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Sentinel 01-24-14

(January 23)  The Upland Fiscal Task Force Committee has completed its analysis of the financial crisis facing the City of Gracious Living without arriving at a definitive strategy for stanching the hemorrhaging of red ink onto the city’s ledgers, instead giving the city council a smorgasbord of choices on measures to make incremental inroads into Upland’s future deficits.
Four members of the task force will present the committee’s analysis  to the city council at the January 27 city council meeting. Those findings will be based upon a written report, now being authored by task force member Anthony Ghosn.
The decision to form the committee came in October, when Upland City Manager Stephen Dunn told the public and the city council that the city was functioning with a balanced budget but was on a collision course with fiscal reality in coming years. Dunn said the city’s financial circumstance is bleak, as is indicated by a 2012 auditor’s opinion from the certified public accounting firm Mayer Hoffman and McCann as well as the financial rating company Standard and Poor’s intended downgrading of the city’s credit rating. Mayer Hoffman and McCann said there are serious questions with regard to the city’s solvency and Standard and Poor’s had already downgraded the city from an AA credit rating to an A+ and was considering downgrading its credit rating even further. A municipality’s credit rating directly impacts the interest rate it must pay when borrowing money.
The city’s currently balanced $39 million budget is being held together by means of heavy borrowing from rapidly evaporating reserves, while relying on income from two of the city’s enterprise funds which remain in the black, its water and sewer service funds, Dunn said.
Years of deferred maintenance are beginning to catch up with the city, Dunn said, pushing it to a point beyond which it will no longer be able to stave off those problems into the future, as potholes, streets and dilapidating equipment are being neglected, funding for promised post employment benefits is non-existent, and no programs are available for attracting businesses into the city or dealing with the city’s burgeoning homeless population.
The city council chartered the fiscal task force committee with finding solutions to the city’s financial challenges.
With the specter of bankruptcy looming over the city, the task force went to work. Based upon the tenor of the comments made during the course of the group’s meetings on December 5, January 11 and January 18, four of the group’s members appeared to be less sanguine about the prospect of the city’s ability to fashion workable fixes to the city’s gaping financial hole than the other six. Ghosn, who was appointed by councilman Brendan Brandt, attorney Robert Gaudy, who was appointed by Mayor Ray Musser, and certified public accountants Bob Nelson and Steven Spears, both appointed by councilman Glen Bozar, were highly skeptical of proposals to right the city’s listing financial ship by means of a taxing proposal, either in the form of a utility tax or sales tax, on the grounds that it would be regressive if passed and would potentially prove counterproductive by prompting businesses to leave town, residents to shop elsewhere or new businesses to avoid setting up in Upland. They also questioned whether the city’s residents would consent to such a tax if an election to impose it were held.
Nor did the quartet readily embrace a proposal for the city to sell off, lease long term or in any other fashion privatize its water division, a move which would generate a considerable amount of cash immediately and would redress much of the city’s current deficit spending, but would provide only a one-time infusion of funds and would result in saddling the city’s residents with astronomical water and sewer service rates to provide the private company involved in the takeover with a profit for its part of the undertaking.
And collectively, Ghosn, Gaudy, Nelson and Spears appeared to be convinced that the only two viable paths out of interminable fiscal turmoil for the city consisted of either bankruptcy or radical cuts in the number of municipal employees and commensurate reductions in the salaries and benefits to the employees that would remain after the bloodletting.  The main thrust of Ghosn, Gaudy, Nelson and Spears’ assertions was that whatever savings and revenue enhancements could be had from the other considered measures, they simply would not be enough to redress the city’s financial problems, given that 68 percent of the city’s operational and existential costs consist of payroll and the provision of benefits and pensions. Nelson, in particular, propounded the argument that the city needed to get a handle on and reduce its pension commitments at once to head off the further deterioration of the city’s financial picture in the future, when more and more of its current employees will join the ranks of the retired.
Despite the dire projections of what it would cost the city to ignore the hazard of maintaining its current manpower levels and labor cost structure, the committee rejected what Nelson felt was a modest but needed proposal to impose a hiring freeze.
Over its two-month active life, the committee looked at 47 different proposals to help cure Upland’s budget ills. Seventeen of those, such as the hiring freeze, imposing labor concessions on city employees or eliminating benefits for the entire city council and treasurer, were rejected. But thirty of those were deemed to be worth either pursuing or further study. In the end, through a selection process by which the task force members were able to essentially vote on their top ten choices, ten cost cutting or revenue enhancing provisions have been earmarked as recommendations to the city council. Those recommendations are not binding, and the council will be free to consider those options which did not make the top ten cut.
The ten top recommendations are: seeking voter approval of a half-cent sales tax, contracting out or privatizing sewer and water service; reductions in the operation of the fire department, including a brown-out of its least used station and selling its ladder truck; renewing the city’s trash contract to generate revenue  the city is not currently receiving; contracting out fleet maintenance;   updating the city’s business license tax schedules; reopening labor contracts; “regionalizing” the police department; combining police and fire dispatch; and outsourcing the animal shelter.
Other money-saving ploys accorded a lesser priority were outsourcing library management as well as the planning, building and engineering departments and information technology functions.
While Nelson, Spears, Gaudy and Ghosn expressed varying levels of disappointment over the task force’s lack of willingness to embrace a much tougher program of austerity for city operations, with each hinting a belief that the city would not be able to turn a corner in its footrace with financial disaster and the possibility of being confronted with bankruptcy down the road, all appeared to be willing to stay on the reservation by endorsing the overall committee’s final recommendations to the city council. Gaudy, who early on both privately and publicly opined that the city appeared to be on the treadmill to bankruptcy, later in the process considered but ultimately rejected asking the committee to consider a 48th option in the form of considering declaring bankruptcy. Ultimately he elected against that course, not wanting to saddle the council member who had appointed him, Mayor Ray Musser, with the legacy of bankruptcy.
