(December 26)  Steadily and methodically, the city of Upland appears headed toward bankruptcy, as management in the City of Gracious Living and its newly commissioned panel of advisers appear unable to resolve differences among them with regard to less dramatic options to address the municipality’s budget crisis.
While Upland City Manager Stephen Dunn had hopes of persuading the city council to okay asking city residents to approve a sales tax to generate revenue, support for the taxing alternative is not even tepid among the members of the city’s recently-formed budget advisory task force. Going back for more than a decade, city residents have rejected every taxing proposal previous city councils in Upland placed before the voters.
Dunn appears to be unwilling or perhaps unable to make substantive cuts from this point forward with regard to staff and its accompanying payroll and benefit liability. And a host of other cost-cutting or revenue producing measures Dunn has proposed appear to be insufficient to move the city into the black.
In October, Dunn said his city was on the verge of bankruptcy and after having engaged in a series of fiscal gymnastics to balance the current 2013-14 budget, the city will require at least $3.5 million in additional revenue annually for the next five years to continue to provide city residents and businesses with the same level of service the city is currently providing.
As of October, Dunn said, the city’s general fund is hard-stretched to cover Upland’s bare operating expenses. Funding for street repairs, equipment and vehicle maintenance, post-employment benefits, equipment replacement, economic development and solutions to the city’s growing homeless problem has been entirely depleted.
Its fiscal condition is a blow to Upland’s prestige, which is the second-most affluent of San Bernardino County’s 24 cities, measured by median household income.
The general fund accounts for most of the city’s services. It funds 73 activities related to the basic function of municipal government.  Dunn said.
In October, Dunn said that the only alternative to drastic service cutbacks consisted of revenue enhancement, most specifically a tax that would need to be approved by a majority of the city’s voters. To emphasize his point and support his case, Dunn referenced a 2012 auditor’s opinion from the certified public accounting firm Mayer Hoffman and McCann and 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 to the point that in a short while “it will be unable to continue as a going concern.” According to Standard and Poor’s, the city, which has already been downgraded from an AA credit rating to an A+, is in danger of seeing its credit rating eroding even further. A municipality’s credit rating directly impacts the interest rate it must pay when borrowing money.
To balance the city’s current $39 million budget, Dunn said Upland’s entire municipal operation is borrowing heavily 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.
The upshot of Dunn’s presentation was to convince the council to consent to placing a tax measure before city voters next year, either on the June primary ballot or during the November general election.  The council, however, shied from embracing on its own authority the taxing solution and instead created a budget balancing task force committee, consisting of two members appointed by each council member. The stated intent of the ten-member committee is to examine the full range of means by which the city is to come to terms with its fiscal crisis and then provide recommendations.
Only reluctantly did Dunn accept the formation of the committee and there have already been indications that some of the committee members are strongly in favor in moving in a direction Dunn did not want to go, namely wholesale layoff of staff.
The disagreement over which path the city should take out of the financial abyss is a fundamental one.
One contingent is calling for the city to embark on cost cutting efforts including streamlining and making more efficient its processes and functions and eliminating services and redundant or nonproductive personnel. Another school of thought advocates the city generating revenue to sustain the current level of service, its current payroll and preparing for future retirement obligation costs.
Those seeking firings, layoffs and streamlining maintain City Hall is bloated and manned by a number of employees who have been disloyal to the community and its taxpayers. This is an outgrowth of the expansion of city staff during the first decade of the millennium, as well as concessions made to the city’s employees’ bargaining units during the tenure of former mayor John Pomierski, who was heavily supported by all of the city’s employee unions. Under Pomierski and his hand-picked city manager, Robb Quincey, the city increased salary and benefit packages for employees markedly. Subsequently, Pomierski was indicted by a federal grand jury for his involvement in a political corruption scheme that involved his taking bribes in exchange for using his influence as an elected official to forge backroom deals and arrange favorable outcomes for individuals and businesses with projects or applications being processed at City Hall. Pomierski pleaded guilty and is now serving a sentence in a federal penitentiary. Quincey has been indicted and charged with three felony corruption charges, including unlawful misappropriation of public money, gaining personal benefit from an official contract, and giving false testimony under oath. He has pleaded not guilty and is maintaining his innocence.
