MOORLACH UPDATE — Green Bay — April 13, 2010

I try to respond (eventually) to personal e-mails.  (Some days are loaded with appointments that keep me away from my monitor and BlackBerry.)

Mr. Bunnell’s recent e-mail to me proposed selling shares to Costa Mesa residents in order to purchase the OC Fair & Event Center. It also appeared as a letter to the editor in the Daily Pilot.  Consequently, I copied the editor of the Pilot, John Canalis, in my response and he decided to print it in today’s letter to the editor section.

Believe me, acquiring a business with equity is highly preferred over acquiring it with debt (which will be “the” issue for the City of Costa Mesa in their negotiations with the state).  I had staff take a close look at this alternative.  Regretfully, organizing it was not conducive to an “auction” or a ”30-day negotiation period.”

Yesterday, the Voice of OC, the new paperless newspaper, had its take on Sunday’s story on the LA Times’ Sunday story on the Sheriff.  See http://voiceofoc.org/article_f30a7d76-465a-11df-b191-001cc4c03286.html.

It also has a piece on the office of the Treasurer-Tax Collector in today’s edition.  It nibbles at the debate on whether the office should be elected or appointed.  It’s the second article below.

Mailbag:

In response to a letter from David Bunnell (“Could public become fair share holders”, April 8):

Mr. Bunnell,

Thanks for the e-mail and the letter to the editor in the Daily Pilot.

Believe it or not, but this is known as the “Green Bay Packers” solution.

I explored this idea a few months ago.

This Wisconsin football franchise is owned by the Green Bay area residents. That’s why you are put on a waiting list, which could take decades, to obtain season tickets.

Why did they use this structure? To insure that the franchise stayed in Green Bay. As you recall, we used to have a franchise known as the Rams here in Orange County, but it moved to St. Louis.

Using a purchase price of $25 million for the fairgrounds, we would only need 25,000 Orange County residents to invest $1,000 for a share.

They would receive free tickets to the annual fair, a newsletter and discounts to all of the other events throughout the year.

It’s a great idea. It’s just difficult administratively. And, with the new tight timelines, all the more difficult. To make matters worse, the state is expecting multiples of the $25 million, so we would really have to work hard to obtain enough subscribers.

Let’s see what happens Monday.

John Moorlach

Costa Mesa

Editor’s note: Moorlach is a member of the Orange County Board of Supervisors. He represents the 2nd District, which includes Newport Beach and Costa Mesa.

Is an Elected Treasurer the Best Thing for Orange County?

It’s election time in Orange County and once again voters are confronted with a treasurer’s race that features high drama, at least a whiff of scandal and a shiver of financial peril.

"Which is why," said Fred Smoller, director of a public administration master’s degree program at Brandman University at Chapman University in Irvine, "it should be an appointed office."

An elected county treasurer is a holdover from political planning in the 1700s when the nation’s founders were trying to establish a stable, dependable new system of government.

But stable and dependable have not always been words used to describe the office in charge of Orange County’s $6-billion-plus treasury in recent decades. Words like bankruptcy and fraud have been more apt.

In 1994 Orange County Treasurer Robert Citron, in conjunction with Merrill Lynch, catapulted the county into the worst municipal bankruptcy in U.S. history.

Citron had unsupervised control of county investments and lost $1.6 billion when he guessed wrong and enrolled the county in high-risk bond investments just in time for the 1994 bond market crash.

Ironically, Citron’s 1994 opponent, John Moorlach had warned the public and county leaders that Citron’s investment strategy was dangerous, but was ignored.

After the bankruptcy state law was revised to require minimal qualifications for someone to oversee the county treasuries. Citron was tried and convicted of fraud and in 1995 Moorlach, who is now a county supervisor, was appointed to take over as treasurer.

Moorlach presided over a stable period from 1995 to 2006. But then in 2006, voters, at Moorlach’s urging, chose Chris Street, his former subordinate.

This year Street was ordered to pay $7 million in a civil fraud case stemming from his handling of the assets of a bankrupt trucking company. He’s also has had his county wages garnished and the board of supervisors stripped him of his power to invest public funds.