On January 27, the committee’s recommendations will be presented to the council by four of the task force members. Three of those – former Upland Mayor Richard Anderson, former Upland Police Chief Marty Thouvenell and Randall Lewis, Upland’s most successful businessman – will represent the more optimistic and numerous members of the task force who believe the city can cure its ills and stave off bankruptcy by means of the nostrums they are recommending. Only one of the pessimistic wing of the committee – Ghosn – will be among those making the presentation.
Ghosn’s perspective – and that of Gaudy, Nelson and Spears – will thus at some level be insinuated into the information presented to the council. Ghosn, a managing director at Worldbridge LCC where he works on pre-bankruptcy preparations involving multimillion dollar corporations, will make that dissenting perspective available through the written report he is to present. The Sentinel has obtained an early tentative draft of Ghosn’s report, which features subtle language intended to drive home the point that the city of Upland is not out of the woods yet and cannot hope to simply shake off the fiscal doldrums with measures that nibble around the edges of a huge problem.
“The city of Upland currently holds a qualified opinion regarding ’its ability to continue as a going concern’ as stated in the  auditor’s letter for the 2013 consolidated annual financial report,” Ghosn’s draft states. “This is a serious matter in need of comprehensive, thorough and orderly attention from an operational and financial perspective across all departments, funds and related entities within the city of Upland.”
The report then calls for a “remediation plan to correct the city’s current financial condition with sustainable and balanced action, revenue enhancement, cost containment policy and asset reallocation.” Ghosn pulled no punches in declaring “the city of Upland finds itself in this situation for the second time in 12 years and the third time in 20 years. Each time the conditions have worsened, creating the death spiral of an organization and its viability to constituents and others stakeholders. A new workout plan is now required to avoid bankruptcy and reorganization. Quick fixes will put us back in the same boat.”
The only way the city can climb out of its financial abyss, Ghosn suggested, is through “reallocating assets and effectuating a cultural change among municipal staff.”

(January 22)  Spurred by the death of an 9-year-old girl and injuries to her 7-year-old brother as they were crossing a street en route home from Etiwanda Colony Elementary School, the Etiwanda School Board last week voted to reverse its decision three years ago to end school bus service.
The board members were confronted with petitions signed by hundreds of parents requesting the return of bussing for the students.
During the 2010-2011 school year, the board terminated district bus service, based on the cost it represented.
An informal survey indicated district voters were overwhelmingly averse to assessments to defray the cost of district bus service. State law does not require districts to provide bus service to pupils other than those who qualify as so-called special needs or special education students. The state partially subsidizes the provision of bus transportation within school districts that offer it, but a significant portion of the cost must be borne by the district.
The death of Ashlyn Gardner, a third-grader who was crossing the street at East Avenue at Banyan Street in Rancho Cucamonga with her younger brother when they were struck by a pickup truck, galvanized the community of Etiwanda, which  was one of the three former wine-producing districts including Alta Loma and Cucamonga that combined in 1977 to form the city of Rancho Cucamonga.
Calculating that the cost of bussing a single student to school each year ran to more than $700, board members gambled three years ago that they could eliminate the district’s bus service without dire or fatal consequences. They lost that bet.
On January 17 they collectively consented to reestablishing bus service for Etiwanda Colony Elementary, Summit Intermediate, Heritage Intermediate, Day Creek Intermediate and Etiwanda Intermediate schools, utilizing seven busses, effective at the return of students from Spring Break in April  for the two remaining months in the school year.
Board members referred to the change as a “pilot program,” saying they would determine at the end of the school year whether to continue with the transportation program when school starts again in August.

(January 21)  In their zeal to make a federal criminal case against the defendants who were already charged with bribery-related crimes in the state’s Colonies Lawsuit Settlement Public Corruption Prosecution, FBI agents and members of the U.S. Attorney’s Office violated the constitutional rights of the central figure in the case, his lawyer has alleged in recent filings in U.S. District Court.
The California Attorney General’s Office and the San Bernardino County District Attorney’s Office obtained an indictment against Jeff Burum, Paul Biane, Mark Kirk and Jim Erwin in May 2011. That indictment alleged Burum, one of the two managing principals of the Colonies Partners, first extorted and then bribed then-supervisors Bill Postmus and Paul Biane to vote to approve conferring a $102 million payment to the Colonies Partners in 2006. That payment was made to settle a lawsuit brought against the county by the Colonies Partners in 2002 over flood control issues at the Colonies at San Antonio residential and Colonies Crossroads commercial subdivisions in northeastern Upland.
According to the prosecution, Burum, with the assistance of Erwin, a former president of the San Bernardino County sheriff’s deputies union who was working as a consultant to the Colonies partners, in 2006 threatened Biane and Postmus, who were that year involved in political campaigns, by creating political mailers that dwelled on derogatory information pertaining to both. Prosecutors further allege that those mailers were withheld from distribution and that three weeks after the election Postmus and Biane joined with supervisor Gary Ovitt in approving the $102 million payment to the Colonies Partners. The prosecution alleges that subsequent to the $102 million settlement, payoffs were made to Postmus, Biane and Mark Kirk, the latter being supervisor Gary Ovitt’s chief of staff.  These payoffs were in the form of separate $100,000 payments over the next seven months to political action committees controlled by Postmus, Biane and Kirk. Kirk was paid, prosecutors allege, for influencing his boss, Ovitt, to support the settlement payment.
Postmus had been named in a previous indictment concerning this alleged activity along with Erwin, in February 2010. Though he had initially pleaded not guilty in response to that indictment, in March 2011 he entered a guilty plea to all charges against him. He then served as the star witness when a second grand jury was impaneled in April 2011, which led to the superseding indictment in May 2011, which renamed Erwin and added Burum, Biane and Kirk.
Four months after the superseding indictment was handed down, the FBI in conjunction with IRS agents served nine search warrants at various locations in Southern California, including the residences and/or the business offices of Burum, Biane, Erwin, and Kirk, unmistakably signaling the federal government’s interest in the case.
