MOORLACH UPDATE — Treasurer-Tax Collector — November 4, 2010

As County Supervisor, these Updates are provided to you as my form of a newsletter.  Consequently, I have to embargo campaign related articles that I am mentioned in.

Now that the election(s) are behind us, I am providing the back articles in chronological order for the next few days on various races in the county.  Today’s focus is the office of Orange County Treasurer-Tax Collector.

One of the funny phrases used by the reporters below is “hand-picked.”  I had actually tried to “hand-pick” Shari Freidenrich to succeed me as Treasurer-Tax Collector back in 2005.  You may have noticed this from the LOOK BACKS (see MOORLACH UPDATE — LOOK BACKS — February 12-15, 2010 and MOORLACH UPDATE — OC Register — February 17, 2010).  When Chriss Street put $100,000 into a campaign account to run for the position, Shari Freidenrich decided against running.  When my Assistant Treasurer-Tax Collector resigned in March of 2006 to enjoy the new “2.7% at 55” retirement benefits, there was only one identified candidate for Treasurer-Tax Collector:  Chriss Street.  We did a very brief recruitment period (not an uncommon approach here at the county) and Chriss Street was hired to be the new Assistant Treasurer-Tax Collector, thus providing an opportunity for training and succession planning.  Just prior to the close of filing, another individual surfaced and also ran for Treasurer-Tax Collector who was unfunded and marginal as a candidate.  Chriss Street was elected.  The filing of the Fruehauf lawsuit occurred after the close of filing for the election.

To explain the articles below, Norberto Santana, Jr. and Tracy Wood write for the Voice of OC.  Jennifer Muir wrote for the OC Register.  Brian Calle is an editorial writer for the OC Register.  The endorsement acquisition efforts during the campaign were a very interesting learning process.  Many wanted “fresh and new,” but this is a position that needed “tried and true.”  Consequently, I did a piece for the renowned FlashReport Blog on the subject.  Frank Mickadeit is a columnist for the OC Register, who closes the set.

The following will provide a perspective as to how history will look at this unusual chapter in the political life of Orange County.  Although most of it is accurate, it would be difficult to address every curious or skewed comment.  I will say this, I did not recommend the lawsuit to challenge the qualifications and title of one of the candidates.  The justification for doing so was there.  Doing it in a one-day forum may not have been the best course of action, however.  All the same, both sides subpoenaed me to appear and neither side called me to testify (see MOORLACH UPDATE — Deputy Treasurer — April 7, 2010).

Treasurer’s Race News on the Way

April 15, 2010

Check back tomorrow morning for the latest installment of the Voice of OC/Probolsky Research poll showing numbers and analysis in the race for Treasurer/Tax Collector.

Following the $7 million judgement against incumbent Chriss Street – who decided last month to avoid running for re-election – there’s a host of political unknowns vying to take over one the county’s most important, and in recent decades controversial, seats.

Few knew what a public treasurer even did before the 1994 municipal bankruptcy in Orange County catapulted the office into the national spotlight. County Supervisor John Moorlach ran the office for more than a decade before stepping down in 2006 and handing the reigns to Street, a decision he’s since regretted.

— NORBERTO SANTANA JR.

 

‘A Massively Undecided’ Race for Orange County Treasurer

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The race for Orange County Treasurer-Tax Collector is adding a whole new meaning to too-close-to-call, with no candidates able to garner the support of even 10 percent of likely voters, according to a Voice of OC/Probolsky Research poll.

Less than two months before the June primary, a whopping 65 percent of likely voters said they had no idea who they were going to support.

"It’s a massively undecided race," said Adam Probolsky, Voice of OC polling consultant.  "Voters just don’t know [the candidates]."

Deputy Treasurer Keith Rodenhuis leads with support from 9.5 percent of the 326 likely voters polled. Both Huntington Beach City Treasurer Shari Freidenrich and county assessor employee Patrick Desmond polled at 8.3 percent and South Orange County Community College District trustee David Lang was last with 6.1 percent.

