Brea’s Folly, Part 2: It’s Either the Parking Structure or the 560 Fund — You Can’t Have Both

If Brea's taxpayer-funded parking structure passes, it will mean the end of the City's "560 fund" reserve for environmental preservation.  Please don't pretend that it won't.

If Brea’s taxpayer-funded parking structure passes, it will mean the end of the City’s “560 fund” reserve for environmental preservation. Please don’t pretend that it won’t.

1. I’m Afraid That You’re Going to Have to Choose

As noted in Part 1 of this series, Brea Republican and environmental advocate Bev Perry (about whom this author has nothing bad to say) followed up her statement that Brea’s “560 Fund” cash reserves would be used to finance the parking structure “over [her] dead body.”  The 560 Fund compensates Brea for hosting the County’s landfill.  It is envisioned to, for example, purchase land to allow it to be protected from development.

Perry’s advocacy for the conservationist use of the 560 Fund is admirable.  But, in a recent comment to a story of mine in THE BREAN,  she also came out in favor of public funding of the now-$13 million proposal (apparently due to scare tactics by Downtown Brea’s major property owner, Dwight Manley, about what would happen if it didn’t pass.  I’ll address those threats of doom later today.)

How does Perry reconcile spending $13 million of Brea’s $26 million cash reserves — including the 560 Fund — on this parking structure while at the same time retaining her dedication to fight to the death against tapping into the 560 Fund?  The answer appears in a small aside within her comment.

I will be making comments [supporting the proposal] to that effect in a letter to the Council after I’ve read everything (and I’m still adamantly against using the 560 Fund as there’s no nexus between what it was set aside for and this project).

If she’s right that this expenditure won’t hurt the 560 Fund, then she’s being consistent.  But if she’s wrong, then she has to choose.  I’m convinced that she’s wrong: this vote will kill her beloved fund — regardless of whether it is officially used to finance the structure.  Because I share her support of the 560 Fund, I hope to change her mind by tomorrow.

2. A Vote for Publicly Financing the Structure Dooms the 560 Fund

When Perry spoke to the Council two months ago today, advocates of publicly funding the parking structure were saying that it would cost as little as $7.9 million, although the projected full price tag was still $8.9 million (which we round off to $9 million.)

That price tag has now grown to $12.65 million, which we round to $13 million (and we expect it to go higher.)  And that means that any hope that the 560 Fund won’t be tapped — and maybe even looted entirely — is no longer realistic.

Perry was convinced by Dwight Manley’s “Domino Theory” horror story that without this structure Downtown Brea would collapse and be left a financial ruin — and that there was no alternative to taxpayers funding the full amount.

I can’t really blame Bev Perry for taking Manley’s predictions of doom seriously (although she shouldn’t.)  I am disappointed, though, that she thinks that she can “have her cake and eat it too.”  Approving the parking structure will very likely mean that the 560 Fund will be cannibalized for General Fund use by the end of the decade.  Anyone who supports the structure had better make peace with the idea that they are probably agreeing to gut this worthy fund.  If Bev Perry won’t do that, she should oppose public financing of parking structure.

I don’t say this as a scare tactic.  I speak as someone familiar with city government spending and how a set-aside fund like this makes an awfully tempting target when it becomes too big compared to the General Fund.  It would take a miracle for the fund to survive — and, if God helps those who help themselves, the fact that we’re really making a choice between parking and open land here suggests that we not expect a miracle.

3. Let’s Do the Numbers

On page 42 of its Staff Report, the City identified potential sources of funds for this project.  The first one listed was $3,750,000 being made available from Redevelopment Bonds approved in 2011.  But we can’t count on their being made available.

If the City Council wants to make any expenditure contingent on their being freed up for our use, that would be a better deal.  But Dwight Manley is saying that if we wait beyond Tuesday, the dominoes fall.  (I think that he’s bluffing.)

So what does that leave — given that the Downtown Owners Group says that it won’t put up money for construction?  (I think that they’re bluffing there too — especially if Brea takes out a bond for it — but we must take their threat at face value.)  Here’s what we have available for construction of the parking structure:

  • $5,160,000 from the (560) Capital & Mitigation Improvement Fund
  • $3,481,000 from the (140) Community Benefit & Economic Development (CBED) Fund
  • $17,000,000 from the (110) General Fund Reserves – which includes Brea’s “rainy day fund”
  • $0 from the Downtown Owners

That totals about $25,700,000.  Manley and his political friends want to spend about $12,700,000.  Let’s see what the budget looks like if things go the way that Bev Perry would like them to go.  Here’s what Brea would have available after such an expenditure — one that would empty the CBED Fund and take $9,219,000 from the General Fund Reserves:

  • $5,160,000 from the (560) Capital & Mitigation Improvement Fund
  • $0 from the (140) Community Benefit & Economic Development (CBED) Fund
  • $7,781,000 from the General Fund Reserves – which includes Brea’s “rainy day fund”
  • Still $0 from the Downtown Owners

If there are no more cost overruns, then Brea would have $12,941,000 left in its cash reserves, period.  39.9% of that would be in the 560 Fund.  With less than $8,000,000 in cash reserves, there would be no rainy-day fund left.  The 560 Fund becomes the rainy day fund.

And it may not have to rain very hard for a future Council — which may be elected primarily with funds donated from Dwight Manley and his cronies, like Councilmembers Hupp and Vargas were last year — to decide to tap the 560 Fund for even MORE boosting of Downtown.  (It’s not like the threat of businesses cutting-and-running goes away after the structure is built — in fact, the City becomes even more vulnerable to their threats because we’ve invested so much in this parking structure!)

4. Would They Put a Guarantee in Writing?

I’m sorry, Bev Perry.  I know that you believe, and I presume it is in good faith, that the Downtown in in mortal danger and this is the only possible solution.  I’ll try to convince you otherwise later today.  But even if I’m wrong and Dwight Manley really intends to close down his part of Downtown if he doesn’t get his way — just like Mark Caplow has let the Tower Records building gather dust over most of the past decade — please don’t pretend that this decision wouldn’t doom the 560 Fund.

For anyone who thinks that the intended purpose of the 560 Fund would certainly shield it from any effort to raid it, please understand that that’s not true.  (If it WERE true, then the Staff wouldn’t have listed it as a possible source of revenue, right?)  Speaking as an attorney, coming up with a legally defensible justification for ransacking it wouldn’t even pose a serious challenge.  It might be something along the lines of how managing such purchased land would require the City to be solvent, so City solvency must take precedence over the presumed purpose of the fund.  If they want to be hard-nosed about it, there’s probably some language in the City’s bond indenture papers that would require the City to use all available sources to repay those debts.

To Bev Perry: if anyone is promising you that the 560 Fund will be safe — not just from being looted to pay for the structure, but because it will be the obvious “low-hanging fruit” in the years following it, then you had better have something truly ironclad put in writing to guarantee the promise.  Please ask for it — they won’t do it.  I’m confident enough of that that I will volunteer my time as a lawyer to review any written proposal they make you to preserve the 560 Fund — and I’ll find show you where the trick is that would leave you, and your rightfully beloved fund, devastated.

It’s cruel irony that the proponents of this ripoff would use your good name and your good nature to prepare to sacrifice the 560 Fund.  Please, please, do your due diligence.  Here’s a question to ask: if it came down to the City’s feeling that it had to use the 560 to cover itself, would it sell off the Birch Hills Golf Course to avoid it?

I think that we all know the answer to that one, don’t we?  Or maybe we don’t — and that leads to the next story.


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.)