The fraud allegations came from his work as a trustee for a bankrupt trucking company before he joined county government. As the court-appointed trustee for the bankrupt Fruehauf Trailer Corp., Street was supposed to liquidate its assets.

Street’s downfall has only bolstered the arguments of Smoller and others who want the position off the ballot. Yet such a change is still not an easy sell.

Orange County voters "haven’t had too much luck" with elected treasurers, noted Bob Stern, president of the Center for Governmental Studies in Los Angeles. "On the one hand, voters don’t want to give up control of who is elected treasurer. On the other hand, they don’t know much about the individual."

The winner, he said, "often is who has the most name recognition or who spends the most money."

But Moorlach pointed out that when voters were given the chance in past decades to turn the treasurer into an appointed position, they opted instead to maintain it as an elected office.

Elected officials, he said, can stand up to members of the Board of Supervisors or a county’s chief executive, a role that is critical if the treasurer ever is urged to do something improper.

The down side of that argument, countered Smoller, who unsuccessfully ran for state Assembly in 1990, is those who win elections are politicians and other elected officials are reluctant to step into their territory, even when intervention is warranted.

When the county’s financial situation was unraveling under Citron, he said the board of supervisors backed away, saying "he’s independently elected and we have no control over him."

And, as Moorlach learned, things can go wrong even when you think you know a candidate well. Like when he supported Street.

Among those jockeying for a chance to succeed Street include his own former subordinate and spokesman, Deputy Treasurer Keith Rodenhuis. Rodenhuis this month successfully defended himself in court against allegations from another contender, Huntington Beach city treasurer Shari Freidenrich, that he lacked the qualifications to legally hold the office.

The other two candidates in the race are Patrick Desmond, who ran in 2006 and is an employee of the county assessor’s office and Dave Lang, a South Orange County Community College District trustee.

So how will voters know if their next treasurer is another John Moorlach or another Chris Street? They won’t, argues Smoller.

"We truly don’t have a watchdog media, we do not have a competitive political system, we do not have an engaged electorate," he said.

In the June, 2006 election, only 27 percent of Orange County’s registered voters cast ballots, according to the Secretary of State’s office.

Said Moorlach, "At the end of the day, you get the government you deserve, isn’t that the saying?"

Please contact Tracy Wood directly at twood@voiceofoc.org and follow her on Twitter: twitter.com/tracy111. And add your voice with a letter to the editor.

FIVE-YEAR LOOK BACKS

April 13

2000

Chris Reed of the OC Register had an interesting Thursday headline on the theme he brought up on April 9.  It was “Smith shocked by vote on CEO – The aftermath of the aborted shake-up leaves many wondering about disarray among supervisors.”  Wednesday’s headlines covered the Tuesday Board of Supervisors meeting’s deliberations.  This was an article dealing with the fallout.  Here are a few selected paragraphs:

                Board of Supervisors Chairman Charles V. Smith—his campaign to fire CEO Jan Mittermeier and sharply bolster the board’s powers in ruins—said Wednesday that he was stunned and disappointed by his surprise defeat.

With fallout from Tuesday’s aborted shake-up evident on several fronts, Smith and other county leaders sought to give their spins on a day without precedent in recent history:  one that began with expectations of major change in county government and ended with three supervisors declaring loyalty to the status quo.

The former Westminster mayor said he pursued the changes in the belief that they would eliminate board members’ two biggest headaches:  Mittermeier’s uncompromising management style and supervisors’ lack of control over planning at the former El Toro Marine base.

[Supervisors] Wilson and Silva said they and colleague Cynthia Coad had concluded that a county that went bankrupt in 1994 still needed to worry about Wall Street’s perceptions of its fiscal stability.

The aftermath of the showdown—with its shattering of past board alliances and surprise ending—left many wondering about disarray at the Hall of Administration.

The uncertainty, Treasurer John Moorlach said, begins with the CEO.

“She’s already got two votes (to fire her),” said Moorlach.  “Being the CEO, you have to count to three.”

                And while in Mittermeier’s October 1998 showdown with the board there were also two votes against her, this time the critics included the chairman—and one of the CEO’s three backers (Wilson) was ready to send her packing in 1998.

                “So maybe that third vote is not as secure now,” Moorlach said.

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