If no candidate wins a majority in June, the two top vote getters face each other in November.

One explanation for the indecision is current Treasurer Chriss Street’s abrupt departure from the race in March after a federal judge ordered that he pay $7 million in a civil fraud case.

The case had to do with his work as a bankruptcy trustee for a trucking company before he became county treasurer. As trustee for the bankrupt Fruehauf Trailer Corp., Street was supposed to liquidate its assets. Instead, according to the court findings, he spent millions of the company’s funds trying to revive it.

He’s appealing the decision. But, in the meantime, he’s had his wages garnished and the Board of Supervisors has stripped him of his power to invest public funds.

As a result of Street’s departure the electorate is left with three virtually unknown candidates to choose from. And, even in normal circumstances, treasurer is not a race that is high on voters’ radar screens.

In the 2006 primary, according to the California Secretary of State, only 27.6 percent (about 408,000) of Orange County’s eligible voters cast ballots.

According to a number of political and campaign experts, the only way to effectively reach large numbers of Orange County voters in a local race is through the mail. To design, print and mail a single piece of campaign literature, estimated Moorlach, a former Treasurer, costs about $1 per voter.

"None of these candidates are going to have the money to talk to hundreds of thousands of voters," predicted Probolsky.

As of the last required campaign fundraising disclosure reports in March, only Freidenrich reported raising money, and that was just $29,500, including $5,000 she loaned her own campaign.

"There’s probably going to be a runoff," said Desmond, who ran against Street in 2006. "That’s pretty obvious."

The election should be a "job interview" for someone responsible for managing the county’s $6 billion-plus treasury, said County Supervisor John Moorlach, who appointed treasurer in 1995 after Robert Citron hurled the county into the biggest municipal bankruptcy in the nation’s history.

The voters should look for someone with "integrity, competence and experience," added Moorlach, who, ironically, pushed for Street to succeed him in 2006.

But Desmond and others said the single-digit support for all three candidates indicates that voters have little knowledge about the qualifications of any of them.

"People don’t read the paper anymore," said Desmond, adding that he’s counting on many of the voters who supported him four years ago to remember his name and vote for him again.

Probolsky said in a race where candidates are this obscure so close to election day, voters most likely will make their decisions based on what they read in the sample ballot pamphlet that the Registrar of Voters sends out in May.

If this is true it does not bode well for Desmond. He was the only candidate who chose not to pay the $22,111 to have a statement about him included in the voter pamphlet.

Another influence on voters will be the professional title that is printed after the candidates’ names on the ballot. Rodenhuis will be listed as "Deputy Treasurer, County of Orange," which will likely help him.

"I think people want someone who has experience in the treasurer’s office," he said.

Freidenrich may benefit among voters in Huntington Beach because she has been on the ballot there before because treasurer is an elected city position. Her ballot title in June will be "Treasurer, City of Huntington Beach."

"I’m the only candidate elected as a treasurer," she said. "My goal is to educate voters on the qualifications over the next (almost) two months."

She also has a long list of endorsements including Republican congressmen Dana Rohrabacher, Ed Royce and John Campbell, and County Supervisors Moorlach and Bill Campbell.

The telephone poll conducted between April 6 and April 11. Voters were asked, if the election for Orange County Treasurer/Tax Collector were held today, for whom would you vote? The survey had a margin of error of plus or minus 5.6 percent.

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.

Four candidates vie for treasurer’s office

By JENNIFER MUIR

THE ORANGE COUNTY REGISTER

May 19, 2010

Orange County Treasurer Chriss Street’s last minute departure from his reelection race has left four candidates fighting to fill the office, which manages $6 billion in investments for county government and more than 20 local school districts.

Street only faced two opponents, Huntington Beach’s elected treasurer Shari Freidenrich and county employee Patrick Desmond, in March before a federal bankruptcy judge handed down a $7 million ruling against him.

When Street dropped from the race, two others joined: Street’s second in command, Deputy Treasurer Keith Rodenhuis, and Dave Lang, a South Orange County Community College District Trustee.

