By clicking on the blue portal below, you can download a PDF of the July 30 edition of the San Bernardino County Sentinel.
By clicking on the blue portal below, you can download a PDF of the July 30 edition of the San Bernardino County Sentinel.
The City of Upland’s recent renewal of a sales tax springback arrangement with Holliday Rock has brought a wider-scale refocusing to the manipulation of taxing authority by which cities are able to divert – some have used the term steal – other cities’ sales tax revenues.
Holliday Rock is one of Upland’s largest and most successful businesses. For fourteen years, the City of Upland has returned, or sprung back, to Holliday Rock 40 percent of the city’s share of the sales tax paid by that company’s customers for the products it sells.
One of the facts of municipal life is that some cities employ as their managers and administrators individuals who are more sophisticated than do many other cities. As in the natural world, where the strong prey upon the weak, in the world of government, where money is the lifeblood that enables official action, programs and the provision of services, the smart take advantage of the less well-informed and less-worldly.
One concept by which money makes its way out of the pockets of one city and into the coffers of another is that of point of sale.
Point of sale is a relatively obscure element of financial function that stands at the intersection of business and government in California, and it applies to in particular the use of taxing authority to enhance the financial circumstance of municipalities.
The State of California imposes a 7.25 percent sales tax on most goods sold in California, with exceptions made for services, unprepared and non-snack food, meals delivered to elderly and disabled people or patents, student meals, medicine, prisoner of war bracelets, blood storage units, carbon dioxide, cogeneration devices, organic fuels, animal feed, original works of art, newspapers and periodicals, items sold at yard sales, oxygen delivery systems, racehorse breeding stock, real property, school yearbooks, teleproduction equipment, timber harvesting equipment, used mobilehomes subject to property tax, vending machine sales, wheelchairs, crutches, canes and walkers, such that seven-and-one-quarter cents is tacked on to each dollar paid in purchasing transactions throughout the state. Of those seven-and-one-quarter pennies that go to the state for every dollar spent, one of those pennies is reserved for and given to the city where those sales occur. If the sale does not occur in a city but rather in an unincorporated county area, that penny is routed to the county government.
In most circumstances, sales occur over the counter, from a store, one that is located unequivocally in a given jurisdiction, such that there is no confusion with regard to which municipality or county is due that one cent per dollar in sales tax that is collected. In virtually all circumstances, the merchant making the sale is responsible for collecting the sales tax at the time of the purchase, and is responsible for passing the sales tax collected to the state, which then makes the disbursement of that portion of the sales tax to the relevant city or county.
In some relatively limited cases, cities use what are referred to as sales tax springbacks to induce a company, usually one with a relatively large operation and a substantial quantity of sales, to set up shop within its particular jurisdiction. For example, city officials in a given city are likely to recognize that an entrepreneur who is contemplating establishing a car dealership has options of placing that business not only in their city but in a neighboring one or perhaps another location. Those officials recognize as well that it would behoove them and their city to host that car dealership so that they will see the benefit of the substantial amount of sales tax to be realized from the sale of large numbers of big-ticket items such as cars, SUVs, trucks and vans. To ensure the dealership locates in their city rather than elsewhere, those city officials will sometimes offer the dealership’s owner an incentive to locate his/her operation in their city, particularly if they know that the entrepreneur is considering locating the dealership in another jurisdiction. In such circumstances, those city officials might be willing to offer to refund to the car dealership ten percent or 25 percent or even as much as fifty percent of the tax money to be generated by that dealership for a set number of years to persuade its owner to locate in their city. These city officials justify these sales tax springbacks by the knowledge that 90 percent or 75 percent or even 50 percent of the tax revenue those car sales in their city will generate is preferable to zero percent of the tax revenue those car sales will generate if they are sold in another location outside that city’s boundaries.
The controlling factor, generally speaking, as to which governmental entity is to be the recipient of the sales tax from a sale consists of the location at which or from which the sale is made. This location is referred to as point of sale.
Mid-size, large and giant companies and corporations often function from a multiplicity of locations, however, and under California law, such entities are permitted to designate a single one of those locations as its “point of sale” for all of its California locations. Thus, a corporation or company can, for example, sell its goods in a few, dozens, scores or even hundreds of places, communities or cities around California, yet have those sales registered as emanating from one specific location or city. A company or corporation designating a city as its point of sale for the products that business is marketing thereby routes all of the sales tax generated from those sales, no matter where they occur in California, to that city.
Such is the case with Holliday Rock and the City of Upland. Holliday Rock, a mining operation/manufacturing operation which produces aggregate, ready mix concrete, asphalt and construction materials, has been in business since 1937. Holliday Rock has 32 operations in San Bernardino, Riverside, Los Angeles, Kern and Orange counties, including three in Upland, Ontario, Chino, Colton, two in San Bernardino and Adelanto in San Bernardino County, as well as in the City of Industry, three in Irwindale, Montebello, Santa Ana, Irvine, Westminster, Vernon, Long Beach, Palmdale, Antelope Valley, Perris, Romoland, two in Sun Valley, Lancaster, Santa Clarita, Canoga Park, Mojave, Tehachapi, Ventura and Bakersfield.
In 2007, the City of Upland entered into a 15-year operating covenant with Holliday Rock, which is set to expire on June 30, 2022. In exchange for Holliday Rock’s commitment to continue its Upland operation and use Upland as its corporate point of sale, the City of Upland in that covenant agreed to spring 40 percent of the sales tax Holliday Rock collects annually back to the company.
According to a staff report by Upland Development Services Director Robert Dalquest dated July 26, 2021 but written prior to that date, “Holliday Rock has continued to expand its operations since the time that 2007 agreement was approved, and the city has negotiated a new agreement to reflect resulting increased sales tax attributable to Holliday Rock facilities within the city.”
Dalquest’s report, which was forwarded to the city council by Acting City Manager Stephen Parker, was intended to orient the city council with regard to the circumstance involving the city’s previous sales tax springback arrangement with Holliday Rock and the point of sale issue in preparation of the city council’s vote, scheduled for the Monday, July 26 meeting, on extending the arrangement with Holliday Rock another 15 years.
The report deals far more explicitly with regard to the sales tax springback while dealing with the point of sale issue obliquely. The indirect discussion of the full implication of Upland being Holliday Rock’s point of sale was to avoid alerting Ontario, Chino, Colton, San Bernardino, Adelanto, the City of Industry, Irwindale, Montebello, Santa Ana, Irvine, Westminster, Vernon, Long Beach, Palmdale, Antelope Valley, Perris, Romoland, Sun Valley, Lancaster, Santa Clarita, Canoga Park, Mojave, Tehachapi, Ventura and Bakersfield that Upland is diverting the sales tax they would otherwise be receiving to its municipal coffers exclusively.
The money at stake is not insubstantial.
“Holliday Rock estimates that over the 15-year term contemplated by this new agreement, Holliday Rock’s activities will result in $3,252,769,492 in taxable sales revenues sourced to the city, with $13,011,078 in covenant payments from the city to Holliday Rock, and $19,516,617 in sales tax revenues retained by the city,” according to Dalquest’s report.
Understandably, Upland officials, including Parker, Dalquest and the five members of the city council, are in no hurry to alert officials with many of the other cities where Holliday Rock has operations of something at least some of them do not realize, which is that Upland has effectively picked their pockets of the sales tax revenue that would otherwise have come their way over the last 14 years and that for the rest of the current fiscal year and for the decade and a-half to come after that, it will be siphoning off the sales tax revenue due them from Holliday Rock’s business activity in their jurisdictions.
Upland’s preempting of the 21 other cities’ and four communities’ shares of the sales tax from Holliday Rock’s operations and its hogging of all of that sales tax revenue is considered, by some, to be poor form on multiple accounts.
Holliday Rock’s operations involve at least nine mining operations similar to its one in Upland, which entail the generation of dust and exhaust from the machinery used to unearth, crush, convey and load gravel, rock and other ore. All of Holliday Rock’s operations involve the use of heavy duty trucks, most of them diesel-powered, carrying substantial loads on local streets. The pollution and contamination the mining operations entail, the belching of diesel and machinery exhaust into the air and the wear and tear on the streets to and from the Holliday Rock operations represent health, safety and economic costs to those communities which see no monetary benefits or cost offsets from Holliday Rock in terms of sales tax revenue flowing into those cities or communities.
The operating covenant between Holliday Rock and the City of Upland for the fifteen years running between July 1, 2022 and June 30 2037 ratified by the council in a 4-to-1 vote with Councilman Rudy Zuniga absent stated, “Holliday Rock shall designate the City of Upland as the sole point of sale for a significant portion of products sold, including but limited to, through an internet website or phone sales which are designated for any location within California. The California Department of Tax and Fee Administration shall maintain the appropriate master sales permits applicable to and required for the operation of the facility. Holliday Rock shall consummate all taxable sales transactions for company sales activities at the facility, consistent with all applicable statutory and California Department of Tax and Fee Administration regulatory requirements applicable to Holliday Rock’s company sales activities and the designation of the City of Upland as the ‘point of sale’ for a significant portion of owner’s Holliday Rock’s company sales activities at [the] facility.”
Upland’s point of sale arrangement with Holliday Rock to seize for itself all of the sales tax revenue from the corporation is a direct and proximate cause of the other 21 cities and four communities not getting the sales tax to which they would normally be entitled.
