Clockwise from top right: Cynthia Ward; Tom Tait; Carrie Nocella, Kris Murray, and Jordan Brandman, Lorri Galloway, the GardenWalk, Debbie Moreno.
As reported earlier, OJB is trying to get information into the hands of those who might offer opinions to City Hall prior to tonight’s (April 7) 5.p.m. Anaheim City Council meeting. With the astonishing number of contentious issues to deal with, and a sure-to-be-packed Chambers — especially given that the police have shot more people since the previous meeting — the more background info we can offer to residents, the better informed all of the discussion will become.
Items 33, 34, and 35 on the agenda are proposed Charter Amendments. Here’s a closer look at each.
ITEM 33
On December 9, 2014, then Mayor Pro Tem Murray requested the City Attorney prepare a Charter amendment to require that taxes proposed by the City Council obtain a 2/3 vote of the full City Council in order to place such matters before the City’s voters. The attached Resolution, if adopted, would call a general election for November 8, 2016 and order on the ballot a Charter Amendment to add Charter Section 1208.1, entitled “City Council Sponsored Tax Proposals – 2/3 Vote Requirement.” This amendment is also known as and self-titled the Anaheim Taxpayer Protection Act. (Attachment 1.)
OJB’s Greg Diamond has described the Council debate over ATPA (or, as he calls it, “PATTOO”) in obsessive [Ed. note: Cynthia presumably means “informative and entirely appropriate”] depth. I will only add the following details:
1: Ordering Staff Around During a Political Speech?
During the recent meeting, Kris Murray thanked City Attorney Michael Houston for “months” of hard work — yet she had only formally introduced the issue a few weeks ago! So on whose authority was the City Attorney expending staff time? While the Staff Report mentions Murray’s December 9 meeting request, that was her grandstanding speech during the “Swearing In” ceremony over at the Rock Christian Center rather than during a business meeting. Since when does Staff direction for a Resolution changing the Charter of our city come during a speech?
2: Too Bad Anaheim Doesn’t Have an In-House Expert on Bonds … Oh, Wait, Yes It Does!
When this item was discussed at the March 3 meeting, both Mayor Tom Tait and Councilmember James Vanderbilt asked about how the changes in the City’s bond ratings might affect its ability to refinance bonds if rating agencies find that we have not only made it harder to raise taxes, but to even let citizens vote on whether to raise taxes.
As we addressed in a previous post, Finance Director Debbie Moreno offered a guessed that it won’t be a problem, because bond rating agencies supposedly would not be concerned about how difficult it was to get a tax increase on the ballot, only whether or not voters would pass it. (And Greg Diamond cleverly caught Murray’s plea to “not tell Mom and Dad” for fear they might say no.)
But understanding bonds is not Debbie Moreno’s job! That is the job of the City Treasurer, Henry W. Stern.
From bond rating agency Standard and Poor’s description of Anaheim:
“The treasurer for the city of Anaheim, California, is responsible for overall management of the portfolio. The treasurer has prior experience managing Standard & Poor’s-rated government investment pools from his tenure at the cities of Los Angeles and Long Beach.”
Mr. Stern is clearly very good at what he does: he has been teaching others in the field, meaning he is greatly respected by his peers. Right off the bat in his presentation we see this;
Impact on Cash Management and Investment Strategies •
Cash Flow – Ensures you have funds to pay the bills •
Issues that affect Cash Flow – Budgetary – Economic Environment – Political Agendas
In fact, it looks like Stern has been teaching this to other professionals for years.
Back in Anaheim, however, Mr. Stern has not been heard from by the public in well over a year. Last year’s Budget Hearing under the supervision of our new Interim City Manager, Paul Emery, replaced substantive and meaningful reporting with an MTV-style video. While Debbie Moreno offered us some insight on bond status, for the first time in anyone’s memory Mr. Stern was not offered a microphone nor an opportunity to explain the City’s positions.
