MOORLACH CAMPAIGN UPDATE — Fifth District and Cypress — October 24, 2014

The OC Register provides an update on the Fifth Supervisorial District race. I have endorsed Robert Ming and this piece affirms my decision. Robert Ming is not accepting union funding, which is a policy I utilized in 2006 when I ran the first time for County Supervisor (long before the Baugh Doctrine). For decades, I could not understand how a candidate could accept contributions, directly or through independent expenditures, from the largest contractors that come before the Board of Supervisors. It’s a blatant conflict of interest and should be a major concern for the voters.

If you accept union contributions, you have the potential of being a sellout to the taxpayers and beholden to the unions. Just look at recent articles about Governor Brown. I also believe that if you accept union contributions, you’re not about public service, you’re just about getting elected in any form or fashion that you can. So, Robert Ming (see MOORLACH CAMPAIGN UPDATE — Supervisorial Candidates — August 30, 2014) and Allan Mansoor (see MOORLACH CAMPAIGN UPDATE — County-Wide Races & Measures — October 17, 2014 and MOORLACH CAMPAIGN UPDATE — Allan Mansoor — September 21, 2014) are the purists in the Supervisorial races. And that’s what we need, true public servants in elected office, not win-at-any-price politicians.

The Orange County Breeze provides a treatise on Measures Q and R in the city of Cypress that includes footnotes! Go figure. Although I am not a fan of ballot measure land planning, I concur with the piece’s conclusions. One clarification: The Irvine Company is in the process of gifting 2,000 acres to the County and the transaction should be consummated before the end of this year.

VOTERS GUIDE (Continued):

Allow me to provide additional ballot recommendations (see MOORLACH CAMPAIGN UPDATE — County-Wide Races & Measures — October 17, 2014 and MOORLACH CAMPAIGN UPDATE — Rossmoor CSD — October 12, 2014). I hope to provide more between now and election day (with apologies to those who have already mailed in their absentee ballots). Remember, I try to provide the candidates that are registered Republicans with bold being an endorsement, italics is a good second choice, and regular print is for informational purposes.

Prop. Title Recommendation Reason

1 Water Bond NO General Obligation – Paid out of State Budget

2 Rainy Day Fund YES State Reserve Policy – No Brainer & Over Due

45 Healthcare Insurance Rates NO Managed Care Nightmare

46 Medical Negligence Law Suits NO Increases Limits – Will raise insurance costs

47 Criminal Sentence Reductions NO Sets Aside Imaginary Savings – Accounting Bunk

48 Indian Gaming Compacts NO Keep Indian Casinos on the Reservations

Title Name Registration

Governor NEEL KASHKARI Rep

Lieutenant Governor RON NEHRING Rep

Secretary of State PETE PETERSON Rep

Controller ASHLEY SWEARENGIN Rep

Treasurer GREG CONLON Rep

Attorney General RONALD GOLD Rep

Insurance Commissioner TED GAINES Rep

Superintendent of Public Instruction MARSHALL TUCK Dem

For Associate Justice of the Supreme Court

Vote “NO” for Goodwin Liu, Mariano-Florentino Cuellar, and Kathryn Mickle Werdegar. None of these judges were willing to hear Orange County’s case pointing out that the California Constitution does not allow the incursion of any debt without two-thirds approval by the voters. Consequently, retroactively granted pension benefits are now an exempted debt from the State’s Constitution. This means that now there is blood on the hands of every branch of government in the State (Governor/Executive, Legislature, and Judicial) when it comes to the recently approved unsustainable defined benefit pension plan unfunded liabilities threatening the solvency of every level of government in California.

For Associate Justice, Court of Appeal, 4th Appellate District

I don’t have heartburn with any of the judges up for reelection.

Supervisor primary pits Republicans against each other

District 5 Party Affiliation

The district has 335,623 registered voters, with 46 percent of them Republican, 27 percent Democratic and 23 percent selecting no political party, according to county voter data. Four percent cited "other."

By Nicole Shine

South County voters will have their pick of two Republican candidates on Nov. 4 in the District 5 supervisorial race, a contest that is shaping up as one of the county’s closest.

Lisa Bartlett, mayor of Dana Point, and Robert Ming, a Laguna Niguel councilman, are staking out traditional GOP positions. They’d reform pensions and increase government efficiency. Both want to ensure that major infrastructure projects in the district – the Dana Point Harbor revitalization and the La Pata extension between San Clemente and San Juan Capistrano – are completed on time and within budget.

