PATTOO WEEK, Part 4: ‘Bonds, James — Bonds,’ and Anaheim’s Finance Director Doesn’t Understand Finance




PATTOO — the “Protecting Anaheim Taxpayers from Their Own Opinions” Act (known by some ideologues as the “Anaheim Taxpayers Protection Act”) first came to the Anaheim City City Council for its approval on March 3, 2015.  It is a Charter Amendment that would require a 2/3 vote of the Anaheim City Council to place any proposed new, increased, or extended tax on the ballot.  Anaheim’s Council may send to the citizenry for a November 2016 vote.

To follow this, you’ll probably want to read:

Part One — Public Comments
Part Two — Murray’s Intro, Kring’s Kvetch, and the Vanderbilt-Houston Discussion
Part Three — Tait & Houston, “Mr. Procedure,” Debbie Moreno, Murray, Brandman
Part Four — Bonds, 3-2 Measure N Vote, Angry Brandman, Tabling, Tait on JPA Loophole

As if we need to repeat it: these aren’t official transcripts; they were the best we could do with our OJB volunteers.

We’re almost done with the 3rd transcript.  Yesterday, we featured the assertion from Debbie Moreno that bonding agencies probably don’t care whether Anaheim makes it a lot harder to raise revenue — ever — by allowing a smaller number of Councilmembers to veto placing a tax measure on the ballot.  But would anyone familiar with Anaheim really believe that Anaheim just flat out wouldn’t raise taxes — like by implementing a “gate tax,” which is a sales tax on Disneyland tickets?  Yes, someone would.  In fact, someone currently on City Council would.


We’re going to use the same “bullet point then comments introduced in orange” method that we did yesterday.

  • Brandman is sorry I’ve left the meeting (I had to pick up my daughter from her evening class at Cal State) because I invoked his Democratic status in wondering whether he’d stick with his “Democratic values” or with his buddy Murray.  For reasons explained below, Brandman plans to oppose the proposal — but doesn’t think that his Democratic values have anything to do with it.

Note: Yo, Jordan.  Democrats tend to strongly disfavor categorically and permanently rejecting taxation as at least a possible means of dealing with future budget crises and exigent needs.  Refer back to the vote of Clinton’s budget in 1993 — which led to the Republican landslide in 1994, but also to most of a decade of prosperity.  That’s what you’d be voting to do if you sided with Murray.  As a Democrat, you would presumably vote No.  If you were a “balanced budget Republican” like Tait, you’d also vote No.  If you’re just Murray’s ventriloquist dummy, you’d vote Yes. Happy to help out here.

  • Brandman then invokes our fellow Democrat Tom Daly, who not so long ago tried to pay him $25,000 in public funds to cut and paste from Wikipedia, to explain why Anaheim will never raise taxes.
  • The story: the Anaheim Council under Mayor Fred Hunter enacted a utility tax.  Daly ran against and beat Hunter for Mayor on a platform of repealing it.  He won and it was repealed in 1993, with Hunter’s vote.  Fullerton approved a utility tax in 1994 to cure a “budget gap” — and their Councilmembers were recalled.  “It’s interesting how voters respond to tax increases,” Brandman said ominously.

Note: Yeah — except that maybe it’s not how they’d respond to a mild tax on (mostly) tourists entering Disneyland’s gates that might be 1-2% as opposed to the 6.5% currently imposed on Disney World in Orlando Florida. That might be something that they’d consider as opposed to , oh, selling off City Hall or something.

  • “Not a single time since Anaheim enacted their utility tax, and Fullerton did theirs, has there been a tax placed on the Ballot, by this Council, previous councils, either in Anaheim, or anywhere else in North Orange County, to my knowledge.  I think that there’s a pretty good indication, for, in this City, that we’re a very taxpayer friendly City – a taxpayer friendly community and I don’t think that’s going to change anytime soon.”

Note: Wait wait wait — what about Measure N???  It was on the ballot just last year!  YOU WERE THE DECIDING VOTE TO PLACE IT ON THE BALLOT, JORDAN!  Well, don’t worry.  Jordan did think about that vote — and it’s a funny story — but it will wait until Saturday or Sunday.

  • Brandman notes a procedural issue that — I’m happy to give credit where and when it is due — makes some sense.  Since 2002, Charter Cities could place taxes on issue with a simple majority.  So — why wasn’t this discussed during Charter Review?  He suggests that this be raised again and discussed in the next Charter Review.
  • Brandman doesn’t see the immediate problem here, given past votes by Anaheim and Fullerton have, which show that voters don’t like tax increases no matter where they come from.  So he won’t support this tonight.


  • Murray thanks Brandman for asking some valid questions, for which she coincidentally has prepared answers.
  • She raises this now because Anaheim is changing its form — a “new paradigm: — of governance.
  • Some candidates indicated that they might potentially embrace regressive taxes on utilities, so that could rear its head again; or regressive sales taxes; or “regressive” gate taxes;to support programs.
  • There is reason to hurry and bring this up now to have it before the voters in the next general election.

