MOORLACH UPDATE — Board Decisions — September 18, 2013

The joys of deciding between a great incumbent or a potentially less costly competent bidder were debated during yesterday’s Board meeting. With the County losing a significant portion of its property tax revenues (see MOORLACH UPDATE — AB 701 — September 14, 2013), any potential source of new funding or expenditure reductions is welcomed by me. The discussion and the intrigue are provided in the first article below by the OC Register. And, yes, you can vote against someone who has contributed to your campaign. The OC Register’s article had a side piece, which is the second article below. The side piece has an item that is worthy of a correction. For the Garden Grove Unified School District, I made the motion to approve the item at the last meeting this item was on the agenda, which did not garner a second. I did the same at yesterday’s Board meeting, this time receiving a second, and it passed with Supervisors Nelson and Spitzer voting in opposition. But, the side piece does lead into the third article below.

During the discussion on the retirement board appointee selection item, I shared my thoughts about the direction of contributions into the retirement system with the concern that keeping an investment rate assumption artificially high would create more serious fiscal ramifications in the future. All of the arguments that were made by labor representatives to vote against the recommended appointee could equally be applied to their four members on the Orange County Employees Retirement System (OCERS) Board of Trustees. The labor representatives vote lock-step and provide no diversity, yet they condemn the four Board of Supervisors for supposedly appointing individuals who they say display this appearance. You’ve got to love bold and hypocritical charges. The real irony, however, is that the OCERS unfunded actuarial accrued liability of $5.7 billion cannot be attributed to the Board’s appointees, it is due in a significant manner to the county’s unions demanding and receiving their recent pension enhancements, retroactive to the date of hire. Now that the Piper has arrived, the union strategy is to pursue the “minimum payment on your credit card balance” method. Even the California Public Employees Retirement System (CalPERS) has grown weary of this strategy. At last week’s meeting, I warned that a councilmember of a city that participates in OCERS may not be able to serve on the Board of Trustees due to restrictions in the County Employees Retirement Law (CERL) of 1937 (’37 Act). Therefore, a legislative change to the CERL would be the recommended strategy to address the concern that was raised. However, I believe that the Board appointees are focused on the success of the plan and the pursuit of providing retirement benefits to the plan members (now, if the employers would not put overly aggressive pension formulas on their plates, they would have a better chance of accomplishing this mission).

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Supervisors retain parking contractor
Parking Concepts wins deal for county parks over company that offered about $1 million in savings.


Turning down an estimated $1 million in savings, the Orange County Board of Supervisors voted Tuesday to keep a politically connected parking contractor who manages lots at county-run parks.

With Supervisor John ‍Moorlach dissenting, the board voted 4-1 to retain Irvine-based Parking Concepts Inc.

While PCI offered more expensive contract terms than runner-up bidder LAZ Parking, supervisors said they were comfortable with the incumbent’s proposal and were willing to pay more for what they considered high quality parking meters and fee collection.

“Yes, there’s a margin that’s greater to go with PCI, but I know what I’m getting,” Supervisor Todd Spitzer said at Tuesday’s board meeting.

Indeed, PCI executives are familiar faces. Over the last two decades, Lyle Overby, a contract vice president for the firm, has funneled tens of thousands of dollars to county supervisors’ campaigns, election disclosures show. Overby, a registered lobbyist who has other county clients, contributes directly and through his political committee, the Committee for Improved Public Policy.

“These tiny amounts of dollars don’t buy anybody,” Overby told the Register last year during an examination of contributions to city council campaigns. He did not immediately return a call for comment Tuesday afternoon.

Overby told county supervisors at their July 16 meeting that he has served as PCI’s contract vice president of governmental marketing for 28 years.

Since 1998, county records show, supervisors awarded PCI millions in parking contracts at county beaches, parks, the Civic Center and John Wayne Airport. The agreements have generated more than $10 million in revenue for PCI.

“Why did we bother going out for (proposals) if we’re staying with an incumbent?” ‍Moorlach asked. “We don’t want to discourage people from bidding on services in the county.”

The bidder evaluation was weighted to emphasize experience and performance over cost, according to a staff report. PCI recently lowered its bid to 30 percent of gross parking receipts, while LAZ offered just below 24 percent – which would leave more revenue for county coffers. This year, gross receipts are expected to exceed $3.6 million.

Over the contract’s five years, officials estimate the lower rate would bring the county about $1 million more.

The OC Parks staff report said PCI demonstrated a “better understanding of the actual costs involved.”

Spitzer said he didn’t think the LAZ representatives understood the contract’s requirements.

