MOORLACH UPDATE — CEO Candidate — May 1, 2013

This morning the agenda for next Tuesday’s Board meeting was released. With item number 53, it made public that the Board will be considering the appointment of long-time county employee and OC Waste & Recycling Director Michael Giancola for the position of County Executive Officer. The agenda item also provides the proposed compensation package that the Board’s Ad Hoc committee negotiated with Mr. Giancola. The OC Register obtained the news ahead of the announcement and it is the first story below.

The second piece is also from the OC Register, and it continues the speculation as to what I will be doing after my term concludes at the end of next year. I always thought my trajectory would be to the State level or back to the private sector. But, the prospect of working together with Mike Giancola over the next four years has an appeal to it.

The third and final piece is from the Dana Point Times and provides its version of the fire pit story (see MOORLACH UPDATE — Fire Rings — April 24, 2013).

Supervisors name CEO candidate

BY TONY SAAVEDRA

SANTA ANA – Orange County supervisors are poised to promote county Waste and Recycling Director Michael Giancola to chief executive officer in a move they hope will boost morale, board Chairman Shawn Nelson confirmed late Tuesday.

The board next week will consider a three-year contract with Giancola at a salary about $245,000, less than the $253,562 paid to predecessor Tom Mauk. After leading the county beginning in 2004, Mauk resigned in August amid criticism that his office botched a sexual-harassment investigation of former public works executive Carlos Bustamante.

County Supervisor Patricia Bates and Mike Giancola, director of OC Waste & Recycling, unveil an artist’s rendering of Prima Deshecha Landfill’s ‘green’ office headquarters.

Nelson said hiring Giancola could inspire the ranks.

"It’s a big morale booster for our people," Nelson said. "He’s been with the county for 34 years, and it shows starting at the bottom can pay off."

Giancola’s proposed contract is expected to be included in next week’s supervisors agenda, scheduled to be posted online at 10 a.m. Wednesday.

The board’s consideration of Giancola comes despite an accusation last year by a former human resources manager that he operated an illegal salvage operation. The accusation, made in a lawsuit by former manager Kathleen Tahilramani, was investigated by an independent party and debunked, Nelson said.

He added that Giancola will not get special perks or benefits, just "what an executive with 34 years" gets. The proposed contract allows him to go back to his old job if the board is unhappy with his performance within a certain period, Nelson said.

In March, the board tried to lure Santa Barbara County CEO Chandra Wallar to take the post, but the deal fell through when supervisors could not decide whether to pay her more than Mauk earned. Wallar withdrew from consideration but was later fired by her bosses in Santa Barbara County.

Supervisor John Moorlach said Giancola will get his vote.

"I am looking forward to many years of success under his leadership," Moorlach said.

Moorlach may run for county auditor

By MARTIN WISCKOL

Termed-out Orange County Supervisor John Moorlach may run for county auditor-controller next year – an effort that could be easier thanks to the auditor-controller he helped appoint earlier this month.

Supervisors voted 3-2 to appoint Jan Grimes to fill the vacant post until the 2014 election. She was the only one of four finalists who said she did not intend to seek election to the post next year, although she did not rule it out entirely.

Moorlach said his support for Grimes was based on her 34 years with the county, the job she’s done as interim auditor-controller for the past year, and the respect she has in the department.

And the likelihood that she would leave an incumbent-free field for Moorlach?

"I really tried to keep that out of the equation," said Moorlach, who was county treasurer from 1995 until being elected supervisor in 2006. "I’m really tickled with the job she’s done and if she was going to run, I don’t know that I’d want to get in the way of that."

Moorlach, a Republican, has also said he’s considering running for governor – a long shot, considering Democratic voters’ advantage statewide and Gov. Jerry Brown’s relatively healthy approval rating (46 percent approved and 31 percent disapproved in an April poll by the Public Policy Institute of California).

So the auditor-controller’s race may be more appealing.

"There’s no question the odds are better," he said.

The auditor-controller’s office is intended to promote effective government and expose malfeasance through audits and oversight.

Supervisors’ selection for office’s top job came down to Grimes and Eric Woolery, a certified public accountant, former member of the Orange County GOP’s governing Central Committee, and currently deputy director of administration for the Riverside County District Attorney’s Office.

Grimes initially wavered about whether to seek the appointment, then decided to apply.

Woolery has called the elected post his "dream job" and told supervisors he would definitely run for the seat if appointed. He said Tuesday he hasn’t decided whether he’ll run for the post next year, but was disappointed not to get the nod from supervisors.

