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Honest Government Through Accountability
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Honest Government Matters - 2009 - 1st Quarter

Socialism for city workers - busted capitalism for the rest of us.
03/27/09

by Pat Flannery

The above graph is like watching two trains on a collision course. What will happen when, not if, the two lines cross? The answer is: nothing. The Unfunded Actuarial Liability (UAL) of the City's pension fund will be greater than the Market Value of its Assets, that's all. If the trend continues, will the pension fund be bankrupt? No - the San Diego taxpayer is on the hook for all city pensions, no matter how outrageous the whole system may become.

Read the Gleason Agreement. It is the 2005 court settlement of a class action suit that nullified the 2002 Manager's Proposal II (MP-2) which in turn had replaced the 1997 Manager's Proposal I (MP-I). The Gleason "Settlement Class" was all San Diego City employees no longer with the City at April 6, 2004 and entitled to pension benefits.

The 1996 and 2002 Manager Agreements, allowing the City to pay less than the actuarially calculated contribution, were nullified by court order in 2005. The City henceforth agreed to pay an annual  "Contribution Amount" as determined by the pension actuary, but by far, the most important "Gleason" agreement was the removal of a previously-agreed lower limit for the City's UAL of 82.2%. When reached, that lower limit would "trigger" additional contributions from the City. That safeguard was abandoned.

There is now no floor to the UAL. There is no limit to the amount of Unfunded Actuarial Liability for which the San Diego taxpayer may become liable. The pension fund could end up owning the entire assets of the City.

But are we not amortizing this debt? Are we not paying it off over 20 years? No. The Pension Board continues to find more creative ways to avoid true amortization. I have been trying to find ways to explain this to San Diegans.

Last week I wrote a blog explaining why we are kidding ourselves if we believe we can amortize the UAL as it grows. We are not even paying down the accumulated deficit set at $1.2 billion on June 30, 2007. At the ballot box in 2006 we solemnly promised  to pay off that deficit. We promised to throw away our pension credit card. The Pension Board has not done so.

Unless the Mayor can persuade the City's 10,575 employees that it is in their best interests to confront this pension bubble, we may be heading for class warfare in America's Finest city. San Diegans are being required to pay for a bloated city workforce with bloated benefits that require service cuts, asset sales and fee increases. A backlash is inevitable. Why wait until it happens? Has Mayor Sanders the leadership qualities to avoid it?

The City already has an unpaid balance of $195 million on its Net Pension Obligation (NPO) account, i.e. its accumulated unpaid ARC, apart altogether from the UAL. The interest on unpaid ARC alone is $15 million per year. That Interest is being added to the unpaid balance each year without any upper limit. It would be over $300 million right now but for the "Tobacco Settlement" securitization proceeds. That money was not paid into the Pension Fund, it was used to reduce the unpaid ARC.

Sooner or later San Diego's retirees and its taxpayers will clash. Smoke-and-mirror accounting will eventually fail to hide the truth. The outrage of the population will be in direct proportion to the lies it has been told.

The Mayor and the city unions have a narrow window of mere weeks to forge a new civic contract. It has to be in place by June 30, 2009. Here is what I wrote on June 21, 2005. It is as true today as it was back then - our City employees have outrageously over-benefited themselves.

No section of a civil population, anywhere, can expect to enjoy the employment privileges currently in place for San Diego's municipal workers. You can't have socialism for city workers and a failed market system for the taxpayers. It pits 10,575 city workers against 1,300,000 taxpayers. My money is on the taxpayers, ultimately they hold the purse strings.

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San Diego really is a police state. 03/26/09
by Pat Flannery

I recently got dramatic proof of this shortly after joining a team of young journalists at San Diego News Network, SDNN, a new online news journal. I was supposed to become its political analyst and columnist. I was looking forward to probing the underbelly of San Diego politics with young idealistic journalists. Unfortunately it was not to be.

Unbelievably, the Mayor, through his Police Chief, refused them press credentials until they "prove themselves". He has put them on a six months probation! After six months of reporting the news to his satisfaction, he may extend press credentials to them. SDNN acquiesced. I quietly withdrew.

In a way, I am not surprised. I was already aware of the control the Mayor and the police have over the local media. They are used to it. There has been only one real training ground for print journalists in San Diego for decades and that has been the Copley press. Many Mayoral and City Council staff are ex-UT people, all nurtured in the same symbiotic coziness. They tear up anybody, like Mike Aguirre, who will not be cozy with them.

What surprised me was how quickly these young SDNN people, barely out of journalism school, accepted it all. How are San Diegans ever going to learn the truth about their city government if the police department, directly under the Mayor's control, licenses all who may ask questions at city press conferences? Should a journalist be foolish enough to displease somebody important at City Hall (e.g. by asking "impertinent" questions) an editor will quickly assign somebody else to kiss up to the offended potentate.

New ownership at the U-T will not bring change and SDNN is not about to challenge the established order. That became painfully obvious this week. The faceless manipulators at City Hall will still exert their enormous power.

As I said, this is not new. A good example of how journalists become pawns of City Hall is what happened at South Eastern Development Corporation (SEDC) last year. Will Carless, a journalist with Voice of San Diego, in answering a question from Tom Fudge on the KPBS radio program "These Days" in June 2008, revealed how it works. Fudge asked Carless why he started investigating certain bonus payments paid to SEDC's President, Carolyn Smith. Carless revealed that he had received an insider tip.

Voice of San Diego then put Carless on the story full time for months. He doggedly pursued what were undoubtedly unauthorized payments to Smith, who was subsequently fired in disgrace. But was that the whole story? I doubt it. I had uncovered a dubious land deal involving SEDC's chairman, "Chip" Owen and Jim Waring, the Mayor's land use Czar at the time.

For all the months the Voice of San Diego doggedly pursued the Carolyn Smith story they just as doggedly refused to pursue the Owen/Waring land deal story, despite my urging them to do so. Read my July 2008 blog explaining this dubious land deal. Surely it too warranted investigation. But it was easier for the Voice to look where it was told to look and claim credit for having "discovered" a story. They have since denied receiving a tip. Listen again to the full KPBS tape - Carless clearly admits receiving a tip.

So, my 2008 predictions seem to be coming true in 2009: the Mayor recently announced (and the City Attorney reversed himself in order to agree) that SEDC and CCDC should be retained, with the Mayor having the power to hire and fire the heads of both corporations. That's what the Carolyn Smith investigation was all about. Somebody wanted rid of her. Her position was too valuable and she had become too independent of City Hall.

Wherever that Voice of San Diego tip came from, it was well placed. The plan worked. Carolyn Smith is gone. Media investigations into shady land deals by insider developers do not happen and two very lucrative city jobs are at the disposal of the Mayor - for faithful services rendered.

When the police license the media, you have a police state.

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Understanding the growing Pension Deficit. 03/20/09
by Pat Flannery

In view of the seriousness of the pension problem the Mayor's office has begun issuing Monthly Pension Updates. Here is the latest one for March 2009. It purports to explain "the impact changes in SDCERS plan assets are having on the City's Pension Plan and the potential budget implications". It estimates an impact of between $27.4 million and $84 million to the Normal Cost component of the Annual Required Contribution (ARC). Unfortunately it does not deal with the impact to the Amortization Component. Therefore I will try to estimate that missing impact.

In May 2007 the SDCERS Board reset amortization schedules for the various components of its unfunded liability or deficit. It determined that its deficit as of June 30, 2007 was $1,183,463,462. The Board then decided to amortize that amount over a period of 20 years and to amortize any future year's losses over a period of 15 years. That means that there will be a separate amortization schedule for each year's addition to the deficit.

The Mayor reports the pension unfunded liability at February 28, 2009 as $2,254,000,000. That means that it grew by $1,070,536,538 since June '07. For simplicity we will treat the additional deficit as if it all happened this year and set up one 15 year amortization schedule starting July 1, 2010.

Now we have two amortization schedules going, one for $1,183,463,462 over 20 years at 8% per annum and another for $1,070,536,538 over 15 years at 7.75%; the assumed rate of return was recently reduced to 7.75%.

Go to this free online amortization calculator and enter the first amount, $1,183,463,462 together with its interest rate of 8% and a period of 20 years. You will get an annual payment of $120,538,367 ($94,677,076 interest and $25,861,290 principal).

Now enter the second amount, $1,070,536,538 together with its interest rate of 7.75% and a period of 15 years. You will get an annual payment of $123,167,633 ($82,966,581 interest and $40,201,051 principal).

Add the two together and you get $243 million.That is an estimate of the Amortization Component of the FY2011 ARC, payable July 1, 2010.

The Mayor estimates that the Normal Cost for FY2011, payable July 1, 2010, will increase by between $27.4 million and $84 million over the $60.5 million payable on July 1, 2009 for FY2010. That means that the FY2011 Normal Cost alone could be between $87.9 million and $144.5 million.

Add the two components together, the Amortization Component and the Normal Cost Component, and you get a total required payment of between $330.9 million and$387.5 million for FY2011, payable July 1, 2010.

Will the Mayor make that full payment? Probably not. He is not doing so now! His total pension payment this July 1, 2009 will be $154 million. That means he is paying only $93.5 million of the primary amortization schedule of $120,538,367, not quite making its interest payment of $94,677,076.

The fact that the Mayor's latest "Pension Update" did not even mention the Amortization Component does not bode well for how he will handle the problem. He will probably deny the full amortization requirement and roll a large part of it into the growing financial cancer that is the pension debt.

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The Mayor diverts even more money to the Zoo. Why? 03/19/09
by Pat Flannery

It may come as a shock to many San Diegans that in addition to providing the Zoo with free rent in Balboa Park, the City imposes a special levy of up to two cents on every $100 of assessed property valuation in San Diego, in order to provide the Zoo with a subsidy now approaching $10 million per year.

Here is the Mayor's 2009 Budget showing the subsidy he actually set aside for 2009: $9,679,780. Here is the relevant City Charter Section 77a. It provides for "two cents ($0.02) on each one hundred dollars ($100.00) of the assessed valuation of their real and personal property .... exclusively for the maintenance in Balboa Park of zoological exhibits".

It appears that the City is assessing one-half cent per $100 rather than the charter-allowed two cents. That is still almost $10 million per year. It means that if you own a condo in Mission Valley worth $350,000 you are currently paying $17.50 each year to the Zoo whether you ever go there or not.

Now look at the latest IRS filing by the Zoo (2005) showing a surplus of $20,137,165 for that year. You and I contributed $7,202,404 of that "surplus". See the Zoo's revenue statement, page 41 of its full 54 page IRS return (I am surprised they have not filed an IRS Form 990 since 2005).

Yesterday Sanders emailed Todd Gloria informing him that he intends to divert monies appropriated by the City Council to repair a controversial pergola in Marston Heights near Balboa Park, to the repair of a storm drain associated with the Zoo parking lot. Gloria wanted the money diverted to a different Balboa Park non-profit - to repair the roof of the Museum of Man.

Here is the 2009 Budget Item, approved by the City Council, appropriating $350,000 for the Myrtle Way Pergola reconstruction. Now it will go to the already over-benefited Zoological Society. Why is Sanders so protective of the Zoo's special privileges? Is the budget preference he displayed in this case part of a wider preference for more privatization in Balboa Park?

The immediate question is: what does "exclusively for the maintenance in Balboa Park of zoological exhibits" mean? Does this special Zoo tax not cover the maintenance of the storm drain emanating from the Zoo's parking lot? Surely the tax levy covers everything associated with hosting the Zoo in Balboa Park. Is it not enough that it occupies one of the most valuable pieces of real estate in the city for ZERO rent (see its expense statement), that we give it a $9.6 million subsidy and it shows a profit of $20 million?

