MOORLACH UPDATE — LA-SB Patch — June 21, 2011

Since assuming this office, I have been active with the County’s Local Agency Formation Commission.  I assisted the leadership of Rossmoor as much as possible in its efforts to pursue cityhood.  During that time period, I carefully guarded the unincorporated corner on Katella and Los Alamitos Boulevard.  The city of Los Alamitos has not actively pursued annexing this corner for more than fifty years; however, I no longer have a good reason to guard that corner.  I continually hear the arguments from the residents of Rossmoor to keep this corner unincorporated, but Rossmoor doesn’t receive the sales tax revenues, the County does.  From an orderly and organized standpoint, it makes sense for that fourth corner to be within the boundaries of Los Alamitos.  Rossmoor had its opportunity to become a city, but residents did not desire to incorporate.  At this time, it’s appropriate to move forward and it’s great to see the city council of Los Alamitos make some progress in this direction.  The Los Alamitos-Seal Beach provides a good summary of recent events.

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Los Alamitos to Explore Annexation of Rossmoor Commercial Center

The move is likely to be viewed as hostile by Rossmoor officials.

After spirited debate and a political game of musical chairs, The Los Alamitos City Council voted to create a subcommittee to explore the annexation of Rossmoor’s only commercial property at the corner of Los Alamitos Boulevard and Katella Avenue.

Any step toward annexing the Rossmoor Village shopping center has been seen as an act of aggression by a majority of Rossmoor residents, who have come out against pressures to merge with Los Alamitos. However, Los Alamitos officials have said that they have long wanted that piece of Rossmoor, and County Supervisor John Moorlach has indicated support for such a move.

The council voted 3-1-1 to name Mayor Pro Tem Troy Edgar and Councilwoman Marilynn Poe to an annexation Ad Hoc Subcommittee. After first nominating Mayor Kenneth Stephens and Councilman Warren Kusumoto to the subcommittee, then asking to serve on the subcommittee herself after the mayor declined, Councilwoman Geri Graham-Mejia voted against the nominations of Poe and Edgar. After advocating for Mejia and arguing that Poe has too many battle scars in her recent dealings with Rossmoor, Kusumoto abstained from the vote.

“To create this kind of adversarial environment is unwise,” said Graham-Mejia.

Since Poe and Edgar attended a Rossmoor community meeting several months ago to talk about the city’s intentions toward Rossmoor, relations between officials in the two communities have been tense.

“It seems like they are adding fuel to the fire instead of choosing diplomacy,” said Michael Maynard, newly appointed member of the Rossmoor Community Services District Board of Directors. “The subcommittee seems very predatory. Annexing our sole commercial segment is hostile, I feel.”

The commercial property is home to the several businesses such as the Original Fish Company, Boot Barn and the Rossmoor Car Wash. According to county officials, it generates roughly $250,000 a year in sales tax revenue.

The formation of the annexation subcommittee is not a step toward annexing all of Rossmoor nor is it part of an effort to undermine Rossmoor, said Poe.

“It has absolutely nothing to do with trying to take a source of income away from the Rossmoor community,” she said.

The Local Agency Formation Commission designated Rossmoor as being within the sphere of Los Alamitos’ influence even though the city didn’t ask for that, Poe said.

“We are interested in annexing that corner, and that’s it,” she said.

After the residents voted not to incorporate into cityhood in 2008, LAFCO placed Rossmoor in the Los Alamitos sphere of influence seemingly in response, said Edgar. Last week, Rossmoor officials voted to petition LAFCO for latent powers to oversee policing, trash hauling and animal control services. It was a move designed, in part, to short-circuit the pressure toward annexation. However, the county agency could deny the petition and, once again, ratchet up the pressure to merge the two communities, added Edgar. Los Alamitos should be prepared for that possibility, he said.

Located just off the San Gabriel Freeway (605), the shopping center is the final piece to a downtown commercial zone in Los Alamitos. Obtaining authority over the property would be a major step toward the goal of creating a unified downtown commercial center that serves as a draw for businesses and shoppers and a source of tax revenue, city officials have said. As someone elected to look out for the best interests of Los Alamitos, Edgar said he doesn’t want to be known as the council that missed out on the opportunity to annex the commercial property.

Graham-Mejia has said that Los Alamitos should not play a role in bullying Rossmoor toward annexation. Instead the issue should go to a vote of the Los Alamitos and Rossmoor residents, she said. In January community meeting in Rossmoor, Graham-Mejia accused Poe and Edgar of double-dealing with Rossmoor in lobbying the county for the commercial property behind closed doors. Because of that, Edgar said Monday night that he could not support Graham-Mejia’s bid to serve on the Ad Hoc Subcommittee.

“So it’s a punishment? That is what it is,” asked Graham-Mejia.

“I think you need to take responsibility for your actions,” replied Edgar.

Graham-Mejia concluded her remarks with a warning to Rossmoor officials. “Rossmoor, I’ll tell you to keep your eyes open,” she said.

Los Alamitos resident Richard Murphy praised the council for creating the subcommittee.

“This is the type of governance, I am looking for from you guys – forward thinking, taking the bull by the horns,” he said.

Far from an act of aggression such as sending in the Calvary, the council is merely preparing for an eventuality, said Murphy.

Rossmoor’s Maynard disagreed.

“While you guys aren’t sending in the Calvary, you are, in a sense, sending the first shot over the bow,” he said.