Note: In other words, the purpose is to lock in the current view of the current majority forever.  (That majority includes her only because of a maniacal amount of election spending by Disney on her behalf and Lou Correa’s and Jordan Brandman’s endorsements — the latter violating a prior promise.)  How very much in the spirit of democracy!

  • Quote time: “Our City Attorney has done a great deal of research on this, spent the last couple months working on it, has brought forward a thoughtful proposal.”
  • “I believe we are ready to move forward, with consideration, if we’re supportive of a 2/3 vote threshold as approved by the voters in Prop 62, and as approved in place for a number of tax measures, that voters and/or other legislative bodies must consider, before putting measures before the voters.”

Note: Ignore that second bullet point except as your probable justification for not watching the video.  Michael Houston has “done a great deal of research” and “spent the last couple months working on it”?  Really?  How did that come about?  Will he devote this enormous amount of time to just any proposal by anyone on Council — or is Kris Murray officially somehow “special” now?  I hope that Councilmembers outside of the majority will test this out.

Now we move to the 4th and final installment of transcripts!  For the next section or two, we’ll play a bonus game in the bullet points, where Kris Murray’s attempts to be recognized to ask a question will be highlighted in hot pink:


  • Vanderbilt asks Tait if his concern is that underwriters of a proposed future bond might require a higher interest rate, because it’s now harder for Anaheim to raise taxes.
  • Tait replies that bond rating agencies assess a city’s ability to raise funds if they someday run short of funds to pay off their debt.  This includes looking at their ability to tax to pay off existing bonds, as an alternative to filing bankruptcy.  Debbie Moreno admitted being uncertain about this big question.
  • Tait speculates that two months after such a vote the rating agencies might drop us a level — costing Anaheim real money for something that may not be, necessary: compromising its ability to pay. Requiring a supermajority for the first time, which no other charter cities do, may attract attention.  So he wants to know those answers.
  • Vanderbilt notes that Moreno said that the bond underwriters would look more carefully at the willingness of voters to approve the tax rather than the ability to get it onto the ballot, and asks her reasoning.
  • Moreno believes that bond rating agencies consider the higher hurdle to be the citizen vote, not the council vote, but admits that this could be mistaken.  Anaheim’s current bond rating is based on its current tax base. It does not anticipate additional taxes, so its current bond ratings are based on the current conditions.
  • Vanderbilt asks about the impact of refinancing the bonds.  He imagines two possible contrasting scenarios: (1) the current condition, the City Council needing a simple majority to put a tax increase before the voters, versus (2) a supermajority requirement if voters approve this change in November. In refinancing bonds today versus refinancing bonds in December 2016, would underwriters view Anaheim differently based on the standard for the Anaheim City Council approving a new tax being much higher.
  • Moreno can’t say for certain without talking to underwriters directly, but she believes that they would only count the revenue that Anaheim is entitled to today: the current tax rates. They would not consider Anaheim’s future ability to tax because that requires voter approval, which is a fairly high hurdle, so they would look its current revenue stream based on its ability to tax today.  That would not change from today, because there’s no plannd increase in tax rates to be able to pay those bills.
  • MURRAY (2:04:41): I have a question, too.

Note: THIS IS A REALLY IMPORTANT EXCHANGE!  READ IT AGAIN IF YOU HAVE TO!  Remember, what lenders (which is what the people who buy bonds essentially become) care about is that you will be able to repay your debt — as an alternative to declaring bankruptcy, which could lead them to lose their investment.  Moreno’s position is similar to saying that they base their analysis on your current status, such as the income you get from working, period.  They don’t care about anything speculative, such as what would happen if you lost your job, where your ability to sell your house for more than your mortgage debt may prevent bankruptcy that would occur if you didn’t even own a house or had no equity in your house.

Moreno’s position is … let’s call it “counterintuitive.”  Of course lenders will be willing to absorb a higher risk, meaning not charging you higher interest on the loan, if they think that you can obtain other assets to pay it back rather than going bankrupt!  The City is paying her a lot of money to be wrong about something like this!  (And note that Murray is worried — and now trying to ride to the rescue.)

  • Tait asks a hypothetical question: if Anaheim passed a law saying that NO Council could EVER put a proposed tax increase, would that affect the city’s creditworthiness?  Moreno agrees that it could.  Tait notes that by the same token making it more difficult, rather than impossible, to put a tax increase on the ballot might also do so — and that Moreno agrees that she’s unsure about it.
  • Tait notes that there’s no rush — which gives the City (at least initially through Moreno) time to get more information about the consequences.


Tait at this point digresses slightly, not realizing that the topic he raises will eat up much of the rest of the meeting and lead to the most heated interactions of the night.

