Anaheim’s Shocking, Terrifying, Theory of Government, PART 4: The City’s Attorney Explains the Theory

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Part 1 of this series gives the broad strokes of what the City of Anaheim is trying to accomplish through litigation — unchecked power for a bare 3-person Council majority to commit the City to as much future spending as it and its big donors fancy.

Part 2 of the series addresses the complex structure and function of the system that Anaheim is using to prevent public votes on very large public expenditures; it will be a good reference for anything you don’t understand later on.

Part 3 of the series introduces you to the CATER/IOC lawsuit against the City of Anaheim in all of its hats and focus on the main issue in the case — is there any legal restraint, such as a requirement for a public vote, on the ability of a JPA to commit public money to any amoubonds?

Each part will make more sense if you read the parts preceding it, but we’re trying to make each of them stand alone as well.

4. Anaheim Shall Have Its Autocracy!

The diagram that you see above, and that you’ve seen in the three previous installments of this series, comes from one drawn by the City’s outside Counsel with Rutan & Tucker.  (I’m not naming him so as not to be personally provocative.  We’ll call him “Rutan” or “Mr. Tucker.)  He omitted everything in off-white, like the JEPA, the caption calling it a power grab, and the designations about “limited power” and “unlimited power.”  Those last parts are the important parts.

Rutan’s argument was essentially that you have a whole other part of local government that you probably didn’t know about — and that it allows a care three-person majority of the City Council to do pretty much anything it wants to when it comes to obligating the City to dedicate large chunks of its General Fund to building Big Construction Projects that profit Big Donors.

Four years ago, while we were still in the heyday of the Age of Redevelopment, they would have been correct.  But in 2011, the Legislature got rid of Redevelopment because it opened up the door to so much waste and corruption — essentially, if you put a huge pot of money out there in public, even for a good purpose, greedy people are going to find out a way to get ahold of it.   You either have to continually bat them down in a never-ending game of “Whack-a-Mole” because you think that your purpose is good enough to justify it — that’s the ideological liberal position — or you give up on that purpose because you can’t tolerate the corruption (the ideological conservative position.)

Both positions have their merits; being a believer in the power of government to foster positive change, I take the liberal position, while others here take the conservative one.  But honest liberals and conservatives agree that what you don’t do is just leave that pot of public money out there and let the greedheads feed at it like pigs at a trough, usually producing nothing much that actually serves the good purpose for which the money was intended.  That’s the “practical” position of Business Democrats and Easy Street Republicans.  That’s what California was doing — just letting a bipartisan coalition the bastards feed and feed — and that’s what California, in Governor Brown’s most dramatic and effective legislative initiative of his first year (and maybe his first term) eliminated.

The end of Redevelopment had two effects.  First, it cut off the spigot of Redevelopment funds.  Second, as a necessary consequence of that — and this was the point of the reforms — it cut off the authority of City Councils to approve these huge piles of spending.  After all, you can’t spend what you don’t have.

Or can you?

You can spend what you don’t have if you can take out a loan — or, especially if you’re a municipality, if you can issue a bond.  Anaheim’s position has been that it wants to be able to continue to issue bonds for Big New Construction Projects even in the absence of Redevelopment money.

Unfortunately for the Anaheim City Council — although fortunately for its residents — if the City is going to issue a huge bond, it has to go to the voters for approval.  For example: if, as it is arguing, the expansion to the Convention Center will be worth the $200 million plus financing fees (apparently based on its likelihood — no guarantee, of course — of keeping two large conventions in the City that might otherwise leave), then it has to convince the voters.  And, if it’s case is as good as it claims — which I doubt, but it’s possible — it shouldn’t have much trouble doing so.  That’s democracy in action.

Also, Anaheim has additional constraints on its power that are imposed by its own City Charter (its local constitution) and the State Constitution.  That’s constitutional democracy in action.

Anaheim says that there’s another pathway that the Legislature didn’t cut off — one that allows the Council majority effectively unlimited power to commit future City Council budgets to current expenditures.  It involves something called a “Joint Powers Authority,” or “JPA.”

After a JPA is created by a City and another governmental entity — even one that, like the Anaheim Redevelopment Agency or the Anaheim Housing Authority, is controlled by the very City Council that governs the City — Anaheim says that it can do WHATEVER IT WANTS TO, in WHATEVER DOMAIN IT WANTS TO, when it comes to issuing bonds.  Of course, they have to make sure that they’ll have the money to repay the bonds — but that’s not a problem for them, because the majority voting to issue the bond under the JPA is composed of the same people on the City Council promising to repay it.

More strikingly, a JPA between the City and the Anaheim Redevelopment Agency doesn’t have to limit itself to dealing with Redevelopment issues.  A JPA between the City and the Anaheim Housing Authority doesn’t have to limit itself to dealing with housing issues.  Take a look at what’s written above and let it sink in:

They Can Do Anything — when it comes to approving construction bonds.  Anything, so long as they vote to put the City on the hook for paying the bill.

The City’s Rutan & Tucker attorney said about the Anaheim Public Financing Authority created by the City and the Anaheim Redevelopment Agency, that the APFA “has its own business that has nothing to do with redevelopment.”

A JPA, he says, “is greater than the sum of Its parts. It can do things that even the city and the Successor agency or the RDA cannot do. That is what Rider stands for. And that is the premise on which this house of Cards is built.”  The other agencies you see in the graphic “were all constrained by something. The city was constrained by the voting requirement. The RDA would have been constrained by the fact that it’s a redevelopment agency and could only issue bonds for redevelopment projects, which this is not.”  (He notes elsewhere that the Successor Agency is constrained by the fact that it exists only to wind down the Redevelopment Agency’s activities.)

That’s what those lines are about, separating “limited power” from “unlimited power.”  Using what he elsewhere calls “magic language,” the City Council grants itself extraordinary — within this domain, almost limiteless power — that ITS VOTERS DID NOT WANT IT TO HAVE.

The important thing about the JPA, from the Rutan attorney’s perspective, is its ability to act without voter approval.  When the Court points out that the City can issue these bonds if it can get a majority vote for the project, he replies: “[T]o me, that’s comparable to saying it can’t do it. It can’t do what the JPA did in this case, which was go forth and approve the bonds without getting a vote.”

All of this is about the ability of the City to shut its voting citizens out of the process.

Now if you’re up to date on the City Charter, you’ll know that it states that even for revenue bonds like these, the City has to get a majority vote for a project.  No problem, according to the Rutan attorney: “In exercising the powers granted pursuant to this, you don’t have to comply with any other law. … You don’t have to comply with any other law that is applicable to your members.”

The idea is that because this bond is being issued by this empty straw entity, the JPA, the terms under which it is offered are beyond regulation by the City or the State.

In other words: “No vote required.  Three people can commit the City to whatever they want.”

Now, don’t panic — CATER and the IOC disagree with the City’s position here.  We’re fighting to restrain them.  Even if — incredibly, horrifyingly — this was the law prior to the State’s elimination of Redevelopment, we argue that it’s not the law today.  That is a big topic — and one for another day.  That’s not the point of this particular discussion

The point is this:

Why does the City of Anaheim EVEN WANT this huge, dangerous, anti-democratic power for three people — on their own, and without much evident understanding of the stakes and consequences to commit the next 30-38 years of the city’s annual budget to these huge construction projects that benefit their own Big Donors?

They want this power badly enough to fight us in Court over it.  They refused to put this issue even on the November ballot — it could have been on June’s — because they care so much about this principle that three people should be able to have dictatorial control over Anaheim’s economic future.

Why?  WHY?