MOORLACH UPDATE — Second DistrictOne of the interesting aspects of terming out is that you get to observe who will be running to replace you. Yesterday another potential candidate announced his intentions and the Huntington Bea Scramble — July 25, 2013

One of the interesting aspects of terming out as a Supervisor is that you get to observe who will be running to replace you. Yesterday, another potential candidate announced his intentions and the Huntington Beach Independent and the Daily Pilot provide the news in the first piece below. The OC Register covers it in the second piece below. A couple of days ago the OC Register’s The Current had a column on the subject of next year’s primary election and it is the third piece below.

The OC Register, in the fourth piece below, has its perspective on the I-405 Hearing that occurred yesterday evening. For those wanting to catch up, see MOORLACH UPDATE — Car Pool Trip Wire — July 16, 2013, MOORLACH UPDATE — Hot City Leaders — July 17, 2013, and MOORLACH UPDATE — I-405 Hearing — July 24, 2013. The piece gives a clear perspective on recent developments and the process going forward, hints and all.

BONUS: The graphic accompanying the fourth piece below is a reminder that the I-405 southbound connector to the Garden Grove Freeway (22) will be closed this weekend. If you’re going north for an event on the weekend and use the 22 for a portion of your journey home, remember that you’ll have to consider alternate routes.

DOUBLE BONUS: Jonathan Lansner picks up where I started in MOORLACH UPDATE — Detroit Parking — July 18, 2013. For the article, go to Although the dead-tree graphic is great, here are the details:

O.C. vs. Detroit by the numbers

Separated by vast demographic differences – yet linked by municipal bankruptcies nearly two decades apart. Here’s a look at some key recent Census data comparing the populations of Orange County (bankruptcy, December 1994) and the city of Detroit (bankruptcy, July 2013).

Orange County Characteristic Detroit
3,090,132 Population (2012) 701,475
+2.7% Population change (2010-12) -1.7%
30.5% Foreign born population (2007-11) 5.1%
55.3% Only English spoken at home (2007-11) 90.7%
83.4% Adults, high school grad or higher (2007-11) 77.1%
$75,762 Median household income (2007-2011) $27,862
10.9% Persons below poverty level (2007-2011) 36.2%
$575,100 Median value, owner-occupied housing (2007-11) $71,100
60.3% Homeownership rate (2007-11) 53.8%

Councilman to run for supervisor

Former Huntington mayor Carchio says he will bring new ideas to the county.

By Anthony Clark Carpio

Huntington Beach Councilman Joe Carchio confirmed Wednesday that he will run for a seat on the Orange County Board of Supervisors next year.

The one-time mayor of Huntington Beach is vying for outgoing Supervisor John Moorlach’s seat in the Second District.

"It’s my time to do this now," Carchio said. "I think that I can bring a lot of new ideas to the county and work hard with the supervisors that are there now that I have a lot of admiration for."

The councilman, whose term with Huntington Beach will end in December 2014, will be running against California State Board of Equalization member Michelle Steel, whose term is also coming to an end, for the seat that covers Costa Mesa, Newport Beach, Fountain Valley and Huntington Beach.

"I’ve always admired her and the work she’s done there on the State Board of Equalization, but that’s not like Huntington Beach or any county," Carchio said. "I just think I can do a great job."

Assemblyman Allan Mansoor (R-Costa Mesa) stated in May that he was considering running for the same position.

Chad Morgan, Mansoor’s chief of staff, said Wednesday that the assemblyman is still considering entering the race.

Carchio has served more than seven years on the Huntington Beach City Council and serves as a liaison to multiple groups in the city, including the Children’s Needs Task Force and the Community Services Commission. He and is working on assembling a downtown task force.

"I’ve got a good pulse on what’s needed to move the county forward," he said. "Being associated with all the boards and commissions that I am on, it also gives me an in-depth view on what is needed in the county."

Carchio said he’s looking to file his application by early next week and has more than $100,000 in commitments to start his campaign.

"I know I’m going to have to raise a considerable amount of money in order to compete in the race and I think that I have the ability to do that," he said.

Moorlach is familiar with Carchio and his work and serves alongside him on the Orange County Local Agency Formation Commission.

He said he hasn’t officially made an endorsement.

He said he’d like to see someone local, like Carchio or Mansoor, fill his position.

"I’ve known Michelle Steel for a long time," Moorlach said. "She just recently moved to the county of Orange, so that makes for an interesting dynamic. That’s why Joe Carchio or Allan Mansoor become a little more attractive as candidates."

H.B. councilman to run for supervisor’s seat


Huntington Beach City Councilman Joe Carchio announced on Tuesday he will run for the Second District seat on the Orange County Board of Supervisors in 2014.

