MOORLACH UPDATE — Service To Country — July 3, 2013

Please have a wonderful and safe Independence Day! I will be recognizing the significance of the day with my family on Friday as we celebrate my wife’s father’s life. The service will include a U.S. Army Honor Guard. The announcement is in the Hi-Desert Star and is the first piece below.

The Jewish Journal of Greater Los Angeles provides a piece on Orange County’s Jewish history in the second piece below (see MOORLACH UPDATE — Western States Jewish History — May 25, 2012). The photo of the Cahen House is attached to the article. The photo of the “Mother Colony House” is one I took in September of 1979 for my California Historical Landmark album, as it is Landmark Number 201. The current book that I am reading is “California Jewish History: A Descriptive Bibliography – Over five hundred fifty works for the period Gold Rush to post-World War I,” selected and annotated by Norton B. Stern. I’m having fun identifying which books I already own and which ones I need to acquire. Norton Stern is one of my heroes and is mentioned, along with Rabbi William Kramer, in the article.

The Voice of OC addresses a concern that I raised to County Counsel several months ago. Their opinion corroborated and confirmed my understanding of the Internal Revenue Code, from my background as a Certified Public Accountant. Having a second look, or a third, is fine with me. It’s discussed in the third piece below.

The Daily Pilot provides an update on Congressman John Campbell’s announcement on Thursday afternoon. Neither Laguna Niguel or Costa Mesa are in Congressman Campbell’s congressional district. It is the fourth article below.

Marlin (Jack) Dean Lehmeier

Machinist, gunsmith, 88

Marlin (Jack) Dean Lehmeier, a 75-year resident of California and a 10-year resident of Yucca Valley, died in Anaheim June 22, 2013. He was 88 years old.

The son of Ernest Dean Lehmeier and Rose Marie Lehmeier, he was born Feb. 24, 1925, in Iowa.

Mr. Lehmeier was a machinist for the Royal Tire Company and a self-employed gunsmith before retiring.

He served his country in the U.S. Army and received a Purple Heart in France.

He loved fishing, hunting and Christian activities.

Mr. Lehmeier was preceded in death by his wife, Gladys Lehmeier, and son Chris Lehmeier.

He is survived by his son Ernest Dean Lehmeier and his daughter, Trina Moorlach.

He is also survived by three grandchildren and one great-grandchild.

A graveside service will take place at 2 p.m. July 5 at Joshua Tree Memorial Park.

In lieu of flowers, donations may be made to the Alzheimer’s Association at www.alz.org/join_the_cause_donate.asp.

Uncorking Anaheim’s Jewish past — the vintage years

by Edmond J. Rodman

The Cahen House, circa 1902. Courtesy Orange County Jewish Historical Society

Long before Tomorrowland, there was another land in Anaheim, created and inhabited by Jews, that as a child growing up there in the 1950s and ’60s I had not the slightest clue existed.

Little did I know from my education there that generations before Mickey and Minnie, Goofy and Donald, there were Kohler and Frohling, Dreyfus and Goodman.

Influenced by “Jews in the Los Angeles Mosaic” — a show that explores the history of the Los Angeles Jewish community at the Autry museum — I began to wonder where I fit into the mosaic of my home town, which up until 1889 was actually part of Los Angeles County.

In elementary school, we learned that the Anaheim colony was founded in 1857 by 50 German grape growers. I even remember dressing as “a little old winemaker” for the city’s annual downtown Halloween parade.

Unknown to me then was that I should have worn that costume with a drop of ethnic pride, as near 100 years before, Jews in Anaheim were not only growing grapes, but making wine, some of it even kosher.

“Benjamin Dreyfus was known as king of the Anaheim winemakers,” said Dalia Taft, who edited “Jewish Pioneers of Orange County” and is the archivist for Orange County’s Jewish Historical Society.

For a period of time, Dreyfus was even an owner of the first house in Anaheim, known as the “Mother Colony House” — built by surveyor George Hansen, said Taft, who writes a monthly history column for Orange County Jewish Life magazine.

In 1885, Dreyfus built a winery that eventually would produce, according to an article in Taft’s book by Gladys Sturman, 300,000 to 400,000 gallons of wine and brandy annually. The kosher wine he produced is considered the first mass-produced kosher-for-Passover wine made in the United States.

