Category: Budgets

City of Laguna Beach Investment Policy

Posted on (Updated: )

It is the policy of the City to invest public funds based on compliance with state law and prudent investment practices. The primary goal of the City’s Investment Policy
is to invest in a manner that will provide the maximum security of the principal invested
with a secondary emphasis on providing adequate liquidity and finally to achieve a rate
of return within the parameters of prudent risk management while conforming to all
state statutes and local regulations governing the investment of public funds.

To view more the full document click here

Don’t Bury Our Money Underground! Vote No On Measure P

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S.T.O.P. Team,

The Sales Tax Increase is now officially called “Measure P” and will appear on the November 6th ballot misleadingly titled as “Laguna Beach Utility Under-grounding and Fire Safety Measure.”

S.T.O.P. is ramping up to defeat Measure P as an unnecessary tax increase, the second in two years. We should PAY AS WE GO, let neighborhoods underground their own utilities at their own expense, and budget to underground utilities on Laguna Canyon Road, if desired for aesthetics, with our budget surpluses. We don’t buy the city’s “fear and fire” campaign. It’s fearmongering, and its false.

A broad spectrum of community groups oppose Measure P, including the Laguna Beach Chamber of Commerce and the Orange County Taxpayers Association, both of which signed on to S.T.O.P’s ballot Opposition Argument.

WE NEED YOUR HELP to get the message our and educate your neighbors and friends to VOTE NO. Here’s how you can help:

  1. YARD SIGNS. “NO ON MEASURE P” yard signs will be available on Friday. Place them in your front yards or local businesses. Please contact us if you would like a yard sign. You can pick them up on Friday or email us and we will drop them off at your home.
  2. VOLUNTEER. We need volunteers to hand out literature around town, in your neighborhoods and at local events. Please contact us if can help out. We have the literature and hand outs.
  3. MAKE A DONATION. This is a grass roots efforts, and we need your help to offset costs for yard signs, fliers, mailers, postage and promotion materials to get the word out to VOTE NO on Measure P. You can mail a check to Stop Taxing Our Property to 2599 Glenneyre Street, LB 92651 or go to the STOP website atwww.stoptaxingourproperty.com and use the PayPal button to make a donation. Every little bit helps!
  4. DON’T VOTE FOR CANDIDATES THAT WANT TO TAX YOU! DON’T VOTE FOR Incumbents Toni Iseman, Rob Zur Schmeide, insider Sue Kempf, or Sue Marie Connelly. They all want to tax you, and put our city in its greatest debt ever by approving a $135 Million dollar bond.

Stop Taxing Our Property
www.stoptaxingourproperty.com

Thank you for your support. Together we can STOP the unnecessary sales tax increase and defeat Measure P.

Jennifer Zeiter, Co-Founder
949-715-8736 or Cell 408-832-7786
2599 Glenneyre Street
Laguna Beach, CA 92651

Stop Taxing Our Property – S.T.O.P.
Outlook-1519089474.jpg

LB Utility Undergrounding and Fire Safety Measure

Update- Measure P was rejected by voters in the November 6, 2018 elections!
Voter results – No’s 53 percent, Yes 46 percent.

Date: August 17, 2018

Is the City blowing smoke?

Will a whopping 12.9 percent sales tax increase for undergrounding a relatively small number of utility poles (compared to the total number of poles in existence) in our city really keep us safer from fires?

Is the City using fear of fire tactics to promote this new tax? Are they capitalizing on the increase of wildfire danger in our region and State to gain support for this tax?

Are they accurately stating the facts regarding the number of fires whose origin have been traced specifically to utility poles? Were these fires due to arson, unmaintained vegetation and trees, cars, and other reasons besides lack of utility pole maintenance?

Do you want to subsidize your neighbors undergrounding and ocean views when you have paid to underground your neighborhood already or for those not pole-less yet hope to have enough money to form an assessment district to underground your neighborhood one day?

Is it worth 25 plus years of city debt potentially costing residents and taxpayers billions?

Has the City been transparent with residents that this tax will be used to float a multi-hundred million dollar revenue bond which is our cities greatest debt ever?

Measure LL passed two years ago. The new tax was supposed to be used for public safety. Who not use this designated tax and other annual city surplus funds to under-ground our share of the cost to underground our major transportation corridors?

These are just a few of the questions being raised by residents in response to the new tax increase being proposed by the City.

Special Tax

On July 17, 2018, the Laguna Beach City Council approved a Special Tax Ballot Measure titled “Laguna Beach Utility Undergrounding and Fire Safety Measure” to be placed on the November 6, 2018 ballot. This measure requires a two-thirds voter approval to pass.

The measure asks qualified voters to approve a special tax to increase City transactions (sales) and use tax rate by one percent (1%).

Otherwise, in addition to assuming debt of a fifth of a billion dollars over the next 25 years, we will pay more daily for everything we buy like cars, appliances, restaurants, home remodeling, internet shopping and more just because we are Laguna residents. This tax will severely impact residents, businesses and visitors.

Is this second tax increase in two years for public safety necessary?

We have a system: Residents support utility undergrounding and have invested in un-dergrounding for years through the City’s Assessment District process. The process allows homeowners to underground their public or private neighborhoods at a shared cost. This is fair and equitable. It does not burden others and requires no additional taxpayer subsidies. No residents have asked for the City to change the process. No individual residential neighborhoods should expect to be subsidized. We expect to “pay as we go.”

We have money: Two years ago we approved Measure LL which generates $4+ ,ioons per year. The funds were approved for public safety use. In addition, annually we have millions in budget surpluses that can immediately be directed to undergrounding. State grants and SCE Rule 20 funds are available. We really can “pay as we go.”

We are safe: We increased fire staff, updated equipment, maintain open spaces, im-plemented drones, trim trees and promote fire safety citywide. We have faith in our fire department and surrounding fire agencies too protect us. We can “pay as we go” for their services.

We have agency partners: SCE plans are underway to underground a portion of Cal-trans’ LCR already. They own it, they should pay. We can support undergrounding the remaining LCR poles for safety and aesthetic improvements and pay our share.

What happened to our historical practice of Paying As We Go and Living Within Our Means?

Please review the following documents and decide for yourself before voting in November.

City Resolution #18.041. Click here
2018 City Tax Measure Argument Click here
2018 City Attorney Tax Measure Analysis. Click here
2018 City Tax Measure Rebuttal Click here
2018 City Elections Ballot Entry Click here

S.T.O.P. (Laguna group opposition to tax measure website) Click here
2018 S.T.O.P. Tax Measure Argument Click here
2018 S.T.O.P. Tax Measure Rebuttal Click here
S.T.O.P. Measure P Update here
Letter To The Editor – LB Indy – City’s Money Tree Is Us! Click here

Community Opinions:
Letter To The Editor – LB Indy – Sales Tax Increase Isn’t Needed for Public Safety. Click here
Letter To The Editor – LB Indy – Unintended Consequences from Higher Taxes. Click here

Share your thoughts with us. Click here

Are There Grounds For Proposing The Undergrounding Ballot Measure?

An extensive utility undergrounding campaign funded by taxpayer dollars is well underway by city officials, staff, and hired legal and finance consultants targeting a November 2018 ballot measure.

The urgent move to underground city power poles has become a concerning and controversial issue for many reasons but primarily because it requires our city to take on substantial long-term debt by either taxing ourselves (property assessment tax), or increasing the local sales tax, or possibly both.

While the final initiative is still in progress, there is growing concern that the city is moving at record speed on the issue and failing to listen to its residents and prove that their information is entirely accurate and factual. This concerns LBCHAT and it should concern every property owner and resident too.

Here are some concerns expressed by residents (in no particular order) and some facts on the utility undergrounding initiative:

Fact: In March 2017, the City created a new Undergrounding Manager position at $230,000 per year. This hire will be in place 18 months prior to our opportunity to even vote for or against the initiative in November 2018 and will cost us about $345,000 annually. The City estimates over 6 1/2 years and possibly $10M spent before construction would even begin on undergrounding due to planning, engineering and approvals. Click here for UM job description and salary pdf.

Concern: The city appears to be moving forward as if Laguna voters have already approved the measure.

Fact: Campaign consultants were hired to conduct surveys crafted to support the initiative costing approximately $240,000. First survey results did not provide the support expected so a second survey was approved by City Council and is currently in progress. In addition, records are showing that nearly $30,000 was spent on TV advertising on CNN and Fox News stations through Cox Cable.

Concerns: The campaign outreach messages are fear-based and have has outraged some Laguna residents. Many survey participants have called the surveys bogus and blatantly obvious that they were created to produce the results the city intended to support the measure.

Fact: Laguna fire history: Contrary to what residents may be hearing during this recent urgent undergrounding movement by the city, the fact is that there have been no major fires caused by utility poles in Laguna Beach. The devastating 1993 fire was caused by arson. Laguna like many other cities in California falls under the high-fire danger umbrella. This is one reason why all utility companies state-wide are already abiding by and implementing strict fire safety regulations for electrical distribution systems.

Concerns: Residents felt safe with their fire departments performance and now have concerns due to the city fire fear promotions. Why has the city not promoted UU before now since the big fire they refer to happened in 1993?

Fact: Fire safety issues have been addressed in light of recent fires and California’s drought conditions. In December of 2017 the California Public Utilities Commission (CPUC) ordered all utilities to implement new fire safety measures for electrical distribution systems in high-risk areas. The CPUC and Cal Fire created a “Fire-Threat Map” where stricter fire safety regulations are being implemented, including some in Laguna in Tier 2 (high) and Tier 3 (highest) areas, and especially along Laguna Canyon Road. These regulations create significant new fire prevention rules for utility poles and wires, and frequent monitoring and inspection of all utility poles, including immediate correction of safety hazards in high fire threat areas, correction of non-immediate fire risks in Tier 3 and 2 areas within 6 months and 12 months, respectively, and major new rules for vegetation management. Click to view Fire Map Report here. These safety measures will sharply reduce the proposed risks.

Concerns: Why are we rushing to underground in proposed evacuation areas rather than allowing SCE to comply with the new regulations? If SC Edison fails to comply and meets the new regulations, its quite possible they could be legally required to underground the utilities at their own costs.

Fact: The urban parts of Laguna Beach (downtown and residential zones along PCH) were excluded from the CPUC Fire Threat Map because they have low vegetation fuel density, very low continuity, and a high degree of access for fire suppression forces. They are deemed low risk for a fire to grow out of control and based on this the CPUC rejected the City’s urging to designate its downtown urban areas as a high risk zone.