Carchio is angling for termed-out Supervisor John Moorlach’s seat; there are at least two other confirmed candidates and several others eyeing the race.

Supervisor John Moorlach is termed out and is setting his sights on a congressional seat.


The early favorite for Moorlach’s seat is termed-out State Board of Equalization member Michelle Steel; those who have endorsed her include Sheriff Sandra Hutchens, District Attorney Tony Rackauckas and U.S. Reps. Ed Royce and Dana Rohrabacher.

Her campaign has announced that it had $530,000 at the end of June, although it had not yet filed mid-year disclosures. She had $316,000 in two accounts at the end of 2012, according to filings.

She and her husband, former state GOP chairman Shawn Steel, moved from Rancho Palos Verdes to Surfside in late 2011 and have the wealth to add their money to the campaign.

"Because of her hard work and fundraising and early endorsements, Michelle is a prohibitive favorite," said her consultant, Dave Gilliard.

Carchio, a Republican, said he’s ready to take on Steel and isn’t concerned about her early jump in fundraising.

"I think she’s a really a good candidate and she has the ability to raise a lot of money, but I think I’m a better choice for the office," he said. "She doesn’t have experience in local politics. I don’t think she’s right for this office."

Carchio has served on the Huntington Beach City Council for seven years and will reach the term limit next year.

He said he believes his service on a variety of boards, including the Orange County Vector Control District, the Orange County Local Agency Formation Commission and the Association of California Cities – Orange County, has given him insight to issues beyond his city’s borders.

"I know what’s going on," he said. "You have to have your pulse on what’s going on in all of these communities."

Carchio said he has commitments for about $100,000 in fundraising and will seek Moorlach’s endorsement. Moorlach plans to enter the congressional race to replace retiring Rep. John Campbell, R-Irvine.

The Orange County Board of Supervisors’ Second District serves more than 600,000 residents in 10 cities, including Costa Mesa, Fountain Valley, Huntington Beach and Newport Beach.

A third Republican, Assemblyman Allan Mansoor of Costa Mesa, has said he’s considering entering the race. In addition, a Democrat, Coast Community College District Trustee Jim Moreno, is running; he faces an uphill battle in a district where GOP voters account for 44 percent of the district’s registration, while Democrats account for 29 percent.

Contact the writer: 714-796-7953 or jfletcher

The scramble is already on for 2014 election



Fire pits? What fire pits? Let’s talk about something really exciting.

On June 27, Rep. John Campbell (R-Irvine) announced he would not seek re-election, and that sent the Orange County political sphere into a tizzy.

After all, in your lifetime, how many different congressmen have represented you? Because Congress has no term limits, Newport Beach has only had three people (Reps. Dana Rohrabacher, Chris Cox and Campbell) represent it for the past 25 years – and it got Rohrabacher through redistricting, not turnover. Costa Mesa has only had one: Rohrabacher.

This as opposed to numerous state Assemblymembers, state senators and even U.S. presidents (four) who have served since 1988.

But unlike running for Assembly or Newport Beach City Council, a candidate does not need to live in a congressional district to run there, which means that anyone, from anywhere, can decide to run for Campbell’s seat.

How exciting! At least for me …

I purposely waited a few weeks before writing about this, to watch the political waves to ripple and see who would jump into the race and how far down the line these repercussions would trickle, especially because of the unexpected nature of Campbell’s announcement.

For instance, termed-out state Sen. Mimi Walters was originally going to run for Pat Bates’ supervisorial seat, but instead immediately changed gears and refocused on the now-open congressional seat. This of course leaves the race for that supervisorial seat wide open for others. More fun!

The scrambling of political aspirations affects Newport Beach also with regard to what Assemblyman Don Wagner decides, because his focus had been running for Walter’s termed out state Senate seat, but since his Assembly district closely follows the now-open congressional district and parts of the now-open supervisorial district, his options have greatly expanded.

Meanwhile, Newport Beach’s current Assemblyman, Allan Mansoor, had been eyeballing both Walter’s Senate seat and termed-out Supervisor John Moorlach’s seat, and would face some serious competition for both in Wagner in the Senate district and state Board of Equalization Member Michelle Steel for supervisor. His choice becomes easier if Wagner decides to drop his Senate run in favor of Congress or the Board of Supervisors.

Then, if Mansoor makes a bid for Senate or supervisor instead of running for re-election to the Assembly next year, the repercussions would break all the way down to Newport Beach and Huntington Beach city councils, as Huntington Beach’s Mayor Pro Tem Matt Harper has already announced that he’s going to run for Mansoor’s Assembly seat when it’s open, while Newport Beach Councilwoman Leslie Daigle, who has already opened up a Leslie Daigle for Assembly 2016 Committee, would certainly refocus her efforts to 2014 instead.