This complex of circumstances has led to open expression by some Upland residents that the runaway labor and pension costs that are plaguing Upland are vestiges of the ethos of public trust violations that occurred under Pomierski and Quincey. The implication is that employee contract terms favorable to Upland’s city employees were given to bind those employees to the mayor as part of an understanding and arrangement which allowed Pomierski’s depredations to take place. In plain terms, many believe the generous salary and benefit packages city employees are now getting were provided to those workers because they were willing to look the other way while Pomierski and his cronies enriched themselves. For that reason there is a reluctance on the part of a sizeable contingent of Upland’s residents to impose on themselves any municipal tax that will be used to pay for the perpetuation of generous pensions for retired city employees.
A manifestation of this attitude came in the form of two recommendations by budget task force committee member Robert Nelson, a certified public accountant appointed by councilman Glen Bozar, who suggested that the city impose a hiring freeze and that it freeze wage increases.
Dunn opposed both moves, stating that “The appearance of going to the employees to correct the city’s fiscal position will affect morale, cause better employees to leave, and make it difficult to recruit quality candidates” and “A further reduction in the city workforce will slow response times to our citizens.”
Dunn has also rejected several other recommendations made so far by the task force, including: ending acceptance of stray animals from surrounding communities into Upland’s animal shelter; combining the police and fire department’s dispatch services; selling the city’s cell towers, which currently generate annual revenue of roughly $200,000, for $2.775 million; increasing the rate the city charges to lease its cell towers; selling the fire department’s ladder truck, which is valued at roughly $600,000, for the approximately $50,000 the market will bear; selling Old St. Mark’s Church and the surrounding property it occupies on 18th Street for between $804,000 and $1.263 million; selling Upland’s interest in the Whispering Lakes Golf course for approximately $1 million; asking voters to approve a lighting and landscape maintenance district to generate as much as $2.5 million per year; asking the city’s voters to approve a special parcel tax for public safety, the library or street maintenance; creating new fees for existing city services now rendered for free, generating as much as $380,000 annually; imposing labor concessions on employees; eliminating the city’s quarterly newsletter to provide a savings of $3,000 or simply turning it into a web-based publication; outsourcing the fire department; closing a fire station; eliminating the fire department’s paramedic program; outsourcing the police department; regionalizing the police department by merging with the Ontario or Montclair departments; eliminating the city’s recreation division; eliminating the city library; reducing library hours; and eliminating the city council members’ benefits.
Dunn did, however, recommend considering outsourcing the management of the library; regionalizing fire service through a merger with the Montclair Fire Department;  “browning out“ a fire station during times of lesser risk; outsourcing development services;  outsourcing fleet maintenance; outsourcing street maintenance; outsourcing engineering services; eliminating the position of the facilities maintenance superintendent; seeking, during labor negotiations, concessions from the city’s employee unions; reworking the city’s contract with Burrtec for trash service; privatizing the management and operation of the city’s water and sewer assets; asking voters to up business license fees; asking voters to approve a half cent sales tax; selling the city-owned parking lot at the southwest corner of C Street and 3rd Avenue; raising water rates; and negotiating the conversion of pension plans with the city’s employee unions.
With little or no prospect that the options Dunn is recommending will make up the $3.5 million in additional annual revenue or operational cost reductions he is seeking, the city appears to be inexorably moving toward exploring, if not outright embracing, a municipal bankruptcy option.
Committee member find daunting the consideration that the state’s public employees’ retirement system will require Upland in the upcoming 2014-15 fiscal year  to increase by $1.5 million the $6.5 million it is already currently paying annually into its employees’ pension fund.  Actuarial tables show that virtually any increase in revenue the city is likely to experience in the future will not go to increasing or even sustaining services but to covering increases in pension payments. .
The Sentinel has learned that at least four of the budget task force members are entertaining the concept of a city bankruptcy filing. Three others did not appear to flinch when the idea was broached.
One committee member stated that such a filing seemed inevitable, given city management’s inability to rein in current personnel and future retirement costs, which account for nearly 80 percent of the city budget. Another member said a bankruptcy filing would prove “cleansing,” allowing the city to dispense with impediments it has accumulated over the past decade-and-a-half, including commitments made during the Pomierski regime to city labor unions which were the heaviest donors, collectively, to the political campaigns of the city’s council members.
Current municipal bankruptcies, including those in Detroit and San Bernardino, have explored heretofore uncharted fiscal territory, including reducing pension payments to retired employees.

(December 25)  YERMO—The long-troubled Yermo Water Company is in the process of being purchased in its entirely by the Apple Valley Ranchos Water Company.