As a kid, I remember seeing the abandoned-looking building. Today, I wonder how knowing of its Jewish origins might have shaped my identity growing up behind the “Orange Curtain.”

My parents, when they came to California, moved first to Whittier, and then to Anaheim, in 1955. They were transplants from the Bronx, and never totally buying into the Southern California dream, they had a mural of the New York skyline painted on their living-room wall. Like many of the Jewish adults I met growing up who had moved to Anaheim from parts East, they lacked a feeling of belonging and place — not knowing that Anaheim was a place for Jews from the very beginning.

“Approximately a third of the 50 founders of Anaheim were Jewish,” said Taft, pointing out on a map the plots of land that each had owned.

Two Jewish pioneers, San Francisco businessmen Charles Kohler and John Frohling, first conceived of “Anaheim as a colony devoted to grape cultivation and wine production,” and recruited the first settlers from Germany for the colony. In the society’s archives there is even an image of a Kohler & Frohling Grape Brandy label.

“By the 1870s, there was a Torah in Anaheim,” Taft said. “Though there was not a synagogue; they prayed in homes,” she added.

In 1880, the Anaheim Gazette, describing the influence of Jews who had opened businesses on the city’s main street, reported that it had been a “week of extremes.”

“On Monday, the streets had been uncomfortably filled with people, and on Wednesday, owing to the closing of many of the stores on account of it being a Jewish holiday, the town was abnormally quiet and dull.”

By 1885, on one block of the city’s main street, “three of the businesses were Jewish,” Taft said. Morris L. Goodman, who was Jewish and was born in Bavaria, had previously established himself in 1850 as one of Los Angeles’ first city councilmen. He was co-owner of a dry goods store, selling “clothing, furnishing goods, boots and shoes, hats and caps.”

In 1893, adding a fourth Jewish-owned business to the block, was Lemuel Goldwater, the politician Barry Goldwater’s second cousin, who bought into the Citizens Bank, becoming the cashier; another Jewish pioneer, Hippolyte Cahen, was the president.

Considering all the Jewish participation in the creation and settlement of Anaheim, and even governance — Dreyfus was the city’s mayor from 1881 to 1883 — you would think that some knowledge of the history would have survived.

“The Jewish influence in Orange County has fingerprints everywhere,” wrote John M.W. Moorlach, a member of the Orange County Board of Supervisors, in the forward of Taft’s book. But in WASPy, conservative Orange County, especially in the 1950s and ’60s, were the prints wiped away or covered up?

“I think of it more as a whitewashing. We had no idea of our history here,” Taft said.

“There definitely was a period when you didn’t talk about being Jewish,” she added, referring to the period between 1915 and 1980, which she calls “the quiet years.”

My wife, who also grew up in Anaheim, recalls how in the 1970s at her parents’ home, which is not far from the “Happiest Place on Earth,” a swastika was burned into their front-yard lawn. I also remember, apart from the mostly benign interest in my religion, how while walking my dog, a neighbor once ran out of her house and screamed, “Keep that f—ing Jew dog out of my yard!”

Taft, who gives talks about her research at Orange Country synagogues, related that “when I tell them that Anaheim was started by Jews, they are shocked.” She feels that children especially need to be aware of their legacy. “You cannot know where you are going until you know where you came from,” she said.

“History gets lost when people don’t care,” said David Epstein, president and co-publisher of the Western States Jewish History Association.

As an example of how quickly history can vanish: When Temple Beth Emet bought its first building in 1956 — a Craftsman house on North Emily Street in downtown Anaheim that had been converted to a dance studio (I learned to read Hebrew in its converted garage) — they had no idea that they had located just blocks away from where the original Jewish pioneers settled.

“We built the foundations of many of the cities of the West,” said Epstein, who thought the problems for Jews started in the West around the 1880s as a result of the migrations from the Transcontinental Railroad. “They brought the restrictions and the anti-Semitism with them,” said Epstein, whose organization recently opened an Orange County Exhibition Hall in its virtual Jewish Museum of the American West (jmaw.org).

In the 19th century and into the early 20th, Jews lived openly in Anaheim, according to Taft, even in business partnerships with Christians. They were buried in a nonsectarian cemetery, and in 1887 a circumcision was even announced in the Anaheim Gazette.