Burum’s legal team immediately went to work, challenging the search warrants, asserting that the wholesale seizure of materials and data from Burum’s home, office, computers and communications devices was overbroad and requesting the immediate return of data critical to the operation of Burum’s business operations. A protracted back-and-forth between Burum’s legal team and the U.S. Attorney’s Office ensued, the upshot of which was that prosecutors were for the time being permitted to retain custody of the seized materials, but a special master was appointed and a protocol was established by which the materials were to be evaluated as to their relevance to any possible prosecution and those deemed as irrelevant to the legal case against Burum or the other defendants were to be destroyed or returned to their owners.
By May 2012, the U.S. Attorney’s Office had come to the conclusion that it would not proceed against any of the defendants in federal court, although no public indication of this decision was given. At that time, FBI agents working the case forwarded copies of data retrieved from both Burum’s home and business office computers as well as from his cell phone to investigators with the San Bernardino County District Attorney’s Office for potential use in the already-filed state case against the four defendants. That data at that time had not been nor was it subsequently subjected to the relevancy examination protocol ordered by the court as the result of the challenges of the search warrants by Burum’s legal team.
Last September, when the district attorney’s office complied with discovery requirements by which it must turn over to the defense the materials it will rely upon in making its case in court, Burum’s team discovered that the district attorney’s office had a computer disk containing unredacted data obtained from the search of Burum’s home, office and phone.
On September 27, 2013, the lead attorney  representing Burum, Stephen Larson, referenced the district attorney’s office’s possession of the data during a court appearance in the pending criminal case. The state court ordered the district attorney’s office to segregate and not review materials seized during the searches of Burum’s residence and office building pending resolution of Larson’s objection to the provision of material to the district attorney’s office. Larson then contacted the U.S. Attorney’s Office and asked whether any additional data subject to the special master order had been provided to the district attorney’s office. The U.S. Attorney’s Office agreed to look into it. It was subsequently determined that the district attorney’s office had another disk containing forensic copies of data seized from Burum’s computers and communications devices. One of the district attorney’s office’s investigators claimed to the U.S. Attorney’s Office that the second disk in question had not been reviewed by his office.
On October 9, 2013, Larson met and conferred with the U.S. Attorney’s Office by means of a telephone conference regarding how to resolve the situation and on October 11, Larson followed that up with a letter raising various grievances regarding the government’s investigation and the FBI’s provision of the disks to the district attorney’s office.
On October 17, 2013, the U.S. Attorney’s Office responded to Larson’s letter, saying it intended to ask the district attorney’s office to return the disks and to delete the disk data.
On November 20, 2013, Larson filed on Burum’s behalf a motion in federal court for the return of Burum’s property.
On January 13, the U..S Attorney’s Office filed a motion in response, opposing the return of Burum’s property. Without conceding that any errors had been made, Assistant U.S. Attorney Joseph Widman in the government’s motion in opposition asserted that there was some confusion over whether the order by the federal court for a speedy [i.e., 60 day, later extended to 120 day] review of the seized materials pertained to the material seized from Burum and his premises or just that data and items seized from the other targets specified in the search warrants served in September 2011. Those targets included Biane; Erwin; Kirk; former state Senator Jim Brulte, who had served as a consultant to the Colonies Partners during the effort to settle the lawsuit with the county; materials obtained from public relations specialist Patrick O’Reilly, who had prepared the mailers containing the derogatory information relating to Postmus and Biane in 2006; and the phone records of former Superior Court Judge Peter Norell, before whom the Colonies lawsuit against the county had been heard.
Widman in his motion asserted that “the [federal] government’s handling of the digital data in question was and continues to be responsible and reasonable” and he pointed out that a federal judge had earlier expressed the opinion that it would be up to the judge hearing the state case against the defendants to determine whether the materials seized by the FBI in its search could or could not be used in that prosecution.
In his motion, Widman made two revelatory disclosures, the first one coming in the motion’s first paragraph, in which he let on that the federal government will not pursue a prosecution against the defendants in the state case.  “The federal statute of limitations on the charges the government was investigating has expired without the filing of federal charges,” Widman wrote.
The second disclosure hinted at some level of defiance on the part of the district attorney’s office with regard to the U.S. Attorney’s Office’s effort to recover the disks containing the data gleaned from Burum’s home and office computers and his communications devices.
“The government asked the district attorney’s office to return the disks; the district attorney’s office declined to do so,” Widman stated in the January 13 motion. “The district attorney’s office asked the government to refrain from deleting the disk data, since its status had not been ruled upon in the pending criminal case. On November 1, 2013, the government informed movant [i.e., Larson and Burum] that it intended to abide by the district attorney’s office’s request and not voluntarily destroy the disk data. To date, the district attorney’s office has not returned the disks to the government.”
On January  17, in a reply to the governments opposition to the motion for the return of Burum’s property, Larson took the U.S. Attorney’s Office, the FBI and the district attorney’s office to task for what he characterized as multiple violations of a court order, along with the filing of false statements and documents with the court, and a cover-up.
Larson, as a former federal judge, speaks with a degree of authority beyond that reserved for other members of the bar.
“The government’s opposition makes clear that it violated this court’s order when it reviewed the digital data seized pursuant to the search warrants, and that it then submitted false and misleading declarations to cover-up its violations,” Larson asserted in the January 17 court filing. “The government also admits that its investigation has been closed for more than a year and a half, and its conduct reveals that it was merely acting as a stalking horse for its state counterparts who are – and have been throughout this investigation – members of a joint federal and state task force.”
According to Larson, the U.S. Attorney’s Office and the FBI were boldly disrespecting the court.
“The government concedes that it did not follow this court’s order when it failed to determine what data fell within the scope of the warrants, failed to provide that data to Mr. Burum’s  counsel for a privilege review, and failed to await a final determination by the special master prior to using the data,” Larson told the court. “The government’s  silence regarding the review of the digital data seized from Mr. Burum’s office is deafening . The government failed to provide any declaration that data seized from Mr. Burum’s office was reviewed at all, either for privilege or scope.”
The U.S. Attorney’s Office has used specious and disingenuous reasoning in justifying its action and that of the FBI, Larson asserted.
