Saturday Mail

And then there was this reaction to those community development block grants for Hip Kitty Jazz & Fondue Lounge and the Packing House Wine Merchants that the city council agreed to award at their last meeting:

DATE: Wed, July 28, 2010 11:16:07 AM
SUBJECT: cdbg funds for hip f***ing kitty
TO: Claremont Buzz

HUD's CDBG website says this:

"...each activity must meet one of the following national objectives for the program: benefit low- and moderate-income persons, prevention or elimination of slums or blight, or address community development needs having a particular urgency because existing conditions pose a serious and immediate threat to the health or welfare of the community for which other funding is not available."

http://www.hud.gov/offices/cpd/communitydevelopment/programs/

What a bizarre way to use this money. Maybe the Packing House is a slum that presents an immediate threat to the health of the community.

The CDBG website also says:

Citizen Participation

A grantee must develop and follow a detailed plan that provides for and encourages citizen participation. This integral process emphasizes participation by persons of low or moderate income, particularly residents of predominantly low- and moderate-income neighborhoods, slum or blighted areas, and areas in which the grantee proposes to use CDBG funds. The plan must provide citizens with the following: reasonable and timely access to local meetings; an opportunity to review proposed activities and program performance; provide for timely written answers to written complaints and grievances; and identify how the needs of non-English speaking residents will be met in the case of public hearings where a significant number of non-English speaking residents can be reasonably expected to participate.

Of course, this being Claremont, there was no mention of future public meetings involving in this particular CDBG disbursement. There was just a decision by city staff, who recommend the council grant Jerry Tessier the two CDBG grants totaling $100,000. The money then disappears into construction expenses at the Packing House, which itself was just renovated by Tessier's company Arteco Partners.

The federally mandated "citizen participation" is equivalent in Claremont to the "citizen oversight" for our school district's bonds. That is to say, in practice it's non-existent.

Highway Robbery

Yes, as through this world I've wandered

I've seen lots of funny men;
Some will rob you with a six-gun,
And some with a fountain pen.

Pretty Boy Floyd
- Woody Guthrie

DEAL GONE BAD

Well, if you happened to catch last Tuesday's Claremont City Council meeting, you would have seen the council vote 4-1 to approve terminating the operating covenant that Claremont Toyota and the City agreed to back in September 2005. Mayor Corey Calaycay was the lone "No" vote.

As we discussed in our last post, the property in question is a 1.25-acre parcel that once contained a Chili's Restaurant and a small parking lot. It's located on the west side of Indian Hill Blvd. next to the offramp from the eastbound 10 Freeway. Claremont Toyota owner Roger Hogan had originally wanted that property to expand his existing operation.

Back in 2005, Hogan, who exerts a great deal of influence in town thanks to the fact that his dealership provides the City with about half of its annual sales tax revenue, talked the council into giving him $100,000 to help him acquire the property. The City also agreed to put in $200,000 in street and signage improvements and used its eminent domain powers to threaten the previous owner. The "threat" was a paper one only. It allowed the seller a tax advantage, so the City had to engage in a oddly legal, wink-and-nod IRS tax dodge for the seller's benefit.

The payoff for the city was supposed to millions of dollars in tax revenue over the minimum seven years Hogan agreed to use the Chili's property to expand his Toyota dealership. So, some time soon after the city council agreed to the deal on a 3-1 vote (then-councilmember Jackie McHenry voted against it; Calaycay abstained), Hogan took possession of the property, had the restaurant structure torn down and paved over, and started parking cars on the lot.

Unfortunately, the car market, and the economy as a whole, crashed, which caused Hogan to reconsider his need for the Chili's lot. With three years remaining on his agreement, Hogan wanted out of the deal, so last week city staff urged the council to allow Hogan to back out of the 2005 agreement and payback only half of the $100,000 of the City's investment.

You can see the actual discussion here (scroll down to agenda item 13 and click on that link).


NOPE, NO CONFLICT HERE

Of course, the council agreed to the deal Tuesday, but not without some squirming on the part of an uncharacteristically sober councilmember Sam Pedroza (carousing, at left). Pedroza received $1,000 in campaign contributions from the Hogan family.

How much did the Hogans love Sam in 2007? Well, the maximum allowable contribution for a Claremont City Council campaign is $250 per person. Hogan got around that by having his wife, as well as his adult son and daughter, contribute $250 each to the Pedroza campaign. Roger Hogan, Jr., by the way, for his campaign donation listed his occupation fleet manager of Claremont Toyota.