On December 5, Apple Valley Ranchos and Yermo Water, which has been operated by the Yermo Community Services District since November 2012, jointly filed an advice letter to the Public Utilities Commission preparatory to that takeover.
According to the letter, Apple Valley Ranchos intends to “purchase all of the public utility assets owned by Yermo and used by Yermo to provide public utility water service in San Bernardino County, California” and seeks “commission authorization for a transfer of ownership of an inadequately operated and maintained Class D water utility.”
In August 2012 the California Public Utilities Commission filed to take control of the severely undercapitalized and dilapidating water company. Three months later, the Superior Court entrusted operation of the Yermo Water Company to the Yermo Community Services District and appointed California Public Utilities Commission Attorney John Richardson to act  as receiver. The Yermo Community Services District has made $40,000 in emergency renovations to the system to keep it functioning.
Last month, Richardson chose Apple Valley Ranchos Water to be the buyer of the company and he petitioned the Public Utilities Commission for a water rate increase.
The Yermo Water Company, formerly owned by Donald Walker, fell into severe disrepair early last decade, a situation which was exacerbated by Walker’s departure to Florida, making it difficult for his company’s customers to contact him.
As the absentee owner, Walker did not have a licensed operator available to operate the system. During the summer of 2006, the primary water tank serving the Yermo community’s water system developed a leak and customers were without water for a week in the small community near Barstow, where temperatures exceeded 100 degrees every day. The California Department of Health and the California Public Utilities Commission initiated an investigation into the matter in 2007.
A decision to pursue the appointment of a receiver was issued in May of 2009.  At that time, however, a community-based prospective buyer had surfaced and the receivership was suspended while it appeared that a sale of the system was possible.
After more than two years of negotiations, Walker refused to inform the prospective buyer how much he owed in back taxes and fines to the California Department of Health. As a result, the sale fell through. The receivership arrangement that took place in November 2012 was contested by Walker’s family. His wife, Charlene, filed an opposition to the appointment of a receiver, raising a number of claims that were ultimately denied by the Superior Court on March 6, 2013.
In July, Apple Valley Ranchos bid $300,000 on the purchase of the Yermo Water Company. On the company’s website, Bob Smith, president of the Yermo Community Services District. informed customers of Richardson’s decision to accept Apple Valley Ranchos’ offer, telling them they should have or would soon receive a letter spelling out the particulars, including the proposed rate increase.

(December 23) A first step toward increasing the number of judges in San Bernardino County was taken last week when the California Judicial Council ratified upping the number of new judicial officers in both Riverside and San Bernardino counties by nine judges each.
Far-flung San Bernardino County, the largest such political subdivision in the Lower 48 States at  20,105 square miles, has been particularly hard hit by cutbacks in the state court system, suffering the closures of the Chino courthouse on its southwest extreme, the closure of the Needles courthouse on its northeast end and the Twin Peaks and Big Bear courthouses in its central mountain communities. In addition, operations at the Barstow courthouse have been scaled back to a single courtroom that is open three days a week. There have been consequent case delays and crowded calendars and courtrooms at all the county’s other courthouses.
With its population having now eclipsed 2.1 million, San Bernardino is the second-most judicially understaffed of California’s 58 counties.
An uptick in the number of judges would offset some of that problem, although the nine approved by the Judicial Council would have San Bernardino County, which now has 84 Superior Court judges and commissioners, well short of the number, pegged at 156,  deemed appropriate for a county of its size and population. Moreover, even if the nine new judges were to materialize, the county itself would probably need to cover some of the cost of providing the additional courthouse staffing to allow those judges to be functional. Over the last six years, court staff  in the county has been severely downscaled.
While the Judicial Council made the recommendation, it does not have budgetary appropriation authority to actually put those recommendations into actuality. The state legislature would have to free up the funding for the judge expansion. And though it is arguably the most needy of the state’s counties, San Bernardino County is but one of dozens lagging with regard to adequate criminal and civil court resources.
Providing a new judge is an expensive proposition, entailing costs of over a million dollars per year. The cost of a judgeship entails the $181,292 in salary each is paid by the state, plus clerks, secretaries and bailiffs, representing a total package, once established of at least $950,000 per year. The start-up cost for the first year is considerably higher, around $1.65 million.
