By Mark Gutglueck
Voters’ rejection of Measure L, which would have imposed a one cent sales tax override on commercial transactions in Upland, has revived serious discussion of the dissolution of the Upland Police Department in favor of the City of Gracious Living contracting with the San Bernardino County Sheriff’s Department for the provision of law enforcement services.
Measure L would have generated approximately $16 million a year if it would have passed, according to Upland Mayor Bill Velto and Upland City Manager Michael Blay. Had voters approved it, 41.5 percent of the money – $6.64 million – would have been used for public works projects, including fixing streets, alleys and sidewalks, filling potholes in San Bernardino County’s tenth largest of 24 municipalities population-wise and sixth smallest geographically. Another 37.5 percent, or $6 million, was to be used for public safety, which was to cover hiring more police officers, stricter gang and drug law enforcement, enhanced 9-1-1 response and eradicating or reducing vandalism. The remaining 21 percent was to be used for what were deemed “citywide services,” youth and senior citizen programs, park maintenance and improvements and dealing with the homeless among programs.As of Friday, November 11 at 4 p.m., available figures from the San Bernardino County Registrar of Voters showed that of the 13,268 votes cast by Upland’s voters counted so far, 5,967 or 44.97 percent were in favor of the tax add-on and 7,301 or 55.03 percent were against it. It does not appear, even with many provisional and mail-in votes yet to be counted, based upon the trending numbers and pattern of voting, that the margin between the yes votes and the no votes is close enough for the rejection of the tax to change.
Upland has been dancing around within an ongoing financial thunderstorm, dodging raindrops without getting wet for a decade. It now appears that city officials and city employees will be soaked.
A 2012 auditor’s opinion from the certified public accounting firm Mayer Hoffman and McCann stated there were serious questions with regard to the city’s solvency to the point that in a short while “it will be unable to continue as a going concern.” City officials since that time have sought to plug the city’s funding gaps, deal with the hemorrhaging of red ink, and engage in deficit spending by utilizing the city’s dwindling financial reserves to engage in balancing each annual budget. But for nearly a generation, the sins, i.e., what literally were crimes committed by city officials and employees, have plagued Upland to the point that it might not be able to recover without drastic action. It was the secret hope of some city officials that the city’s taxpayers would bail the current city council out of the fix it is in by ignoring or simply forgetting about the criminality city officials had engaged in which was documented in 2011 by the U.S. Attorney’s Office. The council and top city administrators wanted Upland’s voters to simply pass the sales tax add-on so the costs of that criminality – in the form of increased salaries and benefits for the city employees who had either engaged in those crimes or peaceably coexisted with it – could be defrayed. That hope terminated with Measure L’s failure.
Of direct relevance to the city’s current circumstance is the city’s yet-unresolved travail with former Mayor John Pomierski, who was in office from 2000 to 2011.
In the 2001-2002 timeframe, Pomierski was grooming the city for exploitation, arranging for and initiating his reception of the first wave of multiple waves of bribes that would go into his pocket and bank account. To many of those who were employed at or close to Upland City Hall, Pomierski’s depredations were obvious. To buy the silence of city staff, Pomierski started giveaways of taxpayer money that are yet plaguing the city. First, he increased pensions that were to be given to city employees through the California Public Employees Retirement System. Thereafter, he upped city employee salaries. Since retirement benefits – specifically pensions paid out after city employees leave the employment of the city – use a formula that is based upon the highest salaries city employees receive while they are yet employed, this procedure caused the city’s current and future pension costs to escalate. Thereafter, Pomierski effectuated with the council he headed a reduction of city employees’ five-day work week to a four-day work week, which was out of step with the employment schedules of the vast majority of Upland residents. In 2005, he hired Robb Quincey as city manager and then arranged for him to be provided with a raise equivalent to whatever raises were given to a) police management and b) police rank and file. Pomierski and the city council thereafter had Robb Quincey carry out the negotiations with police managements’ and the police officers’ bargaining units on their contracts. Over a period of less than five years – throughout a downturn in the U.S., California and local economy – Robb Quincey was given seven raises while the police management and police officers in Upland in general were given three raises apiece. By 2010, Robb Quincey was the second-highest paid city manager in California, despite the consideration that there were 113 other cities in the Golden State with a larger population than Upland.
There was virtually no one who was employed by the city who did not know that John Pomierski was on the take. Many knew precisely what Pomierski was doing; others did not know exactly what his grift consisted of, but they knew he was dishonest and that by going along with him, they were making more money than they would otherwise and that when they retired, they would really clean up, based on the deal the corrupt mayor had signed off on with the California Public Employees Retirement System on their behalf.