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DeMaio is the lone wolf for City efficiency before fee increases. 03/16/09

by Pat Flannery

The City's Financial Management drafted a User Fee Policy and presented it to the Budget and Finance Committee on February 25, 2009, who added the sentence: "Revisions to the fees shall incorporate savings from efficiency reforms. Departments shall include these efficiency savings in their cost analysis to determine fees." The vote was Young-yea, Gloria-yea, DeMaio-yea, Faulconer-not present, Emerald-not present.

The User Fee Policy then came to the full Council on March 10, 2009 for its approval. It was put on the Consent Agenda but Todd Gloria pulled it for amendment.

Despite having voted for it as a member of the Budget and Finance Committee, he now wanted to delete the part that required the City to identify efficiencies that might lower costs before increasing user fees.

This new User Fee Policy provides for full cost recovery, including staff time, without any limitation on how much staff time can be charged to any particular service. Topping the list of the MEA's current proposal (page 2) is "Increasing User Fees". So it is obvious where Gloria is coming from. He is leading the charge for the unions who want to featherbed their city salaries with increased user fees to the citizens.

DeMaio, on the other hand, wanted a clause in there that might at least require the Mayor to offer something to City Council showing whether or not he had looked for any "efficiency savings". Mary Lewis his CFO made it clear that the Mayor's office was comfortable with such a requirement. But she did not exactly insist upon it. Despite having been elected on a "Reform City Hall" platform, Sanders has been dragging his feet on outsourcing or any reform that might pit him against the unions. Ms. Lewis was being very careful not to be seen as too supportive of DeMaio's efficiency crusade.

DeMaio described setting service fees without a proper effort to achieve efficiency as an "inefficiency tax". He wants to see real reform. He wants the Mayor to run a lean City organization with fees set accordingly. He said if we "set our fees based on a bloated organization, inherently we are overcharging San Diego taxpayers" - that is classic featherbedding.

Now watch Gloria's disingenuous attempt to infer that indentifying efficiencies would somehow undermine the Mayor's attempt to implement Managed Competition. Mary Lewis disagreed, but only mildly.

Yet Gloria remained "comfortable" with his motion. He insisted that the offending sentence must be removed. He urged his colleagues to support him - they knew he was speaking for the unions

Before the vote DeMaio eloquently repeated his case for efficiency before setting fees. He reminded Gloria that he had voted for an efficiency requirement at the Budget Committee. But obviously Gloria had a visit from the union godfathers and Todd is too canny (and too ambitious a politician) to argue with union heavyweights like Judie Italiano or Ron Saathoff.

Interestingly Donna Frye had little patience with DeMaio's attempts to impose any efficiency requirement before any fee increases. She felt quite confident that city staff could be relied upon to do everything possible to make sure that any fee increases would include all the efficiencies that could be reasonably expected of them. She abruptly called for the vote.

Faulconer supported DeMaio, but only mildly. Perhaps he and Ms. Lewis, being closer to the Mayor, know that confronting the unions is not part of Sanders' real agenda. They know that lip service is all that is required.

As the Russians used to joke under the communist system: "the government pretends to pay us and we pretend to work". So it is in San Diego: Sanders pretends to argue with the unions and the unions pretend to argue back.

The maestro for this elaborate farce, as it was with Dick Murphy in 2005, is the City's highly paid San Francisco labor attorney, David Kay.

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San Diego City Council and the People's Business 03/12/09

by Pat Flannery

I have done an in-depth analysis into all the votes cast by the current City Council since it was sworn in on December 8, 2008 to March 3, 2009. I compiled a list of action items and their corresponding votes and was surprised by what it revealed (my list does not include the Consent Agenda or items "proclaiming" something or other).

I discovered that 80% of the 136 action items that came before the City Council during that period were disposed of by a unanimous vote. Of the other 20% almost all the Nay votes came from Sherri Lightner and Donna Frye and they were mainly on land use issues. I will be publishing a breakdown of each Councilmember's vote in the near future.

Here is a list of the 109 Council action items approved unanimously between December 9, 2008 and March 3, 2009. And here is a list of the 27 contested actions. A click on any one item will take you to the full Agenda for that day, then scroll down to that particular item.

How did the City Council form a consensus on such a large percentage of its Docketed items? Did it all occur in the Council Chamber? Or was a consensus formed before hearing public testimony and before Council discussion? How a legislative body reaches its decisions is a very important public matter. In California it is governed by the Brown Act, whose preamble states:

"Public commissions, boards, councils and other legislative bodies of local government agencies exist to aid in the conduct of the people’s business. The people do not yield their sovereignty to the bodies that serve them. The people insist on remaining informed to retain control over the legislative bodies they have created."

Are the people of San Diego "informed" and "in control" of the legislative body they created called their City Council? The rare citizen who gets invited into a Councilmember's office on the 10th Floor of City Hall may leave with a question in their mind about how the "people's business" is conducted on that corridor of power. They were far more likely to encounter a lobbyist than a fellow citizen within that high octane office space. Try getting in there without an appointment, unless of course you are a well known lobbyist or a union boss.

It is within the confines of that cloistered space that decisions about the people's business are reached, long before each item reaches the Council Chamber on the 12th Floor. The entire City Council membership and staff are crammed together into that small space, where they can practically shout across the corridor to each other through open doors, making a mockery of the Brown Act. But apparently they like it that way.

In most cases Councilmember opinions are known, item by item, before public discussion takes place at a Council Meeting. That is why in the past three months only 27 items ended up registering even one Nay vote and only one item actually failed: a proposed amendment to the Permanent Rules of Council that would have reduced from four to three the number of Council signatures required to overrule the Council President and put an item on the Council Agenda.

The Council Presidency is currently held by District 8's Ben Hueso. Ben ran in a 2005 primary resulting in a 2006 runoff to complete disgraced Ralph Inzunza's Council term. Hueso won the seat and got re-elected to a full term in the same year 2006. His average vote in those three elections was 7,285; the highest being 7,994 in the 2006 runoff. With a mere 7,994 votes he is now essentially running the City. If such power is to be given to one person, perhaps it should become a citywide elected office. Right now a person whose highest popular vote was 7,994 has total control over the Council Agenda. That used to be the prerogative of an elected Mayor.

These are urgent "good governance" issues that need to be addressed by the citizens. So long as representatives of special interests like unions, developers and contractors, many of whom are ex-city employees, are the dominant influences in Councilmember's offices, behind a cordon of security, in close proximity to each other, the citizens do not have control over the legislative body they created. These eight Council Offices need to be dispersed out into the Council Districts. This love nest for lobbyists and Councilmembers needs to be broken up.

It is the role of the media to counteract such influences by monitoring how the "People's Business" is done. I will continue to analyze how current arrangements are working out. I will try to discern how Council decisions are made, on a case by case basis. I will be particularly interested in the extent to which special interests are influencing our government.

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Our Lady of Peace loses, but will sue for religious discrimination. 03/04/09

by Pat Flannery

Yesterday the City Council voted 5-3 to uphold a citizens' appeal against the expansion of Our Lady of Peace (OLP) Academy.

OLP needed the City Council to deny the appeal and approve an Environmental Impact Report (EIR) associated with its development permit already approved by the Planning Commission.

But without the Council's affirmative approval of the EIR, allowing the demolition of three historic houses, the development permit is no good.

Before the vote, knowing the likely outcome, Hueso deliberately set the City up for a religious discrimination lawsuit by Our Lady of Peace in Federal Court. He carefully read into the record all the stipulations OLP will need when writing their complaint. He was obviously coached by Alexandra Kelly, attorney for the Catholic Diocese and spokesperson for OLP (unless Ben is well versed in Federal Law, particularly as it relates to religious institutions).

Before you watch the video of Hueso condemning his own City under the Religious Land Use and Institutionalized Persons Act (RLUIPA), read about this Act, passed by Congress on July 27, 2000. It says in relevant part:

"No government shall impose or implement a land use regulation in a manner that imposes a substantial burden on the religious exercise of a person, including a religious assembly or institution, unless the government can demonstrate that imposition of the burden on that person, assembly or institution

  • (a) is in furtherance of a compelling governmental interest; and

  • (b) is the least restrictive means of furthering that compelling governmental interest."

Now watch the video and you will understand why Hueso said what he said for the record. He set it up so that the nuns can claim that the City discriminated against them by imposing a "substantial burden" not imposed on other land use applicants, simply because they are a religious institution. That is what the City did according to Hueso and he described exactly how the City did it. Count the number of times he used the word "burden" and how many times he glanced at the notes in front of him, no doubt written by the OLP lawyers. 

It would appear that the nuns and the Catholic Diocese knew all along that the City Council would never grant their application to demolish these three historic houses. Therefore they planned on RLUIPA from the start and Hueso was in on it. That is why OLP was so intransigent. Now it is the City of San Diego vs. the Catholic Church in Federal Court. Nice one Ben. And DeMaio did hand stands trying to support Hueso and his Church.

Just to prove that neither the people nor the City of San Diego discriminate against anybody, least of all religious institutions, the City's Fire Chief, Tracy Jarman, should personally verify that the lives of the school's 750 female students and its 67 staff members are adequately safeguarded by ensuring that all buildings on the campus are in compliance with the City's fire regulations. If we are headed to court it is only the prudent thing to do.

And the City Attorney's code compliance lawyers should investigate and ensure that all Federal, State and City regulations regarding school buildings and occupancy laws are fully complied with. If everything is in order, the nuns should welcome the opportunity to prove their dedication to the health and safety of the 750 young ladies in their charge. A clean bill of health from the relevant City authorities can only help OLP in court.

It will also demonstrate to any future Federal Judge in the case that the City of San Diego has nothing but the welfare of its citizens at heart, particularly its vulnerable student population. If a judge finds that asking OLP to obey the same laws as everybody else is an "unfair burden", then so be it.

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Goldsmith makes Sanders an errand boy for the Council. 02/28/09
by Pat Flannery

"If no agreement is reached at an impasse meeting, impasses shall then be resolved by a determination by the ... City Council after a hearing on the merits of the dispute." So says Section VII B of City Council Policy 300-06.

That Policy needs to be "harmonized" with Article XV of the City Charter, which by a vote of the people on November 2, 2004 changed the City's governance from a City Manager form of government to a Strong Mayor form of government. The key is: how do you "harmonize" these two?

First, a little history: Council Policy 300-06 was enacted on October 10, 1971. It was amended several times, the last on November 14, 2005 adding Section XI that prevents management from negotiating any pension benefit enhancements "until the City Council has been appraised of, and had an opportunity to discuss, the cost and impact that the proposed benefit enhancements would have on any unfunded accrued actuarial liability."

Then along comes Proposition F and the Strong Mayor form of government adding Article XV to the City Charter on January 1, 2006. Does the City Council really retain its right to "resolve" any impasse between the unions and the new Strong Mayor? What was the legislative intent of Prop F? As a ballot measure its "intent" was the intent of the people. Does the Mayor get to make the City's last best and final offer or does the City Council?

According to Jan Goldsmith's Memorandum of Law dated January 26, 2009, the City Council still has the last word. Council Policy trumps the City Charter. He says that is the law! He simply ignores the will of the people.

On Page 2 Goldsmith admits that "Council Policy 300-06 ..... must be harmonized with Article XV of the Charter". However he also says, in the same breath, that these two are "not inconsistent". It is a fundamental principle of logic that two contradictory statements cannot be true at the same time. One does not need to "harmonize" what is "not inconsistent".

Goldsmith seems to be stretching logic in order to reach a legal conclusion he was asked to reach. Council Policy 300-06 and Article XV of the City Charter are either "consistent" or they are not. Somebody wanted him to declare them "consistent", but Goldsmith knew they still need "harmonizing".