In addition, several counties, including San Bernardino County, supplement judges’ pay with stipends. In San Bernardino County, that add-on runs to $20,000 per year. That practice has come under severe criticism, including charges that it compromises the integrity of the judges, who often hear cases in which the county is a plaintiff or a defendant.
The legislature, which several years ago committed to a program of expanding judges throughout the state but reneged on that about one third of the way through the process when funding dried up, will need to approve the financing of the Judicial Council’s request, which it titled its “2014 Legislative Priority.”

(December 24)  Two Chino landowners are undertaking a petition drive to have the city rezone eight parcels on 29.6 acres south of Francis Avenue between Benson and Vernon avenues from their current low density residential use to a much more intensive residential land use designation that would allow for up to eight homes per acre.
Ron “Yogi” Brewer of 11915 Vernon Avenue and Matt Evans of 11867 Vernon Avenue are asking the city’s planning division to change the current single family residential (RD1) land use designation, which calls for one unit per acre, to single-family (RD8) allowance, which provides for up to eight units per acre.
Chino, which historically was an agricultural community, has transformed itself into a suburban municipality, but it yet contains a few hundred acres where the distinction between residential and equestrian as well as residential and commercial agricultural uses is blurred. The properties in question have zoning that currently allows horses to be kept there.
Brewer and Evans’ stated rationale in asking for the zone change is that the equestrian uses associated with the current zoning designations on the property have fallen out of favor with many of the nearby non-agricultural residential neighborhoods.
Maintaining that the property has become unsuitable for livestock or horses, Brewer and Evans are seeking the requisite signatures of 10 percent of Chino’s registered voters – in excess of 3,200 – to place a measure on next year’s ballot calling for higher density single family homes on the acreage than is permitted there now. Such a change, they claim, will eliminate unpleasant animal odors, flies and unanchored soil that results in dust.
While Brewer and Evans have stated that the rezoning they seek would guarantee high quality homes are constructed and that they are not asking the city to allow them to construct apartments, some opposition to their agenda has formed, including that of former mayor and current Chino councilwoman Eunice Ulloa.
Some of those in opposition to the zone change claim Brewer and Evans are actually trying to manipulate the city’s zoning code to engineer a quadrupling in the value of the property.

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Sentinel 12-20-13

(December 19)  Over the objections of a contingent of Upland residents, the Montclair and Upland city councils on December 16 embarked on what has been touted as the wave of the future for local governmental jurisdictions when they separately approved the consolidation of their respective city’s fire administrations.
“We are setting the model,” Montclair Councilman Bill Ruh proudly proclaimed.
Across the city limits in Upland, a handful of residents and business interests and one dissenting city council member expressed concern that the merger was one that benefited its smaller neighbor far more than it did the City of Gracious Living, which under the terms of the agreement would be essentially subsidizing a portion of Montclair’s public safety services.
Upland, the second most affluent of San Bernardino County’s cities as measured by median household income, pays its firefighters higher wages and provides slightly better benefits than Montclair firemen receive.
A previously contemplated accompanying dissolution of the service boundaries between the two agencies will be postponed until July 1, Montclair City Manager Edward Starr said.
The cities will split the compensation for Upland Fire Chief Rick Mayhew and a fire marshal, who will likewise devote his work week between the neighboring cities.73,732-population Upland, which heretofore employed 36 fulltime firefighters staged out of four fire stations will cover 67 percent of the cost of employing Mayhew and the fire marshal. 36,664-poulation Montclair, which now fields 24 firefighters operating out of two fire stations, will pick up 33 percent of those salaries.
Also subject to the merger will be battalion commanders sufficient to cover each station in both cities, augmented by a central administrative staff consisting of an executive assistant, a clerk and secretary.
Not subject to the merger will be two deputy fire chiefs, one for each city.
For the time being, each department will maintain its own identity and retain responsibility for its own firefighters below the command level. The two-year pilot program is being undertaken at this time, with the stated intention of merging the departments entirely down the road. According to Starr, the Upland firefighters will remain Upland city employees and the Montclair firemen will remain as Montclair city employees. In Montclair, the merger was particularly well-received.