If no candidates win half the votes in June, the top two will face off in a November runoff election.

Whoever wins will fill a job with a checkered history.

Former county treasurer Robert Citron’s heavily leveraged investment strategies drove the county into bankruptcy in 1994. Former treasurer John Moorlach, who is now a county supervisor, was one of the first to warn of the county’s looming bankruptcy and was elected after his predictions came true.

Moorlach’s hand-picked successor was Street. But this year, Moorlach voted to strip Street of his authority to invest county funds after a federal judge found he breached his fiduciary duty five years ago when he attempted to build an empire instead of protecting the assets of a trust he was hired to liquidate.

Concerned about the fiduciary breaches that came to light in the case, as well as losses in the county’s investment pools, Freidenrich joined the race long before Street decided against pursuing a second term.

"We need a treasurer who has an unblemished record," she said.

Freidenrich was an audit manager at Deloitte and Touche and was the controller for the McDonnell Douglas Corp. Travel Co. before she was appointed as Huntington Beach’s treasurer in 1996.

The county’s 1994 bankruptcy spurred her into public office, she says, because she realized that government needed competent, qualified finance professionals. She was elected to the job later in 1996 and has been reelected three more times.

In Huntington Beach, she touts a list of achievements, including implementing pre-payment of pension expenses for a $400,000 annual savings, electronic payment and billing for utility customers and saving more than $15 million since 1996 through audits and tighter controls of cash.

Freidenrich was Moorlach’s first pick for county treasurer in 2006. But she dropped from the race after learning Street was mounting a campaign. Moorlach, who says he "was not informed properly" of Street’s past at the time, is one of Freidenrich’s strongest supporters today.

Street’s top aide, Deputy Treasurer Keith Rodenhuis, joined the race after his boss dropped out. While he had a great working relationship with Street, Rodenhuis rejects the accusations that his candidacy would be a continuation of Street’s and says he would not hire Street if he’s elected.

"The problems Chriss has had are outside the treasurer’s office, and my integrity has never been called into question," Rodenhuis said. "If I’m elected treasurer, it will be a clean slate and a fresh start."

He also had to defend his qualifications in April, when Freidenrich mounted a court challenge saying he was not a senior financial manager in the treasurer’s office, didn’t meet other qualifications to run and should not be given the ballot designation of deputy treasurer. A superior court judge ruled in Rodenhuis’ favor.

Rodenhuis, 31, went to work for the Orange County Republican Party after he graduated from Calvin College in 2000 with a degree in political science and history.

He also worked for Morgan Stanley as a stock broker and State Farm Financial Services before going to Whittier Law School law school. He graduated in 2006 and has been working at the treasurer’s office since February 2007.

There, he is Street’s alternate on the Orange County Employees Retirement System board, which oversees a $7.5 billion investment pool.

Patrick Desmond, 63, an employee in the county assessor’s office, ran unsuccessfully against Street in 2006. He says even though the candidates are different this election season, the political landscape hasn’t changed much.

"The two major players are still the same: Moorlach and Street," Desmond said.

Desmond decided to run against Street in 2006 at the urging of his coworkers, who were concerned about news reports about Street’s dealings as trustee of the bankrupt Fruehauf Trailer Corp.

Desmond took out a loan against his house to pay for his ballot statement back then. He’s running an even leaner campaign this time around.

"When Moorlach talks about how he felt betrayed, well he betrayed us," Desmond said. "He knew about the lawsuit. I read the paper and I knew about it."

(The Register first wrote about allegations against Street in the bankruptcy case in March 2006. A month later, Moorlach dismissed the claims as the work of a disgruntled subordinate, according to Orange County Register stories. Moorlach, who was running for county supervisor at the time, maintains that Street assured him the allegations were unfounded.)

Desmond earned a masters degree in theology from Notre Dame University and became a certified public accountant in the 1980s, although his license is now lapsed.