“The government’s argument that the court order did not specifically prohibit it from sharing the data with state prosecutors is a red herring,” Larson wrote. “The issue here is the government’s blatant violations of the court’s order regarding the review of data for privilege and the warrants’ protocols for examining the seized data. At no time did the court countenance the wholesale production of unfiltered digital data to state prosecutors. Rather, the court noted that it was not considering the issue at that time because such sharing had not occurred. Certainly there is no evidence that the court even considered whether it would be appropriate for the government to share the data without first subjecting the data to the court’s privilege review procedures and well-established scope protocols. Moreover, the government’s current position on this issue is belied by its initial request to state prosecutors to return the materials.”
Larson continued, “The government was required to search the digital data within 120 days to determine what data fell within the scope of the warrants, and to then delete or destroy any data falling outside the scope of the warrants.  The government now admits that it failed to search the digital data within this time limitation. In an attempt to justify this failure, the government argues that the search of the digital data from Mr. Burum’s home and office were not subject to the 120 day deadline. The government also contends that the order did not set any deadlines or time periods within which the government must send movant [i.e., Burum and his legal team] a copy of the materials deemed subject to seizure.”
By failing to return the seized data to Burum and instead keeping it, the U.S. Attorney’s Office has openly defied the court, abused Burum’s constitutional rights and set the table for what is tantamount to a conspiracy involving the San Bernardino County District Attorney’s Office, Larson said.
“The government also admits that it did not timely delete the digital data,” Larson wrote. “The government began deleting certain secondary archives on January l3, 2014 – but only after Mr. Burum filed his recent motion, after it requested an extension of time to file its opposition, over 18 months after the investigation was closed, and almost two years after the data should have been deleted. The government’s misleading characterization of the status of the data and its adherence to search protocols is further evidence of its callous disregard for Mr. Burum’s constitutional rights. In another glaring admission, the government failed to provide a clear accounting of what is being deleted and when such deletions will be completed. The government concedes that data falling outside the scope of the warrants should have been and must be deleted. The government nonetheless admits to retaining copies of all the digital data seized from Mr. Burum’s home and business in perpetuity at the request of its state task force counterparts.  As set forth above, the government has demonstrated callous disregard for Mr. Burum’s constitutional rights. Mr. Burum also has an interest in the return or destruction of his seized property so that he can vindicate his constitutional right to unwarranted search and seizure. He is irreparably harmed by the unprotected data remaining with the government and state prosecutors in violation of the court’s order and the specific protocols governing the search and destruction of the digital data. The government also acknowledges that Mr. Burum ‘appears to lack a remedy at law,’ but suggest that he take it up with the state court. A federal court order requiring the return of the data by the state prosecutors and destruction of all seized data is the appropriate remedy here: This matter involves a federal  search warrant, obtained and executed by federal agencies working as part of a joint task force and under the supervision of federal prosecutors, and is subject to protocols ordered by this federal court. Finally, the government has acknowledged that the federal investigation is closed, and thus it has no basis to retain any of the seized data or to deliver the data to its joint task force members. In short, the federal agencies have acted as part of a joint task force with state law enforcement agencies, executed search warrants after the state prosecutors initially lost most of their case on demurrer, and then provided wholesale digital data to the state prosecutors in violation of the plain language of the court’s orders, the search warrants, and Mr. Burum’s constitutional rights. The appropriate remedy, based on the government’s conduct, is to order the return and destruction of the digital data seized from Mr. Burum’s home and business.”
Larson’s  petition was to the federal court. It presages, reliable sources have told the Sentinel, motions that will be forthcoming in state court alleging prosecutorial misconduct against the DA’s office and the California Attorney General’s Office, who are jointly prosecuting Burum, Biane, Erwin and Kirk.

(January 21)  Yet another lawsuit brought by attorney Cory Briggs against the city of Chino and one of the project proponents to which it had given an entitlement to build has been settled on terms Briggs hailed as a victory.
Briggs, representing the Inland Oversight Committee and Citizens for Responsible Equitable Environmental Development, named Chino and Majestic Realty Company as defendants in a lawsuit which cited environmental concerns at the  Chino Gateway Project Majestic intends to develop on unused grounds owned by the state and recorded on maps as within the footprint of the  California Institution for Men. Majestic is leasing the land, totaling 156 acres, from the state and will erect two separate 1.44 million square foot warehouses, a smaller 180,000 square foot warehouse and 46,600 square feet of retail and commercial space.
One of the issues raised in the suit was the manner in which the project had been approved by the city, bypassing a full-blown environmental impact report and substituting what amounted to a negative declaration of unmitigateable environmental impacts by the city council, which consented to amending its general plan environmental impact report where it was out of synchronicity with the project.
Under an arrangement worked out by Briggs and lawyers for Majestic, Majestic has agreed to adjusting the traffic circulation element of the development to reduce nearby impacts. In addition, Majestic is to install, at its own cost, photovoltaic generating equipment at and on the warehouses rated to generate 1.6 million kilowatt hours of power per year, enough to provide 110 percent of the power requirements for operation of the warehouses and the adjoining retail project. Majestic consented to picking up $18,920 of the legal costs the Inland Oversight Committee and Citizens for Responsible Equitable Environmental Development had accrued with Briggs. Briggs agreed to terminate the suit against all parties, including the city.
Briggs has emerged victorious from two previous suits that named the city of Chino and currently has four further cases pending against it.

(January 20)  The field of candidates vying to succeed former 23rd District State Senator Bill Emmerson, who resigned his position in the state legislature on December 1, thinned out in the last fortnight, with Yucaipa Valley Water District Board Member Lonni Granlund and Menifee Mayor Scott Mann pulling the plugs on their candidacies.
Campaign funding, or the lack thereof, appeared to have been a major factor in both Granlund’s and Mann’s decisions.
A suppressed note of bitterness crept into Granlund’s announcement of her withdrawal, which appeared to be vectored at state Republican Party members who initially promised or at least indicated a fair amount of campaign cash would be provided to make her candidacy viable. So far, the race has been seen as falling to Assemblyman Mike Morrell, who has used his incumbency and access to the GOP establishment to distinguish himself as the best-funded and most viable of the candidates in the race. The 23rd Senatorial District has voter registration levels highly favorable to Republicans.
