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Bell Council Seats Waiting for New Leadership in Upcoming Election; Delay in Civil Lawsuit

The Los Angeles County registrar’s office has announced that anyone who resides in the city of Bell who wants to fill one of the vacant council seats can begin filling out the necessary paperwork. In a March election voters will have the chance to approve the recall of council members and during the same election they will decide on who should fill the seats. Whoever signs up for the role will have to be up for a challenging position amidst the flurry of ongoing investigations that have currently stalled city business. Mayor Oscar Hernandez and councilmembers Teresa Jacobo and George Mirabal are up for the recall vote, as is Councilman Luis Artiga, but he already resigned last month. The LA Times reports the following on the election:

“The lone council member not caught up in the city's salary scandal, Lorenzo Velez, is up for re-election and is not a target of the recall. It is unclear whether he intends to seek re-election. In the general municipal election, voters will choose replacements for Hernandez and Mirabal, whose terms expire at the same time as the recall election. The winners will earn full four-year terms. The candidate who receives the most votes in the recall election will fill the vacancy left by Artiga. And if Jacobo is recalled, voters will select someone to complete her term, which expires in April 2013.The two elections will appear on one ballot and will be conducted by the county registrar of voters' office. Candidates may not file to run for both elections. The four-year City Council terms begin in April 2011.”

December 10th is the deadline for prospective candidates to turn in their paperwork and the Times notes that “The nomination period for the recall election closes at 4 p.m. on Dec. 23.” For more, see here. In other Bell-related news, we recently relayed that the state attorney general and the Los Angeles County district attorney's office have agreed to delay a civil lawsuit against former officials because the city of Bell has recently agreed to the appointment of a monitor to oversee day-to-day functions and finances. According to the defendants' lawyers, that delay stems from a lack of evidence in the first place. The Times notes:

“The motion to stay, filed in conjunction with the district attorney's office, said that a delay would prevent defendants from seeking civil documents that could benefit their criminal cases. Waiting for the conclusion of the criminal case would also help narrow the issues in the civil case, thereby conserving judicial resources, the motion said.”

For more on the delay, see here. Finally, in an update to the court-appointed monitor debate, a Los Angeles Superior Court judge did not officially appoint someone to the task yet, even though the city of Bell has agreed to accept such an appointment. The LA Times notes that the judge stated “I don't want to lead anyone to believe we will appoint a monitor but I want to be prepared if we're going to do it." In order to be prepared, the city and state Atty. Gen. Jerry Brown will suggest the names of three individuals who they feel would be best to take on the task. There will be another hearing on Tuesday. For more, see here.

Tustin Residents Hold “Rally to Restore Civility” Over Comments Made by Council

At a November 2nd council meeting, a resident of Tustin expressed great disappointment in a mailer that was distributed to voters during the height of the campaign season because he felt the piece was slanderous and dishonest for the way it characterized a candidate for council named David Waldram. The upset resident called the mailer pathetic and noted that Councilman Doug Davert should not have signed his name to it. He went on to say the word “Honorable” before Davert’s name on the flier is undeserving. Mayor Jerry Amante then proceeded to defend Davert and his availability and called the facts of the mailer “undisputed” and backed with plenty of sources. The mayor also noted that the piece is entirely accurate and that it was Waldram’s claims to begin with that gave rise to the mailer, noting that it was important to keep in mind the context because the piece was intended as a response to what he called many false claims. As an update, during this week’s council meeting, around 18 residents showed up to discuss the comments that were made by Mayor Amante. Also, before the council session, around 50 residents gathered for a rally called, “Rally to Restore Civility,” as many felt that the mayor acted like a bully in his remarks to the citizen who voiced his concerns.  You can view Amante’s comments here:

You be the judge: Should the mayor have responded differently? According to the resident who brought up the mailer, the answer is yes. The OC Register reports he said the following:

“(Amante) could have just said 'Thank you for your time, Mr. Horvath.' And instead of doing the smart thing, he went off on me in a way I haven't been talked to in all my life. I'm just an average guy, a citizen of this city more than half my life.”

Residents and supporters of Waldram who attended the rally said they felt Amante and Davert were disrespectful. For more, see here.

