Colin McCarthy Got It Wrong

INACCURATE AND INFLAMMATORY
This weekend Costa Mesa Planning Commissioner and former City Council candidate Colin McCarthy produced a commentary in the Daily Pilot titled, "Don't burdern C.M. businesses with higher fees", HERE, that attempts to mislead the readers with inflammatory, inaccurate rhetoric on the subject of a possible Business License Tax increase.

ONLY RHETORIC
McCarthy attempts to use the red herring that, if the voters were to approve a modest increase in the Business License Tax - it has had NO substantive change in the structure and/or amount since the 1960's - Nordstrom would pull up stakes and shut down the South Coast Plaza store.  Hog wash!  And, of course, he offers no evidence to confirm his allegation - only his rhetoric.

STUBBORN, NARROW-MINDEDNESS
McCarthy is only regurgitating the party line of those in my Republican Party that are against ANY kind of increase in taxes, even though revenue shortfalls could cripple the ability of Costa Mesa to provide sufficient coverage for public safety - police and fire - and severely limit other services, too.  This kind of stubborn, irrational reaction to this serious situation makes us realize that the safety and future of our city is less important to those ideologues than their own personal political agendas.

REALLY?  I DON'T THINK SO...
Presently Nordstrom - or any of the other high-grossing, top-tier retailers in Costa Mesa - pays a maximum of $200 per year for a business license.  That's a bargain in anybodies book, for sure.  And I don't discount the fact that our laughably small tax may attract businesses to our city.  But, if it was $400 or $800 for those same folks, would that fact alone cause them to pause when considering Costa Mesa as a business venue, or to leave if they are already here?  I doubt it.

WHY NOW?
No, because the Financial Advisory Committee - packed by the current City Council with folks who share McCarthy's aversion to considering even a modest updating of the Business License Tax - has now shoved off any further discussion of the issue until the impact of recently-acquired software designed to help track down scofflaws who have not paid the tax they owe is known, this issue seems to have been placed into suspended animation for six months.  That's what makes McCarthy's commentary so peculiar.  Why now?

POLITICAL MOTIVATION
Well, we are just over a year from the next election that will select at least one new council member, so I suspect McCarthy's ill-timed and inaccurate rant is designed to lay the groundwork for a campaign platform for one or two candidates next year.

COMMENT THREAD IS A "MUST READ"
The comment thread on his commentary is enlightening.  Several residents have taken issue with his views and have debunked his claims one at a time.  I won't repeat them here, but they're worth reviewing if you're at all interested in this issue.

THE "$10,000" OOPS
A year ago this issue was discussed by the City Council with an eye to placing a proposal before the voters last November.  Unfortunately, as part of the staff report presented to the council at the time, Finance and Information Technology Director Bobby Young used one model that would have increased the maximum fee charged to the highest-grossing retailers at $10,000 - a number just pulled out of the air.  I watched as, almost like ballet dancers in unison, the council at the time flinched, then rejected any further discussion.  Obviously, the memory of that $10,000 number has remained stuck in the memory of some people in power.  And, unfortunately, it's impeding any serious discussion of the issue a year later.

CHAMBER DIDN'T FIGHT IT LAST YEAR
The Costa Mesa Chamber of Commerce, a body that certainly should have an opinion on this issue, had no negative comments on a possible modest increase last year.



POLITICAL AGENDAS BEFORE RESIDENTS

The issue is actually pretty simple.  Members of the current City Council majority, and some of their acolytes like McCarthy, have cried "poverty" for the past couple years as a preamble to disingenuous contract bargaining with the employee associations that are beginning now.  They have rejected highly qualified professional recommendations for appropriate staffing levels for public safety organizations and the availability of more funds, like an increase in the Business License Tax, renders those self-serving positions moot.  It is crystal clear to many observers that political agendas are being served here - not the residents, business-owners and visitors to our city.

Finance Advisory Committee Meeting Was Enlightening

MY FIRST MEETING...
Tuesday evening, for the first time, I attended the meeting of the Costa Mesa Finance Advisory Committee, known in a previous life as the Investment Oversight Committee.  In that previous iteration the committee was comprised of the City Manager, the Finance Director, a council member and a couple - maybe three - members of the public.  Their role was more passive/reactive than proactive.

WHO?
The new City Council has a much different idea about committees in general, and this one in particular.  This committee is comprised of six regular members and two alternates, plus Mayor Pro Tem Steve Mensinger and City CEO Tom Hatch.  Senior staffers typically in attendance are Finance and Information Technology Director Bobby Young, Assistant Finance Director Colleen O'Donohue and Revenue Supervisor Judy Vickers and Executive Secretary Kathy Ulrich.