He has been a controller at a car dealership to a quality controller for a software company. He’s been at the county for eight years and has taught night courses in managerial accounting at Fullerton College for more than a decade.

He has 10 children, including three he and his wife adopted. He can read and write in five languages, including English. He believes his experience with the county gives him a good foundation for heading the department, and he’s confident he can quickly learn what is needed.

David Lang, 56, is the only candidate in the race who’s not a government employee. He’s a successful co-owner of a CPA firm in Irvine he started in 1985. Lang has been a CPA for more than 33 years, and worked for two of the world’s largest accounting and auditing firms before going into practice on his own.

He’s also served as an elected trustee of the South Orange County Community College District for 13 years. He first became involved in the district through serving on the board of the county’s academic decathalon association, and later as the president of the Irvine Valley College Foundation. He’s also treasurer for the Jewish Community Foundation of Orange County, overseeing a $25 million budget.

"I have the right set of skills to bring to this office," said Lang, describing himself as a conservative candidate who can offer a fresh perspective.

"A concern I have is that the office shouldn’t be controlled by the Board of Supervisors," Lang continued, a jab at the close relationship between Moorlach and Freidenrich. "We also need to avoid anything that smacks of cronyism."

Contact the writer: 714-796-7813 or jmuir@ocregister.com

Brian Calle: sizing up races for OC supervisor, treasurer

May 30, 2010

Election Day is nearly upon us, and Orange County voters will have the opportunity to elect a number of new lawmakers to fill positions that can affect the economic well-being of the state and county.

There are two key local races that I would keep an eye on: The Board of Supervisors, Fourth District, and OC Treasurer-Tax Collector. There are plenty of important races in Orange County June 8, but, from my viewpoint, these two are the most important, with the exception of the sheriff’s race. (See page 2 for the Register’s editorial endorsement in that race.)

To many, including my colleagues on the Register’s Editorial Board, the Fourth District supervisor race is pivotal for the county because of its implications for addressing unfunded county employee pension obligations and for reforming that unsustainable system. Chris Norby left the job when he was elected to the state Assembly in January.

There are three serious candidates – meaning they have a shot at being elected. All three serve on city councils in the Fourth District: Lorri Galloway and Harry Sidhu in Anaheim and Shawn Nelson in Fullerton. Sidhu and Galloway have recently moved into the district so they qualify to run for the spot.

As my colleague Steve Greenhut outlined in a recent column on the race, this election should be viewed as a referendum on the most daunting and addressable issues facing the county today: public employee pensions and the influence of county employee unions. Current pension benefits need to be aggressively addressed and remedied, and we need a new supervisor who has the intestinal fortitude for the job. Shawn Nelson is the strongest of the three candidates on this issue.

There is no question that Ms. Galloway’s allegiances reside with the unions. As Greenhut stated: "[S]he is a full-on union candidate who routinely shows up at union pickets and protests." Galloway on her website offers a narrow view of the priorities of the county and blames pension problems on the subprime mortgage crisis which has made funding them more difficult, not the overly generous benefits. She wants to "control spending" for the county but make "every effort to preserve jobs," aka government jobs. While some people find her upbeat approach to governance refreshing, her viewpoints on the board would be a setback for reform.

Sidhu has been good councilman in Anaheim, evidenced by his support for such things as a city charter amendment that banned abuses of eminent domain and his recent backing for a similar charter amendment to ban red-light cameras in the city.

Sidhu, though, is weak on pension reform and union-related issues. When responding to a Register questionnaire, on pension reform Sidhu offered platitudes and safe political answers, such as, stating he would "work with the other supervisors in continuing to focus on solutions that bring down the cost of these unfunded liabilities and protect our taxpayers." That sounds correct but Sidhu is backed by the Association of Orange County Deputy Sheriffs – deputies union. And he has already said he would not support the supervisors’ appeal on their lawsuit challenging the constitutionality of a 2001 board decision granting some deputies retroactive pension increases. Opposing the lawsuit alone calls question to his commitment on the pension issue.