The candidates’ performance in the June primary was a near-tie: Ming took 30.9 percent of votes to Bartlett’s 28.4 percent of votes.

But their campaign endorsements highlight key distinctions between the two Republicans vying to take the seat now held by termed-out Supervisor Pat Bates.

Ming, who is endorsed by the influential Lincoln Club of Orange County, said he has pledged not to take union money. Bartlett, meanwhile, is endorsed by Association of Orange County Deputy Sheriffs, the union whose more than 1,800 deputies patrol most South County cities.

THE CANDIDATES

Bartlett, 54, positions herself as proven leader, whose collaborative style results in “good policy solutions,” she said.

With a master’s degree in business administration, she cites her corporate experience and a series of governmental leadership roles. In 2006, she was elected to the Dana Point City Council. She was appointed mayor in 2009 and 2013. Bartlett is the former chairwomanfor the Foothill Eastern Transportation Corridor Agency, the entity that manages the 133, 241 and 261 toll roads.

As founder of the Contract Cities Working Group, an advisory group composed of the county Sheriff’s Department and mayors of contract cities, the Southern California native describes herself as an advocate for public safety.

Bartlett is endorsed by 30 council members and mayors in the 11 cities that comprise District 5, Congressman Darrell Issa, former county sheriff Brad Gates and others, according to her campaign website.

Bartlett had cash on hand of $42,721 as of Sept. 30, campaign finance disclosures show. Since January, she has raised $291,899. Since last fall, Bartlett has made a series of loans to her campaign totaling $117,000.

Bartlett said in an interview this week that the loans show she’s “personally invested.”

Ming, 44, describes himself as a fiscal conservative. A proponent of outsourcing, he says “some of the best ideas come from the private sector.”

An attorney and managing director at an investment banking firm, Ming was the founding president of the Association of California Cities – Orange County, a public policy group, and now chairs its pension reform committee. He serves on the board of the San Joaquin Hills Transportation Corridor Agency, which manages the 73 toll road. Earlier this month, he was one of two board members to vote against a plan to refinance the agency’s estimated $1 billion debt.

Born in Orange, Ming has served on the Laguna Niguel City Council for the past eight years, including two stints as mayor.

Ming had cash on hand of $42,130 as of Sept. 30, campaign finance disclosure forms show. This year, he has raised $189,158. The total includes $40,000 from a personal loan Ming made to his campaign in December.

County supervisors John Moorlach and Shawn Nelson have endorsed Ming, as have the Howard Jarvis Taxpayers Association, the Register and others.

Opponents of Cypress Measures Q and R fight the wrong battle

By Shelley Henderson

I have read letters and editorials for and against Measures Q and R, which Cypress residents will vote on in the Nov. 4 general election. (See the reference section below that includes articles published here at oc-breeze.com.)

A lot of dust has been kicked up over these ballot measures.

In a moment, I will go through the arguments against the measures, but I want to say up front that I will personally be voting in favor of Measures Q and R.

I think that opponents of Measures Q and R should pour their energy into working with the Cypress School District to pay down outstanding callable bonds and enhance educational programs, including funding arts in the classroom.

Yelling about non-callable bonds is not productive.

The Cypress School District’s foundation should be examined as a funding funnel, in a manner similar to Los Alamitos Education Foundation (LAEF) [1] in conjunction with independent fundraising entities like Run Seal Beach [2], School Ghoul [3], and Our Los Al [4]. (A link to a copy of the Foundation bylaws is in the reference section below.)

They should also support the District in an effort to restructure itself — perhaps as a unified school district that includes Lexington Junior High School and Cypress High School plus their feeder schools. Restructuring the District will not be easy, not least (but not only) because of Sacramento politics.

Late update: Orange County Register

Reading through only our second home-delivered copy of the Orange County Register since Oct. 3, we found that the paper has a split decision on Measures Q and R: up on Q [5], down on R [6].

That published opinion does not change my opinion.

Now let’s go through the arguments against Measures Q and R one by one, as published here.

Arguments against Measures Q and R, and responses

Measures Q and R are of a kind with Measures A and L

Voters in Cypress are drowning in an alphabet soup of ballot Measures. (See the reference section below.)

Measure M is the bond measure that funded modernization of the remaining six schools in Cypress School District. It is the source of fury regarding Capital Appreciation Bonds (CABs), described in the Grand Jury report. The only school remaining to be modernized using Measure M funds is Landell Elementary School.

Note that Measure M bonds are a mix of more traditional CIBs (interest and principal paid over the term of the bond), five-year COPs (a bondish sort of financial instrument paid with lease income), and CABs with debt ratios of almost 20:1.

