NEWPORT BEACH, CA – Late last year Newport Beach civil service commissioner Jeff Herdman announced his candidacy to replace Ed Selich on Newport Beach city council.
Herdman has reported raising nearly $30,000 and securing the endorsement of the Newport Beach Firefighters Association and beleaguered councilmen Keith Curry. In fact, Curry hosted a fundraiser at his home on April 15th.
“Section 710 of the Newport Beach charter is clear, his position on the Civil Service Commission prohibits him from serving on the city council,” declared Bob McCaffrey, Volunteer Chairman of Residents for Reform.
The Charter prohibits a Civil Service Board Commissioner from holding any appointed or salaried office within the city for one year.
City councilmembers are categorized as employees of the city thereby triggering Charter Section 710. The provision was put in place to prevent Commissioners from conflicts of interest while ruling on employee matters.
Confirmation that city councilmembers are categorized as employees can be found on the city’s human resources web site here:
SANTA ANA – Orange County’s public city employees earned $144,817 on average last year, amounting to a 3 percent raise from the year prior, according to data released Tuesday by an open-records advocacy group.
The records, which include public data for all but two of the county’s 34 cities, revealed that much of that pay often comes from total compensation packages, not base pay, with 41 percent of average total annual pay coming from benefits, overtime and other payments.
At $453,092, Santa Ana City Manager David Cavazos’ compensation package was the highest of any city worker in the county and the sixth-highest among city managers in the state, according to the data. His $341,710 base salary is top among all city managers in the state.
The average total pay for a city manager in Orange County was $279,000 last year.
Cavazos received a 5 percent, $17,000 bonus from Santa Ana in January amid reports he was being investigated for having a relationship with a subordinate city employee. The following month, the City Council extended Cavazos’ contract until February 2019 instead of October 2017.
The city manager said he hasn’t been able to analyze the report, “but obviously I am very grateful for the wages and benefits that I have.”
“I’m glad that I’m so important,” he joked, adding that his base salary is “pretty much equivalent” to what he earned as Phoenix city manager prior to being hired by Santa Ana.
Cavazos also said his lifetime pension from Phoenix is the second-highest retirement benefit in the Arizona city’s history. But he said his ex-wife gets 45 percent while he gets 55 percent – his portion being $125,000 annually
Though overtime pay dropped 5 percent countywide from 2014, the report notes several city employees who earned more than double their base salary by working large amounts of overtime in 2015.
In Anaheim, firefighter Daniel Lambert earned $156,693 in overtime on top of his $102,065 salary, and fire engineer Brian Pollema made $156,191 from overtime in addition to his $113,218 salary. In all, 18 Anaheim city employees earned more than $100,000 in overtime last year.
Robert Fellner, Transparent California’s research director, said such high overtime was dangerous for public safety workers.
Sgt. Daron Wyatt, spokesman for Anaheim police and fire departments, questioned Fellner’s knowledge of fire department operations, pointing out that firefighter shifts are 24 hours long but typically include time to rest and that the city doesn’t allow firefights to work more than five straight shifts. He said “high fire seasons” and minimum staffing requirements provide many opportunities to work overtime and that some firefighters volunteer more than others.
“We are not going to put someone in a position that is dangerous to them or endanger the public’s lives,” Wyatt said.
Santa Ana’s 27 percent increase in overtime payments last year was the highest of any Orange County city, according to the report.
Among all city employees, Costa Mesa workers had the highest average salary, earning $165,388 in total compensation. Newport Beach employees were second with $165,025 on average, followed by Huntington Beach workers, who earned $162,713 on average.
Costa Mesa spokesman Tony Dodero called Fellner’s analysis an “apples-to-oranges comparison,” because Huntington Beach, Newport Beach and Costa Mesa all have their own police and fire departments, while many other Orange County cities contract out for those services.
Police officers and firefighters tend to have higher benefit packages than other employees and to work more overtime.
Transparent California also released reports Tuesday on employee compensation in Los Angeles and San Diego counties, though the cities of Los Angeles and San Diego were not included in those reports.
In Los Angeles County, public city employees earned $131,600 on average last year. In San Diego County, they made $122,614.
Among Orange County cities, employee payment records for Placentia and Laguna Beach were not available on Transparent California’s website.
The Newport Beach City Council took initial steps forward Tuesday on a proposed charter amendment that could mandate residents’ approval of certain amounts of future bond debt.
The council voted 4-3 to send the amendment to the city Finance Committee so the seven-member advisory body can vet the proposal before the council can vote to place it on a ballot. Council members Keith Curry, Tony Petros and Ed Selich dissented.
The move slowed the process for the amendment, which was originally considered for the Nov. 8 election. Instead, 2018 is the earliest voters could see it on the ballot.
Discussion of the charter amendment came at the behest of Councilman Scott Peotter, who has long criticized the previous City Council for incurring bond debt to fund a portion of the controversial $143-million Civic Center project. The charter amendment, he said, would place much-needed controls on the city’s future spending habits by imposing certain debt procedures and restrictions.
“It’s not going to bring back that money, but it’s going to insert the voters in the process,” Peotter said. “I trust the voters, and I have no problem erring on the side of the voters.”
The city charter currently restricts the city from entering general obligation bond debt –similar to school bonds – that exceeds an amount equal to 15% of the total assessed value of the property in the city. General obligation bonds, which cause an increase in local property taxes, cannot be issued without two-thirds voter approval.
