MOORLACH UPDATE — Alternative 2 — October 22, 2012

Sunday’s OC Register printed my “Guest Column” submission on the Orange County Transportation Authority Board of Directors agenda item for this Monday morning.  OCTA staff recommended Alternative 3, which was voted down.  I recommended Alternative 2, modified as mentioned in my piece, which was also voted down.  The Board then voted for Alternative 1, which is what was promised in Measure M2.  Now that you know the results (and, yes, it was a very long meeting), you can read my position on the matter in the first piece below.  The photo is from the Saturday OC Register’s website on the new Olinda Alpha Landfill Gas-to-Energy dedication (the OC Register even gave me a new name).  A second OC Register photo, which was published Saturday, accompanies an International Business Times article on the event further below, in the third piece below.

The second piece is from today’s OC Register and covers the latest in the CalOptima saga with two of my former CalOptima Board members, who served admirably while I was on this Board for four years.


Best choice for I-405: 2 new free lanes

Sales-tax money can pay the tab; don’t build more toll lanes.

By JOHN MOORLACH / O.C. Board of Supervisors chairman


Supervisor John Moorlock.


You can’t spell freeway without the word free. Yet, with government constantly searching for new revenue streams, toll roads have become an appealing mechanism for building this critical infrastructure. Orange County taxpayers, however, are balking at this approach for expanding the I-405, or San Diego Freeway. Rightfully so, as toll revenues are not required to build the one additional lane that was recently promised in a countywide ballot measure.

In 2006, Orange County voters approved Renewed Measure M – M2 – to fund transportation improvements. This 30-year program began in 2011 and will raise a minimum of $5 billion for freeway construction projects from a portion of the sales tax paid within the county.



As many of you know, the Orange County Transportation Authority has proposed three options to improve travel conditions by increasing capacity on I-405 between Euclid Street and I-605. Alternative 1 adds one general-purpose lane on each side of the freeway. Alternative 2 adds two general-purpose lanes to each side. Alternative 3, which has been recommended by OCTA staff, widens I-405 by two lanes on both sides; there will be one new general-purpose lane on both sides, and two lanes will be revenue generators (one new toll lane, and the current free carpool lane will be converted into a toll lane).

The reality is, though, that OCTA already has enough available funds to build Alternative 1. With a recent upswing in the economy, it also has enough funding to pursue Alternative 2. In fact, the savings from adding only one lane to the northbound side of I-405, between the 22 and I-605, will nearly cover the additional cost of Alternative 2.

Alternative 3 is just a ruse to install a new future revenue source to replace the sales tax when Measure M2 expires.

Orange County toll roads have had a mixed record. The 91 Express Lanes, utilizing congestion pricing (variable tolls), generate enough revenue to satisfactorily service OCTA’s underlying debt to acquire them. Higher tolls are designed to discourage drivers from using the lanes, with those able to pay enjoying a faster drive toward their destination. This is also known as "managed lanes."

However, charging tolls to pay down debt has not always been successful. The toll roads operated by the Transportation Corridor Agencies – the 73, 133, 241, and 261 – have not met growth projections. Consequently, toll collections are just enough to cover the debt payment requirements, but long-term debt retirement is at risk.

Bearing in mind this mixed success; OCTA wants to replicate the 91 Express Lanes experience on both sides of I-405, between Fairview Road in Costa Mesa and the Los Angeles County line in Seal Beach. But, it is my belief that charging you to use lanes that should be free is a tax.

According to OCTA’s recommended plan, the new toll lanes will pay off the debt financing in 30 years, and tolls received after that are pure gravy, which can be used for other transportation projects within the county (with the designated impact area still unspecified).

One could argue that this tax is necessary to pay a debt. However, when Measure M2 was originally established to help finance projects like this, the concept of "tolling" on top of taxing was not part of the deal that Orange County taxpayers voted for.

Any new tax or debt traditionally requires two-thirds voter approval. It would be a shame to see these necessary traffic improvements delayed if this issue is litigated over a legal interpretation on voter involvement.

Alternative 3 didn’t have enough votes to pass at OCTA’s Sept. 24 meeting. Alternative 1, which is deemed a compromise, might get the requisite votes at OCTA’s Oct. 22 meeting from those seeking to generate new revenue, because it leaves open the opportunity for future toll lanes.

