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Blog Archives - 2008 Fourth Quarter


Bush's Holiday Pardon for Turkeys. 12/18/08


                                         by Pat Flannery                                             top^

On the very day President-elect Barack Obama announced his choice for Chair of the S.E.C., Mary Schapiro, George Bush's (outgoing) choice for that key regulatory post, former Orange County Republican Congressman Chris Cox, "pardons" Republican Jim Madaffer. Here is the S.E.C.'s official letter dated today.

It ends the agency's investigation into whether Jim Madaffer et al committed securities fraud "in the matter of City of San Diego Bond Offerings". How many such "pardons" will or have been issued across the nation before Bush leaves office? The Bush insiders take care of their own - while they can. Madaffer is now free to continue his trade, free to take his bonding "expertise" to a higher level.

Cox is a long-time Republican insider. He served in the Reagan White House before which he was a corporate finance lawyer with Latham & Watkins. During his 17 years in Congress he was an ardent tax cutter and financial deregulator. His corporate advocacy continued in Congress - the perfect S.E.C. "regulator" for Bush.

His Congressional career was capped by the passage of his "Private Securities Litigation Reform Act" (PSLRA) in 1995, part of Gingrich's "Contract with America". Cox and Gingrich rammed it through Congress despite a Clinton veto, one of only two times that happened. The Bill raised the bar for complainants in securities fraud cases by imposing more demanding standards for proving allegedly fraudulent statements. It made it much easier to argue, as in the San Diego case, that misleading statements were not in fact misleading.

This Act provides great protection for people like Jim Madaffer. It all but eliminates "the defendant must have known" argument ("scienter" in legal parlance). The plaintiff now has to divine the defendant's "state of mind" before qualifying for the legal right of discovery! Cox sure knew his trade.

Whatever about Jim Madaffer's "state of mind" when he voted for the Petco Park bonds, knowing that a dark pension deficit cloud hung over the City's finances, there can be little doubt about ex-Congressman Chris Cox's "state of mind" as he clears up his regulatory loose ends before leaving office.

Because of Cox's action today, Madaffer is free to play the "scienter" game at a higher level. We all know we haven't seen the last of Jimbo. It's just a matter of time before he lands a plum "public service" job - just like Atkins.


The pending privatization of Balboa Park. 12/17/08


                                         by Pat Flannery                                             top^

"The City cannot provide the necessary funding for Balboa Park today, and is not likely to be able to do so in the future. New sources of revenue and a sharing of public and private responsibilities will be required to provide the "necessary support" for Balboa Park in the future."

So says a verbose, government-bashing, doctrinaire right-wing, privatization-sponsoring, privately-funded (by the Legler Benbough Foundation, the Parker Foundation and the San Diego Foundation) "Report" called "The Future of Balboa Park" released today.

It should be dumped in the nearest trashcan where it belongs. It is a blatant land grab by private interests who want to take over our world-class public park for their own private enrichment and enjoyment. It is as simple as that.

Every argument the report puts forward is standard privatization-of-government rhetoric, straight out of The Reason Foundation and It could have been written by Maggie Thatcher herself.

It extols a world full of limo-driven Rancho Santa Fe philanthropy types, cavorting together in an elegant Balboa Park - if only the snakes, rodents and lesser human beings like you and I can be driven to the surrounding canyon bottoms where we all belong.

Today's report is based upon a previous "Report" called "The Soul of San Diego", which if implemented would have conclusively proven that San Diego does not actually have a soul, or if it does it has sold it to the devil.

I attended several Balboa Park Committee meetings during 2007 and 2008. You can read the minutes of 15 such public meetings here on the Mayor's web site, together with three very biased "reports". This whole "investigation" into the viability of Balboa Park was initiated by ex-Councilmember Tony Atkins. She got the Mayor to co-sponsor her plan to have the Balboa Park Committee (BPC) answer the following questions:

(1) What is the City’s ability to provide the necessary financial support for Balboa Park in the future?
(2) Even if the city can tackle the challenge on its own, should it?
(3) Should management and governance be expanded and, if so, how?

Not surprisingly the mayoral-hand-picked compliant BPC came up with exactly the answer Atkins wanted. And so today: "As a result of its deliberations, the BPC recommends that the City of San Diego further study, and consider formation of, a new public benefit non-profit entity to assist the City with governance, fund-raising and management of Balboa Park through a contractual agreement with the City."

Of course this "new public benefit non-profit entity" will require a highly-paid Executive Director experienced in the politics of public/private shenanigans. I can't imagine anybody more qualified than Toni Atkins. She knows exactly how to reward her backers and create a job for herself.


City Council confirms Committee Appointments for 2009. 12/16/08


                                         by Pat Flannery                                                           top^

Donna Frye today generously gave up her position on Public Safety & Neighborhood Services to make room for Sherri Lighters on that important Committee. Lightner now has three appointments while Frye is reduced to two: Rules, Open Government and Intergovernmental Relations, which Hueso will chair and Natural Resources & Culture, which she will chair.

Frye's generous move puts Lightner on a par with the other newbies, Gloria, DeMaio and Emerald with regard to the number of committee positions they hold. Here is a brief video clip of today's proceedings:

At least they spared us the longwinded, hypocritical speeches so beloved of Atkins, Madaffer and Peters. Implicitly, City Government is now a straightforward fight between the special interests and citizen interests.

Maybe that's progress. It's now on to the pension battle, the infrastructure battle and the budget battle. May the best interest win - the public interest.
When they come to realize it (and they will) the public hold the winning hand. They control the purse strings. They pay the taxes.



The “behind the scenes" work of Council begins. 12/15/08


                                         by Pat Flannery                                             top^

Here is Hueso's Agenda for Tuesday's Council meeting. Notably, Gloria will Chair the Land Use & Housing Committee for the BIA plus sit on three other important Council Committees. Special interests, unions and developers, are again firmly in charge of our City government, with Todd Gloria as their new creation, specially bred and trained for the job.

The unions and developers will dominate the Councilmembers' time every day while the voice of the voters become a distant memory. The behind the scenes” work of building council consensus" continues. Don't expect your phone to ring asking for your opinion, the election is over.

It will not be easy to gain some leverage over this new City Council. All that has happened is that one more "Nay" vote has been added to the lone Frye vote, in the person of an equally incorruptible Sherri Lightner. It is ironic that the more affluent Northwest of the city, Districts 1 (Lightner) and 6 (Frye), should outshine the less affluent Southeast of the city, Districts 4 (Young) and 8 (Hueso), in people-oriented, honest representation.

Three Districts, 3 (Gloria), 5 (DeMaio), 7 (Emerald) are hopelessly lost to the special interests for at least four years. It may be possible to redeem District 2 in two years. Kevin Faulconer only beat Lorena Gonzales by 724 votes in November 2006 - Faulconer got 15,044 and Gonzales got 14,320.

But these two are now in alliance at City Hall. They both support Hueso as Council President, in order to share the spoils of government for business and labor respectively. The people of District 2 are thus without honest representation - development projects and project-labor agreements rule. District 2 needs to find a people-oriented, honest candidate for 2010.

Grassroots pressure on Young (D4) and Hueso (D8) offers the best chance for people-leverage over the next two years. The voter turnout in these two Districts is low. Young, running practically unopposed in 2006, only needed 10,265 votes to get elected. Hueso only needed 7,994 the same year, hardly a mandate to run the City as Council President in 2008.

Sherri Lightner had to get 40,282 to get elected (Faulconer 18,097, Gloria 27,922, DeMaio 19,461, Frye 18,314 and Emerald 27,836). That means that Sherri Lightner got more than five times as many San Diegans to vote for her as did Hueso, who is now strutting around City Hall like a peacock.

In addition to the Council Presidency, Hueso gave himself the powerful Rules, Open Government and Intergovernmental Relations chair. That means that he has put himself in charge of the only committee that might have curbed the excessive power he will exercise as Council President.

DeMaio fared no better for having cast his ignominious vote for Hueso. So much for Carl "speaking truth to power". Hueso's chairmanship of the Rules Committee is the death knell for any reforms suggested by Frye and DeMaio. It was a complete waste of time. Meanwhile Young has the same number of Committee appointments as Frye and Lightner put together.

Sherri Lightner should have received a committee chair. Like Frye she only received two appointments. That is disgraceful. With the exception of Frye she is the most qualified Member of the City Council. Both are eminently qualified to chair either Land Use & Housing or Budget & Finance.

There is something terribly wrong with San Diego when the special interests, unions and developers, can put the least qualified people in key positions, just because such people will do exactly what they are told.

Anybody who can volunteer for a Board or Commission, join a Community Planning Group (CPG), redevelopment Project Area Committee (PAC), town council, neighborhood council, action committee, watchdog committee or any public interest body, needs to do so. These bodies are currently being "packed" with developer-friendly and union-friendly shills.

Don't wait until they try to put a mixed-use high-rise next to your house or close down your favorite library or park. It is up to you. You are the voters.


Is Ben Hueso the next Fabian Núñez? 12/15/08


                                         by Pat Flannery                                             top^

"Peters said he is confident that Hueso will be adept at the “behind the scenes” work of building council consensus and that he will embrace the need to become a more visible presence at City Hall" - that according to Ron Powell in the U-T today. And there you have it, that's how the people's business was conducted at City Hall under union-controlled Council President Scott Peters and will continue under union-controlled Ben Hueso.