Anybody who knows anything about San Diego politics knows that it was never the intent of the voters, who approved the change to a Strong Mayor, to relegate the Mayor to a mere messenger boy for the City Council. Yet that is exactly what Jan Goldsmith's "harmonizing" of Council Policy 300-06 with Article XV of the City Charter would do. He would "harmonize" the intent of Prop F right out of existence! And he says that is the law!

He should have followed the general advise he gave in his press release "The important advice is to follow what the law says and not what you may want it to say". Unfortunately Goldsmith chose what he wants it to say.

What puzzles me is why Sanders is not protesting this from the rooftops. Was he part of the huddle that concocted this plan? It is such a transparent union play. Unless Sanders protests this usurpation of his power, and does it soon, we will have no alternative but to conclude that he was in on all of it.

In order to ensure compliance with the Meyers-Milias-Brown Act (MMBA) which requires cities to have an impasse procedure and to follow it, as discussed in this August 22, 2008 unfair practices judgment against San Diego, Sanders should negotiate a change to Council Policy 300-06 with the unions. And he should do it in a  meet-and-confer separate from wage negotiations. It should give him the final word, as Prop F intended.

Then he needs to take it before the City Council. If it goes to impasse with the unions, the Council can "resolve" the issue according to its old powers.

If the Council agrees with Goldsmith and downgrades the Strong Mayor's powers by formally retaining its right to make the City's last best and final offer to the unions, using the Mayor as its messenger boy, so be it. But the Council will face the rage of the electorate, its true boss, not the unions.

Sanders' alternative is to do nothing and roll over for the unions, as a majority of the City Council and the City Attorney are presently doing. It is therefore ironic that the only thing standing between us and a total takeover by the city unions is Jerry Sanders, a long time city union member himself.

Nor is it very comforting to reflect on the fact that the City unions heavily backed Jan Goldsmith for City Attorney. These unions, through Goldsmith, are now seeking to take advantage of the fact that Council Policy 300-06 was not changed post Prop F. But did it need to be? Does Proposition F not trump any mere City Council Policy? Council Policy 300-06 and Article XV of the City Charter simply need to be read together. Such a reading produces a clear impasse procedure that complies with MMBA - the Mayor makes the last best and final offer because he is the Prop F Strong Mayor.

For further history on this issue read my blog dated January 31, 2009 and my blog dated December 1, 2008. We are perilously close to total control by the city unions. The present wage "negotiations" appear to be a farce.

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Actuary warns: $100 million pension increase next year. 02/25/09
by Pat Flannery

The difference between City Councilmembers who behave like "staffers" and those who behave like "legislators" was clear on Monday when David Wescoe presented his update on the San Diego City Employees’ Retirement System (SDCERS) to the City Council. Carl DeMaio asked the tough questions on behalf of taxpayers while Todd Gloria acted like Wescoe's lawyer. Click on each picture to view the video.

DeMaio thought that Wescoe characterizing the expected June 2009 valuation of the City's pension assets as "challenging", was the understatement of the year. It is on that valuation that the 2010 payment will be based. This year we got away with a payment based on an asset valuation dated June 30, 2008.

DeMaio then turned to the actuary, Gene Kalwarski of Cheiron, who confirmed DeMaio's worst fears: yes, the pension cost could go up by $100 million next year unless, as DeMaio put it, we have a market miracle.  And that $100 million increase is based on last year's market prices! Yet, none of this seemed to phase Mr. Wescoe who apparently believes in miracles.

Mr. DeMaio pointed out that over one quarter of Wescoe's staff earn more than $100,000. He requested that Wescoe present a plan to the City to cut his admin costs by 10% to 15%, as is being asked of all City departments.

Todd Gloria then came to Wescoe's rescue. Each  point Mr. DeMaio had made, Gloria demolished. Is there a little tension between these two? Or is Gloria just a doctrinaire defender of public pensions no matter what? His questioning of Wescoe was like an attorney questioning his own client to make him look good. I was very surprised at the blatancy of Gloria's deference to Wescoe.
 

Wescoe then lectured the Council, telling them that they were mere "politicians", against whom the California Constitution protects all public pensions. It was another example of what those in power think of those who pay their salaries, the lowly taxpayer.

I think Wescoe may have gotten a little carried away at this point (he is essentially a corporate PR guy). He went on to misrepresent to Ms. Frye how his administration costs are absorbed into the pension system.

He actually told Ms. Frye: "when the ARC is calculated, the administrative expenses are apportioned between our three plan sponsors, the City, the Port and the Airport, and a portion of an ARC payment would include expenses for administrative overhead and management of the trust fund assets". That is a totally false statement. An Annual Required Contribution (ARC) does NOT "include expenses for administrative overhead and management".

The truth is that the $15.8 million for his Administrative Expenses plus the $24 million for his Investment Management Services, were funded out of the UAAL, i.e. they were added to the unfunded liability. As stated on page 76 of the 2008 CAFR, the "administrative expenses are deducted from plan assets". It is hard to believe that Mr. Wescoe would make such a blatantly false statement to the City Council, but he did. Watch the video.

City Attorney Jan Goldsmith weighed in with another important question: how much is SDCERS paying for outside attorneys to sue the City, i.e. suing its own plan sponsor? Wescoe answered that it was "more than $1 million". For one year? To sue the City?

Goldsmith then wanted to know if the possibility of SDCERS winning a big monetary settlement against the City, perhaps millions of dollars (regarding the City's alleged past underfunding of the pension system) was reflected anywhere in the actuarial estimates. Wescoe's answer was that it was not.

The amazing thing is that not one line of this important City Council meeting was reported in the U-T, or anywhere else that I have been able to discover. We were officially told by the actuary that we may have an increase of $100 million in our pension costs next year, surely that warranted at least a paragraph in the U-T.

We were also officially told by its Administrator/CEO David Wescoe, that our City's pension system (SDCERS) charged $40 million to administer a trust fund that added approximately $1 billion to its unfunded liability. We were then essentially told to shut up and pay up. Watch that video again.

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The City and Hillel lose their court battle with the citizens. 02/18/09

by Pat Flannery

The California Appellate Court today published its Judgment regarding San Diego Superior Court Judge Linda Quinn's trial court decision in the matter of a disputed development permit for a Hillel Jewish student center in a residential neighborhood of La Jolla near UCSD.

The Appellate Court not only upheld Judge Quinn's finding, that the City needed to conduct (unspecified) "further proceedings" pursuant to CEQA, it modified that judgment with a new finding that went much further:

"there is also evidence creating a fair argument that the Project may have significant impacts on traffic and parking, biological resources and aesthetics and community character. This evidence requires the preparation of an EIR relating to such impacts rather than a mere reconsideration of whether additional mitigation measures are appropriate."

The Appellate Court comments confirm what those who have followed this case know only too well, that there was massive favoritism by City officials for this particular applicant. It is a totally inadequate location for a student center, little more than a traffic island. It consists of a 15,341 square foot triangular segment of land that remained after street construction.

Hillel wants to build a one-story 12,100 square foot student center, with a 17,000 square foot underground parking facility. The City is facilitating them by vacating public rights-of-way over approximately 21,000 of adjacent land. That is a gift of public assets. It is beyond outrageous.

Beginning on page 24, Judge McIntyre reveals that the City actually coached Hillel on how to get around certain "Biological Impacts". The City suppressed the first biological impact report and suggested alternative contents that would allow it to make a "no significant impact" finding.

Hillel's biological consultant, RECON Environmental Inc., did rewrite its first report, eliminating most of the City's concerns. But with one exception. It still contained this: "the loss of an active raptor nest by removal of a tree or the abandonment of an active nest due to construction activity would be considered a significant impact." Undeterred, the City hired an outside contractor to remove four eucalyptus trees on the project site under the guise of widening La Jolla Village Drive. It simply got rid of the trees!

Following the lower courts adverse decision, with the approval of then City Attorney Mike Aguirre, the City advised Hillel to submit a duplicate application, while the City was appealing Judge Quinn's decision! That sounded like contempt of the law to me. I protested it to Aguirre at the time. He said he had no problem about going ahead with a duplicate application and had given DSD the all clear. They were ignoring Judge Quinn's ruling.

Hillel quickly got its duplicate application before the City Council, sans the raptor problem. City staff hurried to get it processed before the old Council dissolved. Up until his last day in office, Scott Peters aided by Karen Huemann of Mike Aguirre's office, hustled to get it through City Council. They were tripped up by a simple publishing error. Here's what happened:

I wrote: "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." He called a Special Meeting of City Council for his last day in office, just to pass this Item.

Heumann bent over backwards to accommodate him by coaching DSD on how to amend the already posted notice regarding the right-of-way vacation. DSD over-printed on it the later Special Meeting of City Council called for that Friday, December 5, 2008. Watch her on video

On Friday, Aguirre seemed to have a last minute change of heart. He overruled his deputy, Karen Heumann. The Item was "sent back" to DSD. Heumann was frantic to get the job done for Hillel before she departed the City. She knew that Jan Goldsmith was not going to retain her.

Now it is up to the new City Council and the new City Attorney. The City has removed the trees and can do a new EIR without worrying about raptors. Or can it? Will the new City Attorney, a former judge himself, take to heart what two judges have said? And there is still the traffic and parking issue. Read what the judge had to say about that, starting on page 15. The Appellate Court concluded that "there is a fair argument that the Project may have significant impacts on traffic and parking."

Will the hard-headed proponents of this project now go away and find a more appropriate site for their student center? They have put the affected citizens through enough. People should not have to go to court to force their city government to obey the law. Thank goodness some very fine La Jolla citizens did exactly that. Council President Hueso should not defy the courts again by re-docketing the illegal Item that was mercifully continued on December 5, 2008. Nor should City Attorney Jan Goldsmith allow it.

What would be the City's position today had Karen Heumann won her fight to get this flawed project approved before she, Scott Peters and Mike Aguirre left the City? It seems to me the City had a narrow escape on that very last day of these three people's involvement with City government.

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Jan Goldsmith seems to be trying. Let's give him a chance. 02/13/09
by Pat Flannery

It is nice to be able to report something positive from City Hall for a change. Here is the first edition of City Attorney Jan Goldsmith's monthly Newsletter.

In his introductory remarks Goldsmith says: "Our purpose is to keep you apprised of some of our work and discuss new laws". That sounds like he understands his role as serving the people while being the corporate lawyer of the City of San Diego. After all, the people are the beneficial owners of the municipal corporation known as the City of San Diego. Therefore, by protecting the City's corporate interests he is protecting the interests of its citizens.

On his web site, which is starting to take shape and give an indication of his thinking, he starts off with a link to the City Charter section dealing with the role of the City Attorney, Section 40. He has organized his Office into three divisions corresponding to his three Charter-defined roles and added what he calls "community-based legal work on behalf of the City of San Diego".

This fourth division will involve "consumer protection enforcement, code enforcement and neighborhood prosecution units". Dedicating more City legal resources to neighborhood code enforcement will be a very welcome development in San Diego. I cannot think of anything more likely to build badly needed neighborhood trust than a proactive City Attorney's office.

The fact that Goldsmith hired an experienced consumer fraud prosecutor from the District Attorney's office, Tricia Pummill, to head up this important division suggests he is serious about clamping down on consumer fraud (e.g. unlicensed contractors) and doing neighborhood code enforcement.

I was surprised to learn from his web site that he will "prosecute criminal misdemeanors and infractions committed within the City limits and in Poway". I didn't know we did Poway. I hope he has an adequate cost recovery arrangement with the City of Poway. I would have thought Poway would have turned to the District Attorney for that. Strange.

It is encouraging to see that he has a link to the City Clerk's Public Records Request page. He seems to be encouraging citizens to ask questions of their city government. I hope that when (not if) we have problems getting public information out of sections of the City government, we can appeal to our City Attorney Jan Goldsmith. It would be a great opportunity for him to show his good faith and his dedication to the law not politics.