Wanting to connect with this history, I went to downtown Anaheim to visit the Anaheim Heritage Center. There, in thick files, including one labeled “Jews,” I found articles by Dr. Norton B. Stern, who, along with Rabbis William Kramer and Max Vorspan, wrote about Anaheim’s and Orange County’s Jewish history. In another folder, I found a black-and-white photo of a spectacular house built by Cahen in 1882.

“Do you know where it is?” I asked the librarian. While explaining that it had been relocated from its original location, she drew me a map.

On a street of one-story bungalows, the Cahen residence, a Queen Ann house at the street’s end, stands out in scale, and its tower peeked out over the trees. “Cahen, a Jewish immigrant from Algiers, was one of Anaheim’s leading citizens. He owned a dry-goods store. Started the First National bank of Anaheim,” Taft’s book says.

It was late in the afternoon as I parked and walked up to the house. It was fenced, and as I looked up to the long wooden porch out front, I imagined Cahen and his family sitting there on an afternoon, perhaps tossing back a glass of Dreyfus’ wine. As two dogs ran up to the fence to greet me, I knew I was home.

Spitzer Questions Legality of Supervisors’ New Pension Approach

By NICK GERDA

As Orange County supervisors move to establish a new system allowing them to pay into their pensions, Supervisor Todd Spitzer is questioning legal advice that he says gives a green light for supervisors to claim tax deductions on their pension contributions.

The new arrangement, quietly approved last week on a unanimous vote, sets up voluntary “charitable contributions” from supervisors’ paychecks to the county to compensate for their employee share of pensions.

Spitzer says he’s concerned about legal advice indicating that supervisors intend to claim the contributions as tax deductions.

“I’m not sure the IRS is going to be comfortable with this,” said Spitzer. “You’re basically reimbursing something that benefits yourself, and then you’re going to write it off.”

“On its face it doesn’t seem logical or right. It doesn’t seem lawful,” added Spitzer, who says he’s requested an IRS opinion on the issue.

Supervisors Chairman Shawn Nelson, meanwhile, disagrees with Spitzer’s analysis, noting that the direct pension plan payments would still come from the county.

“Anyone’s allowed to make a contribution, and it’s not your pension contribution. It’s an amount equal to” it, said Nelson.

"There’s a fictional tie-in to your pension," he added. "You’re not actually deducting your pension contribution.”

County Counsel Nick Chrisos didn’t return a message seeking comment, and the rest of the Board of Supervisors couldn’t be reached late Tuesday afternoon.

Much of Spitzer’s concern rests with an outside legal opinion from Orrick, Herrington and Sutcliffe, which he says was the only legal advice on the topic provided by county counsel.

According to Spitzer, that May 7 opinion is only four paragraphs long and states that the pension contribution should be tax deductible.

Beyond appearing questionable on its face, Spitzer questions the opinion’s lack of any supporting evidence, like citing regulations, tax codes or case law.

“Really?” asked Spitzer. “I’m going to take IRS and potential prosecutorial exposure advice from a four-paragraph memo with no legal research, no citations, no call to IRS?”

“It’s just crazy to me,” he added.

Nelson, meanwhile, considers the supervisors’ charitable donation and the county’s pension contribution on their behalf to be completely separate.

“The supervisors aren’t donating their pension contribution to the pension plan,” said Nelson. “All the supervisors are doing is making a charitable contribution.”

Last week’s move was just the latest in a series of efforts at reforming supervisors’ pensions, which have attracted strong criticism from labor leaders.

While supervisors have pushed employees to contribute their full share – and more and more employee groups have been agreeing to pay it – the supervisors haven’t done so themselves.

Past reform efforts have been largely spearheaded by Nelson, who has pushed to kill the supervisors’ pensions altogether and replace them with either a 401(k) plan or Social Security benefits.

But those efforts failed from a lack of support by his colleagues, leading Nelson to lobby for a requirement that new supervisors accept the lowest-available pension plan, 1.62 percent at 65.

That change was approved by voters last June, with Spitzer coming in under the new plan when he was sworn in this January.

“I think we’ve made a lot of progress” on supervisors’ pensions, said Nelson, describing the 1.62 percent at 65 requirement as an “enormous” improvement.

“There is no system in trouble that pays benefits at the age of 65,” other than Social Security, he added.

Among the supervisors, Supervisor John Moorlach accepts the most generous pension among his colleagues: 2.7 percent at 55. He says he pays for the bump in benefits through a “reverse pickup” of around $14,000 per year.

