PATTOO WEEK, Part 7: Murray: Everything’s Perfectly OK So Long As We Don’t Attract Attention!

PATTOO WEEK #7

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 it to the citizens 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 covering the middle of the 4th transcript.  Skipping over Part 5, in Part 4 we heard Vanderbilt and Tait intensify their concerns about whether passing this measure could harm Anaheim today by increasing the interest rates we’d pay on bond refinancing.

[1] MURRAY CONCEDES; VANDERBILT POSTPONES

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

  •  We finally find out what question Vanderbilt was going to ask in Part 5 — and, sure enough, it was a question of parliamentary procedure that he should have been allowed to ask.  (Blame mostly goes to Houston here.)
  • His question: “If a Council Member made a motion for a continuance, they would have to have it, I understand, a specific date, correct?”
  • Houston responds: “It would be a motion to postpone to a date certain, you could pick that date among…in a motion, requires a second, it’s debatable, and then there’s a vote. That is a motion that takes precedence over the main motion, and it, once made and seconded, the main motion does not continue until that motion is resolved.”

Note: I’m sure that no one else is as mortified by this as I am by this, but if there were a Commissioner of City Parliamentarians, Houston would be fined for this.  The answer to Vanderbilt’s question was “NO.  You need not postpone to a date certain; you can simply postpone indefinitely.”  How can Houston not know this?  One sadly has to wonder whether he simply wanted Vanderbilt to reach the false conclusion that a “date certain” was required for postponement.  (Perhaps Councilmember Murray’s gaze were boring a hole into his forehead imploring him not to tell the new guy the truth.)  This wrong answer is the only reason that this matter is coming back tomorrow.  If Houston had given Vanderbilt the right answer — either when he originally wanted to ask the question or here, the motion would have been transformed to “Postpone Indefinitely” and it would have come back only when it was ready and saved everyone a lot of grief.)

  • Vanderbilt says “ok, then: next meeting.”  Murray says — OK, we’ll continue it, but why don’t you give us two meetings — five weeks.  Vanderbilt says “sure” and Murray seconds.
  • City Manager Emery interrupts asking what exactly City staff is supposed to come back with on April 7.
  • Murray asks that they just come back with the same item, giving Council time to meet with Staff and ask any questions.  Essentially, she knows she’ll lose 3-2 today without Brandman or Vanderbilt, so she needs time to lobby.
  • Houston, safe from questions about parliamentary procedure, reminds Emery that the Council wants “a report provided that discusses the effect of this proposal on creditworthiness, on credit ratings, with respect to borrowing transactions the City might be engaged in.

And then something so truly wonderful happens that it requires a new chapter heading.

[2] TAIT’S INNOCUOUS QUESTION SENDS MURRAY DIRECTLY INTO PANIC MODE

No bullet points yet: we need the full text.  Tait amplifies Houston’s response:

Yes.  Specifically, ideally, I’d like a letter from a rating agency, for some opinion from a rating agency, that it has no effect.

No problem, right?  Debbie Moreno said that none of this would bother the rating agencies — they only care about current revenue projections.  But suddenly, Kris Murray is not so sure.  Bring on the hot pink and fleck it with red!

I would have concern with that, just because, if I may — and our Finance Director says its not a concern — but the question I would have is if we’re asking questions, if it would potentially lead them to question where we are at.  Or if we can find that out legally, without reaching out to rating agencies specifically, and having them question our review? If it’s not going to cause a concern, but if it could lead to a concern, then I would be concerned about it.

Oh, man.  That’s just — amazing.  Let me translate that into Teenager:

“WHAT WE WANT TO DO IS PERFECTLY OK WITH MOM AND DAD! BUT FOR GOD’S SAKE DON’T ASK MOM AND DAD ABOUT IT!  WE DON’T WANT THEM TO KNOW, BECAUSE THEY MAY STOP US AND PUNISH US REAL BAD!”

Here’s the thing: Murray’s position here becomes “THIS WILL NOT AFFECT OUR CREDITWORTHINESS, SO LONG AS WE KEEP IT WELL HIDDEN.”  And that, Dear Readers, ought to be the ball game.  I will promise you this: if the Council passes this measure tomorrow, I will personally get on the phone and I WILL TELL MOM AND DAD WHAT YOU ARE DOING, KRIS MURRAY!  YOU’RE GONNA BE IN SUCH TROUBLE!

Debbie Moreno had a more measured response than mine:

I don’t know that I’ll be able to get a specific letter addressing this issue from a rating agency.  But I will do my best to see what we can find out — between financial advisors, bankers, and discussions with ratings agencies — what concerns they may have.  As Council Member Murray pointed out earlier, you know, this is already the case for General Law cities, so it may be something that they’re ready to answer fairly quickly.

What Moreno says here doesn’t exculpate Murray, though.  Murray has just spent the whole debate assuring everyone that this ballot measure was perfectly safe for the City — and THE VERY SECOND that someone tried to act in reliance of that assertion, she fell apart and begged everyone to hide it.  It is on the video, Councilwoman.  You Lose, Madam!

[3] TAIT SUGGESTS ADDING SOME OTHER ITEMS TO THE MENU

  • Tait asks Staff to prepare an item that reaffirms Anaheim’s City Charter, taking away the loophole about Joint Powers Authority, on major borrowings.
  • “It would reaffirm the intent of our City Charter … that the City no longer be able to enter any Joint Powers Authority to borrow a massive amount of money.”

