Archive | December, 2020

Staff trying to get their pensions bond under the wire by end of January

31 Dec

Next Tuesday city council will hear a presentation on a Pension Obligation Bond. They are trying to slide it under the wire as “restructuring debt,” which is really deceptive – they don’t mention the part where they take on millions in NEW DEBT.  This is really dirty and sneaky, and you need to let your council members know, you know what they’re up to. You can contact them directly through the clerk’s office – debbie.presson@chicoca.gov – or you can go to Chico Engaged. I’d recommend both.

Here’s the link to the agenda:

https://chico-ca.granicusideas.com/meetings/351-1-slash-5-slash-21-city-council-meeting/agenda_items

And here’s the POB presentation:

https://chico-ca.granicusideas.com/meetings/351-1-slash-5-slash-21-city-council-meeting/agenda_items/5fe748e0f395e716e400a434-5-dot-1-calpers-pension-costs-and-ual-restructuring-p

I also wrote a letter to the editor. Staff is trying to  get this thing done within the next two meetings, let’s stop it in it’s  tracks. 

Also, get a load of Coolidge’s request for a “streets bond”! 

https://chico-ca.granicusideas.com/meetings/351-1-slash-5-slash-21-city-council-meeting/agenda_items/5fe748e1f395e716e400a439-5-dot-6-mayor-coolidge-request-bond-for-improvement

Here’s my letter about the POB:

January 5, Chico City Council will consider Pension Obligation Bonds. Staff calls it “restructuring pension debt/Unfunded Actuarial Liability”, but it’s really millions in new debt. A new twist on the old Shell Game, Staff will invest borrowed money in the stock market, hoping to make enough to pay both the pension debt and the new debt. If their investments fail,  the taxpayers will be forced to pay not only the pension debt but the new bond debt, at the expense of city infrastructure and basic services.

Over the last couple of years,  surveys, letters to the editor, and comments on social media have demonstrated two main concerns: lack of law and order, and lack of maintenance to public infrastructure.  While Staff has claimed they don’t have enough money for either, they’ve continued to appropriate more money each year from city departments into the Pension Stabilization Trust – this year, $11.4 million, roughly 20% of tax revenue.  

Furthermore, even with 10’s of millions a year paid through payroll and the PST, the UAL has still grown, up from $126,000,000 only a few years ago to $146,000,000. Staff has recently revealed another $140,000,000  interest. This is the result of insufficient  contributions from employees, and poor returns from CalPERS investments. 

The Government Finance Officers Association says POBs are dangerous without a plan to manage pension costs. Instead, our city has increased pension costs through new hires and overly-generous salaries, without demanding more from Staff. 

The GFOA also determined POBs were the cause of bankruptcy in San Bernardino and Stockton. 

Juanita Sumner, Chico CA

 

Former Sec of State Alex Padilla handed a $35 million contract to a Biden company – insuring his appointment to senate?

26 Dec

Here’s what we can expect from Gavin Newsom’s choice to take Kamala Harris’ senate seat.

https://calmatters.org/politics/2020/12/newsom-padilla-skdknickerbocker-contract-gotv/

As California’s Secretary of State prepares to take a new job as U.S. Senator, he’s not going to let a politically charged $35 million invoice get in the way of a smooth promotion.

‘In a press conference Wednesday, Alex Padilla assured reporters that the multimillion-dollar tab his office owes to SKDKnickerbocker, a Biden-affiliated PR shop, will be ‘resolved soon.’”

Padilla intended to use money stolen from California counties, but our controller says he was not authorized to spend that money.

“As Secretary of State, Padilla served as California’s chief election administrator during an election season unlike any other. In the summer of 2020, his office hired SKDKnickerbocker to produce an ad campaign to explain the new election procedures to California’s voters. Padilla’s office intended to pay the PR firm out of a pot of cash meant to fund county government voter outreach operations.

“But Betty Yee, California’s controller who is responsible for signing off on all state government payments, has so far refused to okay the outlay, arguing that Padilla’s office lacks the authority to spend that money on behalf of the counties.”