Concerns: Why is the City is insisting on undergrounding utility poles in these areas using the “evacuation routes” they have arbitrarily created? All neighborhood streets become evacuation routes so why not address all poles citywide? Fallen trees, light poles and parked cars provide as much obstruction in an evacuation as does a fallen power line. We can’t remove all trees because they might possibly catch fire and obstruct roadways. 90 percent of all fires are human caused (cigarettes, campfires and arson) and electrical transmission fires causing widespread damage are an extremely low percentage of all fires.

Fact: The City Underground Sub Committee City leaders and staff actually traveled to the CPUC in San Fransisco to present the argument for moving Laguna into a high-risk category. Click here.

Concerns: Residents are publicly complaining that as a result of the City’s fire and fear-tactic actions, their homeowner and fire insurance rates have increased and some policies dropped as insurance companies no longer want to insure homes in our city. This backlash from the fire danger promotion may cause substantial increase in insurance rates and possibly cancellations of coverage for our area.

Fact: Laguna Canyon Road is a State owned Right of Way, and is the responsibility of the California Department of Transportation (Caltrans). They are currently planning its widening and will pay for the removal of poles and overhead wires. Caltrans already underground their utilities at Big Bend in 2016 due to concern’s of vehicle safety.

Concerns: Why do Laguna homeowners and residents need to spend millions funding a 30 year bond and adding 1% sales tax when SCE and SDG&E has annual funds available to underground utilities and they can lobby the California Public Utilities Commission (CPUC) for additional funding. Why would our city burden us with this type of long-term debt when in fact overhead utilities most likely will be obsolete in next 10-20 years. If the poles and wires are scheduled to come down is the city’s proposal just to to secure more tax revenue forever by adding the $1% sales tax of undirected funds? When it’s not deemed necessary any longer for undergrounding the sales tax stays in place until voters vote it out. The city will never revisit this and concerns are that it will continue along with our other tax dollars and go towards the Employee Pension Fund and other City Council whims.

Fact: Many residential neighborhoods have already paid tens of thousands of dollars to underground their own neighborhoods with their own money. Many neighborhoods still cannot afford to form assessment district and costs to underground the utilities in their neighborhoods. Some local assessment districts are still paying: Coast Royal, Agate/Glenneyre, Woods Cove, Diamond/Crestview, Ruby Catalina to just name a few. In the Diamond street area the average assessment was $66,000, and Agate/Glenneyre was $54,000.

Concerns: Some of these neighborhood undergrounding’s were on so called “evacuation routes.” Should they now be strapped with paying other neighborhoods to be underground in arbitrary evacuation routes? Neighborhoods still without underground utilities will still need to pay too underground their own neighborhoods and other “evacuation routes” utilities. This personal debt is going to quite possible bankrupt many on fixed incomes or make it difficult or impossible to live in Laguna any longer.

Fact: Revenue resources: The City has determined that the only solution to under grounding utilities is by asking taxpayers to shoulder the majority of the financial burden.

Concerns: The city has not done the proper due-diligence in exploring and working effectively with SCE or other entities to share the burden even though several utility companies and Cal Trans are stockholders in the main evacuation routes. It doesn’t appear that the City has considered leveraging its own revenues to support a revenue bond or looked at the possibility of using Measure LL, the street lighting fund, or the $6.2 million in the City’s disaster contingency fund which could support a substantial debt towards undergrounding.

Fact: Our City annual budget is increasing each year.

Concerns: The City seems to be getting comfortable with a growing annual budget. Some residents feel its growing too rapidly and yet problems are rising and city services and quality of life is deteriorating. Many say its time our city leaders live within its means, stop spending like trust funders, make better use of discretionary expenditures and use existing budgeted tax dollars to underground the utilities at a rate we can afford. Assessing residents for 30+ years on their property taxes bills that are no longer tax deductible under the new federal tax law if they exceed $10,000 will have an impact for sure. Raising our sales tax also has negative and long-term impacts. There is no control over where the tax dollars are to be spent.

Fact: Fire and police support UU. Both of these public safety employee groups strive to do their jobs to the best of their abilities and part of this involves looking at related risks. It is with the best of intentions that they endorse lowering risks in our community and their opinion is important to us.

Concerns: Keep in mind that they are also part of a city government system that expects to be supported when decisions are made at the highest levels. There appears to be a difference of opinion as to what is desired vs necessary in regards to undergrounding and funding. Why haven’t these public safety departments bought this forward prior to 2017 and demanded something be done if in fact undergrounding poles is so dangerous and necessary?

Fact: In the City’s capital improvement plan, over $30M is allocated to items like fire station remodel ($6M), community pool ($15M!!!) and sidewalks on PCH ($9.7M) which is a state highway.

Concerns: If undergounding utilities is so essential to our safety, why is a community pool prioritized as a capital improvement over undergrounding? Adding numerous staff over the last 3 years has added to our City’s payroll and hugh unfunded pension liabilities. It is projected that the costs of the City employees health insurance plan is expected to increase by 18%. Other questionable spending is the purchase of $3 million in new vehicles in under 3 years, replacing low mileage vehicles and spending millions of dollars purchasing real estate that is was not considered necessary. How can we sustain such budget expenditures?

Note: We hope this information has been helpful to you. Other concerns and facts will be added as they are shared with us. If you have additional concerns and facts on this topic, please send them to us for possible inclusion.

LBCHAT focuses on city government accountability and transparency matters related to city business activities, city representatives, city management, escalating legal and consultant budgets, the overall increase in annual city spending and of course tax increases. We encourage voters to become more knowledgeable before casting their votes on in the November election.

We have attached several documents obtained from the city addressing undergrounding for your review and will be adding others as they become available to us. Click here:

The Independent Review Team 11-21-17 (“IRT Report”)

Community Survey And Ballot Measure Advisory 12-05-17

Bond Counsel Consultant Special Tax 12-06-17

Financial Advisors for Ballot Measure 01-09-18

Consultant Agreement Pre-election 01-10-18

Undergrounding Master Plan Presentation 02-06-18

City Undergrounding Campaign Spending 2018

Two local groups have cropped up in support or opposition to the UU measure. We encourage our subscribers to review their positions and better understand facts and concerns. They are:

S.T.O.P. www.stoptaxingourproperty.com
Underground Laguna Now! www.undergroundlagunanow.org

Here are more links that provide information on the Utility Undergrounding:
http://stunewslaguna.com/archives/letters-a-obituaries-archive
https://www.lagunabeachindy.com/guest-column-103/
https://www.youtube.com/watch?v=2b3ttqYDwF0&sns=em
Get Off The Grid! – Undergrounding Guest Opinion Article
Fire Risks and Undergrounding – Guest Article
STOP Ad Placed in LB Indy
Should Power lines Be Underground? Article

Resident Concerns Ignored~ Undergrounding, May 24, 2018

Posted on (Updated: )

Unanimous vote by City Council to underground Edison utility lines on “Key Evacuation Routes” by Ballot Measure, without first addressing the overwhelming concerns expressed by majority of residents aptly delivered during Public Comment. The opposition was well represented by a factual reasonable presentation delivered by the newly formed resident advocacy group STOP. Many concerned speakers brought forth substantive facts and valid concerns that should be reasonably considered and addressed by elected officials, prior to putting this measure to vote.

City has spent nearly half a million dollars and counting to advocate support of an under ground initiative but has ignored continued plea to consult with technological advancements by qualified energy professionals to deliver a comprehensive renewable sustainable energy plan to develop LB Solar City. To ignore available alternative energy sources is offensive toward the sustainable values of an environmentally sensitive aware community.

The city has been utilizing taxpayer money to advertise and promote their Under Grounding initiative using a cleverly designed emotional response delivered by a FIRE & FEAR Safety Campaign cleverly designed to corral sheep to favorable vote to increase Sales Tax to pay for Bonding the massive construction cost. A known business owner expressed his immediate concern.

The THIRD STREET construction debacle created a major disturbance, wait until Edison begins to trench the proposed “Key routes”. Edison has cleverly, with the assistance of the City, graciously agreed to allow taxpayers to be saddled with 100% of construction improvement cost for the aging infrastructure of EDISON, a multi billion privately owned company. Above ground utility poles don’t last forever. I find it particularly objectionable that a depreciating asset cost has not being factored into replacing archaic EDISON infrastructure. Where was the Fire & Fear campaign to underground the newly replaced poles, on LCR, 3 years ago?

Voter ignorance may win 2/3 vote, without STOP to advance an educational campaign regarding the financial risk of over spending that a debt liability of this magnitude will create for our village and the many other potential follies of cost over runs that are not being adequately addressed. I have suggested the city scale back the scope of the project to a reasonable level and include only MAIN Evacuation Routes of LCR and PCH. In this manner, city could pay as we go, using Measure LL Tax and Rule 20A credits to underground MAIN EVACUATION ROUTES.

It is reasonable to assume the intention of creating ‘Key ER’ is to gain voter favor, at the expense of those residents who have already “paid their fair share” to under ground their own neighborhoods. A misguided approach, but a clever effort to place the burden, on all taxpayers, to pay the share of key neighborhoods. Yes, this will benefit some, even specific City Council member, Toni Eisman had to recuse herself after the specific benefit was brought to attention of the city, by another resident.

One matter of particular concern is that the City must STOP (pun intended) the continued spending of the city taxpayer war chest to advocate and promote their advertising campaign designed to support the personal objective of City Council. California Government Code §54964(a) prohibits local governmental agencies from expending public funds to advocate for or against a ballot measure or other voting initiative, with some exceptions for educational/ informative materials.

In short, City Council is not adequately addressing resident concerns and are failing their constituents to reasonably explore advanced technological alternative energy sources and have refused to scale back the scope of the project to avoid assuming gross debt liability of cost over budget construction costs! We all know the government rarely comes in on budget for cost of construction.
CAUTION~BEWARE: City of Fresno went from 25M to 400M for bullet train under ground of utility lines!

Concerned Resident,
Lorene Laguna

Laguna’s Citywide Hazard Report Raises Questions and Concerns

Have City officials ignored basic safety infrastructure for decades and focused too much on aesthetics?

The City of Laguna Beach just released a Local Hazard Mitigation Plan (LHMP) for public review and they are asking for the input by 5 p.m. March 6, 2018. The draft document is lengthy but well worth the read. Click here for the full report.