Note: This is good — but probably not good enough for what Tait wants to accomplish.  The City’s argument is that the Joint Power Authority is like a child with a separate existence from its two parents, from whom it was given birth by the Joint Power Agreement, which is WHY it is not subject to the City Charter.  In fact, given the City’s position — and this gives you a sense of just how perverse it was to be arguing against the City on behalf of CATER in the Convention Center Bonds case — the Joint Power Authority created by a Joint Power Agreement is arguably beyond the ability of the City to regulate at all, just like a legal adult cannot be legally regulated by its parent as if it was a minor.  (THE CITY ITSELF was arguing this!)  And, in fact, Houston says in response to this that:

I haven’t conducted research on that issue — but it becomes somewhat tricky in that JPA’s are separate entities, [and so] our Charter doesn’t control them.

(THIS IS THE CITY ATTORNEY TALKING!)  So, anyway, the solution to the problem has to lie elsewhere.

One weakness in the cunning plan designed by the City’s counsel at Rutan & Tucker is this: it only works if the City agrees to make sufficient payments to the Joint Power Authority to cover the bond payments.  That is why the City’s attorneys could argue with a straight face that it was a “revenue bond” — because the bond payments were being covered by guaranteed payments from the City (which leased the Convention Center to the JPA so that it could pull off this stunt), which created a “revenue stream” that converted a General Obligation bond into a Revenue Bond — even though the revenue stream was coming directly out of Anaheim’s General Fund!

What a charter amendment would have to do is to prevent the City from guaranteeing to provide a revenue stream directly or indirectly from the General Fund that will directly or indirectly form bond payments unless that bond indenture is to be treated like a General Obligation Bond for the purpose of requiring voter approval.  There are probably other avenues of escape to cut off as well, but this is the main one that occurs to me.  (It’s OK, there are 15 months or so to figure all of this out.)  Alternatively, a Charter Amendment might prevent Anaheim from entering into a lease-leaseback arrangement with any other entity — definitely JPAs, maybe others as well — that would make such a deal possible.

(Note: I don’t even know whether the City Council has even been given the chance to READ the transcript of the CATER v. Anaheim trial over the bonds.  Rutan & Tucker has it; I presume that Houston has a copy too.  I presume that they have been offered the chance to see what argument were made in their name — right?)

Anyway, some people didn’t like Tait’s proposal.  Around the “we are helpless to control those crazy JPAs (that are controlled by the five of you and for whom I am General Counsel” quote recounted above, Houston said that Tait could bring back the proposal on a later date, after adequate time was provided to complete the necessary research.  Tait replied that he wanted to see the two issues brought up at the same time because they were tied together and depended on largely the same research.  Murray tries to jump in with another “question” — see Part 6 for why that word is in scare quotes — but Tait recognizes Vanderbilt instead.  He says that he just wants to make sure that there is a clear delineation between the two requests.

Houston says that he understands Tait to be requesting that he:

return with a separate item for consideration that, and I going to paraphrase, would require a public vote for significant bond issuances to be considered.  The caveat I have with that, is that may be an issue requiring research that is much different than the research that was conducted for this, because of other issues, and I can dialogue with you on that offline.

I’ll tell you what: if Houston doesn’t come back with a proposal that contains at least the two options that I generated off of the top of my head while I was composing this post, I don’t think that he’s trying very hard.  (I haven’t read the Staff Report for the relevant item yet, but I’ll update this when I do.)

[4] FALLING ACTION AND DENOUEMENT

  • Again, credit where it’s due.  Lucille Kring has a legitimate and cogent request:

I would also like to see, of the hundred charter cities in the state, if any of those Charter Cities, has gone to this 2/3 vote.

Houston says that he did write that down, and that he and the City Clerk had not found any such examples during their “brief research,” but that they’ll put some more back into it.

  • Murray tells the people, which may or not include her sponsors who have been whispering ideas and perhaps muttering threats into a speaker implanted in her cochlea, that:

Just in closing, I just want to clarify that the item is going to come back, with the additional information requested by Councilman Vanderbilt, on April 7th, and that any items that the Mayor may want to address separately, he has the authority to ask for during Council Comments, as a separate and individual matter.

In other words, she hasn’t screwed up.  Houston confirms that this will be a separate and individual matter unlinked to Murray’s proposal that they want to keep hidden from bond rating agencies.

  • Everybody votes to delay the vote except Brandman, who may have wanted never to think about it again.
  • Then, after ten minutes of Council Communication on other topics, Tait said this.

We mentioned earlier during the comment period: I wanted to put on that same date the putting to the Ballot basically closing the loophole of allowing the City to borrow through Joint Powers Authority to get around, I believe, the intent of our Charter requiring a vote of the people when we have these massive borrowings. So I’d like that on the agenda. And also, a couple years ago, there was 15,000 signatures for an initiative to go on the ballot that Council didn’t vote for at that time — a different Council — that if there is going to be a TOT subsidy for hoteliers, that that be decided by the people, rather than the Council.  Basically there’s an initiative drawn up and ready to review, Mr. City Attorney.  All right, I’d like to see those both on the same day, because I think they are all related.

And, sure enough, both Tait-commissioned items are on the Council’s agenda.  Time for me to go read them!  (Update to follow.)


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.)