Furthermore, this is turning into a partisan war, with Republicans questioning the legality of the hiring in the first place. 

“Responding to the news of Padilla’s appointment to Harris’ senate seat yesterday, Jessica Millan Patterson, chairwoman of the California Republican Party said in a statement that “Governor Gavin Newsom couldn’t have picked a more partisan politician who has yet to answer for his illegal $35 million get-out-the-vote contract with a ‘Team Biden’ PR firm.’”

I’ll question it too. Our Democratic leadership in Sacramento seems to have no moral compass. Furthermore, I suspect Padilla just bought himself a senate seat, and we have to pay for it. 

Council will hear Pension Obligation Bond presentation at Jan 5 2021 meeting

24 Dec

Wow, yeah, Merry Fucking Christmas – want to see what you can expect in your stocking this year?  Look over next year’s first council agenda – it’s a big lump of coal called a “Pension Obligation Bond,” and they’re trying to tell us it’s not really a tax, it’s just a “restructuring” to a lower interest rate. That is not true. 

And on top of that, our new/old Mayor Andrew Coolidge is also calling for a “streets” bond. Read all about it here:

AGENDA FOR 1/5/21

http://chico-ca.granicus.com/GeneratedAgendaViewer.php?view_id=2&event_id=351

5.1. CALPERS PENSION COSTS AND UAL RESTRUCTURING PRESENTATION
The City of Chico (the City) continues to explore various cost management strategies for its $146 million
unfunded accrued liability (UAL) with the California Public Employees Retirement System (CalPERS). At
the September 23, 2020 Finance Committee, the City and NHA Advisors (NHA) made a presentation
discussing the City’s most recent actuarial report released by CalPERS in July 2020. The City and NHA
provided a discussion on alternative repayment strategies, including a restructuring of the UAL. The City
and NHA will make a similar presentation at the January 5, 2021 City Council meeting to assist in providing
continued education on these topics. (Report – NHA Advisors)

FROM STAFF REPORT:

https://chico-ca.granicus.com/MetaViewer.php?view_id=2&event_id=351&meta_id=74726

As current interest rates are at historically low levels, combined with the fact that the City has exhausted many of
its other resources to address rising pension costs, City staff asked NHA to assist them in evaluating the merits
(including benefits and risks) of a UAL restructuring. A UAL restructuring (either through a Pension Obligation
Bond (POB) or a Lease Revenue Bond) entails converting 7% debt with CalPERS to lower debt on a bond
(currently between 3.50% and 4.00%).

That is a FLAT OUT LIE. We will be incurring NEW DEBT, and if the investments they make with the bond money do not pay off, we owe not only the 7% to CalPERS but that 3.5 – 4% for the bond. Read this post for background:

https://chicotaxpayers.com/2020/10/09/heres-the-video-from-that-sept-23-finance-comm-meeting-ever-wonder-what-people-are-saying-about-your-money-behind-your-back/

NOTE: Oh, crap, the video has been taken down! I’ll have to repost it asap. 

You ask your district rep and I’ll ask mine – is Chico still collecting money for the “Shelter Crisis Designation,” and if so, where is it going?

22 Dec

It’s hard not to obsess about the transient camps when they are the first thing you see driving out of your neighborhood. We have to contrive NOT to drive by tents as we go out and about town. Living just a couple of blocks from Bidwell Park is like having a salt patch on a burn, rub it in, rub it in. Having to read letters like this in the paper is a Super Burn.

ENTERPRISE RECORD, 12/12/2020

Merry Christmas, here’s a fine for being homeless.

Is stunning lack of empathy a conservative trait?

Our community members are hurting. They have been burned out, priced out, and driven outdoors. As winter approaches they are living in tents in the park because we have a lack of affordable housing, a lack of shelter space, and a lack of social services in this county.