“After giving careful consideration about continuing my campaign for the 23rd State Senate District to replace Sen. Bill Emmerson, I have made the decision to terminate my campaign effective immediately,” Granlund said. “When I was asked to run for the State Senate I was led to believe that substantial resources would be committed from Sacramento for my campaign. The prevailing sentiment was that the field of candidates was unimpressive and unable to tackle the state’s anti-business philosophy. As a businesswoman I was viewed as someone with the skills to make a difference, but that’s not enough in Sacramento. My friends, family and supporters generously stepped up to help reach the goals set for a viable campaign. Unfortunately the funding from Sacramento simply did not materialize.”
She continued, “As a long-time member of the community, I faced the challenge of running a severely under-funded campaign, which would ultimately waste my supports (sic) hard earned money. I value my friendships and integrity too much to waste the hard earned money of my friends and family. I have seen candidates in the past continue to take their friends and supporters (sic) money knowing full well that their success was unlikely. That’s not something I am willing to do. As much as I would love to serve the people of the 23rd State Senate District, I cannot in good conscious (sic) continue in an underfunded campaign that has little or no possibility of success. At the very least I owe it to my supporters to have the integrity to admit the facts and return their generous contributions, and I will.”
Despite her withdrawal, Granlund was in no mood to endorse Morrell or any of the other currently declared candidates and she suggested that others should take up the burden of keeping Morrell from advancing to the legislature’s upper chamber. “Hopefully this announcement will be timely enough that other candidates might have the opportunity to file for the seat,” she said.
Menifee Mayor Scott Mann’s exodus from the campaign came hot on the heels of the California Fair Political Practices Commission’s leveling of a fine/administrative penalty of $1,500 against him for his  failure to disclose non-monetary contributions during his 2012 campaign for office. According to the FPPC, Mann and the Scott Mann for Mayor campaign received non-monetary contributions totaling $982.25 on or about June 14-30, 2012, from the Menifee Taxpayers Association.
Mann acknowledged  that his mayoral campaign committee was cited for not disclosing receipt of non-monetary Menifee Taxpayers Association  expenditures totaling $982.25 for advertising materials, but he said the FPPC had failed to substantiate any of the original allegations made against him, including reports relating to the use of surplus funds from his original council campaign to run for school board; failure to itemize expenditures by his school board committee; and that the Menifee Taxpayers Association  was controlling the Scott Mann for Menifee Mayor 2012 committee.  He then withdrew from the race, leaving Morell, Calimesa Councilman Chris Hewitt and San Jacinto Council Member Crystal Ruiz as the only remaining announced candidates in the Republican-leaning district, which spans portions of San Bernardino and Riverside counties.

(January 21)  Tim Donnelly’s Quixotic effort to capture the Republican nomination for California governor achieved an unexpected and equally unorthodox boost when one of his celebrity endorsers came under such heavy protest for her support of Donnelly that she was obliged to resign as the member of the cast of a popular play production.
There was resultant news coverage and widespread publicity for Donnelly’s campaign up and down the Golden State.
Maria Conchita Alonso, a top model turned recording star from Venezuela who transitioned into starring roles in movies such as “The Running Man, “Moscow on the Hudson,” and “Predator 2” had been cast in a leading role in the Spanish-language production of the Vagina Monologues, which was to begin its run in San Francisco next month.
Last week marked the debut of one of a series of online videos intended to promote Donnelly’s gubernatorial campaign. The tongue-in-cheek video spot featured the Cuban-born Alonso, who was Miss Teenager of the World in 1971 and the representative of Venezuela in 1975 Miss World Pageant at which she was sixth runner-up, appearing with her pet Chihuahua and standing next to cowboy hat-wearing Donnelly, translating Donnelly’s remarks with regard to politics into Spanish, sometimes accurately, sometimes by means of humorous paraphrase.
Throughout most of the three minute and 13 second-long video, Alonzo registers approval of Donnelly’s message, although at one point in the presentation she begs to differ with him. When Donnelly expresses the view that the state’s ban on lead ammunition is a “cowardly” ploy to outlaw hunting, Alonzo asserts that she disagrees with Donnelly on that point.”No, I do not like hunting,” she says in Spanish. “I hate that animals suffer. I am their voice. I love them. I protect them. I would give my life for them. No. Uh-Uh. We have to talk afterword about this.”
For the most part Alonzo reinforces Donnelly’s assertions with body language and approving facial expressions and nods, or puts a comic emphasis on his presentation, as when he intones “Politicians and big government are killing our prosperity. They’re driving business out of our state, pushing welfare costs through the roof and driving our schools into the ground.”
Alonso, solemnly translates these remarks by saying in Spanish “We’re screwed.”
The video draws to a close with Alonzo accurately interpreting Donnelly’s exclamation that “We live in the greatest state in the union and we the people will never be divided. If you honor me with your support, I will lead California back to prosperity, so help me God.”
Alonzo’s support of Donnelly, who touts himself as a conservative Republican as well as Tea Party member and anti-illegal immigration activist who is the chairman of a chapter of the so-called Minuteman border-patrol movement, in short order triggered a round of protest from a number of groups, resulted in a backlash aimed at her. Some vocal opponents of Donnelly, the Tea Party and the Minutemen threatened to both boycott and protest the play when it opens next month.
Alonso is now a naturalized American citizen and has made a series of public statements condemning what she derides as a left-leaning trend in American politics. She is an outspoken critic of Fidel Castro and the government in Cuba and was equally deprecating of the late Venezuelan leader Hugo Chavez.
In 2008,  she endorsed the presidential campaign of John McCain, She suggested Barack Obama is a “socialist” who is engaged in “spread the wealth economic policies.”
During the 2012 presidential campaign season, Alonso reiterated her opposition to Obama, suggesting he was ushering the United States onto a track emulating Venezuela under the Chávez regime.