Surprisingly, Powell relied heavily on political consultant Chris Crotty for an "independent" assessment of Hueso. Perhaps Powell felt a certain kinship with Crotty because he was a former staff writer for the San Francisco Examiner. But he is hardly an expert on Hueso - at least not yet.

It may be that we will be seeing more of Crotty as a PR man for Hueso. Getting Powell to write this glowing U-T puff piece was a good start: "And political consultant Chris Crotty believes Hueso wants to follow Núñez's path to Sacramento or beyond." Maybe Powell wants to follow Crotty "to Sacramento and beyond". It seems Hueso is adept at "behind the scenes" self-promotion as well as "building council consensus".

He may already be building his PR team for "Sacramento and beyond".


The Office of City Attorney is a highly political Office. 12/14/08


                                         by Pat Flannery                                             top^

Matt Hall has an interesting article in the Union-Tribune today in which he explores the much talked about part of (City Attorney) Jan Goldsmith's inauguration address where he surprisingly focused on a little-known Deputy City Attorney named Andrea Dixon and her relationship with Mike Aguirre. "Andrea refused to do something she was ordered to do because it violated her ethical obligations", said Goldsmith in his very first speech.

The incident is interesting because it deals with a phenomenon I have become familiar with in dealing with the Office of the City Attorney, particularly on land use issues. How political should the City Attorney's Office be? Will it be less political under Jan Goldsmith?

There is no doubt that under Aguirre the CA office was very political. But Goldsmith wasted no time in making it equally political under him. My question is "is that as it should be?" After all it is a citywide elected office. Should it be less "political" than the Mayor's office for example?

Let's look at what Aguirre's "political team", Katheryn Burton and Karen Heumann, wanted DCA Andrea Dixon to do. Apparently they wanted her to "advise" the City Council that there may be an environmental issue not quite fully addressed in the EIR that supported the University Towne Center expansion entitlement permits.

We all know that Aguirre cared deeply about water conservation and felt that it should be considered in planning large projects. It may be that he found Page 44 of the City's "Statement of Overriding Considerations"  deficient and felt that it should be brought to the City Council's attention.

Yes, that was "political". But I am not sure what "ethical obligations" Ms. Dixon would have violated if she had obeyed such a directive from the elected City Attorney. I wonder how many staffers have disobeyed similar directives from Mayor Sanders and survived. I think we all know the answer to that.

It is perfectly proper that elected city officers be "political". The City Charter ordains it so. I think it is perfectly proper for a new City Attorney to have different political priorities from the outgoing one. That is what elections are all about. It is therefore proper that Jan Goldsmith reinstate DCA Andrea Dixon to her former role as chief advisor to the Planning Commission if he feels she will better reflect his views on land use issues.

I don't think there was anything either "ethical" or "unethical" about what happened between Aguirre and Dixon. It was political, that's all. Obviously to have challenged Aguirre, Ms. Dixon has some political "awareness". I fully expect there will be many instances when I and others will disagree with Goldsmith and his deputies over land use issues, but cloaking such political differences as ethical issues would be a mistake and must be avoided.

Jan should accept the fact that the office he has assumed is highly political. So far he wants us to believe that it is just another big law firm that happens to have a city as its only client. That is not going to work. How, for example, are we going to resolve the thorny Density Bonus issue if we are to pretend that Shannon Thomas and her September 8, 2006 Memorandum of Law are not "political"? Are we to believe that she has some kind of "ethical obligation" to DSD requiring her to tell them what they want to hear? 

Let's be realistic. Look at the two pictures above - one has a distinctive "blue" tinge, the other a distinctive "red" tinge. Let's recognize political realities for what they are and get on with it. After 5:00 PM we can all get together in Downtown Johnny Brown's for a beer.



City's Density Bonus Law thrown out by Judge Quinn. 12/12/08


                                         by Pat Flannery                                             top^

Today, Superior Court Judge Linda Quinn invalidated the City's Density Bonus Ordinance adopted by the City Council on November 20, 2007, because the required Supplemental EIR failed to sufficiently analyze its  environmental impacts or provide a basis for the conclusions it reached. Here is the Writ of Mandate.

Bob "findings" Manis, now the Director of Development Services at the City of Poway, wrote this Supplemental EIR, as he wrote many others. Here is what I had to say about him on October 19, 2006. Referring to his infamous Navy Broadway CEQA "finding" (that nothing had significantly changed downtown in 16 years) I wrote: "This man has today deliberately penned a profoundly dishonest letter and expects to get away with it. He is knowingly and deliberately denying our right to honest government."

Manis has got to be one of the worst employees the City of San Diego ever had, and that is saying something. When he went to Poway I wrote: "He left a trail of environmental disasters around this city." That he did.

Judge Quinn's decision today opens up the Density Bonus can of worms all over again. It will be a test of City Attorney Jan Goldsmith's election promise that his office will be about the law and only about the law. If he is sincere he should start with this Memorandum of Law , written by Deputy City Attorney Shannon Thomas on September 8, 2006. It rivals the Manis document in its blatant misstatement of California law in favor of developers.

Ms. Thomas had played games with the words "in and of itself".
Here's Density Bonus - "In and of itself" is being avoided like the plague on November 2, 2007: "The existing State Density Bonus Law does not recognize San Diego's local coastal 30 foot height limit. The Coastal Commission is not empowered by the Coastal Act to implement a local height limit. The State Density Bonus Law was intended by the legislature to apply equally to all parts of the state."

DSD actually got Manis to rewrite his original Supplemental EIR to conform with Shannon Thomas's more favorable opinion. Read Density Bonus Alert on May 16, 2007. So you can see that this is a very complicated business, made so by DSD staff and Deputy City Attorneys conspiring together to twist State law in favor of developers who want to use the state Density Bonus law to bust San Diego's 30 foot coastal height limit.

The basic problem is that developers pay the salaries of DSD staff (it is an "enterprise fund") and Shannon Thomas is their attorney at our expense. It is clear that the law was not followed with regard to this Ordinance (see Judge Quinn's ruling), the question now is: who will "Judge" Jan Goldsmith represent, the people of San Diego or Sanders' developers? He should start by personally reviewing this Memorandum of Law by Shannon Thomas.



We must hang on tight to our City lands and other City assets. 12/09/08


                                         by Pat Flannery                                             top^

To paraphrase a famous story from Chicago politics: "San Diego ain't ready for reform". Students of politics will recognize the words of a colorful Chicago saloonkeeper/ward-boss named Paddy Bauler who danced a jig the night Richard J. Daley was first elected Mayor of Chicago in April 1955 declaring prophetically that "Chicago ain't ready for reform yet".

It is ironic that on the very day Illinois Governor Rod Blagojevich was being arrested and accused of attempting to sell Obama’s Senate seat, San Diego should be going through the motions of electing a Council President that everybody knows was chosen months ago by our own version of the Chicago political machine.

Watch a condensed version of today's farce .

I can only guess at the intimidation some members of the City Council must have been subjected to by the supporters of Councilmember Ben Hueso for President because I was subjected to a little of it myself today. I was told in the Council Chamber by a senior union official that I "better stop this", referring to my less than flattering writing about San Diego city unions.

I think in that respect I am a bit like Sherri Lightner - any attempt to bully me has exactly the opposite effect. There is no doubt that some union bosses have used bully tactics on some Councilmembers. Some have clearly yielded to it, some have notably not, and sadly some are part of it.

An alliance between the unions and the developers, as prevailed under Dick Murphy and John Kern, is a deadly combination. Now the Murphy/Kern nightmare is back. The unions want the City to sell off as many of its assets as possible to pay for pension benefits and the developers are only too eager to oblige by buying them all up. Citizens get squeezed in the middle.

Councilmembers are mere actors on this City stage where the unions and the developers write the script. The actors who walk away with the Oscars are the ones who take direction best. Ben Hueso won an Oscar today.


Why Sanders should back Donna Frye for Council President. 12/06/08


                                         by Pat Flannery                                             top^

Watch this Obama transition video called "A Seat at the Table".

What we need is "".

Wouldn't that be nice?

We could put all the bickering and stupid bell-ringing behind us. We could make the tough decisions together.


I cannot imagine a better prospect for harmony at City Hall over the coming years than by the two people who competed for Mayor in 2005 joining together to represent the full spectrum of political opinion in this city. They are both experienced politicians and know that politics is "the art of the possible". Our narrow partisan politics, whether from the left or the right, would be subsumed in the dynamics of these two people working together.

Both Sanders and Frye understand that the people of this city have chosen a Strong Mayor and a Strong Council form of government. If Sanders wants to "Reform City Hall", as he promised, his best chance is with Frye. The unions, should he back them, will kill his political career as surely as they did with Dick Murphy. The unions only care about their pensions.

This Monday, December 8, 2008, will be a watershed in San Diego history. At 10:00 A.M. Jerry Sanders will be sworn in as Mayor for another four years; Jan Goldsmith will be sworn in as City Attorney for four years; Sherri Lightner, District 1, Todd Gloria, District 3, Carl DeMaio, District 5 and Marti Emerald, District 7, will be sworn in as City Councilmembers for four years. It is a great opportunity for real change and a brand new start.