In Brief…The City states that the purpose of the LHMP is to allow public safety officials and city staff, elected officials and members of the public to understand the threats from natural and human-caused hazards in our community. They claim that the LHMP will:
– Let Laguna Beach plan for future emergencies
– Be more prepared in advance of disasters
– Use strategies to reduce instances of property damage, injury and loss of life due to disasters
– Protect public health and safety and save money
– Strengthen the mission of public safety officers (police and fire staff), providing them with clear roles and responsibilities to build a safer community
– Make Laguna eligible for grants from the Federal Emergency management Agency (FEMA)
– Make Laguna eligible for financial assistance from the State when disasters occur

The LHMP identifies these natural hazards requiring protective measures: 
– Drought
– Extreme heat
– Floods
– Geologic snd seismic hazards
– Nuclear hazards
– Severe weather
– Wildfire
– Affects of climate change and other hazards that pose a threat to the community

The LHMP is divided into four main sections: 
Chapter 1: Summary of the identified hazards
Chapter 2: Hazard assessment/threat to LB and vulnerability to future disasters
Chapter 3: Hazard mitigation strategy
Chapter 4: Maintenance of the LHMP

LBCHAT Observations, Questions and Concerns..
The LHMP is a well-constructed report that meets FEMA regulations and may position the City for grant funding. The report appears to be more of a public relations document rather than a scientific effort.  The information within the plan is not new information but rather data that the city has had for years. The report often exaggerates some hazards and minimizes others.  It does not examine current and past city policies, procedures, and ordinances for accuracy and “good practices.”

While we applaud the City for creating the Local Hazard Mitigation Plan and fully support a plan to prepare and address future emergencies we are concerned about the serious nature of the contents identified and feel they raise safety and security questions that property owners/residents should be asking city leaders and staff.
For example…
• Why does the study not distinguish between fires that start in urban areas from downed utility lines and wildfires? What is the probability of an urban line starting a wildfire and traveling into the chaparral?  How many “wildfires” has Laguna Beach experienced in the last 100 years that were caused by downed utility lines in the city?
• Why does the report cite data only for the 100 year and 500 year flood scenarios? Have residents and businesses not experienced flooding from 5 year, 10 year, 25 year, and 50 year floods?
• Why are the watercourses in the city not part of the report?  Are they not the source of most frequent flooding and mudslides in neighborhoods?
• Why does the report only have a hazard map for earthquake induced landslides/mudslides, which are rare, and not one for rain induced landslides/mudslides, which happen regularly and often spectacularly?
• Why did the study not make use of the 2017 National Climate Assessment Report? For example, the committee decided not to include hurricane risk because of past weather patterns. The NCA report indicates that over the next 20 years hurricanes that hit Baja will likely move northward as the California Current warms.
• Why did the study not include an examination of city ordinances to assess whether they reduce or exacerbate natural hazards?
• Why did the study not examine the quality of Initial EIRs prepared by the Dept. of Community Development to assess their accuracy and full disclosure of risk?
• Drainage issues appear to be a serious threat. Has the City Master Drainage Plan written 11 years ago been implemented?
• The report lists 17 high-risk areas scattered throughout the city. Are residents aware that they live in a city-designated high-risk area?
• Why hasn’t Laguna had a Hazard Mitigation Plan until now when the report clearly identifies serious potential disasters in our area.
• Have we ignored potential hazards while focusing on aesthetics like the village entrance or the under-grounding of utilities?
• The driver to conduct the hazard identification effort is to gain grant or other disaster funds. Haven’t they always been available to us?
• Will the plan only be implemented if grant monies are available to us?  How many additional staff will be needed to implement and oversee this plan?
• What has been done to educate the public on environmental risks prior to this report?
• Will Laguna residents receive a higher level of environmental scrutiny by agencies such as CAEPA, Coastal Commission and FEMA?
• Should home sellers and RE agents advise new home buyers of the risks identified in this new City LHMP?  Will the LHMP have home insurance impacts?
Reference material worth reading: LB Flood History 1937-2011 by Village Laguna. Click here.

LBCHAT Subscribers
After reading the full LHMP report, you may have questions of your own. Submit them to the city and please share with LBCHAT. We do have to ask … are you concerned that City officials have ignored basic safety infrastructure and focused primarily on aesthetics and building tourism? And, are you satisfied with the vision, direction and effectiveness of our city leaders?  

Share your thoughts and comments with us at contact@lagunabeachchat.com. We want to hear from you!

Local resident comments on LHMP:

One of the things that you mentioned in your article is that people are concerned about how the LBHS will affect insurance rates. They have already been affected, but many people are unaware. If you have a longstanding policy insurance companies cannot arbitrarily cancel, but if you need a new policy, no major insurers are writing new policies in Laguna Beach.

Last year our company, Fireman’s Fund, went out of the home insurance business, so we had to find a new policy. Our broker came up with a high-risk, high premium policy from a Swiss company. We were looking at $6,000 per year premiums for a standard policy, which did not include earthquake insurance, and no commercial company would insure us for mudslide.

We were able to get a reasonably priced policy only through the State of California high risk pool, but even that is expensive.  The State itself is the insurer. Farmer’s insures the contents of the house, but no major company will insure the house even for fire, flood, or wind.

The insurance underwriters have calculated the risks that the City Council continues to deny, as they order trimming and removal of trees and vegetation that hold the soil. In the city’s Initial EIRs for the view ordinances it did not disclose that the ordinances would be applied to flood zones, landslide/mudslide zones, or watercourses. The city has been applying these ordinances to Laguna Canyon, Bluebird Canyon, South Laguna and all at-risk areas.

Coastal Commission Will Vote To Support Laguna’s STL Ordinance

STL Ordinance still in effect… Click here

Guest Letter by Roger Bütow – Click here

On December 14, 2017, The California Coastal Commission (CCC) made the decision to deny the City’s request to prohibit short term lodgings (STL) in residential zones. The CCC approved the City’s request for additional operational standards and to increasing the number of commercial zones that would permit short term lodging. Neither will become effective until the Laguna Beach City Council formally (through public hearing) accepts the Coastal Commission’s changes.

The City is currently operating under its existing STL ordinance which was in effect before it adopted the changes submitted to the Coastal Commission for review in December.

The next step is for the City Council to decide whether to accept the changes adopted by the Coastal Commission, file litigation, and/or to propose modifications to the ordinance in a new request. No decision has been made yet.

Stay tuned for regular updates on LBCHAT. For more details on the City/CCC meeting click here

The Deadline is this Fri, Dec. 8 by 5 p.m. to email the California Coastal Commission stating your support for Laguna’s ordinance banning Short Term Lodging (STL) in the town’s residential zones. If you are in support of this ban then here’s what to do:

1. Address your email to California Coastal Commission at SouthCoast@coastal.ca.gov and copy Marlene.Alvarado@coastal.ca.gov

2. Put on the subject line “Agenda item 19b on Thursday Dec. 14: City of Laguna Beach LCP Amendment No. 1-16 (LCP-5-LGB-16-0055-1 Short-Term Lodgings/Rentals)

3. In the body of the email, state your point of view immediately. One possible statement might be:

 Please grant Laguna Beach’s request for certification of its LCP Amendment No. 1-16 restricting new STLs to commercial zones only.

If you want to follow your general statement in an email with more content, the following are some suggestions.

Possible Topics:

1.    Your own experience with STLs in your neighborhood.

2.     Laguna Beach is already very visitor friendly with plenty of provision for their lodging and recreation and transportation (trolleys). The city funds Visit Laguna (our visitors bureau) with over a million dollars.

3.     Taking care of visitors already costs the city dearly in extra policing, fire and rescue, traffic control, providing parking, trash collection, transportation. Analysis shows that much of this extra cost is footed by resident taxes rather than being covered entirely by visitor spending.

4.     The CCC staff’s argument that more STLs in neighborhoods provides more affordable housing for visitors is merely an assumption. Many STLs charge as much as luxury hotels and many of our hotels are relatively affordable.

5.     STLs increase long-term rental costs, and cut down on available housing of all types, to say nothing of affordable housing. STLs in residential areas cannibalize rental housing stock otherwise available to older, long term fixed-income residents and artists.

6.     A high proportion of residents in Laguna Beach are generally supportive of the Coastal Commission and its mandate—denying our ordinance would be a blow to these supporters.

7.     It is truly impossible to adequately oversee and enforce STLs in residential zones—we and others have tried.

8.     STLs are often detrimental to neighborhoods, requiring residents to confront bad behavior or call the police, late night partying noise, extra trash and parking/traffic, etc. Quality of life for residents is adversely affected by STLs.

9.     Since the charm of Laguna is part of what brings people here, why allow diminution of that very charm?

10.  Many STLs run illegally, not even contributing to the city tax base, and pinning them down legally is surprisingly difficult. Then the fines that can be levied aren’t punitive enough to stop them.

11.  There is plenty of lodging (over 1,000 rooms at only 80 percent occupancy) in the commercial zones near the beach and restaurants. And we even have camping available at Crystal Cove State Park and Doheny State Beach. And this area of beach, recreation, shopping, restaurants and bars is where visitor want to go, so it’s more than reasonable that’s the area they’d want to stay in.

12.  The existing LCP of Laguna Beach prohibits commercial uses in residential zones, and STLs are clearly commercial ventures, as shown by the fact that most of the owners don’t even live in Laguna Beach.

13.  Realtors say being next door to an STL lowers property value. Obviously this alone is of concern to resident homeowners.

14.  Residents report a loss of the sense of security and community that come from knowing one’s neighbors.

Measure LL Oversight Committee Reports

This committee reviews the uses of the LL tax revenues to ensure that the City Council spends the revenue generated from this local voter approved tax as of Nov. 8, 2016 as promised.  These are the areas that are currently approved by council for funding by the LL tax:

  • Public Safety
  • Utility Undergrounding
  • Street & Beach Cleanliness
  • Protecting beaches from pollution

Specifically, the Measure LL Oversight Committee’s charter is to:

  • Conduct annual audits
  • Review expenditures
  • Provide public reports

LagunaBeachChat will provide committee reports and financials as they become available.

Updates on the city of Laguna Beach’s Measure LL spending and reports are available for view on the city’s website:

Most current Measure LL: Laguna Beach Vital Services Measure available here

Most current Audit Review and Measure LL Oversight Committee information is available here

The report from the September 2017 meeting can be viewed here

Note:
The next committee meeting open to the public is December 11, 2017, 6 p.m. at the Susie Q in downtown Laguna Beach. Documents from this meeting will be posted following the meeting. View city calendar here

 

Accessory Dwelling Unit (ADU) State Law Causing A Household Stir…

No matter what position you hold on the issue of providing and regulating additional housing within Laguna Beach the subject has become extremely controversial.

Much of the controversy is in response to the interpretation of the new California State Law 65852.2 (click here for pdf) related to the creation of Accessory Dwelling Unit (ADU) by municipalities. The new law was signed by Governor Brown last year. The State’s intent was to address a proposed California housing deficit and to encourage more affordable housing options, especially in coastal and higher-income areas. The new State law promotes less restrictive ordinance guidelines and other than State guidelines and existing zoning codes, minimal interference by municipalities. In essence, the push is to relax or loosen-up current housing use restrictions to accommodate more renters and provide homeowners looking to generate extra income the option of sharing their home or
unused space.