Labor Dispute: Ventura Council Seeks Pension Concessions; Negotiations at an Impasse

A contract between the city of Ventura and union employees expired back in June, and under its terms, the city paid the full portion of an employee’s pension contribution. Currently, negotiations are at an impasse because the city is insisting that union workers should now pay a share of their contribution, which has faced resistance. In light of rising retirement costs, it has been reported that the city is seeking a 3.89 percent employee contribution. At a recent council meeting, the chambers were full of union employees who came to make their opinions heard about any changes. From the union’s perspective, the Ventura County Star reports the following:

“The SEIU workers contend that the proposal amounts to a 3.89 percent pay cut, which coupled with increases to healthcare premiums for families would be too much to bear. They argue that their salaries already lag those paid in many other cities and the private sector, as much as double-digits in some cases. Workers in the audience held signs and small flash lights as part of their theme to ‘shine a light’ on the city’s ‘misplaced priorities,’ namely that the council is ignoring its work force and hurting morale. Workers say they would agree to permanently pay more toward their promised pensions if the city paid more toward their healthcare.”

If negotiations continue to stall, then it is possible council members would impose concessions on rank-and-file workers and safety personnel. Such pension contributions would affect around 300 workers. Police and fire union representatives also spoke against the concessions by arguing that due to cuts in the past few years, a change was not necessary. The Ventura County Taxpayers Association spoke in favor of the permanent pension concessions. For more, see here.

Alhambra and Cerritos Honored as Most Business-Friendly Cities in L.A. County

The cities of Alhambra and Cerritos have been declared the most business-friendly cities in Los Angeles County, according to the Los Angeles County Economic Development Corporation (LAEDC) at the 15th Annual Eddy® Awards. Alhambra won top honors for cities with populations greater than 60,000 and Cerritos won for cities with less than 60,000 residents. Reasons for Alhambra’s award included reasonable rates charged for business licenses and utility user tax and fees. It was also pointed out that the city provides assistance with timely customer service and a wealth of information found on the city’s website. Its favorable combination of housing, business, employment and recreational opportunities were also applauded. The LAEDC notes that “Alhambra’s Economic Development Element in its General Plan provides a blueprint to sustain and grow commerce and businesses including industrial and central business district project areas, financial assistance in redevelopment areas, land acquisition, negotiated sales, lease agreements with an option to purchase, rent subsidy, and rebates.”

As for Cerritos, it was lauded for its “solid fiscal position, exceptional services and a tradition of strong city leadership.” Also, it was pointed out that “The city provides fast-track permitting, is a “no/ low” property tax city with no utility user tax, and has two redevelopment project areas, and a business retention and expansion program.” In 2007 and 2008, Cerritos was a finalist. Bill Allen, LAEDC president and CEO, said the following of the award recipients:

“We’re delighted to present our fifth annual award to these very deserving cities. The cities of Alhambra and Cerritos best represent what can be achieved when our city governments work side by side with the business community to create business-friendly environments where quality jobs can grow.  Each year, this competition reveals that more and more cities are being proactive in their efforts to retain and attract quality jobs and businesses in their communities. The ability and commitment of our local governments to attract and retain good jobs is absolutely essential if our region is to regain its economic vitality and sustain our quality of life in the future.”

According to a news release, The Eddy Awards were introduced by the LAEDC in 1996 to celebrate individuals and organizations that demonstrate exceptional contributions to positive economic development in the region. For more, see here.

Fire Safety: Palo Alto Becomes 2nd CA City to Require Photoelectric Smoke Detectors

The installation of photoelectric smoke detectors will be required in all new homes and businesses in the city of Palo Alto after the City Council recently voted unanimously to become the second city in the state to require such detectors. Ionization detectors are more commonly used, but one major proponent of getting residents to switch to photoelectric devices is Fire Chief Marc McGinn from Albany, which is the first city in California to mandate the switch. We’ve relayed in the past that McGinn believes that ionization smoke alarms do not react as quickly to deadly smoke and because they are prone to setting off frequently for false alarms, people often disconnect them. McGinn believes the fire industry should take an official stand on calling for the complete elimination of these ionization smoke alarms because the response of photoelectric alarms is far better. Palo Alto Online News reports:

“The council considered requiring photoelectric alarms in all new buildings, but reconsidered after learning that ionization alarms could be more effective during flash fires. Mayor Pat Burt recommended requiring builders, landlords and homeowners making major renovation to install either dual-sensor alarms or both types of alarms at areas outside the kitchen. In the kitchen area, where nuisance activation is common, photoelectric alarms will now be required.The council voted unanimously to adopt Burt's proposal. Simpkinson and Albany (California) Fire Chief Mark McGinn both argued Monday that photoelectric alarms are far safer than the ionization type. McGinn said his city has successfully switched over to the photoelectric alarms and encouraged the Palo Alto council to do so as well.”

On the opposing side, the California Fire Chiefs Association suggested the city was moving too quickly to implement the change before a proper evaluation could be conducted. As of January 1, the requirement will be in effect. For more, see here and here.

