MOORLACH UPDATE — Barbara Venezia — November 19, 2011

OC Register columnist Barbara Venezia has a piece in today’s issue and yesterday’s Newport – Costa Mesa Current, provided below respectively.  Barbara provides her perspectives on the topic I addressed in last Sunday’s OC Register Commentary section (see MOORLACH UPDATE — JWA and #2 — November 14, 2011).  One point that Barbara brings up needs more elaboration.  Charging someone a developer fee for building a new structure that will increase traffic is one thing.  Charging them for a remodel, which will not generate new traffic, is another.  With passengers limited at the airport, the amount of those going there before the remodel will be no different than those coming after the remodel.  Therefore, the developer fee is unjustified.

I was informed of the developer fee sometime back when asked to join Supervisor Campbell in his office for an impromptu meeting with the Transportation Corridor Agency’s Chief Executive Officer Thomas E. Morgro.  We discussed various alternatives, but I never concurred on a specific solution.  And I certainly wasn’t pleased with the news.  When you step back and ponder the dilemma, it becomes obvious that the developer fee on tenants (versus JWA – which is exempt) is nefarious.

The second piece is about a potential Newport Beach city council candidate who happens to be a longtime friend and an appointee of mine to the County’s Housing Community Development Committee, replacing another longtime friend, Jim Wahner of Costa Mesa, who served on this committee with distinction for a very long time.

The Seal Beach Sun also has “Critique of Super City ‘Case Study’ Part 2” in their latest issue, but since I haven’t provided you with the “Case Study” or Part 1, you’re on your own on this one.



Fees grounding JWA restaurants seem high

Conspicuously missing last week when I attended Media Day at John Wayne Airport were the much-anticipated restaurants slated to open in the new Terminal C.

Their openings were delayed primarily because of a hiccup in extra fees now being levied on concessionaires like Carl’s Jr. and others.

So who’s really to blame for the fee dilemma, JWA or the TCA? In a nutshell, food vendors who last year won lucrative county contracts to service the flying public at JWA got a big surprise when hit by the Transportation Corridor Authority with fees – some upwards of $100,000.00 – they didn’t see coming just before the opening.

Now, it seems reasonable vendors pay fees for the square footage their establishments occupy, the space generates revenue. But to charge them for common areas that they have no control over and that don’t generate dollars doesn’t seem right.

On December 8 the vendors, who’ve paid the fees under protest, will appeal them to the TCA.

But what really are these fees and their purpose?

The TCA consists of the San Joaquin Hills Transportation Corridor Agency and the Foothill/Easter Transportation Corridors Agency. The developer fees in question for the JWA restaurants fall under the San Joaquin Hills Transportation Corridor Agency, which has jurisdiction over the 73 freeway.

Years ago, the Board of Supervisor approved using developer fees to help pay the bonds for the 73 freeway. Yes – more than just our tolls pay the debt.

After being slapped with these fees, Carl’s Jr.’s has lawyered up. Their attorney Roger Gable sent a letter to the TCA taking issue with the fees, contending they only apply to new square footage –not tenant improvements. Carl’s Jr. played no role in building Terminal C and isn’t looking to increase square footage, he argued.

He also claims fees shouldn’t apply here because his client doesn’t generate extra traffic.

Before 9-11 anyone could accompany traveling passengers through the terminal to gates, grabbing a bite while waiting for flights. Nowadays, only ticketed passengers clearing security can frequent these establishments.

Gable argues that including the common area square footage in calculating these fees isn’t how the fee program was intended to be figured originally. He says that prior to 1990 a very small amount of common area played into the calculation of tenant square footage. In May 1990 the county’s Environmental Management Agency requested a change to remove the common area altogether from these calculations.

He admits it’s unclear if the common area was taken out of the calculation only to be reinserted later.

Supervisor John Moorlach has voiced his support of the restaurants against the fees, but many wonder why. Moorlach doesn’t sit on the San Joaquin Hills Transportation Authority board. The airport and the 73 Freeway certainly fall within his district.

"We’re trying to get him on the board," said Moorlach’s Chief of Staff Rick Francis.

When the TCA was formed in the late 1980’s the 5th District encompassed Newport/Mesa, Francis said. It wasn’t appropriate for a 2nd District Supervisor to sit on this board. With redistricting over the years this should’ve changed. He’s not sure why it didn’t.

"We think the TCA might have to change their current bylaws – we’re talking with county counsel right now about it," he stated.

