MOORLACH UPDATE — Daily Pilot — February 18, 2010

We have spent an incredible amount of time at the Orange County Transportation Authority on dealing with the southbound traffic flow from the Costa Mesa (55) Freeway when it intersects with 19th Street onto Newport Boulevard.  We have commissioned a study and conducted a number of stakeholder meetings.  We have agreed on a solution.  The only thing missing is the cash in the bank.  At least we’re down to specific and realistic options.  A little forward movement towards “shovel ready” is the next step in the process.

Traffic jam goes to study

Costa Mesa is looking at options to loosen up congestion where the 55 Freeway ends and Newport Boulevard narrows.

By Mona Shadia

Peter Naghavi, Costa Mesa’s director of public services, along with staff from the Orange County Transportation Authority are preparing to take bids for a project study on the expansion of the 55 Freeway where it ends on Newport Boulevard.

The report will examine the various proposed solutions and look at the project’s impact on local businesses and residents.

Bidders will be invited to bid on the project study by late March.

Costa Mesa took on the expansion project more than a year ago, as traffic congestion in the area made it impossible to ignore.

“A lot of people think traffic is good for business, but too much traffic and congested traffic is not good for business,” Naghavi said. “If I’m a loyal customer near there and it takes me half an hour to get there every time, I’m going to find another place where there isn’t too much traffic.”

About 100,000 cars unload from the southbound 55 Freeway onto Newport Boulevard with about half going to local destinations and the other half traveling to Newport Beach and Huntington Beach, among other cities, Naghavi said. And although there are seven lanes, they are not enough to prevent jams because the street eventually narrows.

The city attempted to help the situation by adding more lanes, but that relieved traffic by about 33%, Naghavi said.

Then and Now

In 1985, the California Department of Transportation proposed extending the freeway from 19th Street, where it ends, through the eastside of Newport Boulevard.

That plan would have eliminated at least 80 homes and businesses for needed space and the potential for a pedestrian-friendly downtown would be nonexistent, Naghavi said.

The proposal also stalled for lack of funds.

An access study, which cost about $275,000, provided seven alternatives to the freeway’s expansion.

Naghavi said many of those alternatives would only find temporary fixes, including adding bus turnouts, improving signal coordination and adding lanes, which the city has done.

The seventh solution, however, stands out, Naghavi said. The cut/cover freeway under Newport Boulevard would separate local and regional traffic by providing lanes for both. It is estimated to cost about $200 million, Naghavi said.

Newport Beach Mayor Keith Curry said that his city, like every other in the region, is interested in creating a solution for traffic congestion where the 55 Freeway ends.

“I think we are generally supportive of Costa Mesa’s goal to reduce the impact of the 55 terminating at 19th Street as long as they don’t simply move the traffic to Newport Beach in a way that would increase congestion on our streets,” he said.

Show Me The Money

Costa Mesa would like to see regional financial support for the project because the congestion caused by the freeway is not solely the city’s problem. The city is also actively looking for funding and grants sources to help with some of the financing, Naghavi said.

“This was forced upon the city because of regional traffic,” He said. “If we didn’t have 50,000 regional cars, we would handle our 50,000 cars with the existing facility. We think OCTA should pay for this.”

Financial help from other cities might not be easy.

Although Costa Mesa hasn’t asked yet, Curry said Newport Beach will not be able to help with the project’s finances because the city doesn’t have available resources.

Orange County Supervisor John Moorlach, whose district includes Costa Mesa, said that while it’s important to find solutions to relief the congested traffic, there is no funding, especially when there are other pressing projects the transportation authority is working on. Among others, he cited the addition of four lanes to the 405 Freeway and the expansion of the 405 Freeway to the 605 Freeway.

“We’re working with the city, but with the economy today, things are not going to go as quickly,” Moorlach said.

The project is likely to take a decade to come to fruition, Naghavi said.

FIVE-YEAR LOOK BACKS

February 18

1995

The Daily Press in Victorville covered a speech I gave in Riverside.  David Allen’s piece was titled “Accountant who predicted Orange County crisis sees cause for concern here.” 

Let me set it up.  After the bankruptcy filing I was still engaged in my practice.  At first it seemed as if I was on the phone with reporters the entire day.  That finally slowed down.  But, then it was speaking requests from everywhere.  I was doing three speeches a week at first (one per week is more than plenty—with preparation, travel, meal time, et al). 

I had fallen behind on my work load.  And I was slowly moving into tax season, the busiest time of the year for Certified Public Accountants with tax practices. 