One other interesting thing about the Hogan donations is that none of them - father, mother, daughter, son - live in Claremont. Roger Sr. and his wife live in Newport Beach. For all the talk about how much Roger Sr. gives back to the community, it certainly seems like he takes an awful lot out, and we have to wonder if there isn't sometimes an implicit threat to take his dealership out of Claremont if Roger doesn't get what Roger wants.

Yesterday's Claremont Courier had an article by Tony Krickl (sorry, no link) that quoted Pedroza's rationale for not recusing himself from the vote for his auto dealer patron:

"It just astounds me as we're talking about the challenges to our businesses at this time and people are talking about charging this number one income producer $100,000," Councilmember Sam Pedroza said. "I just think it's the wrong direction."

Mr. Pedroza defended himself at the meeting after Mr. [Dean] McHenry pointed out that some city council members had received campaign contribution money from Mr. Hogan and questioned whether their votes would be swayed due to a conflict of interest.

The other councilmember who received a campaign contribution from Hogan was Mayor Pro Tem Linda Elderkin (pontificating, at right). Elderkin, whom we like to refer to "The Process Queen" for her supposed adherence to rules that enforce orderly, fair government, received $250 from the elder Hogan in her 2007 campaign.

Neither Pedroza nor Elderkin were on the council back in 2005 when the City agreed to operating covenant with Hogan for the Chili's property. But it never hurts to have some allies when a vote is needed, as it was on Tuesday night. Fortunately for the council, it has always reliable city attorney, Sonia Carvalho, standing by. Tuesday, Sonia leaped to the defense of Pedroza and Elderkin. Krickl's article quoted Carvalho:

"Campaign contributions for the purposes of conflicts are not sources of income," City Attorney Sonia Carvalho added. "So you can receive campaign contributions and not have a conflict of interest."

Carvalho also said in her comments that as long as the council can claim a "legitimate public purpose" for any expense, there is no gift of public funds involved.

Thanks for that, Sonia. So, Hogan gets a break, and the city gets back $50,000 of it's $100,000 investment, a 50% loss on the investment. Think of what services that $100,000 might have purchased, or how much interest the city might have earned over the past four years if it had merely invested the money in a long-term bond or CD.

Pedroza was careful to point out that there was no conflict on his part because he hadn't accepted any money from Hogan, et. al., in the last 12 months. It's also good to know that 12 months hence, in his presumptive 2011 campaign, Pedroza will again be cleared to accept even more Hogan money.

Who in 2007 knew the best return on investment might be a Claremont City Council campaign? (Start with $1,250, $50,000 returned = a 4000% gain over about three years.)

Check out these 2007 City Election campaign finance documents:

(Click on images to enlarge)

Pedroza 2007 Campaign Finance Statement

Elderkin 2007 Campaign Finance Statement

POSTSCRIPT

The funniest thought of all occurred to us as we were driving past the Claremont Auto Center last week. What if three years from now Roger Hogan decides to pull up stakes and concentrate on the Orange County car market? Who can guarantee he doesn't anyway? We couldn't help but noticing how his Claremont Toyota ads now say "Claremont/Capistrano." Capistrano is sure a lot closer to Newport Beach than Claremont.


The sight of the Claremont Auto Center last week wasn't exactly a confidence inspiring image. There certainly seemed to be a lot of empty spaces. The Chili's lot appeared empty except for six vehicles:



So, we wonder, how long did Hogan's operation really use the property? The answer is less than three of the agreed upon seven years. As always, Google Earth tells all (the Chili's lot is outlined in red):

4/1/05 - Before the deal

3/15/06 - Restaurant gone

6-17-07 - Cars. Now you see 'em....

6/27/08 - ....Now you don't

6/19/09 - More cars gone

Claremont Trash News

Claremont's proposal to raise trash service fees remains in the news.

You may recall that we noted in our post on this subject that it certainly appeared back at the July 22nd City Council meeting that city staff was telling the Claremont City Council that the rate hikes would be limited to multi-family dwellings, businesses and dumpster rentals. Not only did the charts that accompanied the staff report show NO increase to residential fees, but the charts specifically said the staff's projections "Assumes a 2.5% CPI [consumer price index] increase on all fees except Residential."



In addition to the report, in the July 22nd Council meeting city staff specifically told Councilmember Linda Elderkin twice that residential fees were not being raise. This is on video, by the way.