This option, to me, is inefficient. I’m in no mood to build just one lane when you have the wherewithal to do two lanes, especially when the alternative is to drag out construction one lane at a time for the next decade. If every overpass bridge has to be rebuilt to widen I-405, why not add two lanes at the same time, and be done with it?

Traffic in Orange County is already a concern. Why would we want to have one of the most traveled freeways in the United States be under construction indefinitely?

In my opinion, Alternative 2 is the only logical option. It has many positive aspects. First, it will be a one-time construction project that won’t drag out for decades. Second, it doesn’t impose, or leave open a future opportunity to impose, a new tax on Orange County residents. Third, and most importantly, it reinforces that new taxes (i.e. tolls) cannot and should not be imposed unless voted on and approved by Orange County taxpayers. I hope the majority of my colleagues on the OCTA Board concur at Monday’s meeting.

Ex-chairman tells CalOptima he won’t pay $82,000

A former chairman of CalOptima, Orange County’s public health plan for the poor and disabled, says he won’t pay any part of the $82,000 that the plan’s board of directors has requested for alleged misuse of resources.

By Andrew Galvin

The former chairman, Michael Stephens, denies any misuse of resources and is asking the county’s Board of Supervisors to intervene in what he says could be viewed as either “a series of ‘surreal events’ or a vindictive ‘witch hunt’ ” at CalOptima. But interviews with four of the five supervisors suggest such intervention is unlikely to occur.

Stephens, for more than 30 years president and CEO of Hoag Hospital in Newport Beach, served as CalOptima’s board chairman, an unpaid position, from 2007 to 2011. The only member of CalOptima’s current board who served alongside Stephens is county Supervisor Janet Nguyen.

Since Nguyen joined the CalOptima board in early 2011, most of the organization’s top staff has resigned, along with several board members. Other board members were replaced with candidates backed by Nguyen, who has enjoyed the steady support of two of her colleagues on the Board of Supervisors, Bill Campbell and Pat Bates. All members of CalOptima’s board are appointed by the supervisors.

CalOptima administers health insurance plans, including Medi-Cal, for more than 400,000 county residents, many of them children. It has annual revenue from federal and state sources of $1.4 billion. It is expected to grow by about 150,000 members when federal health insurance reforms take effect next year.

Last month, CalOptima mailed letters to Stephens and another former board chairman, Ed Kacic, requesting about $82,000 and $8,000, respectively. The health plan said it wanted the money to cover the cost of CalOptima staff time that was devoted in 2010 and early 2012 to projects on behalf of Managed System of Care, a collaborative of local hospitals and other health care providers of which CalOptima was then an enthusiastic member. The mission of the collaborative was to improve access to care for the uninsured while lowering the cost of such care.

Managed System of Care identified a federal funding opportunity that netted CalOptima $12 million, yet CalOptima’s new board said its old board had never approved the donation of $90,000 worth of staff time to the collaborative.

Richard Chambers, CalOptima’s former CEO, who left in April to take a new job with Molina Healthcare California, told the Watchdog last month that he did approve the use of such staff time, under authority delegated to him by the board. Chambers said it was “totally appropriate” for CalOptima to participate in “a broad community coalition” seeking to help the uninsured get access to care, as many of those same uninsured will become CalOptima’s clients in 2014, when health-care reform takes effect.

In a letter to CalOptima’s board dated Oct. 11, Stephens called its allegations that he misused resources “false and defamatory.” In a separate letter to members of the Board of Supervisors, he urged “each of you to look closely into this matter, and after doing so, to require CalOptima to take the action I requested at the end of my letter, to wit: To withdraw its request for reimbursement, and to publicly announce that it is doing so and that it no longer believes I was responsible for any misuse of CalOptima staff or other resources.”

In an interview, Nguyen said she “didn’t expect Mr. Stephens to just roll over and hand over $80,000.” She said she viewed Stephens’ letter to CalOptima as “pointing the finger back at Richard Chambers,” in that Stephens’ letter cited Chambers’ public statement that he had approved the use of the disputed staff time.

“I’m not surprised that there will be finger pointing — ‘I got the benefit but I didn’t make the decision’ sort of a deal,” Nguyen said. Nguyen asserts that Stephens personally benefited from the use of CalOptima staff time because he was working as a paid consultant to Managed System of Care.

Correspondence between Stephens and CalOptima confirms that he worked as a paid consultant for Managed System of Care and that Stephens declined CalOptima’s request to disclose his billing records. Stephens couldn’t be reached on Friday. We’ll update this with Stephens’ consulting fee if we get it.