Laguna Beach has an existing Single Resident Unit (SRU) Ordinance 25.17 (click here for pdf) and is currently in the process of updating the ordinance to comply with the new State Law requirements.

According to Monique Alanz-Flejter, AICP, Associate Planner, Community Development Department, City of Laguna Beach. “We are currently accepting and processing applications with the current SRU Ordinance criteria, as well as adhering to the parking exemptions required by State law, and waiver of water and sewage connection fees, and exceptions for fire sprinkler requirements. A draft ordinance will be presented to the Planning Commission on December 13, 2017 for their final recommendation to the City Council on the proposed changes.”

This topic should be of interest to all property owners and residents as changes to the current LB SRU ordinance regulations will have a direct impact on Laguna’s residential neighborhoods, city-wide density, parking, students, those with disabilities and senior populations and possibly yet unknown shared taxpayer fiscal considerations. LBCHAT encourages homeowners and residents to review the local SRU ordinance, the new State Law and the revised draft ordinance (when made available to public) and to communicate your thoughts and opinions to the Planning Commission as well as the City Council when the final recommendation goes forward.

Please feel free to share your thoughts via our contact page and we will add your comments below this article. There are strong opinions and support on both sides of this issue. Lets hear from our subscribers!

Swimming After Gold or Plunging into Red Ink?

In 2016’s Laguna Beach Community Survey, respondents were asked to rate 21 different ‘perceived local problems’ in terms of seriousness. Respondents could select:

  • Extremely Serious
  • Very Serious
  • Somewhat Serious
  • Not too Serious
  • Don’t know

in response.  As you might imagine, issues such as traffic congestion on PCH & LCR, traffic congestion on local streets, number of homeless,  and insufficient public parking topped the rankings. For example, 71% of  respondents felt traffic congestion on PCH/LCR was an extremely or very serious problem.  At the 20th position (of 21) was the issue: “Lack of Recreation Facilities”.  This perceived local problem was seen as Extremely or Very serious by slightly less than 10% of respondents. 63% felt the issue was “Not too serious”.   Only “911 emergency response times” was seen as less problematic in the survey, with slightly less than 4% indicating this in the top 2 categories.* Given this statistically significant feedback, the impartial observer could not be blamed for being surprised at the passionate rhetoric being heard about the desperate need for a second public pool in Laguna Beach.

Is the Current LB High School Pool so Bad?

The current public-accessible pool is owned by the Laguna Beach High School, but maintenance costs are shared between the city and LBUSD, much like the Park Avenue tennis courts. According to the city’s website on the pool:

The Laguna Beach Community & High School Pool offers water polo and swim teams for kids of all ages, water aerobics classes, swim lessons for children of all abilities, and Masters’ swim programs. We also offer lap and recreational swim times every day. Laguna Beach High School also uses the pool for their swim and water polo team practices.

There are no doubt a varying community of users beyond the High School swim and water polo teams.  Indeed casual observation confirms that there is a lot of activity at the pool site (at least during the daylight hours when this author typically passes by). So, we have an existing pool that is well used, especially during the school year when LB sports teams are active.  Another common complaint about the existing pool is that is is not “Olympic” sized; to be sure the current pool allows only 25 yard(/meter?) lengths as opposed to the 50 meters of an Olympic pool. However, throughout the U.S., 25 meter length pools are the most common, so Laguna Beach isn’t a outlier in that regard.

Who is Promoting the Idea

With that background, we are wondering how the debate about a possible second public pool in Laguna Beach became so passionate.  Insofar as lack of a second public pool would fall into the “lack of recreation facilities” bucket, shouldn’t more local folks have indicated this as either Extremely Serious or at least, Very Serious on the Community Survey, if indeed it was a common sentiment?  Or are we witnessing an extremely vocal minority pushing for its pet project loudly and frequently whenever the opportunity arises?

An extensive search through City Council/LBUSD meeting documents shows that the topic of a “Potential for a second community pool” was agendized for the joint CC/LBUSD meeting held on 24Jan2017.  At that meeting, school board member Ketta Brown showed her support for the construction of a larger pool with the statement: “…glaring need in the City”.

Its likely that the very vocal and well organized group of “2nd pool boosters” who regularly attend City Council meetings and speak in favor of a 2nd community pool have built support via the Laguna Beach Unified School District board and have expanded their efforts at lobbying the City Council.  As early as February 2016, in response to 4 parents’ public comments in support of a second pool (Christine Kelleher, Susan Lewis, Richard & Eleanor Ramsey), Mr. Whalen voiced support for the concept.  Since then, City Council meetings have seen many speakers during the public comments period, speak in favor of a second pool.

Here Come The Consultants

Last February during the City Council’s mid-year budget update, item 17 read: “Lang Park Community Pool Geotechnical Environmental Investigation, Public Outreach – $80,000”.  This item was approved by all 5 council members.  Interestingly, this same vote also approved the additional funding for the (in)famous City Wayfinding Signage program in the amount of $300,000.  In the notes for the 19 funding items being considered was the rather matter-of-fact footnote that ultimately approving the project for the Lang Park Community Pool would require a 1-time set-aside of $15,000,000 (fifteen million dollars) to the Capital Improvement Fund.

The $80,000 appropriation followed an initial $15,000 spent on a consultancy to locate an ideal spot for a second pool. The other guidelines that were provided by the City to the consultancy were:

  • Constructing a 33 meter by 25 yard pool(!!!)
  • Adjacent teaching pool
  • 100-space parking deck (assumes multiple-level)
  • Project should not impact existing major features, including playground, tennis & basketball courts and community center

It is unclear whether the potential of locating the facility at Lang Park was suggested as a starting point, or whether the consultancy was allowed to explore all possible sites within the city.  Please note the 1st bullet point; the proposed second public pool will not be Olympic-sized according to these guidelines. So, for those advocating the second pool because of this feature, they appear to be misinformed. As best we can determine, this second proposed pool will be similar in size to the existing pool.

Public Pool Resources Elsewhere in OC

LagunaBeachCHAT investigated the current public pool resources in all 34 cities in Orange County last January, when we first started seeing the repeated comments in favor of a second pool during city council public comments. We felt that by analyzing the number of public-accessible pools elsewhere, we might better understand the real needs of our community.  What we found was:

  • Locating information on public-accessible pool resources throughout the 34 cities in OC was exceedingly difficult
  • Number of public-accessible pool resources is a poor metric; public-accessible pool hours is better but very hard to determine
  • Public-accessible pool resources differ; some are not suitable for activities such as team water polo or even lap swimming

So, take these caveats to heart when you review the data. Here is what we found.  Population data is based on the 2010 US census (some cities provided 2015 updates, and when available, these numbers were used):

OCPublicPools-vDraft-RO

We thought we would find a moderate positive correlation between city population and number of public-accessible pool resources. It turns out that there is only a very weak positive correlation, which means that other factors are in play (accepting of course, that correlation is never causation).  If population size isn’t significantly correlated to increased numbers of public-accessible pools, what might be at play?

Critical Mass

Looking at the spreadsheet data, the City of Placentia stands out for its 4 public-accessible pools (2 public sites and 2 High School sites).  This for a city with roughly twice the population of Laguna Beach.  Many folks will recall that one of the best female swimmers of her generation, Janet Evans, grew up in Placentia and nearby Fullerton, CA.  She started competing in school events including El Dorado High School in Placentia, CA. Evans was a world champion and world record-holder in distance free-style swimming, and won a total of four gold medals at the 1988 and the 1992 Olympics. Many of her long-distance world records stood for nearly 20 years. Currently the Swim Team of Placentia, which is affiliated with USA Swimming operates out of one of the Placentia facilities.  What we take away from the example of Janet Evans is that ample opportunities for swimming activities during her youth helped her hone her natural abilities, to ultimately become a champion.  We believe that her astonishing success built enthusiasm and support for swimming endeavors in Placentia that helped to create a critical mass of talent, coaching, facilities and funding to that city.

Laguna Beach has also seen its sons and daughters succeed on the international stage in various sporting events.  The remarkable water polo achievements of the Makenzie sisters in the 2016 Olympics and World Championships as well those of Annika Dries (2012) have helped to build enthusiasm for the sport.  The city also has its share of Olympic and world champion volleyball players.  If any of these champions come to dominate their respective sports we could expect residents’ support and enthusiasm levels to continue to grow.  With this growth, Laguna Beach might eventually see a critical mass of factors coalesce, resulting in momentum towards building a ‘sports dynasty’ to replicate its past sporting success.  It is reasonable to expect that with additional public/private funding for improved coaching and facilities, Laguna Beach would improve the rankings of its various sports teams.

Dollars and Cents

Pools are expensive to build, but also very costly to maintain.  When this author lived in a condo with a pool only in operation from Memorial Day to Labor Day (3+ months), the operational costs of the pool were among the top-5 annual expenditures of the HOA.  Its unlikely that any public pool can operate on the income generated by admissions fees alone. They will always require tax-dollars/additional funding for operations, let alone to service any debt that might be incurred for construction. And that is the core issue for Laguna Beach tax payers to consider.  The debt placed upon local tax payers to service the bonds that would have to be issued for construction, will be significant. Together with the low priority that the vast majority of LB residents place on a second public-accessible pool (as extrapolated from the LB Community Survey responses), it is questionable whether public financing is justifiable.  Indeed, given the many other infrastructure priorities that the Community Survey revealed, a publicly financed second public-accessible pool would likely fail a popular vote.

Others have suggested that a way forward would be for a public/private partnership.  Indeed, LagunaBeachCHAT is amenable to exploring such a possibility. Perhaps the city could provide the land necessary for a second public-accessible pool. Through is contribution of land (a significant contribution, to be sure), Laguna Beach residents would be offered ‘resident’ entry fees. But to be clear, we feel that the funding for construction as well as the substantial ongoing operations would have to be financed privately.  Those seeking to establish a Laguna Beach water polo dynasty need to seek private sources to fund their plans. Tax payers are already paying the costs of the existing High School pool; its unreasonable to expect them to carry the burden for a second facility.

*A total of 543 responses were received from 6000 residents whose email addresses were available from voter registration files and commercial lists. With this number of respondents, there is an overall margin of error of +- 4.2% and a confidence interval of 95%.

