Thursday, July 12, 2012

RDA Grab Worse Than Previously Thought (Updated)

The Special City Council meeting on this subject may be one of the shortest such meetings on record.  It began promptly at 2:00 with all council members present except Mayor Pro Tem Jim Righeimer, who crept in about 3 minutes late.  After short, brief comments by three members of the public, the council adjourned to Closed Session.  At that time the journalists in the audience outnumbered residents.

Ten minutes later the council returned to the Council Chambers and former City Attorney, now special counsel, Kimberly Hall Barlow, led the discussion of this issue, supported by Finance and Information Technology Director Bobby Young.

In a nutshell, Barlow and Young had spent many hours since the demand for payment was received at end of the business day Monday, July 9th reviewing the county calculations.  They determined that the Orange County Auditor-Controller had miscalculated the debt in question and that the City didn't owe the County anything at this time.

However, because the penalties are so severe - see letter below - they recommended that the council authorize payment as demanded UNDER PROTEST and forward an explanatory letter to the Auditor-Controller along with their worksheet showing the discrepancy.

During her comments to the council Barlow confirmed my suspicions that, if we failed to make the payment today, the penalties would be beyond severe.  Yes, they could shut off future Sales Tax revenues to the City.  And, yes, they could penalize BOTH the City AND the Successor Agency (the City in another dress) equally as described on pages 2 and 3 of the letter below.

So, the council voted 5-0 to cut the check for $1,392,470 out of the Successor Agency funds - leaving around $100,000 in that account - and authorized Barlow to proceed with negotiations with the Auditor-Controller's office to resolve the disputed amounts.  The check will be hand-delivered to the Auditor-Controller this afternoon.
If you read the letter below you understand why this was the wisest choice the council could make.  The penalties that could be imposed are so onerous - which I'm sure was the intent by The State - that non-compliance was never an issue.  However, the door was left open for the possibility of - you guessed it - litigation against the County if we are not able to resolve the dispute.


In my previous post I outlined what I thought were the facts of the reason for the Emergency City Council Meeting scheduled for today at 2:00 in Council Chambers.  Part of that effort was to contact the County Auditor-Controller's office for clarification.  I presented to you what I was told.  Unfortunately, that information was not complete nor accurate.  The reason for that was that he did not yet have access to the letter I'm presenting to you, below.  Click on each page separately to enlarge for easier viewing.

You will note that the letter is dated July 11, 2012 but requires the County Auditor-Controller to perform actions on July 9th!  That's a clue as to how messed up this whole process has become.

Here's the facts as I now understand them.  Read the letter and interpret it as you wish.

1) The City is being required to pay the Auditor-Controller TODAY an amount just under $1.4 million.  See the calculation sheet on my previous post for the actual numbers.

2) If we fail to submit those dollars TODAY the Auditor-Controller tells the State on Friday the 13th and they may withhold our Sales Tax revenue.  It is unclear whether they will withhold ALL of our revenue each month until it's paid or just the amount of the outstanding debt.  If they withhold ALL of it that might be in the range of $1.7 - $2 million each month!

3) By not paying TODAY the City is subject to a 10% penalty PLUS 1.5% each month until it's paid.

4) It appears, if you read the bullet points that begin at the bottom of page 2 and go on to page 3, that BOTH the City AND the Successor Agency (the city in a different dress) could EACH be subject to the penalties!  Yikes!

4) The Successor Agency DOES have enough cash on hand to make this payment TODAY.

5) This letter seems clear enough until you try to drill down, then you realize that it is full of ambiguities.  One thing is clear... if we don't pay TODAY it's going to cost us a lot of money downstream.

I'm attending the meeting and will report back afterward.



Anonymous You decide said...

“Whenever the people are well-informed, they can be trusted with their own government.”
Thomas Jefferson

Please remember in November. The current City Council can not be trusted.

7/12/2012 12:13:00 PM  
Anonymous Themosticles said...

Getting rid of redevelopment is one of the prices that we eventually need to pay for Schwarzenegger's and other Republican tax cuts.

California lost its Estate Tax, which was fully deductible against federal estate taxes.

California enacted a huge tax cut for the largest corporations, who can choose between two methods of calculating the income subject to tax.

Then there was the cut in the car tax, and paying back the billions of dollars we borrowed to pay for that tax cut.