I supported Aguirre, but who knows, Goldsmith could turn out OK yet.

P.S. Mr. Goldsmith emailed me this evening and explained: "Our office has handled Poway misdemeanors for many years by agreement with the DA’s office in exchange for the DA’s office handling San Ysidro misdemeanors."

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Church, state and land use - Our Lady of Peace Academy 02/12/09

by Pat Flannery

One of the most contentious land use issues to come before the San Diego City Council in recent years is the Academy of Our Lady of Peace (OLP) extension in North Park. I attended a "community forum" last night and just listened. It was a well executed exercise in faux community outreach.

On the face of it, what is at issue is the fate of three single family homes OLP wants to tear down to make room for a 21,000 square foot expansion of its all-girls Catholic High School. But it is perfectly clear that the school could easily achieve its current expansion objectives without destroying the three Spanish-style homes the neighbors feel are an integral part of their neighborhood's character.

The real issue is: should an institution, such as this private school, be allowed to encroach further and further into a residential neighborhood, as the market for its product  grows?  OLP is the only all-girls private high school in the greater San Diego area. Many of its students come from the South Bay and even from Mexico.

The school has already demolished homes in order to grow to its present enrollment of 727 girls and 67 staff. The fear among the local community is that the school wants to go on expanding into their quiet neighborhood. Future expansion is the only plausible explanation for the demolition of homes not necessary for the current expansion. The school could easily double its enrollment if it had the facilities. The demand is obviously there.

Representatives of the local community started last night's conversation by restating their oft-repeated objective: to obtain a promise not to destroy the three homes. If such a promise was forthcoming, the neighborhood leaders again assured the school, they would do everything possible to achieve the school's current expansion needs, including some new construction. The school board declined to give such a promise.

At one point the school's principal spokesperson and Vice-Chair of its Board, Alexandra Kelly (who also happens to be Bishop Brom's attorney and represented the Diocese in the priests' sex-abuse case) actually said that they were in fact planning the school's future for the next 100 years. That statement got my attention. I wondered if the neighbors knew what they are up against. The Bishop and the Diocese obviously want this OLP expansion real bad. The Bishop's officer for schools at the Diocese, Sister Breege Boyle, is on the OLP Board and attended last night's meeting.

Attorney Kelly is no stranger to stonewalling. She helped Bishop Brom shield his 23 priests accused of sexually molesting children until finally forced to cooperate by both the San Diego and Imperial Counties' District Attorneys. She used the excuse of protecting the accusers identities!

Normally at this point such a meeting would break up. The neighbors had made this offer on several previous occasions over the last three years and this was supposed to be the last try. Miraculously the neighborhood representatives kept their cool and continued to probe. In fact they offered to keep trying right up until the last possible moment on March 3rd. The school agreed to look at any new suggestions, but would promise nothing.

Like all major land use decisions it comes down to counting votes on the City Council. On January 26, 2009, just when the school was staring defeat in the face, after a 4 1/2 hour emotional hearing, Carl DeMaio proposed a continuance to March 3, 2009 to allow one last effort at reconciliation.

Here is a video of Carl DeMaio's City Council comments, before he suggested the continuance. His vote will now decide the issue on March 3rd. Five City Council votes are required to uphold an appeal against the Planning Commission's decision to allow the project. The North Park Community Planning Group voted against it.

Four City Councilmembers are firmly opposed to the project: Donna Frye, Sheri Lightner, Tony Young and Todd Gloria in whose District it lies. Ben Hueso, Kevin Faulconer and probably Marti Emerald are in favor of the 21,000 square foot expansion. DeMaio will have to answer his own question of January 26th "how do you carry out that mission and be consistent with the integrity of a neighborhood and to be a good neighbor". As Carl said, this is not about three historic homes. It is about the power of Bishop Brom.

DeMaio, a Catholic himself (Jesuit educated and Republican) must pass the "John F. Kennedy" test: should a call from the Pope, or in the case of DeMaio, from the Bishop, influence his decision? I think we learned the answer as to Kennedy, we will learn it as to DeMaio on March 3rd.

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Are we totally losing it here in San Diego? - "Destination Lindberg"? 02/11/09

by Pat Flannery

In a city full of characters that not even Hollywood could invent, Steve Peace takes our zaniness to a whole new level. As a former State Senator he is much in demand as a Sacramento lobbyist. He was recently hired as "a senior policy advisor" to Brownstein Hyatt Farber Schreck, a large lobbying law firm. That is on top of being "a senior policy advisor" to local developer John Moores and his royal court. I thought court-jesters existed only in merry old England, to entertain kings like Henry VIII between wives.

Steve's latest "jest" for the San Diego court is the launch of "Destination Lindberg". This promises to be a knee-slapper to rival his 1978 Attack of the Killer Tomatoes, in which he co-starred and also co-wrote. He seems to have a long-standing fetish about airplanes. In the film he was the nutty tomato-fighting Wilbur Finletter who wore an open parachute everywhere.

At the launch of a 25-year-anniversary "Tomatoes" DVD, State Senator Peace as he was at the time, was shown walking into the California Senate with an open parachute on his back. This guy definitely has a sense of humor. But he needed more than a parachute to rid himself of his title as "the father of deregulation". The Electricity Deregulation Bill, which he wrote as State Senator, did not turn out too well, as we all know from the rolling blackouts of 2001. Maybe he should stick to writing comedy scripts.

But this "Destination Lindberg" thing is really a hoot. It is so crazy it makes "Attack of the Killer Tomatoes" appear boring. Casting director Jerry Sanders said he assembled the best and the brightest to write it. Apart from Steve Peace and Alan Bersin I think he also cast the San Diego Chicken.

Or maybe this is just another spin-off of "Tomatoes", like the animated TV cartoon of 1990. In it, San Diego became San Zucchini and the mayor was a klutzy airhead named Mayor Earwax, who appointed Steve Peace's old character, Wilbur Finletter, Sheriff in an episode entitled "The Gang That Couldn't Squirt Straight". Here, look at the characters. Isn't it straight out of real life San Diego? Check out Dr. Putrid T. Gangreen.

Here is a picture of what can only be called "Peace's Folly". Can't you just imagine Steve running around his imaginary airport creation, goggles and open parachute, shouting "tomatoes"? The trouble is our Mayor Earwax is taking him seriously. Sanders long ago lost the ability to distinguish between reality and make-believe. Yesterday, shovel in hand, he got on an airplane to Washington DC to cadge $4 billion dollars for his "shovel ready" fantasy.


Mayor Earwax and his developer friends are ready to bond and spend between $4 and $12 billion on Steve Peace's "Destination Nuthouse", but will not even entertain the idea of building a secondary sewage treatment plant for the approximately 200 million gallons of raw sewage we dump in the Pacific Ocean every day.

No wonder Hollywood loves us. We are zanier than anything they were ever able to come up with. Between the image of a San Diego State Senator wandering around the State Capitol with an open parachute strapped to his back and the image of a San Diego Mayor wandering around Washington DC with a shovel in one hand and a tin cup in the other, we take the Oscar.

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The 2009 Budget: you are not getting the whole story. 02/07/09
by Pat Flannery

Below is a series of graphs I prepared from the Mayor's published 2009 Budget. All the Mayor and City Council will discuss with the public is the General Fund, where most of the public services come from. You even get to pick which of your favorite essential services you would like them to cut.

The General Fund is only 38% of what the City spends. Therefore 62% of the City's spending is hidden from the public. And that does not include the Redevelopment Agency, which in turn includes CCDC and SEDC. Redevelopment is a "city within a city" and CCDC and SEDC are "cities within a city, within a city". Yet they are not on the budget-cutting agenda.

Huge amounts of money sloshes backward and forward between a myriad of "Funds", making it impossible for the public to track or monitor "cost-recovery", if any. We have no idea how each fund's shortfall or surplus is dealt with. They all magically balance. It was by manipulating these "Funds" that old Jack McGrory was able to work his famous funding magic.

Sanders is a product of those good old days and likes it the way it is. McGrory was able to fund the entire 1996 Republican Convention without ever opening an account for it. Not one penny of its cost appeared on the City's books. Sanders was the McGrory/Golding Police Chief, managing the biggest single departmental budget in the City. He knows the ropes.

Sanders still does not publish anything remotely resembling a Revenue and Expense Statement for each "Fund". That would reveal too much. For example, it might reveal that the $11.3 million CCDC "repayment" I wrote about on January 21, 2009, is being recycled back to Petco Park and the Convention Center (which I know to be the truth of it) through the $90.1 million Special Promotional Programs Fund (TOT Fund).

Please  study the pie charts below, then ask your Councilmember where the money comes from and how it is spent for each of these "Funds". Most of them don't know and don't care. Let them know that you care.

Total City Expenditure - $3,127.4 million

Enterprise Funds - $876 million

Internal Services - $137.5 million

Capital Improvements - $587 million

Special Revenue Funds - $276.6 million

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Water, sewage and politics - 2010 elections already in play. 02/04/09
by Pat Flannery

I have received numerous emails from concerned environmentalists as well as emails from representatives of Coastkeeper and Surfrider. These two organizations deny advocating Indirect Potable Reuse (IPR) as the only solution to the sewage treatment and ocean outfall problem.

Well, it sure seems that way to me from reading Gonzalez' Memorandum and from watching Bruce Resnick's and Donny Frye's comments at City Council on January 27, 2009. They are no longer pushing for a secondary treatment sewage plant. A Section 301(h) 5-year waiver is only breathing space to get it done. And this is definitely the last waiver.

Florida on the other hand now "requires that all facilities that discharge domestic wastewater through ocean outfalls achieve, at a minimum, 60 percent reuse of the facility’s actual annual flow by December 31, 2025, and prohibits discharge through ocean outfalls beyond that date, unless as a backup to the functioning reuse system". And they have no waiver.

Florida wisely recognizes that reuse will never fully eliminate the need for secondary treatment plants and certainly not within five years, as our local experts are suggesting. Gonzalez, Resnick and Frye clearly think that IPR is the magic answer that will eliminate secondary sewage treatment.

Saying we don't need to build a secondary sewage treatment plant because we are going to reuse all our water is like saying we don't need the Miramar landfill because we are going to recycle all our trash. We need to build a sewage treatment plant now for the same reason we have a landfill now. We don't need a feasibility study to tell us what we already know.

San Diegans voted 67% for a questionable $2.1 billion school bond but use the ocean as their toilet. I believe they would vote an increase in their water rates to act as a civilized community. As has been proven in other environmental areas, adding cost results in more conservation. Building a secondary treatment plant would see a significant reduction in water use.

Gonzalez says on page 10 of his Memorandum that upgrading the Point Loma secondary plant may at some point "become entirely moot". He goes on: "Surfrider, Coastkeeper, and Sierra Club in San Diego believe the future of sewage treatment is IPR". What could be clearer than that?

Bruce Resnick of Coastkeeper, said that "we should move beyond the debate about secondary treatment". His goal, he said, is that in five years "we will all be standing together with no waiver application and a long term strategy to eliminate all discharge into our ocean". Watch the video

Donna Frye agreed and noted that right now we "treat sewage and dump it" when instead we should "treat the water and reuse it". This will "potentially allow us to meet secondary treatment standards" and is the "best possible way to deal with our sewage" she said. Watch the video .

They all seem to be singing from the same hymn book. I had not intended to drag Donna Frye into this fray as all the other City Councilors, with the notable exception of Carl DeMaio, voted for the $2 million Feasibility Study. But having been challenged by Marco Gonzalez and others, as to their true position, I decided to let the videos speak for themselves.

It is clear to any interested observer that Frye, Gonzalez and Resnick, who came to prominence in public life as clean water advocates, have shifted their long-held positions. Or perhaps surfers no longer get sick from contaminated water. For some reason these three have fallen in love with Indirect Potable Reuse (IPR) as the cure-all for both our water and sewage problems i.e. they have merged water supply with sewage disposal.

