office.

The county will spend $11.4 million patrolling the county’s coastline and harbors this fiscal year, up from nearly $9.4 million in 2004-05. Meanwhile, staffing levels have remained virtually the same for decades, the report says. (Orange County Harbor Master Lt. Mark Long says he’s actually lost a dispatcher, a lieutenant and part of a caption position since 1975).

Disagreement over how to pay for the patrolling — or whether the county should be paying for it at all — frequently ignites public debate among county supervisors.

The county’s three harbors are patrolled by Orange County Sheriff’s deputies. The county reimburses the sheriff’s department for their services: more than half of the Harbor Patrol budget comes from the county’s park fund, while the remaining 45 percent is paid for through county Newport Beach Tidelands and Dana Point Harbor accounts.

Supervisor Chris Norby believes coastal cities should be paying for deputies to patrol the harbors, saying the Harbor Patrol is taking much needed cash away from other county parks.

“When park-poor districts like mine see were spending $5 million in park funds every year to patrol Huntington and Newport Harbors, that’s just wrong,” Norby said.

The sheriff’s department is only required by law to to assist stranded boats along the county coastline and provide law enforcement services to unincorporated coastal land, such as county-owned Dana Point Harbor. But the Harbor Patrol does much more than that, performing law enforcement, educational and homeland security functions in all three harbors, as well as marine and residential firefighting and environmental protection and enforcement.

Norby believes the sheriff should stop doing work that’s not required by state law and leave cities to pick up the slack.

So Moorlach, who has two harbors in his district, formed a group to evaluate those concerns, as well as other staffing and funding issues. Their report disagrees with Norby, saying Harbors are regional facilities used by residents from inland and coastal communities alike.

And it says that asking cities to take over non-required duties wouldn’t save much money because the sheriff has said she’d still need virtually the same resources to perform its state-mandated work. Supervisors have no legal say over how she staffs her department.

The Harbor Patrol performs most of the extra duties to add value to the harbors because they’re already there, Long said. Adding more agencies to pick up those duties would complicate a streamlined operation and create overlaps, he said.

Plus, it would add law enforcement and budget problems for the affected cities, the report says.

“I think we hope that this sets a couple of these issues to rest,” said Moorlach staffer Mario Mainero, a law professor at Chapman University, who authored the report.

(The working group also included representatives from the Orange County Sheriff’s Department, OC Parks, Dana Point Harbor, the county CEO’s office and representatives from the staffs of Moorlach and Supervisor Pat Bates.)

Still, as Harbor Patrol costs continue to climb, the report says supervisors will need to decide how to best pay for it.

One option the report explores is creating a new, cheaper class of Marine Safety Officer. Long estimates the department could save $808,000 replacing 11 deputies with a new class of officers, but that creating a new class, training them and navigating scheduling difficulties would reduce that savings.

Sheriff Sandra Hutchens sent a letter to Moorlach declining to consider the idea, expressing concerns about “possible increased overtime, labor group issues and administrative difficulties.”

FIVE-YEAR LOOK BACKS

December 12

1994

The pace slowed down a bit on Monday.  The OC Register had a section on “What Are They Saying Now?”  It took what people were quoted as saying during the campaign and compared it to what they were saying now.  For me, with that awful photo, and a few selected others:

                JOHN MOORLACH – Challenged Citron in election

                THEN:  “I’m not trying to cry wolf or scream fire in a theater, all I’m saying is, ‘Board of Supervisors, look, this is risky.’”

                NOW:  “I tried to warn everybody, and nobody understood.”

                GEORGE JEFFRIES – Tustin resident who manages the Los Angeles County Investment Pool

                THEN:  “I can’t agree with people crying wolf.”

                NOW:  “I guess the people who were crying wolf were right.  They must have known more than I did.  Bob Citron has always been an aggressive investor.  He’s had a lot of very successful years.  That crumbled in a hurry.  You’re only as good as your last trade.”

                LEONARD LAHTINEN – Trustee, North Orange County Community College District, which invested $98 million

                THEN:  “We have benefited from the investments of the treasurer.  Going through some very difficult budget times, we’ve been able to use proceeds from the investments to help us balance our budgets.”

                NOW:  “Hindsight is always 20-20.  It looked good at the time.  We felt at the time it was a good risk.  We were driven by a shortage of funds.”

                DEREK LEWIS – securities broker, Newport Beach

THEN:  “That’s a highly, highly leveraged portfolio.  For that to be happening with public trust funds is just wrong.  The whole concept of that kind of leverage – you’re reading every day in the papers of all the companies getting burned on these derivatives.  Citron is playing with things that the big guys are getting burned on.”

NOW:  “People making my kind of comments were pooh-poohed as political.  Orange County was lulled to sleep.  But when someone does as well as Bob Citron did, the market eventually gives them a comeuppance.  They are humbled.”

MARIAN BERGESON – state senator who withdrew her support for John Moorlach halfway through the campaign

THEN:  “If this was going to be politicized, that I didn’t want any part of it.”

NOW:  “It was a decision based on the information I had at the time.  I felt the criticism could endanger the county – that the signals would be felt.  I made a mistake.

JEFF THOMAS – Tustin councilman whose city withdrew $4 million from the county fund in March and April

THEN:  “A lot of cities are chasing very high yield in a very risky bond market.  We are an ultraconservative city.”