So it is surprising now to see the same city staff saying that the City meant all along to include an annual refuse collection rate CPI increase for individual residences, even though Claremont residents pay some of the highest garbage collection rates in the area and despite the fact that the residential portion of the Sanitation Fund is projected by staff to run a surplus for at least the next two fiscal years.

That same staff, by the way, gave residents until October 14th to register protests against the rate hike. If a majority of the 10,000 or so residential property owners in town do not protest, the CPI hike will be implemented.

The Daily Bulletin had an article on the subject today, though they seem to have bought into the city staff's version of events and make no mention of the false assurances to Councilmember Elderkin on July 22nd about the rate hikes not applying to residences.

The Bulletin reported:

CLAREMONT - Some city residents are upset over what they say is an unfair hike in monthly trash fees of about 70 cents.

Nineteen residents have written protests about the hike, City Clerk Lynne Fryman said Tuesday.

A letter with 95 signatures has been received, but, Fryman said, she needs to validate them with City Attorney Sonia Carvalho.

"It shouldn't be a problem," Fryman said.

The signatures have to be in Fryman's possession by Tuesday and before the close of a public hearing when the council will meet to discuss the issue.

Protests involve writing down a parcel number or description of the property and the rate increase the owner opposes, said Anna Sanchez, a senior management analyst.

Some residents against the increased trash rates said they did not know the trash rate increased until an Active Claremont meeting in September when Community Services Director Scott Carroll informed attendees.

The issue began with a July 22 staff report for that day's City Council meeting, and a notice was mailed to residents the next day.

Some residents said the notice excluded mention of residential fee increases, and they said those fees should not be subject to an increase because they are already high.

As is typical in any Claremont City Hall controversy, City Attorney Sonia Carvalho is lurking in the background, advising the staff on how to use misleading language to sneak the rate hike in.

Pay Now, Pay More Later

Look out, Claremont. Your city staff just may cost you a trip to the poorhouse. A reader wrote in to tell us that the city of Vallejo voted earlier this month to file for bankruptcy.

According to an Associated Press article about the bankruptcy:

VALLEJO — With hundreds of concerned residents looking on, the Vallejo City Council voted unanimously late Tuesday to file for bankruptcy, making the city the first of its size to seek protection due to unaffordable labor contracts.

The dramatic vote came despite a last-minute appeal by state Sen. Pat Wiggins, D-Santa Rosa, and an aide for Assemblywoman Noreen Evans for the city to avoid bankruptcy....

....Vallejo has been slammed by increasing costs of its public safety contracts, the housing crisis, lower property values and state raids on local coffers.

The city faces a $16 million deficit in the 2008-09 fiscal year which starts July 1. Tuesday night's dramatic vote came after months of fruitless talks between city and labor representatives.

After those talks, which continued through the weekend and failed to produce a long-range fiscal plan, Vallejo's top administrators recommended bankruptcy as the only option remaining.

Chapter 9 bankruptcy will allow the city to gain temporary protection from creditors and enable the city to continue to offer citizens necessary services.

Another AP story explained the reasons why employee costs are dragging down city budgets and talked about the downside to a municipal bankruptcy:

Like Vallejo, many U.S. cities are saddled with labor contracts that offer salaries, overtime pay, pensions and health benefits they say they can't afford. Those expenses are expected to balloon as health care costs soar and employees retire earlier and live longer.

Vallejo officials hope the bankruptcy judge will allow the city to rewrite its labor contracts and bring compensation down. If they're successful, other cities may follow their lead, experts say.

"The solution that will come out of Vallejo may very well be a model for other cities facing similarfiscal challenges," said Marcia Fritz, vice president of the California Foundation for Fiscal Responsibility. "If Vallejo turns out better after declaring bankruptcy ... that will be an avenue (other cities) look at to break contracts."

But bankruptcy is not without risks. It will cost the city millions of dollars in legal fees and damage its credit rating. As a result, borrowing money to build roads, schools and other projects will become much harder - and more expensive.

Claremont has some experience with ballooning employee costs. Before he left for Indio, former Claremont City Manager Glenn Southard got the Claremont City Council to raise city employee pension benefit to 2.5% at 55, meaning that once employees reach 50 years of age, they are qualify for a pension equal to 2.5% of their annual salary at retirement for every year of employment. So an employee who started working for Claremont at, say, 25, and who retired at 55, would qualify for a pension benefit of 75% of their salary - 30 years of service, times 2.5%.

Claremont police officers qualify for an even higher pension. CPD gives out 3% at 50.