Fiscal Prudence Makes Surprise Visit to LB City Hall-Part 1

During the City Council meeting on February 28, 2017, Laguna Beach resident Emil Monda spoke during the public communications period. During public communications anyone can speak on a topic of their choice for 3 minutes. Mr. Monda brought up a concern that had been circulating among residents since it had become known that the City had an “Essential Employee Housing Assistance Program” (EEHAP) and that the program had no official guidelines. Mr. Monda admonished the Council to review the program and “develop a detailed written policy…to clarify eligible positions, what the program offers to the employee and the responsibility of the employee who makes use of the program”. He voiced the concerns that many residents had that the City was offering to enter into 50/50 ownership arrangements with certain senior staff members under the idea that certain “essential” employees needed to live in Laguna Beach so as to be most effective in their jobs. In addition to becoming joint-owners on the properties, the City would also become the mortgage provider for the employee’s share of the purchase.

A Bit of Background and Some Maths

The EEHAP program was started in April 2000 when the then city council (motion by Dicterow, seconded by Iseman and supported by all others: Blackburn, Peterson, Freeman) approved the program which was intended to encourage employees having “essential emergency response duties and/or department heads essential to the efficient operation of the City to live in the City and be available to quickly respond to emergencies and other exigent conditions”. Back then, the median Laguna Beach house cost $625,000 and the informal program (recall, it was never formalized) was targeted at positions such as: City Manger, Assistant City Manager, Fire Chief, Fire Division Chief, Sewerage Supervisor, etc. During the ensueing 17 years, only 6 City essential employees have taken advantage of the program they are with the year they entered the program:

1. Mike Macy (former Fire Chief)
2. Jeff LaTendresse (a Battalion Chief at the time of the agreement, now Fire Chief) – 2000
3. Tom Christopher (Fire Division Chief) – 2006
4. Graham Wright (former Water Quality Supervisor)
5. Shohreh Dupuis (Assistant City Manager/Director of Public Works) – 2016
6. John Pietig (Asst City Mgr at the time of the agreement, now City Manager) – 2001

The most recent recipient of the program was Ms. Dupuis, who joined the City on or about May 1 2016. During the May 10, 2016 City Council meeting, a motion was made and unanimously passed to include Ms. Dupuis in the EEHAP with a term to:

“(c) appropriate $1.3 million from the proceeds received from the sale of 1044 Noria Way and 1419 Regatta Road toward this transaction and, if necessary until the properties are sold, temporarily borrow from the Insurance Fund to complete the transaction.“

(1044 Noria Way was the home that was jointly owned between the City and Fire Chief LaTendresse). So until just 14 months ago, the City Council felt that the program was reasonable, even though Ms. Dupuis’ likely total annual compensation (excluding pension benefits) is over $220,000 (we don’t have the exact figure but are using the 2016 figure for the other Assistant City Manager, Ms. Christa Johnson). Total annual cost to the City taxpayer’s for Ms. Dupuis inclusive of benefits is well over $275,000. For the Dupuis purchase, the City put in $797,500 for a 50% ownership, plus it provided a $450,000 loan. This means that the Dupuis contributed approximately $347,500 towards the total purchase price, or just under 22%. A commercial 30yr fixed mortgage for such a property would cost borrowers about $6,900 per month at current interest rates. On her income alone (ignoring that of her spouse), it seems that the Assistant City Manager could afford the house they purchased without any assistance from the City.

As is mentioned above, Fire Chief LaTendresse exited the program in July of 2016, and the City was the beneficiary of 50% of the proceeds of the sale of his property. As we see now, the Fire Chief’s exiting from the program was an early indicator of his intention to leave city employment (he announced his retirement in July 2017). A term of the program is that once the participating employee retires or otherwise separates from City employment, the joint-ownership arrangment must end; either through a sale of the property or a ‘buy-out’ by the exiting employee of the City’s interest. With LaTendresse’s exit, only 3 employees remain in the program: Christopher, Pietig and most recently, Dupuis. It is worthwhile noting however, under the programs if the participant retires and has been in the program for X years, they have X years after retirement to complete the sale. Since Mr. LaTendresse was in the program for over 16 years our reading of the program indicates that he could have waited until 2033 to buy-out the city’s equity in his home. The taxpayers’ money could have been tied-up for 32 years in this property.

The analysis done by City staff found that contrary to common assumptions, the City did not gain financially through participation in the EEHAP. Most thought that despite tying up large amounts of taxpayers’ funds in local properties, property-value increases together with the loan interest-rate being pegged at an amount slightly higher than the City gains from investments would naturally mean that the City gains financially through the program. The findings were that the City actually loses approximately $8,200 per participant/per year via the program. The reasons given were: “ongoing costs for property insurance, property taxes, reimbursement of federal and state taxes attributable to City ownership interest, and qualifying property repairs have created an annual cost for some properties. … the annual cost of the three properties recently sold in the Program averaged approximately $8,200 for each employee…”.

Reduced Need for Such a Program

Half of the program’s participants have been with the Fire department and most would agree that having managers of this department living in the City would be adventageous. However, the Fire department has gone to 24-hour shift management, meaning that there is always senior management on-duty in the City. This reduces the need for EEHAP participation for senior Fire department staff. For the sewerage department, the City has established the ‘Wastewater Emergency On-Call Response Program’ in 2003. As stated in the staff report: “This program was designed to help facilitate response to the sewer system emergencies (sic). In general, the program reimburses four employees up to $987 a month for locating in the City and being on-call.”

Since arguably the most ‘essential’ City staff have now been accommodated and are guaranteed to be in-City 24/7, the only other eligible employees are the City Manager and various Assistant City Managers. It is far less clear how having employees in these roles living in the City adds to residents’ safety or better execution of City operations. Maybe I’m missing something.

One-Percenters Don’t Need Public Housing Assistance

This author presented 2016 remuneration data for Laguna Beach employees (sourced from www.transparentcalifornia.com) during the City Council meeting of July 11 2017, as part of his argument against continuing the EEHAP. We reproduce the graphic here:

(These data are from 2016 and so the current amounts should all be increased by about 3% according to the most recent terms of the Employee Union contract).

After presenting this data, the City Manager felt it necessary to add some context to his EEHAP deal and where is current remuneration stands. His point, which is valid to a limited degree, is that he took the deal while he was still Assistant City Manager/Sewer System Manager and earning a lot less than the 2016 indicated amount. The background of his EEHAP deal:

  • Originated in April 2001
  • City put in $400,000, or 57.89% of the purchase price ($690,965) and provided him a loan for a portion of his remaining 42.11%

In April 2001 the Assistant City Manager was earning $136,200 annually ($11,350 per/mo). The then prevailing 30 year-fixed home loan interest-rate was approximately 7.0%. Assuming a 10% downpayment, the Pietig’s would have had monthly P&I payments of $4,138 and total monthly payments (inclusive of property taxes & insurance) of $4,925. This would have been too large of share of the monthly income at 40%. If the Pietigs could have made a 20% downpayment on the home, the numbers change a lot, and the percentage of monthly income needed for the purchase would have been 36.6%, arguably a manageable amount. Fiscal prudence might have dictated that the Pietigs wait a few years for the city salary to increase and their savings to do likewise and the purchase could have no doubt been made comfortably.

Final Thoughts

In the end, we applaud the City Council for halting future use of this informal program. The remaining 3 City employees will continue to enjoy the benefits of joint-ownership but we encourage them to buy their way out as soon as possible. The taxpayers’ money can be put to better use.

While the program will not continue to be used, we have some concerns that the program (or something largely similar) might be used on an ‘ad hoc’ basis in the future. During the Council’s deliberations on the agenda item, Mr. Dicterow (who readers will recall was the Council member who originally made the motion that resulted in the programs’ establishment in 2000) commented that he wanted the Council to have the option of using a housing assistance program in an ad hoc fashion. He stated: “I can support case-by-case assistance”. His reasoning was that when the city needs a new City Manager, such a facility should be available to the Council to ensure that the new manager lives in the city.

This author believes this is a very dangerous precedent and is worse than having an unwritten but semi-understood program in place in the first place. We take comfort in that the motion that the Council passed explicitly opted for Staff Report Option #4: “Discontinuing the program”, and expect that if a future Council wanted to offer ‘essential housing assistance’ in the future, the proposal would have to be agendized, discussed and voted upon before the public.

 

Are We Being Well Served? Laguna’s 38-Year History of Legal Representation by Rutan & Tucker

Laguna Beach Legal Spending Update 2019-2020 – Click here

Update on Rutan & Tucker LLP costs to Laguna Beach City Tax payers in city funded lawsuits through 2018. Click here

This past March Laguna Beach witnessed its 38th anniversary of its relationship with the Rutan & Tucker LLP (R&T) law firm. 38 years is an extraordinarily long run for any 3rd party vendor servicing a public entity customer, especially so in the case of a City Attorney (CA). Should we assume that the reason for the longevity of this relationship is the stellar representation that the residents of Laguna Beach have received from R&T or might there be other factors behind this remarkable run?

Regular readers of this website will recall that LagunabeachCHAT did an analysis of all R&T invoicing to the City for fiscal years 2010 through 2016 (see http://lagunabeachchat.com/well-see-you-in-court/) to get a sense of the actual costs to taxpayers that legal representation has cost residents. The earlier analysis gave us a sense of the costs, but did not address the question of whether the legal representation that was involved in these cases was indeed in the best interests of the taxpayers. We hope to gain insight into the legal representation that R&T have been providing to the City in this article.

Firstly, to be clear, the author is not an attorney and has no legal training. Therefore this analysis is not founded upon a legal review of the cases or laws related to them. Instead, this review is founded upon an analysis of “reasonableness” and a common-man understanding of legal principles in the U.S. By this we mean that if the City found itself the defendant in a lawsuit resulting from an ordinance it passed that was in clear violation of accepted legal principles, then we would question:

a) why the City’s legal council did not persuade the City Council to avoid passing such an ordinance in the 1st place

b) why the City’s legal council did not persuade the City Council to settle such a case and void the offending ordinance before litigating the issue before the courts

We will also look at the City’s most costly and long-running litigation/cases and try to understand why the City’s legal council might not encourage the City to arbitrate such cases to closure rather than endlessly fighting before the courts. (Note: the term “cases” includes all claims filed with the City as well as issues that have resulted in litigation before the courts).

Background

As stated earlier, the City has used the R&T law firm as its outsourced legal representative since March 1979. Currently, Mr. Philip D. Kohn acts in the role of “City Attorney” and has done so since at least 2002. Other R&T employees who act as “Assistant City Attorney” on behalf of the City are:

  • Noam Duzman
  • Hans Van Ligten
  • Ajit Thind

Interested readers can look on the LagunabeachCHAT website to see the Form700 filings (statements of Economic Interest) for 2016 for all four of these individuals. R&T are a California based firm with 140 attorneys and have wide-ranging practices, including government law. They currently or formerly act(ed) as City Attorney for San Juan Capistrano, City of Irvine, San Clemente and Dana Point in addition to Laguna Beach.