“I don’t want the government to be involved in my life,” she said, sounding much of the same libertarian theme that Donnelly has embraced.
Donnelly, who has unabashedly espoused right wing causes, has developed a reputation as an extremist in some political and social circles. He cemented this reputation with his outspokenness with regard to Second Amendment issues and then lived into the persona he had constructed for himself by being arrested  on  January 4, 2012, for attempting to carry a loaded Colt handgun while boarding  an airplane. Transportation Safety Agency security screeners discovered the gun in his carry-on luggage.
Though Donnelly agreed to a plea bargain in which he accepted conviction on a single count of carrying a loaded firearm into a city without a concealed weapons permit and another count of possessing a prohibited item in a sterile area, both misdemeanors, he was not forced to leave the Assembly and he remained unapologetic, continuing to bring a concealed weapon into the Capitol and onto the Assembly Floor, action which even some of his political associates and supporters found alarming.
Last year he surprised many when he gave indication that he would not seek reelection to the Assembly in 2014 and would instead seek the Republican nomination to challenge Governor Jerry Brown.  Even the prospect of achieving the GOP nomination appeared to be questionable, as Abel Maldonado, the state’s former lieutenant governor, described as a political moderate, was also vying for the nomination. Maldonado withdrew last week, but Neel Kashkari, a Goldman Sachs executive who as the former deputy U.S. Treasurer overseeing the Troubled Asset Relief Program during the final year of George Bush’s presidency in 2008 and 2009, has now declared his candidacy for governor. As the architect of the nation’s bank bailout during the most critical phase of the recession that began in 2007, Kashkari believes he can weather charges that he headed a program that bailed out the wealthy at the expense of taxpayers and focus attention on his fiscal management talent, which he said gives him a leg up on Brown when it comes to rejuvenating California’s sluggish economy. Brown, a Democrat, enjoys a tremendous political advantage over Republicans, as nearly half of the state’s voters are registered Democrats and only 31 percent align themselves with the GOP. That advantage is reflected in the state legislature, where the number of Democrats in both the Assembly and State Senate have rendered Republican parliamentarily irrelevant.
Donnelly is not only the longest of longshots with regard to ousting Brown from the Governor’s Mansion, he faces an uphill battle in getting past Kashkari, who, though he has never held elective office, will be able to call upon Republican donors from around the country and tap into the generosity of major players in the banking industry whom he assisted when hew as assistant deputy U.S. Treasurer.
Nevertheless, with the flap over Alonzo’s endorsement coinciding with Kashkari’s announcement, Donnelly appears to have serendipitously tapped into publicity that will promote his candidacy with the most conservative element of the Republican Party at a crucial juncture.
Alonzo, who is a veteran guest star on many television shows including Chicago Hope, the Nanny, Fantasy Island, Knight Rider, CSI Miami, Desperate Housewives and had a major part in the television remake of High Noon, was philosophical about having to back out of the role in the Vagina Monologues. The loss of the role does not leave her without work as she is currently engaged in shooting on a yet untitled project by director/producer Matt Riddlehoover.
Incidental to her threatened-boycott-induced withdrawal is the attention being brought to Donnelly and his campaign. While he is a moderately well recognized figure in San Bernardino County, Donnelly’s has a relatively low profile for a politician with gubernatorial ambitions, his only claim to notoriety stemming from his firearm arrest.

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Sentinel 01-17-14

(January 15)  The state of California has struck back at the city of Twentynine Palms’ cutting edge effort to preserve bond proceeds issued by its former redevelopment agency.
In 2011, the state legislature at Governor Jerry Brown’s behest passed Assembly Bills XI 26 and XI 27, two redevelopment agency shuttering laws which closed out all municipal and county redevelopment efforts statewide. A coalition of cities fought the law, but the state Supreme Court upheld the measure.
While 317 of the state’s 482 incorporated cities went along with the new law without question and shut down their redevelopment agencies, 165 cities have resisted the state on the issue. That resistance ranged  from registering relatively mild protests to filing lawsuits against the state and its Department of Finance, which is the entity designated under the law to make a determination with regard to how the money that was in the possession of the former redevelopment agencies is to be disbursed.
Twentynine Palms, led by its city attorney A. Patrick Muñoz of the law firm Ruttan & Tucker, has been the most aggressive of San Bernardino County’s 24 cities in disputing the state’s action in confiscating redevelopment money and then redistributing it to other local taxing agencies or using it for education or public safety purposes.
At stake in the matter for Twentynine Palms, a city of 25,048 in San Bernardino County’s Mojave Desert outback,  are two tax allocation bonds issued for a total of $8.5 million. Those bonds were intended to defray the cost of Project Phoenix, a downtown revitalization which is to include a community center, a 250-seat theater, classrooms, a civic plaza, a park, a paseo, residential units, a wastewater treatment plant, and improvements to the downtown fire station. The last of the bonds were issued three months before  AB X1 26 and AB X1 27 passed and went into effect.
Based on an analysis by Muñoz, the Twentynine Palms City Council publicly asserted that that AB X1 26 and AB X1 27 are trumped by federal securities regulations, meaning the money the Twentynine Palms Redevelopment Agency bonded for in 2011 must be utilized only for the purpose that bondholders were told the money would be applied toward.
The city followed Muñoz’s recommendation to have the successor agency to the redevelopment agency lay claim to the redevelopment money and declare its intent to proceed with Project Phoenix.  AB X1 26 and AB X1 27 provided for the creation of locally based oversight boards to direct the discharging of remaining redevelopment money.  In  May 2012, Muñoz drafted a contract between the successor agency and the city by which the  successor agency turned over the bond spending authority to the city with a directive that it go toward Project Phoenix. On a 4-1 vote on May 22, 2012 the city council voted unanimously to transfer the seven-member oversight board’s duties and obligations to administer the bond proceeds to “the city in its capacity as a municipal corporation.”