Debbie Moreno is paid far too much to make a wild guess — especially a guess about someone else’s job! (And note that this is another reason that last year’s “technical clean-up” Charter Revision vote to allow the Council to combine Stern’s job with Moreno’s — with her probably occupying the combined position — was a terrible mistake and should be reversed in 2016.)
Had Mr. Stern been offered a chance to speak on March 3, he could have shared that yes, bond rating agencies can and do care about how hard it is to get an issue on the ballot. In fact, that is the exact reason that Anaheim’s bond rating was downgraded in 1997 just before the release of the Disney expansion bonds!
If Stern is not available to provide a Staff Report tonight, City Manager Emery should be asked to explain why.
3: Murray’s Motivated Timing for this Charter Revision
The Register reports about the timing of this measure:
Murray said she didn’t know about the agreement [that Anaheim would not pursue a gate tax for at least 20 years, i.e. until 2016], which was quietly tucked within a $546 million contract adopted in 1996 to pay for infrastructure improvements tied to the opening of California Adventure, Downtown Disney, the Grand Californian Hotel and a Convention Center expansion.
The councilwoman said the timing of her proposed Anaheim Taxpayer Protection Act is a coincidence.
“This isn’t about any one tax; it’s about protecting our residents from all taxes, whether it’s utilities or sales or anything else,” Murray said. “There are people who want to increase taxes in our city, and I think it’s unfortunate that they won’t embrace this measure.”
So: Murray’s story is that Disney told their SOAR Advisory Board about the gate tax but failed to brief the City Council member most likely to be friendly to their cause, who happens to be BFFs and vacation buddies with the head of Disney’s Government Relations department? Well that must be embarrassing for Kris to publicly admit to the press that Disney left her in the dark.
Let’s go ahead and admit this is really all about the Gate Tax. Whether or not Murray knows that this is why Disney put her up to this is beyond the point. Her being duped would not release taxpayers from what she does in her ignorance.
4: A Gate Tax Isn’t Regressive — and Can Easily Be Made Even More Progressive!
Let’s examine Murray’s argument that a gate tax is “regressive” and hurts the working poor by taking a greater percentage of their incomes. As Greg Diamond has explained, luxury taxes generally aren’t regressive to begin with. But beyond that: a gate tax can be easily rebated back to Anaheim residents through utility bills, just as a U.S. tourist to Canada may apply for a rebate of certain taxes paid while visiting. The rebate application might even offer citizens the options of leaving the tax in the General Fund for use providing specific city services or donating it to an Anaheim non-profit program through the Anaheim Community Foundation.
A gate tax would thus truly not be harmful to Anaheim residents. It would be bolstered by the same argument made in support of bed taxes: that the fees are paid by visitors. Contrast that reality to the bed tax, which is claimed to be an “economic engine,” but which does not exempt Anaheim residents who seek shelter in Anaheim motels as a last stopgap before homelessness. Talk about a regressive tax that harms the poorest families! (In fact, we should also permit Anaheim families to rebate back their TOT when staying in Anaheim lodging facilities. Murray’s concern for Anaheim’s poorest families should carry at least as much weight as her concern to fill the “feasibility gap” of $158 MM to an already wealthy hotelier.)
5. Anaheim’s “Check Economic Engine” Light is On
Since Murray is inviting us to shine a bright light on the Resort, let’s go ahead and look. Ah, there’s your problem! The policies of Anaheim’s Council majority, largely in opposition to the Mayor, have generally been regressive in nature.
GardenWalk developer Bill O’ Connell made a really bad investment at the top of the market — so bad that he could not find funding willing to back what must have been one hellluva bad business plan. (Potential backers were refusing a return on investment at rates that were (no kidding) equal to those for a hard money loan for poor credit risk borrowers.) But he was politically well-connected, so he convinced the Council majority to make taxpayers, many of whomare equally underwater, to underwrite his losses in the land game by rebating TOT taxes to him. We call this “the GardenWalk Giveaway.”