Spitzer and Supervisor Nguyen receive 1.62 percent at 65, while Nelson and Vice Chairwoman Pat Bates aren’t part of the county’s pension system.

Moorlach recently took credit for the new arrangement, calling paying his full employee share “the appropriate course of action” as county managers agree to pay their share.

Meanwhile, Spitzer says he also endorses having supervisors pay their full share, but is left concerned by the approach.

“We should be doing what we’re asking of our employees. But we have to make sure it’s lawful,” said Spitzer.

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

Walters announces run for Congress

Supervisor John Moorlach also expresses interest in the congressional seat to be vacated by retiring Rep. John Campbell

By Bradley Zint

o State Sen. Mimi Walters announced Tuesday that she plans to run for the 45th Congressional District seat retiring U.S. Rep. John Campbell (R-Irvine) will vacate next year.

Walters, a Republican, currently represents the 37th District in the California Senate. The district includes Costa Mesa, Newport Beach, Irvine and portions of Huntington Beach and Laguna Beach.

"John Campbell has served the people of Orange County, California and the United States with distinction and with a commitment to a firm set of principles," Walters said in a prepared statement. "He will leave behind some big shoes to fill. In Congress, I will continue to fight for the fiscal responsibility, less intrusive government and property rights, and look forward to representing our special part of Orange County in the nation’s capital."

The 45th Congressional District includes Irvine, Tustin, Lake Forest, Mission Viejo and portions of Anaheim and Orange.

Supervisor John Moorlach, a Republican who represents District 2 on the five-member Orange County Board of Supervisors, also said Tuesday that he is exploring running for the congressional seat — he recently ruled out a bid to run for governor against incumbent Jerry Brown — and has received positive feedback so far.

Moorlach, who will be termed out of the board next year, said he hasn’t made a formal announcement yet, but that after a recent dinner with family, they gave him "the green light" to move forward. He will be working on fundraising and other aspects of a potential campaign.

"So far, so good," Moorlach said. "Everything’s positive … full speed ahead and having fun."

He said the news about Campbell came as a surprise.

"It wasn’t on the radar screen," Moorlach said.

The Costa Mesa resident doesn’t currently live within the 45th Congressional District, though per federal law, it does not prevent him from running for it.

Moorlach said he has served the area in the past as the county treasurer, and that he would consider moving to the district if he won.

Walters said Tuesday that U.S. Reps. Ed Royce (R-Fullerton) and Darrell Issa (R-Vista), as well as Orange County District Attorney Tony Rackauckas and Sheriff Sandra Hutchens, have endorsed her.

Walters, a UCLA graduate, got her start in politics as a member in the Laguna Niguel City Council 1996.

Campbell, who is serving out his fifth term, announced Thursday that he will not seek reelection in 2014.

"At the end of this term, I will have spent 14 years serving in full-time, elected politics," Campbell said in a prepared statement. "I am not, nor did I ever intend to be, a career politician. I am ready to begin a new chapter in my life."

Campbell was elected to the newly redrawn 45th Congressional District seat in the November general election. He won the seat against former Irvine Mayor Sukhee Kang with 58.5% of the vote.

He was first elected to Congress in a 2005 special election to serve the 48th Congressional District. He had the seat until 2012, when the district was redrawn.

Before getting elected to Congress, Campbell served terms in the state Senate and Assembly.

FIVE-YEAR LOOK BACKS

July 2

2003

Linda Rapattoni of the San Francisco Daily Journal covered a topic that is of major importance today in “Budget Squeezes Trigger – A Suit Against the State Alleges That Higher Vehicle License Fees Have Been Charged Automatically and Improperly.” It was a thorough treatise on the Vehicle License Fee (VLF) and its history. Ten years later, we are still dealing with actions perpetrated by the Department of Finance in regards to the VLF. Here are the opening paragraphs:

A taxpayers group has sued the state over the tripling of California’s vehicle license fee, raising serious questions about separation of powers.

Jon Coupal, president of the Howard Jarvis Taxpayers Association, said the two main questions are whether a law providing for an automatic trigger of the tax is constitutional and whether the trigger was pulled by the right state official.

Coupal, a lawyer who has argued many tax issues before the state Supreme Court, contends a tax increase cannot be triggered automatically. He says it must be approved by two-thirds of the Legislature’s members in both houses.

