On the very day President-elect Barack Obama announced his choice for
Chair of the S.E.C.,
Schapiro, George Bush's (outgoing) choice for that key regulatory
post, former Orange County Republican Congressman
"pardons" Republican Jim Madaffer. Here is the S.E.C.'s
official letter dated
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.
Congressional career was capped by the passage of his "Private
Securities Litigation Reform Act" (PSLRA) in 1995, part of
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.
privatization of Balboa Park.
"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."
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
argument the report puts forward is standard privatization-of-government
straight out of The Reason Foundation
and Privatization.org. It could have been written by Maggie Thatcher
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
(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
City Council confirms
Committee Appointments for 2009.
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
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
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.
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
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
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 &
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
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.
"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
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
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.
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?
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
Towne Center expansion
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
Page 44 of the City's "Statement
of Overriding Considerations" deficient and felt that it
should be brought to the City Council's attention.
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.
Bonus Law thrown out by Judge Quinn.
Bob "findings" Manis,
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
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".
Density Bonus - "In and of itself" is being avoided like the plague
on November 2, 2007:
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.
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.
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.
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
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
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
Why Sanders should back Donna Frye for Council
Watch this Obama transition video called "A Seat at the Table".
What we need is "change.sandiego.gov".
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
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.
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
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
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.
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
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
prevails - City Attorney agrees with Frye on Hillel.
Deputy City Attorney Karen Heumann sent
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.
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.
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
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
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.
deliberately creating "deferred maintenance".
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
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
Back on July 2, 2005 I wrote a blog entitled
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
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".
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".
last act of infamy as a City Councilor.
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
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
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
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
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
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
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
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?
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
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
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 -
deals and lucrative outsource contracts.
Are the library
closings really secret land deals?
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
the public record,
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
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 planaddressing 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
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".
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
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.
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:
An entity may be a debtor under Chapter 9 of this title if and only
if such entity
(1)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;
(4)desires to effect a plan to adjust such debts;
(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
reasonably believes that a creditor may attempt to obtain a
transfer that is avoidable under section
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
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
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
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
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
(2)any of the property or revenues of the
(3)the debtor’s use or enjoyment of any
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
Lobbyists from City Hall, as Obama is doing in Washington.
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:
Lobbyists cannot contribute financially to the
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
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
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
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.
extends her winning lead in District 7.
Marti Emerald received 876 of the
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
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
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?
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
Interest per year on the old $1.2
billion Unfunded Liability
Interest per year on the new, most
recent pension losses
Annual subsidies to
developers for "redevelopment"
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.
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)
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
It must have been
tough on the Mayor to make these cuts.
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.
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
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
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.
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
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
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
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
Interest per year on the $1.2
billion Unfunded Liability
Interest per year on the most
Annual subsidies to
developers through redevelopment
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.
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
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.
the U-T lead editorial today:
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.
the Ethics Commission part of the "insider" game?
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
First there is a "preliminary review" by the
Executive Director. Here is the Municipal Code governing
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
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
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
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
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
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,
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.
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
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
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.
Here is what Coronado's three-term Mayor, Tom
Smisek, has to say about the 2008 Coronado
"I want to share my thoughts with you as to
why I will
be voting for Tom Stickel to be our next Mayor of
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 619-435-3710"
That is a powerful endorsement of Tom Stickel.
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
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.
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.
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
three times. He is a good judge of men. His pick is
10/21/08 Can revenue from predicted assessed property increases bail out
San Diego Schools' and San Diego City's deficit spending?
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 &
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
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
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
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
I believe the basic problem lies in
this County pie chart. I blame the School Board for
blowing the whistle on those who are stealing the
that should be going to our children's education.
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
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.
Why is the Girl Scouts organization actively promoting
the School District's $2.1 billion Bond measure?
Superintendent Terry Grier, the School District Board
and political consultant Larry Remer, have
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:
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
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
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"
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,
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
1% Property Tax, the $3.8 billion property tax collected by the San Diego
County Tax Assessor. Each of these people's monthly
will be further increased by whatever it will cost to
service and repay the extra Proposition "S" $2.1 billion.