So redevelopment, which is just a way of diverting state taxes from schools and public safety into projects like Triangle Square, paid the price.

7/12/2012 01:48:00 PM  
Anonymous OCGOP Strategy said...

Riggy on Faux News:

"There is absolutely NO truth to the charge that Carlos Bustamante and I "forced ourselves" on this new tax bill..."

7/12/2012 02:11:00 PM  
Anonymous Rigged City said...

Let's face it! The executives on the 5th floor are incompetent in that they have no prior experience in managing MUNICIPAL government. Well, I take that back, CEO Hatch was a Community Services Director from Brea; basically a Recreation Director.

Previously, the city had EXPERIENCED knowledgable staff that had at least a decade, if not more, of experience that one could consult with for matters such as this. However, they have all left to work for other municipalities and the city has hired a rubber sidewalk rep, a pastor, a magnet guy, and a former newspaper writer to manage this once fine city of 100,000+ residents, with nobody with real municipal experience to lead the ship.

How do you move forward? Fire all the execs on the 5th floor, replace them with candidates that have solid MUNICIPAL experience (keyword: MUNICIPAL), not buddies of council members or persons within the inner circle of the GOP, or sons of community group presidents, etc, etc!!!!

Heck, at this point, the city has nothing to lose; I suspect it will gain!

Also, where was the city atty all this time since the implementation of this? Oh, but they get paid by the hour regardless of whether the city follows their advisement or not!

7/12/2012 02:34:00 PM  
Anonymous anotherriggymess said...

i agree with "rigged city". No jobs to ANYONE associated with OCGOP, ANY relatives of community group leaders, or acquaintences of any male members(Sandy does not like male members:) of the city council. Gut the 5th floor of all job holders (START THE LAYOFFS !), let Sandy and Robin vet ALL applicants that survive initial screening by Ridge and Goldman. Final decision left to Brenneman. Then we will be the City we USED TO BE, with the bestest workers and most special police and firemen. Join cm4rg and let's CLEAN HOUSE !!

7/12/2012 03:38:00 PM  
Anonymous puppetroll2chins said...

blaming this on Riggy and OCGOP is typical of people who are used to turning everything around. This is a Sacramento money grab, Sacramento is controlled by Democrats, not ocgop, and unions. Vote for a charter. It may not help stop THIS moneygrab but we need to distance ourselves as far as possible from Sacramento. CA is a failing State thanks to Democrats and Unions. We have a strong ocgop in OC and especially in Costa Mesa. Let's hold the line. Remember in November!!

7/12/2012 04:20:00 PM  
Blogger The Pot Stirrer said...

As a matter of FACT, being a Charter City would have had NO - ZERO - effect on this situation. Continue to spread your lies, but don't expect them to go unchallenged here, liar.

7/12/2012 04:28:00 PM  
Anonymous Consistency? said...


Why don't you jump all over the trolls trying to blame this mess on Righeimer or the people on the 5th floor?

7/12/2012 04:36:00 PM  
Anonymous Chewbacca said...

Hey Riggy --can you ask your Wookie friend Moorlach what's up with the County coming in and demanding money for the State? Maybe you can draft up some sort of BS document about how the City of Costa Mesa is never going to deal with the County again, those union thugs.

7/12/2012 06:01:00 PM  
Anonymous Sick of dumb people said...

Why would Geoff do that?

Riggy should have had his minions all over this! It’s not like he didn’t know this situation was coming. What a tool!

“Whenever the people are well-informed, they can be trusted with their own government.” Thomas Jefferson

7/12/2012 06:12:00 PM  
Anonymous Cathlic OCGOP is Pissed said...

To the City of Costa Mesa---just pay whatever they're asking. You wouldn't want to add another FUBAR situation to the Citys' immaculate record.

The funny thing about this whole fiasco is that they don't think they owe this money right now, they admit that they'll be paying it, but right now is not the time.

No Riggy, you can't blame pensions on this one.

7/12/2012 06:26:00 PM  
Anonymous bawahahaha said...

To puppetroll2chins:

For the sake of all of us, please learn how to properly put together a sentence so we can understand what you are attempting to say. Also, I would hope OCGOP has strong support in OC... bawahahaha Are all of you OCGOPers this brilliantly intellectual?