NOW:  “My god, I feel like Nostradamus, this is not the type of thing anybody wanted to be right about.  It’s predicting a disaster, and who ever wants to be right about that?”

The December 12 issue of the Orange County Business Journal had a chance to weigh in on the events impacting the county.  Howard Fine, someone I FAXed throughout the campaign kicked into gear with an article titled “Bergeson:  ‘In retrospect, Moorlach was right.’”  Enough said.  The Comment section, written by Rick Reiff, had interesting insights as well.  It takes a big person to admit that they failed.  Rick is a very big person and it was reflected in his comments, titled “Apologies.”  He also made a typo that would occur more than once.  Between Robert Citron and John Moorlach, it’s not hard to come up with Robert Moorlach.  Funny side story:  When I was sworn in as Supervisor my cousin, Robert Moorlach, was in town from South Dakota and at the ceremony.  It was fun to finally introduce the “real” Robert Moorlach.

                While I pass around blame, let me hand out a large amount to the local press, including ourselves at the Business Journal.

We in the media should have been far more vigilant in alerting the public to Robert Citron’s dangerous investment practices.  There was some brief, intensive coverage back in April, when treasurer candidate Robert Moorlach made Citron’s investment strategy a campaign issue and it came to light that Citron had been forced to make $140 million in collateral calls.  But after that, the story became less of a news priority.

We should have been more prying, more skeptical, more plugged-in.  We should have more closely examined the substance of Moorlach’s allegations, rather than treat them as little more than campaign rhetoric.

We should have examined why the county was issuing billions in notes during the summer, and why school districts were hocking their budgets to make $50 million bets.

We didn’t at the Business Journal.

We have tended to cover government only as it interfaces with private enterprise.  We’ll re-examine that tendency of ours.  I think we’ll start doing a better job of covering government itself as a business.

Better late than never.

1999

It was Sunday on this day and the LA Times had “Living With Bankruptcy’s Lessons” as their lead editorial.  They were even a tad charitable to me—“wonders of wonders, miracles of miracles” – forgive me for the impromptu singing of a “Fiddler on the Roof” song.

On the plus side, Orange County government also has done much to institute better fiscal discipline, with fewer managers and more emphasis on getting services directly to people.  Treasurer-Tax Collector John M. W. Moorlach has reversed the casino mentality of public investing that prevailed in his predecessor’s shop and put the county on a solid financial basis for making investment decisions.

The lead editorial for the OC Register’s Commentary section was titled “Deal shouldn’t end road privatization.”

Orange County Treasurer John Moorlach, for instance, said the revenue projections were overly aggressive, meaning that tolls would be likely to increase to enable the newly formed nonprofit company, called NewTrac, to make its bond payments.  He said the sale wasn’t an “arm’s-length deal” in light of evidence that CPTC came up with the idea to form NewTrac, then gave the startup $1 million in seed money to cover the costs of the sale.  And many critics were troubled by the expected $225 million price tag for a franchise that has not been doing well financially, and by the fact that the price was established without an outside appraisal.

Privately owned toll roads can provide needed road capacity and can point the nation toward a more market-oriented pricing system that holds real potential for reducing our region’s road congestion.  But the state should not be permitted to underwrite or bail out such deals.  The 91 Express Lane debacle should encourage the Legislature to hold hearings on the matter and to reform the laws that allow private companies to tap into taxpayer-backed bond financing.

The top headline on the front-page of the OC Register was “Tollway deal spooked investors—Potential bond buyers found problems in proposed 91 Express Lanes sale, audiotape of meeting reveals” and it was written by Kimberly Kindy, James Kelleher and Kate Berry.  One thing that this exercise did was allow me to develop a relationship with the impacted Riverside County Supervisors, including Bob Buster.  The article provided an update on our proposed activities.  The current OC Fair activities have a similar tone to these activities from ten years ago.

                Buster and Orange County Treasurer John M. Moorlach—along with Riverside County transportation officials—are scheduled Monday to discuss the bond deal with top officials in the office of Gov. Gray Davis and the attorney general.

                Buster’s and Moorlach’s goals for the meeting include:  triggering a criminal investigation, killing the bond deal and securing the return of the toll lanes to public control.

The OC Register’s Kimberly Kindy also jumped into the topic with “State loan agency thrust into spotlight—The bank gains attention after its endorsement of the bond deal for the tollway sale.”  With only three members, you can’t talk to your colleagues.  Talking policy and encouraging a position with one other member would mean that the majority of the board is conducting an unnoticed meeting and this is a Brown Act violation.  Crazy.

                The California Infrastructure and Economic Development Bank was created five years ago to provide low-cost financing for community projects, but the state agency has never made a loan and until a year ago didn’t have a penny in its account.

                It also operated in obscurity until last month.

Orange County Treasurer John M. Moorlach said one problem with the agency is that its board has just three members—the state treasurer, the finance department director, and the secretary of the trade and commerce agency—all officials who don’t have time to review the deals.  They must depend on staff recommendations, Moorlach said.

Toll Roads Newsletter, a monthly on turnpikes, tolling and road price issues, had their November/December issue hit the streets.  Writer and publisher Peter Samuel had fun with our 91 Express Lanes fiasco.  Under the heading “Farce & Scandal,” Samuel wrote a lengthy treatise titled “91 Express ‘Sale’ to NewTrac Unravels.”  It was fun to get an industry read, but I’ll spare you the details as there is nothing new to add.

               

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