MOORLACH UPDATE — Voice of OC — March 23, 2012

Well, we voted.  The Commission to End Homelessness voted to encourage the Orange County Transportation Authority (OCTA) to give the County and the City of Santa Ana more time to address the city’s concerns.  The original recommendation was simply to encourage the County to purchase the Santa Ana Transit Station.  In an effort to provide good dialogue, I did reach out to Acting City Manager Paul Walters earlier this week to inform him of the agenda item at this morning’s meeting (Paul is also a member of the Commission).   You can see from the Voice of OC what happened after the heads up.  For the record, I abstained on the vote because I am on the Board of Supervisors and the Board of OCTA.

Homelessness Panel Set to Vote on Santa Ana Bus Station Plan

The Orange County Commission to End Homelessness is scheduled to vote Friday on whether to urge the Board of Supervisors to use an empty bus station in the Santa Ana civic center as a year-round homeless shelter.

The proposal faces potential opposition from Santa Ana businesses.

Santa Ana acting City Manager Paul Walters, who sits on the homeless commission, sent emails to city business leaders this week urging them to attend the meeting. In an interview Thursday, he said the homeless issue and possible use of the bus station, has to be discussed by the entire community.

“How do you get to making a decision without talking to the people who are going to be affected, both pro and con?” he asked. “That’s what good government is about.”

However, it is clear from the emails that Walters and others in Santa Ana want people to turn out against the plan, which has been advocated by John Moorlach, chairman of the Orange County Board of Supervisors.

Vicky Baxter, executive director of Santa Ana’s property tax-funded Downtown Inc., sent out emails that said, in part:

Last night I received this email from the City Manager and wanted to make sure that several prominent Santa Ana residents were aware of this upcoming meeting. … I ask that you come to the meeting and fill out a card to speak about the potential negative impact and the fact that the residents have not been consulted on what this potential use would mean to this corridor. Please forward this on to residents that may be effected by such a center.

She attached part of an email from Walters that said:

Vicky this is really important can you get some of your downtown business owners to turn out to stop the transit center from being recommended for homeless at the transit center on Santa Ana Blvd.

Walters said the full context of his emails made it clear that he felt it was important for all sides of the issue to express themselves. “They need to say it in their own words,” he said.

The only dependable sources of emergency shelter for those who suddenly find themselves homeless or who do not fit into programs run by county charities are the winter shelters at the National Guard armories in Santa Ana and Fullerton. For the past two years, those shelters have been threatened with early closure as federal funds run short.



March 20


The litigation front always provided for some fun stories.  Leslie Berkman of The Bond Buyer provided one in “S&P’s Try to Block Orange County Suit Is Scuttled by Judge.”  I can still hear a version of the OC Register reporter’s question in my head, “Do you have someone comparable to S&P to agree with your concerns, because they are comfortable with Citron’s investment strategy.”  Right.  I’m going to find a firm with the size and reputation of S&P to point out their “incompetence.”  Got it.  Not going to happen.  But, eventually the truth does come out.  Here is the opening and a few selected paragraphs:

                A federal court judge has scuttled an attempt by Standard & Poor’s to use the First Amendment as a shield against a $500 million lawsuit filed by Orange County, which is seeking to hold the rating agency partly responsible for its 1994 bankruptcy crisis.

                John Moorlach, the county’s treasurer, said rating agencies seldom have been sued because they claimed First Amendment privileges.

                “You can’t shield incompetence with the First Amendment,” Moorlach said, adding that, “I think if Orange County is successful, it will make bond ratings much more credible.”

Few lawsuits have been filed against rating agencies, said [Michael] Swartz, [a lawyer representing the county in the case,] and frequently the agencies have used the First Amendment as a defense.  He said he believes in most cases the rating agencies were investors rather than clients with whom the rating agencies had contractual obligations.

Bloomberg News also covered the story in “Standard & Poor’s Motion to Dismiss Orange County Suit Rejected.”  It was written by Tom Cahill.  My aggravation continued to show in these selected paragraphs:

                “They would probably have saved Orange County $1 billion if they had done the level of work that they claimed to be doing,” said John Moorlach, Orange County treasurer.  “You can’t shield incompetence with the First Amendment.  It’s sloppy.”