At 2:00 P.M. the four new City Councilmembers will join the four existing City Councilmembers Kevin Faulconer, District 2, Tony Young, District 4, Donna Frye, District 6 and Ben Hueso, District 8, in the Council Chambers for their first official meeting together. By prior agreement at Council on November 18, 2008 Tony Young will run Monday's meeting.

The first item on the agenda is "Selection of a Council President for Calendar Year 2009". The known candidates are Donna Frye, Ben Hueso and Tony Young. The city employee unions are heavily backing Hueso.

If Hueso is chosen, there will be a strong perception that the union bosses will still be pulling the strings. That was the old way. And look where it got us. "Insanity is doing the same thing over and over and expecting a different result". Frye and Sanders would achieve "a different result". There needs to be more than unions at the table. Inclusion is the new world order.


Aguirre does the right thing in the end. Hillel sent back. 12/05/08


                                         by Pat Flannery                                             top^

To the great relief of a quiet residential neighborhood in La Jolla, a proposed Hillel student center development in their midst will be decided by the incoming City Council, sans Scott Peters, who had almost made it his life's work. He had long worked this troubled project jointly with Deputy City Attorney Karen Heumann, but in the end they were unable to get the job done for their political patrons. It will now be decided on its merits as an ordinary land use issue, without any of the backroom arm-twisting.

The groundwork was laid by Peters and Heumann to separate the right-of-way (ROW) vacation from the rest of the project application, as evidenced by this document - the ROW was put on today's agenda as a separate item! It would undoubtedly have gone through as planned today if Aguirre had not withdrawn his support. It caused Madaffer to ring his "I hate Aguirre bell".

So, better late than never. Maybe it's just the way Aguirre does things. He has a flair for the drama of the last minute. He issued his final Interim Report 35 at 4:00 P.M., just as he was leaving his office for last time. City Hall will be dull without him. Madaffer should find a job on a Hate Radio station in some red-neck state, where he can ring a "I hate all liberals" bell every day to his heart's content. I hope he is soon forgotten in San Diego.


Aguirre has one last chance to redeem his legacy. 12/03/08


                                          by Pat Flannery                                             top^

Peters and Aguirre may not have finished their Hillel shenanigans yet. They may yet pull "a stroke" on Friday. My guess is that they will "split the baby".

When you carefully watch the video of Karen Heumann "advising" the City Council (below) on proper procedure for continuing the Hillel project on Tuesday December 2, 2008 to Friday December 5, 2008, their strategy emerges. Note that she starts by asserting that there are "several components" to this project before the Council. That statement betrays their strategy.

Do they intend to split the project into component parts to "rationalize" their posting deficiency? I think they do. Watch the video very carefully.

Heumann finishes her well thought out "advice" to City Council by recommending that the "component" with the defective noticing i.e. the right-of-way vacation, be docketed as an "additional item" for Friday. There is no way that she came up with that sophisticated docketing tactic on her own. She is clearly working hand-in-glove with the ever-wily Peters. Thank goodness this is the "Last Hurrah" of this devious bunch. Here is the video.


Peters understands that land use entitlements, like pension benefits, are difficult to roll back once granted. Granting illegal entitlements has been the hallmark of Peters' eight year career on City Council. He hopes to pull off one last giveaway on Friday. Here's how he hopes to do it:

He will suggest that the City Council approves all Hillel's entitlements while sending back the one right-of-way "component" for corrective noticing. That is classic Peters. He knows that the next City Council will have great difficulty taking back what the outgoing City Council has granted. He knows that the incoming City Council would be forced to grant the right-of-way vacation or face the financial might of Hillel in court.

His last official act would thus be to set up the City for a massive law suit, or grant his giveaway. And this is the man who is to be a Port Commissioner?

The one man who can prevent this from happening is Mike Aguirre. He is still the City Attorney until Monday morning at 10:00 A.M. Will he turn up tomorrow at 10:00 A.M. and tell the outgoing City Council that a land use project is one indivisible item? That these so-called "component parts" are interdependent and that an applicant can't have one without the other?

Mike Aguirre knows that a public agency cannot grant a permit for a private building part of which sits on a public right-of-way, without vacating that right-of-way. All Aguirre has to do tomorrow is take that City Attorney's chair one last time and uphold the law. Will he do it? Or will his name appear on a Wall of Shame alongside the names of the four worst City Councilmembers in San Diego history? One way or another tomorrow marks the end of the most shameful period in San Diego history.


The law prevails - City Attorney agrees with Frye on Hillel. 12/02/08


                                         by Pat Flannery                                             top^

Deputy City Attorney Karen Heumann sent this Memorandum of Law to the Mayor and City Councilmembers this afternoon. She concluded:

"The City failed to satisfy the state law requirement that published notice of a public right-of-way vacation "shall be published for at least two successive weeks prior to the hearing". The public right-of-way vacation must be re-noticed and heard at a later date in accordance with all applicable San Diego Municipal Code and state law requirements. Therefore, the practical consequence of the noticing deficiency is to re-notice the entire matter for a future hearing date."

So, Peters and Aguirre failed to give Murray Galinson his pet project, a Hillel facility on a too-small, too-residential lot, before leaving office. They could only contort the law so far. It is a great victory for the rule of law and a great defeat for the power of money in politics. It should give heart to citizen activist groups everywhere. It proves that you can fight City Hall.

Congratulations to all those brave La Jolla citizens who, unlike their politicians, were not intimidated by the big political donors. A few over-ambitious politicians will have some explaining to do tonight. They failed to deliver for their political bosses. They could so easily have avoided their current embarrassment by listening to the people, their real political bosses.


Politics is a dirty business. Just ask Peters, Aguirre and Heumann. 12/02/08


                                         by Pat Flannery                                             top^

Hillel's controversial Item 343 was continued to a special meeting of the City Council on Friday December 5, 2008 at 10:00 A.M. It turned out that the City Attorney, Mike Aguirre, played a major role in the final push to grant this much disputed land use entitlement. Today, City staff admitted that they failed to give proper notice, by newspaper and on site, of their proposed vacation of a public right of way. The question was if that omission required the item be re-docketed for January. Strangely, the City Attorney said no.

Watch this video of today's Council proceedings.
Ms. Heumann is either an awful bad attorney or an awful good politician. It was all very clear to Frye.

I had called Mike Aguirre over the weekend and discussed the Hillel issue with him at length. I was surprised at his intimate knowledge of the whole affair. I was even more surprised to learn that he was just as determined as Scott Peters to see it approved. What in the world could be so important about this very questionable development project? The answer - politics.

We all know that Peters and Aguirre despise each other. But they are both Democrats. And neither is quite finished with politics. Peters intends to spend the next four years on the Port Commission running for Mayor and Aguirre wants Obama to give him Carol Lam's old job - U.S. Attorney.

At first I thought it was Aguirre's favorite deputy, politician/attorney Karen Heumann, currying favor with La Jolla moneybags, Murray Galinson, (a prime mover on the Hillel project from the beginning) for a 75th State Assembly District re-run. Karen ran against George Plescia in 2004 and did well. She got 38% against Plescia’s 60%. It was considered a good showing for a Democrat at the time, in a safe Republican seat.

She sat out the 2006 and 2008 elections as she had a high-paying job with Aguirre. Nathan Fletcher held the seat for the Republicans in November, but only just. His majority was reduced to 52%. Darren Kasai, a weak unknown candidate, got 42% for the Democrats. Next time it will go Democrat and Heumann wants it. She will need the big La Jolla Democratic money.

But Aguirre assured me that I had it all wrong, Huemann was not interested in running for the 75th District. Then why all the kissing up to moneybags Gallinson? Why were these two outdoing Peters in ramming through the Hillel project at any cost? The answer of course is the U.S. Attorney job - Heumann would be Aguirre's number two. And it would come within a year.

Aguirre plans to spend a lot of time in Washington over the next few months. He can be very persuasive. But the last thing he needs is Obama's big La Jolla contributors badmouthing him to Obama & Co. I guess the fact that the residents of a quiet La Jolla neighborhood will get saddled with a noisy UCSD frat house (or noisy religious house if you prefer) with every inch of curb space taken by strangers, is nothing to ambitious politicians like Aguirre, Peters and Ms. Heumann.


Sanders is deliberately creating "deferred maintenance". 12/01/08


                                         by Pat Flannery                                             top^

The San Diego Unified School District deliberately neglected to maintain its school buildings so as to create a massive deferred maintenance deficit. It knew it could float a School Bond to pay for deferred maintenance. It is illegal to use bond money for regular maintenance, but not for the "deferred" variety. That is the big loophole. They avoid paying it out of their General Fund leaving more operating money for payroll and pensions.

The City of San Diego is doing precisely the same thing. Sanders is pushing maintenance costs into a deferred maintenance deficit. Like the School District he wants to finance it as a capital item. He has a private placement lined up with the Bank of America for $103 million. Aguirre blocked it because it used a creative financing method called "lease-lease". The City leased properties such as the downtown police station to itself. No doubt Jan Goldsmith will dutifully sign off on it as soon as he takes office.

Apart from the illegality of creating internal lease-lease "revenue", creating deferred maintenance to capitalize the cost is horribly expensive. You re-roof whole buildings rather than fix a small area; you replace whole parking lots instead of filling a few holes; you let doors, windows, railings etc. rot away, when a little paint would save millions. Watch City staff explain it.


Sanders also prefers deferred maintenance because it creates lucrative contracts for his friends. To them government is all about business.