Nelson, in contrast with his opponents, has a clearly stated, principled position and plan for dealing with public employee pensions and union influence. He says, "Pension reform and elimination of unfunded pension liabilities" would be his No. 1 priority in office. He refuses to take union campaign money and has not even met with the union for endorsement because he believes itcompromises the integrity of the office he seeks. His commitment to pursuing bold pension reforms includes changing current pensions "from defined-benefit to defined-contribution to eliminate unfunded liabilities and to bring public employees into line with pension plans in the private sector." And he supports continuing the critical retroactive pension spike lawsuit.

What concerns me most about Nelson, aside from his sometimes-intense and gruff governance style, is a council vote he cast Tuesday night, opposing a 760-home private development project in West Coyote Hills that would have created many new jobs. He contends that the devil was in the details, and the developers pandered, trying to serve too many masters, by adding a number of civic work projects to the development, like an interpretive center, to pacify stakeholders in the community. Still, he made the wrong vote.

Nelson is not perfect on all of the issues, no politician is, but he is good on a few – namely, redevelopment, eminent domain and, most importantly, pensions. Some see him as a one-issue candidate, but if there is one county issue most important to deal with, it is unfunded pension liabilities, bar none.

Treasurer-Tax Collector

Although the supervisorial race gets top billing, the contest to become county Treasurer-Tax Collector also is crucial. A job often overlooked until something goes wrong, the treasurer is the fiduciary watchdog for the county’s $7 billion investment portfolio. The treasurer is responsible for investing county funds, administering the budgets and collecting taxes.

Robert Citron, who served as treasurer-tax collector for 24 years, utilized risky investing strategies and breached his fiduciary duty, which cost the county investment pool $2 billion to $3 billion and forced the county in 1994 to file the nation’s largest municipal bankruptcy. As such, voters should pay closer attention to the office considering the role the treasurer plays in the county’s economic health.

There also are three credible candidates for treasurer-tax collector: Orange County Deputy Treasurer Keith Rodenhuis; Shari Freidenrich, the elected treasurer of Huntington Beach; and South Orange County Community College District Trustee David Lang.

Rodenhuis is deputy under outgoing Treasurer-Tax Collector Chriss Street. Street decided not to run for reelection after a federal judge in a bankruptcy case unrelated to Street’s role as treasurer ruled he breached his fiduciary responsibilities while managing a private trust he was hired to liquidate.

Opponents have tried to paint Rodenhuis as a continuation of Street’s administration, but that would not be a bad thing. As treasurer, Street has done a good job. The concerns raised about him were in his private-sector dealings some five years ago. Rodenhuis shares in the successes of the treasurer’s office and demonstrates a commanding knowledge of the inner workings of the position. What I like most is that he is energetic and brimming with ideas as to how to improve the office.

Supervisor John Moorlach, a former treasurer, has put his considerable backing behind Freidenrich. Since being elected treasurer in Huntington Beach, Freidenrich has developed a noteworthy track record, including automating payments for utility users, instituting tighter controls over cash management and a reform that has saved the city $400,000 on pension payments. She is well-versed in the investment of public funds and has a commanding, conservative approach to cash management and budgetary issues.

One concern about Freidenrich is her close ties to Moorlach. A working relationship between the supervisors and the treasurer is beneficial, but it is imperative that the treasurer-tax collector have autonomy, hence why the position is directly elected by county voters and not appointed by the Board of Supervisors. Freidenrich has maintained that autonomy and independent approach in Huntington Beach and I would expect no less if she were elected countywide.

David Lang has been a certified public accountant for more than 33 years and is the only candidate in the race currently employed in the private sector. He is the owner of a CPA firm based in Irvine and has served 14 years on the South OrangeCounty Community College District Board of Trustees. In that role, Lang has been fiscally conservative in overseeing the district’s budget and ensuring a healthy reserve fund. While Lang already is an elected official, he would come to the treasurer’s job as somewhat of an outsider because he is not as closely involved in the politics surrounding the offic

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