As a result of the state of California’s shuttering of municipal redevelopment agencies throughout the state, toward the end of the 2010-11 fiscal year, Montclair laid off 10 employees as part of its effort to make up for its loss of redevelopment money. Throughout much of 2010-11, one of the Montclair Fire Department’s paramedic units was parked and the city’s paramedics functioned from the department’s remaining engines, which stayed in service. Over the last year-and-a-half, what was a 27-firefighter department has lost three positions to attrition, and has not filled those vacancies, making up for the manpower shortage with overtime. In September 2012, Starr, in a cost-cutting move that saved the city a third of a million dollars a year in wages and benefits, elevated police chief Keith Jones to the position of director of public safety and gave fire chief Troy Ament his two-week severance notice. In June of this year, police captain Michael deMoet was appointed to the position of director of public safety, following Jones’ retirement.  de Moet will continue to function in the role of Montclair fire chief until the merger becomes effective, likely next month.
Starr projected that Montclair will realize $476,170 in operating cost savings as a result of the merger. The agreement will not result in any further layoffs of firefighters, Starr said, but the department will from this point get by without filling any of its vacant slots. Starr said the merger will also assist his city’s fire department in reducing overtime costs.
Unlike Montclair, which has been engaging in a drawdown of its service, the Upland Fire Department has been intensifying its level of service, including maintaining, over the past four years, an air ambulance, consisting of a paramedic team stationed aboard a helicopter based at Cable Airport. That enhanced level of service may in part explicate the discrepancy between the $476,179 in savings Montclair is to yield by the merger in comparison to the $156,000 in savings Upland is projected to see.
While there was marked enthusiasm for the limited merger of the two departments in Upland, where the city will likely see, according to city manager Stephen Dunn and Mayhew, $156,000 in savings, the approval of the consolidation, or at least its timing, was not unanimous as it was in Montclair.
The merger was opposed by one city councilman, the chairman of the council advisory committee and a prominent city businessman. City councilman Glen Bozar cited salary increases to management staff and resultant future pension benefit costs as a major factor in his opposition.
“There is no true savings in this,” Bozar said. “This is savings on paper only. This is not reducing our current operating expenses. Not enough scrutiny was given to this 42-page document before the council gave the mayor authority to sign it,  locking ourselves into an agreement with our neighboring city we cannot walk away from. Montclair previously made substantial layoffs in its fire department. How did those vacancies there come to be? They did not fill those because of budgetary problems.“
Bozar continued, “This agreement is going to expand the administration of the fire department. Our fire chief and three of our guys are going to get very generous salary increases out of this.  Where are we going to come up with the money to give all these raises?  No one on the council was informed of what the chief’s salary will be or where this is going to land in terms of the increases in our public employee retirement system costs for the fire chief and at least two others.  This does nothing with regard to our ongoing issues with the budget. This does nothing to control costs. Figures available from the state controller’s office show that as a city we have 12 people on our payroll who are making more than the governor of California. That was as of 2012. This does not alleviate that and now we are going to be on the hook for additional public employee retirement benefits.“
Tom Mitchell, the chairman of the Upland City Council Advisory Commission, told the Sentinel, “One of the things I had difficulty on was the creation of the two assistant chiefs positions and the creation of a third position. I was given a response to indicate there would actually be elimination of two existing command positions so that matter was resolved. Another problem, I thought, was the long term nature of this and were we entering into a two-year commitment we would not be able to get out of if problems developed. It was stated that either city can terminate this with six months notice, so that was resolved. The one issue that for me remains unresolved is what we are taking on by the promotions of our battalion chiefs who will  be getting a $20,000 per year pay increase. This could only make worse the situation with regard to our pension requirements. Our responsibility to the state pension fund already is an unfunded liability that we have not resolved. Under the current retirement formula, firefighters can retire at 55 and be eligible for a pension. There is a multiplier of three percent times the number of years worked, so at 55, a battalion chief who has been with the city for thirty years can retire and be eligible for 90 percent of his pay. We are already under the gun and unable to keep up or barely keep up with our pension fund payments. An increase of $20,000 per year for each of these battalion chiefs means $18,000 a year more when they retire. I don’t think we can afford that.
“I just wanted to make sure that the city council looked at this all the way around before moving forward with it,” Mitchell said.
Albert Pattison, a resident, businessman and major property owner in Upland, expressed concern that the council’s action might be counterproductive and premature.
