MOORLACH UPDATE — Waiting — October 7, 2010

I had the pleasure of presenting at The Bond Buyer’s 20th Annual California Public Finance Conference.  I spoke to the 5th Annual Conference fifteen years ago at the same location in San Francisco.  The conference has more than 700 registered in attendance.  I served on the panel that addressed:  “A Road to Reform? The State Fiscal Crisis and the November Ballot.” 

One of the strong points that I emphasized at the conference is the impact of the recession on municipalities.  Every year finds them dipping into reserves to make budgets balance.  The issue:  How long will these reserves last?  So Councilmember Eric Bever and I used recently released numbers from the City of Costa Mesa to address a bargaining unit reopener by the public safety unions.  Why encumber the next council this close to a change in membership?  Why not wait a few weeks?  It is the first piece below and it appears in today’s Daily Pilot.

The second piece should appear in Friday’s edition of the OC Register’s The Current.  Barbara Venezia shakes it up on a project our office and the City of Newport Beach have been attempting to complete for a very long time.  One recalcitrant landowner can really disappoint the neighborhood.  If someone offered to pave my dirt road I would be jumping up and down with joy.  What is Mrs. Lee waiting for?  Go figure.


Community Commentary: Fiscal future lies with the unions

By Eric Bever and John Moorlach

The Orange County Register’s Watchdog column recently stated that, based on the State Auditor Controller’s report, every city in Orange County generated a profit, except for one: Costa Mesa.

"Facts are stubborn things," the saying goes.

Fiscally speaking, these are the bleakest of times. And the city’s public safety employee unions are demanding concessions at Costa Mesa’s weakest moment. Are our police and fire unions tone deaf, greedy or ignorant of the facts?

It is time to step back from the negotiating table, assess where the city really stands, and include our soon-to-be elected council members in the process.

Costa Mesa is going broke the old-fashioned way: It is spending more each year than it receives in revenue. The city’s $50 million unreserved savings has dissipated in less than three years. Capital improvement funds have been reduced by more than 80%.

Costa Mesa faces a $9.5-million budgetary shortfall. All variable costs have been cut to the bone. Now it is time to make serious staffing decisions, like cutting salaries and pursuing more layoffs.

In fiscal 2007-08, the city, experiencing its highest revenue to date of $103 million, spent $82.7 million to compensate 611 staff members. Staffing consumed 80% of the operating budget and translated into an average cost of $135,352 per employee.

In fiscal 2010-11, revenues are down 20%, or roughly $20 million. Consequently, 113 employees, or roughly 18.5% of staff, have either taken early retirement or been laid off, with the vast majority retiring.

In 2010-11 Costa Mesa has budgeted revenue of $83 million and staff costs of $74.3 million for the remaining 498 staff members. Staff costs now represent 89.5% of the operating budget at an average cost of over $149,146 per employee.

It is difficult to fathom that during the worst economic decline in recent history, while the city initiated austerity plans and reductions in staffing, the cost per employee actually jumped by $13,844 each, which reflects more than a 10% increase.

The bottom line is not pretty. According to City Manager Allan Roeder, Costa Mesa’s reserves have been reduced to a level that barely covers the city’s self-insurance, equipment replacement, and the like.

In his budget message to the City Council, Roeder wrote: "Continued use of fund balance at this level is unsustainable."

In fact, Roeder has also confirmed that if conditions don’t change, cash flow could become a problem within the next year.


Venezia: Dirty secrets of Santa Ana Heights redevelopment





The OC Register Watchdog column reported recently on an LA Times story regarding city redevelopment agencies.

"The Times found widespread instances of corruption, questionable spending and poor accountability at such agencies, which take in $5 billion in property tax revenues each year."

They were careful to state no OC agencies were being investigated. Too bad.

Millions came and went from The Santa Ana Heights RDA for decades. The agency was originally created by the board of supervisors in the mid-1980s to "redevelop" the area "blighted" by John Wayne Airport, East and West Santa Ana Heights. It was funded by JWA and property taxes. The state raided it repeatedly. So did the county, to pay off the bankruptcy.

My guess is that the dirty little secrets of this agency are buried far in the past, well covered by years of ever changing, ambiguous redevelopment law open to wide interpretation from politicians and county departments.

Oddly enough, when Supervisor Silva left office, none of his Santa Ana Heights RDA files were left for incoming Supervisor Moorlach’s staff.

I attended my first Santa Ana Heights Redevelopment Agency Project Advisory Committee meeting in 1993. Residents vented frustration over years of county bureaucratic stonewalling on proposed RDA projects. One in particular was what they called "Old Kline Drive."

Over a decade later, as PAC Chairman, I drove Supervisor John Moorlach down Kline Drive in West Santa Ana Heights. He couldn’t believe his eyes. He agreed the area looked like something from a "third world country." The unpaved road was littered with potholes, disabled vehicles in front yards, blue plastic tarps covering roofs and homes in disarray. Where was the health department? County code enforcement? Fire department? It was the place time forgot. Even after being annexed by Newport Beach, the city didn’t aggressively address bringing the area up to health and safety codes despite surrounding resident’s complaints.

Why hadn’t the county taken redevelopment money and addressed Kline Drive years ago? Layers of hired county consultants studied the issue, but nothing of consequence was ever accomplished.

It turns out property owners actually own the road. A limited easement had been granted to the county years ago. But in order to make it safe, property owners would have to relinquish small portions of frontal properties to the county.

Letters were sent to owners. Some were in favor. Many were non-responding, absentee slumlords. Annexation to Newport only brought another layer of bureaucracy, further complicating an already tangled issue.

Now Moorlach’s chief of staff, Rick Francis, is bent on spending the last of this RDA money to fix Kline Drive. Time’s running out. The RDA is slated to sunset and with it any county funding for this project.

Only one absentee property owner’s holding up the process, a Mrs. Lee who won’t respond. There’s an obvious solution, but who will utter the politically incorrect words "eminent domain?"

Several years ago, Newport threatened eminent domain on one unreasonable landowner blocking the way of building Santa Ana Heights Fire Station. Now they’re threatening another obstructing the current planned widening on Jamboree Road. So, why not on Kline? Is it because Kline doesn’t benefit anyone politically, as the other projects did and do?

VIDEO: See Kline Drive for yourself in my latest Barbara’s Bits segment.


Freelance writer Barbara Venezia’s opinion column appears online each Thursday and in The Current every Friday. Email BV at