A MORE PROACTIVE ASSIGNMENT
Having read the agendas of all previous meetings it seems clear that the council wants this group to play a much more active role in how the City's finances are managed and it has taken on assignments previously the purview of the staff.  Tuesday evening was my first chance to actually watch this group in action.

NOT A FULL HOUSE
In addition to the staffers mentioned above, committee members attending the meeting were Shawn Dewane, Jim Fisler, Terry Shaw, David Stiller, Howard Hull and Richard Riva.  Members John Hinson and Robert Juneman were absent, as was Mensinger.

NEW GUYS IN CHARGE
Stiller and Shaw are holdovers from the previous configuration.  All the other members are new to this committee.  Dewane is the Chairman and Shaw is Vice-Chairman.  Dewane and Fisler are Directors of the Mesa Water District Board.  They, plus Hull, can be said with accuracy to be tightly aligned philosophically with the current City Council majority - a fact that became crystal clear as the meeting progressed.

IMPORTANT ISSUES
I wanted to attend this particular meeting because there were items on this agenda, HERE, that interested me.  I was particularly interested in how they would handle New Business item 7a, Business License Tax Information/Study.  As it turned out, that was the only item they covered - the other two New Business items, PERS Prepay and Revenue Sources, were trailed to a future meeting.

DEWANE DOMINATED
Dewane ran a crisp meeting, blitzing through the early agenda items before guiding the discussion on 7a for more than an hour.  "Guiding" may not be exactly right - "dominating" would be more appropriate, in my opinion.  He began his discussion by stating that this issue should not be political - a statement I later found very amusing because that's exactly what he did - politicize it.

PLENTY OF INFO
The staff had provided a large pile of reference materials, including several city council staff reports that covered the subject previously, focusing on the most recent serious discussion of increasing this tax last year.  Also included were copies of a PowerPoint presentation Young had given to the council last year and the entire section of the Municipal Code that deals with Business Tax.

VIOLATING 4TH AMENDMENT?
As the discussion began Fisler expressed concern about section 9-58, which seemed to him to give authority to city officials to enter his home to look for his business license.  Staff, in response to the concern, assured him that there had NEVER been an instance of that happening.

NO AUDIT, NO PENALTIES
He asked if there had ever been an audit of claimed revenue - our business license tax is based on tiers of revenue claimed by the applicant - or if any penalties had ever been imposed.  The answer was NO.

TAKE A DEEP BREATH...
OK, I'm not going to try to regurgitate every comment word for word.  I'm going to give you my impressions of the high and low points, with some specific quotes as appropriate.

DEWANE'S VIEW
It was very clear to me by the line of questions posed and the positions taken that Dewane and Fisler - and Hull to some extent - came armed with an opinion and were not eager to have the facts complicate it.  Dewane, while dominating the early part of the discussion, frequently expressed disdain for the "insignificant" amount of revenue generated by our business license tax, which runs from $800,000 to $850,000 year after year.  Hatch chimed in to observe that it has been our most consistent revenue source.  And still, throughout his comments, Dewane referred to the amount as "nickels and dimes", and wondered if it was even worth it to have a Business License Tax.  He also referred to the Business License Tax revenue as a "rounding error".

DEFENDING THE REVENUE STREAM
At that point Young jumped into the discussion, taking umbrage at that description, stating that it was a viable part of our revenue stream and, as Hatch had earlier stated, was our most consistent revenue source - much less volatile than the Sales Tax or Property Tax, as demonstrated over the past several years.  To that Dewane stated that "1% of the Budget is insignificant!"  Are you getting his drift?

BUSINESS TAX?  TO RAISE REVENUE
At one point he asked the purpose of the Business License Tax and was told by Young that it was to raise revenue.  That answer seemed inadequate to Dewane.

COLLECTING WHAT IS DUE
The discussion turned to how we collect our Business License Tax.  Until about 3 years ago we had a person on staff that was tasked to check newspapers and other public records to see if folks doing business in our city were, in fact, paying our license fees.  Keep in mind that Costa Mesa's Business License Tax is among the very lowest in the county.  The maximum ANY business pays is $200, with most paying less than half that amount.  Fisler and Dewane both suggested that we could generate enough revenue from the scofflaws that we wouldn't have to raise the tax.  They offered no documentation for the opinion, though.

CMFD CHECKS FOR LICENSES
Hatch told us that the Fire Department, as part of their routine inspections, now looks for the Business License document.