Pattison said the city had not publicly released a cost analysis of the consolidation, saying he wanted the public and the council to see a side-by-side accounting of the number of fire department command positions currently and what those employees receive in salary and benefits and the city’s total costs in employing fire department commanders after the merger. Noting that the city’s budget management task force is currently considering the city’s revenue enhancing and cost cutting options, Pattison said the council’s commitment to the command level staffing numbers contained in the merger agreement with Montclair did not allow the task force to bring forth proposals related to eliminating battalion chiefs within what might be considered to be a top-heavy department. We did not give the committee, which is composed of top-tier business people and residents of our city, an opportunity to weigh in on this.”
“What it boils down to,” Pattison said, “is they have given us razzle-dazzle, not facts. There has been no disclosure to the public on the detail needed to analyze this thoroughly. They have not divulged what is actually in the contract. I have not seen the contract and neither has anyone else. They have not given this process enough time. They  rushed it through before the specially-appointed budget committee had time to consider it. There has been a totally inadequate discussion of how this will impact the financial stability of the city. Montclair is going to realize savings of $470,000 on this and Upland is going to supposedly see a $156,000 reduction. But Upland is putting two-thirds of the horsepower into this and Montclair is providing one third. I’m not sure there is a cost-benefit equity in this deal. This was not put on the  budget task force’s agenda and now that the council has ratified the agreement, it is another element that will contribute to the confusion and retard the city’s ability to deal with its financial challenges.”

(December 14) Furthering its reputation as the most upscale and exclusive of San Bernardino County’s 24 incorporated cities, Chino Hills last week consented to the creation of yet another gated community within its 44.7-square mile confines.
Located in the extreme southwest corner of San Bernardino County and nestled against Riverside County to the south, Orange County to its southwest and Los Angeles County to its northwest, the 74,799 population city boasts the highest median income and highest household median income among all cities in the county.
The gate is to be located at the entrance to the neighborhood on Summer Canyon Road at Canyon Hills Road, north of Carbon Canyon Road.
This week, Irvine-based Forester Canyon Hills had its plan to set off the 76 homes it has developed on Summer Canyon Road, Spring Oak Way Rock Vista Lane Viewcrest Road Hawk Canyon Road, Feather Hollow Court, Flint Hollow Place, Canyon Glen Road, and Rock Ridge Way as a gated community which will be accessible only to the residents of the neighborhood and public safety personnel.
According to findings first made by the planning commission in October and confirmed by the city council this week, the vacation of those roads as public thoroughfares is consistent with the Chino Hills General Plan and exempt from environmental review as a minor alteration to land under the California Environmental Quality Act.
Vacating the streets for public roadway purposes, according to a city document “is a benefit to the public because the city will not be responsible for the maintenance and liability costs associated with such roads.”
As such maintenance of the streets will now be the responsibility of a private homeowners association.
According to the city, “The gate will make it a well defined neighborhood. The surrounding land and homeowners met design review and access standards.”
To ensure emergency response to the area is not interrupted the fire department will be provided with a key system consisting of switch overide capability. The city also said the proponents of the gated community met minimum setback requirements on structures and provided a 40-foot radius turnaround on the roadway to ensure unrestricted access from the gate area. Putting in the gate, the city said, “won’t inhibit the general public from access to parks and other public facilities.”

(December 18)  LOS ANGELES—The California Public Employees Retirement System will get another bite at the apple in trying to establish that U.S. Bankruptcy Judge Meredith Jury erred when she ruled four months ago that the city of San Bernardino qualified for bankruptcy protection.
After years of staving off financial challenges, San Bernardino filed a Chapter 9 bankruptcy petition in August 2012. In its filing, the county seat asserted it had $180 million in ongoing unfunded liabilities and a $49 million annual operating deficit. Shortly thereafter, the state’s public employees retirement system, known by its acronym CalPERS, contested the city’s filing, maintaining San Bernardino has hundreds of millions of dollars worth of assets it could liquidate to make good on its responsibility to its creditors.
CalPERS is San Bernardino’s largest creditor. The city currently has a $25 million annual obligation to the retirement system and it withheld more than $14 million in pension fund payments from July 2012 until July of this year. The city wants to continue to make partial payments until such time as it gets back on its feet financially. Even more alarming to CalPERS is the perception that the city is looking down the road at a longer-term solution that would include renegotiating the amount of its commitment to the retirement system, one that would indeed set a precedent in California of reducing the pensions of retired or soon-to-retire city employees.
In addition to opposing San Bernardino’s bankruptcy petition outright, CalPERS has asserted that the pension fund system has a special status among the city’s creditors and that it should go to the front of the line when the city begins to pay those to whom it is in arrears. Jury did not accept that, ruling that CalPERS has no greater or lesser standing than the scores of other entities the city owes money to.
