MOORLACH UPDATE — New CEO — May 8, 2013

The County has a new County Executive Officer and the San Juan Capistrano Patch covers the news in the first piece below. I am looking forward to working with Mike as we continue to live in interesting times.

The Orange County Grand Jury requested a budget augmentation and it was specifically pulled from yesterday’s agenda item for discussion and a separate vote. Non-approval was passed unanimously. Apparently, I am not alone in my frustrations with this group. The Voice of OC provides the story in the second piece below.

And the weather is great! Newport Beach Mayor Keith Curry provides an uplifting commentary submission in the Daily Pilot, which is the third piece below.

BONUS 1: I have some bad news. The Superior Court tentatively ruled against the County in its VLF lawsuit with the Department of Finance. More on this tomorrow.

BONUS 2: Speaking of the Grand Jury (see Voice of OC below), today they released a report that again makes sweeping conclusions about the “culture” of Orange County government. The report focuses largely on Carlos Bustamante and his alleged escapades. It is a rather thorough, but overall imbalanced report that largely discounts the significant strides made by the County over the last year or more. Moreover, the tone of the report is schizophrenic, noting “change on the horizon,” but also a deep “cultural” problem still in existence. Once again I’m left scratching my head. More on this tomorrow, too.

County Promotes Waste Chief to CEO

Mike Giancola, the county’s waste chief, will take the county’s top job for $245,000. He replaces the former CEO who resigned amid a county sex assault scandal.

Orange County supervisors today hired a new chief executive officer, nearly a year after the county’s top administrator resigned because of fallout from the prosecution of a former county executive on sex charges.

Supervisors approved a contract with Mike Giancola, the county’s waste chief, to take the CEO job after 34 years working his way up the ranks from a parks groundskeeper.

Giancola, 54, will earn a base salary of $245,000, less than former CEO Tom Mauk’s annual pay of about $253,000.

"I’m humbled and honored," Giancola told City News Service after the vote approving his contract.

Giancola has a bachelor’s degree in business administration from the University of Phoenix and earned certification as a hazardous material manager at UC Irvine.

Giancola has been the director of OC Waste and Recycling since 2009. Before that he was deputy director of the agency’s south region from 2006 to 2009.

Giancola has worked in the county’s waste department since 1988.

Supervisor Todd Spitzer launded Giancola’s ascension through the ranks.

"There’s just something so rich and vibrant about someone who’s worked their way up," Spitzer said, adding his experience working in the county will give him an added sense of "empathy and understanding" of his co-workers.

The supervisors in March wanted to hire Santa Barbara County CEO Chandra L. Wallar, but she turned them down when the board wasn’t willing to meet her demand of about $290,000 in annual salary. She also wanted $15,000 in moving costs.

Wallar’s current employers voted in April to not renew her contract, which expires Oct. 31.

When the recruitment of Wallar fell apart, county officials took a look within their own ranks for a successor, Orange County Board of Supervisors Chairman Shawn Nelson told City News Service before today’s meeting.

"We all looked at each other and (Supervisor) Pat Bates and I decided to form our own subcommittee, and we just tried to short-list people we should be interviewing and we hadn’t," Nelson said.

In the initial search for a new CEO, the county-hired recruiter only had one internal candidate, Nelson said.

Nelson and Bates encouraged Giancola to apply, and he interviewed well, Nelson said.

"We sat down to negotiate terms and he couldn’t have been easier to deal with. It’s like a dream come true," Nelson said.

Hiring Giancola would send a positive message to county employees, Nelson said.

"This guy truly worked his way from the bottom up, and it’s healthy for any organization that people believe you can have dreams, work hard and start at the bottom and there’s no artificial ceiling if you don’t have a certain pedigree. You can still get to the top," Nelson said.

"I think it’s a great pick. He’s a proven leader in the county, he’s got a long track record and it speaks volumes to everyone in the county."

The supervisors were unconcerned that Giancola was the subject of a lawsuit that county officials have tentatively agreed to try to settle for $350,000. County officials say an independent review of the matter cleared Giancola.

The lawsuit involved allegations that Giancola demoted a former human resources manager for refusing to bend county recruitment policies and for the way he handled a sexual harassment case.

Spitzer lamented how allegations can smear county officials. Former county public works executive Carlos Bustamante was charged with sexually assaulting seven women he worked with.