FIVE-YEAR LOOK BACKS

1996

June 19

With the bankruptcy still fresh, Ken Kohn of Bloomberg Business News did a piece on a recurring story, titled “Managers of rogue traders share blame for huge losses.”  Here are the opening three paragraphs, a middle section, and the closer to give you a flavor of the topic:

                In case after case, investigations of traders who lost hundreds of millions of dollars found their managers were loathe to examine their trading as long as they were making money.

                In the latest such case, Sumitomo Corp. last week disclosed that its copper trader, Yasuo Hamanaka, lost $1.8 billion during a decade of buying and selling copper.  The Japanese trading firm said he falsified records to hide his losses from his bosses.

Regulators, who have picked up the pieces from similar disasters – from Nick Leeson’s $1.4 billion of losses for Barings PLC to Robert Citron’s $1.7 billion of losses for Orange County, Calif. – say the fallout generally follows a familiar pattern:  The institution blames a lone trader.  As more evidence develops, it becomes clear the losses stem as much from bosses who were willing to overlook trading risks as from the deceptions of an individual.

Regulators often say they don’t believe rogue traders acted alone.  Executives are responsible for policing their traders and for knowing how they make their money.

“I don’t believe (Hamanaka) could have done it all by himself,” said John Moorlach, the treasurer for Orange County, Calif.

Moorlach has experience cleaning up messes.  Orange County filed for bankruptcy in December 1994 after his predecessor, Citron, lost $1.7 billion on risky, highly leveraged investments on the direction of interest rates.

Orange County supervisors ignored warnings by the county auditor about the investments, which reaped the county above-average returns for years while interest rates were falling.  The officials, who were required by law to help oversee the county’s finances, said they didn’t understand Citron’s investment strategy or the risks involved.

When things are going well, officials have little incentive to crack down on a trader who is stretching the limits.

In its report on Barings in July, the Bank of England said Leeson was to blame for the catastrophe, but only because he took advantage of “a failure of management and other internal controls of the most basic kind.”

2006

One of the nice moments in defeating my election opponent was some of the kind editorials of congratulations that appeared.  The fact that I beat a candidate that was so heavily funded by public employee unions was a cause for statewide rejoicing.  Jon Coupal, attorney and president of the Howard Jarvis Taxpayers Association, had this submission printed in numerous newspapers.  It was titled “Taxpayer Champion Prevails Over Union Dollars.”  The column below came from the Metropolitan News Enterprise.  Thank you, Mr. Coupal, very much. 

Justifiably, taxpayers rejoiced over last week’s defeat of statewide measures Propositions 81 and 82. Both were dangerous, silly proposals that would have resulted in more debt and higher taxes. But perhaps the most significant outcome of California’s primary comes from a local race in Orange County. There, Orange County Treasurer John Moorlach prevailed in his bid to join the Board of Supervisors.

Moorlach’s history in the OC is reminiscent of the story of Cassandra, the mythological princess who rejected the god Apollo’s amorous advances, and was, in turn, cursed by him with the gift to foretell catastrophic events, while her words were perceived as lies by all who heard her.

More than ten years ago, Moorlach accurately predicted the Orange County bankruptcy before it was generally known that the county treasurer, Robert Citron, was using illegal investment schemes and relying on a psychic for advice in managing county funds. Because he was a candidate for the treasurer’s office, Moorlach’s words were generally dismissed as campaign puffery by the political establishment and the media, and were not given the gravity they deserved by some prominent taxpayer organizations.

Shortly thereafter, the county was forced into BK and it will not be until the year 2016 that all the bills will be paid. The result has been higher costs and fewer services to taxpayers. However, the situation could have been worse. Moorlach was appointed county treasurer to replace the criminal Citron, where he made the best of an extremely difficult situation. Subsequently, he was reelected three times.

But Moorlach has not been content to rest on his laurels. He has continued to speak out when he has believed that county finances and taxpayers are in jeopardy. Recently, he challenged the sweetheart pension deal with county employees that the Board of Supervisors approved, warning that county finances resembled a "house of cards," and that future board members will be forced to clean up the mess left by those currently in charge. Among other problems, the agreement with the unions allowed retirement with generous benefits at age 55, instead of the previous age 62, putting the whole plan actuarially out of whack. The county faces billions of dollars in unfunded pension liabilities.

Never one to shrink from a challenge, and at great personal sacrifice, Moorlach made the decision to run for a soon-to-be-vacant seat on the board, a position that pays $30,000 a year less than his current salary.

No sooner had he announced for office than the government employee unions began playing the role of Apollo to Moorlach’s Cassandra. So anxious were the government employee union leaders to discredit Moorlach’s prediction of dire consequence resulting from the overly generous union contract, that the Orange County Employees Association dunned its members an additional $10 each to pay for a misleading campaign to attack Moorlach and support his opposition.

The unions’ choice was Stanton City Councilman Dave Shawver, whose Council colleagues had censured him for bad behavior. A former Stanton mayor said Shawver interrupts, calls people names, pouts, and fakes being asleep. Apparently, the unions assumed that, if elected, he would feign sleep when next the Board of Supervisors considered the impact on county finances of increasing the already lavish benefits provided public employees.

So, while Moorlach continued to defend the interests of county taxpayers, a union boss called Moorlach, "the biggest threat in the county to employees’ personal financial security," and the unions spent hundreds of thousands of dollars in their effort to bar Moorlach from the board.

Well, the results are in and voters in Orange County are smarter than the unions are rich. Nearly 70 percent saw through the unions’ smokescreen and elevated a taxpayer champion to an office where he can promote sound fiscal policy.

Moorlach’s election bodes well for Orange County and is a lesson to candidates throughout the state that, armed with the truth, they can take on the public employee unions and win.

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