I repeat here what I wrote to one of the email correspondents: "The important point is that the people are not misled into believing that they don’t have to worry about a secondary treatment plant. The solution is part IPR and part secondary ...... we need both. Pretending that the need to dump in the ocean will go away is environmentally irresponsible." We will always need a secondary treatment plant just as we will always need a landfill.

I strongly believe that an unholy coalition has been forged between the one-time clean water advocates and powerful City pension interests. The 900 lb secondary sewage treatment gorilla is being made to magically disappear to make room for the 2000 lb pension gorilla. We cannot afford a sewage treatment plant and the city pension. So the 2010 elections come into play. New alliances are being formed. Water, sewage and politics are in the mix.

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Pension Obligation Bonds vs. Clean Water Bonds. 02/03/09

by Pat Flannery

Marco Gonzalez, attorney for Surfrider and Coastkeeper, emailed this Memorandum to "Environmental Community Activists" today. It is dated January 30, 2009, two days after the City Council approved a: "Cooperative Agreement with San Diego Coastkeeper and Surfrider Foundation for the Study of Feasibility of Diverting Wastewater from Point Loma Wastewater Treatment Plant through Increased Wastewater Recycling", at its January 27, 2009 meeting.

This Resolution is city-speak for the unpleasant truth that Surfrider and Coastkeeper have sold out the environmental community. In the process they extracted $2 million from the cash-strapped City for a phony study of a phony solution to a real problem: secondary treatment of city wastewater.

Why the sellout? - to secure first place at the public bond window for the city's pension deficit - Pension Obligation Bonds (POBs), the unions' Holy Grail. If San Diegans knew the truth, that building a secondary sewage treatment plant is unavoidable and that the likelihood of yet another waiver is nil, the idea of Pension Obligation Bonds would be an impossible sell.

The convoluted and spurious argument for Indirect Potable Reuse (IPR), or toilet-to-tap as its detractors prefer to call it, so painfully attempted by Marco in his Memorandum, is bogus in the extreme. He actually expects us to believe that "toilet-to-tap" will suddenly become so accepted and so wildly successful that not even a trickle of sewage need be dumped in the ocean by the time the next waiver application comes around.

To add insult to injury the compliant City Council, with the exception of Carl DeMaio, authorized $2 million of our much needed money to "study" this insulting proposition. It suggests the unions have got their POB deal.

Gonzalez lashes out: "The notion that a decision made in furtherance of elimination of all sewage discharges in the future somehow indicates a trend toward acceptance of waivers is absurd and, frankly, doesn’t even deserve this response." Who are we to question "the master"?

Coincidently, Michael Zucchet, the incoming President of the Municipal Employees Association (MEA), said at Tony Young's Budget Committee hearing last Friday January 30, 2009, that "the (pension) debt is there, whether you like it or not". Watch the video .

They are trying to turn an actuarial debt, based upon actuarial assumptions, into something very different, hard debt. The connection between the City employees' push for bond securitization of the pension debt and Gonzalez' sudden conversion from clean water, is obvious.

The truth is that we have a veritable Joint Regency in San Diego - the Gonzalez Royal Family. Lorena is secretary-treasurer and CEO of the San Diego and Imperial Counties Labor Council while her brother Marco is attorney for the well financed Surfrider and Coastkeeper organizations. Together, this brother and sister team, are the ringmasters for much of the behind-the-scenes political deal-making in San Diego.

There is a "Cooperative Agreement" alright, but not between the parties stated. It is between the City unions and the Gonzalez Royal Family. City employees will get their Pension Obligation Bonds, while the taxpayers will still have to pay for a sewage treatment plant. Favors were exchanged and favors is what San Diego politics is all about.

Now that the public bond slot has been left open by the clean water people, there will be a steady drumbeat of POB sales talk from the unions. For the next few months, during the 2009 wage negotiations, they will loudly "forego" pay raises, in return the Mayor and City Council agreeing to issue POBs. You will be subjected to slick sales talk about how the City unions will save you money on the double: first by foregoing a 2009 wage increase and second by "refinancing" a loan that does not exist. It is all about them.

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Is the Mayor complicit in this labor negotiation tactic? 01/31/09

by Pat Flannery

Thinking overnight about what happened at the Budget Committee meeting yesterday, I may have figured out what is going on. My only remaining question is whether the Mayor is in on it. If so, we are in serious trouble.

Exactly a year ago I attended a news conference given by Mike Aguirre proposing new procedures in labor negotiations. His proposals are summarized in this Memorandum of Law. I summarized the significance of the event in this blog dated February 4, 2008. In essence Aguirre reminded Sanders that the voters passed Proposition F, which requires him to be a Strong Mayor not a tool of the unions and that he has responsibilities to the people. Sanders either has forgotten this or is in league with the unions.

Aguirre warned of union "backdooring". He reminded the public that the unions have often boasted of "owning" a sufficient number of City Council Members to get anything they wanted out of the Council. Now they have the City Attorney's office as well. Do they also have the Mayor's office?

I believe that yesterday's budget committee open door to the union leaders, masquerading as a "public" hearing, was a very well thought out means of undermining the impasse procedures that will inevitably ensue. These people have little else to do but figure out how to cheat the citizens, while we have to stay awake at night trying to figure out what they are up to.

Here are the Strong Mayor provisions now included in the City's Charter. It was precisely to end the autocratic style of Jack McGrory as City Manager that the voters passed Proposition F. Sanders needs to be reminded of this. Ironically it was Sanders' current spinmeister, Jerry Braun, who wrote this definitive expos
é of McGrory in the U-T back on December 18, 2005. Braun forgot to mention that before becoming City Manager McGrory had been the City's labor manager for years. He was actually the MEA's choice for City Manager, just as Hueso is their choice for Council President today.

Braun should have a talk with his boss, unless he wants some future Jerry Braun Jnr. writing about Sanders in very unflattering terms (perhaps the "unsmooth operator"), exactly what Braun was hired to prevent. The bottom line is that whether Sanders was in on it or not, yesterday's union ploy worked. The 2009 labor negotiations procedure is now irretrievably tainted.

It is all designed to make the union-controlled City Council the final arbitrar of Sanders "negotiations" with the unions. The only question is whether Sanders is in on the conspiracy. Like McGrory, he has been around for a long time and knows how to "get things done", McGrory's old mantra.

In other words, did the City unions manage to sneak their choice of City Manager, now called the Mayor, by the voters? We already know they own the City Council and the City Attorney's office, do they also own the Mayor's office? If so, they truly own this City.

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What a farce! Today's "public" budget hearings..... 01/30/09
by Pat Flannery

Chairman Tony Young and his City Council Budget Committee today demonstrated how hopelessly lost our City Council is to the City unions. This hearing called "San Diego Speaks: Public Input on the City Budget" started at 2:00 PM.

At 4:20 PM the first public speaker got to the microphone. For 2-1/2 hours five of our elected City Councilors, Young, Faulconer, Gloria, DeMaio and Emerald, had cowered in front of the City union bosses as they jawboned why their members should remain a privileged class of workers, all this without interruption and insultingly billed as "public input". The only thing "public" about it was that it was hosted and paid for by public money. Our publicly funded Chanel 24 gave the unions a free 2-1/2 hour commercial.

What a farce! It was like a judge giving 2-1/2 hours to the prosecution and 8 minutes to the defense! That is a kangaroo court. This was a kangaroo committee. Not satisfied with 2-1/2 hours of publicly funded time he invited them to meet him privately in his office any time. Shame on you Young.

When Kathryn Rhodes, one of only four public speakers who stuck it out from 2:00 PM to 4:20 PM, finally got to the podium, she was told by Mr. Young that public comment would be limited to 2 minutes! Ms. Rhodes managed to scrounge 2 minutes from a Mr. McNamara who accordingly had to give up his chance to speak - after waiting 2 1/2 hours!

When the second speaker, Joy Sunyata, got to the microphone, well just watch what happened . You must watch the video, it is only 30 secs. Joy is a regular at City Council and is the most polite person on the planet.

I can't believe Young could be so insensitive to the public and so completely subservient to the union bosses that he would do this in front of the cameras. He seemed to realize it at the end of Ms. Sunyata's time - after she apologized to him for God's sake! But for me it was too late.

The employees are not only running the Corporation that is our City, they are taking the cash register home with them, the City Council is providing the getaway car and Tony Young is at the wheel.

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The right not to associate - union shop vs. merit shop. 01/28/09
by Pat Flannery

There is an interesting exchange between Sheila Jackson, president of the San Diego Unified School District (SDUSD) board of education and executive director of the Coalition for Fair Employment in Construction (CFEC) in the U-T this morning. It heralds a gigantic fight between union and non-union construction interests, not just in the spending of the $2.1 billion Proposition S school bond, but the $1 billion to $2 billion Sunrise Power Link, which the unions have supported.

Both sides have a lot at stake in the School District fight. Whichever side wins will be in the drivers seat during the spending of all the manna from Washington over the next few years. We are entering a new age from which the private sector may never recover. America is in danger of becoming one giant TVA (Tennessee Valley Authority). Yes, that FDR-era government behemoth is still there. It even has its own police force.

It reminds me of Ireland's Shannon Development, formed 50 years ago to promote Shannon Airport and still there, the de facto government for one fifth of Ireland. It is registered as a private company with minimal reporting duties, every politician's dream slush fund. Former San Diego Mayor Dick Murphy admired it so much he tried to form a "sister city" with it.

Oh, how these elected officials and union bosses love power. We can only imagine the power lunches between Sheila Jackson, Richard Barrera and John Lee Evans, the SDUSD "Union Three", with Lorena Gonzalez, Tom Lemmon and Donald Cohen, the "Union Cardinals".

But what about the other side? There is another side. The unions only represent approximately 15% of San Diego construction workers! Sheila Jackson et al will not get reelected on union votes alone. There are many pickup trucks parked in driveways all around the District waiting for a call from a general contractor with a job contract. Not all jobs are union jobs.

Eric Christen accuses the unions of buying the "Union Three", as he has dubbed them, for $400,000. The payback being the exclusive right of the "Union Cardinals" to decide who gets into Heaven - i.e. a piece of the $2.1 billion bond action. This is hard-ball politics. This is a real prize fight.

What is at stake is how public works, which looks like being the main economic engine for some time, will be manned. We may be entering an era that resembles the 1930's in more ways than one: we may need to revisit its labor relations text books as well as its economic text books.

But right now it is purely political. It is being "duked" out in the opinion pages of the local media. There is even talk of recalls in the air. $2.1 billion is a prize worth fighting for. It is a "must win" fight for Lemmon, Gonzalez and Cohen but the "Union Three" can hedge their bets. They are already selling their "everyone is welcome to help improve our schools" slogan.

Politicians always follow the votes, irrespective of who paid their election tab. If the School District PLA runs into heavy weather, the "Union Three" will run for cover. A good example is Todd Gloria who abandoned the Our Lady of Peace (OLP) girls High School in its expansion bid before the City Council last Monday. OLP heavily backed his election campaign.

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Is SDG&E genuine about the Sunrise Power Link? 01/27/09
by Pat Flannery

If you missed "Nova" on KPBS tonight, here is the part about renewable energy. Nova explained that 16% of California's electricity now comes from coal and that Schwarzenegger hopes to "scrap all of it and replace most of it with renewable energy" by the year 2010 and 33% by the year 2020.

To do this, he wants to "put solar panels on 1 million roofs and on 1,500 acres of commercial buildings". But, according to "Nova", 1 million solar roofs will yield only 1% of the necessary emissions cuts. Power-plant levels of solar generation will still be required. These are called "solar thermal plants", of which there is currently only one in California.