"It’s one of my biggest complaints in this county post-Bustamante — people can make allegations against you and, without a prima facie showing," there’s an investigation, Spitzer said.

Supervisor Patricia Bates called Giancola a "stand-up guy."

Before today’s meeting, Orange County Supervisor John Moorlach said he is "comfortable" with Giancola in the top administrative spot.

"I believe he has a high integrity level," Moorlach said. "He knows the drill. He’s been here and I think it speaks well that you can work your way up the ranks here and the county and make it to CEO."

The supervisors have been searching for a new CEO since Mauk resigned in July following the prosecution of Bustamante, who is also a former Santa Ana City Councilman. Chief Financial Officer Robert Franz has been interim CEO since then.

Bustamante is awaiting a preliminary hearing on the charges later this year.

– City News Service

OC Supervisors Reject $20,000 Funding Request from Grand Jury

By NICK GERDA

After issuing several scathing reports that took direct aim at county supervisors, Orange County’s grand jury saw its proposed $20,000 mid-year budget increase rejected Tuesday by the board of supervisors.

“Apparently they cannot live within their means,” said county Supervisor Todd Spitzer.

Spitzer added that the grand jury reports seem to be more about “grabbing headlines” than helping supervisors improve services.

County Supervisor John Moorlach seconded Spitzer’s sentiment and motion.

The panel has issued scathing reports critical of supervisors this year, including one titled “CalOptima Burns While Majority of Supervisors Fiddle” and "A Call for Ethical Standards: Corruption in Orange County."

Grand jury foreman Ray Garcia didn’t return a message seeking comment.

Asked about Spitzer’s criticisms and the importance of the funds, Orange County Superior Court spokeswoman Gwen Vieau referred questions back to county supervisors.

“Your questions would best be addressed to the Board of Supervisors,” said Vieau.

In an interview Wednesday, Spitzer said the grand jury also didn’t explain to him why they were making the request.

“They didn’t come to me and explain why they needed more money,” said Spitzer. “There was no rationale for why they needed more money.”

He noted that relations with the panel have reached a sour point.

“I don’t think this board has any love lost for this year’s grand jury,” said Spitzer, adding that the panel didn’t consider any of the suggestions he made for their report on political corruption.

“I think they’re very concerned and they’re trying to have an impact on the county. I just think the way they’re going about it is long on dramatics and short on substance,” said Spitzer.

County documents said the grand jury’s $20,000 request was “for administrative support to the grand jurors, and court reporter services.”

The grand jury is expected to issue two more reports on CalOptima this session, with the health plan’s CEO Michael Schrader reminding its board members of that just last week.

The Orange County Superior Court budgeted $209,000 for the grand jury this year, with $180,000 of that going to salaries and benefits and $29,000 spent on services and supplies.

Spending is down about 20 percent from fiscal year 2011’s actual expenses of $259,000.

Orange County’s grand jury has produced five reports so far this year, including examinations of bus service for the disabled and challenges in collecting child support.

You can reach Nick Gerda at ngerda, and follow him on Twitter: @nicholasgerda.

Commentary: Things are looking up in Newport Beach

By Keith Curry

What an amazing month in Newport Beach!

The Board of Supervisors approved the memorandum of understanding with the city, Stop Polluting Our Newport (SPON) and the Airport Working Group, moving forward with airport curfew protections for an additional 15 years, all the way to 2035. This will appreciably protect our quality of life. Thank you, Supervisor John Moorlach, for your support and leadership.

More than 2,000 residents joined us Saturday as we dedicated our new Civic Center, which includes the city’s fifth-largest park and a needed expansion of our award-winning library. This new complex was built to last and will serve our city for the next four generations.

At the same time, we received three outstanding proposals, including two for a luxury hotel, which will enable us to economically revitalize the Lido Village area and the entire peninsula. Ross Perot Jr. was in town to break ground on a $100 million investment in luxury housing (with Texas money!).

Our budget office reported that we are projected to again run a surplus, with expenses coming in below budget. This will enable us to keep investing in needed street, parkway and infrastructure improvements and will add to our record levels of reserves.

We gathered on the bay to recognize and thank the Army Corps of Engineers for their partnership in completing the dredging of Lower Newport Bay, the first comprehensive dredging since the bay was dedicated in the 1930s.