                Moorlach said the county has continued to use S&P to rate its debt because there were few alternatives.

                He also said S&P and other rating companies have changed their practices in the wake of the county’s bankruptcy.  Now S&P, Moody’s Investors Service and Fitch Investors Services include scrutiny of investment pools and management, in addition to simple demographic trends, in credit ratings.

                “This whole episode is a wake up call to the ratings agencies that you just can’t be sloppy,” Moorlach said.  “This is going to make ratings much more useful.”


Jean O. Pasco of the LA Times provided an update on the recapture case in “Decision Time for County Assessor—Law:  Official has a week to tell judge if he will seek to appeal ruling that could change property tax reassessments.”  The case was a circus and provided plenty of drama.  Here’s a sampling of the piece:

[Orange County Assessor Webster J.] Guillory has two options in the controversial case.  One is to file what is called an extraordinary writ with the 4th District Court of Appeal, asking justices to overrule [Judge John M.] Watson’s decision so far, or wait until Watson rules on whether to expand the case to class-action status and then appeal.

Watson’s ruling was the first court test of the method anywhere in California. "As your honor knows, your ruling is a novel one," [Guillory’s attorney, Robert D.] Luskin said Tuesday, noting that every county uses the practice.

"I see my ruling as a novel one because it’s the only one," Watson said. "No matter what I decided, it would have been novel."

In January, the Board of Supervisors sided with the judge’s interpretation of Proposition 13 and denounced the recapturing practice, but gave Guillory the authority to hire his own attorney to pursue an appeal. The board also ordered Guillory, Treasurer-Tax Collector John M.W. Moorlach and Sundstrom to notify taxpayers whose property assessments increased more than 2% in the past four years that they might be affected by Watson’s ruling–notification that county attorneys said Tuesday hasn’t been done.


Moorlach, who originally was sued with Guillory and the county, was brought back into the case Tuesday with Watson’s approval. Moorlach said he hasn’t been able to notify taxpayers of the ruling’s impact because Guillory hasn’t identified them.

Supervisor Todd Spitzer said board members were told in January that it would take about six weeks to prepare a list of taxpayers whose assessments rose above 2% in a year for reasons other than sales or new construction. The board expects those taxpayers to be notified, he said.

But Guillory said Tuesday that by law, he cannot notify taxpayers of potential refunds. Sundstrom said Guillory is preparing a list of properties whose assessments rose more than 2% a year, and then Sundstrom will determine the amount of taxes potentially overpaid. Also, the law requires refund notifications to be sent to whoever paid the tax, not necessarily the owner of record, Sundstrom said. That’s where Moorlach comes in, because his office must determine who actually paid the bills.

The process of identifying affected taxpayers could take months, Sundstrom said, and cost the county as much as $2 million.


“Rossmoor moves toward incorporation – Officials have filed paperwork to circulate a petition for vote on cityhood” was the headline for the OC Register’s Scott Martindale’s update.

                The petition must be signed by 1,837 registered voters – equivalent to 25 percent of Rossmoor voters – before the issue can go to a popular vote.

                Orange County Supervisor John Moorlach, meanwhile, has proposed the creation of a “supercity” combining Rossmoor, Los Alamitos, Seal Beach and unincorporated Sunset Beach.

March 21


Addressing the County’s unfunded retiree medical liability started shortly after I was elected.  Modifications to the plans were eventually approved by all of the negotiating units, some before I was installed and some after.  The agreed to changes would reduce the liability by nearly $1 billion.  Five years later, the status of this important reform is still being contested in the courts.  The first piece is by Peggy Lowe of the OC Register, titled “County’s retiree medical debt reduced – But retirees are ‘irked’ benefits have been cut.”  Here is the beginning of the article to give you the flavor:

Orange County’s $1.4 billion debt in unfunded retiree medical benefits has been reduced to $598 million since employee unions made significant concessions and the county changed how it funds the plans.

All the unions – with the exception of the Association of Orange County Deputy Sheriffs – have agreed to changes that caused a "major reduction" in the county’s liability, Tom Beckett, the county’s public finance manager, said today.