Even more pointedly, the manner in which Upland and Holliday Rock mutually induced one another into maintaining the 2007 arrangement for another 15 years has been questioned. Upland offered Holliday Rock the incentive of a 40 percent sales tax springback. Holliday rock, at least implicitly, threatened to make a location other than Upland its point of sale. Were there no point of sale agreement between Holliday Rock and Upland, each of the 26 cities or communities where the company has operations would come in for a share of the sales tax levied upon the Holliday Rock products. Through its springback pact with Holliday Rock, however, Upland has made it so that the company, over the next 15 years, will keep more than $13 million in sales tax its customers will have paid to buy its products. Many see this springback as a kickback, by which Upland is able, under a loophole in California law, to essentially legally bribe Holliday Rock into designating it as the point of sale for all of its products, and by so doing deprive the cities where Holliday Rock is operating of sales tax they should receive while capturing for itself sales tax from places outside of Upland’s jurisdiction. If the City of Gracious Living were not offering the monetary inducement to Holliday Rock, it would not be receiving that enhanced sales tax revenue, which many people feel Upland is neither ethically nor morally entitled to.
This week, the Sentinel sent letters to Adelanto City Manager Jessie Flores, Chino City Manager Matt Ballantyne, Colton City Manager William Smith, Ontario City Manager Scott Ochoa and San Bernardino City Manager Robert Field, asking them if they believed the city each of them worked for is powerless to resist the arrangement Upland has with Holliday Rock, or whether they felt, on the contrary, that there was perhaps a way to prevent the sales tax from business activity involving Holliday Rock in their cities from being diverted to Upland. The Sentinel inquired as to whether they felt that the diversion of sales tax money to another municipality through the point of sale ploy was something entirely in the hands of another governmental entity such as the Tax Franchise Board or the California Department of Tax and Fee Administration, and whether they had explored their options in preventing the loss of the sales tax revenue they should have been receiving from Holliday Rock. The Sentinel asked if those cities had in the past fought a battle over this issue and not prevailed or whether there was a case where some other city waged such a battle in court or elsewhere, establishing a precedent that made taking this issue up moot or futile. If that was not the case, the Sentinel inquired of each of the city managers whether they would they consider exploring their cities’ options in that regard.
By press time, neither Flores, nor Ballantyne, nor Smith nor Field had responded.
Ontario is no stranger to point of sale arrangements with companies doing business within the 50-square mile confines of Ontario’s city limits, deals which have enhanced Ontario’s revenues. In his response, Ochoa acknowledged that there was a cut-throat competition amongst cities to increase their revenue. He insisted, however, that this dog-eat-dog ethos, while somewhat unseemly, was not a result of unprincipled city officials who are taking advantage of cities other than their own which employ city managers and administrators less sophisticated and aggressive than they are. Rather, he said, what is happening is more a product of a state government which has over the past several decades deprived cities of revenues that were formerly available to them, while creating circumstances wherein cities, which have been outcasts from the feast of government funding, must fight among themselves for the leftovers and table scraps. Accordingly, he indicated, he did not begrudge Upland the money it is realizing through its arrangement with Holliday Rock.
“Particularly in the wake of the Educational Revenue Augmentation Fund takings of the 1990s, the ‘triple flip’ involving the reduction in vehicle license fees in the 2000s, loss of redevelopment in 2012, and the host of other state mandates along the way, cities in California have had to utilize whatever tools were still available to generate the general revenues needed for municipal services ranging from public safety to quality of life,” Ochoa said. “Sales tax sharing agreements are such tools. Until and/or unless the State of California rationally, comprehensively and strategically revisits the broad policy issue of intergovernmental revenue sharing, then my wager would be that cities will continue to unapologetically leverage the tools and rules as they currently exist.”
At their July 26 meeting, the four Upland City Council members present heard a presentation on the covenant from Dalquest and an exposition from Holliday Rock principal John Holliday with regard to his company. They then voted to extend the operating covenant between Upland and Holliday Rock for a decade-and-a-half, effective July 1, 2022. During the presentation and the council discussion, there was reference to the point of sale arrangement, but there was no explicit reference to its implication, that being the diversion of sales tax revenue from Ontario, Chino, Colton, San Bernardino, Adelanto, the City of Industry, Irwindale, Montebello, Santa Ana, Irvine, Westminster, Vernon, Long Beach, Palmdale, Antelope Valley, Perris, Romoland, Sun Valley, Lancaster, Santa Clarita, Canoga Park, Mojave, Tehachapi, Ventura and Bakersfield to Upland. The city council members came across as determined to deal with that aspect of the deal in the most indistinct way possible, one that was calculated to avoid alerting any of the officials or residents of the cities or communities deprived of that sales tax revenue from taking stock of the situation. Moreover, the council came across as being unwilling to acknowledge, even to themselves, what the full implication of their action was, let alone create a situation where they might have to explain why or justify Upland foreclosing on revenue that others would certainly contend should more properly go to other governmental jurisdictions where the taxable product was actually sold.
Nevertheless, while Upland’s officials were unwilling to enter into a polemic to justify their city’s monopolization of the sales tax revenue generated by Holliday Rock’s operations, a former governmental official was willing to defend Upland’s use of both point of sale and tax springbacks to fill its coffers.
Greg Devereaux stands rightly accused and convicted of being the most sophisticated and resourceful governmental functionary in San Bernardino County history, someone whose skillful and creative manipulation of the arcane and complex regulations attending governmental and intergovernmental operations were envied by his peers in municipal management and both highly valued and sought-after by elected officials.
In the early 1990s, as Fontana was teetering on the brink of bankruptcy and possible disincorporation as a result of malfeasance, misfeasance and mismanagement on the part of its civic leadership, he initiated that city’s economic turnaround, first in the capacity of housing and redevelopment director and then, beginning in 1994, as its city manager. In the three years while he was at the helm in Fontana City Hall, Devereaux structured an economic recovery program and set in place both reforms and revenue-generating mechanisms that moved the city out of the red and into the black. So comprehensive was Devereaux’s recovery blueprint that only a portion of it had been put into action by the time of his departure, and his successor as city manager, Ken Hunt, not only survived but thrived the next 22 years as Fontana’s acting and thereafter full-fledged city manager by, essentially, executing the plan that Devereaux had put in place before he left.
In 1997, the City of Ontario, impressed by what Devereaux had achieved in Fontana, lured him away to become its city manager. In Ontario, Devereaux started with the advantage of serving a community that was already in decent shape financially. From that position, he intensified its economic primacy, utilizing the full panoply of what was available, including incentives such as sales tax springbacks in combination with point of sale arrangements to induce large corporations such as Cemex and Hewlett-Packard to make Ontario their California headquarters, facilitating residential, commercial and industrial development, while leveraging the city’s existing draws, including the Mills shopping mall and Ontario International Airport, as well as progress in Ontario’s neighboring communities of Chino, Upland and Rancho Cucamonga, to encourage further economic expansion in the city. By the time he left Ontario, it was economically head, shoulders and torso over the rest of the county’s cities, with approaching two-thirds of a billion dollars running through all of the city’s funds, making its municipal budget more than twice that of the next most prosperous city in the county.
In 2010, San Bernardino County poached Devereaux from Ontario, creating the previously nonexistent position of county chief executive officer into which Devereaux was hired as the replacement of what had previously been the county’s highest staff position, that of county administrative officer.
Devereaux left the county after seven years and is now the principal of Worthington Partners, a consulting company. Worthington Partners’ primary clientele consists of governmental agencies, such that at present nearly a dozen governmental entities are making use of Devereaux’s managerial expertise simultaneously. In his capacity as a municipal troubleshooter, Devereaux now earns more money than he did when he was San Bernardino County’s highest paid public official.
Whereas Upland officials were not willing to speak up for themselves and defend how their city is monopolizing all of the sales tax revenue reserved for municipalities generated by Holliday Rock’s operations, Devereaux rallied to their defense.
The ground upon which governmental entities compete for funding is an uneven one, Devereaux said, and the rules governing that competition defy the concept of fairness. Accordingly, he said, cities have to be aggressive and in some cases ruthless in pursuing revenues.
The fact is, Devereaux said, the agreement worked out between Upland and Holliday Rock was perfectly legal.
“I can understand how people can come to the conclusion that the covenant they have is unfair, but what I would point out is the state legislature made that deal possible,” Devereaux said. “If people perceive that to be unfair, then they should go to the state legislature to change the law. People are criticizing the city for doing something that is permitted under the law. The city did not put the state’s sales tax policy together. The state did that in a way that allows what you are discussing. The city is doing what the law allows. It is an awful lot to ask the city to follow the law and then criticize it for doing just that.”
Just like many things in life are unfair, Devereaux said, there are disparities in the way governments operate.
“I can take exception with all sorts of things,” Devereaux said. “Is it fair that one city gets 50 percent of the one percent property tax collected on the property in its city limits and other cities get virtually nothing from the collection of property tax? Is that fair? Maybe it isn’t fair, but that is what the legislature has set up. Is it fair that those cities next to the mountains where water runs down can charge its residents lower rates for water? Is that fair? Each city has its own circumstance and has to make the best of that circumstance. It isn’t fair that one city has a mall and another one doesn’t. Just because of one city’s location, it sometimes gets all that sales tax. If a mall developer came to a city and the members of the city council said to him ‘Don’t locate your mall here. Locate it in city next to us because they need the revenue more than we do,’ how long do you think those people would last in office?”
Devereaux continued, “When you look at the system of revenue distribution to local government, Proposition 13 skewed the system considerably.”
Proposition 13 was passed in 1978 by means of the initiative process. That initiative replaced the practice of annually reassessing property at market value with a system in which assessments are based on cost at acquisition. It also restricted annual increases of assessed value to an inflation factor, not to exceed 2 percent per year. Proposition 13 locked in existing property tax rates, including existing disparities.