John Moorlach, chairman of the Board of Supervisors, sees Stephens’ situation differently than Nguyen does.

“I certainly sympathize and maybe even concur with Michael Stephens’ concerns but I believe I’m in the minority (on the Board of Supervisors), and so I have to wait for one of my colleagues to let me know that they want to review it, and until that time, my hands are tied.”

Moorlach, who served on CalOptima’s board for four years before Nguyen took over the seat reserved for a member of the Board of Supervisors, added “I just have the utmost respect for Michael Stephens and Ed Kacic and this has been a real heartrending occurrence to observe.”

Supervisors Bates and Campbell have consistently supported Nguyen in her moves to repopulate CalOptima’s board.

Campbell said he can understand Stephens’ response to CalOptima’s reimbursement request and wondered why the request wasn’t directed to Managed System of Care alone.

In addition to asking Stephens and Kacic for the money, CalOptima requested the same amounts from Managed System of Care and Kacic’s employer, Irvine Health Foundation.

“My reaction is Managed System of Care ought to send CalOptima the money,” Campbell said, adding that he didn’t think intervention by the Board of Supervisors is necessary.

Bates said she will look into the assertions made by Stephens in his letters. She said she would be interested to see whether, for example, minutes of CalOptima’s past board meetings shed light on the CEO’s authority to approve expenditures.

Kacic has yet to respond to CalOptima about the $8,000 that he and Irvine Health Foundation purportedly owe.

CalOptima’s board will likely consider its next move at its November meeting, Nguyen said.


From left: Paul Mitchener, of Macquarie Infrastructure Partners, Frank DiCola, CEO of DCO Energy, Randy Holms, president and CEO of Broadrock Renewables LLC, Orange County Supervisor John Moorlock and Orange County Supervisor Bill Campbell participate in a ceremonial ribbon-cutting during a ceremony to inaugurate the new landfill gas-to-energy generating facility at the County•s Olinda Alpha Landfill in Brea Friday.



Broadrock Renewables LLC Marks Inauguration of Landfill Gas-to-Energy Expansion Facilities at Olinda Alpha Landfill

Broadrock Renewables LLC, in partnership with the County of Orange, held a ribbon cutting ceremony to mark the inauguration of Broadrock’s newly completed landfill gas-to-energy generating plant located at the County’s Olinda Alpha Landfill in Brea, California. Broadrock’s new facility has a renewable energy generating capacity of 32.5 MW, and when combined with Broadrock’s existing 5MW facility, totals 37.5 MW of renewable energy generating capacity installed at the Olinda Alpha Landfill. This is the 2nd largest power plant fueled by landfill gas in the United States.

"Broadrock is extremely pleased to bring this new facility into commercial operation," said Randy Holmes, President and CEO of Broadrock. "This exciting project was only made possible by the extraordinary level of collaboration and cooperation among the stakeholders. Orange County provided the landfill gas, the City of Anaheim purchased the electricity, the City of Brea provided infrastructure support, and the U.S. Department of Energy provided grants and other financial incentives that played a key role in financing the construction of the project. This project is an outstanding example of how public sector entities can work with the private sector to create innovative solutions for our nation’s critical infrastructure needs. This project will provide clean, reliable, renewable energy to Orange County for decades to come. "

The Project is a recipient of a $10 million stimulus grant from the U.S. Department of Energy (DOE). DOE awarded these funds under the American Recovery and Reinvestment Act to promote increased use of industrial energy efficiency technologies as part of a broader effort to help cut overall energy use, save American businesses money, grow jobs, and reduce carbon pollution across the country.

John M. W. Moorlach, Chair of the Orange County Board of Supervisors, cites the new power plant as an excellent example of a successful public-private partnership. "The facility benefits the environment and the economy. The electricity produced at the plant will power local homes and businesses. It’s a win-win."

"This project was truly ‘groundbreaking’ in a number of ways, from a clean energy generation perspective, the emissions technology utilized and job creation," said Frank DiCola, President and CEO of DCO Energy. "The facility’s output is roughly ten times the size of the average LFG to electricity project, all while utilizing state of the art high efficiency, low emission controls that will set a new standard in this industry."

Honored guests at the October 19th ribbon cutting ceremony included: Jordan Brandman, Chair of the Public Utilities Board; Pat Carroll, Public Utilities Board; Charles Peltzer, Public Utilities Board; Mayor Ron Garcia, Brea City; Marty Simonoff, Brea City Council; Ron Garcia, Brea City Council; and, Brett Murdock, Brea City Council.