The City Council today identified funding to keep three painters on the job. Keeping even one of them will save millions later. But the Mayor is disputing the funding source, saying it is eating into his reserves. It is not. He and his staff wrongly claim that any surplus revenue or unspent appropriation automatically becomes "reserves". That is accounting nonsense. Reserves become reserves when designated as such and only then.


Will Ann Smith be the real City Attorney? 12/01/08


                                         by Pat Flannery                                             top^

Back on July 2, 2005 I wrote a blog entitled "The City may as well have hired Ann Smith". I was referring to the fact that the City had hired a pro-union labor lawyer to "negotiate" on behalf of the City. Today the City rehired the same Bill Kay from San Francisco to "negotiate" the City's next round of wage agreements with the public service unions.

The unions trotted out the City Attorney-elect Jan Goldsmith to read a script extolling the wisdom of rehiring their hand-picked "negotiator".


Here is an op-ed written by Mr. Kay in the Union-Tribune on July 2, 2005. Mr. Goldsmith even referred to the spurious $350 million Mr. Kay claimed to have saved the City in that op-ed union puff piece.

We have now officially reentered union fairyland with Kay and Goldsmith as our tour masters and Ann Smith writing the scripts. The script begins with "welcome to San Diego, the land of the lotus -eaters".

Scott Peters' last act of infamy as a City Councilor. 11/27/08

                                          by Pat Flannery                                             top^

A bizarre end to Scott Peters' eight years on the City Council is unfolding. He is using his powers as Council President to finally ram an unwanted 12,000 square foot student center, with a 17,000 square foot garage, on a quiet single family residential neighborhood in La Jolla. For some unknown reason he has pushed this project like a tiger for his entire term in office.

Facing widespread opposition from his own constituents in La Jolla, he managed to get his former law partner, Suzanne Varco, to represent the City in a law suit filed by two La Jolla citizen groups: the Taxpayers for Responsible Land Use and the La Jolla Shores Association. On March 27, 2007 the City lost. Superior Court Judge Linda B. Quinn struck down the City of San Diego's decision to permit this totally inappropriate project.

Peters and the City decided to ignore the court, saying: "it was determined that the applicant would be allowed to resubmit a new application addressing the judge’s concerns, and process it through the City’s review process." Peters docketed the project for a Council hearing on December 2, 2008, his last day on the City Council. Here is the full documentation for the Council Meeting on Tuesday afternoon. Note that the project has been rejected numerous times by the City Planning Commission, the La Jolla Community Planning Association and other local groups.

According to this Peters Doctrine of land use, if a citizen objector sues the City and wins, the City simply invites the applicant to resubmit substantially the same project and call it a new project. The City will then decide what "addresses the judge's concerns", not the judge. That is what Peters has placed before the City Council on Tuesday. They should reject it.

But here is where it gets really bizarre: the City screwed up the public notice regarding the vacation of a right of way that is part of the project's application. Dr. Ross M. Starr, a Professor of Economics at UCSD, sent this email to the City Clerk on November 19th. He noted that after inspecting the site on November 18 "There were no posted notices for the hearing currently docketed for December 2, 2008."

There was however a posted notice dated October 1, 2008 for a hearing on October 16, 2008. Dr. Starr and his friends wisely took pictures of the posted notice in front of a copy of the Union-Tribune for that day, November 18, 2008. Here it is and another showing a wider view of the site.

The City's response was to go out to the site and post this Revised Notice, announcing a special City Council meeting for December 5, 2008. It explained in bold print: "This Posted Notice is being provided in addition to the Posted Notice, previously posted on November 19, 2008. The Hillel of San Diego Student Center Public Right-of-Way Vacation has been noticed for the City Council hearing of December 2, 2008. It is anticipated that this item will be continued until Friday, December 5, 2008."

This means that Council President Scott Peters informed the City's Development Services Department that five Council Members had reached a "collective concurrence", on or before November 21, 2008, to continue Item 343 on the City Council Agenda for Tuesday, December 2, 2008 to a special City Council meeting on Friday December 5, 2008. Such a "collective concurrence" is illegal - a breach of the California Brown Act.

Yet that is exactly what Scott Peters is planning - one final act of infamy on his very last day as a member of the City Council. I hope a sufficient number of his former La Jolla constituents turn up at City Hall on Tuesday December 2, 2008, to deny him this final abuse of elected office.

Let's hope the swearing in of a new City Council and a new City Attorney on December 8, 2008, marks the beginning of a new era in San Diego.

Is DeMaio setting himself up as the Mayor's hatchet man? 11/25/08

                                          by Pat Flannery                                             top^

Just when we thought we had seen the end of nastiness on the City Council with the departure of Jim Madaffer, along comes Carl DeMaio with this:

Mild mannered, consensus-seeking Kevin Faulconer, DeMaio's sole remaining Republican colleague on the City Council, must have been dismayed at DeMaio's display on Monday. So too must Donna Frye who has formed an alliance with DeMaio in her bid for Council President.

It was not even clear what DeMaio was upset about. It seemed he was merely trying to win favor with the Mayor and his staff. At the podium he turned to Jay Goldstone for reaffirmation that the Council had raided the City's reserves in saving the libraries. That argument had been prominent in the Mayor's failed attempt to close the libraries. But it made no sense.

Goldstone had asserted that the $2 million Transient Occupancy Tax Surplus, identified by Andrea Tevlin to offset the cost of deferral, was a "reserve". It is not. In picking up on this misrepresentation was DeMaio setting himself up as the Mayor's hatchet man at City Council? These two men share a passion for privatizing large chunks of the City's treasury.

Faulconer had been widely perceived as the Mayor's man on the City Council, but he was never really comfortable in that role. Besides, to get re-elected in 2010 he has to "reach out and touch" a growing number of left-of-center younger voters in the coastal areas of his Council District. At the same time he must maintain the trust and confidence of his core support, the downtown business community. He may now be free to pursue both.

The task ahead is not about busting city unions, as DeMaio seems to think. It is about achieving equity between city employees and taxpayers. The taxpayers are currently burdened by the excesses of two over-aggressive union bosses, Judie Italiano (MEA) and Ron Saathoff (Firefighters), who over-benefited their union members to the point of a taxpayer revolt. That is the core of the City's fiscal crisis. But union busting will not solve it.

City employees can provide better city services than private contractors. Good faith labor negotiations, if needs be under the supervision of a bankruptcy judge, is the only way out of our present difficulties. Seven members of the incoming City Council appear to have the right temperaments to tackle the job. But Sanders and DeMaio seem more interested in exploiting the City's fiscal difficulties for their own agendas - forced land deals and lucrative outsource contracts.

Are the library closings really secret land deals? 11/22/08

                                          by Pat Flannery                                             top^

Mayor Sanders made an abrupt proposal to summarily close down several libraries. Here is Andrea Tevlin's much more thoughtful budget cutting proposal. Hers shows a wider perspective and allows for community input.

Tevlin's recommendation is: "keep these facilities open until a more deliberate and comprehensive plan for facility closures is developed and presented to Council." She notes that a number of libraries are on Sanders' closure list and also on his expansion list. Is this just incompetence or something else? If it is incompetence it is really gross incompetence.

Take the Ocean Beach Library for instances. Is Sanders aware that:
"In 2005, the City purchased land adjacent to the Ocean Beach Library for an expansion. According to Council reports at the time, this property is collateral for a HUD Section 108 loan of $2.0 million garnered for the Ocean Beach Library. Loan payments are approximately $223,000 annually through FY 2017 and are being paid from District 2 CDBG allocations."

Here is the public record, from the Tax Assessor. It confirms the IBA's findings but does not reveal the sale price from attorney Thomas Bryan to the City. It would take a little more digging to get that. The fact that the City later borrowed $2 million against the property tells nothing of the sale price or the value of the property. The important point is that the City is on the hook for $223,000 per year for that property. They have probably used the $2 million elsewhere by now. They move such money around all the time.

It seems to me that this whole library and park closure business has more to do with secret land deals than balancing the 2008/09 Budget. If Sanders is about anything he is about land deals. It is my guess that somebody wants that OB site. The library lot together with the lot next door would make a perfect mixed-use development. How many of the other library lots chosen for closure would make excellent development opportunities? Here are aerial pictures of the seven properties, all prime developable lots.

It would explain why Sanders is so sore at Andrea Tevlin. Is she spoiling a well-laid plan? Her recommendations make all the sense in the world. She says: "we are recommending a comprehensive facility plan addressing proposed closures along with proposed openings be brought to Council by February 2009 in order to prepare for the future." Sanders was very scathing about that suggestion. Why? His demeaning remarks about Tevlin brought public protests from Councilmembers Atkins and Young.

Sanders argues that because of an implementation delay, Tevlin's recommendations will result in a "cost". He failed to mention that she has offset this "cost" by raiding two of his pet projects: a BPR (outsourcing) surplus and his reallocation of a Transient Occupancy Tax surplus (he wants to use it for promotional expenditure on his hotel friends). Look at the attachment to her Report to Council. Sanders has a very weak argument.

The best thing that came out of the new "Strong Mayor" form of government was IBA Andrea Tevlin. We are immensely lucky to have her. Let's hope the City Council votes to support her sensible recommendations over the very suspicious proposals of Sanders on Monday November 24, 2008.