“At the time Proposition 13 passed, there were cities that were being very responsible in some people’s minds and not taxing their residents heavily while there were cities that were increasing property tax all along,” Devereaux said. “The latter cities got a much higher percentage of property tax than the cities that were most responsible and kept their taxes low. This was unfair. I can go on. At its heart, you are talking about what is allowed as part of the system. You are talking about what is moral and what societal judgment is. Isn’t that what the legislature is for? If the legislature wants to change that system, it can do so.”
Upland was merely making use of an opportunity available to it, Devereaux said.
“The inequalities in how cities are being funded are rife, and to pick out one thing and say that shows something is wrong misses the bigger picture,” Devereaux said. “The bigger story is the inequities that are built into the system that need to be redressed. Until you do that, you are going to have cities in the system scrambling within the system to provide services at the highest level they can.”
In the same way, Devereaux said, it is perfectly legal for Holliday Rock to have negotiated with Upland to work a trade-off which obtained for it the 40 percent sales tax springback in return for making Upland its point of sale.
“It is not surprising that corporations will try to see who will give them the best deal,” Devereaux said. “If they don’t do that, they aren’t being responsible to their shareholders. It is not uncommon for a company to look at six or seven competing cities when they are deciding where they are going to locate.”
To survive, all cities need revenue, and the competition for that revenue among cities is fierce, Deveraux said. Some cities are more aggressive while engaging in that competition than others, he said.
“There are cities that have staff and leadership that are more entrepreneurial,” Devereaux said. “They understand they are in business, the business of running a city. I am not suggesting that cities are businesses, but there are city leaders who understand that if they want amenities for their community, they have to generate revenue. Some cities are more accomplished in doing that than other cities. In Ontario, when I was there, we held our own. We had the Mills. We had point of sale agreements with HP [Hewlett Packard], Cemex. There were many of those kinds of deals. But we weren’t the only city to do that. Ontario was entrepreneurial. Ontario really worked hard to have diversified revenues. In any jurisdiction where there are difficult financial and budgetary times, its leadership will try to cut their way into balance. Ontario always tried to earn its way into balance. There are different philosophical approaches. Our approach led us to trying to diversify the city’s revenue base. We wanted to have higher levels of service, high levels of public safety. We wanted well-equipped departments with high levels of training. We were an entrepreneurial city, determined to earn whatever we could and to use that to provide those services.”
“People think all cities have the same revenue bases,” Devereaux said. “They don’t. Each city has to find its own way because of those differences. Most people do not understand that every single city’s circumstance is different, and it is the structure that leads them to have to seek different sources of revenue. The system creates inequities because choices in many instances have not been given to the local jurisdictions. They don’t get to impose income tax. City councils can no longer raise property taxes. They can’t raise the sales tax rate. That has to be done by a vote of the people. Cities work within the system. If they are working within the system, what’s the problem? There may be a problem with the system, but you cannot rightfully criticize cities for working within it.”
The 16 of San Bernardino County’s cities which hold by-district elections and the county government are awork either determining whether they need to, or actually moving forward to, redraw their electoral district maps in the aftermath of the 2020 Census.
The U.S. Census Bureau is expected to release 2020 Census numbers toward the end of August. California’s statewide database will release the state’s 2020 redistricting data later, in October. Already, however, preliminary numbers, which are believed to deviate by no more than a few percentage points from the soon-to-be-available official numbers, are available.
The goal in redistricting is to create or maintain electoral districts which are as close as possible to being mathematically identical in terms of population. The census data is used to achieve that. It is possible that the growth in some communities has been uniform geographically, such that no shift or change in electoral districts or wards will be necessary. It is anticipated, however that changes will be made to some districts or wards in most of the county’s cities, as well as to at least two of the county’s five supervisorial districts.
In those jurisdictions where redistricting must be carried out, the governing boards of those governmental agencies will be the final arbiter of where district or ward lines will be drawn.
Traditionally and until quite recently, only two of the county’s cities had district or ward electoral systems – San Bernardino and Colton. Redlands in 1989 switched to by-district elections, but abandoned them after 1995.
Beginning in 2014, a number of lawyers based outside of San Bernardino County – R. Rex Parris, Milton Grimes, Kevin Shenkman and Matthew Barragan – began using provisions of the California Voter Rights Act to challenge cities for engaging in what was asserted to be racially-polarized or ethnically-polarized voting. Those law firms threatened to bring lawsuits against those cities which did not adopt by-district elections, replete with districts wherein so-called protected minority groups, which in practical terms in San Bernardino County meant Latinos, constituted a majority or a plurality. The intent was to all but ensure that members of those protected minority groups obtained representation on the respective city councils in those cities where the suits were threatened. Because the California Voter Rights Act contained a provision by which an entity bringing a lawsuit against a city to force it into holding by-district elections could not be held liable for the city’s legal costs if the suit was unsuccessful and because cities that did not prevail in such suits were consigned to paying a victorious plaintiff’s legal costs, most cities folded when threatened with such a suit.
A lawyer issuing such a demand letter to a city was entitled to a $45,000 settlement from the city upon the city complying with the demand. Thus, a spate of such demand letters were issued in the 2014/2015 timeframe. As a consequence, Highland, Chino Hills, Chino, Upland, Rancho Cucamonga, Fontana, Redlands, Yucaipa, Big Bear Lake, Yucca Valley, Twentynine Palms, Barstow, Apple Valley and Hesperia transitioned to by-district elections. The districts that were drawn up for those cities and which have been used in the last two and three election cycles were based upon the 2010 Census.
Yet holding at-large elections in San Bernardino County are Montclair, Ontario Grand Terrace, Loma Linda, Adelanto and Victorville.
21 of the county’s 24 municipalities have town or city councils consisting of five members. Colton and Needles have city councils with six council members and a mayor. San Bernardino has seven council members and a mayor. In all three of those cases, the council members are elected by-district or by-ward, and the mayors are elected at-large.
As part of the redistricting process, cities or towns are required to hold at least four public hearings at which the public is invited to provide input regarding the composition of one or more council districts. At least one public hearing must be held before the council draws a draft map or the lines of the proposed council boundaries. At least two public hearings have to be held after the council has drawn a draft map or maps of the proposed council boundaries. At least one public hearing or public workshop must be held on a Saturday, on a Sunday, or after 6 p.m. on a weekday Monday through Friday. These public hearings must occur in buildings accessible to persons with disabilities.
Public input on the drawing of the map must, by law, be allowed.
Under Senate Bill 1018, cities have a degree of latitude in how redistricting is to be carried out. A city or town council can, if it chooses, perform the redistricting on its own. The city council can also appoint a redistricting advisory commission to assist it. A city or town can delegate the districting authority to a commission, and simply ratify by a vote the commission’s map. A city or town, through its council, can create a hybrid districting or redistricting commission. A council can also contract with a county redistricting commission or demographics company to provide it with a district map it can ratify.
National Demographics Corporation was used by a multitude of San Bernardino County’s towns and cities in assisting with the drawing of the electoral maps adopted over the last six years. It appears that company will be widely used during the upcoming electoral map redrafting effort.
National Demographics Corporation did come in for some degree of criticism during the drawing of district lines for many cities in 2016 and 2018, in that the maps drawn by the company appeared to favor the incumbent council members who had voted to retain its services. In case after case, the cities and towns adopted district voting or ward maps that were gerrymandered to provide incumbent councilmembers an advantage by placing them into districts that did not include other incumbents, and by timing the elections in such a way that the incumbents’ districts held elections at the end of the electoral cycle terminating with the elapsing of the close of the term the incumbents held as a result of their most recent at-large elections.
San Bernardino County’s cities and towns holding by-district or by-ward elections are under the gun to to adopt and submit a new map to the San Bernardino County Registrar of Voters by the April 18, 2022 deadline that office has set so it can meet its cut-off dates for the preparation of election materials, such as the sample ballots and the actual ballots for the June primary and November gubernatorial/general election.
Without first exploring whether the City of Upland’s astronomical pension debt can be reduced, city officials in the 77,754 population municipality are inching toward an inevitable issuance of so-called pension obligation bonds to render, their advisors say, that arrearage more manageable.
That bond issuance will be for the accumulated debt of roughly $130 million so far. It will not redress the continuing debt going forward.
Upland is not unique among California cities in facing a financial crisis brought on by its commitment to providing generous – what many consider to be overly generous – retirement benefits to its municipal employees past and current.
Upland is at a crossroads, and its elected leadership now in place has the option of using California’s criminal statute relating to public employee conflicts of interest to rescind commitments to enhance the pensions of city employees that were made as part of an effort to keep an illegal enterprise engaged in by former Upland Mayor John Pomierski under wraps. As a consequence of the assistance virtually every one of the city’s employees of that time lent to the mayor, he and his graft-encrusted regime were able to stay in place for over a decade. Those employees, many of whom have retired and some who are still employed by the city, have already seen or will eventually see their retirement checks fattened as a result of their complicity in looking the other way while Pomierski and his associates were engaged in their misdeeds. Those giveaways of public money, tainted by the criminal conflict of interest the city’s employees and their unions engaged in to get those pension benefit increases, provides the city at present, if its council members have the will to do so, with the legal grounds to cancel the generous terms of those pension guarantees, thereby reducing the city’s enormous debt. It does not appear, however, that the current city council, which is being advised by city employees who have a personal interest in seeing those giveaways perpetuated, is willing to seek the remedy that will, conceivably, save Upland’s citizens in excess of $100 million over the next several decades. Nor does the council seem willing to have the city exit from the retirement system that, together with the corruption of City Hall, created the ongoing financial disaster it is beset with.