In the end, it was the FBI that slapped the handcuffs on Pomierski and not the Upland Police Department. In June 2010, Pomierski’s home, his office and City Hall were subjected to raids by FBI and IRS agents. In 2011, he was indicted by a federal grand jury, which was followed by his 2012 conviction, which resulted in his two-year sentence to federal prison. In 2012, as well, Quincey was criminally charged, followed two years later by his conviction. In the years since, many of those people who were looking the other way so Pomierski and Quincey could get away with what they did for as long as they did have retired.
The escalation in the pension payouts received by now retired Upland city employees is a factor in the city’s ongoing financial challenge.
Presently, the city’s pension debt, the amount of money owed to the California Public Employees Retirement System, is approaching $140 million. Since the city is not capable of paying that entire amount off at once, it has financed the debt, paying an amount of money to the California Public Employees Retirement System annually which the system’s administrators accept, and which is used to pay the city’s current crop of retirees their pensions. Viewed in this way, the city is shelling out on a yearly basis $11 million to provide pensions to people who are no longer working for Upland and pay the interest on financing that debt. In considering the City of Upland’s current financial circumstance, when the one-time infusions of federal CARES Act and American Rescue Act funding augmentation are left out of the equation, the city is shown to have a $46.5 million actual budget. Thus, 23.65 percent, approaching one fourth of the money the city is taking in goes toward paying pensions to people who no longer work for the city. As a consequence, there is insufficient money available to pay for street, sidewalk, alleyway and other infrastructure maintenance or for key services such as keeping pace with the number of police officers to match the city’s population growth. With that unfunded pension debt growing every year, in 12 years – 2034 – nearly half of the city’s budget will be consumed by paying pension stipends to those no longer for the city.
The city’s dilemma can be brought home in a consideration of just some of the higher pension payouts that are being made to former Upland employees through the California Public Employees Retirement System.
Former Police Chief Kenneth Jeff Mendenhall, who had 34.07 years working as a public employee, is receiving an annual pension of $205,691.25. His wife, former City Clerk Stephanie Mendenhall, who had 28.04 years working as a public employee, is receiving an annual pension of $111,625.69. Former City Manager Michael Milhiser, who had 34.33 years working as a public employee, is receiving an annual pension of $199,858.44. Former Police Chief Marty Thouvenell, who had 33.63 years working as a public employee, is receiving an annual pension of $174,028.04. Former Police Captain Arlis Garner, who had 34.07 years working as a public employee, is receiving an annual pension of $170,950.66. Former Development Director Jeff Zwack, who had 33.8 years working as a public employee, is receiving an annual pension of $140,190.96. Former Police Chief Steve Adams, who had 27.05 years working as a public employee, is receiving an annual pension of $127,446.92. Steven Dukett, who had 34.43 years working as a public employee in the California Public Employees Retirement System, is receiving an annual pension of $122,467.36. Former City Manager Jeannette Vagnozzi, who had 25 years working as a public employee, is receiving an annual pension of $119,166.24. Former City Manager Stephen Dunn, who had 28.55 years working as a public employee, is receiving an annual pension of $113,908.35. Police Captain Kenneth Bonson, who had 22.19 years working as a public employee, is receiving an annual pension of $113,694.92. Those represent but a fraction of the former Upland employees receiving pensions. Others are progressing toward retirement, and they too will soon be collecting generous retirement benefits.
A band of Upland residents has repeatedly called upon Upland city officials to engage in reform of the city’s pension system before the city goes bankrupt. The city council, however, for a variety of reasons, is unwilling to confront the city’s employees and retirees about their unwillingness to check the criminal action that Pomierski and Quincey engaged in, a tolerance that allowed the city’s employees to reap these benefits they are now being provided with. In particular, members of the city council are concerned that if they seek to reform the pension system, reduce salaries or force the city’s workforce to reassume a five-day work week, the public employee unions which represent the city’s employees would actively resist them by a concerted effort to prevent their reelection to the city council.
Nevertheless, there is a belief among some city residents that the city has the legal authority to curtail the pension benefits current and future Upland municipal employees are now receiving or will get.
Under Government Code Section 1090, any contract a governmental agency enters into that is a product of a conflict of interest is rendered null and void. When Quincey was negotiating with the police unions and receiving himself everything that he conceded to them during those negotiations, he was involved in a conflict of interest. At present, instead of using the city attorney to overturn the arrangements for the benefits that are being given to the city’s employees illegally by Pomierski and Quincey, the city council relies upon advice being given to it by the city’s administrators and managers, who are themselves to be the beneficiaries of the pension benefits the city has worked out with the California Public Employees Retirement System.