To those of you working in private industry, do you receive such generous pension benefits? If you are a worker in one of the 87% of private businesses not offering a defined benefit pension, you're pretty much on your own to fund your own retirement through a 401(k) plan or an IRA. But public employees are in a different class from you.

Prior to the current pension benefit going into effect in July, 2004, Claremont's non-public safety pension benefit was 2% at 55. What Southard didn't tell you, what he didn't care about, was that the .5 % increase was retroactive back to each employee's date of hire. Consequently, Claremont's non-public safety pension account with the California Public Employee Retirement System (CalPERS) became instantly underfunded by as much as $10 million - a fact that Councilmember Peter Yao tried without much success to get Southard's staff to face.

Those of you who recall the meeting where Claremont's City Council voted on the pension increase may remember the unseemly spectacle of senior city employees lined up in the front row and cheering when the council approved the pension.

This all raises the a second problem - that of the blurring of the line between employee and friend. While it's great that the elected and appointed people who run the city love their staff, it's terribly irresponsible for them to abandon their duties to safeguard the public coffers by allowing themselves to become too close to their employees.

Claremont Human Services Deputy Director Mercedes Santoro, for instance, is no doubt a very nice person. She and her family live in Claremont, and they are involved in the community. However, is she really worth $130,000 in salary and benefits (as of the end of 2006)? Is anybody? And she is relatively young. What will her pension be when she retires?

No wonder cities - not just Claremont - seek to hide their employee compensation and are willing to take any step, no matter how questionable to cut off access to that public information. But just look to Vallejo or San Diego to see what happens when elected officials ignore their financial responsibilities.

Claremont: "Security through Obscurity"

A reader sent us a reaction to the City's plan to hide the report of the security consultant on problems with the City of Claremont website and computer system.

As a computer professional, I'm astounded that the city would decide to hide the results of their security audit. "Security through Obscurity" is a widely-derided concept. It isn't that hard to make a website secure, and it really shouldn't involve any deep secrets. Presumably thousands of cities across the country have done it.

What this regular human being does not understand is that secrecy and obfuscation is a way of life, a credo, a hard-wired response with these people. It is a reflexive reaction that occurs without thought or consideration. It is limbic. It won't change until the voters make it change. Our guess is that the City Council will sit up there like potted plants on this matter. We get the kind of government we deserve.

Staff Efficiency

Claremont's city government has become a model of efficiency. Our city staff has figured out how to shrink 55 pages of analysis into a mere three, as you can see from the agenda materials for tonight's city council meeting.

Item #11 on the agenda is a proposed amendment to the city's Land Use and Development Code. Staff proposes that the council approve raising the amount charged to businesses for the city's in-lieu parking fee from $9,000 per parking space to $20,000.

The in-lieu fee is charged to Claremont Village businesses - a restaurant adding seating spaces, for instance - that want to increase expand or intensify their use but don't have land available to add parking spaces for the additional customers. The business can instead pay the in-lieu fee, which is supposed to go into a fund dedicated to buying land for parking or to building new parking structures.

In 1990, the last time the in-lieu parking fee was raised, the council agenda materials contained 55 pages that included a breakdown of how staff arrived at the per-space cost estimate:

Click on Image to Read

The 55 pages of staff materials also included an initial study under the California Environmental Quality Act (CEQA), and a negative declaration with several mitigations to offset adverse impacts.

So, in 1990 you had at least the appearance of staff doing the work to justify their recommendation that the in-lieu fee be set at $9,000.

Fast-forward to tonight's council meeting, and you see a three-page document with no supporting analysis. And two of the pages are taken up by the proposed council resolution language with the code change concering the fees. Community Development Director Anthony Witt and Housing and Redevelopment Manager Brian Desatnik simply have one sentence that says "The average cost of a structured parking space today is approximately $20,000."

Click on Image to Read

No supporting data, as in 1990. They just pull a number out of thin air that may or may not be true. We don't know because there's no information to evaluate the statement - Claremont 400 reasoning distilled to perfection!

This is the "process" that City Councilperson Linda Elderkin and her friends over at the League of Women Voters crow on and on about. And businesses in town will pay for that process - a process the Claremont Chamber of Commerce seems to endorse, given its silence on the matter.

No doubt Witt and Desatnik cut the material down to three pages to save the city the expense of their staff time (Witt: $148,223.77 in earnings per year, plus $51,532.43 in benefits; Desatnik: $111,846.06 in earnings, plus $43,450.38 in benefits).

Sometimes you don't get what you pay for.