The pension party is over - now comes the "rush to the door". 11/21/08

                                         by Pat Flannery                                             top^

Ron Saathoff today warned the Pension Board that there would be "a rush to the door" if the Board reduced the DROP creditable interest rate from its current 8% to the assumed rate of return rate of 7.75% effective January 1, 2009. He recommended waiting until June 30, 2009, the fiscal year end.


Of course there would also be "a rush to the door" for a June 30, 2009 deadline, but more DROP people would make it to that exit door. What a rush there would be if the interest rate dropped to 5%! A stampede.

Here is the DROP Report for October 31, 2008. Note that there are 226 police and 166 Firefighters in Active Drop as of that date. How many of those will "rush for the door" before December 31, 2008? Maybe Sanders won't have to make any budget cuts after all.

This shows how fragile a system we have here in San Diego. Up to 1,028 City employees (they have already technically retired) could "rush to the door" at short notice if the Pension Board stopped paying those ridiculously high interest rates on their five year DROP accounts.

The reason the 1,028 with the $159,983,398 in Active DROP accounts would "rush to the door" to join the 718 with the $164,070,764 in Retired DROP accounts, is because the interest on their Retired DROP accounts would be set at 8% for up to 20 years as they withdrew it on an annuity.

It is clear to me that Saathoff was simply attempting to create exiting room for a larger number of his former colleagues to exit while the exiting is good. It is also clear to me that all but the most junior staff know that the party is over. All the senior staff think of now is the timing of their exit. There is at least some protection in being actually retired - your claim on whatever pension assets that may be left takes precedence over those still working.

They all know that there are not going to be any pension obligation bonds (POBs), despite what Scott Peters may be spinning to them about selling the people a bill of goods that POBs would save the City money. In fact his spurious argument can be turned against him: yes, POBs would probably cost the City less than 5%, which means that that is all the taxpayer should be paying the pension fund as an assumed rate of return!

Either way the party is over. The crunch will come when the present value of future benefits of retirees is so far beyond the market value of the pension system's assets that the retirees will be the ones clamoring for "reorganization". To paraphrase Steve Erie: hell will freeze over before the taxpayers bailout Ron Saathoff and his millionaire retiree colleagues.

Is Bankruptcy an option for San Diego? 11/20/08

                                         by Pat Flannery                                              top^

That may be the biggest question facing San Diego's politicians over the next few years. Municipal bankruptcies are governed by Chapter 9 of the U.S. Bankruptcy Code. Chapter 1, Section 109 (C) of that Code defines the conditions that must apply before a city can qualify for bankruptcy:

§109 (c)
An entity may be a debtor under Chapter 9 of this title if and only if such entity
is a municipality;
(2) is specifically authorized, in its capacity as a municipality or by name, to be a debtor under such chapter by State law, or by a governmental officer or organization empowered by State law to authorize such entity to be a debtor under such chapter;
(3) is insolvent;
(4) desires to effect a plan to adjust such debts; and
(5) (A) has obtained the agreement of creditors holding at least a majority in amount of the claims of each class that such entity intends to impair under a plan in a case under such chapter;
     (B) has negotiated in good faith with creditors and has failed to obtain the agreement of creditors holding at least a majority in amount of the claims of each class that such entity intends to impair under a plan in a case under such chapter;
     (C) is unable to negotiate with creditors because such negotiation is impracticable; or
     (D) reasonably believes that a creditor may attempt to obtain a transfer that is avoidable under section 547 of this title."

First hurdle: permission to file for relief in Federal Bankruptcy Court must be obtained from the State. That usually comes in the form of a signature from the Secretary of State. In California it would be pretty well  automatic as this State has never questioned municipal bankruptcy filings in the past. Most states take the view that such permission is given in aid of, not in derogation of, their sovereign powers. States' rights are thus preserved.

Federal and state constitutions restrict the "impairment of contracts" - U.S. Constitution Article 1, Section 10. Only the United States Congress has the power to override those restrictions through the bankruptcy powers conferred upon it by Article1, Section 8 of the United States Constitution.

When a state gives permission to one of its municipalities to invoke the powers of the U.S. bankruptcy courts (to cancel debts and/or modify contracts that would otherwise be irrevocable) it is actually coming to the aid of a municipality, because states do not have bankruptcy powers.

Second hurdle: a municipality must be insolvent. San Diego would need to demonstrate that it is unable to pay its debts "as they become due" - the legal definition of insolvency. Would our City be able to pay its debts as they become due if the Pension Board insisted upon an 80% or higher unfunded liability ratio? Would our City be able to pay its debts as they became due if the Pension Board used a straight line amortization of the accumulated unfunded liability as provided in the Charter? Probably not.

The Pension Board has long kept the City out of bankruptcy by setting the Annual Required Contribution (ARC) artificially low. That tactic got previous board members into trouble. The present Board is repeating the tragic mistake of 2002 - it is helping the City balance its books by underfunding the pension system. The UAAL is about to plummet past the 60% mark.

The gap between the present value of future benefits (PVFB) and the market value of pension assets is exploding and will not be "smoothed" by actuarial magic, as David Wescoe (the hand-picked-by-the-unions pension administrator) is assuring the Board. At what stage will the Board finally take action? When the UAAL plummets past 50%? Past 40%? Right now there is nothing to arrest its downward spiral.

Doug McCalla, (the long-time City employee who after 22 years became the hand-picked-by-the-unions pension system's investment manager) pulled the ripcord on his golden parachute today. He bailed out of an airplane fast running out of fuel. Board members now need to decide whether they are pilots or passengers. Either way they will be blamed when it crashes and burns. Pleading ignorance is no longer an option.

Each member of the Board knows that the present unsustainable 7.75% assumed rate of return is showing up as a rapid buildup of UAAL - the investment shortfall is simply being debited to the taxpayer. In choosing between twin evils (a high assumed rate of return or a high ARC) they are being subjected to massive pressure from the City unions.

The unions know that by far the biggest threat facing their bloated entitlements is municipal bankruptcy. They also know that the Meyers Millias Brown Act (MMBA) will not save them. The MMBA is a California labor law mainly concerned with
"the establishment of uniform and orderly methods of communication between employees and the public agencies by which they are employed", commonly known as "meet and confer".

No amount of MMBA "meet and confer" or union stalling can prevent a Federal Bankruptcy Judge from deciding whether excessive pension benefits, (acquired through collective bargaining agreements deemed sacred by the unions) are in fact a "severe burden" on the City's taxpayers.

A bankruptcy judge would have the power to order the unilateral rejection or impairment of such benefits, by applying the "balance of equities" principle. The fundamental question is whether San Diego's ballooning pension burden is "equitable" or not. If it drives the City into bankruptcy it is hardly "equitable". That is why the City unions fear bankruptcy above all else.

Finally, for those of you who fear that developers would reap a bonanza of City properties at a bankruptcy fire sale, relax, it can't happen. Subchapter 1, Section 904 of the U.S. Bankruptcy Code specifically forbids the forced sale of municipality assets. That is the main difference between a municipal bankruptcy and that of a commercial corporation.

Here is what the Municipal Bankruptcy Code actually says:

"Notwithstanding any power of the court, unless the debtor consents or the plan so provides, the court may not, by any stay, order, or decree, in the case or otherwise, interfere with
(1) any of the political or governmental powers of the debtor;
(2) any of the property or revenues of the debtor; or
(3) the debtor’s use or enjoyment of any income-producing property."

It means there is no such thing as forced municipal liquidation. That is why municipal bankruptcy is called "reorganization". Our parks and libraries are safer with a bankruptcy judge than with Sanders and his developer friends.

Expel the Lobbyists from City Hall, as Obama is doing in Washington. 11/15/08

                                         by Pat Flannery                                              top^

Your weekly YouTube address from your President-elect, Barack Obama.

On November 11, 2008  the Obama Transition Co-Chair John Podesta announced the strictest, and most far reaching ethics rules of any transition team in history. They are:
  • Federal Lobbyists cannot contribute financially to the transition.
  • Federal lobbyists are prohibited from any lobbying during their work with the transition.
  • If someone has lobbied in the last 12 months, they are prohibited from working in the fields of policy on which they lobbied.
  • If someone becomes a lobbyist after working on the Transition, they are prohibited from lobbying the Administration for 12 months on matters on which they worked.
  • A gift ban that is aggressive in reducing the influence of special interests.

How about our new City Councilmembers adopting similar rules? They have each run on a "clean up City Hall" platform in one form or another. Such rules would keep union and developer special interests out of City Hall, for at least a year. Everybody knows that senior union staff have "special" seats in the Council Chamber. God help any ordinary citizen who might dare sit in any of these "special" seats. It is an unspoken rule at City Hall.

No other special interest group enjoys the lobbying privileges City unions have arrogated to themselves. They wander the corridors of power at will. What we need in San Diego is a "Citizen Surge". It was the citizens who elected the eight City Councilmembers, not unions or developers. We need to stake our claim to the power they represent - it is called citizen power.

Marti Emerald extends her winning lead in District 7. 11/14/08

                                         by Pat Flannery                                               top^

Marti Emerald received 876 of the 1,671 provisional votes counted this week and added to the previous tally of 52,082 in Council District 7 for a total of 53,753. April Boling received 795 of that 1,671. The margin is consistent with the original vote. Emerald moves up from 50.43% to 50.50% while Boling moves down from 49.57% to 49.50%.