The City of Upland is a participant in CalPERS, the California Public Employee Retirement System. The terms by which Upland participates in CalPERS is similar to those of all of the other governmental entities that are engaged with the California Public Employee Retirement System. The city contributes a given amount of money to CalPERS for each city employee. The California Public Employee Retirement System then invests that money in a variety of financial instruments, including the stock market and real estate ventures. The return on, or earnings from, those investments is utilized to pay out the pensions to the retired employees.
The two most common type of pension systems exist as either a defined-contribution plan or a defined-benefit plan.
In a defined-contribution plan, the employer and employee make matching contributions on a regular basis toward the retirement fund set up for each employee. That money is either put into an interest bearing account or invested. Upon the employee’s retirement, money drawn from that particular retiree’s account is dispensed on a regular basis, monthly, quarterly, every six months or yearly, to that employee as his or her pension. In a defined-contribution plan, the amount of the employee’s pension is not guaranteed, but instead controlled by how much money is in that particular employee’s retirement account and the earnings from the interest or investments made by the money in that account. If the value of the investments go up, the amount of the pension goes up. If the investments fare poorly, the retiree’s pension goes down.
In a defined-benefit plan, the retiree is provided with a guaranteed pension based on the number of years of employment, the highest salary that retiree earned while employed multiplied by an agreed-upon percentage, usually between 2 percent and 3 percent, times the number of years the employee was employed in California’s public sector.
In a defined-benefit plan, such as that used by Upland, the employer accepts all of the investment risk relating to the retirement fund, such that if the investments over a given year fail to achieve the returns needed to meet the amount of the yearly payout guaranteed to the retired employee, the employer, such as a city or county, must then make up for the degree to which those earnings have fallen short.
The California Public Employees Retirement System is a defined-benefit plan, meaning all of the participants in it, such as the City of Upland, have guaranteed that those who have retired as city employees will receive the full pensions offered them when they were employed with the city.
During the strong economy of the late 1990s and early 2000s, the California Public Employee Retirement System was heavily invested in the booming stock market, which was advancing on the basis of rapidly prospering start-up technology companies. This phenomenon became known as the dotcom bubble. Based on the market’s performance, CalPERS was superfunded, and its investment earnings had created a circumstance where it reportedly had 140 percent of the money it needed to meet its obligations to all of its then-current pensioners. In the exuberance of this confidence and in the mistaken belief that the state’s public employee retirement fund would remain shipshape perpetually, along with the overall bright financial picture at that time, many municipal governments throughout California, including Upland, provided their employees with substantial salary and benefit increases.
In the years since, the ebb and flow of the economy, which included the so-called Great Recession which lasted from 2007 until 2013, has shown that the exuberance that led to the provision of those inflated benefits was unjustified. In order to keep up with the financial demands of those commitments, cities up and down the state find themselves reducing the level of services they provide and even reducing their current workforces so they can ensure that past employees are paid their pension stipends.
Upland, like virtually all other cities in the state, has experienced in the last decade financial strain as a result of the CalPERS-driven pension fund collapse. Compounding that was its unfortunate experience with Mayor Pomierski.
John Pomierski was elected Upland mayor in 2000. Domineering, manipulative and dishonest, Pomierski solidified his hold on the city by forming lock-tight political alliances with members of the city council. Virtually from the outset of his time in office he took advantage of his position of power and authority, and violated the trust the voters of the city had placed in him. He took bribes and accepted kickbacks from all order of business interests seeking permits or project approval from the city council, planning commission or community development department or those seeking contracts or franchises to provide goods or services to the city and its residents.
As Pomierski was enriching himself in this fashion, the circle of those who directly saw what he was doing or who had come to understand the depredations he was engaged in widened. In early 2005, he forced the departure of City Manager Mike Milhiser, who had held that post since 1996, conferring upon him a $200,000 severance package to buy his silence. Two weeks later, then-Police Chief Martin Thouvennell was persuaded to retire. Pomierski induced the city council to hire his hand-picked replacement for Milhiser, Robb Quincey, and he elevated a captain in the police department, Steve Adams, to police chief.
Because he had concerns that the circumstantial knowledge about his bribetaking and other illegal activities that existed among city staff might not contain itself, Pomierski made arrangements to increase employee salaries generally at City Hall and had the city go to a four-day work week. A handful of city employees were actively assisting Pomierski in shaking down those doing business with the city or those subject to its regulatory authority. The lion’s share of city employees, while not directly involved in Pomierski’s pillaging, were nonetheless cognizant or subliminally aware of what was taking place. As beneficiaries of the generosity being shown them in terms of the uprating of their salaries and benefits, they simply chose to passively ignore what the mayor was doing.
Quincey had been hired as city manager on a contract that provided him with a combined salary and benefits package of slightly less than $260,000 per year. Pomierski in time arranged to get the city council’s acquiescence in conferring upon Quincey a contract enhancement that guaranteed he would receive the same percentage increase in his salary and benefits that were provided to the members of the police department. Pomierski also designated Quincey to represent the city in its negotiations with the police officers’ union in the collective bargaining process by which the officers’ salaries and retirement benefits were set. During the slightly more than five-and-a-half years that he served as city manager, Quincey was provided with eight raises that boosted his combined salary and benefits from less than $260,000 per year to $429,000 per year, making him the second-highest paid city manager in California. Meanwhile, the members of the police department saw their salaries and benefits escalate significantly, such that their silence and investigative inactivity with regard to Pomierski’s activities was secured. At the pinnacle of the police department was Adams, who, like Quincey, was beholden to Pomierski for his professional and financial advancement. Adams at no point had his department act to bring Pomierski’s violation of the law to a halt.
Throughout his ten years and a little more than two months in office, Pomierski had a free rein and experienced no obstruction from anyone at City Hall with regard to the graft he was involved in, even as that activity intensified during the last five years he was Upland mayor. It was only after Thouvenell approached the FBI in late 2009 that any semblance of an effort to hold Pomierski to account was made. Nevertheless, even after a joint FBI/IRS task force on June 10, 2010 descended on Upland City Hall, Pomierski’s home and his business office as well as the homes and offices of several of his business associates, Pomierski maintained his domination of Upland’s city government. He continued to exact an under-the-table tribute from those who wanted to ensure they had an edge over their competition in securing city contracts or when they were seeking to get permission to proceed with their property development proposals or see their applications for business licenses or permits approved. With the dawn of 2011, in rapid succession, Quincey was suspended in January, Pomierski resigned as mayor in February and in March a federal indictment was unsealed in which the now-former mayor was charged with bribery. The following year, in April 2012, Pomierski pleaded guilty and was given a two-year sentence. In October 2012, Quincey was arrested and charged by the San Bernardino County District Attorney’s Office with three felonies consisting of unlawful misappropriation of public money, gaining personal benefit from an official contract, and giving false testimony under oath. Quincey’s lawyer would later work out with prosecutors a plea deal for him on a reduced charge.
In the meantime, while Pomierski and Quincey were opening up the city treasury and handing money hand over fist to the city’s employees to keep them from going public with their knowledge about the criminality at City Hall, the bursting of the dotcom bubble – the precipitous drop in the value of tech stocks – took place, precipitating the economic downturn of 2007 and the ensuing six-and-a-half year financial slump. The collapsing of the national, state and local economy would have a devastating impact upon Upland as well as the California Public Employees’ Retirement System’s fiscal position. The abrupt drop in stock values meant that the California Public Employee Retirement System’s investments did not net the returns needed to keep the pension plan fully funded, resulting in cities and counties throughout the state along with the state government itself having to step up and make substantial payments beyond what they normally made to CalPERS. For cities like Upland, this meant money that otherwise was used for basic operations, paying salaries and providing services to residents was in short supply. That translated into layoffs and resultant manpower shortages and service reductions, along with delays in constructing new infrastructure, the deterioration of existing infrastructure and the deferring of purchasing new equipment and vehicles and the neglect of maintenance and servicing to city assets.
The difference between the total amount of benefits owed to all of a city’s current employees & retirees and the value of the financial assets devoted to that city’s pension plan is referred to, in municipal parlance, as an unfunded pension liability, what is more commonly understood by the public to be pension debt.
As of June 2012, the City of Upland had an $88,994,066 unfunded pension liability. That debt had reached $99,976,917 as of June 30, 2019, and then climbed more steeply thereafter, hitting $112,039,675 as of mid-fiscal year 2019-20 and $120,920,721 as of June 30, 2020. Unofficial documentation available to the Sentinel suggests that as of March 2021, Upland’s unfunded pension liability had climbed to $130,185,277.
In fiscal year 2020-21, 20.65 percent of the city’s operating costs were devoted to paying those who were no longer actively working for the city, as $8,996,364 of the city’s $43,559,950.78 general fund budget was utilized in paying off its pension debt.
Projections are that 11 years from now, in 2032, with more and more of the city’s current employees joining the rolls of the city’s retirees drawing pensions at ever higher and higher rates, the city will be expending more than 50 percent of its operating budget on paying pensions to former city employees, resulting in the city drastically reducing the municipal services it provides.