I asked Newport Councilman Rush Hill – who serves as vice chairman of San Joaquin Hills Transportation Authority board – about the fee issue.

"The controversy isn’t with the TCA; it’s between the lessors and the airport," he said. "Every licensee in the airport has always paid a development fee to TCA. The issue is the vendors were never told about it by the airport."

When I asked if I’d see him at opening ceremonies on Nov. 13, he laughed and said, “I received a save the date, but never got an invitation.”

Seems vendors aren’t the only ones who should take issue with communications around here.

Contact the writer: Barbara Venezia’s columns appear weekly on Contact her at

Tony Petros makes early bid for Newport council

The Newport/Costa Mesa City Council races are starting to see some early activity. Mostly because in each election cycle candidates face campaign costs upwards of $100,000, and 2012 could be the most expensive year yet.

Candidates jumping in early certainly get a head start on fundraising and this aggressive tact could scare off competitors.

In Costa Mesa, Councilman Gary Monahan’s already started his bid for re-election.

Now the first serious Newport candidate comes to light. Enter Tony Petros.

Petros is running for the District 2 seat on the Newport City Council – Councilman Steve Rosansky’s now termed out.

So who is Tony Petros?

As a native of Southern Californian, Petros grew up in Huntington Beach, lived in Costa Mesa, finally settling his family in Newport.

He’s just turned 51 years old, and with his youngest daughter in high school and eldest in college, he feels the timing’s right for a run for office.

His wife, Kristen, has never been keen on him being in politics, and understandably so. Her dad was former O.C. Supervisor Ron Casper, who was lost at sea in 1974 on the 59-foot yacht the Shooting Star off the coast of Baja California.

But life and times change – his wife now supports his decision to run.

"I’ve been part of the Newport Beach area for a very long time and I’ve always wanted to be part of the city," Petros says. "I’ve seen the area grow, and I appreciate the quality of life we have here."

Petros feels he’s uniquely qualified for the job, and maybe so.

As a partner in the local engineering firm, LSA, he runs the traffic engineering and planning group there.

He’s been involved in the widening of the 5 freeway, worked on global warming bill SB375 in Sacramento, and just completed the Sustainable Community Strategy covering all cities in O.C. and 35 agencies for the county.

"I get called in when there are problems in things, and I find solutions," he says.

Petros is currently working on the proposed completion of the 55 Freeway.

Where will it end?

"That’s a good question," Petros said.

In 1985-6 there was a plan to end the 55 south of Industrial Way, he says. But the area’s grown up, so now they’re trying to find alternatives.

One option is to do nothing; another is to work on signal modifications, overpasses, underpasses, cutting a tunnel through Newport Boulevard. But with each idea, Petros said he understands the reality of costs and what the public would most likely to get on board with.

An avid Triathlete, he sits on Newport’s cycling committee. He also is on the West Newport Revitalization Committee and Supervisor John Moorlach put him on the county Housing Community Development Committee.

Petros tells me he’s doing his homework as far as Newport’s issues are concerned.

He says he’s had several meetings with Newport City Manager Dave Kiff to discuss budget issues. He’s meeting with JWA’s Director Alan Murphy to "understand the playing field" as he put it, and the upcoming settlement agreement, which will affect the number of yearly passengers and the curfew.

He’s following the rehab group home issue closely as it relates to his district, and is exploring what to do with the city corporate yard.

He’s a man with fresh ideas.

Petros tells me he readying a website for the campaign and will start fundraising after the holiday.

I asked if anyone’s endorsed him yet. He told me he’s working on it but so far he has the support of former city councilman Don Webb and Denny O’Neil.

Petros could be a contender.

Contact the writer: Barbara Venezia’s columns appear weekly on Contact her at


November 18


Daily Pilot columnist Steve Smith penned a piece titled “ON THE TOWN:  Costa Mesa in good hands, nonetheless.”  He opined on the city council election results, which found Allan Mansoor and Wendy Leece as the winning candidates.

And for those who like to think, Leece will provide many opportunities. You may not always agree with her, but you will understand that in our society, we have to make room for anyone to voice a view that is different from ours.

I can make the same claim about John Moorlach, our new county supervisor. I can name a couple of key issues on which I disagree with Moorlach, but I voted for him because he has the common sense and integrity we need in that position.