Guest Feature: Proposition 26 is the Latest Limit on Local Revenues

Guest Feature
By Michael G. Colantuono, Esq.
Colantuono & Levin, PC

The following article was taken from the C&L Bulletin published by Colantuono & Levin, PC. You can read other newsletters here.

On November 2, 2010, by a relatively narrow 53% margin, California voters approved Prop 26 to convert some local fees to taxes requiring voter approval. Although, like most initiatives, the measure raises many questions, some initial guidance is possible.

Background: In 1997 the California Supreme Court decided Sinclair Paint Co. v. State Board of Equalization, upholding a fee imposed on businesses that make products containing lead to fund health services to children and to otherwise mitigate the social and environmental consequences of lead contamination. The Court ruled that the use of the proceeds of a fee need not benefit those charged to avoid making the fee a tax as long as the fee bears a reasonable relationship to the burden imposed by those charged. Similar fees have been proposed, such as fees on sweetened beverages to fund anti-obesity programs and fees on alcohol vendors to fund police services and public education efforts to address the adverse consequences of alcohol consumption. In addition, a number of proposals in the Legislature sought to avoid the two-thirds approval required for taxes, such as a proposed surcharge on vehicle license fees to fund state parks; and a 2010 action to reduce state taxes on gasoline, but to increase fees on gasoline to fund public transportation and other programs.

The Measure: The heart of Prop. 26 is its definition of “tax”: “As used in this article, ‘tax’ means any levy, charge, or exaction of any kind imposed by a local government, except the following ….” Seven exceptions to this sweeping definition are all that remain of local governments’ power to impose fees without voter approval. The first of these covers fees “imposed for a specific benefit conferred or privilege granted directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of conferring the benefit or granting the privilege.” This should cover fees associated with planning and police permits, franchises, parking passes, and the like provided that those fees are limited to cost of the permit program and the benefit or privilege “is not provided to those not charged.” If taken literally, this means that no one can be charged for a benefit or privilege if anyone gets it for free, thus prohibiting free passes for senior citizens and lower-income households. It certainly prohibits discounts or free passes if the cost of services to those charged less than the full price is recovered from fees imposed on others – i.e., the measure prohibits cross-subsidies among fee payors by which some pay more than the cost of service so others may pay less or nothing. It seems likely that discounts are permissible if funded from non-fee revenues, because the language of the exception is “those not charged” rather than “those not charged in full.” Less clear is whether free passes can be subsidized with non-fee revenues while still allowing the City to impose a fee on others.

Toy Ban for Happy Meals Vetoed by SF Mayor Gavin Newsom; Board to Override Veto?

Recently we relayed that San Francisco’s officials gave preliminary approval to a new ordinance that would ban toys from being provided with kid’s meals if they don’t meet certain nutritional standards. The proposal met stiff resistance from the National Restaurant Association and McDonald’s, which sharply criticized the move for taking the decision out of the consumer’s hands. However, in an update, Mayor Gavin Newsom has vetoed the legislation, as promised. That being said, there seems to be enough support for the ban for the board to override the veto, but such a vote has not yet been slated to take place. Those in support argued it would help combat obesity, but Mayor Newsom said it went too far and stated the following:

“There are times when a city can go too far. There's a time when we even cross the line. Doing these types of toy bans is inappropriate, I don't think particularly effective, and I just think goes way too far in inserting government to try to be the decision-maker in someone's life as opposed to parents.”

Newsom also called the ban an improper intrusion into parental responsibilities. If the veto is challenged by the board, it is possible that such a ban could also face future legal challenges. Though the California Restaurant Association, for example, has stated that a decision on litigation has not been reached. If a ban were to go into effect, none of the Happy Meals on McDonald’s menu would meet the basic nutritional standards set by the ordinance. For more, see here and here:

Quan Declared Oakland’s Next Mayor; Criticism about Ranked-Choice Voting Remains

Now that the dust has settled over Oakland’s mayoral election, City Councilmember Jean Quan has officially been declared the winner, making her the city’s first woman and Asian American mayor. Former state Senate President Pro Tem Don Perata was considered the favorite to win due to greater name recognition and fundraising, but with 10 candidates and the use of Ranked-Choice Voting for the first time, Quan ended up pulling out the lead after Councilwoman Rebecca Kaplan was eliminated because her supporters’ second and third choices were heavily in favor of Quan. Due to the election’s outcome, a consultant to Perata had only negative things to say about Ranked-Choice Voting, which has become a subject of scrutiny. Political Buzz reports that the consultant stated the following:

“This is the first time that instant-runoff voting has produced this result. It happened in San Francisco too, and I think you might see people taking another look at the system now that, in three elections, the first place winner didn’t win the race. […] I think less than 5 percent of the people understand ranked-choice voting; walk outside the office and ask somebody how it works, I don’t think they’ll know. Choosing a leader is not about a game of ‘Survivor’ on TV, y’know? It’s just not.”