Not so with wind energy. It is experiencing a boom right now. In Tehachapi for example, one company has installed 1,500 new turbines, equivalent to nine coal fired power plants! That is the future we all want - if "certain problems" can be solved i.e. the transmission line issue.

As Awnold puts it "zis krazy stuff that you have environmental regulations holding up environmental progress": this craziness puts his "33% by 2020" dream "on the line" so to speak. Our own Sunrise Power Link (SPL) immediately comes to mind. Right now the SPL is making progress but is not out of the woods yet. Both the California Public Utilities Commission (PUC) and the federal Bureau of Land Management (BLM) have given their approval, but one hurdle remains - the Cleveland National Forest supervisor.

The SPL is a 120 mile power line whose new "southern route" would largely follow I-8, avoiding the Anza-Borrego Desert State Park as previously proposed. That proposal was totally unacceptable to environmentalists, but not their only issue. They are still suspicious because SDG&E will not sign a written promise not to use SPL for importing "dirty" energy from Mexico. SDG&E says that Federal and State "open access" laws prevent it from committing to any exclusive use e.g. it may have to provide access to a wind generating company at some future date. So, who are we to believe?

Then along comes an Irish company named NTR plc (public limited company) that is not interested in "dirty" energy from Mexico or anywhere else. NTR is seeking recycling-led waste management, solar energy, wind energy and ethanol investment opportunities around the world. The company made its fortune as Ireland's National Toll Roads builder/operator.

It has invested $100 million in Stirling Energy Systems (SES), a company based in Phoenix, Arizona that developed a unique solar technology called the SunCatcher TM. NTR also invested $150 million in a Missouri based wind energy company called Wind Capital Group.


I am now more inclined to believe that SDG&E is genuinely committed to using SPL exclusively for solar. Why? Because it has already signed a 20 year Purchase Power Agreement (PPA) with SES for 300 megawatts of power to be delivered on the existing SDG&E power link running just north of the Mexican border from Imperial Valley to San Diego at its Miguel substation. That will require SES to build an array of 12,000 SunCatchers.

When the SPL is built, if it gets passed any environmentalist court challenge, SES is contracted to add another 24,000 SunCatchers. That means that SES will have a generating capacity of up to 900 megawatts, sufficient to power 500,000 San Diego homes. That is already locked in a 20 year contract. Somehow I don't see SDG&E messing with "dirty" energy from Mexico after that. SDG&E knows that California people are becoming ever more environmentally skittish. A "Mexican" fight may not be worth it.

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Aguirre's new gig: bank bankruptcies. 01/25/09

by Pat Flannery

In a Report issued today, reincarnated as general counsel to his new citizens group called the "National Center for Regulatory Reform", former City Attorney Michael Aguirre seems to be making a play for bankruptcy-attorney-in-chief to the current banking crisis.

Here are his three main recommendations (note "reorganization" is code for "bankruptcy"):

(1) insolvency reorganization for the troubled financial services firms,
(2) reinstatement of banking, insurance and securities regulatory protections,
(3) reorganization of the banking and securities industry to service the national public interest.

Aguirre has done a good job describing what went wrong in the credit markets. I am not sure he has done as good a job telling how to put it right.

He accurately pinpoints "In 1999 the Congress repealed the 1933 Banking Act" as the genesis of the present banking crisis. He is right that this misguided action led to the creation of so-called riskless "credit derivatives" and "credit default swaps" that promised to eliminate risk.

Eliminating risk is the financial equivalent of the age-old dream of turning base metal into gold - alchemy. Even the great Isaac Newton wasted a considerable amount of his talents on that futile pursuit.

Eliminating risk is code for suspending the pricing mechanism, the very essence of a free market system. How did the investing world fall for that one? No doubt because of the same human failing that made Newton fall for the dream of alchemy - they all wanted something for nothing.

Moralizing about how the financial crises happened will not bring back the money we lost. "Reorganizing" the banking institutions that brought us this tsunami of worthless debt will be no more successful than the City of San Diego suing itself for its past mistakes, which is essentially what Aguirre's pension strategy was. We have to look beyond the courts for solutions.

The biggest obstacles to new thinking are three old Articles of Faith:

(1) government is the problem, not the solution;
(2) unfettered American markets will eventually right the ship of state;
(3) foreign ownership of anything American is bad.

Americans fell in love with Maggie Thatcher's "free markets" theory, that everything about government is bad and everything about business is good. Ronald Reagan put his Hollywood training to work in spreading Thatcher's doctrine and got himself elected President of the United States. But it was a simplistic theory and is the ultimate cause of this financial meltdown. Thatcher/Reaganism ignored the destructive power of greed. It only saw its dynamic power, because that was what it wanted to harness.

I believe the answer is international banking. We would not even have this crisis if the world was not willing to buy the financial junk created by the out-of-control Wall Street banks. Let's lose our xenophobia and give the international banks our investment grade local Government securities.

What an opportunity to build America's next generation of infrastructure, using the savings of those around the world eager to invest directly in American assets. Let's go directly to the Chinese with our municipal bonds. They will love the fact that they are directly secured by real infrastructure projects. The global markets were willing to accept our word on what are now totally discredited mortgage-backed securities. We lied to them. We can regain their trust by offering them our high-grade municipal securities.

Thus the ultimate economic stimulus package could be the building of a people-to-people international financial system that would change the world for generations. It could be a global version of the 1946 film "It's a Wonderful Life".

Instead of being snake oil salesmen to the "savers" of this world, we could become the creators of a worldwide "Bedford Falls" - the classic film's American town where one neighbor's savings provided the money to build another neighbor's house, the origin of our great Savings & Loan system.

If too ready global acceptance of our badly securitized paper was the architect of this global financial crisis, let's go around, not reorganize, the dishonest Wall Street banker/brokers who destroyed the good name of America. Let's deal directly with the Chinese, the "savings" side of a new worldwide Savings & Loan system.

What we do next will determine whether America becomes a Pottersville or a revitalized "Bedford Falls". Saving our banks with taxpayers' money is economic nationalism in a time of economic internationalism. We now have a global economy whether we like it or not. We should bank accordingly.

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How about combining a new Convention Center with a new Stadium?
01/23/09

by Pat Flannery

In a Press Release yesterday the Mayor announced that:

"San Diego Mayor Jerry Sanders has named 17 local community and business leaders to his newly formed Citizens’ Task Force on the San Diego Convention Center Project. The group is charged with engaging the public to develop a set of recommendations to the mayor on matters related to the proposed expansion of the Convention Center."

Well, here is a suggestion. If we really are a world-class city why not build a world-class stadium in conjunction with a world-class convention center? Remember Dick Murphy's slogan "More than a Ballpark"? Well let's make our stadium "More than a Stadium" - really more than a stadium. Let's make it equal to or better than the Bejing National Stadium (the Bird's Nest); equal to or better than Wembley Stadium in London. Can we do it? Yes we can.

Look at Wembley Stadium's Special Events brochure. Can we not do that? Wembley says it is "at the heart of London's special events and corporate entertaining". Is that not right up our alley? We would have a bond paid off in no time and bring tens of millions of tax revenue to the City every year.

All we have to do is design it for "multi-use" like Wembley (opposite). The San Diego developers are in love with "multi-use", they should have no difficulty designing an all-steel stadium suitable for both international soccer and American football. Why build a $1 billion stadium for 8 to 10 NFL games a year?

In addition we could get 8 to 10 international soccer games, plus much more in "special events". Think of the national and international concerts we could host. The potential is limited only by the vision and marketing expertise of our Convention & Visitors Bureau. San Diego could become the international Mecca for sports and entertainment.

Or are we also going to be outclassed by the Beijing Bird's Nest (opposite)? How long will it be before they start hosting world-class special events? And all we can think of is keeping the

Chargers. Why not combine our desire to keep the Chargers with building on our success as a convention destination? Wembley has demonstrated that a sports stadium can double as a convention center very nicely.

Where would we put it? Probably on the present site of the 10th Avenue Marine Terminal. That would get the unions all stirred up. But San Diegans as a whole will need to decide what is the highest and best use for that site.

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Redevelopment is the City's "slush fund".  01/22/09
by Pat Flannery

The City is asserting that an area designated to receive CDBG funds, (funds provided by the Federal Government to provide low and moderate income housing) need not be "coterminous" with the actual recipient area. This is to get around a HUD requirement that CDBG funds must be used in "primarily residential" areas. This is reminiscent of the Grantville scam where the City will spend Grantville's tax increment money downtown.

Read the City's Defense to HUD's audit charges.

According to this unique San Diego doctrine the City can receive CDBG funds from the Federal Government, give it to its developer-friendly Redevelopment Agency or its sub-agents SEDC and CCDC, to spend as it pleases. That flies in the face of the basic, traditional "census tract" concept of Community Development Block Grants (CDBG). Uniquely, indeed arrogantly, this City claims that as long as CDBG funds are spent within the City's total area designated for redevelopment, it is legal. All because the City needs to retroactively "qualify" its past CDBG abuses.

Now read HUD's Rebuttal. HUD stands firm that the City still has not provided any documentation for the CDBG monies it spent in the Central Imperial redevelopment project area. So let's concentrate on that actual recipient area. Read HUD's Criteria for spending CDBG funds - Central Imperial clearly does not qualify.

HUD also reminds the City of a specific rule to prevent CDBG becoming a "spending account", in other words a "slush fund".

The injustice of all this, to the low and moderate income citizens that are supposed to benefit from redevelopment, is that large amounts of CDBG monies were spent in Central Imperial, which is not "primarily residential". We are expected to believe that because it benefited developers of large commercial and industrial projects, it must have benefited ordinary homeowners throughout South East San Diego (map) i.e. it "trickled-down".

Now the citizens of San Diego want their CDBG money to trickle back up again, starting with this Central Imperial "loan". They want it back. Their CDBG money was stolen by the Redevelopment Agency to benefit developers. To add insult to injury the Redevelopment Agency, not satisfied with spending it, put it down as a "loan" from the City in order to get "tax increment" and they never intended to pay it back as it wasn't a real loan.

This scandal must not get buried under the usual City double-talk, often reprinted by the media. The fact is that in order to avoid requiring the Redevelopment Agency to pay back this CDBG "loan", the City knowingly did not show it as a loan in its books while showing it as a loan in the Redevelopment Agency's books! That's fraud.

Everybody knows that you can't spend money and show it as a loan to somebody else at the same time. The City knew perfectly well that it couldn't show CDBG funds as a loan to its Redevelopment Agency and at the same time claim it had been spent according to CDBG rules. It chose the later.

This must be corrected or there may be fraud charges from the public against the City. The only possible solution, other than giving it all back to HUD, is to reverse the entries in the City's books showing this CDBG money having been spent by the Redevelopment Agency and re-book it as a loan. That will mean that it still has not been properly spent. The rightful beneficiaries of this Federal CDBG grant money have yet to receive the benefit of it. They are the low and moderate income citizens of this City.

Finally, now that San Diego is a known CDBG scofflaw, this City may have damaged its ability to receive future Federal block grants, which will be the preferred way of getting stimulus package monies directly down to cities.

The Obama administration and the Democratically controlled Congress will be watchful for cities like San Diego where all Federal money seems to quickly disappear down a developer sinkhole. San Diego has demonstrated a tendency to ignore Federal guidelines in spending grant monies, how will it convince the Feds that it "will be good" spending stimulus money?

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CCDC is Downtown's "slush fund". 01/21/09
by Pat Flannery

Today the CCDC Board, on its Consent Agenda without public or Board comment, approved three items purporting to pay the $11.3 million annual debt service on the Ballpark Bonds. I say "purporting" because CCDC is showing the $11.3 million on its budget as a "City Repayment", i.e. repaying a Center City redevelopment project debt, not a contribution to any "debt service". There is no mention of the Ballpark Bond debt service.