The conservative “solution” to this problem isn’t to create more space and services, it is to levy a fine on people whose backs are already against the wall. What do they think this is going to accomplish apart from creating a criminal class, and putting the police into contact with a population they have dealt with notoriously poorly in the past?

Can the conservatives not see the ridiculous, and by that I mean worthy of ridicule, nature of their “solution”? These people aren’t rolling in dough, if they were they’d have a house to go too.

I keep hearing conservatives say homeless people are simply lazy and need to pull themselves up. Really? The numbers of homeless are rising nationwide. Did all of these people suddenly decide to abandon their homes and be lazy? Or perhaps is there some systemic pressure that is putting people on the streets en masse?

Speaking of lazy, this conservative “emergency resolution” is about the laziest piece of legislating I’ve ever seen. If this is the best the conservative majority can come up with, Chico is in for a long 2 years.

— Bob Howard, Los Molinos

The first burn is having met Bob Howard as “Mad Bob,” a musician who made his home in Los Molinos years back, but still thinks he is allowed to complain about what we are doing in Chico.  Bob doesn’t have to look at these people, he can live in his romantic imagination – they’re just vagabonds, free spirits! They’re not going to rob his garage while he’s at work, or sell his kid crank at the playground, or stand across the street staring at his wife or college age daughter while they yank off in the bushes. 

The second burn is in agreeing with him somewhat – the new parks ordinance is a lazy and worthless piece of legislation. Read it yourself, I don’t think you need to be a lawyer to see it has no teeth whatsoever, just another discretionary law. Like, move along Buddy, and if I catch you beating off in the bushes outside this sorority house again… well… I’ll counsel you and move you along… again… 

You heard another musician say this. “Meet the New Boss. Same as the Old Boss.” And the beards have, indeed, all grown longer overnight. The “conservatives” have done quite the about-face, all the sudden we have to find “some place for them to go.” 

A friend of mine was expressing frustration with a situation in his neighborhood. He lives very near the old Louisiana Pacific lumber yard, where he has seen transients camping for years. People seem to forget how many fires have been started there – an entire building burned down one winter – by transients. My friend and a neighbor of his have not only called the fires in but have run over to the site with picks and shovels to beat the flames back themselves. Right in the middle of a densely populated neighborhood, the city allows illegal campers to threaten homes with elderly and children inside. I’d have to ask Mad Bob – whose backs are against the wall here? 

Why aren’t these arsonists jailed? If you listen to the Chico side of the story, it’s because county DA Mike Ramsey won’t prosecute Chico Muni Code violations. Well, isn’t arson a federal offense? I would guess Ramsey is sick of trying to prosecute for urinating/defecating in public, littering and illegal camping because those are only misdemeanors. With our pathetically inadequate jail and now COVID, they would just be processed and released.  But I can’t believe he won’t prosecute for starting illegal fires. A local transient who fire bombed a college girl’s bedroom was arrested and held, but illegal campers who threaten people’s homes are not?  My friend says the fires are put out and the transients just disappear, no one is held accountable.  I believe this is a Chico problem, starting with cops who are unwilling to do their jobs and council members who are unwilling to push them to do their jobs because the Chico Police Officers Association is a big player in every local election. 

But yesterday I realized that the real lynchpin to this entire problem is the Shelter Crisis Designation, and the annual pot of money received for declaring it. Here’s a question for your district rep: why aren’t they discussing that declaration, and overturning it? Ask if they are still receiving the grant for this designation, and if so, what are they spending it on? 

I’ll  get back to you with my rep’s response, you do same. 

 

Promises, promises

21 Dec

 

 

Pictured above is the area known as “Devil’s Triangle”. Not  really a “park,” the DT is really just a median created where Mulberry Street splits into Pine and Cypress Streets at Little Chico Creek. The conflagration of tarps and garbage is an illegal camp site, so far tolerated by city officials, even after promises made with a new ordinance enacted a couple of weeks ago. In fact, the four conservatives who swept into office in this most recent election made some pretty fat-mouth promises about “cleaning up” our town. 