So do voters understand Ranked-Choice Voting? There have been plenty of articles on that debate, but the results are the results and Perata has conceded and noted that he will not challenge the votes. Also, it has been reported that only a small percentage of ballots were thrown out because voters failed to follow the instructions. Quan gave her own take on the system, stating that “I’ve been seeing the snarky remarks about ranked-choice voting. People in Oakland are not stupid. It was very, very clear in this race that people understood it.”

While Perata may be upset with the outcome, Quan strategized to use the new system to her advantage, as one consultant argued that “She ran a very focused campaign to be the second-place candidate for a lot of candidates. She never spoke ill of anyone except Don Perata, and she really became the leader of the ‘not Don Perata’ sentiment in Oakland, and that’s how she became everybody’s second choice.” FairVote, which supports Ranked-Choice, released a statement about Perata’s criticism of the system by tackling his points. You can view the rebuttals here.

Bell Updates: Pensions to be Reduced; Outside Monitor Approved; Municipal Audit’s Failure

Now that the city of Bell has recently agreed to the appointment of a monitor to oversee day-to-day functions and finances, the state attorney general and the Los Angeles County district attorney's office have agreed to delay a civil lawsuit against former officials. According to Bell's interim city attorney, Bell could not afford to fight such a lawsuit due to the legal costs. The Times reports that “Christine Gasparac, a spokeswoman for the attorney general's office, said the ‘motion to stay the civil proceedings will be made Dec. 13.’ The state's civil lawsuit accuses former Bell City Administrator Robert Rizzo and seven others of conspiring to increase their salaries, inflate their future pensions and conceal the cost to the city. The suit seeks to force all eight to pay back hundreds of thousands of dollars of the salaries they received and to slash their future pensions.” For more, see here.

In other Bell-related news, CalPERS has announced that the huge pensions slated for former Bell officials will be greatly reduced. Since necessary information was missing or not provided, the pension fund has stated that the pension calculations were off and wrongly included special compensation. Some of the pensions that will be affected include the city’s former Chief Administrative Officer, Assistant Chief Administrative Officer and Chief of Police. According to the findings of an audit, former Bell City Administrator Robert Rizzo may only earn $100,000 for his pension as opposed to $600,000--$1 million a year. The audit concluded the following:

• “Pay rates reported by the City of Bell failed to qualify as compensation earnable for pension purposes
• Non-reportable special compensation such as employer payments to a deferred compensation program were incorrectly reported to the pension fund as compensation earnable
• The City failed to complete and submit membership forms to CalPERS to properly establish membership for certain elected officials’ positions and failed to report earnings and submit retirement contributions on behalf of certain temporary/part-time employees who qualified to become members of CalPERS"

For more, see here. Finally, according to the LA Times, Bell’s outside auditors found nothing troubling with the city’s financial records, despite the excessively high salaries, arbitrary fees, illegal taxes, and improper loans. Public corruption issues have gone unnoticed in other cities as well, even though audits are obtained (as a legal requirement). Consequently, concerns have been raised about the quality of municipal auditing if fraud and mismanagement is going unnoticed. The Times notes that “Many cities that have been troubled by public corruption or mismanagement during the last decade — including San Diego, Compton and South Gate — got clean audits, even in cases in which public officials were later sent to prison.” For more, see here.

October Cash Update Released by State Controller; Receipts Above Estimates

According to the latest cash update released by the State Controller, receipts for the month of October indicate that the state's balance is $232.3 million, or 4.6 percent, above estimates presented in the State budget. So it’s not all bad news after the LAO dropped a bombshell by projecting the state’s deficit at $25.4 billion. The controller’s figures indicate that “Corporate taxes were up $26.8 million (8.8 percent), personal income taxes came in $63.8 million above (1.8 percent) estimates, and Sales and use tax revenues were $108.7 million above (13.1 percent) estimates.” Chiang stated the following of the receipts:

“The record 100 day budget stalemate pushed us past the point of having enough cash on hand to pay more than $8 billion in outstanding bills that came due when the budget was signed. Thankfully, the State received the proceeds from an interim cash flow borrowing that allowed us to start paying the $5.5 billion in payments delayed by the budget for tax refunds, community colleges and school districts.”

In comparison to October of last year, general fund revenues are up 9.0 percent, as personal income tax is up 22.2 percent.

October’s financial statement can be found here. Summary analysis can be found here.