To top it all off, there’s Moorlach, who was already weighing his options for 2014. He had been considering a run for Mansoor’s Assembly seat or for governor, but now has now decided to explore throwing his hat into the ring in the open congressional district.

How fun it’s been to watch the political ants scramble for office after Campbell announced his retirement. A scramble that only happens once, maybe twice in a generation.

The 2014 election just got exciting.

– Jack Wu resides in Newport Beach.

$1.3 billion project to widen I-405 hits bumps

Long Beach has threatened to sue over Orange County’s plan to add lanes, and cities along the route are upset at revived talk of toll lanes.


Orange County has more than a billion dollars riding on a plan to widen I-405, but if anyone thought untangling the politics of traffic and money would be that simple, Wednesday night showed otherwise.

A middle-school cafeteria in Long Beach murmured with disaffection during a two-hour community meeting. Long Beach representatives warned that the plan is pointing toward litigation. And officials from some Orange County cities were there to protest the reawakened idea of charging tolls in the carpool lane.

The project’s path forward seemed straight enough just a few months ago, when Orange County transportation directors voted to add one lane in each direction to 16 jammed miles of the 405. But a series of developments has kept the discussion going and has made the future of the freeway far less certain.

“We’re going to have to see what comes out of this process,” said Charles Parkin, Long Beach’s acting city attorney. “Hopefully, what changes.”

For now, the plan remains: one new lane in each direction at a total cost of $1.3 billion, with construction to start in 2015 and the first cars to hit the pavement in 2020. It would widen the freeway up to the Los Angeles County line, and that’s where the problems start.

Cross that line, and those extra lanes vanish. “Essentially, a very big bottleneck is going to be created,” right at the doorstep to Long Beach, said Stephen Bos of the city’s engineering department. And that, the city fears, will chase drivers onto side streets, flooding its neighborhoods with traffic.

Protests from Long Beach prompted a deeper review of the traffic problems the project would cause on the Los Angeles side of the line. That delay gave an opening to Orange County Transportation Authority board members who didn’t think a single lane in each direction went far enough.

Orange County Supervisor John Moorlach, in particular, wanted two lanes in each direction and pushed to reopen that discussion. It was a gamble, because reopening the discussion put all options back on the table, including the idea of charging tolls for the carpool lanes.

“I believe those two lanes should be open, clear lanes. Two free lanes for regular traffic,” Moorlach said. But, he said: “I knew the risk going in.”

The California Department of Transportation has the final say on what happens to the 405. And it has signaled that it, too, is considering changing the carpool lanes to toll lanes as a way to manage traffic and keep carpool congestion below federal standards.

That has locked Orange County in a guessing game, because it stands to lose that toll revenue if Caltrans acts and it doesn’t. “The real lose-lose situation is people living with toll lanes and the money that they’re having to pay might well be sent off to San Francisco,” OCTA board member Tim Shaw said.

OCTA staffers are now working on two new concepts that they will present to the board in late September. Both would add two free lanes in each direction. One would also convert the carpool lane to a toll lane.

The board would have to vote to take back its support of the existing plan and endorse a different alignment. At least six of its 17 members have either voted before for tolls on the carpool lanes or expressed some willingness to consider it. Three others said they would oppose tolls. The others either declined to comment or did not return phone calls.

Orange County cities along the 405 have begun to mobilize to fight any effort to bring back the toll idea. Los Alamitos earlier this week adopted a formal resolution against tolls. The Rossmoor Community Services District called a special meeting and issued a news release, with its board president challenging the new concepts as a “bait-and-switch.”

Long Beach city leaders have also met about the 405 project – in a closed-door session to talk about potential litigation.

Traffic reviews found that the project would immediately worsen traffic at between two and five Long Beach intersections. The OCTA has proposed paying for new lanes and other improvements to those intersections based on the share of traffic caused directly by the project.

It estimates that those improvements would cost at least $3.2 million, based on the plan to add one new lane to each side of the freeway. And, to the frustration of Long Beach officials, the OCTA calculates that the part of that $3.2 million attributed to the added traffic from the project amounts to around $356,000. The rest would fall mostly on Caltrans, with Long Beach on the hook for around $239,000, the review documents show.

“There is no way that we feel that it’s our position to mitigate” a state freeway project in Orange County, Long Beach traffic engineer Dave Roseman said during the public hearing Wednesday evening. The small crowd that gathered also included representatives from Los Alamitos and Seal Beach, there to voice their opposition to tolls; and residents who live near the 405, worried about the traffic.

Caltrans is scheduled to decide in October which option for widening the 405 will proceed. OCTA may not have the final say, but it does have a big voice in the decision; it controls the money for the project, almost all of which comes from Orange County’s half-cent sales tax for transportation.