In the event O’Connell builds his hotel and collects bed tax from his future guests, there will be a 17% charge in addition to the room rate. Of that 17%, 2% goes to the ATID, which funds promotion of, and transportation projects within, the Resort. So that 2% stays in the Resort for the benefit of the Resort, and offers no benefit to the community as a whole. That 2% remained intact; O’Connell’s TOT rebate would come from that pot.
The remaining 15% TOT goes to the General Fund. SOAR, Disney’s Booster Club, continues to claim that this represents FIFTY PERCENT of General Fund revenues. But it does not equal the promised 50%, not even in gross value before expenses. And after deducting the expenses of the bond payments, the Resort produces a mere 20% of General Fund revenues. That means it should no longer be proclaimed as the “biggest single source of funding”; more money comes in from property taxes. Yet the homeowners paying property tax have nowhere near the influence that the Resort does, despite our greater percentage of contribution to the General Fund. Go figure.
No, 20% of the 15% TOT on room rates (meaning 3% of the entire bill for staying in Anaheim) comes right off the top for bond payments to recover the $500MM in infrastructure costs from the Disney expansion funded in 1997. So that 20% of TOT is not touched by O’Connell’s rebate.
So, the tax money that the Council is rebating to O’Connell comes from the remaining 80% of TOT that is owed to the taxpayers of Anaheim for the “vital city services” which SOAR keeps claiming they protect. It is not the fellow hoteliers sharing in the sacrifice of a percentage of their ATID 2%, nor is Disney being shortchanged in the 20% that hoteliers put up for bonds to benefit Disney. It is only the taxpayers’ rightful portion of the TOT that is giving back to O’Connell. That is the definition of “regressive.”
Disney’s refusal to ask their own guests to contribute to Anaheim’s economic engine (as they do for Orlando, Florida, site of Disney World), while demanding that local hoteliers collect the tax from the same tourists, is insulting under any circumstances. But is especially degrading when Disney is demanding a $300MM streetcar that benefits only their own end goals, with what has thus far been planned to be 100% public financing.
ITEM 34
Item 34 fits nicely into the above analysis. It is the Mayor’s Charter Amendment that ropes in the Joint Powers Authorities that the Council has used to get bond money to their buddies without a vote of the taxpayers who will fund them well into future decades!
(This issue was litigated last year by plaintiffs including CATER, the Coalition of Anaheim Taxpayers for Economic Responsibility. Full disclosure: I’m CATER’s President, Greg Diamond is its General Counsel, and neither of us speaks for the organization on this website unless otherwise expressly stated. CATER is for litigation and other limited purposes as spelled out in its charter and it doesn’t engage in electoral politics.)
As CATER learned from the argument during our Convention Center bonds lawsuit, where the City’s outside attorneys at Rutan and Tucker marched into court with a legal argument entirely contrary to what had been said at the City Council hearings, Joint Powers Authorities such as the Anaheim Public Financing Authority need not comply with the City Charter. Therefore, this Charter Amendment binding the JPAs has no teeth. If we can successfully get this on a ballot, the proper wording for the issue must insist that the City of Anaheim will not participate in lease-leaseback agreements with JPAs using lease payments to cover bonds from the General Fund.
This is really complicated stuff, which is what the powers that be count on. If you can’t boil a ballot measure down to a sound bite the voters have a tough time determining how they should vote. However, the ballot title is freaking brilliant: the “PROTECT TAXPAYERS FROM DEBT ACT”! Hats off to Mayor Tait for that one!
ITEM 35
Tom Tait was clearly feeling like a bad-ass the other night, as he has also demanded that the “Take Back Anaheim” amendment be brought back to voters. (We love it when the Mayor gets all Dirty Harry on the Kleptocracy.)