But the county’s 10,000 retired workers are angry about the changes and are considering filing a lawsuit designed to preserve benefits promised at their retirement dates.

"The retirees are irked that their benefits were taken," said Doug Storm, a retired sheriff’s department employee.

The board last June began addressing the spiraling costs of medical benefits for retired county workers, creating a trust fund and abandoning a pay-as-you-go method for funding the plans. Local governments across California are wrestling with how to pay the health costs for workers who are retiring earlier and are in better health. The state may have up to $70 billion in unfunded liabilities for its retired employees, according to one study.

Orange County’s unions agreed to a restructuring of the benefits, including splitting the pool of current and retired employees, a dramatic change that means current workers won’t be funding the retirees’ benefits. In return, the county agreed to help fund the trust with 3.2 percent of its annual payroll, which comes out to more than $30 million.

"We’ve made a big step. Everybody’s feeling some pain," said Supervisor John Moorlach. "Everyone is stepping up to the plate – almost."

That’s a reference to the deputy sheriffs union, whose leaders have been publicly bickering with Moorlach. The deputy sheriffs group is currently negotiating its contract with the county and Moorlach wants an audit of its health care fund, which the union says it’s already done. Moorlach said he also found it interesting that the deputy’s union, which has 1,800-members, represents 40 percent of the county’s total liability in retiree medical costs.

The second piece is by Mike Anton of the LA Times and it was titled “O.C. reduces projected healthcare deficit —  Concessions on retiree coverage by labor groups have cut about $800 million from a projected $1.4-billion shortfall in future costs.”  Here are a few selected paragraphs:

Rising medical costs and longer life spans created the huge gap over the next 30 years, and workers agreed to reduced medical coverage in retirement in exchange for pay raises now as a way to close the gap.

"We’ve dealt with it," Supervisor John Moorlach said. "We still have an unfunded liability, but we’re working" to reduce it further.

Under the restructured plan, the biggest savings will come from splitting active and retired employees into separate insurance risk pools.

The move will reduce the county’s cost to cover current workers but will require retirees to pay higher premiums.

The compromise angered current retirees on fixed incomes, who fear they may not be able to afford the insurance.

March 23


Alicia Robinson of the Daily Pilot provided the background on what would be a multi-year project.  In fact, thanks to a number of various reasons, many beyond our control, some of the project components are still in progress.  The title of the article wasCounty leader moves ahead on redevelopment – O.C. supervisors are set to vote on $23 million for 10 final projects in Santa Ana Heights.”  The influence that former Supervisor, and now Assemblyman, Chris Norby had on Governor Brown should not be understated.  Assemblyman Norby has wanted to shut down redevelopment agencies for as long as I can remember.  Consequently, it was quite fortuitous to get the process of shutting down the Santa Ana Heights redevelopment agency five years ago.

The last three months have been a blur for redevelopment agencies.  The California Supreme Court ruled that they were to be closed down just a couple of days after Christmas.  The County Board of Supervisors is the successor agency and we completed our appointments to the oversight committees on Tuesday, March 20.  With all of the commotion, there really is no clear understanding of what happens next.  This topic, and its hectic pace, should be a major inflection point in the history of this effort to improve what were deemed to be blighted areas of older cities.

Orange County Supervisor John Moorlach says he has colleagues’ support to finance a $23.7-million list of 10 projects in Santa Ana Heights.

In February, Moorlach and his staff put out a timeline to finish projects that have been stuck in the planning stages for years. Now he’s coming to the county board of supervisors for the money, which would come out of Santa Ana Heights’ $40-million redevelopment fund.

Once the projects are done, the redevelopment agency’s debts would be paid off and the agency shut down.

The city of Newport Beach, which annexed East Santa Ana Heights in 2003 and is looking to bring in the western half, still will foot some of the bill for the area’s new fire station. City Manager Homer Bludau said that’s fine because a community room and a training facility to serve the city were added to the project, which also required a slightly larger piece of land.

The project went from an original $4.1-million estimate to $11 million. If supervisors agree to Moorlach’s plan the redevelopment fund will cover $9.8 million of the total fire station costs.

"I am very encouraged by what Supervisor Moorlach is proposing," Bludau said. "I think it’s something that the City Council will feel very good about."