The current contract with R&T stipulates a monthly retainer of $8,500.00 for up to 60 hours of attorney time. Additional attorney time beyond the monthly 60 hours is billed at $235.00 /hr, which is a fairly standard rate under such arrangements. For Paralegal services the City is billed at the rate of $125.00/hr and for Document clerk services, $50.00/hr.

Our earlier analysis of the 2010-2016 billing records showed that the City’s legal expenses (ignoring any judgements against or for the City) have been trending upwards towards $1million annually, with our projected legal expenditures for FY16/17 nearing $900,000. And in what has become a standard operating procedure due to these ever-increasing costs, the City Council has again had to earmark additional funds at its mid-year budget review for legal services (i.e., an additional $500,000 set aside on 2/07/17 against the original budgeted amount for FY 16/17 of $635,000). This pattern is identical to the pattern followed in previous years which makes our City’s actual costs for legal services quite opaque to all but the most attentive observers. Figure 1 is a graphic from the earlier article that shows the expenditures for the period analyzed:

Figure 1

These expense amounts include the monthly retainers, ongoing legal advice and representation, and of course the costs for litigation. Litigation includes both cases where the City is the plaintiff, but more commonly, where the City is the defendant. Table 1 shows the 15 most expensive litigation suits/legal cases that the City has been involved in during the analysis period (the costs listed do NOT include any judgements that the City will be required to pay-out, if it loses):

Table 1

LagunabeachCHAT holds the opinion that Case 3 stemmed from a foundation of a poorly written ordinance with poor procedure built around it. Reading the volumes of transcripts from the related cases comprising Case 3, one is struck at the flimsy basis of the ordinance itself and the unsophisticated and ad hoc nature the processes built around it. Laws of this type are magnets for dispute and ongoing litigation. It is also notable that Council passed this CA reviewd hedge height ordinance as though Laguna Beach has a Charter and did not have to follow state code (of course the City is a General Law city which means it must follow the State’s lead).

Likewise it would seem that even a 1st year law student could see the potential 1st amendment problems with the “amplified sound” ordinance at the center of case 7. How the City Council was allowed by the CA to put this ordinance into effect is inconceivable. One has to wonder whether prior to implementation, any effort was made to review case law to see whether similar ordinances elsewhere had met with lengthy or costly lawsuits. Given that the plaintiffs in the case were lawyers themselves, a prudent reading of the circumstances would have urged caution once the lawsuit was filed. Its very likely that plaintiff attorneys were looking for headlining 1st amendment case and our hayseed City Council provided them one based on the ill-advised amplified sound ordinance.

We also fear that poor legal advice lies at the heart of the cases in Table 1 categorized as: ACLU/Homeless (cases 4 and 12). The core legal issue behind these ACLU lawsuits is the City’s enactment of various vagrancy laws making it illegal to camp or sleep in public areas. No doubt such ordinance(s) were (and still are) very popular as an attempt to stem the increasing numbers of homeless blighting our public spaces. The problem is that the core elements of typical vagrancy laws have repeatedly been found to violate numerous federal laws, not to mention the 8th and 14th amendments to the U.S. Constitution. In the City’s attempts to ward off earlier ACLU lawsuits against the original vagrancy law, the City compounded the problems in its unilateral attempts to ‘fix’ the issues. Homelessness is a far too big and complex problem for any city to tackle on its own, and the City was ill advised to attempt it to the exclusion of broader countywide and statewide efforts. So now the City finds itself constantly defending itself against incremental ACLU lawsuits which are demanding that ever more services and resources be devoted to the homeless, with no end in sight.

Regardless of the case, we also wonder what ‘stop-loss’ guidelines are in place to ensure that lawsuits are not being fought once defeat is likely. A prime example is Case 7, the 1st amendment case. Would it not be in the best interests of the defendant, to have the CA advise the likelihood of winning vs. losing, and with that analysis to decide that its in the best interest of taxpayers to throw in the towel? This analysis should certainly be done once a claim is made against the City, but it should be repeatedly done as the claim progresses into a lawsuit and as it churns its way through the legal system. Seven years is far to long a time horizon to allow a losing lawsuit to be faught. Of course an outsourced City Attorney is racking-up enormous extra billing as a result of the continued fight on such “lost cause” cases.

The Role of City Attorney

This author believes that the top responsibilities of a City Attorney includes the following:

  • Ensure constitutional (and property) rights of the residents, city employees and vistors are upheld in all City ordinances
  • Minimize litigation where the City is the defendant
  • Provide ongoing legal advice and representation to the City

An independent, elected CA would focus on these priorities in roughly this order because the electorate would punish him or her for failing to do so. We can not be sure whether an outsourced CA would do the same. Unlike an elected CA who is beholden to the electorate, an outsourced CA is working for City Hall and thus, the City Council. The two constituencies are not necessarily aligned. Recall, an outsourced CA is paid for any work that exceeds their monthly retainer. Ongoing litigation is potential money spigot for the CA’s law firm, so there is an upside to not stopping their customer from enacting legally questionable ordinances and encouraging their customer to defend weak cases.

Consider a hypothetical situation where the City Council wants to enact a popular ordinance. Perhaps the proposed ordinance is politically popular and will help council members in their re-election bids. The legal foundation of the proposed law is shaky; indeed other jurisdictions have found themselves being sued because of a similar measure. What might we expect under an elected CA vs. outsourced CA situation?

Elected CA –

  • The elected CA would be expected to advise the council about the legal downsides of enacting the proposed law.
  • They would go on the record, stating their misgivings of proceeding with the ordinance
  • When the inevitable lawsuit(s) are filed by plaintiffs regarding the ordinance, the CA may decide NOT TO DEFEND the suit, instead working to settle.

Outsourced CA –

  • The outsourced CA would be expected to advise the council about the legal downsides of enacting the proposed law.
  • If the council persists, the outsourced CA (who maintains their position at the pleasure of the council) drafts the proposed ordinance which the council will pass into law.
  • When the inevitable lawsuit(s) are filed by plaintiffs regarding the ordinance, the outsourced CA will follow the council’s demand to defend against the suit.

I believe that Laguna Beach has seen many examples of the latter hypothetical scenario play out (e.g. Klein v. City). Are there any instances where the City has decided to not defend a lawsuit that is based on ordinances it has passed? Given the dynamics of an outsourced CA who serves at the pleasure of City Hall who also stands to benefit financially from litigation, it is extremely unlikely and indeed LagunabeachCHAT is unaware of any such cases.

Conclusion

Our review of the legal expenditures and litigation cases for the past 6 fiscal years caused us concern about Laguna’s having an outsourced CA. The lack of accountability to voting taxpayers together with the misaligned financial incentives inherent in having a private law firm representing the City lead us to conclude that the City would be better served by having an elected City Attorney, or at a minimum, that the City should go out to bid for other possible law firms to represent our legal interests.

The current CA’s modus operandi seems to be to deliver any and all new ordinances that the City Council dreams up with minimal attempts to convince their customer to reign-in laws that might overreach or attract lawsuits. Given that, what legal jeopardy might the City be inviting with its leading-edge ordinances on:

  • City-wide smoking ban
  • Drone regulation
  • Short Term Lodging prohibitions
  • View restoration

Time will tell but we don’t expect to see the legal expenditures trend-line seen in Figure 1 decreasing anytime soon as long as our CA reports to the City Council/City Manager and is not held accountable for the City’s legal expenditures.

Pietig’s Pay; Plenty Perplexing

At about 11pm at the end of the March 28 City Council meeting, the council addressed the last item on the agenda: the annual review of City Manager Pietig’s employment contract.  This author was the only ‘member of the public’ remaining in the City Hall chambers to watch this annual spectacle of Council members singing the praises of a City Manager who is apparently perfect in every way.

With a 5/0 vote, Mr. Pietig was granted his demands which consisted of:

  1. Extension of his employment contract to June 30, 2020 with an automatic additional 1 year extension to be enacted on July 1, 2018 (extending the total contract until June 30, 2021). The automatic extension will happen unless the City Council intervenes to stop the automatic extension.
  2. Provision of a 5% “exceptional performance” pay/bonus for the next year (effective March 27, 2017, to be calculated against his current Regular Pay)
  3. Elimination of a $4000 annual cap on reimbursements for attendance at conferences or payment of dues (no new limit on these reimbursements was mentioned).

It is difficult for the average Laguna Beach tax payer to determine what all of these newest changes to Mr. Pietig’s employment contract mean in terms of dollars and cents.  Since Mr. Pietig’s contract is reviewed and revised annually, with concessions that roll-out over a period of several years and which overlap earlier concessions, the nett results are very difficult to determine.  I have reviewed the relevant Staff Reports and can not claim to understand the details completely.

Take for example, the current concession of a 5% “exceptional performance” bonus which was sought and granted. The City Council made a point of saying that this was not a request for a salary increase; instead it is an optional, 1-time bonus. That sounds good, but the reader needs to bear in mind that Mr. Pietig has already been granted annual salary increase guarantees in previous years’ contract concessions.  Plus, the 5% “exceptional performance” bonus appears to be granted during annual reviews when a salary increase is already due, as agreed in previous year’s negotiations.  As best I can tell, the current 5% bonus will ride on top of an already approved 3% salary increase scheduled for July 1 2017.  LagunabeachCHAT tried to piece together the history of concessions that Mr. Pietig has received over the past several years from the City Council.  The overlapping increases to salary (negotiated directly with the City Manager or as part of a city-wide increase for all “management employees”) together with the 5% “exceptional performance” bonuses makes it very difficult to get a firm grasp of Mr. Pietig’s actual remuneration. (We will be the first to admit we might have gotten it wrong; and if so we will print a correction). Graphically, here’s what we’ve been able to piece together from the Staff Reports over the past 3 years:

Blue stars represent concessions that were agreed at the 2/3/15 City Council meeting. Those in red, during the 1/12/16 City Council meeting, and so on.  For reference, I have included links to the relevant Staff Reports where all of these concessions are discussed:

1 – Staff Report referenced in the City Council decision of Feb 3, 2015 is here

2 – Staff Report referenced in the City Council decision of Jan 12, 2016 is here

3 – Staff Report referenced in the City Council decision of Mar 28, 2017 is here

Pouring through those documents, what we can see is that Mr. Pietgi’s total compensation at the point of 2015 was:

Regular Pay – $229,436.69

Other Pay – $20,476.14

Benefits Pay – $71,579.66

Total Pay – $321,492.49

The Staff Report from 2017 indicates that his current Regular Pay is $251,809 and is scheduled for a 3% increase on July 1, 2017 (to $259,363) and another 3% on July 1, 2018 (to $267,144) as indicated on our graph above. We estimate that his total compensation will have reached $358,124 at the completion of that fiscal year).