TOO MUCH PAPERWORK!
Dewane continued, referring to the Business License Tax as a way to kill businesses and stifle recruitment of new businesses.  He complained about the 22 page document a businessman must complete to begin a business in the city, observing that it just added to the paperwork burden businessmen face.

NEW SOFTWARE
Dewane stated several times that it's more important to attract more businesses to the city than to raise taxes.  Another part of the equation is the collection of the tax that is due to us.  A new suite of computer software has been purchased and is online now.  Soon it will facilitate the auditing process and aid in collecting ALL the taxes due to the city.  It will also create new efficiencies in the handling of these transactions.

PUBLIC COMMENTS
About 45 minutes into the meeting - it lasted 90 - Dewane asked any of the members of the public present if they had comments to make.  Each of the four of us in the room took our turn to express views on the issue.  Jeff Arthur briefly discussed the points Young had made and posited that perhaps we should increase the threshold of the tax.  Dewane pumped Young about the cost to cut a check.

MOONEY - A SALES TAX RAISE INSTEAD?
Charlie Mooney wasn't satisfied with the purpose of the tax - to raise revenue.  Among other things, he wondered whether, in place of the tax, an increase in the Sales Tax might be more appropriate.  Dewane chimed in, complaining that businesses already pay taxes and fees.  He mentioned a "supplemental sales tax".  He then veered off into a rant about the power of government being unlimited and taxes are a violation of personal property rights.  He said regulation is not business-friendly.

BETH AND I
Beth Refakes, a long time resident and participant in most important meetings in the city, said she had no real problem with the Business License Tax and suggested that volunteers might be useful helping reconcile unpaid tax.  She also opined that the electorate in Costa Mesa probably wouldn't take kindly to the elimination of the Business License Tax.  I suggested that anyone currently holding a license should be required to pay something - at least a modest handling fee - which is not the case today.  You can keep your business license active at no charge if you have less than $1,000 annual revenue.

TO THE EXTREMES!
Dewane, in response to my observation that his opinions made it clear which way he was trying to direct the discussion, rejected that characterization - saying that he was just trying to carry the discussion to the extremes.  Well, he did that well enough, believe me!

PERMITS VS. FEES
The discussion continued and got mired down into the difference between a permit and a fee.  Briefly, Young explained that a permit typically covers the cost of the service - inspections, planning applications, etc.

TRYING TO FOLLOW HIS THOUGHTS
Dewane suggested this issue is highly complicated and political and wanted the staff to do some more work.  He said that if he was a council member in a city with NO business license tax he might be tempted to "poach" businesses from neighboring cities who DO have such a tax.  He also suggested a way to allow businesses to pay their license fees 5 years ahead, which seemed very contradictory to his entire premise before.  Earlier he suggested that Segerstroms might just petition the local agency formation commission to become part of Santa Ana if the tax was raised.  That was an astounding statement!

THE 10K DOOR-SLAMMER
The discussion turned to last year, when the council discussed this issue and did nothing about putting the issue before the voters.  Some wondered what happened.  At the end of the meeting I told them what happened.  One of the scenarios Young presented to the council a year ago had a maximum tax of $10,000.  When the council heard that number their collective brains just locked up and they never could get past it.

MORE GOOD QUESTIONS
Richard Riva presented a list of things he felt needed further discussion/explanation.  He felt the committee needed to continue the discussion and asked the staff to consider several questions, including, What is the capacity for more businesses in the city?  What are the types of businesses worth going after?  He also indicated that permits needed to be part of the discussion.

NO HARM, NO FOUL
Hatch offered this comment.  "Will we fall apart if this tax goes away? - NO.  Will we fall apart if it stays the same? - NO."

HOW TO SPEND THE MONEY
Riva wondered what we would do with, say, an additional $2-3 million in additional revenue from an increased Business License Tax.  Hatch mentioned infrastructure improvements, including City Hall, which is showing it's age.  No, I didn't hear him say we could begin paying down the Pension debt...

MORE WORK FOR STAFF
Finally Fisler suggested that members email their thoughts to Young before the next meeting in July.  The two remaining items will be considered at that time.

NO SURPRISES...
My impressions?  I've heard many of the things Dewane and Fisler espoused last night coming from the mouths of Mayor Jim Righeimer, Mayor Pro Tem Steve Mensinger and councilman Gary Monahan over the past couple years, and during the discussions last year on this same issue.  It was clear to me, as I said earlier, that Dewane, Fisler and Hull are carrying the water for the council majority on this issue.  I was not surprised by this at all.  The biggest problem I saw was that Dewane so dominated the discussion that he intimidated other members and stifled some of the discussion.  Again, I was not surprised - at all.  It will be very interesting to see how this plays out.  There's still time for calm, rational discussions on this issue before the council gets into it to consider placing it on the November ballot next year.