A representative from LAZ did not immediately return calls for comment Tuesday afternoon.

LAZ underbid the job, ‍Moorlach and Spitzer speculated, to be better positioned for future county parking business. In January, another PCI contract will expire: for parking at John Wayne Airport.

“Someone is using this as a loss-leader,” ‍Moorlach said. “They’re willing to give us a million and we’re saying, ‘No thank you?’ ”

Staff writer Morgan Cook contributed to this report.


In other business

Orange County Employees Retirement System: The Board of Supervisors unanimously appointed David Ball, the former president of Arnel Development Co., to the system’s board. Stanton Mayor David Shawver had lobbied for the seat and city government representation, but supervisors said their attorney advised them city officials are typically disqualified from such OCERS political appointments.

Garden Grove Unified School District: It again requested that the board approve $ 1 20 million in borrowing for school construction. In August, supervisors turned down the request and expressed concern about the bonds’ cost to taxpayers, but Tuesday they approved it, 3-2, with John ‍Moorlach and Shawn Nelson voting no. Supervisor Janet Nguyen said Tuesday that she was now “very comfortable” with the borrowing because the district is prohibited from refinancing with expensive capital improvement bonds.

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OC Supervisors Stick with Conservative Pension Board Appointment

BY Norberto Santana Jr.

Orange County supervisors Tuesday unanimously approved the appointment of retired Newport Beach real estate developer David Ball to the Orange County Employees Retirement System.
The move was heavily criticized by labor officials and city elected officials like Stanton Mayor Dave Shawver and Westminster Councilwoman Diana Carey, who both argued that cities who contract with the county or the Orange County Fire Authority for public safety services should have a seat on the OCERS board.
“Not one of us has a voice on this board,” Shawver said. “This is not practical or fair.”
Despite serious differences between the all-Republican board of supervisors and local labor officials – who supported Shawver – regarding amortization schedules and investment assumptions at OCERS, supervisors said state law prohibited them from appointing a city official.
“We have been advised through our counsel that there are restrictions, that individuals like Mr. Shawver are not eligible for this appointment,” said Supervisors’ Chairman Shawn Nelson.
Pointing to a confidential county counsel opinion, Supervisor Todd Spitzer said the statute governing OCERS mandated that supervisors’ appointees not have any connection to the county government.
Because cities contract for public safety services with the county, city elected leaders would be conflicted out, Spitzer said.
Both Shawver and Association of Orange County Deputy Sheriffs President Tom Dominguez challenged supervisors saying they had a different legal opinion that allowed city representation.
Supervisors and labor leaders have been squaring off for better part of the year over an attempt by supervisors’ appointees to the OCERS board to move up amortization schedules and lower investment assumptions beyond the recommendation of staff.
All of this is playing out against the backdrop of a soaring unfunded liability, now beyond the $5.7 billion mark.
Supervisors and their appointees argue that despite higher payments for plan sponsors, tightening repayment schedules and lowering investment assumptions is the fiscally responsible path, both for current and future retirees.
However, labor leaders argue that supervisors are abusing their position to artificially boost pension payments with the aim of cutting public services.
“Exploiting those issues have translated into a big political pay day for some,” said Jennifer Muir, an Assistant General Manager for the Orange County Employees Association.
Supervisor John Moorlach fired back at Muir arguing, “I don’t’ think there’s anything political to discussing math equations.”
While Ball generally avoiding talking much about his position on the issue, he gave every indication his votes would be consistent with the intent of supervisors to seek the most conservative assumptions on the retirement system.
The catch for supervisors, like Pat Bates whose Fifth District includes many contract cities, is that those kinds of moves will inevitably spike public safety costs.


September 20


John Canalis of the Long Beach Press-Telegram provided a campaign update in “Rossmoor homeowners group backs cityhood.” Here are a few selected paragraphs:
The Rossmoor Homeowners Association issued a statement this week in support of making the unincorporated tract on Long Beach’s eastern flank Orange County’s newest city.

“We are the ones who have given up weekends and work days to attend meetings in downtown Santa Ana, on matters important to Rossmoor,” the RHA board said. “We know from our personal experiences how difficult it is to get the county to respond to our neighborhood problems.

“The county has bigger problems to solve than worry about Rossmoor levels of services.”

The homeowners group endorsed the cityhood initiative, Measure U, in July and is urging its passage in the Nov. 4 election.

Supervisor John Moorlach, whose 2nd District includes Rossmoor, has long supported cityhood, arguing that the county should focus on providing regional services.

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