To reinforce that action, on February 26, 2013, the city council authorized Muñoz to file litigation against the Department of Finance so the city could move forward with the expenditure of the bond proceeds. The city took the position that the bond documents are contracts that created specific obligations between the city, as the issuer, and the bond purchasers, and as such are enforceable obligations such that the state cannot interfere with them. Moreover, according to Munoz, the city would be violating IRS and SEC regulations as well as put the tax exempt status of the bonds in jeopardy if it does not spend the money for the purpose for which the bonds were issued.
AB X1 26 and AB X1 27 contained a provision requiring any municipalities that contested the law to do so in Sacramento Superior Court.  The California Department of Finance is being represented by the California Attorney General’s Office’s civil division in the case. On December 23, the California Attorney General’s Office laid out an answer to Twentynine Palms’ legal action preparatory to an upcoming January 24 hearing on the matter.
According to deputy attorney general Michael Witmer, $12 million of the tax allocation bonds issued by the city – offered to bondholders in March 2011 – while earmarked for Project Phoenix, contained no concomitant contracts to build anything or a defined plan of how the bond proceeds were to be expended.
Witmer maintains the assertion by Muñoz and a consultant working for the city in the capacity of community development director, Matt McCleary, that Project Phoenix disbursements could be placed on the phased out redevelopment agency’s recognized obligations payment schedules runs contrary to instructions from the California Department of Finance that the project was not to be listed on the payment schedule.
Witmer told the court that the transferring of bond authority from the successor agency to the city was an illegal ruse and had to be rescinded. He further brought into question the escalating cost of the project, noting that it was originally cast as a $750,000 effort under a different name, the “Split Rock Housing Project,” first noted in the Twentynine Palms Redevelopment Agency’s five-year plan in 2009. It drew to itself other facets over the next two years, including a $3 million bump for affordable housing and then another $2.5 million increase until it was listed as representing an $8.5 million undertaking
“[A]s contemplated in the five-year plan, Project Phoenix and the Split Rock housing development only needed $2.5 million,” Witmer told the court. “Even with all of the other projects listed in the five-year plan included, the aggregate added up to less than $5 million.”
In early 2011, Witmer said, the city openly defied the spirit of the anticipated new law, saying  “the city worked feverishly to expand Project Phoenix to utilize the funds it had obtained by issuing bonds” and after AB X1 26 and AB X1 27 were signed into law by Governor Brown, broke the law outright on May 22, 2012  when it “entered into an agreement with itself” to transfer the money from the successor agency “for the express purpose of circumventing the Department of Finance’s disapproval of Project Phoenix as a recognized obligation payment schedule item.”
Upon McCleary’s representation that California Department of Finance Budget Manager Matt Hill had stated that the city could assume the authority of the successor agency if the oversight board approved such a transfer, the oversight board unanimously approved the switch.
According to Witmer, this was done “surreptitiously” in that the transfer of bond proceeds to the city had been done without consultation with the California Department of Finance or its approval. “[T]he city/successor agency went ahead and caused the bond trustee — U.S. Bank — to pay over the funds to the city-as-city,” Witmer writes. The California Department of Finance remained in the dark about the illegal transference of bond proceeds for nearly six months, Witmer claimed. A month later, in December 2012, the California Department of Finance directed the city to reverse the transaction, according to Witmer. While Witmer maintained the California Department of Finance consistently declined the city’s moves to leave payments toward the Phoenix Project bonds on the recognized obligations payment schedule because they did not qualify as enforceable obligations, Muñoz and McCleary insist the California Department of Finance was twice told about the switch and the city was given no instructions by the department to undo the transfer.
Witmer asserts the bond payments are not enforceable obligations because the bond documents do not specify the completion of the Project Phoenix or Split Rock projects. And because the contracts for the projects were entered into after AB X1 26 and AB X1 27 went into effect on June 28, 2011, Witmer maintains the city’s intended use of the bonds is prohibited.
Muñoz, bond counsel, disclosure counsel and the city outsmarted themselves by putting wiggle room in the language of the bond documents that was meant to protect the city and redevelopment agency from being sued by the bondholders if the city did not proceed with the completion of the bonded-for improvements, Witmer maintains. Those clauses render the bonds unenforceable obligations, he suggested, as does other language in the bond documents warning investors of the pending redevelopment agency shuttering laws – AB X1 26 and AB X1 27 – that would compromise the city’s ability to proceed with redevelopment projects.
Moreover, Witmer said the city had missteped when it did not include representatives of other taxing entities that had previously been beneficiaries of money disbursed by the redevelopment agency  such as the Morongo Unified School District, the Hi-Desert Memorial Healthcare District and Copper Mountain College on the oversight board.
Witmer said the city had manipulated, misled and made patsies out of the oversight board.
“[I]t appears that the successor agency may not have given the oversight board accurate information in connection with key decisions,” Witner told the court.

(January 14)  The county of San Bernardino’s legal costs precipitated by its 2012 acquiescence in the Santa Margarita Water District’s approval of the so-called Cadiz Valley Water Conservation, Recovery and Storage Project last year have now exceeded $1.8 million.
Eleven separate lawsuits challenging the  Cadiz Valley water project, which upon completion will extract an average of 50,000 acre-feet of water from the East Mojave Desert annually and convey it via pipeline to Orange and Los Angeles counties for use there, have been filed in San Bernardino County, Orange County and in U.S. District Court.
The lawsuits allege that the project will drain the aquifer in both the Cadiz Valley and nearby Fenner Valley, wreaking environmental harm, that the approval process for the project which allowed a water district in Orange County more than 217 miles from the  project area to serve as the lead agency for the project and oversee its environmental certification violated state and federal environmental laws, that the county of San Bernardino failed to abide by its own desert groundwater management plan in approving the project, that the environmental impact report for the project was inadequate,  that approval of the project violated provisions of both the National Historic Preservation Act and the Federal Land Policy and Management Act,  that the Bureau of Land Management failed to conduct a proper review of the cultural and environmental impacts of the project; that the extraction of the water will interfere with salt mining and other pre-existing industrial operations in the area, and other issues.