October 19


It was a busy news day, so I’ll start with my highest achievement on the Daily Pilot’s annual “Top 103 list.”  This year I achieved position number 4!  Alicia Robinson provided the narrative in “First-Year Dynamo – From his scuffles with deputies to his success in getting Santa Ana Heights redevelopment projects moving, no one can say John Moorlach hasn’t been busy his first year in office.  His eyes are already set on next year’s horizon.”



ON A ROLL: O.C. Supervisor John Moorlach at his office in Santa Ana. His list of ideas for next year includes enabling political candidates to file campaign reports electronically; finding county departments and agencies that could be merged for efficiency; and advancing the concept of the Orange County River Park. JAMIE FLANAGAN / DAILY PILOT

Orange County Supervisor John Moorlach is unquestionably influential, but whether his influence is good or bad depends on whether you’re asking a sheriff’s deputy.

Since the supervisor took office in December, he’s gone head-to-head with deputies over his proposal to audit their union health care fund, his plan to create a civilian oversight board for the sheriff’s department, and his legal challenge to a retroactive pension benefit deputies got in 2002.

Moorlach, who served as county treasurer for more than a decade, said the retroactive pension boost created a debt one-fifth the size of the county’s massive 2004 bankruptcy, and he felt compelled to address it.

“I strongly believe pension reform is necessary,” he said, adding ruefully, “It’s not just the deputy sheriffs — it’s every police union in the state that doesn’t like me.”

Aside from the scuffles with deputies, Moorlach appeared to be a dynamo for much of his first year in office.

 He got supervisors and residents to agree on a plan to get Santa Ana Heights redevelopment projects moving, something Moorlach’s predecessor failed to do for years.

He may have gotten overly ambitious with a “global solution” to Costa Mesa and Newport Beach’s annexation woes, but at least in July West Santa Ana Heights became part of Newport, even if other areas remain unincorporated.

And he’s drawn up a list of ideas for next year: enable political candidates to file campaign reports electronically; find county departments and agencies that could be merged for efficiency; and advance the concept of the Orange County River Park.

But Moorlach has had his failures, too. In recent months he distanced himself from Orange County Treasurer Chriss Street, a private-sector bond trader who rode Moorlach’s coattails into office, after Street came under investigation by county and federal prosecutors.

Moorlach has said he still considers Street a friend, so it hurt to ask colleagues to strip the treasurer of control over the county investment pool. Perhaps it hurt more that they didn’t agree to do it.

With his instantly recognizable bear-like physique and somewhat wonkish conversation punctuated by bursts of laughter, Moorlach may well be the most popular unpopular man in Orange County politics.

It’s a tough job, and — as Moorlach said of his pension challenge — “No one else wants to do it, because they don’t want to put up with it.”

Peggy Lowe of the OC Register provided the good news of the latest negotiation efforts in “Deputies, county report progress in contract – Tentative pact includes changes in retirees’ health care.”  Here is the beginning of the piece.

Orange County sheriff’s deputies finally won a tentative deal on a work contract with the county after making two major concessions on health care that could have implications for other public employee unions.

In a pact reached late Thursday, the Association of Orange County Deputy Sheriffs made the surprising agreement to begin the transition to defined-contribution accounts for retirees’ health care. County officials said they believe that would make the union the first in the state to move to a 401(k)-style account for health benefits.

On the other major sticking point that created a yearlong stalemate, the union agreed to allow the county to share an audit of its $16 million healthcare trust fund. The county contributes $620 a month for each deputy to the fund, and the union uses it to pay for the members’ benefits.

Mark Nichols, the union’s general manager, said he believes negotiators came up with a fair contract that will help with recruiting employees to the Sheriff’s Department.

"I don’t think it’s everything we wanted to get and everything the county wanted to give," he said. "We met in the middle."

The proposal signals surrender in the war of words the union has been waging during the past month to try to get its deal. Already distressed about a plan to reduce its pensions, the union staged work slowdowns at the county courthouses that delayed high-profile trials, kept inmates jailed extra days and frustrated jurors, lawyers, clients and their families.

After three such "job actions," the union ended the practice after District Attorney Tony Rackauckas and Sheriff Mike Carona told union leaders the disturbances had "cataclysmic effects on court operations."

Perhaps sensing a public relations backlash, the union backed off the slowdowns late last week and returned to the bargaining table Thursday. A lawsuit that the union filed claiming the county reneged on past agreements and was negotiating in bad faith is now moot.