"Here you have someone who’s publicly stated they didn’t want the post and now they appoint her to the post?" he said. "What kind of leadership is she going to provide?"

Supervisor Janet Nguyen, who favored Woolery, said both candidates were qualified and that Grimes "has done a phenomenal job" in the post. But she said Woolery’s desire to be an elected official and Grimes’ reluctance were key to deciding her vote.

Supervisor Pat Bates, who also voted for Woolery, expressed similar sentiments.

In tapping Grimes, the all-Republican Board of Supervisors added a Democrat to a countywide post for the second time in two years. The other was Lucille Lyon, who was appointed public guardian in July 2011 and then filled the slot of public administrator in February 2012, when embattled incumbent John Williams resigned.

While nonpartisan posts, the auditor-controller and the public administrator are the only countywide jobs held by Democrats.

"I’d rather have a smart Democrat than a dumb Republican," said Moorlach. He said he was not referring to Woolery, opining that "he would make a good candidate." Rather, he referred to the example of former Sheriff Mike Carona, serving a 66-month term in federal prison for public corruption, "who sullied the office."

Both Nguyen and Bates said they had no objections to Grimes because of her party affiliation.

"She’s highly qualified," Bates said. "Party affiliation did not have a role in my decision."

Staff writer Kimberly Pierceall contributed to this report.

County Opposes Universal Beach Fire Ban, Says Towns Should Hold the Decision

By Andrea Papagianis

The Orange County Board of Supervisors has formally opposed a proposed ban on beach fires citing a municipality’s right to decide what is best for area residents.

“With the geographical differences between each beach in Orange County, a universal ban would impose a one-size-fits-all approach,” said Orange County supervisor John Moorlach.

At a meeting last week, supervisors moved forward an item establishing a position on the South Coast Air Quality Management District’s (SCAQMD) suggestion to eliminate wood burning fires from Orange and Los Angeles County beaches.

Chairman Shawn Nelson (4th district) abstained voting on the measure, because he represents Orange County on the SCAQMD board. Nelson said he did want to take a position on the proposal before the air district’s June 7 public hearing. The board is expected to rule on that date.

Fire ring at Doheny State Beach. File Photo

Citing public health concerns, the city of Newport Beach sought to remove dozens of fire rings from two beaches, Corona del Mar and Balboa, last year. The measure received City Council approval and went before the California Coastal Commission for approval. Ultimately the commission tabled its decision and air-quality regulators became involved earlier this spring.

Throughout its OC Parks, the county maintains 11 fire rings, seven at Aliso Beach, and four at Capistrano Beach. According to a staff report, the county has not received complaints from residents living near either beach over the course of 10 years.

Supervisor Todd Spitzer called the fire rings “sacred” and said it wasn’t right to “strip residents and visitors of their freedom” to enjoy this beach activity that is part of “our American fabric, our California lifestyle.”

Spitzer voted with the rest of the board—aside from Nelson—but went on record to say he did not agree that this was a local issue.

“I am generally a local control kind of person, but in the case it would be like saying, ‘Locals you don’t have to fly the flag if you don’t want to,’” he said, adding “What came first, fire rings or homes?” Spitzer said those living close to beaches should generally understand what living near fire rings entails.

While Nelson did not vote, he said the removal of fire rings had “nothing to do with” the district’s overall air-quality plan to get in line with federally implemented standards. The district—which includes parts of Los Angeles, San Bernardino and Riverside counties and all of Orange County—plans to reach set air quality standards by 2015.

Nelson said the AQMD board was looking at possible substitutes to wood burning fires, including a natural or propane beach fire pilot program in Newport Beach. He added, there are parties here in Orange County ready to offer “creative solutions.”

“I hope Newport Beach will be provided some alternatives,” he said, “and if they are sincere that their desire is not to get certain undesirables off the beach, but to improve air quality, that they’ll embrace the opportunity.”

The air district’s governing board planned to discuss the issue at its meeting May 3, but postponed the public hearing until its June 7 meeting, scheduled for 9 a.m. at South Coast AQMD Headquarters, 21865 Copley Dr., Diamond Bar.