The Measure M CABs are not callable — that is, they cannot be paid down prior to maturity.

The real killer is a CAB’s compounded interest. From the Grand Jury report:

A Capital Appreciation Bond (CAB) typically defers the payment of both the principal and interest until the end of the term of the bond. The interest accretes, which means the interest due each year continues to accrue, or accumulate, until the entire amount of interest due is paid for the CAB at the end of the the term of the CAB. Since the interest is not paid when it is accrued, the interest cost compounds, which can have a dramatic effect on the total interest paid over a long term…

Measure D is the reason that Measures Q and R appear on this November’s ballot. Enacted as Sections 5.28.020 and 5.28.050 of the Zoning Code of the City of Cypress, it requires a vote of the citizens of Cypress to change the zoning of any property currently zoned Public or Semi-Public.

Realistically, that means property owned by Los Alamitos Race Course (LARC) or surplus property owned by Cypress School District. Nobody expects Forest Lawn or Cottonwood Church to request rezoning.

Editor’s note: I would like to thank a reader for correcting me that I flipped Measures A and L. The mislabeling does not materially change the analysis.

A lot of people are still angry about Measure L, which successfully re-zoned 33 acres on the southwest corner of property owned by LARC. The re-zoning was sold to voters by claiming that the property would be developed into senior housing, similar to Sunrise Senior Living in Seal Beach [7].

That proposed development project fell through. Many suspect the proposal was never real in the first place.

The property owners turned around and sold to ProLogis [8], which for its community outreach walked into a buzz saw. That sale was reversed and the property remains undeveloped but re-zoned.

When LARC attempted to re-zone two other parcels, resentment over how Measure L was handled boiled over. The new Measure A was shot down by voters, despite covenants requiring residential housing on the corner of Lexington Dr. and Cerritos Ave. that remain in place.

Those bad feelings are misdirected at both the Cypress City Council and Cypress School District.

The City Council responded to the request of the property owners, as well it should. In the first two instances, the property owner was LARC. In the current instance, the property owner is Cypress School District.

Neither the City Council nor Cypress School District should be held responsible for bad feelings generated by Measures A and L.

Why were no other options considered for either Mackay or the District Headquarters property?

Other options were considered, as described in the final report and recommendations published by the Surplus Property “7-11” Advisory Committee:

  • Mackay property: First priority: lease; second priority: exchange; third priority: sale…
  • District office property: First priority: exchange; second priority: lease; third priority: sale…

Why were there no competitive bids for either Mackay or the District Headquarters property?

Competitive bids are not required by law. (Climb down! Keep reading!)

According to Tim McLellan, Assistant Superintendent of Cypress School District:

Our District spent approximately 6 months (beginning sometime after the District’s settlement with the City of Cypress regarding Measure D), seeking out interested developers that would be open to an Exchange of identified surplus properties.

An independent consultant was hired to seek out potential developers who might be interested in performing an Exchange of any identified surplus properties. Given the following three challenges:

  • The City of Cypress having a Measure D Ordinance,
  • The District’s established goal of generating ongoing revenue (not a one-time sale), and
  • The method needing to be performed to have any property be valued at its highest and best use (i.e., approval by community election to have identified properties rezoned for homes),

(given the above) many developers showed minimal interest.

The Board took action and accepted the 7-11 Committee’s report in March 2013 to establish Mackay as a surplus property. The City of Cypress expressed interest in exercising their Naylor Act rights and purchasing part of the property.

Warmington Residential was one of the many developers approached. Given the above, they showed an interest and willingness to accept all risk associated with both proposals (Mackay and the District Office). They provided a proposal to the District which was then reviewed by our Board of Trustees.

Around this same time period, CenterStone also showed an interest and willingness to assume the risk described above. CenterStone was in the process of finalizing their 16-home development across the street from the District Office. Also, CenterStone had a realistic property within the City of Cypress that could be used as a possible and viable relocation site for the new District Office property.

After several Close Session meetings, the Board of Trustees approved Exclusive Negotiation Agreement with both, without utilizing a competitive bidding process.

  • Warmington was selected for Mackay (though they provided a proposal too for the District Office property).
  • CenterStone was selected for the District Office property (mainly for two reasons: the development across the street and the possible new property, across from Cypress College, that will be used in the exchange).

(As has been shared to other inquiring community members) Utilizing a competitive bidding process is not required when a school district elects to exchange real property. Pursuant to Education Code 17536 et seq., a governing board of a school district may do so upon such terms and conditions as the parties agree. Attached, for your reference, is a letter of response provided to one such inquiring individual.