Plaintiffs included Delaware Tetra Technologies, which operates a salt and mineral mine in the Fenner Valley, the Center for Biological Diversity, the National Audubon Society, the Sierra Club, the International Union of North America Local No. 783, the National Parks Conservation Association, the Colorado River Branch of the Archaeological Heritage Association, Santa Margarita Citizens and Ratepayers Opposing Water Nonsense, and Rodrigo Briones.
The project is an undertaking of Los Angeles-based Cadiz, Inc., which since the 1980s has operated a 500-acre organic grape, citrus, melon and pepper farm in the Cadiz Valley. Cadiz, Inc. arranged to have the Santa Margarita Water District, to which it is contracted to deliver a portion of the water to be extracted from the desert, to assume lead agency status for the project’s approval. Many of those opposed to the project considered that to be a conflict of interest. San Bernardino County contemplated, but in March 2012 ultimately elected against, challenging Orange County-based Santa Margarita’s assumption of that lead agency status on the project and instead on May 1, 2012 entered into a memorandum of understanding with that district and Cadiz, Inc. and its corporate entities, including the Fenner Valley Mutual Water Company, allowing Santa Margarita to oversee the environmental impact report for the project and conduct the public hearings related to project approval.
On July 31, 2012, the Santa Margarita Water District Board of Directors approved the Cadiz Water Project and certified the environmental impact report for the Cadiz Water project.
On October 1, 2012, the San Bernardino County Board of Supervisors gave approval to a groundwater monitoring plan to facilitate completion of the project.
The project generated a flurry of lawsuits in which San Bernardino County, Santa Margarita and Cadiz, Inc. have been named as defendants. Even before those lawsuits materialized, the county, on March 27, 2012, retained the San Francisco-based law firm of Downey Brand to assist county counsel in responding to any lawsuits it contemplated might be triggered by the project at what was then said to be a not-to-exceed cost of $449,322. Within four months, however, those funds had been exhausted and on July 24, 2012, the board authorized a $250,000 amendment to the Downey Brand contract, increasing the amount to $699,332.  Legal billings to the county by Downey Brand ate up that funding by December 2012, and Christine Kelly, who was then county land use services director, asked the board to give approval for the expenditure of another $250,000 to cover continuing legal costs, pushing the Downey Brand contract to $949,332. Downey Brand’s total billing to the county exceeded the million dollar mark before 2013 was half over and on June 18 the board of supervisors complied with a request by Tom Hudson, who succeeded Kelly as the county director of land use services, to increase the contract with Downey Brand by $500,000 from $949,332 to $1,449,332. This week, nearly seven months later,  Hudson called upon the board of supervisors to “increase the existing contract with Downey
Brand LLP for legal services by $400,000, from $1,449,332 to $1,849,332.”
Hudson told the supervisors Downey Brand’s services are needed “as a result of on-going legal challenges relating to the 2012 Groundwater Management, Monitoring and Mitigation Plan and the memorandum of understanding by and among the Santa Margarita Water District, Cadiz, Inc., the Fenner Valley Mutual Water Company and the county.”
The county finds itself pressured inside and outside the courts for having relinquished oversight over the project to the Santa Margarita Water District, which approved the environmental impact report for the project, despite data provided by biologists and hydrologists contradicting that report. Among those inveighing against the project is U.S. Senator Dianne Feinstein, who has publicly stated that the project’s proposed extraction of more than one million acre-feet of water from the Eastern Mojave Desert over the 50-year life of the project will significantly exceed the United States Geological Survey’s estimate of the area’s recharge capability.
Environmentalists insist Cadiz has cynically overrepresented the amount of annual precipitation recharging the groundwater basins in the Cadiz and Fenner valleys, and that springs linked to those ground water basins within the Mojave National Preserve and the plants and animals that depend on them are thus under threat.
Among those condemning the county’s approval of the project is John Goss, a former assistant administrative officer with San Bernardino County who drafted the county’s desert groundwater management ordinance before it was adopted in 2002. Goss said that ordinance was violated when the memorandum of understanding between the county, Cadiz, Inc. and the Santa Margarita Water District had been entered into before a groundwater management plan for the Cadiz project was adopted.
A prime mover in the county’s acquiescence in Santa Margarita’s approval of the project was former First District Supervisor Brad Mitzelfelt, who left office after he did not run for reelection in 2012 when he instead unsuccessfully vied for Congress. Mitzelfelt, whose district included the Eastern Mojave, received $48,100 in political donations from Cadiz, Inc.
The project’s proponents, including Scott Slater, the general counsel for Cadiz, Inc., insists the project is a “responsible and environmentally safe” one that “protects the desert” and provides thirsty Southern California with “an innovative water supply option.”
County officials maintain the county’s taxpayers are not being hurt by the litigation.
In keeping with Section 24 of the memorandum of understanding and the conditions of approval adopted on October 1, 2012, the county is indemnified against any action challenging the county’s approval of the
Cadiz Project, Groundwater Monitoring Management and Mitigation Plan or the memoranducm of understanding,” Hudson said. “The indemnity includes, but is not limited to, damages, cost of suit, attorneys’ fees, expert consultant or witness fees, and other expenses incurred in connection with any such action. To date, the county has been reimbursed by the Santa Margarita Water District, Cadiz, Inc., and the Fenner Valley Mutual Water Company in the amount of $1,301,726.”
The county’s legal costs growing out of the Cadiz Water Project are now mounting. While two of those lawsuits have been litigated to completion or have been dropped, nine remain active and proceeded to trial on December 3, 2013.
An issue in the lawsuit brought by Santa Margarita Citizens and Ratepayers Opposing Water Nonsense pertains to the Santa Margarita Water District’s assumption of the financial liability of other parties involved with the project approval. Opponents of the project have questioned whether Cadiz, Inc., an agricultural and landholding company that owns or has options to buy 45,000 acres in the eastern Mojave Desert overlying the Cadiz and Fenner valleys’ aquifers but which has nonetheless not shown a profit for more than 15 years, will be able to sustain itself in the face of the legal challenges to the project. Those inveighing against the project not on environmental grounds but financial ones have questioned who will assume the company’s liabilities if it folds or declares bankruptcy.