FIVE-YEAR LOOK BACKS

May 1

1998

R. Scott Moxley of the OC WEEKLY did a five-page piece, titled “Dornan Slayer? Lisa Hughes Stands Poised to Permanently Retire Bob Dornan and Give Loretta Sanchez the Race of Her Life,” that is, regretfully, no longer on the publication’s website. Here is a prescient snippet:

Her biggest priority “isn’t real sexy,” but, she says, it is screaming for attention: keeping the federal government fiscally honest by requiring it to adopt private-sector accounting standards. Such a “radical” reform, Hughes argues, would restrict the ability of congressional politicians to play financial games with government spending. Her ideas impress Orange County Treasurer John Moorlach, the man who single-handedly tried to prevent the county’s 1994 bankruptcy by exposing then-Treasurer Bob Citron’s high-risk investment strategies. “I think the world of Lisa,” Moorlach said.

The Society of American Business Editors and Writers (SABEW) came to town for a conference and I was asked to provide a welcoming speech. The May issue of The Business News Reporter was not very impressed with what I had to say. So much so, they didn’t even spell my name correctly. How’s that for premier journalistic quality? The mention was under the subtitle “Recalling The ‘Peter Pan Portfolio,’” a phrase used by Barron’s to describe the County Investment Pool in December of 1994. For a defense of Orange County business reporters during my Treasurer campaign in 1994, I would refer you to Susan Paterno’s expose in the American Journalism Review, “When the Watchdogs Don’t Bark,” which can be found at http://www.ajr.org/Article.asp?id=1486.

Less complimentary was the presentation by Orange County Treasurer John Morlach, who reminded those attending how poorly most business journalists fared in covering the 1995 financial debacle that befell the region.

Had business reporters bothered to look more closely, Mr. Morlach contended, they might have spotted the magical accounting that hid the county’s impending insolvency. He referred to it as Orange County’s “Peter Pan Portfolio.”

For the most part, business editors and reporters were “caught flatfooted on the biggest story to dominate headlines in California since World War II,” Mr. Morlach said. Ten months before the county’s financial collapse, Mr. Morlach campaigned to become treasurer on the premise that Orange County’s investments were a sham. His urgent warnings and the documentation he provided were repeatedly ignored by the local media, he told the group.

Mr. Morlach easily lost that election to the incumbent, who was later held responsible for the county’s financial crash. “Two major business dailies did not put business writers on my campaign,” Mr. Morlach noted. In an interview after his talk, Mr. Morlach identified the papers as The Orange County Register and The Los Angeles Times.

Mr. Morlach did single out two journalists who covered the story well once it came to light: He praised Earl Gottschalk Jr., who since retired, and Bloomberg’s David Evans, who was at the conference.

2003

Dennis Foley of the OC Register did a fun piece on volunteers that were a real asset to the Tax Collector in “Lodge gets stamp of approval – Supervisors honor volunteers, among them Placentia’s Sons of Norway, which raises funds with used postage.” I still display the Viking helmet they presented me here in my office. Here is the piece in full:

Wendy Zander spends hundreds of hours a year slicing canceled stamps from property-tax payment envelopes to help handicapped children in Norway.

She was among 37 individuals and three organizations honored Wednesday by county supervisors.

More than 24,000 volunteers last year donated more than 1 million hours worth $25 million to county programs, county officials said.

Amid the recognition for volunteers working to combat child abuse and drug and alcohol problems — and those working in parks, the county zoo and branch libraries — Zander and her Sons of Norway lodge members were, well, different.

For one thing, they broke the solemnity of the proceedings by announcing that the five supervisors had been voted by their Placentia lodge, Solbakken 6-64, “Viking for a day.”

Then they handed out horned helmets the supervisors wore for photos.

The service they provide the county is as unusual as the way they earn money for their charity.

For 13 years, the lodge members have gone through the envelopes taxpayers send in with their property tax payment, cutting off canceled postage stamps.

Turns out there’s quite an international market for U.S. postage stamps among collectors.

“Particularly anything with a U.S. flag on it,” Zander said.

The charity the group benefits is know as Tubfrim, and it sells the stamps and uses the proceeds to support programs for mentally disabled youths. “Tub” comes from tuberculosis, the disease the organization fought in its early years. “Frim” is Norwegian for stamp.

Last year, the charity reported proceeds of $350,000. And the Placentia lodge alone donated 10 percent of all stamps received from 400 Sons of Norway lodges in the United States, Canada and Norway.

“We sent 358 pounds of stamps last year,” Zander said Wednesday afternoon, sorting envelopes in her Santa Ana home.

“Our goal is to hit 400 pounds this year,” said her husband, Hal.