7/12/2012 08:47:00 PM  
Anonymous puppetroll2chins said...

safety pensions are sucking the life out of government budgets. FACT
Charter wins PROBABILITY
Genis loses CERTAINTY

That's a wrap.

7/12/2012 09:30:00 PM  
Anonymous Robin said...

Yes, we have a strong GOP in Costa Mesa. It's made up of a lot of strong-minded people. I'm one of them, and many of the Republicans I talk with are quite strong enough to resist the effects of the special council kool-aid. In fact, many have strong opinions about the actions of this council majority, and can’t relate to it as reflecting small government, fiscally conservative Republican ideology. Don't assume all Republicans support this council or their charter. Republicans have never been sheep.

I'm not as arrogant as those that think they can predict the outcome in November, nor will I tempt fate. But I sure won't be surprised if the Council Majority shifts.

One of the most memorable lines from the Missed Charter Deadline trial came when the City's expensive attorney insisted he represented “the majority of the citizens of Costa Mesa”.

The Judge interjected, “I think you confuse the majority on the City Council with the majority of the citizens of Costa Mesa.” The Jones Day attorney replied he “saw no distinction.”

Judge Miller retorted, “Oh, I do [see the distinction]. That’s why city council majorities sometimes turn into minorities.”

7/12/2012 10:23:00 PM  
Anonymous CM Whine Press said...

Judge Miller retorted, “Oh, I do [see the distinction]. That’s why city council majorities sometimes turn into minorities.”

You just got Barry aka Phil aka Neanderthal Mensa ALL upset.

To "Barry": The judge meant POLITICAL minorities, not racial ones.. haha!

7/13/2012 05:59:00 AM  
Anonymous Marshall Krupp said...

At this point in the process, there is no value to point the finger at anyone and attach blame on this matter. I trust that the topic of blame will unfold as this process unfolds. In addition, there is no question that the City Council made the right decision to pay the County demand under protest and not incur any penalties and reductions of sales or property tax revenues. Discussing this in closed session was also appropriate in that it could potential involve litigation. However, there are several concerns that I hope will unfold over the next several weeks. First, how did the City get in this position when it was fully aware of the passage of AB 1484 on June 27, 2012 and the processing of this legislation occurred prior to June 2012? Yes, AB 1484 was adopted by the Legislature and signed by the Governor on June 27, 2012. What blatantly not offered by Ms. Barlow was that AB 1484 was introduced and ready to be read by the Legislature on January 11, 2012 and began the process through State legislative committees and the State Legislature. So the City has been or should have been aware of this legislation for more than five months. This was occurring during the same time that the City was preparing and adopting the City’s budget. Since, ABX1 26 was adopted by the State Legislature and signed by the Governor on June 28, 2011, the question of redevelopment financing has been a serious issue and something the City should have been watching. The question is why did the City not have the foresight to see the possible consequences of this coming? Second, if the City is unsuccessful in addressing this matter with the County in a negotiable relationship what will the cost-benefit for the City be to pursue this through litigation? How much will it cost the City in legal fees and if successfully what will be the net implication on the City? This is a perfect example of the City consistently be in a reactive mode versus a proactive mode with the foresight to make decisions from a long-range perspective. By the way, Mr. Righeimer’s charter would not have addressed any of this. Finally, Ms. Barlow also misled the City Council on July 12th. She indicated that if the City did not pay the demand that the Department of Finance would hold back the entire sales tax distribution (100%) to the City. This was factually incorrect. Section 34183.5 (c) states in part “Additionally, any city, county or city and county that created the redevelopment agency that fails to make the required payment under this paragraph by July 12, 2012, shall not receive the distribution of sales and use tax scheduled for July 18, 2012, or any subsequent payment, up to the amount owed to taxing entities, until the payment required by this paragraph is made.” So it is not 100% of the sales tax, only that portion that is due the demand.

Marshall Krupp, Candidate for Costa Mesa City Council

7/13/2012 07:12:00 AM  
Anonymous Talking Stick said...

Mr. Krupp:
Politics/Communications 101:
Keep your message short and sweet. You lost 90% of the readers after your 5th sentence.

7/13/2012 08:04:00 AM  
Anonymous Teacher said...

Mr. Fitzpatrick:

Politics/Communications 101:
You should talk! Please note, you are a giant blowhard AND a broken record!

7/13/2012 12:52:00 PM  

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