So I get a call.  “Would you please speak to the Inland Empire Business Journal’s annual conference in mid-February?”  “No.”  It’s too far away and I have too much to do.  “We’ll rent a limo—you can work during the drive.”  I reluctantly agreed.  Lesson learned?  I don’t work well in a moving vehicle thanks to motion sickness.

I rolled into the Riverside Convention Center and in my remarks I praised then-Riverside County Treasurer Wayne Watts and raised concerns about then-San Bernardino County Treasurer Tom O’Donnell’s investment pool.  

A few years later, due to different scandalous issues, both O’Donnell and his Chief Investment Officer would spend time in prison.

                The man whose warnings about Orange County’s money management weren’t heeded a year ago raised red flags Friday about San Bernardino County’s investment strategy, which he said “has speculation written all over it.”

                John Moorlach, who unsuccessfully challenged Orange County Treasurer Robert Citron in the June 1994 election, has been hailed as a prophet following that county’s bankruptcy filing.

In a speech to Inland Empire business leaders Friday, Moorlach said he sees similar – but less dangerous – cracks in San Bernardino’s investments.  And he said reported comments by Citron and his counterparts in San Bernardino are uncomfortably close in tone:  “defensive” and full of “patronization.”

“Can the sort of financial crisis that occurred in Orange County occur in Riverside County or San Bernardino County?  My answer would be:  Maybe,” the certified public accountant said.

Moorlach’s criticism echoed questions raised by others about San Bernardino’s reliance on reverse repurchase agreements.  But his comments have added resonance based on his newfound reputation as a financial Nostradamus.

San Bernardino’s chief money manager disputed Moorlach’s assessment, called the comparison with Orange County unfair and complained that Moorlach has never spoken with him.

                “Our fund is not in any danger whatsoever,” maintained Treasurer/Tax Collector Tom O’Donnell in a telephone interview.

                Reverse repos are deals in which owners of a security use it as collateral to borrow money, then invest that money in another security.  Such investments can go south when interest rates rise.

                San Bernardino, however, matches the maturity dates of its reverse repos with the maturity of incoming revenues – “borrowing short and lending short,” in the words of CSU San Bernardino economist John Husing, who said the difference between the two counties’ use of reverse repos is crucial.

                “It’s not so much that the instrument is wrong, it’s how it’s used,” said Husing, another speaker at the Inland Empire Economic Forecast Conference.

                Moorlach noted that 50 percent of San Bernardino’s investments last December were in reverse repos, which he compared to alcohol.

                O’Donnell, however, said “plain vanilla” is a better description of his $2.4 billion investment portfolio, which earned what he termed a “respectable” return of 5.88 percent in the last quarter of 1994.

                He said the percentage of reverse repos should be down to 15 to 20 percent by June to eliminate what he has called “the perception of risk,” based on the drubbing reverse repos have taken.

                Moorlach’s advice is that reverse repos should account for no more than 20 percent of the portfolio.  However, he described himself as “extremely conservative” and an opponent of any leveraging of taxpayer dollars, which he called “immoral.”

                The actual level of reverse repos will be determined by the San Bernardino Investment Committee, a seven-member panel recently appointed by the Board of Supervisors at O’Donnell’s request to oversee investments.

                The panel has six county officials and an outside financial adviser who has not been named.  In an interview, Moorlach said that sounds “ingrown” and urged the appointment of investment brokers, accountants and financial planners.

                O’Donnell disagreed and added that the meetings will be open to the public to ensure the process has “credibility.”

The Coaster’s Jim Wood was back with a “Commentary – The Solution Revisited.”  He a four-fold plan that included repaying all the pool participants 100 cents on the dollar and implementing a one-half cent sales tax.  I told him that the first idea was coercive and that the second was repressive and felt that “they both will backfire . . . however, they are both legitimate views that need a good, healthy debate.”  We had the debate and they both failed.  Here was his first recommendation:

1)       The naming of experienced businessman Bill Popejoy as county CEO is a step in the right direction.  Now, each of the Board of Supervisors must commit to not seeking reelection and select a noted business person as their municipal alter-ego and financial advisor.  The names Sutton, Argyros, Ueberroth, Hunt, Moorlach and Gross come to mind.  The objective is to find committed individuals who instill trust and confidence both locally and nationwide.  These fiscally-savvy leaders would commit to serving as ad hoc consultants to each of the supervisors until this fiscal tragedy is put to rest.

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.

Advertisements