Moreover, Jury has consistently ruled that San Bernardino is as insolvent as it claims. In August, she ruled that the city’s bankruptcy should be granted pursuant to a pendency plan by which the city continues to pay its employees and other expenses critical to its day-to-day operations but services its other debts on the basis of the limited financial means available to it.
CalPERS wants out of Jury’s courtroom and previously pressed for leave to appeal the matter to another judge, a request Jury denied.
CalPERS took a writ to U.S. District Court in Los Angeles, where Judge Dolly Gee granted the pension fund’s request to appeal Jury’s findings directly to the 9th Circuit Court of Appeals.
Gee’s decision merely gives the California Public Employees’ Retirement System permission to request that the 9th Circuit here the case. The 9th Circuit can turn down the appeal request or agree to hear arguments that Judge Jury was wrong in allowing the city to envelope itself in the blanket of bankruptcy protection.
Jury had been reluctant to allow CalPERS to pursue the appeal because she was hopeful that ongoing mediation sessions involving the city and its creditors before one of her colleagues, U.S Bankruptcy Judge Gregg Zive, were making considerable progress and she was concerned the appeal would divert both the city and the pension fund’s focus to non- productive issues.
As it stands, the Zive-led efforts to reach an accommodation will continue while the 9th Circuit considers whether to hear the appeal.
That appeal and the mediation come in the midst of a profound examination of a basic public financial and policy issue, i.e., the question of whether public pension obligations are to be held as sacrosanct, no matter how generous or reasonable individual pensions are, or whether troubled municipalities can skip out on their commitments to continuously fund the retirement accounts of  their current and past employees.
San Bernardino is at the forefront of that issue, having sought to have its pension fund obligations categorized as indistinguishable from its responsibilities to its other creditors.
In the cases of two other cities in California that have sought bankruptcy protection, Stockton and Vallejo, those cities have chosen to stay current on their obligations to CalPERS.
Seven–ninths of the way across the continent, in Detroit, the Motor City had its bankruptcy petition granted on December 3 as a consequence of having run up a monster debt so humongous it could only be estimated – at an unfathomable $18 billion. The U.S. Bankruptcy Judge  hearing that case, Steven Rhodes, threw public employee unions and pension funds into paroxysms when he  ruled that Detroit is not only eligible for bankruptcy but can also cut pension benefits as part of its strategy to map its way out of the financial abyss it has found itself in. Pensions, just like any other contracts, can be altered, given the exigency of bankruptcy, Rhodes ruled.
Rhodes’ ruling provides a precedent that outfits San Bernardino with more leverage in its match with CalPERS, providing the city with the potential option of abrogating a contract that CalPERS and the city’s municipal employee’s unions considered absolutely ironclad.
Like that of Jury, Rhodes’ ruling is now the target of an appeal request.

(December 17)  RIVERSIDE—San Bernardino Second Ward Councilman Robert Jenkins pleaded not guilty on Tuesday to the thirty criminal charges lodged against him by the Riverside County District Attorney’s Office.
On October 17, Jenkins was charged with 18 felonies and 12 misdemeanors pertaining to his use of the internet to place several personal advertisements on Craigslist seeking sex liaisons and then diverting responses to those ads to his one-time boyfriend or the man whom Jenkins is alleged to have believed his former boyfriend to be involved with, as well as with forging a San Bernardino Police Department internal memorandum. Jenkins is represented by attorney Virginia Blumenthal, who has consistently proclaimed her client’s innocence, as well as by attorney Jeff Moore.
Blumenthal previously suggested Jenkins, who once hid but now openly acknowledges his homosexuality, was set up by his former lover, who had a key to his home and access to his computer.
But the Riverside District Attorney’s Office says evidence churned up during the course of its investigation contradicts that version of events. Investigators traced the online ads to Jenkins directly at locations beyond his home, linking the postings, through IP, or Internet protocol, addresses at his workplace at the Riverside Office of Education and the home of his relatives, where his former boyfriend had no access.
Moreover, the forged San Bernardino Police Department memorandum was conclusively shown to be the handiwork of Jenkins, investigators insist. Jenkins is said to have relied upon his access, as a city councilman, to materials unavailable to the two alleged victims in the case. The forged memorandum utilized the names of two department employees, Sgt. Tom Bielaszka and Lt. Dario Robinson, along with police department seals. The memorandum was intended to make it appear that Jenkins had also been a victim of online harassment, according to the district attorney’s office.