That is a major misstatement of fact. So far the media has swallowed this deceit. They are giving credit to CCDC for paying the Ballpark debt service. Here are the facts:

The Budget Item being increased today, from $7.5 million to $11.315 million (it had already been increased from $5 million to $7.5 million) is Item 29, "City Repayment", on CCDC's FY09 Budget. Here is the Budget Document. Note that the Budget Item is not "Debt Service" but "City Repayment".

This is the Budget Amendment Item on today's CCDC agenda amending that Budget Item. Note the wording: "to accommodate payments for debt service", not to make payments on the Ballpark Bond debt service. CCDC is claiming that this is a partial "repayment" of the outstanding Center City project loan from the City described in this Repayment Agreement approved today (also on the Consent Agenda). Note that the CCDC staff report says there is no other outstanding City loan administered by CCDC.

The City will have no choice but to "book" this as a Redevelopment Agency "repayment" in its books. That is what the CCDC Board has called it. It can't be one thing on the Redevelopment Agency's books and something else on the City's books. In other words it is not a "revenue" to the City. Repayment of a debt is not "revenue", one does not have to be an accountant to know that. This $11.3 million "repayment" has no effect on the City's Revenue & Expense Budget.

If the City wishes to book this $11.3 million as "revenue" it must instruct CCDC to re-docket a new resolution specifically calling this payment "debt service". But that was never the intent. They want it both ways. CCDC wants the Redevelopment Agency to receive credit for paying Ballpark Bond debt service for five years, while receiving credit, with the same payment, on the Center City redevelopment project debt.

Working together in 2002, the City and CCDC used the same duplicitous bookkeeping methods to funnel cash for the ballpark. First, CCDC used $95 million of the Redevelopment Agency's tax increment money for the purchase of the land donated for the ballpark. Then CCDC conveniently "coincided" a $46 million repayment of a Center City project loan, enabling the City to give $46 million cash to the ballpark. The City then borrowed $160 million, in the form of a General Obligation bond, repayable out of the City's General Fund. That made the City's total investment $301 million. The Padres put in $153 million for a total ballpark cost of $454 million.

Here is today's spurious Second Amendment to the 2000 Ballpark Cooperation Agreement between the City and its Redevelopment Agency. I say "spurious" Second Amendment for the same reason I said "purported" to pay debt service above because this payment is not a Ballpark Bond debt service. It is a "City Repayment". Therefore there is no need for any redevelopment "findings". This is what staffers call an "advocacy tool".

Now for the Repayment Agreement triggered by the HUD audit. First of all, none existed before. Note this is not an "Amended" Agreement. This is a first. When/if this agreement is approved by the City Council, the Mayor has no choice but to enter it in the City's books. It will be the first time this loan to the Redevelopment Agency will have appeared in the City's books!

That has huge implications. As I pointed out in my blog dated January 7, 2009,
Mayor Sanders must disclose this error (or worse) before going to the bond market. Unfortunately for him and the City he already has issued a bond without disclosing this gaping hole in his CAFR.

If the City Council approves this action when it comes before them, it will be a scandal. It will also be dangerous for each of them personally. Suddenly discovering that your favorite slush fund, the Center City redevelopment project, owes you $116 million that was not previously reported, is no small matter. Yet that is exactly what has happened. The fact is that this Center City redevelopment project debt was never recorded in the City's books.

As if to add insult to injury, CCDC now proposes
that the Center City redevelopment project pays back its City debt without interest. Here is the proposed Repayment Schedule. The first payment is in 2013, the last in 2021. Interest is waived.

These money transactions must be accounted for properly. If they are loan "repayments" they must be entered in the City's books as such. The City cannot show these repayments as "revenue" so that it can use that "revenue" to pay the debt service on the Ballpark Bonds.

To sum up: the "purported" action today was to approve "repayments" on a loan that does not exist until the loan described in the CCDC-proposed  Repayment Agreement is approved by the City Council and entered in the City's books. Note that CCDC reports that there is no other City loan. In calling this repayment "revenue" the City is using CCDC as a "slush fund". It is "loaning" money to a Corporation and receiving it back as "revenue".

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Open government Obama-style vs. "Staff" government in San Diego. 01/21/09
by Pat Flannery

I watched the Budget Committee debate this morning and noted the contrast between Obama's high ethical ideals vs. those of our Council Budget Chairperson Tony Young. Obama announced tough rules curbing the power of lobbyists - Young embraces the lobbyists. Watch the video

He openly admitted having had numerous private meetings with union and business lobbyists, asking for their budget priorities. It shows Mr. Young's priorities. Why do you think he wanted to be Chair of the Budget Committee? Because he is now the guy lobbyists have to "lobby". That's power - exactly what Obama wants to eradicate from the White House.

The citizens will be asked for their opinions at five citizen meetings, starting January 30, 2009 but while he has invited the union and business lobbyists to these citizen meetings, the citizens were not invited to the union/business meetings. Note on the video how Tony is on first name terms with MEA boss "Judy" Italiano. Judy knows how to keep her "staff" in line.

As for the planned "community forums", by the time the Mayor's office, the Council, the union bosses and the business lobbyists get done telling us citizens how it is all our fault for being so cheap, there will be very little time for hearing citizen views. Community forums organized by the City are always one sided affairs - the City talks and we listen.

Here is Obama on lobbyists and open government:



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"There's No One as Irish as Barack O'Bama"
01/20/09
by Pat Flannery

'Tis True! - Happy Inauguration Day - from the proud Irish.

Yes, they are dancing in the streets all over the world. The America the world loves is back, the real America, the America that cares about people. The "greed-is-good" era is over, the "people-are-good" era begins.

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Ben Hueso's gift to the Developers/Unions: Barrio Logan. 01/17/09

by Pat Flannery

I went to the "Community Meeting to review/discuss land use alternatives" for Barrio Logan today between 9:00 A.M. and 1:30 P.M. It was an object lesson in how the City will impose "mixed use" zoning on San Diego as a whole. It was a sight to see, a well-oiled propaganda machine. The bottom line is that virtually all the (yellow) residential lots west of I-5 will disappear.

Here is the "Barrio Logan Community Plan Update" draft document.

 

Click here for the full zoning map, then zoom in for even higher resolution.

First, Council President Ben Hueso and Mayor Jerry Sanders arrived to show their "respect" for this doomed residential neighborhood. It was like they were coming to a funeral, or like the old American Indian tradition of "honoring" an animal before killing it for food. Looking very chummy and pleased with themselves, they left together - one representing the unions the other representing the developers, San Diego's axis of greed.

Then their well-oiled City propaganda machine swung into action. The slick consultants launched into their fast-moving PowerPoint presentation. The doomed residents, many with only a poor command of English let alone the sophisticated nomenclature of city planning, sat glassy-eyed contemplating their inevitable fate. They all know that this so-called City "planning process" is nothing more than a cynical land grab designed to drive them from the little homes most of them inherited from their parents or grandparents.

The City's hired "consultants" remind me of those dreadful people who run up and down the aisles at the now all-too-familiar foreclosure auctions at the Convention Center and Del Mar Fairground. The function of both types of snake oil salespeople is to create what professional manipulators call an "affirmative momentum", i.e. a roomful of mesmerized bobble heads.

Next the staff "commissars" broke the citizenry into "tables". Each table was supervised by a City staffer, mostly from the Planning Department. I table-hopped to get a flavor of what was going on. A clear pattern soon emerged.

At each table was at least two very aggressive representatives of the "Barrio Logan Smart Growth Coalition", which represents the owners of existing light industries and commercial lots, each hoping for an up-zoning of their property. The rest were from other government agencies such as SANDAG, the Port District etc., all dedicated to "multi-use", but not one homeowner.

What I assumed to be the single-family residential community was huddled together at two tables speaking Spanish.
The well-known community activist Rachel Ortiz, executive director of Barrio Station, one of the oldest Latino community organizations in San Diego which she founded in 1970, had the biggest crowd at her table. Unfortunately I was unable to understand their conversations but I could feel their vulnerable intensity.

The room was thus abuzz with outside non-residents "planning" changes of use for the actual residents' properties, a very strange business indeed. No wonder Ben & Jerry went away smiling. They make a great team. They had just succeeded in setting one half of this old community against the other half, so they and their developer/union friends can come back in a few months and pick up the pieces. Is this what is ahead for all of San Diego?

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The School District's Project Labor Agreement. 01/14/09
by Pat Flannery

I stuck it out to the bitter end last night as the San Diego Unified School District (SDUSD) Board debated whether or not to adopt a Project Labor Agreement (PLA) for spending the voter-approved $2.1 billion Proposition S money. No surprise - the unions got their PLA, in a preliminary resolution.

The unions now control the School District. The real battle of course was fought at the November election. However, is Board Member John Lee Evans a true "union man" or just the property of one union, the teachers union? There may come a time in the spending of the $2.1 billion bond money when the teachers' interests may not coincide with that of the building industry unions and Dr. Lee Evans may switch sides. After all, John de Beck (Mr. San Diego School Board himself) did exactly that last night.

The winning votes came from Richard Barerra, John Lee Evans and Sheila Jackson. Barerra, with a Masters Degree in Public Policy from Harvard University, is the only true-blue union person on the Board. He is very ambitious and aims to get wherever it is he is going, with union help. But the real ruling coalition of this Board may yet turn out to be Jackson, Lee Evans and de Beck. Yes, de Beck. Barerra may be just too "union".

Chairperson Sheila Jackson, the ultimate local gal made good, is finally getting a taste of power and is loving it. Her predecessor Katherine Nakamura was beside herself with frustration last night. When she had the chair Nakamura "stuck it" to Jackson more than once, now it is Sheila's turn. Sic transit gloria.

But there is more to this than personalities. There are some big issues at stake here. It is where big money and big labor meet. It is also where Tom Lemmon, business manager of the San Diego County Building and Construction Trades Council and Lorena Gonzalez secretary-treasurer and CEO for the San Diego and Imperial Counties Labor Council, can make big mistakes. Their careers are on the line.

Lemmon and Gonzalez are in a similar position to the Israeli generals who invaded Gaza. They must win. No second chances. Lemmon cannot afford another Gaylord and Gonzalez has yet to fully fill Jerry Butkiewicz's shoes.

Because I wrote the ballot argument against Proposition S, I received dozens of emails today from people I do not know, telling me that if they had guessed that the unions would hijack the $2.1 billion School Bond money for "social engineering", they would never have voted for it.

My impression is that union leaders Tom Lemmon, Lorena Gonzalez and CPI's Donald Cohen may have gotten a little ahead of themselves on this one. They have left very little room for a strategic retreat if events go against them. What if the Obama public works program swamps their School District gig? What if Obama money and Prop. S money together create a shortage of labor in San Diego? The PLA will be a burden to the Schools. Like Jackson to Nakamura, the taxpayers will show no mercy.

The only way Lemmon and Gonzalez can protect their flank is by securing similar PLAs with SANDAG and the City of San Diego, maybe even the County. But that is a tall order, especially with SANDAG. They just might pull off a "living wage" style PLA ordinance with the City, but the San Diego Regional Chamber of Commerce dominates SANDAG, which will be the main gateway for Obama public works money (if it ever starts to flow).

The unions may celebrate their achievement at the Unified School Board, but like the Israelis, they shouldn't declare victory just yet. The people who voted for Proposition S did not vote for a jobs program, nor for social engineering. There will be a backlash if the unions turn it into either.

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Community Planning Group Indemnification is tricky business. 01/12/09
by Pat Flannery

A proposed ordinance that would indemnify approximately 600 members of Community Planning Groups (CPG) throughout the city was introduced at City Council on November 24, 2008 and approved following an extensive public hearing. It was docketed for final adoption on December 9, 2008 but was "pulled" by the new City Attorney Jan Goldsmith for further study.

