MOORLACH UPDATE — Salt Creek Beach — May 5, 2010

We enjoyed an action packed six-hour Board of Supervisors meeting yesterday.  The “human interest” story was a long-time concessionaire who found that one of the three businesses that submitted bids to replace him actually received a much higher score by the panel reviewing the bid responses.

Our OC Parks Commission heard the matter and, on a split vote, advised that the incumbent should be selected by the Board of Supervisors.  That became the recommendation from staff.  None of the other bidders, including the original winning bidder, came to yesterday’s Board meeting.  However, family and friends of the current vendor did.

The story is covered by our paperless news providers, Orange County Local News Network (OCLNN) and Voice of OC, respectively.  The OC Register’s Total Buzz Blog also has an entry at  Its piece has a more on- target quote from the meeting:

             Supervisor John Moorlach voted against awarding the contract to Efstathiou, saying he felt uncomfortable with the process. He asked county staff to reevaluate how they bid out these types of leases — or whether they should do it at all.

“What it looks like to me is you have a fine incumbent, and you have a result that wasn’t what you were expecting, so you have this big ‘whoops,’ ” Moorlach said. “Why go through the process and put so many people though (sic) so much anguish? And why do we take the time of three other potential bidders who put a lot of time and effort into the drill too? I’m a little troubled here.”

Longtime operator keeps Salt Creek Beach concession lease

By Erik HolmesOCLNN

SANTA ANA – The concession stand at Salt Creek Beach in Dana Point won’t be changing hands, after all.

After a lengthy and at times contentious process to decide who will run the beach’s concession stand for the next 10 years, the Orange County Board of Supervisors on Tuesday extended the contract of John Efstathiou, who has run the popular Salt Creek Beach concession for 22 years.

Eleven people – including Efstathiou, family members, Dana Point residents and community merchants – spoke on Efstathiou’s behalf and encouraged the supervisors not to award the concession contract to Mike Ali, who runs two concession stands in Huntington Beach. Ali did not attend the meeting.

In the end, Efstathiou’s support within the Dana Point community – including a petition with more than 1,300 signatures – won the day.

“What I think is compelling … is that the role of our … elected officials (is) to hear the people,” said Supervisor Pat Bates, whose 5th District contains all of South County. “I don’t think that has been demonstrated any greater in my term on this board (than today), that the people are speaking.”

Efstathiou’s company narrowly beat out Ali’s in a written proposal for the concession contract, but Ali won handily in an oral presentation. That allowed Ali to prevail by about 500 points in the 4,000-point evaluation system.

But community support for Efstathiou convinced the OC Parks Commission and Board of Supervisors to continue Efstathiou’s lease, despite the fact that he scored lower in the formal evaluation. Supervisor John Moorlach of the 2nd District voted not to select Efstathiou because Ali’s proposal earned more points.

Jim Miller, owner of Coffee Importers in Dana Point, was one of several residents who told the board of Efstathiou’s commitment to and role in the quiet seaside community.

“I have worked with John on many harbor issues and watched him work hard to make the Salt Creek concession a successful business and part of our community,” Miller said. “The city of Dana Point and the Dana Point Harbor take pride in what we call family atmosphere and character that make our city and harbor special. John Efstathiou has proven in his years as a merchant … that he exemplifies the meaning of family, character and involvement in our community.”

The county in September released a request for proposals for the Salt Creek Beach concession, as it is required to do once every 10 years. After evaluating competitors, the Parks Commission staff recommended awarding the contract to Ali because his proposal claimed he would bring in greater revenues, of which the county takes a portion. But after hearing from community members supporting Efstathiou, the commission voted in his favor and recommended that the Board of Supervisors do the same.

Supes Debate How Concessions Are Granted

A battle over a snack stand concession at Salt Creek Beach led to a debate Tuesday among Orange County Supervisors about how the county handles small concession contracts.

The supervisors voted 3-1 to leave the concession with the current operator, John Efsatathiou, who has held it for decades and developed a loyal following among Dana Point locals. 

Efsatathiou withstood a challenge from another beach concessionaire, Mike Ali, who runs a series of food spots along the coast.

Ali seemed to work behind-the-scenes connections having a series of lawmakers advocate for his business proposal. Efsatathiou worked the local community flooding officials with letters of support, online petitions and even a facebook page run by his two daughters.

"What is compelling in this particular item, is that the role of our commissioners and elected officials are to hear the people. And in this item, I don’t think its been heard any better," said Supervisor Pat Bates who ardently defended Efsatathiou’s stewardship of the stand, which is in her district.

Bates also said the debate said a lot about the differences in beach-going experiences between Huntington Beach and Dana Point.

Supervisor John Moorlach stood in stark contrast to Bates defiantly saying, "I’m on the other side of this discussion."