A significant factor in the pension debt crisis consists of the very generous terms contained in the formulas for those pensions. Generally speaking, employees are eligible to retire at the age of 55 to 60 and begin to draw a yearly pension equal to two percent of their highest annual pay, including salary and overtime, multiplied by the number of years they were employed in the public sector in California. Thus, a city employee who retires at the age of 55 and has achieved the paygrade of $100,000 per year and has 30 years of employment within the public sector would be eligible to draw an annual pension of $60,000 per year [$100,000 X .02 X 30] for the remainder of his/her life. Upon that former employee’s death, his or her spouse/widow/widower would be eligible to continue to draw a pension equal to half that amount, $30,000, for the rest of her/his life. The more an individual rises in the municipal ranks in the City of Upland, the more generous the formula. Senior administrative employees such as the city manager are eligible to draw a pension equal to his/her highest annual salary and add-on or overtime pay during that year times two-and-a-half percent times the number of years that person was employed in the public sector in California. Thus, a city manager paid $250,000 per year who retires at the age of 60 after a 35-year career as a public employee in California would receive an annual pension of $218,750 [$250,000 X .025 X 35] for the rest of his/her life, with his/her surviving spouse eligible to collect $109,375 yearly for the remainder of his/her life.
In this way, members of the city’s managerial echelon, subject to similar or the same rewards as the city’s line employees, have a disincentive to reform the pension system and its terms, as any action they take will impact their own retirement plans.
In the case of police officers, they are eligible to retire at the age of 50 and receive a pension of three percent times their highest level of pay multiplied by the number of years they have worked as government employees in California.
A circle of Upland residents sensitive to their city’s looming pension crisis years ago began a serious discussion over what steps could be taken to reduce the onerous burden of the city’s escalating pension costs and the resultant impact on ongoing and future municipal operations. Among the limited options contemplated was altering future employee contracts to reduce the level of benefits guaranteed to city personnel going forward. Another contemplated solution consisted of maintaining the level of benefits as they are but shifting the cost of participating in the California Public Employees’ Retirement System from the city to the employees themselves, meaning those employees – through payments deducted from their wages – would cover the cost of making annual payments the city is currently making to CalPERS, alleviating the taxpayers of that financial responsibility. Another approach that was floated called for using the collective bargaining process to work into the employment contracts with employees a cap on pension amounts at what might be considered to be a reasonable maximum – $100,000 annually, for example – that would still provide the means for retirees to live in dignity without breaking the public treasury. Another option discussed was for the city to pull out of the California Public Employees’ Retirement System altogether, paying off its debt to CalPERS, and instituting a municipal employee 403 (B) retirement program for those city workers which they pay for themselves, perhaps with some modest city contribution, similar to 401 (K) programs available in the private sector. Another contemplated option called for the city to utilize the legal leverage available to it and uniformly revoke the past salary and benefit increases provided to city employees under the Pomierski regime. Government Code Section 1090 renders null and void any contractual arrangement entered into by a public agency as a consequence of a conflict of interest. The contract negotiations Quincey engaged in with the police union while his contract entitled him to any concessions he made to the police officers constituted just such a conflict of interest. Thus, the enhancements the police officers received as a consequence of those negotiations, including the generous terms of their retirement packages, upon legal challenge, would likely prove unenforceable.
Larry Kinley, a 42-year employee and vice president with the Bank of America who oversaw its problem loan division, was elected Upland treasurer in 2016. After acclimating himself to the office, Kinley in 2018 and into 2019 attempted to draw attention to the pension cost crisis facing the city by providing a running tab of the city’s unfunded pension liability in the monthly treasurer’s report he signed which gave a tallying of the city’s investments and reserve funds. Then-City Manager Rosemary Hoerning and Finance Manager Londa Bock-Helms, both of whom were on a trajectory to qualify, by the time of their retirements for pensions of, respectively, over $200,000 and over $120,000 per year, altered the treasurer’s report by erasing or whiting out the inclusion of the unfunded pension liability before that document was posted or provided to the city council and the public. Neither considered it to be in their personal interest to draw attention to the pension fund deficit issue, which likely would have encouraged reform that might reduce the eventual retirement benefits they are to receive.
In an effort to divert the momentum away from a reform of the underlying issue – the sheer magnitude of the pension system’s cost and the continual escalation of that cost – city officials sought to refocus the discussion from reform aimed at undoing the pension enhancements engineered by Pomierski to refinancing the debt.
Late last summer, city officials welcomed Suzanne Harrell, a financial advisor, into their midst. Harrell provided the city council with a sales pitch relating to the possibility of issuing pension obligation bonds as a means of defraying over time the exorbitant cost of the city’s unfunded pension liability.
Hailing pension obligation bonds as a debt management tool, Harrell said such bonds could be issued without requiring voter approval, such that their issuance could be subject to a judicial validation proceeding, which would require that a citizen or citizens go to the expense and trouble of going to court to prevent the city from issuing the bonds.
By issuing the bonds at a fixed rate of 3.3 percent, Harrell said the city could undertake a strategy by which the proceeds from the issuance and sale of the pension obligation bonds could be invested in high yield securities that would bring in a rate of return greater than the interest to be paid on the bonds. The money earned in this way could be applied to pay down the city’s pension debt, Harrell said. This involved a gamble that the city would most likely win, she said, essentially a bet that the stocks and other securities that Upland would invest the proceeds of the pension obligation bonds in will perform well and provide the investment returns hoped for.
Harrell endeavored to shoot down many of the arguments against pension obligation bonds, including that they would impact the city’s debt capacity and that they would commit the city to a longer debt service period. The city already is overburdened with debt in the form of its unfunded actuarial pension liability, Harrell said, and if the city realized a net gain between its return on the investments made with the bond money and the interest on the bonds, the city’s debt would be reduced. The city could, Harrell maintained, match the maturity of the bonds to a timetable of the city’s choosing, calibrating them so they coincide with the maturity, life or sunset dates of the city’s other debts, and refinance them after ten years if the city deems doing so necessary.
With attention to detail and timing, Harrell said, issuing pension obligation bonds could prove a sound and prudent way for the city to eliminate its existing unfunded pension liability, simply by investing the investment of the bond proceeds in financial instruments with a higher return than the interest cost on the bond debt.
Critics and naysayers such as the Howard Jarvis Taxpayers Association and the Government Finance Officers Association have likened the use of pension obligation bonds to paying off the money owed on one credit card with another credit card.
Harrell minimized, indeed left out of her presentation entirely, mention that she stood to churn considerable fees for herself and her company if the city chose to issue the bonds and utilized the professional services she provided related to those issuances.
By the point that Harrell was making her presentation to the city council, in September 2020, Kinley, aghast at the way in which his efforts to bring the pension fund crisis to the attention of city residents was being thwarted by city staff and despairing of being able to prevent what he saw as the city’s inevitable march toward bankruptcy, had resigned, simultaneously opting out of seeking reelection in the November 2020 election.
The growing contingent of Upland residents concerned with the city’s quickly eroding financial condition brought on by its ever-mounting pension debt coalesced around Greg Bradley, who ran against two others, former Upland City Manager Stephen Dunn and Darwin Cruz, in the November election for city treasurer. Among those residents there was hope that Bradley once in office would have the strength and resolve to stand up to the entrenched forces at City Hall and within the California Public Employees’ Retirement System and city employee unions in a way that would reform the one-sided arrangement that is providing the City of Upland’s public employees with pensions that are on the order of five and six times as generous as those available in the private sector and which is on the brink of bankrupting the city and depleting its treasury. It was hoped Bradley would succeed where Kinley had tried but had been stymied, and that by doing so he would render the city’s finances into a far more manageable state, eliminating the future prospect of bankruptcy and heading off the impingement on city services.
During his ultimately successful campaign for treasurer, Bradley cautioned against blindly utilizing the pension obligation bonds-issuing solution to overcome the financial challenges brought on by the funding demands of the pension system.
“If elected, I would insist that we have a plan to stop adding new debt before we consider a bond to push off old debt. You can’t get out of debt while you’re adding new debt,” Bradley said at the time.
Upon consideration that Harrell’s advisement was compromised by the consideration that she and her firm stood to profit in some fashion if the city elected to issue the pension obligation bonds, the council at that point grew tentative, put off by the potential that the citizenry might conclude that they were depending upon direction from someone who had a conflict of interest. They resolved to have city staff delve further into the option and provide the council with fuller information before any issuance of the bonds was made.
Once he was sworn into office, Bradley consented to hearing city officials out with regard to their assertion that the city could reduce the red ink it was hemorrhaging in servicing its pension debt by creative borrowing, meaning, in essence, the issuance of pension obligation bonds. Both Hoerning and Assistant City Manager Steven Parker were clamoring for the city to utilize the pension obligation bond solution.
Some residents were pushing Bradley toward utilizing the provision of Government Code Section 1090 to rescind the generous terms of the employment contracts offered to city employees during Quincey’s management of the city as a means of buying those employees’ silence with regard to Pomierski’s criminal activity. Hoerning and Parker were having none of that. Instead, they steered Bradley toward the concept of refinancing the pension debt on terms that were represented as being preferable to what the city is now enduring by saddling the coming generations of Uplanders – the children, grandchildren and great-grandchildren of Upland’s current taxpayers – with that debt by the issuance of bonds.
In March 2021, Hoerning and Parker elected to utilize a different advisor than Harrell to stand off a suggestion that the city might not have been getting the straight scoop from Harrell because of her financial stake in the city’s eventual decision. Nevertheless, the other experts Hoerning and Parker turned to in order to provide the city council with orientation with regard to this relatively obscure and complex means of financing themselves have their own financial stake in the outcome of the city council’s decision to utilize pension obligation bonds. Moreover, the firm that employs one of those advisors, Urban Futures, for reasons that were hidden from the city council, the city treasurer and the public, had a motivation to prevent the City of Upland from undertaking pension reform and instead defer the problem runaway pension costs represent into the future through some form of refinancing mechanism, of which a pension obligation bond issuance is the most likely option.