Bever's Legacy? Hushed Community Voices

BIG COUNCIL MEETING TUESDAY NIGHT
The Costa Mesa City Council will hold a regularly-scheduled meeting Tuesday, July 17, 2012 in Council Chambers at City Hall beginning at 6:30 p.m.  It will be preceded by a Closed Session at 5:00.  You can read the entire agenda, including the details of the Closed Session, HERE.

TOO IMPORTANT TO WAIT...
Under ordinary circumstances I'd try to just wade through the agenda, giving you links as they appear in order and offering my observations.  Today there is an issue on the agenda near the end that requires star billing.  This is New Business #4, Mayor Eric Bever's attempt to quash the appeal process that has served this community well for decades.  You can read that staff report HERE.
 

THE CURRENT METHOD
Presently, if a party presents an issue before the Planning Commission or the Parks and Recreation Commission and is rejected it can be appealed to the City Council within 7 days.  That happens one of two ways - the appellant pays the fees (perhaps several hundred dollars) and files the appeal.  Or, the appellant could receive assistance from ONE council member, who would - using his or her authority - bring the item before the council for its consideration and no fees would be charged.

BEVER'S BACKHAND AT WENDY
However, Bever doesn't like that very much.  He apparently thinks that Wendy Leece - you know, that council member who represents ALL the people of this city - abuses that authority, so he wants to cut her off at the knees and change the municipal ordinance to require TWO council members to approve such an appeal.  And, since she has virtually NO support from the four male members of the council, that means that those folks who find a need to appeal an issue will have to pay MORE money to do so.

WOULD REQUIRE TWO SPONSORS
So, Joe Blow who has already spent several thousands of dollars on plans and fees to renovate his Westside home, but has it rejected by the Planning Commission, will now have to find TWO sympathetic council members or end up paying even more money to appeal the decision.

BROWN ACT VIOLATIONS GUARANTEED
In addition to this being a flat-out slap at Leece personally, it creates a process with almost guaranteed Brown Act violations built-in.  Say, for example, Joe Blow contacts Bever about an appeal.  Bever agrees, then makes contact with Jim Righeimer seeking his "second", who declines.  If Bever then contacts Gary Monahan on this issue we have an automatic Brown Act violation - a "serial conversation" on an issue that will come before them.

BEVER SHOULD ABANDON THIS
This is an unnecessary, capricious and mean-spirited move that certainly will not serve the public well.  Whether Bever "signed up for this" or not, he should withdraw it from the agenda and chalk it up as just another of his many boneheaded moves.  He should find another issue to be his legacy - not quashed public participation.

Now, on to the rest of the agenda for Tuesday.

CLOSED SESSION
The aforementioned Closed Session has three items on it - labor negotiations, conference with legal council in anticipation of significant litigation (sound familiar) and a request by a Public Employee for a special leave of absence.  We'll never know about this stuff until it actually hits the fan.

CONSENT CALENDAR
As always, the Consent Calendar is filled with little goodies just waiting to be discovered.  These items are theoretically things that can be voted upon in one vote, without separate discussion.  Lately, though, many items have been pulled by council members and members of the public for separate discussion, explanation and vote.

WARRANTS
For example, there are two more Warrants on this agenda, #2428 and #2429. Click on those numbers to read them, if you wish.  #2428 contains a couple interesting legal payments.  One, to our contract City Attorney firm, Jones and Mayer, is for $111,170.64, which means we've spent more than $775,000 on that legal firm alone in the last fiscal year - with another month to go.  There's also a payment of $14,425.49 to Liebert Cassidy Whitmore, which means we've paid them more than $46,000 since March, when they began "helping" us with labor negotiations.  On #2429 there's a very interesting entry - a payment of $25,000 to Talon Executive Services for "IT Consulting".  I sure wonder what that was all about and whether the recent departure of former IT Manager Rick Kirkbride, whose position was canceled as part of the recent budget approval process, was somehow involved.

  BANNING RANCH BUCKS

Down at #5 is an interesting item - Traffic Mitigation Agreement with Newport Banning Ranch, LLC. As you read the staff report, HERE, you'll see that this is an agreement that facilitates The City of Costa Mesa being paid more than $4 million by the proposed developers to mitigate traffic impacts on our city as the project is built.  Funny, you'd have thought somebody on the council might want to let the voters know that they were looking out for their interests in this election year.  Late tonight, Saturday, the folks at the Banning Ranch Conservancy fired off a misleading email about this item, neglecting to mention that the City of Costa Mesa has NO authority to interfere with this project and that the agreement, if signed, provides for funding of improvements necessary to handle the 15,000 cars per day that are expected to pour onto Costa Mesa streets.

