MOORLACH UPDATE — OC Register — October 28, 2010

You’ve just got to love mixed messages.  On the one hand, we hear that the Treasurer-Tax Collector’s Department has recently made award winning changes.  On the other hand, we hear that it has confused taxpayers by changing its electronic payment policy multiple times in the last few years.

An Internal Audit Department audit draft was leaked to the press and it was a little confusing when the reporter contacted me.  What report?  The Board of Supervisors receives completed audit reports, not works in process, so that the audited department has time to respond to the findings.

One of the more difficult tasks a Treasurer-Tax Collector faces is pleas from late paying taxpayers.  That’s why I worked to establish a Late Payment Penalty Waiver Review Committee near the end of my tenure.  Unfortunately, I did not get a chance to implement it before transitioning to my current position.  A penalty review board would have been helpful in the situation addressed in today’s OC Register.

As much as I would like to give a long and detailed lecture on penalty waivers, I’ll make it short.  If your wire transfer fails, contact us immediately.  Not five days later.  And, while we’re on the topic, why did you wait to make the payment on or very close to the last allowable day (April or December 10)?  There’s no interest income to be gained (at least at this time in history).   Tip:  Please mail or wire (for those businesses and homeowners required to use electronic funds transfers) long before the due date.  The most often requested reason for waiving a penalty is that the taxpayer delivered the payment to a post office on the 10th, but it was postmarked the 11th.  The postmark prevails.

Treasurer tries to waive $371,000 in penalties for mall owner

Documents show Chriss Street tried to set aside six-figure fine for Brea Mall owner.

By Tony Saavedra

Orange County Treasurer-Tax Collector Chriss Street tried to waive $371,072 in late penalties last March for the owner of the Brea Mall, but backed down after his staff protested, according to documents obtained by the Orange County Register.

Street’s office is undergoing an internal audit ordered in March by the Board of Supervisors. A preliminary version of that audit notes that Street attempted to waive penalties for an unnamed delinquent taxpayer, identified in other documents as the Simon Property Group, owner of the Brea Mall and four other Orange County shopping centers. The pre-draft audit says the requested waiver did not comply with tax laws.

Street disagreed, in an interview, saying the waiver was deserved because the county had confused the taxpayer by changing its policy requiring electronic tax payment three times in as many years.

“If the tax collector’s office is 10 percent wrong, then we’re all wrong,” Street said. “I would support their appeal.”

Michael Larson, vice president of property tax for Simon Property,  declined to comment. But in a March 25 letter faxed to Street, Larson wrote, “We strongly believe that the inconsistent conduct of the county was a significant factor in this issue.”

Less than a day after receiving the letter — the second from Simon Property Group — Street made the preliminary decision to grant the refund. 

Documents from the tax collector’s office show the company was five days late last December in paying taxes of $3.7 million. Deputy county counsel Angelica Daftary, in an email to Street, said she did not believe the Simon Property Group qualified for a waiver under the tax code.

“SPG has not demonstrated that its failure to make a timely payment was due to reasonable cause and circumstances beyond its control,” Daftary wrote. Also intervening were top officials in Street’s office.

Street said he relented rather than go against his staff.

County Supervisor John Moorlach said the key to the attempted waiver was whether Street was consistent with past decisions.

“My question is what was so compelling that he would want to waive it?” Moorlach said.

The pre-draft audit also noted that Street approved two other penalty waivers — $280 for a Laguna Beach boat owner and $11,513 in delinquent sewage assessments from county parks — after he removed himself from the list of individuals authorized to make those decisions. When questioned by the Watchdog, Street said he would just put himself back on the list.

The audit was ordered by county supervisors after a federal judge ruled that Street had breached his fiduciary duty as a trustee for a bankrupt truck company. Supervisors also stripped Street of his ability to invest county funds.

In general, the pre-draft report found that controls in Street’s office were adequate to ensure that tax receipts were handled completely and accurately. However, the preliminary probe noted that too many people — up to 19 — were allowed to waive penalties or grant refunds, while the automated system is limited in tracking the transactions.  The audit estimated that $7.4 million in penalties were refunded in fiscal 2009-10.

“When system limitations are combined with numerous users who can each unilaterally access and grant penalty cancellations, the risk increases for unauthorized penalty cancellations with small chance of discovery,” the audit said.