Supervisor John Moorlach, who has proposed cutting the deputies’ pensions, was "delighted" that the tentative agreement was completed, said Mario Mainero, his chief-of-staff.

"We look forward to working with them on continuing to provide a high level of service to the citizens of this county," Mainero said.

The OC Register printed my “The Orange Grove” submission, titled “County, deputies hammer out a deal – Union agrees to allow county to audit the deputies’ health plan.”  You can see from the opening paragraph, that I’ve clearly stated and been on theme for the past five years, the County cannot allow total compensation increases to outstrip the annual growth in property tax revenues.

Two joys of serving as a County Supervisor include negotiating bargaining unit agreements and balancing a $6 billion annual budget.  Each has an impact on the other.  With the residential real estate market in a free fall, we need to be sure that future annual labor contract pay increases do not outstrip annual growth in property tax revenues.

Overall, the negotiations have gone very well.  We’ve had spirited debates and tough compromises with our employee groups.  We approved the latest contract with the 400-member Orange County Attorneys Association at Tuesday’s Board meeting.  And, except for one bargaining unit, we’ve already had positive closure.  Hopefully, we may soon have closure with this union, too.

The one bargaining unit that held out for a lengthy period of time has some 2,000 hard-working members.  Six years ago they obtained, by re-opening an existing contract, a retroactive pension benefit that generated a liability that is equal to about one-fifth of the debt the County incurred as a result of its investment losses in 1994.  This new debt was approved without a vote of the taxpayers and is currently being reviewed as to its constitutionality.

These fine employees receive wages that are more than competitive with their counterparts within the County of Orange and the State of California. 

The County also totally funds their pensions to the tune of 50 cents for every dollar they receive in salary.  I would defy you to find an employer in the private sector that even comes close to one-quarter of this level of funding, without requiring the employees to pay anything.  Stated in another way, if you’re making a $70,000 annual salary, is your employer also contributing $35,000 annually to your retirement plan?  And providing top-of-the-line medical, dental and life insurance benefits?

These uniformed employees face serious risks to life and limb, but they knew that going into the profession.  Consequently, they can retire as early as age 50 with a retirement benefit of up to 100 percent of their final salary.  They will also enjoy a 3 percent annual cost of living adjustment (COLA) increase.  Using the Rule of 72s, their annual retirement benefit will double in 24 years! 

With such an attractive benefit we are watching these wonderful employees retiring early, saying four words, “Why work for free?”   And retiring at such a young age allows them enough time to pursue a second career, thus “double dipping.”

The County also makes some $16 million in annual contributions into this union’s medical insurance trust, but we were not permitted to review their books.  Every other public employee union in the County had an open-book policy, except for this one.

We also pay the trust $25,000 per month to handle the administration of the medical insurance premiums.  This is more than 8 times what another union, for a similarly sized public employee group, charges its municipalities.

This union, when not granted everything that they requested, would claim that we were anti-public safety and vindictive toward police officers.  If we asked for transparency, we were told that we did not trust them.  If we engaged in serious negotiations, then we were told that we were hurting recruitment.  And when they didn’t see the Board backing down, they  engaged in delay tactics but blamed the Board of Supervisors for the lack of a contract agreement.

It is so important to remember that they are our employees and we are a team.  I am pleased to report that we may have a tentative agreement with the Association of Orange County Deputy Sheriffs addressing these concerns.  Through the fine efforts of the County’s CEO, Tom Mauk, his negotiating team, my Chief of Staff, Mario Mainero, and the union’s General Manager, Mark Nichols, it looks like the County will have the right to independently audit the medical insurance trust and that current and future members will have a defined-contribution retiree medical plan established to address the long-term obligations of providing this benefit.  I am thankful to all those involved in the negotiation process for their creativity and wisdom in achieving satisfactory solutions.

We are watching employers in the private sector choking on retiree medical care.  Ask the steel companies, the airlines and General Motors how it’s working for them.  They are proactively working together with their unions to remain solvent.  We should, too.

I look forward to closure with these negotiations and continuing to work with the Association of Orange County Deputy Sheriffs as they provide the highest levels of public protection for the residents of the County of Orange.

October 20


The LA Daily News had an odd piece, written by Art Marroquin, showing the strain between LAX and JWA that was perceived by the LAX representatives, in “LAX leader proposes charging OC to fly.”