Congratulations to Marti Emerald, it looks like she will win by 1% of the vote.

Is that a mandate? In a democracy 50% plus one is a mandate. I attended the post-election Republican forum at the Town and Country Hotel Monday evening. April was not a happy camper. She said Marti Emerald "does not represent us". I assume she meant those in District 7 who voted for April.

I was hoping that the mean old days of Madaffer's entitlement-of-the-right politics was over. It is - but only just. We had a narrow escape. It seems Boling still believes in some form of divine-right-of-the-right. Marti Emerald, the trouble-shooter, will be a welcome breath of fresh air - Obama style.

How about some "pro-citizen" government - for a change? 11/14/08

                                         by Pat Flannery                                                   top^

In its editorial today, the Union-Tribune blames the City's financial problems solely on the City's pension system: "The latest actuarial figures make it glaringly plain yet again that San Diego's staggering pension costs are simply unsustainable." It goes on to say: "On the current trajectory, pension costs for city retirees will soon devour 25 cents of every tax dollar, forcing cuts in everything from police and fire protection to libraries and parks."

The U-T analysis leaves out the other culprit of the City's financial meltdown - the $150 million being diverted each year to pork-barrel "redevelopment"  projects. Here again is the "culprit" chart I published last week:


Interest per year on DROP $25 million
Interest per year on the old $1.2 billion Unfunded Liability $96 million
Interest per year on the new, most recent pension losses $68 million
Annual subsidies to developers for "redevelopment" $150 million


$339 million

Those numbers actually understate the problem. The pension cancer is much worse. CCDC alone owes the City hundreds of millions of dollars. For Sanders to step up to the plate Wednesday only to protect his two sacred cows, public employees (of which he is one himself) and developers (who elected him), is troubling enough, but for our "watchdog newspaper" to take such a one-sided view of the City's financial problem is extremely troubling.

It is time we heard from the citizens. Our "pro-business" City fathers are meeting in their penthouse clubhouses right now divvying up the prime lots our libraries currently stand upon. Jim Barwick has probably already accepted offers on the Ocean Beach lot and the two Clairemont library lots.

How about some "pro-citizen" government for a change? Where are the real "reformers"? Where are the real "watchdogs"? Was there an Obama surge? No. The tsunami of real change hasn't reached San Diego yet. Maybe a change of ownership at the U-T (and its editorial bias) will help.

As for Sanders, I doubt he has the intestinal fortitude to stick it out until 2012. He didn't sign up to preside over America's first big-city bankruptcy. I suspect his wife and daughters are already nagging at him to seek some respectable Schwarzenegger fig leaf appointment - for health reasons.

It must have been tough on the Mayor to make these cuts. 11/13/08

                                         by Pat Flannery                                              top^

I sat through five hours of budget "hearings" at City Hall yesterday. It was an uneven contest - powerful City staff vs. powerless citizenry.

Occupying almost every seat in the Council Chamber, the City's department heads, with dozens of stern-faced, immaculately-dressed City aides by their sides, taxpayer-provided Blackberries silently relaying play-by-play instructions to the next City soldier at the podium, the City staff successfully pulled off a "save our pensions - cut your libraries " raid on our parks and libraries that Blackwater would be proud of. It was a military-style operation carried out to perfection, leaving devastated services in its wake.

At 9:00 A.M. Colonel Sanders stepped forward to let loose the dogs of this war by announcing that he had delegated his citizen-given authority to all City department heads, with a stern warning to whining complainers - us. 

Long-time City employee, ex-cop Gerry Sanders told how he turned to the City department heads and "accepted their honest advice about where cuts could be taken". Surprisingly these public-minded City department heads advised the Mayor that they and their senior Blackberry-bearing City staff should feel no pain, that all the pain should fall on complainers - us citizens.

San Diego's axis of greed - developers and unions. 11/09/08

                                         by Pat Flannery                                                 top^

While Sanders cuts our libraries and parks, his sacred cows, developers and unions, continue to thrive. First, the hallowed pension fund. According to the actuary's report there was $318 million left in the DROP account as of September 30, 2008. DROP accounts are credited with 8% interest, compounded quarterly. Try that on your 401(k). The cost to the City for this one pension benefit is $25 million per year, over $2 million per month.

Some months ago the San Diego City Employees' Retirement System (SDCERS) asked its actuary, Cheiron, to do an "experience study" for the period July 1, 2004 to June 30, 2007. Here is the complete report.

While the entire document makes interesting reading I would like to focus on DROP because a key decision will be made by the SDCERS Board at the next monthly meeting on Friday November 21, 2008.

§24.1407 of the San Diego Municipal Code gives the SDCERS Board the sole authority to set the "creditable interest rate" for DROP accounts. It is currently at 8%. Both the actuary and the Mayor are recommending that it be lowered. Here is the actuary's report and available options. It is clear that DROP is causing City employees to retire earlier and at lower ages than might otherwise be expected. Here are the actual figures.

Table II-1 shows that during the study period a total of 705 "General" employees and 339 "Safety" employees retired. Table II-2 shows the split of DROP versus normal retirements for all General and Safety retirees.

It shows that 66% of all General retirees entered DROP, with 70% of them between the age of 50 and 59. For Safety employees it was even higher. 80% of Safety retirees entered DROP, 85% between the age of 50 and 54.

The Report explains that the higher the DROP interest rate the greater the incentive to retire early. This means that the City is losing its best employees in their early fifties. The Report also explains that the earlier an employee retires the higher the cost of their retirement to the City. A person who retires at 50 will probably draw a pension for 15 years longer than a person who retires at 65.

The politically powerful City unions have over-benefited themselves to the point where most City employees need only work into their 50s to receive what they should normally receive in their 60s. In other words, the unions have been enormously successful in shortening the time it takes to retire.

Below, Ron Saathoff, with a little gloating, gives a history lesson on how it was all achieved and why it should continue, as a matter of right. It is clear that the City unions intend to hold us to our "promises". Saathoff defends a 7.75% interest rate for DROP by defending the overall "assumed rate of return" (currently at 7.75%, it was lowered from 8% this last September).

All this while pension assets drop precipitously. Here are the notes of a San Diego Retired Employees Association (SDREA) meeting, taken by SDREA note taker, Patti Karnes, on the morning of October 14, 2008. Doug McCalla, the pension fund's investment manager, informed the gathered retirees that the assets backing their pensions had dropped by $859 million to $3.92 billion.

The problem is that, unlike a 401(k), the taxpayer kicks in and makes up any loss to the (privileged) City pension system to the extent of 8% per annum. The cost of this particular loss of $859 million is $68 million per year. The taxpayer is already paying 8% on the carried forward deficit of $1.2 billion. That annual interest on $1.2 billion at 8% is $96 million.

These interest payments are hollowing out our city in the form of closed libraries, deteriorating park facilities and a growing infrastructure deficit.

Now for the developer sacred cow in this axis of greed. Look at this tax revenue summary for FY 2006-07, published by the San Diego County Tax Assessor. It shows that the developer community received $150 million as "redevelopment" subsidies during that year and that figure has gone up considerably since then. CCDC alone took in $104 million in FY 2006-07.

So let's add up this "axis of greed" money:
Interest per year on DROP $25 million
Interest per year on the $1.2 billion Unfunded Liability $96 million
Interest per year on the most recent losses $68 million
Annual subsidies to developers through redevelopment $150 million


$339 million

You might want to reflect on that $339 million per year figure next time you hit a pothole, visit a closed library or explain to your kids why you can't take them to the park today. It clearly indicates Mayor Sanders' priorities.

The Council Presidency is their first big decision. 11/06/08

                                         by Pat Flannery                                             top^

The three newly-elected City Councilors, Sherri Lightner, Marti Emerald and Todd Gloria will be called upon on December 8, 2008 to show their true political colors. They will cast their first vote (perhaps the most important of their four year term) for a new Council President.

On Thursday October 30, 2008 I attended a public forum at City Hall organized by Donna Frye and Carl DeMaio. Here is their Reform Report prepared for that evening's event. It is essentially a plea for more open government: - "the City Council should strive to provide maximum access to the people to participate in their local government." 

On the other side of this high-stakes battle is Ben Hueso and the City employee unions. They want to control City Hall and run the City for the benefit of City employees. They see themselves, not the citizens, as the real shareholders of this $3.5 billion corporation. As a life-long City employee himself, Mayor Gerry Sanders, tends to agree with them.

The new City Attorney, Jan Goldsmith, was heavily backed by City employee unions. Jan's very first act, the morning after the election, was to appoint  Andrew Jones, president of the Deputy City Attorneys Association, to the powerful position of head of the City's civil litigation division, Don McGrath's old job. To the winner goes the spoils.

According to the U-T lead editorial today: "Gloria, Lightner and Emerald all owe their victories to union financial backing. They are not likely to cross their union patrons on any substantive issue."  So that's it then? This giant $3.5 billion corporation we call the City of San Diego is really a giant welfare system for 10,000 individuals we happen to call City employees?

It all depends on Lightner and Emerald. If the U-T is right and they go with Hueso and the City employee unions, we may as well all move into gated communities (like Saathoff) and send our kids to private schools. The idea of a public-servicing municipal corporation called a City will be abandoned.

We will officially have embraced the Third World concept of government: build a high wall around your home and throw your garbage out over it for the poor and their dogs to fight over. Those of you who have ever ventured away from the Holiday Inn or Marriott, in Lagos or any such teeming city around the world, know what I am talking about. There, city officials drive Mercedes and live in mansions. Is that where we are headed?