I have to point out that in reviewing the remuneration of the City Managers in other Orange County cities, that of Mr. Pietig’s falls in the middle of the pack. That is to say, his 2015 total remuneration is at about the 50% percentile of the other 30-odd City Managers.  But bear in mind that such a comparison places him in the company of City Managers who’s cities have populations an order of magnitude more residents than Laguna Beach. The city of Santa Ana which has a population of 334,000 provides total remuneration of $453,000 to its City Manager, the highest in Orange County, as detailed last year in a Voice of OC article.  With Mr. Pietig soon at or near $350,000 per year, he is earning 3/4’s of that amount with 1/13th of the population.

A final note I’d like to make on this topic.  During the Council meeting on March 28, 2017 at 11pm, several council members took pains to extol on the many virtues of Mr. Pietig.  He is in their estimation among the best of the best. That very well may be. I am in no position to determine how well he compares to other senior city executives in other cities. However, I’d like to make a couple of points on that line of reasoning as the basis for handing out endless numbers of annual pay increases and ‘”exceptional performance” bonuses:

  1. An executive at this level is expected to perform superbly and with the highest standards, otherwise they should not have the job in the 1st place. When did traits such as quick turn-around time and encyclopaedic knowledge of city issues become extraordinary for a City Manager?  Isn’t this the standard of performance that tax payers should expect? So how do these traits (which Mr. Pietig may well possess) become the basis of granting these generous, yearly concessions?
  2. Private Company CEO comparison – To my mind, this comparison is not valid. Although both City Managers and CEOs require substantial leadership and organisational skills, a CEO of a publicly traded company deals with many issues and pressures that a City Manager simply does not. A CEO is measured on the change in value that their leadership brings to the company and hence, the share holders of the enterprise. And commercial enterprises are not guaranteed the majority of their annual income through the collection of taxes that are mandatory contributions to a City Manager’s “enterprise”. To suggest that Mr. Pietig’s job is similar to that of a CEO leading an enterprise with a $70+ million annual turnover is not a valid comparison.  Therefore to look at CEO’s compensation as a relevant measuring stick to that of a City Manager is not reasonable.
  3. Need to compete with other cities – This is a valid concern. City Councils everywhere give-in to the demands of their executive employees with little regard for the financial implications.  The close and often long-term relationships that City Councils develop with their senior management leads them to be very supportive of demands for increases in compensation from these senior managers, as long as these senior managers give them the political capital they need to keep and do their jobs. We end up with an ‘arms race’ in executive compensation.  I do not have a solution to this dilemma, other than for City Councils to be very savvy in the HR policies they promote which may lead to viable future senior managers to be nurtured from within existing City employee staff.

What can we, the tax paying residents of Laguna Beach do check the apparent largess that the City Council seems determined to visit upon the City Manager annually?  Attend council meetings and make your voice hear during the public comments period.  You can send emails to the council members with your thoughts.  You can also register your opinion by taking the Survey Monkey survey that we’ve put together, to determine Laguna Beach voters’ opinions on governance: https://www.surveymonkey.com/r/X6Y2PJ9

 

We’ll See You in Court! – Analysis of Claims, Settlements, and Litigation engaged by the City

LagunaBeachCHAT has embarked on an extensive and thorough analysis of the City’s history of claims, settlements and litigation.  We felt that tax payers deserved to know the facts behind how the City chooses to direct resources and taxpayer funds to defend the City against claims. Also of public interest are what types of claims/litigation tend either to be paid without much of a fight, and those that result in years of legal battles (and huge legal bills for the taxpayer).  We were also interested to compare the costs and types of cases that our City pursues vs other cities.

*UPDATED PDF 2019-2020 Here*

LagunaBeachCHAT made a California Public Record Act (CPRA) request of the City, which in-turn directed the City’s external law firm (Rutan & Tucker) to review, redact and organize a large amount of billing data going back to 2010. The cooperation we experienced from the City Clerk and her staff was exemplary and we never doubted their intention to provide us with the information we needed.  That cooperation stood in stark contrast to the resistance we received from R&T. Our 1st CPRA request directed to them was denied.  It took a second request along with a reference to the recent California Superior Court ruling on the public’s right to access city/public legal documents, to finally get their cooperation.  That notwithstanding, the sense we got from the City’s external law firm was decidedly chilly and dismissive of our efforts.  We received reports that representatives of Rutan & Tucker made public comments dismissing our work and claiming that it was costing the city “tens of thousands of dollars” in labor hours.  We also experienced first-hand critical comments from a City councilmember also complaining of our waste of the City Clerk’s time (and that of her assistant).  Apparently neither this City councilmember nor the representative of Rutan & Tucker feel transparency is worthwhile or a right of the tax paying residents.

We poured over hundreds of pages of invoices, covering monthly retainer fees, regular ongoing issues, and individual litigation cases, trying to make sense of what was often quite a messy affair. We were struck by how the data we sought appeared to be fairly difficult to pull-together and how the many different entities overseeing this invoicing, all had different views of the same underlying activities.  If nothing else, this undertaking shocked all of us involved at the lack of adequate software and technology to track and maintain our public city documents and important financial information.

Summary: We continue to examine the results and we plan to share the resulting database of information with the City.  For now, we’d like to share a few interesting bits with our readers.

  1. A consolidated view of the total Rutan & Tucker expenditures covering 5 fiscal years: 2011/12, 2012/13, 2013/14, 2014/15, 2015/16 and a partial 2016/17 (with extrapolation).

We note a disturbing trend in the data in that our legal expenditures have approached US$1 million per year since FY14-15 and have remained there for the FY15-16. Our projections have it near that limit for the current fiscal year too.  Readers should also bear in mind that these payments to Rutan & Tucker exclude certain extraordinary legal expenses (sometimes secondary legal counsel is retained on some cases), as well as any judgements against the City (as we are expecting in the Klein et. al v. City of Laguna Beach).

  • We have also obtained summary data on claims filed against the City and the results of such claims actions. Please click here to see the 2016 PDF file. Updated – Please click here to see the 2017 PDF file.
  • Secondly, we have a summary spreadsheet from the City (this looks very different from the spreadsheet we have assembled and are in the process of thoroughly analyzing), which shows the various litigation cases the City has been involved in over the past 5 fiscal years, and the amounts the taxpayers have paid to keep these before the court. Please click here to see this PDF.
  • Finally, we have extracted the most expensive R&T cases that we tracked for our 5 year review. You can see the list here.

<Updates: 13Nov17 – updated linked spreadsheet under 1st bullet. 24April17 – updated linked spreadsheet under 1st bullet. Added “Top-15” spreadsheet via 3rd bullet point>

Updated – The Great Laguna Beach Real Estate Giveaway

What do the following have in common:
* City Manager
* Assistant City Manager
* Fire Chief
* Battalion Chief (1)
* Battalion Chief (2)
* Senior Sewer Services Supervisor

If you guessed that all of these folks working for Laguna Beach earn well in excess of $150K per year (base), and in most cases in excess of $250K (total comp), you’d be partially right.

All of these folks have also been the recipients of the largess of the City Council who have deemed them to be “Essential Employees” making them eligible for the City’s “housing assistance subsidy” in which the city agrees to share equally in the PURCHASE of a LB home, (up to 50% equity or less). The logic behind this incredibly generous program is that “essential” employees need to be able to respond to emergencies in a timely manner. There is no formal definition of the program, nor which positions are “essential”, meaning it is up for grabs.

Bear in mind, the City Council believes that these “essential employees” need to reside in or near Laguna Beach, and could not afford to do so on their government compensation. Let’s take a look at the figures for 2015 (since then, all of these positions have received pay increases of at least 3%), as provided by Transparent California (http://transparentcalifornia.com/salaries/2015/laguna-beach/):

Total Pay (without benefits)

  • City Manager –                  $249,912.83
  • Assist City Manager –       $203,104.07
  • Fire Chief –                        $236,056.98
  • Battalion Chief –               $222,996.72

LagunaBeachCHAT finds it to be unreasonable to have the taxpayers contribute more on top of these very generous amounts of compensation (bear in mind, the taxpayers are already contributing approx 30% more for each of these employees in the form of their DEFINED BENEFIT pensions). Its simply largess that no city can afford.

Click here to see 2015 compensation amounts for Laguna Beach’s city & safety employees

What the program means in practice is that the City is co-investor in several properties along with essential employees. Once employment with the City terminates, a participating employee can have up to 10 years to sell the property at which point the City gets its pro-rated share of the proceeds back. The most recent “essential” employee to avail themselves of the program is the new Assistant City Manager (annual base comp of her predecessor in 2015 = $194,239.23), for whom the CC moved in May of 2016 (shortly after her start) as approved by the  City Council:

Moved by Councilmember Dicterow seconded by Councilmember Zur Schmiede and carried unanimously 5/0, authorized the City Manager to:
(a) negotiate an offer with Shoreh Dupuis, Assistant City Manager/Director of Public Works (started with the City, around 1May2016), under the Essential Employee Housing Assistance equity-sharing and direct loan program on the terms and conditions consistent with other employee agreements and with the Agenda Bill;
(b) prepare and execute all documents necessary to implement the transaction with any costs shared equally by the City and the employee; and
(c) appropriate $1.3 million from the proceeds received from the sale of 1044 Noria Way and 1419 Regatta Road toward this transaction and, if necessary until the properties are sold, temporarily borrow from the Insurance Fund to complete the transaction.

Members of the tax-paying public went before the City Council to object to this “perk”, but the plea fell on deaf ears; the City Council continues to approve requests presented by the City Manager unanimously.

The accompanying document shows the agreement that the City made with the then Senior Sewer Services Supervisor, who had at that point (2008) worked for the City for 35 years. He & his wife wanted to stop renting & purchase a property to start building equity. Ultimately this request for “Essential Employee” status was granted and the city contributed up to $400,000 for the purchase of the home. This despite the fact that sewer division employees were already eligible for a monthly housing subsidy from the City at at then-$800 per month.

Recently we became aware that the City Manager refinanced his LB Employee City Subsidy Program partially city-owned home. Due to newer refinancing practices put in place after the housing melt-down, the City eventually gave-up its 50% equity position in the CM’s home, and has instead become the loan holder of the (refinance) note.