He noted that it’s sometimes a good thing to change concessions, such as with the case of the county’s own cafeteria.

Then Moorlach asked a series of questions about the whole proposal process. If Efsatathiou was doing such a good job, and the concession offers a low rent, then why make the concessionaire, county staff or county supervisors go through a process that seems better suited to a large concession.

"Maybe we need to reevaluate how we do this," Moorlach said. "It gets really interesting when you have a person whose sole livelihood depends on the concession."

Supervisors Chairwoman Janet Nguyen, however, defended the process saying it just needs a bit of tweaking citing issues with the oral and written interviews. "I think we have a good process and a good system," she said.



May 3


This was one of the more surreal headlines that I’ve ever been involved with.  My investment pools were earning too much!  Jean Pasco covered the topic in “County Must Cut Investment Return – New fund must be created because post-bankruptcy profits exceed federal limits for tax-free earnings.”  Oh, if only we could have arbitrage issues like this one, again, considering our current interest rate climate.  Since it is a short article, I’m providing it in full.

The success of Orange County’s post-bankruptcy investments has led Treasurer John M.W. Moorlach to create a new investment fund that will earn a lower rate of return needed to comply with federal tax rules.

Federal regulations say the county cannot invest tax-free money from government agencies, schools and special districts to make an excessive profit.

Specifically, under the county’s bankruptcy refinancing plan, the county cannot earn more than 6.21858% on about $350 million out of a total of $1.6 billion invested. The county is allowed greater leeway with money set aside for a "reasonable working capital reserve amount," according to the plan.

Moorlach said Tuesday he didn’t know about the yield restrictions until late March, when he was told by two county finance officials. The county’s two investment pools as of Monday were earning returns of 6.211%, he said.

"I was a little surprised," Moorlach said. "I said, ‘OK, fine, let’s figure out how to deal with it.’ "

County Executive Officer Jan Mittermeier followed up with a letter to Moorlach outlining the problem and suggesting the third fund for the yield-restricted investments. The details of the fund haven’t been determined.

Supervisor Todd Spitzer complained Tuesday that Mittermeier didn’t send copies of her letter to the board, and that at least three supervisors didn’t know about the potential investment problem.

"With something this significant, the decision should come from the Board of Supervisors after a full discussion of what it means to open a third investment pool," Spitzer said. "[Lack of communication] is how the bankruptcy occurred."

Moorlach said board members needn’t approve the new fund because it doesn’t involve a change in county policy.

The county is still carrying about $1 billion in debt from the bankruptcy that occurred in 1994. It has paid back about $300 million in debt in the past year.

May 4


The very public negotiations between the Orange Unified School District Board and the Orange Unified Employees Association union continued.  The Orange City News weekly section in the OC Register carried a Letter to the Editor, titled “Funding isn’t there for benefits.”  I had already done a column on the matter in the Foothills Sentry (see MOORLACH UPDATE — Costa Mesa — April 10, 2010).  I had prepared another column, with Orange County Auditor-Controller David Sundstrom, which would be printed in the OC Register in a few days (May 7).  However, a draft copy must have been circulated as the letter writer refers to it as well.   Last week, at a book signing reception, I bumped into Sid Stokes, who was assisting the OUSD administration at the time.  We marveled at how quickly ten years had flown by.

Many people in addition to myself agree teachers in general do not receive enough respect, pay and professional accolades for their efforts in positively affecting the lives of children in our community.  But now in the midst of deep emotions on this issue that are experienced daily by our families and children on our neighborhood playgrounds, at the Little League baseball fields, and around the dinner tables.  OUEA union president John Rossmann arrogantly demands that the people “speak out” to support his union leadership positions.

As a community member and elective representative from this community, my response to Rossmann illustrates his erroneous rhetoric and actions.  For example, he stages phony teachers strikes.

And what is the truth?  According to experts on financial matters there is no such public funding available to meet Rossmann’s demands.  No individuals are better to publicly state these facts than Orange County Treasurer John Moorlach and Orange County auditor-controller, David Sundstrom, who have recently become personally involved in our community’s situation and have supported the OUSD school board’s position.

As is well-documented in their recent analysis and a recent letter by Moorlach in a local newspaper, it is obvious that the district cannot offer any more than it already has.  Lifetime health benefits to veteran teachers and their families, unfunded future liabilities and a union-dominated school board in the 1980s that promised more than it could, have resulted in the district giving an 8 percent raise to its employees.  This figure is well above other school boards who have given 4 to 5 percent cost of living salary increases to their employees.

So why does Rossmann continue?  The answer is quite simple and it relates to pure personal ambitions, revenge and politics.  Rossmann’s main goal is through unpleasant and biased methods to change public opinion and embarrass the Orange Unified school board in order to win a union-dominated school board majority in the next round of elections.

Dr. Ken Williams

Member, O.C. Board of Education, 4th District

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