Somehow, I think (certainly hope) that the U-T has it wrong. I don't think "Lightner and Emerald owe their victories to union backing". Yes, some City unions, particularly the firefighters, endorsed and put money into the Lightner and Emerald campaigns. But to say that they "owe their victories to union backing" is very unfair to these two aspiring public servants.

Both Sherri and Marti wore out multiple pairs of shoes knocking on every door in their respective Council Districts. Union money cannot claim credit for their victories and the people of their District's know it.

I have no doubt that both Sherri and Marti will do what they believe is right for the people of this city as a whole, not for any narrow special interest, union or otherwise. If they believe that Ben Hueso is better qualified to be Council President than Donna Frye I for one will defer to their better judgment because I know it will be formed in good faith.

As a long-time supporter of Donna Frye I would like to see her have the opportunity to practice her open-government style of public representation as Council President. But Sherri Lighter and Marti Emerald (on their own!) have earned the right to make that decision, not me. I wish them luck.

Is the Ethics Commission part of the "insider" game? 10/30/08

                                         by Pat Flannery                                             top^

As a downtown establishment "team player", Ethics Commission Executive Director, Stacey Fulhorst, may be pushing the envelope of her extensive powers. It now looks like she may have used those, perhaps too extensive, powers on behalf of two long-term insiders, April Boling and Tom Story.

First the April Boling Story. Marti Emerald contacted me telling how she is very frustrated with what appears to be an insider protective wall around April Boling. Apparently Emerald complained to the Ethics Commission that Boling continues to receive approximately $1,750 per month from the Lincoln Club while it makes expenditures as an Independent Expenditure Committee on behalf of Boling's campaign for San Diego City Council.

So I called the Ethics Commission for verification. They told me they were unable to confirm or deny any particular complaint. Fair enough, so we talked extensively about hypothetical's. Here is what I found out.

First there is a "preliminary review" by the Executive Director. Here is the Municipal Code governing such a Preliminary Review. But the Ordinance seems to present a "catch 22" situation for a complainant at that point. It states that in order to make a preliminary determination "the Commission will not be investigating any facts alleged in your complaint, but will simply be making a determination regarding whether or not ..... (d) the complaint consists of opinions or frivolous accusations."

This gives Stacey Fulhorst enormous power. She can simply rule that a complaint is "frivolous" and that is the end of it. On the other hand she can pursue a complaint that really is frivolous e.g. against an "outsider" candidate like Carl DiMaio for inadvertently including a few city employees in a mass email. That is too much power for one person. It sure has Marti Emerald hopping mad.

While the Ethics Commission staff would not discuss April Boling's relationship with the Lincoln Club, they were willing to discuss hypothetical's. So, I posed a hypothetical question: if I as an accountant (which I happen to be) were running for elective office and one of my long-standing clients, a well funded Political Action Committee, wanted to support me financially, would I need to break that client relationship? Apparently not. At least not in the case of April Boling.

The San Diego Ethics Commission advised Marti Emerald that candidate Boling can continue to provide financial services, for compensation, to the Lincoln Club provided she is not actually its designated treasurer (perhaps forewarned, Boling had shed that official designation in the lead up to the campaign). Furthermore, according to the Commission, a complainant would need to prove that Boling actively participated in the Lincoln Club's specific activities promoting Boling.

Now that seems like a protective wall to me - even if a complainant got to present evidence showing a candidate's "participation" in support activity. This city is well and truly controlled by insiders. It is locked up tight.

Now for the Tom Story story which tends to confirm that perception. Here is Fulhorst's letter giving him the all clear on Sunroad. On page 5 it says:

"In sum, the Commission determined that the “project ban” did not apply to your activities as an employee of Sunroad, and that you were not precluded from assisting Sunroad with respect to the Centrum project during your twelve month post-employment period."

Fulhorst informed Story of the Commission's finding that "the development changed so substantially that the “project” you worked on in 1997 for the City was not the same “project” you worked on in 2006 for Sunroad."

It was not the same project because Story's post-employment activities had substantially improved the project for Sunroad. A "catch-22" in reverse. Is it any wonder people no longer trust City government? To them it is a game, with the deck firmly stacked against the citizen, who gets to pay for it all in reduced city services and (impending?) tax increases.

Will it change after November 4th? It is starting to look like it will get worse.

The new exciting world of politics and its young practitioners. 10/28/08

                                      by Pat Flannery                                                 top^

Politics has dominated Americans' lives for months now. It has even eclipsed sports. And like sports, everybody has a favorite team. There is no middle ground, you can't be a Raiders' fan and a Chargers fan at the same time. You can't even occupy the same side of the room at some cocktail parties. It's "them" and "us". Even the Hollywood moguls are perplexed. What they would not give for the star power of a Barack Obama or a Sarah Palin. These political superstars are bigger than movie stars.

Who are the practitioners in this glamorous new world? We know they are there, we see their handiwork everywhere. Who are the thinkers and creators behind those slick TV ads and those glossy mass mailers? All that money must be attracting the best and brightest. I decided to investigate.

Using the sports world as my guide I looked for a campaign manager that might have brought a previously losing Proposition to the election Super Bowl with a chance to win. California's Proposition 4, the statewide ballot measure that requires parental notification prior to a minor's abortion, fitted the bill perfectly. This ballot measure looked like a sure three-time loser, it had both the pro-life and pro-choice armies lined up against it.

I interviewed its Chief Strategist and Campaign Manager, Charles P. Gallagher, a 34 year old veteran of statewide politics. I asked him what he saw that others may have missed?

"Just as in sports" he said, "you identify your strengths and concentrate on the outcome".

It all begins, explained Gallagher, with a thorough analysis of the issue and reliable polling data. His analysis of the parental notification issue convinced him: (1) that the differences between the pro-life camp and the pro-choice camp do not extend to parental notification and (2) that Latino and Asian voters have deep family values that put the health and safety of their daughters above all else.

Armed with this analysis he enticed activists from the pro-life camp and the pro-choice camp into the same room to discuss it. That was a major breakthrough in itself. As Gallagher had predicted, both camps quickly found that they could put their philosophical and religious differences about abortion to one side and concentrate on the health and safety of their respective daughters. It was a revelation to both sides.

Gallagher calls this his "Doctrine of Inclusion". I see it as a tool with far-reaching potential in conflict resolution throughout the whole political arena. If it will work in the most divisive arena of all, abortion, it would work anywhere. Conflict resolution is, or should be, what politics is all about.

In the case of Prop. 4 it was sufficient to discover just one area of agreement: that the health and safety of a teenage daughter is the primary concern of any parent, that it transcends a position on the abortion issue.

Amazingly, Gallagher was able to thus unite both pro-life parents and pro-choice parents in support of his parental notification ballot measure. What parent could withhold their love and support from a daughter at such a dreadful time in a young girl's life? This recognition became a major milestone in his uphill journey to the November 4th election Super Bowl.

Next he turned to the practical problem of reaching the millions of Latino and Asian families he knew would be the core support of his ballot measure. But how does one get such an important message to such a vast and diverse population? He reasoned that sooner or later they all have to come to the grocery store - the common watering hole of modern life. 

He placed hundreds of thousands of "Yes on Proposition 4" flyers at grocery checkouts all up and down the state of California. It turned out that store managers and store clerks, many of whom were themselves Latino or Asians with teenage daughters, were not only cooperative, they were downright enthusiastic. They became Gallagher's army for family values.

It now appears that not only will Proposition 4 benefit from the much talked about "Obama factor" (an increase in voter registration and voter turnout among Latinos, African-Americans and Asians), Gallagher's grocery leaflet campaign will be responsible for much of it. Californians of all colors, races and backgrounds, with strong family values, now have two powerful incentives to register and vote: Barack Obama and Prop. 4.

With just seven days to go before Election Day, Prop. 4 is ahead in the polls. Thus, its Chief Strategist and Campaign Manager, Charles Gallagher, has answered my question: who are the architects of this new political awareness that seems to be sweeping the country?

They are young, they are bright. They are deserting Reality TV for Reality Politics. They apply lessons from baseball to the field of politics. I wish them well. I hope they play the political game better than we did.


It may be too late for San Diego, but it is not too late for Coronado. 10/27/08

                                      by Pat Flannery                                                 top^

Here is what Coronado's three-term Mayor, Tom Smisek, has to say about the 2008 Coronado mayoral race:

"I want to share my thoughts with you as to why I will be voting for Tom Stickel to be our next Mayor of Coronado.

Most of our major public projects have been completed during the 12 years I have served as your Mayor, and new development standards are already in place to take care of those currently in progress. We are fortunate to have a healthy and well financed city budget, so that is not an issue either.

Your new Mayor will be spending a much higher percentage of time dealing with external issues such as: more intense negotiations with the Navy in Washington D.C. about the increasing presence of the Navy at North Island and the Amphibious Base; working with Caltrans concerning southbound traffic through our city; engaging the Governor and state legislators over budgetary takeaways; and working with San Diego and the region to ensure that smart transportation plans protect Coronado.

It is therefore much more important than it has ever been to have a Mayor with talents and the experience to tackle these important challenges.