Since that ordinance was voted in, this illegal site has actually attracted more campers. When I drove by today I noticed a tent had turned into a huge trash pile. Same for the illegal campsite in Bidwell Park at the Mangrove bridge. Neither site has a dedicated bathroom or trash container. Someone has placed a blue room on the side of the street on Humboldt, where the DT campers are spilling over from the original site, into the adjacent greenway. 

Recently I asked my district representative when we could expect to see these illegal dumpsites cleared away. I was surprised to hear this answer – “we can’t clear the camps until we find someplace for them to go...” She also informed me that while the city had identified two locations that would be suitable for emergency shelters, they could not find anyone to run them. 

The city actually has no responsibility for providing social services. That’s what the conservatives reminded us prior to the election. Now they’re singing a different tune. Why? Because they never meant it. Ask Andrew Coolidge, who, prior to losing his bid for council in 2018, voted to declare a “Shelter Crisis”. At that time, Coolidge made note of the $4 million a year in grants that came with that designation, transferred into the General Fund, to spend at council’s discretion. 

Frankly, I don’t think the conservatives were ever genuine in their promises to do anything about “homelessness,” illegal camping, the increase in crime, or the degradation of our parks. I believe they see these transients as just another revenue source. If that’s not true, why did they allow the city manager to create a NEW position, “Homeless Coordinator”?  

We’ll wait and watch.

 

Time to sue the county of Butte

13 Dec

Well, you know how I love to say “I told you so…” So, I told you so – despite a lot of tough talk out of the local conservatives, the bum camps have not disappeared from our parks and waterways, in fact, there are more tents in both Bidwell Park and the “Devil’s Triangle” next to the Pine/Cypress bridge today than there were a week ago. The “urgency” ordinance passed last Tuesday by our new, conservative SUPER MAJORITY is toothless. I even got one of the conservatives to say it – “we can’t clear the camps until we find someplace for them to go…”

The real problem, according to Chico PD officer Scott Zuchin, is County DA Mike Ramsey’s refusal to prosecute for Chico Municipal Code offenses. 

As Zuchin reported on Chico First Facebook, “Unless something has changed, any misdemeanor violations of CMC Chapter 9 are filed by the city attorney. The DA won’t prosecute Chico CMC’s. That was the problem from the beginning of adding camping and waterways. Infractions were meaningless and misdemeanors were not getting filed. With regard to being an enforcement tool, the camping and waterways ordinances were a failure.”

Well, there it is, from a guy who actually is charged with enforcing the laws – they’re unenforceable if there’s no cooperation between the county DA and the city attorney. I’m no lawyer, but I forced myself to read the entire ordinance, along with the old ordinance, and I already saw it was vague and left too much discretion to both arresting officers and the court, including the DA.

Lawyer Rob Berry seems to agree, but he constantly lets the city out of any responsibility for the problem.  “That is true, but that, like drug adn mental treatment, is a failure that does not belong to the City of Chico. Our job is to establish and enforce constitutional laws for the benefit of the general welfare of our citizens. Jails, prosecution and the penal codes belong to the county and state. We have to continue to work to find a way to not make them meaningless. By the way, violation of camping and dumping ordinances are also violations of various state and federal laws. The problem is enforcement and meaningful consequences. If a law that makes perfect sense cannot be enforced, we need to change that. Let’s make sure, as a first step, that Chico is not the bottleneck to those changes.”

Rob, old Dog, Chico Staff wrote the ordinance, and the boobs on council passed it. Staff also recommended the Shelter Crisis Declaration and the Consolidation of Services at the fairgrounds. That netted the city over $8 million in state (and federal?) funding. 

Zuchin reiterates his statement, this time explaining the city attorney’s role in this mess. “I totally agree. In this case it will be up to the city attorney to file charges on misdemeanor CMC violations. Problem solved. Use of state and federal laws are obviously another option. However, it will then by up to our local DA or state prosecutor to file the charges. It is my experience that our DA did not file 647e PC or 602 PC violations related to camping. Why? Because the city adopted their own camping and waterway ordinances. So, the problem with enforcement was the city attorney would not file the misdo CMC violations and the DA wouldn’t file penal code violations. That was my experience but perhaps things have changed in the 4 years since I was involved in that process.”