Jenkins, who avoided arrest and being taken into custody when Blumenthal arranged for a bondsman to post $25,000 bail on Jenkin’s behalf through the court on the day he was charged, was nevertheless hurt by the negative publicity surrounding the affair. On November 5, Jenkins failed in his reelection attempt, losing to his only opponent in the race, Benito Barrios. Jenkins will remain in office until March, when Barrios is to be sworn in.

(December 16)  JOSHUA TREE — The Hi-Desert Medical Center’s governing board on December 11 voted unanimously to promote Robert Tyk, the hospital’s chief financial officer for the last 11 months, to the position of chief executive officer.
The board’s action follows by less than two months what was termed a mutually agreed-upon  decision  for current chief executive officer Lionel “Chad” Chadwick to depart at the end of the year.
Tyk will officially take over the reins of the hospital on January 1.
The decision to hire Tyk came during a half hour-log closed session in which Dianne Swella was not present but participated by the means of a remote communication device.
The same secrecy that shrouded Tyk’s selection attended Chadwick’s departure. Throughout the first nine months of 2013, Chadwick appeared to be working diligently on the financial challenges facing the hospital district. On October 29, however, the district made an abrupt announcement that Chadwick would be leaving his position on December 31. Despite statements to the effect that all parties were amenable to the departure, an indication of the board’s discomfiture with Chadwick came in the form of the terms of his departure, which did not include the conferring of a severance payment.
A terse press release that went out with the announcement of Chadwick’s pending departure cited “irreconcilable incompatibility of management approach” between Chadwick as hospital CEO and the board. “Dr. Chadwick has made meaningful and appreciated contributions to the district’s mission and operations,” according to the release. “We thank him for his many contributions and wish him well in his future endeavors.”
The hospital district’s financial woes are variegated, consisting of burgeoning patient care costs and dwindling revenue from solvent patients, insurance carriers and governmental programs set up to cover the medical costs of indigent patients or those otherwise eligible for subsidized medical assistance.
Many of the services rendered at the hospital by doctors are not billed for by the hospital but by the  physicians themselves, who are not employees of the hospital, by law.  The hospital does not now have clearly delineated revenue sharing agreements with local healthcare providers such as Oasis Healthcare and the county of San Bernardino.
A major portion of Hi-Desert Medical Center’s financial travail is attributable to the persisting economic recession, which has been accompanied by the reduction of government payments to hospitals, including 25 percent cuts from the Medicare and MediCal programs, entailing an annual loss of revenue to the institution exceeding $500,000.  Simultaneously, federal law mandates that hospitals deliver emergency care whether or not patents have medical coverage or the ability to pay for that treatment.  This has been coupled with steady increases in the cost of delivering medical care.
Chadwick had advocated the aggressive use of case management to discharge recovered patients earlier and reduce the length of time they remained in the hospital consuming costly services. This was of only limited success.
In order to remain operational, Hi-Desert Medical Center has for the last three-and-a-half years burned entirely through its operating budgets and tapped into financial reserves.  Chadwick’s attempts to stem this hemorrhaging of red ink have failed, resulting in the consternation of the board. Chadwick’s efforts to directly lobby both state and federal legislators for relief, coupled with similar requests of other civic and community leaders he had enlisted for that cause were largely ineffective.
In a last-ditch effort to right the hospital’s listing financial ship before he was essentially forced out, Chadwick in September induced the board to vote to put a tax initiative on the November 2014 ballot.
That move was considered a long shot. In the less lean economic atmosphere of 2005, the hospital sought voter approval for Measure N, a tax bond that would have added $24 to individual homeowners’ annual property taxes to provide funding for emergency room improvements and other hospital service enhancements. Measure N went down in defeat in a mail-in ballot election.
The board, led by board president Korina Cole, is staking the hospital’s future on what it hopes will prove to be the superior financial management skills of Tyk, who boasts more than three decades of experience in the healthcare industry, including a stint as chief financial officer for Roswell Regional Hospital in New Mexico and interim financial management and reform work at several institutions while he was with Kaizen Consulting.
Tyk said he took pride in his selection by the board to “lead our healthcare district through these challenging times. I look forward to working with this board, our physicians and staff to ensure the viability and future of our healthcare district.”