We need a Mayor who has proven himself to be a strong leader, is principled, and has the moral courage and temperament to make tough decisions, to do what is right for our community. He must be consistent and decisive in the way he governs.

There is one candidate that fulfills these requirements - Tom Stickel - and I endorse him to be our best choice as the next Mayor of Coronado.

Tom Smisek

That is a powerful endorsement of Tom Stickel.

Smisek, who has been Mayor of Coronado since 1996, flew combat missions over Vietnam and was a TOPGUN instructor. That, together with his long experience as a Delta Airlines captain, probably makes him a good judge of men.

If "keeping Coronado's village atmosphere and not allowing it to become overdeveloped", is truly one of the reasons he has picked Stickel, then I want to add my enthusiastic endorsement.

Coronado is one of the last remaining jewels on the Pacific Rim. But the San Diego developers are now eyeing it greedily as they run out of land across the Bay. Coronado residents fought to keep their
Village Theatre and their Coronado Hospital. They also fought to preserve their many historic buildings. But mostly, they do not want more traffic congestion.

Stickel would carry on Smisek's conservative fiscal policies, that have kept Coronado's fees low while building up its reserves - the opposite to what has happened across the Bay at San Diego's City Hall. With a continuation of such policies Coronado could become a model for the rest of the region.

The fact is that the San Diego area as a whole is the last remaining jewel on the Pacific Rim and we are losing it fast through overdevelopment.

If the voters of Coronado become the final cave-in to the insatiable appetite of developers, through the super-aggressive promotion of hand-picked developer-friendly candidates for mayor in each of our region's cities, the beauty of this area we all call home, as Ken Kramer so lovingly describes it on his NBC 7/39 TV show "About San Diego", could be lost forever.

Stickel's stated priorities are keeping Coronado's hospital and its emergency room in Coronado and preventing Orange Avenue "from becoming a freeway". Other candidates want to emulate San Diego's failed attempt to regionalize medical services and want to imitate San Diego's failed General Plan that refuses to acknowledge a link between development and infrastructure.

It may be too late for San Diego, but it is not too late for Coronado. Let's hope the Coronado voters are as wise in 2008 as they were in electing and re-electing
Tom Smisek three times. He is a good judge of men. His pick is Tom Stickel.

10/21/08 Can revenue from predicted assessed property increases bail out San Diego Schools' and San Diego City's deficit spending?

                                      by Pat Flannery                                                     top^

How many people really understand Proposition S, the San Diego School District's $2.1 billion bond measure on the November ballot? I would venture to say, very few. I spoke to some of those "very few", at the Financial and Management Advisors firm of Gardner, Underwood & Bacon in Los Angeles today, who advise the School District on bond issuance. They were very courteous and very helpful and provided me with detailed graphs and tables on Prop. S which I will share with you.

But first let's look at some new information I have extracted from a presentation made by the County to the rating agencies on September 10, 2008 (by the way, the County was successful in obtaining a AAA rating, one of the very few counties in California to be able to do so).

The chart shows the median home prices declining sharply in 2007 and 2008. But the County believes that the decline will stop at the end of 2008. It believes it will flatten out at the 2004 level, thereafter showing a straight line as during the '90s. There is however, some evidence to suggest that it will settle down at the 2003 level. In some market areas it already has.

In any case a substantial amount of the County's AV will become trapped inside a "bubble", that hump in values between 2004 and 2008. The County says: "Less than 28% of parcels would likely be subject to reassessment given current market conditions". Yes but how big is that "hump" in terms of AV? Not just in terms of parcels? That hump contains the highest assessed valuations because those sales were at "bubble" prices. I suspect that in terms of AV it is much greater than 28%.

How much will the deflation of this hump impact the future growth in overall AV? In its forecasts, the County relies heavily on the built-in 2% increase mandated by Prop. 13. It believes that this 2% increase in the 72% that will not change ownership, will offset the 28% that will.

The County is thereby telling its taxing agencies, both cities and school districts, that the evaporation of the "bubble" will have "negligible" impact on the growth of AV. The School District has embraced this optimistic view and projects a continuous growth rate of 5% in its AV all the way to 2044.

In column 8 of its financial forecast the District predicts a continuous AV growth of 5%. The debt service projection shows it has chosen to use "deferred capital" bonds. They are similar to getting a 25 year mortgage and paying it all off, principal plus accumulated interest, in the 25th year.

By 2019 the School District would have issued all of its $2.1 billion Prop. S authorization. All of the District's revenue available for debt service in 2044, $457 million, and all of its revenue available for debt service in 2043, $436 million, a total of $893 million, would be required to pay the final balloon payment for that 2019 bond. That is very expensive borrowing.

I believe the basic problem lies in this County pie chart. I blame the School Board for NOT blowing the whistle on those who are stealing the financial resources that should be going to our children's education.

Prime among those agencies stealing from our children is the San Diego City Redevelopment Agency, particularly the bloated, developer-managed CCDC, which alone diverts more city tax revenue to itself than would pay all the bond debt the San Diego Unified School District would ever need.

For example, the total School District's projected debt service for 2010, including the projected debt service on the first issuance of Prop. S, is
$99,484,785, while the total amount of property tax revenue diverted to the San Diego City Redevelopment Agency in 2007-08 (the most recent figures available) was $167 million. The 2010 figure will be much higher.

Proposition S would cover up this massive diversion of funds by seizing all the bonding capacity of the School District right up until 2044.


10/13/08 Why is the Girl Scouts organization actively promoting the School District's $2.1 billion Bond measure?

                                      by Pat Flannery                                              top^

School Superintendent Terry Grier, the School District Board and political consultant Larry Remer, have recruited Jo Dee Jacob, Chief Executive Officer of Girl Scouts San Diego-Imperial Council Inc., in their drive to get Proposition S passed by the voters.

Ms. Jacob is a retired Navy Captain who left the Navy after 27 years to become the Girl Scouts CEO in 2001.

Apparently she donated the use of the Girl Scouts' extensive facilities at Upas Street, Balboa Park to Grier and Remer for a Proposition S campaign event on the morning of Tuesday, October 7, 2008.

There were two media reports of the event, one in the Union-Tribune and another in the Voice of San Diego. Both raise serious political questions. But first, a little background to the story.

John Stump is a well-known City Heights attorney and civic activist. He has been a leading opponent of Proposition S since it was first mooted. On Thursday, October 10, 2008 he sent a series of emails to Maureen Magee at the U-T, to Emily Alpert at the Voice of San Diego and to me here at the Blog of San Diego. Mr. Stump then provided us with copies of the relevant law and legal opinions. Here they are:

First, the relevant section from the California Education Code, Section 7054. Next Government Code Section 8314.

The Education Code Section seems to be the most restrictive. It specifically refers to "any ballot measure", whereas the Government Code Section 8314 merely says "a campaign activity".

Robert Stern, president of the Center for Governmental Studies (CGS) in Los Angeles, with whom I spoke at length about this situation last week, makes a big distinction between the rules governing "a campaign" and "a ballot measure". He said you "lobby" for a ballot measure but "campaign" for a campaign. He told me that his non-profit organization (CGS) frequently "lobbies" for state-wide ballot measures. Perhaps he has a soft spot for "non-profits".

Before joining CGS, Mr. Stern was General Counsel to the California Fair Political Practices Commission for nine years. In dealing with my question regarding the Girl Scouts/School Board issue, he attached great importance to the legal concept of "materiality" or de minimis as it is known in the law.

As a London-trained accountant (albeit forty years ago) I am familiar with the accounting concept of "materiality", a principle whereby accountants disregard trivial matters in their reports to decision makers. It was Mr. Stern's opinion that the money involved in the School District's activities promoting Proposition S, or in the Girl Scouts helping it, could not have amounted to much more than $100 each.

But should we measure the value of the event by adding up the cost of the coffee and doughnuts, or should we measure its value in terms of the effect it will have on the Proposition S campaign (or the "lobbying" for it)? Neither Grier, the School Board nor consultant Remer would have imposed on the Girl Scouts or arranged the event if they did not think it would make a very valuable contribution to the "Yes" campaign.

There is a City Council Policy prohibiting the use of city-owned land being used by non-profit lessees, such as the Girl Scouts, for political activities. It specifically prohibits the promotion of a ballot measure such as the School Districts Proposition S. Will the City Council ignore that breach?

I have placed a number of phone calls to the Girl Scouts' CEO, Jo Dee Jacob, to discuss this whole matter but so far she has not returned my calls, despite assurances from her administrative assistant, Karoline Jones.

So, this School Board/Girl Scouts episode raises serious questions about how the political process works in San Diego. Many non-profit organizations around the county play key political roles. Many have carefully chosen "team players" (often retired high-ranking Navy officers such as Ronne Froman or Jo Dee Jacob) as CEOs.

"Non-profits", such as the so-called "San Diego County Tax Payers Association" are the main cheerleaders for the various business and labor special interests. It is not surprising therefore that the special interest-dominated School District knew exactly who to turn to for a friendly off-campus rally site for Proposition S - the "non-profit" Girl Scouts.

Meanwhile the unsuspecting real taxpayers of San Diego are too busy trying to pay their monthly mortgage bills. Each of those bills include a portion of the 1% Property Tax, the $3.8 billion property tax collected by the San Diego County Tax Assessor. Each of these people's monthly mortgage bills will be further increased by whatever it will cost to service and repay the extra Proposition "S" $2.1 billion.


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