INCREASING RESERVE POLICE OFFICER PAY
The final item on the Consent Calendar, #8, is a resolution to raise the pay of Police Reserve Officers.  You can read about it HERE.  Part of the scheme by this council majority is to more fully staff the Costa Mesa Police Department with Reserve Officers - those who don't get any benefits, including those nasty pensions.  To do so they've decided to raise the hourly rate by just under $6.00 per hour, to $33.00 per hour.

PUBLIC HEARING
There is only one public hearing scheduled, a resolution certifying special assessments for collection of delinquent civil fines for municipal code violations.  The staff report, HERE, includes a list of all those violators who will have action taken against them for non-compliance.

NEW BICYCLE ORDINANCE
The only Old Business item is the second reading of the new ordinance against locking up your bicycles to posts, poles and any other "non-bike rack" fixture, and it outlines the fees that will be charged, HERE.  I scoured the ordinance and didn't find anything about the disposition of impounded bikes that are not claimed.  One must assume that, after a specified period of time, those bikes would be disposed of - auctioned off or crushed as scrap.  This item, which was initiated to discourage homeless folks from leaving their bicycles chained to fixtures all over town, but particularly in Lions Park, will very likely become an unpleasant fact of life for those who ride their bikes to public parks - where there are woefully insufficient bike racks - and to other public and private locations that also lack the approved devices for securing their bikes.  It feels pretty heavy-handed to me, particularly in a city that appears to be trying to encourage bicycle use.
 

ANNUAL PERFORMANCE AUDIT
There are 5 items under New Business.  I've already dispatched with #4, Bever's bonehead move, above.  Item #1 Steve Mensinger's scheme to have an annual performance audit.  This item, HERE, describes how that should work.

GOING GREEN
Item #2 is a plan to waive fees for a "Go Green Program", for solar systems and electric automobile charging sites.  You can read about it HERE.

  TELECOMMUNICATIONS RFP
Item #3 is the Request for Proposals for the Telecommunication Technical Services.  The staff report, HERE, recommends simply receiving and filing and continue to attempt to partner-up with another municipality.  We'll see how that goes Tuesday.
 

BUSINESS LICENSE TAX
The final item on the agenda is the discussion of possibly placing an increase in the Business License Tax on the November ballot.  You can read the staff report HERE.   As almost everyone who pays the slightest bit of attention knows, Costa Mesa has an abysmally low Business License Tax, ranging from "0" to $200 dollars for the maximum charge.  To say this is "business friendly" is beyond laughable.  Our tax, which brings in about $850,000 annually, has not changed since 1985, for goodness sake.

NOT ENOUGH DISCUSSION PREVIOUSLY...
The original staff report at the study session last week had a couple proposals, designed as starting places for discussion.  However, the council - apparently pre-occupied with the Charter Public Hearing that immediately followed the study session - didn't take the bait.  Instead of tinkering with the numbers Finance and Information Technology Director Bobby Young presented them, they sent the Finance staff back to the drawing boards.  One of the proposals put a minimum amount of $50.00 per year and stretched all the way to $10,000 per year and would have theoretically generated a potential INCREASE in revenue of $2.7 million.  Those numbers were too severe for the council.  The council could have simply said to double or triple the existing fee structure - I seriously doubt ANY business owner would have balked.

UH-OH...
The staff report includes a very thorough analysis prepared by a consulting firm.  However, the staff did NOT have time to do what Mayor Pro Tem Jim Righeimer asked them to do - return Tuesday with a proposal to calculate our Business License Tax on a per-employee basis, as Newport Beach does.  The staff suggests that if the council isn't able to arrive at a good solution with the data available to them right now, then perhaps the thought of putting this issue on the November ballot should be abandoned so a more thorough study can be done between now and 2014 - the next time it could be placed on the ballot.  Actually, that would take those lock-step "NO TAX" lemmings off the hook.  They can tell their handlers at the OC GOP that they didn't propose any new taxes, and - for the voters - blame it on insufficient staff work.  It will be the staff's fault that we don't have more revenue.  Ya gotta love it.
 

COULD BE A LONG NIGHT - AGAIN
Tuesday promises to be a long, and potentially raucous meeting.  Business leaders have said they will fill the house with unhappy business owners to address the Business License Tax issue.  Hope they bring a pillow, since it's the final item on the agenda.  We'll attend and report back next week.