That said, Warmington & CenterStone were NOT the only developers considered. It should be noted that a separate developer (William Lyon) has been utilized for the Dickerson property Exchange Agreement.

Why swap the 6.3-acre District Headquarters for a smaller 1.4-acre parcel on Valley View St.?

The short answer is that the District will make up the difference in value through improvements: a new headquarters (that includes leasable income-producing space) and a new maintenance yard (in the northwest corner of the former Swain Elementary School site).

Why rely on developer costs for new District headquarters and maintenance facility without independent studies or analysis?

According to CSD Assistant Superintendent Tim McLellan:

The valuations for the scope of services to be performed for construction of the new proposed District Office and Maintenance & Operations building were performed jointly between CenterStone and Cypress School District. Meaning we both agreed to use an outside developer (Slater Builders, Inc.).

It was important for the District to have an outside developer to perform this valuation because CenterStone primarily is a residential type developer; not a commercial building developer. We provided a list of facility needs for both projects and then were provided anticipated value costs. These costs were taken, reviewed and approved by the Board last December 2013 (for reference, attached is a copy of the First Amendment Agreement with CenterStone [9] (pdf)).

In addition, Cypress School District had these identified costs reviewed independently by our current consultant/project director (Schoolhaus Advisors) for modernization, and confirmed that the valuations provided were within reason.

Why exchange Mackay for an unknown property?

Short answer: Warmington, the developer, does not have a property in its inventory that meets the exchange criteria set by the District. That means a property must be purchased from someone else.

Given the bitter wrangling over previous re-zoning, who is going to put a valuable property in limbo waiting to see if the Mackay property will be re-zoned?

So if Mackay’s re-zoning is approved, a search for a proper exchange property will begin.

From CSD Assistant Superintendent Tim McLellan:

The exchanged property for Mackay is unknown at this time, because the voters have yet to actually approve the proposed rezoning.

The District’s Exchange Agreement with Warmington Residential is based on the highest and best use of the Mackay property, which is based on the premise that the property will be rezoned to allow single-family, detached homes be built like its surrounding neighborhood.

I believe the best way to answer your question is…If Measure R does not pass, and the Mackay property is not able to be rezoned, then the District does not have an available property to trade.

We know that Warmington Residential does not have a possible exchange property within their known inventory of owned properties. Given that fact and after it is clear that the Mackay property has been approved for rezoning, the District will perform the task of finding a revenue generating property that meets our established goals and conditions.

Why not sell Mackay and use proceeds to pay down bond debt?

California Education Code section 17457 restricts the use of the proceeds of a sale of surplus property: “no proceeds… shall be used for general operating purposes of the school district.”

Section 17462 states positively that “funds derived from the sale of surplus property shall be used for capital outlay or for costs of maintenance of school district property…”

Section 17463.7 at first looks like a way around these restrictions, but applies only to surplus properties “purchased entirely with local funds…”

Why is the District focused on income for the general fund?

General fund money is the least restricted, hence the most desired. It can be used to plug whatever budget holes need plugging.

That doesn’t mean that the administration and Board of Trustees will use any new general fund money to increase their own compensation.

In any case, the District budget [10] (pdf) is open to public scrutiny. If you think that staff is over-compensated, you may take your grievance to the School Board. If you are unsatisfied with the School Board, you may vote in replacements.

In Tuesday’s election, you have a chance to vote on three members of the Cypress School Board from a selection of four:

  • Lydia Sondhi
  • Sandra Lee
  • Steve Blount (incumbent)
  • Valeri Peters Wagner (incumbent)

Or you can write in someone else!

As Mr. Rose, Mr. Mauss, and Mr. Pardon chose not to run for School Board, perhaps they can severally or collectively be convinced to work on community-building projects in support of Cypress School District and Cypress Educational Foundation, as suggested in the introduction to this (overlong) article.

Why is the District planning to build a new headquarters twice the size of its current facility?

Short answer: half the new headquarters building will be leasable income-producing space.

Where is the bus yard facility going?

This item is still being pondered. Currently, the small fleet of buses are parked on the District Headquarters property when not in use.

According to Assistant Superintendent McLellan:

The District is not proposing to have the new bus yard at the closed Swain site. The new Maintenance and Operations facility will not include our bus transportation department.

We do plan on maintaining our bus transportation program. If voters approve Measure Q, then we will explore options for where to relocate our bus transportation department. We have a very small transportation program of 6-7 buses, used primarily to support our Special Education program. Also, we still provide a very limited home-to-school bus program.