The proposed charter amendment would not affect the rules for general obligation bonds.
However, Peotter is suggesting that the city also restrict other types of debt, such as certificate of participation bonds, which were used to fund part of the Civic Center project. COP bonds do not require an increase in property taxes, according to city Finance Director Dan Matusiewicz.
Under the proposed amendment, a single debt issuance could not exceed 25% of the annual revenue of the fund that would repay the debt.
For example, if the city planned to repay bond debt from the roughly $200-million general fund, the amendment would cap the city’s borrowing potential at $50 million. A simple majority of voters would have to sign off if the city wanted to borrow a larger amount, according to Matusiewicz.
The proposed amendment also seeks to restrict the city from incurring non-callable debt, or debt that keeps the city from paying it off early or refinancing if rates allow.
The $128 million in bonds that helped fund the Civic Center project, which are repaid by the city over a 30-year period, cannot be refinanced or paid early without the city incurring a penalty.
Bonds that don’t allow payoff within five years would not be allowed without a majority vote of the people, unless voters decide to extend the time period, according to the proposal.
Curry has been vocal in his disapproval of Peotter’s proposal, calling it irresponsible and an example of amateur-hour politics.
“This is designed to leave a big turd in the city after [Peotter] leaves,” Curry said. “This is pathetic. This is bad public policy. Nobody else in America has this policy. It’s an absolute disgrace.”
Another proposed charter amendment would ask voters to consider whether the charter should require at least five of the seven council members to vote in favor of a general tax increase before placing the increase on the ballot for voter consideration. Current city policy requires a simple majority of the council.
The council signed off last year on the measure, which was spearheaded by Curry. On Tuesday it was expected to vote to add it to the ballot for this year’s election.
However, Mayor Diane Dixon opted to combine Peotter’s proposal with Curry’s and send them both to the Finance Committee for consideration.
“Neither the two-thirds vote on new taxes nor the bonded debt item was vetted by the Finance Committee and exposed to in-depth public debate and discussion,” Dixon said. “There has been no council-approved special tax imposed on residents in over 50 years or in anyone’s memory, and I do not believe any such tax increase is likely to see the light of day, particularly between now and November 2016. So I do not believe there is a need to put such a matter on the November ballot this year before the Finance Committee has had a chance to look at it.”
Curry took issue with the amendments being combined, partly because his had already been vetted by the City Council.
“There’s no real question about its value; it’s simply a political ploy to try to combine it with a very poorly drafted, poorly conceived proposal from Mr. Peotter and to sort of hijack this idea and have everybody pretend the history that’s happened over the course of the last year didn’t occur,” Curry said.
The Finance Committee and the City Council will both have to sign off on the proposed charter amendments before they can move forward.
Taxpayers just paid $22,000 for the debt today on the “Taj-Ma-City-Hall,” which happens every day until 2040.
Just imagine if the previous City Council had to ask voters’ permission to borrow $128 million.
Do you think taxpayers would have given the go-ahead to increase the new City Hall’s budget from $40 million to $143 million, and that it was OK to borrow $128 million?
The previous council most certainly would have been rebuffed by taxpayers, and the council would have gone back to the drawing board for a more modest City Hall and worked out a way of building it with either no loan or a much smaller loan.
The previous council was partially led into this financing by the so-called brilliant finance abilities of Councilman Keith Curry. Curry made millions of dollars for his former employer, PFM, selling these types of loans to cities.
What is this type of financing? Certificates of Participation, or COPs. Whether or not cities can afford them, the loan broker gets paid his millions.
In 2010, when the council borrowed $128 million for the $143 million City Hall it financed the debt using Certificates of Participation. It is a convoluted method where a finance corporation is set up to borrow the money based on the anticipated cash flow of rent income from the city.
In this case, the city built City Hall, gave it to the finance corporation and then the finance corporation leased it back to the city for about $10 million a year for 30 years. Then the finance corporation sells bonds (borrows money) at the going rate based on the city’s payments (but not the “full faith and credit” of the city). A legal way to borrow huge amounts of money without voter approval.
I am proposing a charter amendment to require voter approval for major loans, regardless as to whether the state requires it, and what kind of loans you can do.
First, the state (Proposition 13 and its follow up propositions) requires a vote of the people when a new bond is floated. But only if it goes against the “full faith and credit” of the city.
If taxpayers are going to be on the hook for the bond repayment, they need a two-thirds approval of the voters, regardless as to whether taxes need to be raised to pay off the bond.
My proposal would require a majority vote of the taxpayers for borrowing with COPs or similar borrowing schemes that exceed 25% of the city’s annual budget or exceed total debt of 50%.
It would also eliminate the option that locks in future city councils, meaning they are not allowed to pay off debt early or even to refinance if rates allow.
We cannot refinance our current debt. In fact, if we could have refinanced our debt last summer, we could have saved the taxpayers approximately $40 million, according to the city’s financial advisor. But the Curry council locked us in, and we cannot refinance without paying $40 million extra. That is an $80 million swing.
Home mortgages used to have a prepayment penalty. If you had to sell or refinance your home, you had to pay a penalty to pay off your loan early.
The Curry council, in an effort to save a half a point of interest and betting taxpayer dollars that interest rates wouldn’t drop any further, bet wrong and has cost the taxpayers $40 million so far.
Taxpayers are paying the cost of Curry’s brilliance to the tune of $460 for every man, woman and child in the city. Some politicians are more expensive than others.