Hoerning and Parker utilized Julio Morales, a managing director with Urban Futures, and Ira Summer, an actuary who is well versed in public pension statistics, in an effort to convince the city council that issuing pension obligation bonds is the best approach to structuring a solution to Upland’s pension debt crisis. Providing legal background on the issuance of the bonds were City Attorney Steve Deitsch and Assistant City Attorney Thomas Rice, both of whom are partners with the law firm of Best Best & Krieger, which provides legal services to the city. Like Morales and Summer and their companies, the law office of Best Best & Krieger has a potential financial interest in the city issuing pension obligation bonds.
Pension obligation bonds can be issued by a city without a vote of its electorate – its residents, citizens and voters – to do so. Instead of a vote, the city can undertake a validation procedure, which is essentially a call to all people of standing, primarily the city’s residents, to lodge a protest in court against the bond issuance if they deem doing so to be called for. If no protest is lodged, the court gives the city clearance to proceed. If a protest is filed, then during court proceedings those contesting the issuance can seek to convince the judge hearing the matter to prevent the issuance.
At present, there is a likelihood that the City of Upland will use the same entity that is to carry out the validation proceeding for the issuance of the bonds as will be used for serving as bond counsel and disclosure counsel with regard to those issuances. Bond counsel and disclosure counsel are involved in the drafting of the documents relating to the issuance of the bonds, and certifying that the issuance passes legal muster. On the inside track for gaining that assignment is the law firm of Best Best & Krieger. By capturing all three of those assignments – validating the bond issuance, serving as bond counsel and then serving as disclosure counsel – Best Best & Krieger stands to gain as much as $1,006,389.57 in legal fees.
In providing their input to the city council throughout the process so far, neither Morales nor Summer nor Deitsch nor Rice engaged in any serious or meaningful discussion of the city’s pension reform options, such as ending its relationship with the California Public Employees’ Retirement System beyond precluding the concept by advising that it was unattainable or prohibitively expensive. Nor have Morales or Summers as the city’s financial advisors, and Deitsch and Rice, as the city’s legal advisors, engaged in a dialogue relating to switching the burden of defraying pension costs to the city’s employees or altering the terms of the city’s employee benefit packages either through negotiation or on the basis of the illegality inherent in the circumstances under which those benefits, during the Pomierski era, were derived, offered and accepted.
Morales acknowledged that in the current economic circumstance, over the last several years, pension funds dependent upon stock market and other investment returns have been about 75 percent funded, meaning cities have been perpetually subsidizing CalPERS.
Morales shot down the concept of the city moving out of its contractual arrangement with the California Public Employees’ Retirement System and switching to a 403 (B) program, the public sector equivalent of a 401 K program, saying that CalPERS would not allow employees in its system to withdraw. He further said that the California Public Employees’ Retirement System would not allow a city that currently has its employees in the California Public Employees’ Retirement System to hire new employees who were not automatically enrolled in the retirement system. Without making any citation to his authority for saying so, Morales indicated that doing so would be a violation of California law.
Morales told the city council it is not impossible for the City of Upland to leave CalPERS, but that it would cost more than paying off its current unfunded liability. Rather, he said, Upland could not buy its way out of the California Public Employees’ Retirement System for anything less than $490 million.
Morales continuously painted the option of issuing pension obligation bonds in the best light possible, acknowledging that doing so would create for the city new debt that would need to be paid, but he insisted payment of that bill would “avert a worse bill,” such that the city and its council would find itself and themselves “in a better position than you would have been” if it did not issue the pension obligation bonds.
Admitting the city could take the approach of having its employees pay more of their pension costs, Morales nevertheless said the best that would do is have some impact “around the margins” of the mounting debt issue. He told the city council that it would essentially prove futile for the city to seek getting out of its relationship with CalPERS or to strive to lessen its actual payments into the system, but should instead seek to use bonds to reduce the cost of financing its pension debt. Doing so at this point, he explained, would escalate the savings the city is to potentially reap, given the historically low interest rates in the financial marketplace at present.
At no point did Morales address the concept of the city using the violation of Government Code Section 1090 that Quincey engaged in to render the contracts the city had entered into with its police officers which escalated their pension benefits null and void. “You cannot undo these formulas,” Morales solemnly informed the counsel with reference to the pensions that Upland’s past and current employees are guaranteed through the California Public Employees’ Retirement System.
While Morales acknowledged the city ran a certain limited risk in utilizing the pension obligation bonds option, explaining that the city would save money, relatively, by issuing the bonds as long as the earnings of the California Public Employees’ Retirement System’s investments remained higher than the interest on the bonds. If CalPERS suffered consistent or sustained low, flat or negative earnings on its investments, Morales pointed out, the relative advantage of issuing pension obligation bonds would be wiped out. He nevertheless said it would be to the city’s advantage to pursue the pension obligation bond issuance option and that doing so immediately while interest rates remain low offered the greatest chance of benefit to the city.
Urban Futures has long been involved in an advisory or consultancy role in Upland municipal operations. A major portion of the firm’s work consists of advising the city with regard to and then making the arrangements for debt refinancing. In doing so, Urban Futures stands to gain fees pursuant to the ancillary services it provides relating to the city refinancing its debt. Given the financial stake Urban Futures has in these refinancings, questions have arisen about the integrity of its advice.
Moreover, in this circumstance, Urban Futures, or at least some of its employees, have an interest in discouraging any options that might pertain to Upland exiting the California Public Employees’ Retirement System or altering the employee contracts the city entered into during the Pomierski era.
Steve Dukett from 2018 until 2019 served as Upland’s contract development services manager after having served, more than a decade prior to that, as an Upland municipal employee, in the post of development services manager. Dukett is one of three managing partners with Urban Futures. In addition to his work for Urban Futures, Dukett draws a significant amount of his personal income from CalPERS. Dukett served stints as the redevelopment or development director with the cities of Redlands, Upland, Hesperia, Ontario, Lancaster and San Bernardino. He was briefly, in the late 1990s, the interim city manager in Hesperia. His employment in Upland took place during the reign of then-Mayor Pomierski. At present he pulls a $173,071.80 public pension consisting of $119.863.44 per year provided to him by the California Public Employees’ Retirement System based on his 29.43 years with various municipal entities, as well as $53,208.36 from the retirement system Los Angeles County has for its public employees, based on the 12.42 years he worked there, including within the county administrative office.
At a March 2 workshop relating to the issuance of pension obligation bonds, Parker stated that the city at that point was utilizing both Urban Futures and Summer only for advisory and informational services. Simultaneously, the city is contemplating roles for both with regard to professional services related to the bond issuances.
Parker was formerly employed with Urban Futures. During a nearly five-month interim between the time he ended his employment with the Yorba Linda Water District in early July 2013 and the time he was hired on as the director of administrative services with the City of Stanton in late November 2013, Parker was among the stable of municipal advisors Urban Futures provided to its clients. In that span, he was employed as a consultant on loan from Urban Futures to the City of San Bernardino, serving in the capacity of financial manager in the county seat.
Since he has been in office, Bradley has continually huddled with Parker, who has by this point convinced the city treasurer that pension obligation bonds are the way to go. At least some of Bradley’s most passionate supporters in the 2020 election have expressed dismay at the way in which the city treasurer has been beguiled by Parker, and has signed on to the stratagem of taking on low-interest bond debt to finance a paydown on the city’s pension debt while forsaking any effort to reduce the debt prior to securing that financing by addressing the illegal activity that precipitated the increase in Upland municipal employees’ pension benefits.
The city council placed Hoerning on administrative leave in March, and the city parted ways with her the following month. Since that time, Parker has been acting in the capacity of interim city manager.
Parker has made steady progress in convincing not only Bradley but the five members of the city council that the city should move ahead with issuing the full $130 million in pension obligation bonds. In making that case, he has relied on a support network – consisting of Morales, Summer, Deitsch and Rice – who themselves have a financial interest in the city issuing the pension obligation bonds. It does not appear that the council and Bradley have taken full stock of the degree to which this may have compromised the integrity of the advice they are receiving.
At present interest rates stand at 2.5 percent/2.6 percent. The city is striding toward a vote by November to issue the bonds, at which point it is believed that interest rates will reach no higher than 2.8 percent to 2.9 percent. The city’s advisors have convinced Bradley and the council that issuing the bonds while interest rates are at historic lows are a “no-brainer,” and that the city most assuredly will see a financial benefit by refinancing its pension debt if upon doing so the interest rates are below 3.5 percent, and would very likely realize marginal inroads against its pension debt totals even if the interest rate climbs to as high as 4.5 percent. The sole risk the city runs in issuing the pension obligation bonds, the city council is being advised, consists of the off-chance that the stock market will tank in the six-to-eight month period after the bonds are issued.
While city officials maintain that they are being deliberative in the consideration of whether to issue the pension obligation bonds, the Sentinel has learned that Parker, now fully in control at City Hall, is moving forward with laying the groundwork for the issuance, including having committed to using J.P. Morgan as the bond underwriter.
Parker, Morales, Urban Futures, Summer, Deitsch, Rice and Best Best & Krieger are now stampeding the city council toward the inevitable issuance of the bonds by the threatening suggestion that if the city does not act now, the opportunity to realize a reduction in the cost of retiring the city’s contemplated future bonded indebtedness will be lost if interest rates should increase. As a result, the brow-beaten city council is on the brink of exercising the pension obligation bond issuance option.