We have had some informal initial discussions with neighboring school districts about utilizing their existing bus yards. They appear open to the idea.

Also, when the timing is right, the District will ask the City of Cypress about the possibility of utilizing the City yard (this could allow our bus transportation department to possibly stay within the City of Cypress).

What goes on at a maintenance facility?

Given that the proposed new maintenance facility on the northwest corner of the former Swain School site will not include a bus yard, what should neighbors expect?

According to Assistant Superintendent McLellan:

The activities that take place in the Maintenance & Operations facility are:

  • Routine maintenance work/support area – This facility is a centralized hub area where basic materials, equipment, tools, and supplies are kept, etc.
  • Mechanical garage / Wood shop area
  • Grounds keeping team – supply room, planning area, vehicle storage (for lawnmowers and trucks)
  • Warehouse facility – Centralized hub area for all textbooks and classroom supplies and other storage area
  • Food Services – Supply area/storage room
  • Offices for Director of Maintenance & Operations and Food Services / this includes important records storage
  • Restrooms and general parking

Given that the Swain Site will NOT be used for bus transportation, we do anticipate to generate some traffic. Currently the District’s Maintenance & Operations team utilizes the following vehicles:

  • 3 maintenance trucks
  • 1 warehouse truck
  • 1 Sprinkler truck
  • 2 Gardener vans (that utilize trailers for towing lawnmowers)

Regional-sized park proposal

Desirable but unlikely unless a funding angel poofs into existence.

The City of Cypress does not have the money to purchase the Mackay site outright for such a use.

The County of Orange most likely has no interest in doing so. Supervisor John Moorlach reminded me that Donald Bren gifted the County with 2,000 acres that the County must figure out how to maintain indefinitely. A small regional park in Cypress is a distraction in comparison.

References

  1. Articles published by Orange County Breeze:
  2. Background documents from Cypress School District
  3. Relevant sections of the California Education Code
  4. Ballot measures relevant to the discussionEditor’s note: a reader corrected me that I have flipped Measures A and L. The mislabeling does not materially change the analysis.
    • Measure D, as enacted in the Cypress Municipal Code [25], Appendix I, Zoning Code, Sections 5.28.020 and 5.28.050.
    • Impartial analysis of Measure A [26] (pdf) to rezone a portion of property formerly part of the Cypress Golf Course and another property, both owned by Los Alamitos Race Course, at the request of the property owner
    • Impartial analysis of Measure L [27] (pdf) to rezone a portion of property owned by Los Alamitos Race Course, at the request of the property owner
    • Measure M allowed the Cypress School District to sell captial appreciation bonds (CABs) to pay for modernization of its six remaining schools. The school board received a presentation on the status of Measure M funds [28] (pdf) over last summer. That presentation does not address long-term consequences of issuing CABs.
    • Full text of Measure Q [29] (pdf) to rezone the Cypress School District headquarters site to allow development of single-family detached homes
    • Full text of Measure R [30] to rezone the former Mackay Elementary School site to allow development of a public park and single-family detached homes
  5. Items related to the Grand Jury report on school bonds

Definition of terms

From a glossary of terms [34]

Administrators: administrators are certificated employees who are not teachers or student services personnel. Administrators include principals, assistant principals, program directors or coordinators, and other certificated staff members who are not providing direct services to students.

Classified staff: a classified employee is an employee of a school district who is in a position not requiring certification. The classified staff data are collected in three subgroups with an individual staff member counted in only one of the subgroups. The “paraprofessional” subgroup consists of teaching assistants, teacher’s aides, pupil services aides, and library aides. The “office/clerical” staff are the employees who perform clerical or administrative support duties, such as a school secretary. The “other” subgroup consists of the remaining noncertificated staff, such as custodians, bus drivers, and cafeteria workers. The numbers of classified staff members do not include preschool, adult education, or regional occupational center or program classified employees. The data are not collected in a manner that will allow full-time equivalent (FTE) reporting.

From a FAQ published by the Human Resources Department [35] of the Contra Costa County Office of Education:

Certificated employees are required to have a Credential from the California Commission on Teacher Credentialing. Classified Employees are not required to have a teaching credential.

Certificated employees belong to the California Teachers Association (CTA) and include, teachers, speech therapists, school psychologists, nurses, and similar classifications.

Featured photo

Current Cypress School District headquarters building on the northeast corner of Orange Ave. and Moody St. in Cypress. File photo by C.E.H. Wiedel.

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