Numbers are important, and so is organization.

The lodge crews spent more than 750 hours sorting envelopes in Treasurer-Tax Collector John Moorlach‘s office last year. They worked in four-hour shifts during the busy two- week periods of the April and December property-tax payment deadlines.

Moorlach said he sent out about 950,000 tax bills with two payment coupons and envelopes each.

Some people pay by credit card or pay in one installment, but most mail in checks, an estimated 1.5 million.

Moorlach hires extra help to process them, and the envelopes then are dropped on the Norwegian contingent.

Occasionally, an unopened envelope sneaks through, which the volunteers catch, turning the tax payment over to the county.

“He calls us his last line of defense,” Wendy Zander said of Moorlach.

“Every once in a while, we find a check,” she said.

A larger lodge contingent gathers twice a month at someone’s home for “cutting parties.”

That’s where all those sorted envelopes, weeded of worthless metered mail and damaged stamps, are subjected to scissors and clippers.

“It’s just another way to get a bunch of Norwegians together to talk and eat, which is what we do best,” Wendy Zander, 65, said with a laugh.

Over salmon (Norwegian, of course) and lutefisk, two dozen folks chat about children, marriages, their health and local and world events, and hear from self-taught Norwegian history experts.

And they cut stamps; 1,500 hours’ worth last year.

Over the years, they’ve figured out that cramming an empty 3-pound Folger’s Special Roast coffee can full of clippings equals 2 pounds of stamps. And about 2,000 envelopes yield 1 pound of stamps.

The stamps are weighed, boxed and stored in garages and a rented shed awaiting the quarterly trip the Zanders make to drop them at the Norwegian Seamen’s Church in San Pedro.

From there, they are shipped to Norway on a Norwegian freighter.

“It’s been a great symbiotic relationship,” Moorlach said.

He added, unable to resist some teasing, “They are great people — for Norwegians.”

Westways, a monthly publication of the Automobile Club of Southern California, provided the Auto Club’s annual 2002 review in “Increasing The Value Of Membership.” The segment included three photos of me, including one with my 1974 Bricklin SV-1, and the following quote:

“The Auto Club saved me when my collectible car broke down. I didn’t want just any tow truck for the job. Fortunately, I had my AAA card, so I got the help – and the flatbed – I needed.”

I also made it to the cover story of the May issue of California CPA Magazine, “Do the Right Thing,” written by Jerry Ascierto. Here are the opening, middle and closing paragraphs:

It’s intangible, amorphous and hard to pin down. It’s a CPA’s primary concern, yet most struggle just to define the term. If ignored, it holds the potential of derailing the entire profession.

The public trust.

The meaning of upholding the public trust has been a source of much debate in the accounting profession since the Enron bankruptcy and the chain of high profile corporate collapses that followed.

“The integrity of accountants was always unquestioned,” says Zaf Iqbal, a CPA and Cal Poly accounting professor. “Now, we have become the butt of jokes, and my students are confused. What I tell them is, this may be a blessing in disguise. That we, as a profession, are going to emerge stronger.”

John Moorlach, Orange County’s treasurer and tax collector, found out the hard way what upholding the public trust means. When campaigning for his post, Moorlach noticed that the county’s portfolio “looked more like a hedge fund than a municipal bond portfolio,” and pointed the county toward bankruptcy.

“I see myself as a watchdog, and my big issue is when do I bark? How loud do I bark?” Moorlach says.

When he first realized Orange County’s potential for fiscal tragedy, Moorlach was tentative, and he worried that he might have been wrong. But he sent out the warning that the county was heading toward bankruptcy. He was met with an unbelieving public that refused to elect him. But soon after, the county declared bankruptcy and Moorlach was appointed to the position for which he had just months prior vied unsuccessfully.

In private practice, Moorlach had been faced with similar dilemmas. When one client asked the CPA to take a radical accounting position, Moorlach did some research and found that stance to be illegal. He refused to follow the client’s wishes and lost the client.

“Losing a job isn’t that bad a thing if it shows that you stood up for the right side of the issue,” he says.

Moorlach sums up his position with three lessons the recent accounting scandals have taught him.

“The first is that liars do have their day of reckoning. Your sins will be exposed in the light of day. Second is that the consequences of their actions hurt many more people than just themselves; and finally, that suffering is a necessary part of business nature,” he says.

“Sometimes you need a big forest fire to clear the land. Then you wait for new growth.”

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