Auditors also found that Street incorrectly charged interest on bankrupt taxpayer accounts – despite advice from the county counsel’s office not to do so.  As of October 2009, $120,605 was collected. The practice has stopped and the money is being returned, the audit said.

The report also said two fees for delinquent unsecured and secured taxes were inflated by 25 percent.  Staff time was counted twice in computing the fees, one for $75 which mostly affects boaters and one for $23.

FIVE-YEAR LOOK BACKS

October 27

1990

Jeffrey Miller of the OC Register did a piece on “City, Assembly races roar toward finish line – Costa Mesa:  Council election could turn on immigrant policies.”  It provides some fun history from twenty years ago.  With all of that time under the bridge, Peter Buffa now serves with me on the Orange County Transportation Authority (OCTA) Board and Arlene Schafer serves with me on the Orange County Local Agency Formation Commission (LAFCO).  Also, I still stay in touch with Orv Amburgey, Karen McGlinn and Jay Humphrey, with the latter two having even visited my Board office.  Community is great and important.  Here’s the opening and a segment near the close:

                For most of the past two years, local leaders have engaged in fiery debate over complex issues:  illegal immigrants seeking work on city streets, conflicts between the Share Our Selves charity and angry neighbors, publicly funded art that offends some taxpayers.

                On Nov. 6, voters will have their first chance to say whether they support the council’s groundbreaking efforts to deal with these issues.

                Mayor Peter Buffa and Councilman Orv Amburgey, two key players in the recent disputes, are seeking re-election.  Their challengers – Jay Humphrey, Karen McGlinn and Arlene Schafer – represent a spectrum of views on divisive issues such as illegal immigration.

                . . . the Costa Mesa Republican Assembly – a significant group in a city where 56 percent of the voters are Republican – is staunchly backing the incumbents.  More than two-thirds of the members chose Amburgey on the first ballot.

                John Moorlach, the group’s president, said members did not discuss their reasons for supporting the candidates.  However, he said he believes the efforts to stem illegal immigration will play well with voters.

                “I think the feeling among people in town is that most are happy that someone is finally taking on this issue,” he said.

2005

Alicia Robinson of the Daily Pilot covered former U.S. Congressman Bob Badham’s funeral service, which I attended.  When Bob retired from Congress, it was the beginning of a new era with allowing two young bucks to run for open seats in 1988.  They were Chris Cox, who succeeded Bob, and Dana Rohrabacher, succeeding Dan Lungren in the adjoining District.  The event is covered on the front page, top-of-the-fold, in “Lawmaker mourned – Hundreds attend funeral for Robert E. Badham, who suffered a heart attack last Friday.”  At the service I discovered that my long-time friend, Bill Manning, was also a dear friend of Bob Badham’s.

The many years of service Robert E. Badham gave to the city as its representative at the state and federal levels were remembered by hundreds of mourners who came to his funeral Wednesday.

Badham died Friday at Hoag Memorial Hospital Presbyterian after a heart attack. He was 76.

A longtime Balboa Island resident, Badham served in the state Assembly from 1963 to 1977 and in Congress from 1977 to 1989.

"I thought he was the consummate representative for the Newport Beach area," said Orange County Treasurer-Tax Collector John Moorlach after the service at Our Lady Queen of Angels Church.

Badham was a professional while in office, but he knew when it was time to gracefully retire and let new talent emerge, Moorlach said.

"I knew Bob as someone who has this incredible legacy of what followed — [former Rep.] Chris Cox, [Assemblyman] Chuck DeVore, all these incredible people that blossomed and are contributing to the community as a whole."

Badham’s son Bill — one of his five children — said at the service his father appreciated the different qualities each of his children exhibited — patriotism, self-reliance, artistic beauty.

"He saw in those traits a reflection of who he was, and that, I feel convinced, more than any political accomplishment or accolade, was to have succeeded," Bill Badham said.

Others recalled his sense of humor. Bill Manning, a friend of 68 years, said Badham did a great impression of Johnny Carson.

Longtime friend Byron Tarnutzer described Badham as "a lot of fun, very responsible." The two met when Badham worked in his family’s hardware business, and they had adjacent offices.

"He had the ability to simplify complicated issues," said Tarnutzer, adding that Badham will be remembered for his service to his country.

"I just think we were all so proud of him serving our country and our state as a congressman," agreed Mary Blake, a Newport Beach resident and longtime friend of the Badham family.

He held a number of high-level positions on congressional committees, she said, adding, "He was a great credit to Orange County and to the people he served."

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