You may recall the summer 2012 Citizens Initiative to “Let the People Vote” was ended abruptly when the community group led by Lorri Galloway failed to even attempt the level of citizen engagement needed to complete their mission and the Orange County Employees Association (“OCEA”) cut off their funding. Galloway claims Nick Berardino, the union now-retiring leader, met with Disney executive and Murray BFF Carrie Nocella to make a deal wherein the City would offer the AMEA employees regained losses on previous contracts in exchange for the OCEA cutting off the mailers that frankly humiliated the Council majority. This was also the issue that led the Council majority to strip Galloway of her Mayor Pro Tem title, with quite the vicious little cat fight.
Now how “the girls” got from this place to the love-fest we saw the other night, involving Kris Murray repeatedly referencing the once-hated Galloway as “Lorri” with some measure of faux affection in her voice — well, I don’t know. It seems to be somehow linked to massive amounts of non-profit cash the Council majority is now recommending be donated to Galloway, whose past performance has been BEYOND sketchy, to run a program that she has no experience running. Sure, this makes sense — but only in the alternate universe in which the Anaheim City Council operates.
If passed, the citizens of Anaheim would take the SOAR coalition’s 2007-08 arguments to heart: protecting the precious economic engine that is the TOT, and requiring a public vote before siphoning the revenues away from “providing vital city services” and into the pockets of well-connected hoteliers with the argument that they need it more than our libraries, parks, or law enforcement.
You might recall that the last time Tait attempted to get this critical issue before voters was the July 24, 2012 meeting, rudely interrupted by hooligans intent on causing trouble … and there was some rioting from non-officials going on as well. One of the issues Gail Eastman was grateful to be saved from voting on by the breakout of violence was this very issue.
It is not going to be a fun meeting Tuesday. On the other hand, it will probably be a long one.
Everyone attending the Anaheim Council Meeting tonight should read this first!
I was too late getting this out, everyone kept interrupting wanting their own private research stuff done for their own issues and I could not get to this. Sorry, I need to be 20 of me right now.
That would seriously freak out your husband.
“Check Economic Engine” Light —— ROTFLMAO !!!! Brilliant!
Sadly, the trio of economic illiterates on the dias and their BFF Debbie Moreno, will ‘fix’ it by applying a piece of black electrical tape (as the old joke goes) !
The Kleptomobile Check Economic Engine light only turns off when more debt is pumped into the fuel tank.
Speaking of debt, it seems to be creeping in just EVERYWHERE, like a parsley garnish on a plate, even where it’s necessity is not clear. Did you notice in last night’s San Onofre de-commissioning item, we authorized $20 M from the line-of-credit, for “flexibility” (oh, gotta have THAT!), yet it was firmly established that only $110M of the $130 M FUNDED RESERVE was needed to accomplish the task. WHAT delays exist in accessing our OWN FUNDS that we need the (paying Wells Fargo for) LOC in the middle?
In last meetings breakdown of the Utility bonds usage (escapes me if it was electric or water at the moment) we BORROWED $11 M to use as a “Reserve Fund” or IF NOT NEEDED as the last (after 30 yrs) payment. Would someone want to look at the Utility books and see if there is $11M under a couch cushion somewhere that we could just ESCROW, instead of PAYING TO BORROW FOR NO PARTICULAR USE? Evidently NOT.
OK on that I think I can answer. The money in reserves is not sitting in a Scrooge McDuck type vault, or even in an investment fund with much liquidity, although our City Treasurer does a good job of maintaining funds in accessible accounts for those expenses reasonably expected and he has built some relative liquidity into his Investment Policy. We actually have a very, very good City treasurer, they just don’t let him out of the closet to shout down Debbie Moreno’s “best guess” policy, which is apparently the new standard for professional best practices in municipal finance.