Based on the increases in salary and benefits provided to city employees in the crucial 2006-to-2010 timeframe when Quincey was engaged in his conflict-entangled role of negotiating Upland employee contracts, utilizing the Government Code Section 1090 option to rescind the generous terms of the benefits provided to city employees under the reign of Pomierski and Quincey could have the effect of reducing the city’s current $130 million unfunded pension liability by what is calculated to be somewhere between $30 million to $50 million, meaning the city’s current pension debt could be reduced to $100 million or as low as $80 million. The city council, however, has given no indication it has the stomach to do so. Not only have their advisors refused to explore that concept, the council on its own does not have the will to confront the city’s employees and their unions over the matter. Moreover, the council is now in the middle of recruiting a new city manager, whom they will be calling upon to run City Hall. Saddling their new city manager with a situation where he or she must ride herd on a discontented workforce sore over having lost the overly generous benefits they feel they are entitled to would almost certainly rock the city’s boat unto capsizing, thereby consigning the city manager the council is going to hire in upcoming weeks to failure.
The council’s unwillingness to make a concerted effort to reduce the retirement benefits conferred upon city employees during Pomierski’s tenure as mayor has an impact beyond potentially reducing the current unfunded pension liability. Addressing the overly generous retirement benefits that have been in place for the past decade-and-a-half would give the city leverage to further downscale the future unfunded pension liability that is being created at present and will accumulate and increase in the years going forward. Reduction of the unfunded pension liability to date and reduction of the future unfunded pension liability potentially would provide Upland, at a point two generations hence, with savings estimated at upwards of $100 million. Given the current elected leadership’s fear of the city’s municipal employee unions and its inability to resist or see beyond the advisal of top city staff and the consultants staff has hand-picked to reinforce the script being writ large at City Hall, it is highly unlikely the council will seize the day and choose the more bold options that lie before it.
It is anticipated that on August 9, when the council next meets, it will make a decision to allow Parker, as he is recommending, proceed with putting all things in place to accomplish an issuance of the pension obligation bonds in November.
Robert Shuey, whose violent 30-year existence left a train of ruined lives in its wake, met an equally violent end, information provided to the Sentinel this week by a reliable source indicates.
There have been conflicting accounts as to Shuey’s April 2021 demise. In one he was felled by an effort to ensure he was unable to cooperate with law enforcement authorities or testify, and in another he was dispatched in a revenge killing. A third featured him as a victim of a professional hit commissioned by an international drug cartel. There were two suicide scenarios promulgated, one involving him shooting himself and another in which he was said to have willfully overdosed. He was also said to have accidentally overdosed.
In its original public notification of the incident, the San Bernardino County Sheriff’s department characterized Shuey’s death as a murder. Subsequently, however, the department represented it as an unexplained death, and the department did nothing to stem a billowing rumor that Shuey had succumbed to a drug overdose. There were discrepancies between that suggestion and certain known facts. Other anomalies and developments pushed others to the conclusion that the sheriff’s department was withholding information from the public to assist its homicide investigators in cracking the case.
Shuey’s body was found inside his Blue Jay home sometime in the morning of April 27, roughly 10-and-a-half to 13 hours after his April 26 death.
On the sheriff’s department’s call/dispatch log, available online, the matter was referenced as a 187, that is, a showing that the sheriff’s department considered the matter to be a homicide, Penal Code Section 187, defined as the intentional killing of another. In a highly irregular development, the sheriff’s department’s call/dispatch log was subsequently altered to reference the matter as a “DB,” i.e., a dead body. An indication the department initially considered the matter to be a homicide consists of a screen shot in the Sentinel’s possession showing the log as it was originally posted prior to its alteration.
Shuey’s body was discovered by an as-yet unidentified female, who was either one of Shuey’s immediate or extended family members, a girlfriend or an acquaintance. When she arrived at his home, it was was locked. She gained entry, either using a key or some other means. Inside the home was Shuey, who was dead. Shuey had bled profusely from his nose. This led to a report that he had been shot point blank in the face.
Indications were that Shuey’s three-and-a-half-year-old daughter was in the house at the time of his death, and she remained there with her father’s corpse for at least ten and perhaps more than 12 hours until sheriff’s personnel arrived the next morning. The Sentinel was told in April that after investigators arrived and took stock of the situation, they, in recognition of the delicacy of the situation, arranged to have a child psychologist/child and family services expert speak to the girl, and she said that the night before a man she did not know had come to the house to speak with her father, and that her father had told her to hide before he engaged with that individual.
Thereafter, the unofficial story circulating in the mountain communities was that Shuey died at his own hand, either purposefully as a suicide or unintentionally from a drug overdose. The sheriff’s department did nothing to discourage the suicide narrative from gaining currency. Multiple sources in the Lake Arrowhead District have told the Sentinel that the sheriff’s department went so far as to convey to Shuey’s family that he had died of an overdose.
While an autopsy on Shuey’s body was completed within a week, the pathologist’s report and the autopsy protocol was either not compiled or withheld for more than two months and three weeks.
Word has reached the Sentinel that the autopsy protocol provides an indication that Shuey had indeed been shot in the head, though not in front, as was previously stated, but rather from behind, and at close range.
The Sentinel immediately sought to verify that report through the coroner’s office, which is a division of the sheriff’s department. While the coroner’s office did acknowledge that the autopsy results and the pathologist’s report was available, the records clerk who is authorized to release it was not available this week, and will return on Monday August 2, at which time the Sentinel was told, those documents will be available.
It was indicated to the Sentinel that in addition to Shuey having sustained a single gunshot wound, fentanyl, an extremely powerful synthetic opioid, was present in his body at the time of his death.
Recurrent in the unverified reports relating to Shuey’s death is that he was entangled in a circumstance involving an international drug distribution ring, one involved in the importation of both methamphetamine and fentanyl from Mexico.
In his 30 years, Shuey was charged with 13 separate felonies and more than 20 misdemeanors stemming from 17 different cases/arrests in San Bernardino County alone. He was convicted on seven of those felonies and 11 of the misdemeanors. At the time of his death, two felony charges stemming from a single incident on May 21, 2020 were pending against him, those charges being first degree burglary and assault by means of force likely to cause great bodily injury.
Since turning 18 years old, Shuey was sentenced to prison or jail terms totaling seven years and 257 days. Records indicate he served less than half of that time in actual incarceration.
Among the felony convictions Shuey sustained were for drug dealing, theft, assault, burglary and weapons charges. Several of his misdemeanor charges involved fighting or assault. At the time of his death, the district attorney’s office was considering filing charges, either as misdemeanors or felonies, relating to two physical assaults – indeed severe beatings – he had administered. Simultaneously, Shuey was yet facing a charge of burglary together with assault with a deadly weapon resulting in great bodily injury relating to the incident he was involved in on May 21 of last year in Blue Jay. Shuey was arrested by San Bernardino County Sheriff’s Department deputies working out of the Twin Peaks sheriff’s substation in the aftermath of that incident. Shuey and his attorney maintain that the arrest and charges were inappropriate and unsupportable in that Shuey was the victim, and what had actually occurred was Shuey’s motorcycle had been stolen by the individual he was charged with assaulting and that the theft he was charged with was his successful effort to take back possession of his stolen motorcycle.
Shuey had drug-related convictions including drug-trafficking, in particular dealing methamphetamine. There is indication that he was involved in the importation of methamphetamine manufactured in Mexico and that he was associating with a drug dealer working in the San Bernardino Mountains communities, Johnny Garcia. Garcia was formerly involved in the distribution of methamphetamine and more recently began trafficking in fentanyl. Unverified reports are that there were six fentanyl-related deaths in the mountains between early April and mid-May of this year as Garcia’s distribution of that very powerful synthetic opioid intensified, and that the sheriff’s department was closing in on Garcia. Growing out of this circumstance are allegations that it was Garcia who killed Shuey out of concern that Shuey, in an attempt to have the assault and theft charges that were pending against him dropped, was cooperating with the sheriff’s department, and had already implicated or was about to implicate Garcia in the fentanyl distribution activity tied to the spate of overdose deaths in the mountain communities.
The sheriff’s department has not confirmed whether it suspects Garcia of being involved in the distribution of fentanyl that resulted in the overdose deaths in the San Bernardino Mountains earlier this year or in having killed Shuey. In June, word on the street was that Garcia had departed the Lake Arrowhead district in an effort to elude law enforcement authorities, perhaps having gone to Mexico. This week, the Sentinel was told Garcia is lying low in the Riverside area.
While the withholding of the pathologist’s report and the autopsy protocol may have been a ploy to assist the sheriff’s department in making a case against a suspect such as Garcia by providing investigators with a possible opportunity to elicit from the suspect during an interrogation details of Shuey’s death contained in the autopsy protocol that would be known only to his killer, the release of the coroner’s report would seem to indicate that the sheriff’s department either has sufficient information to make a case against a suspect or alternatively that it does not yet have a viable suspect, and that it can no longer forestall the public’s access to the information contained in the coroner’s examination of Shuey’s body.
Amsel Crossings, in his dotage, met the sister of one of his former classmates while he was living in a cottage at the complex for a rest home he had been committed to.
Jennifer Parker was a decade and a half younger than he, but at this stage of her life, she was no spring chicken
As had Adelanto and Fontana before it, the City of Grand Terrace this week turned to G. Michael Milhiser to fill the gap as its city manager in the aftermath of the departure of its previous top municipal administrator.
With the hiring, Mike Milhiser, already the most traveled city manager ever among San Bernardino County cities, can boast having held the top spot on the staffs of one-fourth of the county’s 24 municipalities.