It reappeared on yesterday's Council docket as Item 200. The City Attorney made his reservations known in this Memo, which was circulated to City Councilmembers on Friday, January 9, 2009. The Memo refers to the original CPG Indemnification Ordinance dated April 25, 1988.

Mr. Goldsmith saw some "red flags":

  • the ordinance would indemnify (temporarily) untrained CPG members and (always) include non-members on sub-committees;

  • requiring the City Attorney to "defend" rather than "provide for the defense of" members would preclude the retention of outside counsel and create conflict of interests for the City Attorney;

  • the ordinance would extend coverage to former members (this is known as a "tail" in insurance coverage terms);

  • the City Attorney is required to complete a "thorough investigation" for eligibility of coverage within the 30 day period for answering a complaint, which may not be enough time;

  • the proposal to require the City to defend and indemnify each CPG member on each and every complaint filed, regardless of the allegations, may invite predatory lawsuits and exorbitant claims;

  • the proposed ordinance would provide CPG members with a greater level of indemnity than the City provides its own employees and is more than the law requires.

Here is an edited video of the City Attorney's remarks explaining his legal advice to the City Council. He was obviously very persuasive because the vote was unanimous to send the whole ordinance back for further work between the City Attorney and the CPGs.

In an interview with Mr. Goldsmith afterwards I raised what I believe to be the greatest concern of CPG members viz. a fear that they might be targeted for a personal law suit because of their outspoken opposition to some project or other that may have political support in high places at City Hall. He referred me to an area of law known as Strategic Lawsuit Against Public Participation (SLAPP) lawsuits (which I have since researched).

Mr. Goldsmith thought he might have his staff write a memo expanding on how he would defend against SLAPP lawsuits, if it would help allay fears in the minds of some CPG members. It might. I know that a force behind CPG
"requiring the City to defend and indemnify each CPG member on each and every complaint filed, regardless of the allegations" was the fear of somebody (a City Attorney, City Council or a Mayor) "finding" that a CPG member had committed "a deliberate act" and therefore was not covered, when in fact they were the target of an intimidation (SLAPP) lawsuit.

Mr. Goldsmith can be forgiven for not realizing the depth of distrust that has accumulated in the area of land use in San Diego. When he sits down with the representatives of these Planning Groups he will find it very difficult, if not impossible, to keep strictly to the law and avoid "mixing politics and law".

He did an excellent job in identifying the underlying attorney/client problem. He proposed that in future the City Attorney may not deny a defense without authority from the City Council. That is a sensible step in the right direction but it may not satisfy a majority of CPG members unless their trust in the independence of City Council has greatly improved. I doubt it.

This will require all the lawyerly skills Jan Goldsmith possesses and more. It will require considerable political skills - by somebody. Too bad we don't have a hands-on Mayor. It is unfair to ask Goldsmith to do the politics also.

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My analysis of the current City Council. 01/10/09
by Pat Flannery

There are two kinds of San Diego City Councilmember's: "staffers" and "legislators". The "staffers" are Faulconer, Gloria, Young and Hueso and the "legislators" are Lightner, DeMaio, Frye and Emerald.

"Staffers" are easily identifiable by their "institutional" mentality. They demonstrate a natural sympathy with the bureaucratic mind and identify more with city staff who come before them for "Council Action" than with the electorate. They see "Council Action" as part of a bureaucratic process rather than the revered workings of representative democracy.

The Staffers

Kevin Faulconer was first elected for District 2 on January 10, 2006 with 15,044 votes to Lorena Gonzalez's 14,320. He had worked for the public relations firm of Porter Novelli and served on a wide variety of civic boards and commissions. His professional clients were large institutions such as San Diego State University and the San Diego Unified Port District. He was already a solid "institution" man.

Now, as a City Councilmember, he thinks as an institutional lobbyist. He always looks for ways to "get things done" between the City and the various agencies and corporations that interact with each other. He is very good at it. But that skill set makes him less at home in the living rooms of his District 2 constituents than in the boardrooms or committee rooms of downtown.

Todd Gloria virtually fawns over any City staffer that comes before City Council. Like Toni Atkins before him in District 3 he indulges in tiresome ritualistic thanking of city employees for simply doing their jobs.

Perhaps he thinks this affability will be rewarded whenever he asks staff for "favors" in doing their jobs. Maybe he learned how to "kiss up" to Congressional staff when working for Congresswoman Susan Davis.

In any case it is clear that Councilmember Gloria will use more carrot than stick in dealing with San Diego City staff. Eventually, after he has been lied to often enough, he may realize that staff self interests are often adversarial to the public interest. Therefore the job of an elected official is to question unelected officials closely and hold them accountable, not pander to them.

Tony Young succeeded his (deceased) boss Charles Lewis who in turn had succeeded his termed-out boss George Stevens, as Councilmembers for District 4. Like his current  Chief of Staff Jimmie Slack, Young worked as an aide to County Supervisor Leon Williams.

Being a City Councilmember, County Supervisor or any other elected official, is just another staff job to these people. They become institutionalized. Young is the quintessential institutionalized "staffer". One thing for sure, he is never going back to his old teaching job with San Diego City Schools.


Ben Hueso is more than a "staffer", he is a "staffer boss". What makes him "boss" is that he was such a reliable "staffer" to begin with. Ben knows on which side his bread is buttered. And the unions have been generous with the butter. They know he will not let them down. That is why they appointed him "boss" of all the other compliant City Council "staffers".

All Ben has to do is keep troublesome "legislators" like Carl DeMaio in check and run the City Council meetings on time as a service to city staff to get their "Council Actions" through on schedule. That is how it has worked for decades. Ben will always have a smile on his face because all he has to do is read what is put in front of him and his bills get paid. He doesn't even have to remember which District he represents.

The Legislators

Sherri Lightner is the antithesis to a staffer. As a longtime community volunteer she has seen how city staff routinely sells out citizens' rights to developer greed. For decades she has been on the receiving end of their manipulations of Land Use and CEQA laws. 

She and her fellow-engineer-husband Bruce, put their considerable (self-made) family fortune on the line for the long-suffering citizens of San Diego. She is not doing this for the money nor is she interested in higher office. She will be a worthy opponent for venal city staff who are counting the years to their over-benefited retirement. She is a true public servant.

 

Carl DeMaio is a bit of a hybrid - he is a public servant, but with ambition. He seems to have a genuine interest in good government and to have made it his profession. He is in a frightful hurry, which is both good and bad. San Diego has problems that just won't wait, so Carl's passion to make a difference is good.

But those who are not in such a hurry, Ben Hueso and Tony Young, will use Carl's haste against him. We saw what happened to Aguirre who was also "on a mission". I am impressed with Carl's sincerity, if not his impetuosity. If DeMaio can build a team, he could make a difference and bring his success to the next level, perhaps Governor. He is, for good or ill, a quintessential Californian.

Donna Frye is a legend in her own time. For years she has held the fort for honesty-in-public-life, when all around her was corruption and deceit. She has, without doubt, earned an honored place in the annals of San Diego. The only question is: are her best days behind her or before her? I hope the latter.

She is a natural-born leader and despite having been robbed of the office of Mayor and the Council Presidency, she will doggedly lead the "legislators" against the "staffers" for the next two years. Her grasp of the issues is second to none.

Marti Emerald makes it into the "legislators" category despite having one foot firmly in the union/staff camp. It is probably true that she would not have made it onto the City Council without the help of the city unions, "staffer" Ben Hueso and "godfather" Ron Saathoff.

But Marti has another (hopefully even more powerful) side to her - she has an instinct for "the people". Channel 10 was not mistaken when they made her their very successful TV "Troubleshooter", a role she loved.

She is hard not to like. She is a touchy-feely "people" person. She will probably defer, out of loyalty, to union/staff interests when she must, but she is no "staffer" - she is no Ben Hueso, and I think the unions know that.

Conclusion

These are the eight people who will make key decisions on the lives of 1.3 million San Diegans over the next two years. We need to watch and understand their motives. The above analysis suggests that four are public-serving and four are committed to special interests - business and unions.

Carefully watching them during their first two weeks on the job, certain basic trends are evident. The "staffers" are already protecting the status quo by carefully containing the "legislators". Council/Committee deliberation, a vital part of good legislating, is being kept to a minimum.

Despite the Brown Act, "Staff" President Ben "I move the staff recommendation" Hueso, working to a staff script, will shepherd each agenda item along in order to quickly implement the staff recommendation. After each successful "Action" Ben can hit the "That was Easy" button.

The "legislators" and the public will have to constantly outsmart the wily administration staff and their puppets on the Council. That will not be easy.

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Mayor Sanders has a new "Redevelopment" problem. 01/07/09
by Pat Flannery

Responding to a citizen complaint, the Office of the Inspector General of the Department of Housing and Urban Development (HUD) took a look at San Diego's handling of the Federal Community Development Block Grant (CDBG) program. It issued this Audit Report dated December 30, 2008 requiring the City to:

"1. Pay back more than $1.8 million plus any applicable interest to HUD from nonfederal funds for CDBG project costs determined to be ineligible.

2. Provide supporting documentation for unsupported redevelopment project activities or reimburse its program more than $11 million from nonfederal funds.

3. Execute written interagency agreements and loan agreements with the Agency for outstanding loans totaling more than $139 million."

This means that the City's
CAFR (Comprehensive Annual Financial Report) is wrong by $139 million. According to HUD the CAFR shows a certified debt to the City of $139 million on the Redevelopment Agency's (RDA) books, with no corresponding asset on the City's books!

Sanders will need to disclose this "error" before he goes on his borrowing spree. But that is only part of his problem. Providing HUD with retroactive "supporting documentation" for the CDBG monies spent on unqualified projects, will require some "imagination". He will need to put his most "creative" accounting staff on this one - or he will have to pull $11 million from the General Fund and spend it on new qualified CDBG projects.

For a start, HUD requires him to immediately and formally acknowledge the $139 million RDA debt to the City. It was this deceit that prompted a citizen to complain to HUD. The City, including its current Mayor, likes to keep its finances "informal" (like a slush fund). They hate to be constricted by "policies and procedures", to the extent they actually ignored the accounting requirements that come with CDBG grant money.

They lied on various annual reports to HUD - that they had a CDBG monitoring program in place, when in fact no such thing existed. HUD has found that "there were no project files in the City's CDBG administration office" and that the RDA "was free to spend CDBG funds at will". HUD noted that "SEDC staff managing four redevelopment projects areas were not aware that most of the loans issued by the City were actually funded through the CDBG program." Sanders can't blame this on Carolyn Smith.

Why would City staff do this? They clearly knew they were falsifying important HUD reports; they must have known their books didn't balance; City Comptrollers certified and submitted to the State of California, for fiscal years 2001 through 2008, multiple false "statements of indebtedness", in order to obtain redevelopment tax dollars i.e. they certified RDA debt to the City totaling $139 million, with no record of that debt on the City's books.

The HUD Report is very clear as to the City's motive: "The Agency [RDA] received well over $500 million in tax increment funds between fiscal years 2000 and 2007. CDBG represented nearly 20 percent in the Agency's total debt in fiscal year 2007, illustrating how instrumental CDBG debt has been in obtaining tax increment funds."

It is impossible that this was just an accounting error, as Sanders will no doubt try to spin it. It was all very deliberate and very dishonest. HUD found that "the City and the Agency [RDA] were primarily using the CDBG funds to leverage/obtain tax increments from the state." City staff actually admitted to HUD that they were fully aware that CDBG "loans" were being used as a "tax increment leveraging tool". City staff "repeatedly indicated"
to HUD that the City intended to eventually write off the RDA loan - which may explain why they never bothered to put it on the City's books to start with.

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