Adding to this circumstance is that when the concept of reforming the city’s pension system was last floated, in 2021, the city relied upon the advice provided to it by a consulting firm, Urban Futures. Urban Futures in the past had been involved in assisting the city in the refinancing of its debt. As such, the methodology for dealing with the city’s pension debt that Urban Futures gravitated to was that the city should look at utilizing so-called pension obligations bonds as a means of refinancing the debt, which one of Urban Futures’ advisors, Julio Morales, insisted would be the best way to approach the situation. Morales told city officials that the city could not, as some had suggested, move its current and future employees out of the California Public Employees Retirement System, such that it could cap its currently unmanageable pension debt at what is owed to its past employees. Upland was caught in and could not escape from the all-or-nothing scenario it was in, Morales said. If some of the city’s employees are in the California Public Employees Retirement System, according to Morales, all of the city’s employees had to be allowed to participate in the system. Morales sought to refocus city officials’ attention on the pension obligation bond option. For many Upland residents, this was troubling, as the firm he worked for, Urban Futures, potentially was poised to be intimately and professionally involved in the issuance of those bonds if that company were to be used in the preparation/brokerage of the bond sales. This, in the minds of many, constituted a conflict of interest that was limiting the validity, quality and integrity of the information city officials were being provided about their options in dealing with the city’s seemingly intractable pension debt challenge.
In one fell swoop, Morales had removed from the table the strategy of having the city exit from its relationship with the California Public Employees Retirement System.
Moreover, Morales simply ignored and thus erased from consideration the suggestion that the city utilize Government Code Section 1090 to rescind those portions of the city’s agreement with the employees unions that conferred on the employees the retirement benefits which Quincey had negotiated while he was subject to receiving the same benefits.
Consequently, the city moved forward, in the summer of 2021, with an effort to issue pension obligation bonds.
There were substantial unanswered questions about the advisability of the city’s intended reliance upon pension obligation bonds to structure its way out of its burgeoning pension debt, one which would defer to future generations the city’s pension financing obligations, a practice which has been likened by the Government Finance Officers Association to paying off money owed on one credit card with another credit card. Additionally, the city had put itself into the position of not only relying upon Urban Futures for guidance in a matter by which Urban Futures was on the brink of generating for itself fees if the city followed its advice but a similar arrangement with the law firm, Best Best & Krieger, that employs City Attorney Steven Deitsch, by which Best Best & Krieger was to serve as bond counsel and disclosure counsel with regard to the issuance of the bonds, also representing a conflict of interest.
Faced with these unanswered questions and the prospect of the conflicts of interest they had entangled themselves in with Urban Futures and the city’s own law firm, the city council opted against issuing the pension obligation bonds.
In the run-up to the vote on Measure L, which city officials hoped would provide Upland’s economic salvation, City Councilman Rudy Zuniga put things in rather stark terms. If the voters fail to approve Measure L, he said, the police department would likely be outsourced.
“We have one of the best police departments and one of the best police chiefs around,” Zuniga said. “We need to have better pay, but how do we do that? We don’t have the money. We can think of all these ideas on how to get them more money and such, but the city doesn’t have the budget. We have no fat to trim. We don’t have the money. So, we have to think of different ways of raising revenue to be able to give our officers what they need to stay with us. The past council got rid of our fire department. What’s next? What do you want to outsource next? It’s never good to outsource. We need to keep everything in-house.”
Once the sheriff’s department is brought in, Zuniga said, the police department will be “gone forever. If it doesn’t pass, remember this, if someone comes and takes it, it’s your fault it’s gone. We will never get it back again.”
That is where the city now finds itself.
During the campaign for and against Measure L, former Councilman Glen Bozar asserted that before the city moved to the option of raising taxes on its citizens, it needed to consider all means of efficientizing the city’s operations and cutting the already too high costs of city operations that are overburdening the city’s taxpayers.
“There were all of these dire predictions of what would happen when the city closed out its fire department and contracted with the county,” Bozar said. “The county fire department arrived and everything has been fine.”
He predicted the city would adjust equally as well to law enforcement services in Upland being transferred to the San Bernardino County Sheriff’s Department.
The Sentinel is informed that City Manager Michael Blay, Police Chief Marco Blanco, Mayor Bill Velto and Councilman Carlos Garcia are huddling as this article is being composed, discussing what can be done to deal with the funding crisis the city is experiencing in the aftermath of Measure L’s failure to pass and a circumstance in which roughly 61 percent of the city’s budget is consumed by the operation of the police department.
With Bozar and other residents pushing for greater fiscal responsibility and Measure L having failed, Blay, Blanco, Velto and Garcia face a new reality in which the city must either institute the salary and pension reforms city officials have so far balked at, make further reductions to the number of the police department’s officers or close out the police department entirely in favor of a contract with the sheriff’s department. Blay, a former sheriff’s sergeant, is potentially the best emissary the city has with regard to that final option. Unknown is whether Blanco is willing to sit still while the department he leads is consigned to oblivion and if Velto and Garcia are up to getting the remainder of their council colleagues to come to terms with fiscal and political reality.
By Mark Gutglueck