For 14 years and four months, from March 1978 until June of 1992, Milhiser was Montclair’s city administrator. For two years and seven months, from June 1992 until December 1994, Milhiser was city manager in Ontario, where his father, Charles L. Milhiser, Sr., was city treasurer. Milhiser was hired as city manager in Upland in June 1996 and remained there for eight years and ten months, until March of 2005, at which point he was forced to resign by Mayor John Pomierski.
Milhiser subsequently, from June 2005 until July 2007, served as the interim executive director of the Tri-City Mental Health Center in Pomona. For nine years and eight months, from July 2007 until February 2017, Milhiser was the chief administrative officer with the Morongo Band of Mission Indians near Banning.
Beginning in February 2017, he served a five-month stint as Adelanto’s interim city manager, departing when that city promoted its development director, Gabriel Elliott, to become city manager. But within three months, then-Adelanto Mayor Rich Kerr grew disenchanted with Elliott after he opened up back channel communications with the FBI in which he fingered Kerr and his council colleagues, John Woodard and Jermaine Wright, as being recipients of bribe money from multiple marijuana-related business applicants. In January, 2018, Milhiser was brought back to Adelanto to serve again as interim city manager. In May 2018, he was succeeded in Adelanto by interim City Manager Brad Letner.
In July 2019, Fontana Mayor Acquanetta Warren, with the support of her council colleagues John Roberts, Jesse Armendarez and Phil Cothran, Jr., tapped Milhiser to serve as interim city manager in the aftermath of the departure of Ken Hunt as Fontana city manager. Milhiser remained in that position until January 2020, at which point he was succeeded by Mark Denny.
Milhiser, 74, lives in Montclair and is a board member with the Monte Vista Water District. His wife, Laurie, was considered as an appointee to the Montclair City Council two years ago. His brother, James, is currently the treasurer in the City of Ontario.
Milhiser attended Chaffey College and obtained a bachelor of arts degree in public administration from Chapman University in 1969. He then earned a master of arts degree in public administration from Claremont Graduate University.
A retiree who is pulling a $209,389.32 per year pension from the California Public Employee Retirement System based upon his work with Ontario, Upland and Montclair, Milhiser under the rules governing retirees can work only 960 hours per year under contract for a public agency.
Thus, at 40 hours per week, Milhiser will be able to remain in Grand Terrace no later than January 12, 2022, given his start date of July 28. At present, the city is seeking to recruit a city manager to replace former City Manager G. Harold Duffey, who resigned June 22, effective July 20, to take on the position of public works director in Oakland.
Steven Weiss, Grand Terrace’s planning and development director, served as acting city manager from last Friday until early Wednesday morning.
Milhiser is respected in many circles and has proven qualifications, skill and experience in managing municipal operations. Nevertheless, he has not been immune to controversy or criticism.
During his last four years and four months as city manager in Upland, John Pomierski was that city’s mayor. Shortly after coming into office, Pomierski began taking bribes and kickbacks from individuals and companies with project applications as well as contract and franchise bids for work with the city. Those close to City Hall and observant onlookers knew the score. Pomierski sought to include city employees in the graft, providing them with raises and benefit increases to induce them to allow his depredations to continue uninterrupted. There is evidence to suggest that Milhiser, in his function as city manager inadvertently and very likely early in Pomierski’s time as mayor, was enabling Pomierski in his running of a corrupt municipal regime in Upland. At some point no later than December 2004, it became clear to Milhiser that Pomierski was violating the public trust in his elected role, and that the mayor was bending staff to his will in order to get it to cut corners for those who were doing business with the city and paying him off. When Milhiser signaled that he was no longer willing to go along with Pomierski’s machinations, Pomierski forced Milhiser into resigning as city manager, replacing him with Robb Quincey. Pomierski arranged to provide Milhiser with a $200,000 severance package when he departed in March 2005, which effectively bought Milhiser’s silence. Ultimately, in 2011 Pomierski was indicted by a federal grand jury on political corruption charges, convicted in 2012 and sentenced to two years in federal prison.
During Milhiser’s tenure in Adelanto, the three members of the controlling majority on the city council who had hired Milhiser to run the city in 2017 were taking money from applicants for cannabis-related business operations in the city in exchange for providing those entities with permits. Between Milhiser’s two stints as interim city manager there, Councilman Jermaine Wright was arrested by the FBI for receiving a bribe from an undercover FBI agent posing as an applicant for a marijuana-related business license in exchange for Wright’s assurance that the business would not be subjected to city code enforcement action that would shut it down. Unlike Gabriel Elliott, the city manager between his two runs as Adelanto city manager, Milhiser maintained an amicable and cooperative relationship with Wright and Mayor Rich Kerr and Councilman John Woodard, as they approved multiple marijuana-related business applications in their city while receiving substantial amounts of money provided to them by those business operators in the form of political donations and cash provided to Kerr’s wife, Misty, in envelopes during her attendance of city council meetings.
Ken Hunt, the city manager in Fontana whom Milhiser replaced when he assumed the interim city manager role in July 2019, had been highly thought of by the city council, which in 2011 rewarded him by making him San Bernardino County’s highest paid city manager. By 2016, Hunt’s pay was boosted even further, such that he was the third highest paid city manager in California. In 2018, he was the second highest paid city manager in California. When Hunt’s level of remuneration was challenged, Mayor Acquanetta Warren and three of her colleagues on the council were insistent that Hunt’s performance level was such that his pay was justified, and they indicated that they were hopeful of keeping him in place until 2026, which was five years beyond the duration of his contract which was set to elapse in 2021. Nevertheless, in 2019, Warren forced Hunt to resign after he became aware of bribes she was accepting. To buy Hunt’s silence, Warren conferred upon him a $1.1 million severance package, and brought in Milhiser to replace Hunt. There have been suggestions that Milhiser, based on his experience in Upland with Pomierski, had an understanding of what was transpiring between Warren and Hunt.
Even as Milhiser was hired by the Grand Terrace City Council to serve as interim city manager and was being welcomed into the city, there were questions about the arrangement.
Under the contract he has with Grand Terrace, Milhiser is to make $18,000 a month, with no benefits. Over the last decade, Grand Terrace’s municipal operations have been slashed to the bone. At present, the city, which is San Bernardino County’s third smallest in terms of population at 12,640 and the smallest in terms of land area at 3.5 square miles, employs six people, including the city manager – five full time and one part-time employees. When Milhiser was hired to replace Hunt as city manager in Fontana, that 43.07 square mile city had 214,547 residents within its city limits, making it San Bernardino County’s second largest city population-wise. Fontana at that point had over 1,200 employees, and to oversee them, Milhiser was with a straight $148 an hour, with no other benefits beyond the provision of a vehicle. That $148 per hour translated into $25,456 per month.
While Milhiser’s hiring by Grand Terrace passed on a 4-to-1 vote of the council, Councilman Bill Hussey, reflecting the attitude that paying Milhiser $4,186.04 per week to ride herd on five-and-a-half employees was not justifiable, cast the dissenting vote.
At Tuesday night’s meeting at which the vote to hire Milhiser took place, Milhiser said he was “excited” at the prospect of his new job, and the “opportunity for me to continue in the profession I’ve always loved, which is that of city management and working with elected officials [and] working with the community. I really appreciate the mayor and council’s confidence in me to serve in this capacity. I will do everything I can to continue what I consider great momentum the City of Grand Terrace has in development and taking care of their residents.”
A conflagration on the water at Lake Arrowhead’s north shore on July 16 that destroyed seven boats and did substantial damage to five others has been deemed to be “highly suspicious” by the team of investigators with the San Bernardino County Fire Department who have looked into what occurred.
Damages in excess of $2 million were sustained in the fire that broke out on or next to Dock #4 at Lake Arrowhead’s North Shore Marina shortly after 4 a.m. Friday July 16. The 20-slip dock and seven of the boats there were total losses. Two of the boats were entirely consumed to the point where little more than the keel and an entirely charred boat deck was all that was left, such that the vessels were left visually unidentifiable.
A first call came into the fire department’s dispatch center at 4:05 a.m. It is believed that an effort to reach the Arrowhead Lake Association safety office was made prior to the call summoning the fire department. At that hour, the safety office was not manned.
Upon the arrival of the first fire crew, which had been dispatched from Fire Station 92, ten boats were already aflame, as was the dock. Fire Station 92 is located at 981 North State Highway 173 in Lake Arrowhead, roughly 1,000 feet east of Lake Arrowhead’s east shore.
The crew quickly manned Fireboat 92, and moved into close proximity to the dock.
This entailed some danger, as there were explosions from fuel stores on some of the boats.
Using the watergun on the fireboat’s deck as well as hoses, the firefighters sprayed the flames, while a land-based crew maneuvered into position from the other side of the dock.
In addition to braving the fires, the crew was subjected to the hazard of noxious fumes, as the boat hulls were largely composed of fiberglass.
Within a half hour of the fire team’s arrival, the flames had been doused.
Nevertheless, damage was extensive.
In the aftermath of the fire, there was charred debris spreading out from the dock toward the middle of the lake and fanning in both directions from the dock along the shore.
Arson investigators, led by Hector Trevino, were doing a chemical analysis of the debris, the ships and the dock to determine if an accelerant was present. That so many boats and the dock caught fire so quickly is highly unusual. There was no word on the results of the chemical analysis of the fire remnants.
Witnesses, consisting primarily of residents of the north shore, reported that individuals carrying flashlights were seen and heard near the gate to the dock within an hour prior to the fire. There were also reports of vandalism to boats that were not damaged in the fire.