Under clear skies and strong wind, the 66th Newport to Ensenada yacht race continued one of the grandest and oldest traditions in our city.

More than 50,000 attended our 14th annual Newport Beach Film Festival, including Taylor Hicks, Green Day and award-winning Disney composer Richard Sherman. Several films were set here in Newport Beach.

More than 20,000 runners participated in the Orange County Marathon, starting in Fashion Island and running in solidarity with the people of Boston. Thousands more participated in the March of Dimes earlier to raise money to fight childhood disease. The Gift of Literacy luncheon was one of several charity events that occurred in our community.

The 52nd Chamber of Commerce Scholarship Breakfast recognized our outstanding graduating students from Newport Harbor, Corona del Mar and Sage Hill. These students excelled in both academics and community service.

Finally, our yacht clubs celebrated the opening of another season of family tradition on the Bay.

With all the negativity that surrounds us, sometimes it is good to pause and be thankful that we live in such a wonderful city.

KEITH CURRY is the mayor of Newport Beach.

FIVE-YEAR LOOK BACKS

May 8

2008

Jim Christie of Reuters, along with Anastasija Johnson and Jan Paschal, wrote “Calif. City Oks bankruptcy filing, debt trades down.” The first portion of the article addressed concerns about a credit downgrade. With five years hindsight, it looks like the city of Vallejo drove into a cul de sac. Here is the remainder of the piece:

Vallejo Councilwoman Stephanie Gomes said the debt would have been downgraded in any case as her city is set to run out of money at the end of June and faces a $16 million shortfall in its general fund for the fiscal year starting on July 1.

Bankruptcy offers Vallejo an opportunity to get its books in order over the near term and address long-term costs for public safety workers, which already consume three-quarters of the city’s general fund and are forecast to continue rising.

"They would have the same reaction if we were unable to pay our bills," Gomes said, referring to S&P. "At least we’re fixing the problem."

That problem, which Vallejo officials say pushed them to approve a Chapter 9 bankruptcy filing, appears to be unique to the city, a former Navy town of more than 100,000 near San Francisco, according to Hitchcock.

"We don’t see anything like that for the cities we rate in California," said Ken Kurtz, managing director at Moody’s Investors Service.

Other local governments in California, especially in Riverside County, have been hit much harder by the housing slump and its drag on property and sales taxes. But unlike Vallejo, they do not have labor contracts in place that are at the same time pushing payroll costs up at steep rates.

"You’d expect that if that’s the problem, some of the cities in Riverside County would be talking about it," Hitchcock said, referring to the housing downturn.

"From what we’ve seen to date, it doesn’t seem like necessarily it’s going to be a widespread problem," he added.

Other observers have also noted Vallejo’s problems seem unique. They note poor investments triggered the spectacular 1994 bankruptcy of Orange County, California, and that fees arising from losing a legal dispute pushed Desert Hot Springs, California, into bankruptcy in 2001.

Likewise, Half Moon Bay, California, is mulling bankruptcy if state lawmakers fail to pass a law to help it undo a costly legal settlement over a land dispute with a developer.

Municipal bankruptcy lawyer James Spiotto said Vallejo is gambling with its reputation and should expect its borrowing costs to soar.

"It’s an admission of failure," he said, noting that Vallejo will be in rare company.

"There have been about 558 municipal bankruptcies since 1938 and that’s out of over 50,000 municipal entities," added Spiotto, who is with Chapman and Cutler in Chicago.

Orange County Supervisor John Moorlach, the county’s treasurer-tax collector appointed after its bankruptcy filing, agrees that Vallejo is embarking on a risky course. But he said it may need to do so:

"If you drive into this street, you may end up in a cul de sac and have spent a boatload of money for nothing … But maybe you need a federal bankruptcy judge to ferret through everything, to say, ‘Time out.’"

The Seal Beach Sun had a piece, titled “County staff considers reducing Rossmoor services – Fiscal Analysis data shows $592,705 more than revenue,” written by Sean Belk. Here are a few selected paragraphs:

Rick Francis, deputy chief of staff for supervisor John Moorlach, said the “subsidy” or financial backing the county has given Rossmoor could have gone on for “several years.”

Henry Taboada, RCSD general manager, said the subsidy the county has provided over the years has never been brought to light until GST Consulting provided the analysis.

“We’ve been fortunate the county has treated us as good as it has,” he said.

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