Back to the money…it is invested so the citizens get return on the money, and the best returns are offered by investments that are long range and fairly inflexible. Folks pay big to know they can keep using your money without interruption for decades. So the Treasurer tries to balance those long term investments that get big bucks back, with mid-range stable investments that give us assurance the money is likely to be there, and then the short term investments that let us draw against it if in need. So sometimes it makes more sense to borrow what is needed at lower rates than draw against something that is giving us a better return. (Using a low rate HELOC rather than tapping the 401K)
I don’t have as much argument with that theory, and the Utilities are still being very well run, as evidenced by the flood of immigration out of City Hall into Utilities by anyone still desperate to have pride in their work while drawing a paycheck with the City Seal on the top of it.
Those unable to make a lateral move are quitting, some within days or weeks of taking a job and realizing the place is a freaking nightmare. This seems especially hard on those with an engineering mindset, expecting some linear sequential pattern to work being done, who cannot process the current WORK ON THIS OVER HERE INSTEAD nonsense going on.
Not that I know anything, I am simply misinformed and politically motivated and staff time must be expended to ensure that those watching the Council meeting at home are assured I am misinformed and attempting to mislead the public. Which is funny since I come to the podium with documents in my hand in case anyone wants proof while Staff tends to increasingly answer with “It is our understanding that…” or this unnamed consultant refusing to put anything in writing says they don’t think there is evidence to support the scenario in which….
Yes I am aware of the City’s investment pool, I believe they are mandated to invest a good percentage in US Treasuries or equivalents, but I doubt that applies to 100%, and I DOUBT that any City investments have 30 YEAR maturities. And isn’t OUR Credit Rating good enough to qualify? (Aside that WE can’t print $$ at will or have the Fed gimmick the Market for our benefit) IF THERE WERE THE POLITICAL WILL, (Like there somehow always IS for creating JPA’s out of thin air, withholding information, and ignoring the Brown Act) I’ll bet that the structure of the Fund withdrawals (WHICH are CERTAIN to happen ANYWAY) could be tweaked to use some sort of shorter term revolving fund or escrow (of OUR $) , instead of always paying for a bank run. Hard enough to get the question of alternatives to be ASKED, and of course, WHO do they run to for an answer? THE BANK.
PS I’ll bet that whatever interest rate Utility Reserve funds are (hardly)EARNING is MUCH LOWER than the cost WE ARE PAYING W-F to BORROW the same amount – that’s what keeps banks in business, BTW. To confirm that, you could have Debbie Moreno take a wild guess at it, UNLESS ‘they’ decide to release our City Treasurer Mr. Stern back into the public, from wherever he might be held. Bonds and debt are his JOB, you know.
Let’s put this one here, even though this post stopped just short of Item 36. I just posted this on the CunningBlog, but of course it’s in moderation there.
Ahem:
The City of Anaheim itself engaged in litigation with the Angels when Pringle was Mayor, so what’s your point?
Because it now matters for conflict-of-interest reasons, I’ll confirm that he’s not involved with CATER. But I will be very surprised if — unless specifically ordered to by his client or the City Attorney supervising him — he comes back with anything like the “Grounds Lease MOU” that Charles Black put together.
Speaking for myself, not CATER: I would NOT be surprised, though, if he were able to engineer a deal where development on most of the lot would be allowed because Arte Moreno waives his right to encumbrances on too many parking spaces to make it feasible. This would happen under the existing lease if the City, alone or in association with Moreno, were to build a very big above-ground parking structure.
So long as the City profits very substantially from parking in the lot (probably built to either the north or the east of the stadium) — as in, a permanent share of parking revenues (which are now 0%) equal to the percentage that the City pays into its construction, operation, and maintenance, that’s FINE. And it would easily pass a public vote, too, given the likelihood that all factions of the Council would support it.
This “joint venture” is what Mayor Tait proposed on both Sept. 3 and Sept. 24, 2013 — and he couldn’t even get a second to explore this prospect. Maybe the passing of the Charles Black era means that there would be at least three votes on the Council to pursue a plan that would be of certain, rather than speculative, financial benefit to Anaheim. (It would ideally be accompanied by an agreement by the Angels to extend their stay through the end date of the bonds, so there’s something to park for.)