Contact the writer: 714-704-3777 or dirving


July 25


The review of the depositions continued to generate articles. Jean O. Pasco and E. Scott Reckard of the LA Times provided “Merrill Chairman Helped Guide Handling of Citron – Securities: As head of global debt, David Komansky was ‘fully aware’ of internal debate over county’s risk but agreed warning treasurer was enough.”

The current head of Merrill Lynch & Co. not only knew of the high investment risks Orange County was taking two years before its bankruptcy, he also helped devise a company plan for dealing with then-Treasurer Robert L. Citron, according to sworn depositions made public this week.

The documents from the county’s civil lawsuit against the investment giant provide fresh details of how Chairman David Komansky, then head of global debt for Merrill, was apprised of internal warnings that the county’s investments with Wall Street’s largest brokerage firm could backfire.

The depositions show that Komansky attended a key internal meeting in late 1992 in which Citron’s investment scheme and the county’s exposure were discussed, and that he was sent a Feb. 24, 1993, memo from Merrill executive William S. Broeksmit warning that Orange County’s investments could crash unless they were restructured.

Broeksmit had helped pioneer the investments sold to Citron. Depositions show he told a colleague at the time that the county pool was at risk because, among other things, it owned more than $1 billion in highly interest-sensitive securities whose value depended on currencies other than the dollar.

Merrill was Citron’s chief brokerage and the main source of the interest rate-sensitive securities that were largely responsible for the county’s crippling investment losses in late 1994. The change in fortune culminated in the county’s Dec. 6, 1994, declaration of bankruptcy after losses of $1.64 billion.

Merrill spokesman James Wiggins said Friday that Komansky was "fully aware" of the internal debate regarding the Orange County portfolio that flared in 1992. But he said the debate didn’t end in a unanimous view of the county’s risk. And Citron disagreed with the dire predictions.

"We didn’t feel it was appropriate to substitute one person’s market view [Broeksmit’s] for Mr. Citron’s market view," said Wiggins, the company’s senior director of corporate communications in New York.

He said Komansky and other executives were satisfied that the company issued adequate warnings to Citron about the county portfolio’s volatility and with its offers to buy back the county’s investments–which Citron twice rejected.

"As head of an organization, [Komansky] was aware of the issues raised, and aware of the response to those issues," Wiggins said. "The question of whether we did enough may be open to debate. But whether we responded is not open to debate."

Edson V. Mitchell, who shared responsibility for Merrill’s fixed-income division, testified that Komansky was among the senior Merrill executives whom he made sure were fully informed about the Orange County investments.

Mitchell said he wrote at the top of the Broeksmit memo, "I am in agreement with Bill’s recommendation."

Robert Simonson, now manager of Merrill’s money-market trading desk, testified that Komansky attended some of a series of meetings about Orange County that were held before and after the Broeksmit memo was issued, though Simonson couldn’t recall exactly which meetings. At the time, Simonson was managing director in the company’s trade and risk strategies group.

After examining his office calendar, Simonson said it appeared that he had met with Komansky regarding Orange County on March 1 and 2, 1993, a week after Broeksmit issued his memo. Broeksmit left Merrill and now works for Deutschebank in London.

The fuller view of Komansky’s involvement in how to handle Citron’s investments comes a week after the current Orange County treasurer, John M.W. Moorlach, acknowledged asking county attorneys when he legally could do business again with the investment giant.

The request was made after Merrill agreed in June to pay $437 million to settle civil lawsuits by the county and a water district. The county argued that Merrill broke state law by selling it high-risk investments. The company defended its dealings with Citron as legal and appropriate.

Moorlach said Friday that he has been aware for some time of the involvement of key Merrill executives, including Komansky, in what he called "incredibly stupid decisions" involving Orange County and Citron.

But he argued that the constraints now on county investments make it impossible for any single dealer, or any single treasurer, to make the same blunders.

"The area Merrill was functioning in allowed Mr. Citron to establish a highly leveraged mutual fund. We now have a low-leveraged, short-term money-market fund," said Moorlach, who issued the first warnings about Citron’s investment strategies when he ran against him unsuccessfully in 1994.

"What all of this shows me is that Merrill Lynch has a lot of fence-mending to do," he said. "A lot of good people did a lot of stupid things, and they should have known better. They need to restore their credibility. And I don’t know when that’ll be."


Stuart Pfeifer of the LA Times did his take on “O.C. Is Still Looking for Top Executive – Seven months after firing its CEO, the county board isn’t close to filling the vacancy.” It was a rather detailed analysis of the candidates that have been considered and included a mention of me.

John M. W. Moorlach, appointed county treasurer by the board after the county’s 1994 bankruptcy, also has applied for the post but has not been interviewed.

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