Moorlach said he had to do the most schmoozing with Supervisor Chris Norby, who has said the county should shut all its redevelopment agencies down, but he thinks he’ll have the board’s support for the Santa Ana Heights projects.

Residents are excited to see the projects poised to move after being stalled for, in some cases, as long as 10 years, said Barbara Venezia, who chairs an advisory committee that represents residents.

Venezia said she isn’t concerned about the prospect of the redevelopment agency shutting down because she expects the western part of the neighborhood to be annexed to Newport Beach. Officials will take up the annexation debate in May.

"I think that at this point we’ve worked very hard. And if we can get these projects finished and the agency winds down, then we’re part of the city of Newport Beach," Venezia, a former City Council candidate, said. "When there are things and issues that our community needs, we go to our city."

David Reyes of the LA Times took on the topic of Veolia in OCTA sticks with firm despite complaints – Company contracted to transport disabled has made only ‘incremental’ improvements. But the contract is under scrutiny.”  Veolia was a classic case of strong lobbying, under-bidding, causing the contractor to provide poor delivery on service and indigestion on its losses, thanks to what its sales department had promised.  The contract was approved before I was elected to the position of Supervisor.  Let’s just say that I was not amused with what I had found myself walking into.

Despite a track record that includes leaving disabled bus riders stranded and being hours late for pickups, Orange County transportation planners will recommend that the county continue to pay $30 million a year to a private transit firm to bus disabled passengers.

Switching firms, officials believe, would cause too many disruptions. Recent scheduling and dispatching changes have improved service by Oak Brook, Ill.-based Veolia Transportation, but only "incrementally," said Erin Rogers, Orange County Transportation Authority manager of transportation services.

Rogers told an OCTA committee Thursday that Veolia’s on-time performance improved from 89% to 91%, but still failed to reach the 94% level the contract called for.

"Veolia has put in place a number of strategies for scheduling and dispatching," Rogers said, adding that those strategies had helped Veolia’s performance.

The committee voted 3 to 1 to recommend that the full OCTA board keep Veolia and continue scrutinizing performance for 90 days. It’s the firm’s second evaluation since taking over the contract after winning the bid in July over Laidlaw Transportation.

Supervisor John Moorlach, who is on the committee and cast the dissenting vote, said he was fed up hearing about delays and complaints from disabled clients getting picked up late under OCTA’s Access program.

"We’re baby-sitting a vendor for another 90 days," Moorlach said. "Give me a break. We need to make incremental improvements on our own…. I can’t hold hands with vendors who can’t produce."

The committee’s recommendation goes to the full board Monday.

Although Veolia’s performance has not met standards, the firm is seeking more money, said Art Leahy, OCTA’s chief executive. He said Veolia was seeking additional funds because of higher costs. He didn’t have details on what those higher costs were, and Veolia could not be reached for comment.

Asking for more money could doom Veolia’s contract chances with board members such as Moorlach, said Greg Winterbottom, the committee’s chairman.

Winterbottom, who is disabled, said he voted for Veolia only because of recent support for the firm from the disabled community, including the Dayle McIntosh Center, an advocacy group.

They’re "helping 4,800 people a day, and you will always have people upset because it’s very difficult providing services to people with disabilities," he said. "But I think they’re going to be able to do as good a job as anybody can at this point."

Drivers have been late with pickups and hazy on destinations, sometimes arriving an hour late or longer, prompting numerous complaints from riders who have missed appointments or been left waiting at hospitals, medical centers and shopping plazas.

Deb Vanderhulst, who is disabled, said she rode in an Access bus this week and the driver kept looking down at the floor. "He kept hitting curbs and had cars honking at him. He couldn’t read a map." Veolia officials have told OCTA that they failed to hire enough bus drivers and had problems training them, and experienced scheduling difficulty because of new software.

The bus company stressed the large size of the operation and the difficulty in managing a program that picks up nearly 5,000 riders daily, and dispatches more than 230 buses in an urban area with heavy traffic patterns.

Several drivers who were contacted said they had noticed positive scheduling changes with Veolia, and attribute that, in part, to a new project director, the third in nine months.

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