Even if a court decides that the 1998 law delineating the circumstances for initiating the tax is constitutional, the law requires the state controller to determine those circumstances, Coupal said.

“If a trigger can be pulled that results in a $4 billion tax increase and nobody is responsible, this is the worst hunting accident in the history of California, and taxpayers have just been shot,” he said Tuesday.

The taxpayers group filed a suit for declaratory relief Tuesday in Sacramento Superior Court on behalf of Republican lawmakers and two Californians who own vehicles and would be subject to the increased fees. The complaint manes the state Department of Motor Vehicles and the state director of finance as defendants. Howard Jarvis Taxpayers Association v. Calif. Department of Motor Vehicles, 03AS02665.

The vehicle license fee is a yearly assessment on vehicles registered in California amounting to 2 percent of the vehicle’s market value. The state Department of Motor Vehicles must tell the state controller monthly how much has been collected and deposit the funds in the state treasury.

Local governments depend on the VLF for 15 percent to 25 percent of their revenue. Orange County Treasurer John Moorlach said he knows of at least four cities in his county that would be forced to unincorporated if they lost the revenue.

In 1998, the Legislature passed a law to reduce the fee permanently by 25 percent and cut it further in increments up to a total of 67.5 percent, depending on how much money was in the state’s general fund. The law also provided a mechanism to increase the fee if state funds were depleted.

So that local governments would not suffer, the state agreed to offset the lost revenue by paying them out of the state’s general fund to make up for the money they would have received from the fee.

The exceptional municipal bond market columnist for Bloomberg News, Joe Mysak, provided a commentary titled “Californians Should Stop Flirtation With Unthinkable.” It is contemporary for today.

California is the scariest place in the U.S. municipal bond market.

The state is looking at a $38 billion budget shortfall — a gap bigger than the budgets of all other states except New York — for 2003-2004. The state’s lawmakers are deadlocked over what to do about it.

This is the same state that only two years ago surpassed France as the world’s fifth-largest economy, at $1.33 trillion, and gave Britain (at $1.4 trillion) a run for its money. Now some Californians are talking about bankruptcy.

States can’t declare bankruptcy. James Spiotto of the law firm Chapman & Cutler in Chicago, the nation’s foremost municipal bankruptcy specialist, says so. Bruce Bennett, who helped engineer the bankruptcy of California’s Orange County, says so. John Moorlach, who blew the whistle on Orange County’s investments and is now the county treasurer, says so.

And yet. And yet. There is an old expression about how new ideas in public finance blow in from the West. John Hallacy, head of municipal research at Merrill Lynch & Co., put it another way: “Isn’t California always the test case?”

States toying with insolvency isn’t a good or new idea.

Try to Remember

“The posturing of no new taxes is not helpful in finding a solution,” Dan Heimowitz, then director of public finance at Moody’s Investors Service, told the New York Times.

A financial adviser had another take. “They don’t want to raise taxes, that is not a viable option,” said Thomas Hayes, former California state treasurer. “It will take a two-third’s vote to enact more taxes and that is not going to happen,” he told the Times.

They aren’t referring to what’s going on in California now. They were saying that in 1994 when Orange County declared bankruptcy, a move that stunned everyone in the municipal market.

Perhaps you remember. Here was one of the wealthiest counties in the nation bankrupt, the result of the county treasurer’s wrong-way bets on interest rates.

This kind of thing just wasn’t done. Bankruptcy was the refuge for the municipal market’s sickest cases, not the healthy and wealthy temporarily caught up short just because they weren’t wise when it came to investments.

Lack of Will

The Orange County bankruptcy rocked the municipal market because it went against all the rules. The No. 1 rule is that a municipality must do everything to repay its debts. That’s what the pledge of a municipality’s “full faith and credit” means, when it sells general obligation bonds. Orange County had the ability to repay its debts. It lacked the will.

California’s lawmakers apparently don’t have the will to pass a budget with a little pain.

What is happening in California isn’t much different from what has been going on from coast-to-coast, although the numbers are larger and scarier and the legislative inaction inexplicable.

Government is in the business of providing services. The more money comes in, the more services government can provide. This is what took place in the 1990s. The stock market boomed, people made more money, and tax revenue swelled.

What did states do? They put aside more money in rainy day funds. They cut taxes. They increased services. They introduced new services.

Spending More

Here’s what has happened in California, according to figures provided by the State Controller’s office.

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