City Manager – John Pietig Housing Agreement 2001
More on Pietig FPPC here

City Manager John Pietig’s Laguna Beach Housing Loan Agreement

Battalion Chief – Thomas Christopher Housing 2005

Employee Graham Wright, Sewer Services Supervisor City Housing Agreement 2008

Assistant City Manager Housing Subsidy 2016

Housing Element Agreement 2013-2021-final

Amortization Schedule – Shohreh Dupuis Updated 12/31/20

Dupuis Housing Assistance agreement with all signatures 5-26-16

Housing agreement amendment

Memo Annual Rate 2020 SIGNED

Fiscal Prudence – Qualifications for City Treasurer Position

The City treasurer position held by Laura Parisi is being challenged by local resident Anne McGraw.  Ms. McGraw is endorsed by Council members Boyd, Whalen, Zur Schmiede and Dicterow.  The issue for residents has become whether the position requires a CPA with City Government and investment experience vs a small business bookkeeping level professional.

LagunaBeachCHAT has weighed the arguments on both sides and believes that fiscal safety of our city’s investments is more important than any poorly understood, but likely small cost-savings that might be realized by having a part-time bookkeeper looking after the investment portfolio.  We have also learned that ensuring that the City’s investments are compliant with numerous State and local mandates requires specialized knowledge and a considerable and constant time commitment on the part of whoever undertakes the task.  We therefore believe that fiscal prudence calls for entrusting the City Treasurer position to the more qualified, CPA candidate.

Read more on this issue.

Setting the record straight about Parisi
Courtesy of Stu News

Misrepresentations are circulating about compensation paid by the City to our treasurer, Laura Parisi. Let’s set the record straight. Your vote should be based on truth, not exaggeration and misinformation.

Laura’s base salary is $6450 per month ($77,400 per year), plus the benefits other City employees receive. For the last several years the Council granted her exceptional performance pay, up to 5 percent, and Laura has also taken the additional responsibility of reviewing our hotel bed tax, the Transient Occupancy Tax.

In 2015, the City chose Laura to resolve a complex accounting problem. She spent hundreds of hours correcting an error the City (not Laura) made on a document submitted to the federal government. Neither the City or the outside auditor caught the error. It was discovered by our new auditing firm. Regardless of the responsibility, it had to be addressed. Laura had the skill set and we asked her to complete the task.

The Laguna Beach City Council selected a subcommittee to determine appropriate compensation for Laura’s work. Steve Dicterow and I, as the subcommittee, recognized that we did not have the expertise to understand the complexity of this task and what was necessary to correct the errors. We sought a respected local CPA to determine whether Laura›s request for compensation was appropriate. He confirmed that her request was appropriate. And he added that if we were forced to use an outside firm, the cost would have been much higher.
Other comments have surfaced in an attempt to malign Laura’s reputation and integrity. Remarkably she’s been accused of being overqualified. Doesn’t Laguna deserve the most qualified to serve us? Not only is Laura a CPA, she is the only CPA working at the City. She has the training to be a Watchdog for the City and the Public.

Cities without this independent and qualified oversight run increased risks of improper handling of funds. Recently millions of dollars were embezzled from the City of Placentia.

What a shame it would be to lose Laura as our Treasurer.

Toni Iseman
Mayor ProTem
Laguna Beach

Letter from Victoria McIntosh

As you all know I am not generally a person who is outspoken on any topics, least of all politics, but as this election season is coming to a close I feel I have to make an exception.  I want to address something in our town that I am passionate about, and which I have a lot knowledge about that might make a difference in how you decide to vote in a few weeks.  I’m talking about the race for City Treasurer (no, I’m not running!), and I’m concerned that there’s a lot of inaccurate talk going around that could lead to well-meaning voters making an uninformed  – and unfortunate – choice.

Before going into the details, let me tell you where I’m coming from.  As you may or may not know, I have been a Certified Public Accountant (CPA) for 30+ years and have vast experience in Finance, Accounting & Taxation. So what I’m about to say is not personal. It’s based entirely on my knowledge of private and public accounting and finance, and the differences between them.

I know and like both parties who are running for City Treasurer, and believe both candidates are nice, friendly and generally good role models.  Both are active in our community and there’s no doubt they both have Laguna Beach’s best interests at heart.

But there is an enormous difference in what our city needs in the role of Treasurer and in what individual taxpayers and private businesses need in their personal bookkeeper.

The City’s annual operating budget and day-to-day accounting activities are performed by the Finance Department, which employs a Finance Director and various personnel including bookkeepers.

This is separate from the Treasurer who is the check and balance to those who keep the books, is our Chief Investment Officer and administers the assessment districts.  The Treasurer is elected by Laguna Beach residents, and has the fiscal responsibility to manage the City’s (OUR) money to make sure it grows and is protected.  The Treasurer has to have

  • In-depth knowledge and understanding of compliance with and implementation of complex state and city laws and regulations, which differ greatly from private sector rules and practices;
  • A thorough understanding of financial reporting according to Generally Accepted Government Accounting Standards, again very different than private sector standards;
  • Expertise in the highly specialized field of municipal finance including bond administration and continual evaluation of financing alternatives in the context of financial conditions that can change daily;
  • Reporting to the SEC (Security and Exchange Commission)

I could go into much greater depth on this but I probably lost you at “ACCOUNTING” – J

Anyway the City Treasurer is elected independently by all of us, the citizens of Laguna Beach, versus being appointed by the city.  This is a for a reason!  The person we elect has OUR backs and critically needs to have the knowledge and expertise to do so. The Treasurer protects and responsibly grows our money so the City can safely operate within our approximately $80 million annual revenue budget, and build and maintain reserves that make it possible for the City to invest in capital projects and improvements for the benefit of we local residents.

The difference between the qualifications and experience of the two candidates is immense.

Laura is a Certified Public Accountant, a Certified Municipal Treasurer and Certified Fixed Income Practitioner.  During her years as our City Treasurer revenues have doubled and investments under management have tripled. In addition, Laura’s solid competence and expertise have been recognized by municipal finance experts statewide, who have chosen her as the current Vice-Chair of the Orange County Treasury Oversight Committee (this is where the schools keep their money); Board Member for the State of California Local Agency Investment Board, and Chair of the Revenue and Taxation Committee for the League of California Cities.

The challenger for the City Treasurer position started a local bookkeeping business in 1998. She should be commended for her decision to run as Laguna Beach’s City Treasurer in order to utilize her skill sets to benefit our great community. Unfortunately, bookkeeping skills are simply not adequate to responsibly and successfully fulfill the complicated duties of Laguna Beach City Treasurer, including the stewardship of our $90 to $100 million investment portfolio.

The argument I’ve heard most in favor of changing Treasurers is that a change can save the City money.  With all due respect, this is naïve at best and incredibly risky at worst. As it is, the budget for the Treasurer’s office is a small fraction of one percent of Laguna Beach’s total annual $80 million budget and even less than that as a percentage of the City’s investment portfolio, so any savings would be symbolic but not in the least bit material. Let me assure you that in the world of finance you do get what you pay for, and if we go down that road we will be very unhappy with what we ultimately get.

Again, I would have preferred to remain quiet on this but decided to write as I felt strongly I had a duty, with my expertise, to make sure my friends have all the facts before making this important decision.

Million Dollar Parking Garage

Story courtesy of the LB Indy –

There’s life again at the village entrance, a highly visible and often-congested downtown corner where hundreds of people park their vehicles between a concrete flood channel and a chain-link fence.

Over several decades, the asphalt parking lot has seen multiple virtual iterations. But plans for what some deem an eyesore near City Hall are getting closer to reality. The City Council decided Tuesday, Aug. 30, without a formal vote, to revive the plan, opting for an amalgam of two concepts presented to council members by a team of consultants. Read more here

City Council Proposed a $42.3 Million Parking Structure in 2013!  The Village Entrance continues to be a source of controversy.  This year, City Council members introduced  yet another Village Entrance plan presented by high-paid consultants.  As soon as this plan is available it will be posted.

Laguna Streets post is here –

Check the city agenda record for specifics here.
Agenda-bill-village-entrance-project-6-11-13

LagunaBeachCHAT also wants to point out how LB’s own City Council super-donors/development interests showed up to speak in favor of the project:

  • Matt Lawson
  • Morris Skenderian
  • Sam Goldstein
  • Joe Hanauer
  • Marshall Ininns
  • Larry Nokes

Of course, they only have the best interests of the typical Laguna Beach tax-paying resident in mind 😉

Mayor Dicterow’s Bankruptcy

 Fact’s about Mayor Steve Dicterow –

  • Laguna Beach has a Bankrupt Mayor!  He says,”Everyone in Laguna knows. Did you?
  • Filed Chapter 11 Bankruptcy in 2014… less than two years into his 4th Council term.
  • Did not publicly disclose bankruptcy to voters/homeowners until exposed by resident  at the City Council Meeting on October 18, 2016.
  • Remained in Chapter 11 BK for several years.
  • Has refinanced his home 7 times since 1995.
  • In April 2015, 7 months after petitioning for Chapter 11 re-organization, BK Trustee makes a motion to force him into Chapter 7 (liquidation) due to failures in following through on many mandates issued by the court.
  • As of the April 2015 motion by the trustee to force Chapter 7; the Debtors have lived in their residence for at least 27 months without making a mortgage payment (22 months pre-petition and 5 months post-petition)
  • As of April 2015 motion by the trustee to force Chapter 7; Debtors have yet to propose a plan of reorganization or a disclosure statement in violation of a Court directive that they file a plan and disclosure statement no later than March 31, 2015.
  • Possible discrepancy found in BK filing and Form 700 Berkshire Hathaway stock pension plan filings. Current request for review by resident to BK Trustee. Pending.    
  • Formal complaint filed with the FPPC by resident regarding Form 700 filings. FPPC Investigation by FPPC is underway.
  • Owns rental property in Laguna Woods and did not disclose this on mandatory reporting Form 700 over last 4 years.  On Oct. 25, 2016 after FPPC notified him that sworn complaint was received, he amended only the 2016 Candidate Form 700 disclosure leaving the earlier disclosure forms in non-compliance.
  • Retained rental property rather than sell it to save his personal home from foreclosure and pay off debts. Appears that he chose to keep both properties under BK protection and stiff creditors. 
  • Uses family health issue as justification for filing bankruptcy to save his house. Again, he not only owns a valuable residence but he is also fortunate to own a valuable rental property nearby.  Question: why not sell the rental property to keep their home? 
  • Blames bad investments and poor choice of jobs for his irresponsible financial habits and instabilities. He admits to making poor finance decisions which confirms residents  concerns of his inability to responsibility oversee city finances. 
  • 38 percent of his campaign contributors are development interest and a good percentage of local business owners who may have benefitted from city contracts. Raises special interest concerns. 

Mayor Dicterow’s 2014 Bankruptcy Filing