  • Tait notes this: for last November’s election, the previous Council placed a tax measure, Measure N, on the ballot.  He and Murray disagreed with it, didn’t want it see it on the ballot, but it passed in a 3-2 vote.  As an aside, before going on, he asks City Attorney Houston to confirm that it was a tax, which is why it required a vote.
  • Houston replies that “Measure N was put on the Ballot as a result of settlement, but there were other matters covered in Measure N.  One of the components was an affirmation or validation of the transfer that was occurring.”

Note: Uh-oh.  That is not exactly the straightest of straight answers.

  • Apparently not realizing that he had just ripped the scab off of a gaping sore, Tait tries again: noting that its being a tax is why it had to go to a vote.  Houston interrupts him, saying that the vote was “to validate” the transfer. For some reason, he’s not using the word “tax”!
  • Tait doesn’t yet notice that Houston has crawled into a defensive posture and is starting to fill the air with legalese.  He gets to his point: he lost that vote, and it went to the ballot (where it lost) — but that majority vote is how the system has worked.  And it has worked just fine.
  • Murray repeats to the Mayor that she has a question.
  • Tait, who was not done, says that he understand’s Murray’s interest in changing this, but that under that rule it would not have gone to the ballot — and that it was right, and fiscally responsible, that the majority had been able to put it on the ballot for a popular vote.

Note: Hey, doesn’t everyone agree that Measure N was a utility tax?  Come to think of it, why didn’t it require a 2/3 vote of the public to pass…?  Anyway, it’s Kring’s turn.

  • Kring says that the bonds discussion has been a diversion.  Only General Obligation bonds must go to a public vote; “revenue” bonds do not because there is a funding source dedicated to paying off those bonds.
  • Kring, because she still doesn’t understand the City’s position in the case brought by CATER over the convention center bonds, uses them as an example.  “[With] the Convention Center: we refinanced the bonds, replaced them with new bonds, we had a specific revenue source to pay them back. If you go, I don’t know, you want to buy a building somewhere, that would be a General Obligation bond, and that would have to go to a vote of the people. So when we’re talking about bonds, we have to be very clear which type of bond we are discussing.”

That Kring doesn’t understand what she herself did last year has been a constant source of irritation to CATER.  According to the City’s legal counsel, “we” — meaning the City Councildid not refinance the bonds.  No, a separate agency — a Joint Power Authority called the “Anaheim Public Financing Agency,” which was created as an agreement between the City Council and the Anahem Redevelopment Agency (which is itself composed of the City Council) and continued (after Redevelopment ended) as an agreement between the City Council and the Successor Agency to the Redevelopment Agency (also composed of the City Council) — IT (which is also composed of the City Council) is the entity that “refinanced the bonds.”  What the City Council did was to pledge the full faith and credit of this city — potentially including all of its real estate, if necessary to repaying the APFA (which is, again, governed by the same five people) for the cost of the bond payments.  By doing so, the City Council created a revenue stream that allowed the Anaheim Public Financing Agency — the “we” in Kring’s sentence where she either herself believes or wants you to believe that she means “the City Council”– to pretend that it was offering a “Revenue Bond” when it was for all intents and purposes a General Obligation Bond because it obligated Anaheim’s General Fund to honor the payments — and provided no financing to honor that promise!

(CATER is going to explain this as many times as we need to — 5, 50, 500 — until Kring understands it.  5000?)


(Sigh.)  Anyway:

  • Kring doesn’t remember what the Council’s vote was to put Measure N on the ballot — 4-1 or 3-2 — despite Tait just having said that it was 3-2.  Murray and Tait simultaneously tell her that it was 3-2 — which, as the “2,” they should know.
  • And … Kris Murray says: “Mr. Mayor, I just have a question—”

Third time — and the fact that finally there is no one ahead of her on the Speaker’s List — is the charm.  Tait recognizes her.  But sadly, we’re out of time today, so unless you go to the 2:07:58 time stamp on the 4th transcript (link way up top) you will have to wait until Saturday or Sunday to read it.  The other day will be reserved for a digression on Jordan Brandman’s participation — more of a humorous aside (except for the fact that it’s really not funny.)

Part 5 — whichever one of those it is — tomorrow.

About Greg Diamond

Somewhat verbose attorney, semi-retired due to disability, residing in northwest Brea. Occasionally runs for office against bad people who would otherwise go unopposed. Got 45% of the vote against Bob Huff for State Senate in 2012; Josh Newman then won the seat in 2016. In 2014 became the first attorney to challenge OCDA Tony Rackauckas since 2002; Todd Spitzer then won that seat in 2018. Every time he's run against some rotten incumbent, the *next* person to challenge them wins! He's OK with that. Corrupt party hacks hate him. He's OK with that too. He does advise some local campaigns informally and (so far) without compensation. (If that last bit changes, he will declare the interest.)