November 20


The front-page, top-of-the-fold OC Register headline was “JAIL FOR CITRON.”  The subtitle was “O.C. FINANCIAL CRISIS:  The one-year sentence is the first jail term arising from the county’s investment-fund crash.  The judge also fines the ex-treasurer $100,000.”  The story was written by Chris Knap.  Here is the reference to me:

“This sentence probably is as fair as we’re going to get,” said new county Treasurer John M. Moorlach, who tried to warn the public about Citron in 1994.  “You have to consider that he chose to be treasurer and that, although he didn’t act alone, his decisions and actions impacted an entire nation.  He’s got a lot of victims.”

It was a rather long article which included a “Chronology of O.C.’s Bankruptcy.”

Spring 1994:  Costa Mesa accountant John Moorlach challenges Citron for re-election, claiming that Citron is taking big risks with his investments.  County officials back Citron, and he easily defeats Moorlach.

There was also a “Voices” section.

                “This sentence probably is as fair as we’re going to get . . . Some jail time seemed appropriate.  One year, seven years – when you read in the paper about his health, his ability to function, his never having been to jail – one year may be enough.  I’m really not sure.  At least this is behind us – I hope.”

                County Treasurer John Moorlach, who ran unsuccessfully against Citron in 1994 after warning of looming disaster in the county investment fund, then later succeeded him.

It was also the lead article in the Daily Pilot “Citron’s sentence called ‘fair’ – Former county treasurer, who was largely blamed for the tumble into bankruptcy, could serve as little as nine months in jail with five years probation.”  The article was by Christopher Goffard.

                “I’m relieved that it’s over with” [Marian Bergeson, who left her post as county supervisor last week to work as Gov. Pete Wilson’s secretary of education] said.  “I hope it will bring some degree of finality to a very unfortunate business.”

                Current treasurer John Moorlach, who warned against Citron’s risky investment strategies prior to the bankruptcy, offered similar sentiments.

“This sentence seems to be about as close to fairness as you’re probably going to get,” he said.  “My cynical side said he’d get zero, and my compassionate side said I hope it’s less than seven.  Let’s just hope the county can heal and move forward.  I hope it’s an opportunity for some sense of closure.”

But Moorlach said Citron’s age [of 71] should not have played a role in the judge’s decision.

“Why should age be a factor?” he said.  “If someone young does something like this, he should have more jail time for being younger?”

Bloomberg News broke the story “CS First Boston Sued by SEC for Orange County Fraud,” by Neil Roland and David Evans.  For those new to the MOORLACH UPDATE, this will provide a little perspective of the fun that continued to occur, even after we emerged from Chapter 9 bankruptcy protection.  It is nice to reflect on the fact that my campaign in 1994 was one of the disclosure failures cited by the SEC.  This particular investment banker case would come up in the years that followed, as Douglas S. Montague was a La Canada, California, resident and would continue his career in the investment banking field.

                CS First Boston Corp. and two of its former investment bankers were sued today by the Securities and Exchange Commission for alleged fraud in the sale of $110 million in 1994 [Series B Pension Obligation] bonds issued by Orange County, California.

                The SEC is seeking fines and promises not to commit future violations from CS First Boston and two of its former investment bankers, Jerry L. Nowlin and Douglas S. Montague.

                “When you sell securities to the public, you have to tell the truth,” said Elaine Cacheris, the SEC’s regional director in Los Angeles.  “Here, investors didn’t get what they paid for.”

                Cacheris said bond investors had to wait 14 months to get repaid.

                The county’s investment pools guaranteed the liquidity of the pension bonds, enabling investors to cash in their bonds on seven days notice.  The investors, some of whom were money-market funds and retirement plans, were unable to liquidate the bonds because of the county’s bankruptcy.

                The SEC suit says CS First Boston also failed to disclose that:

·         The county pools’ investment strategy assumed that interest rates would remain low for at least three years;

·         The pools’ reliance on reverse repurchase agreements, in which the county used its bond holdings as collateral for loans from brokerages, magnified the risk if interest rates were to rise;

·         The pools’ investment strategy had been criticized as too risky for public funds.

Orange County today applauded the SEC’s suit.  The bonds that CS First Boston underwrote were “a big mistake,” said Orange County Treasurer John Moorlach.

“CS First Boston did it to make money, without considering the best interest of their client, Orange County,” Moorlach said.

CS First Boston is the first private firm, and Nowlin and Montague the first private-sector employees, to be charged in connection with the Orange County bankruptcy.

Disclaimer:  You have been added to my MOORLACH UPDATE communication e-mail tree.  In lieu of a weekly newsletter, you will receive occasional media updates, some with commentary to explain the situation, whenever I appear in the media (unless it is a duplication of a previous story). 

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