Zuchin admits he’s been out of that loop eversince he got reassigned and hopefully neutered after unloading his service revolver in the back of a 16 year old girl’s head. But I’ll tell you what, things have only changed for the worse. Now we have Sheriff Corey Honea telling us the jail is over capacity because of COVID, even while he’s been sitting on a $44 million grant since 2015, money that was supposed to be used to expand the jail.  I’ll guess that has been whittled away on over-generous salaries and benefits. The county also has an awesome pension deficit, a pot of money melts like butter around here. 

All Berry can do is agree. “No, you are stating the status quo correctly. But this must change. A city has the right and the duty to protect it’s own parks, and has a mandatory duty to the state and feds to protect waterways. Everyone is failing to do so. That cannot stand.”

This a far cry from his comments directly after the meeting. 

“And that, my friends, is how it’s done.Mayor Coolidge and Vice Mayor Reynolds appointed without drama. On the first significant issue, making the Park Regulations enforceable under misdemeanor penalties, the vote was 5-2. How many times have we been on the losing end of this kind of vote. But not tonight. That was 5-2 despite the illogical and inaccurate musings of Huber and Brown, and the unintelligible “explanation” by City Attorney Jared. We win. Watch us reclaim our parks and waterways.”

“CHANGE IS COMING!!!”
 
Reminds me of what Ned Pepper says to Rooster Cogburn: “I call that bold talk for a one-eyed fat man.”  Unfortunately, Rob Berry, neither fat nor one-eyed, is also no Rooster Cogburn. 

Berry, a natural mouth piece, has been telling us his new Super Council was  going to sweep this problem out the door with their new, Bad Ass Urgency Ordinance. I imagine he feels like a little boy who got a lump of coal in his Christmas stocking.

Frankly, our whole town just got handed a lump of coal. 

Here’s my idea: let’s sue the county. 

David Crane: “POBs are meritless products deliberately misnamed by bankers in search of fees. Just say no.”

7 Dec

Thank Dave for sending me this “5 minute read” on Pension Obligation Bonds from David Crane. It’s certainly worth more discussion.

https://davidgcrane.medium.com/pobs-bankers-as-pushers-f0963bf853b8

David Crane

David Crane

LecturerLecturer in Public Policy

About

David Crane is a lecturer in Public Policy at Stanford University and president of Govern for California. From 2004-2010 he served as a special adviser to Governor Arnold Schwarzenegger and from 1979-2003 he was a partner at Babcock & Brown, a financial services company. Crane also serves on the board of the Goldman School of Public Policy at the University of California and formerly served on the University of California Board of Regents and as a director of the California State Teachers Retirement System, Environmental Defense Fund, and the Volcker-Ravitch Task Force on the State Budget Crisis.

While I have no formal background in finance, I think it’s obvious that POB’s are a scam that is only going to benefit pensioners and bond holders. But maybe people would rather hear it from a guy with many degrees and respectable credentials. Crane puts it very simply, “Pension Obligation Bonds (POBs) do NOT reduce pension obligations.”

“POBs would be a truthful title if the bonds actually reduced pension obligations. But they don’t. All they do is increase pension assets, which produces an accounting benefit (more assets — the same liabilities = a lower unfunded liability). Economically, a POB is no more than a “carry trade,” which is borrowing at a low rate to bet on hopefully-higher-yielding assets (e.g. stocks, private equity, hedge funds, etc). Not surprisingly, Wall Street also sells and manages those products.”

And here’s an important point – these bonds are SOLD to public agencies by bond managers, people who make a lot of money selling and managing these bonds. Read on. 

“When the smoke clears, a POB issuer has (i) the same pension obligations it had before, (ii) more debt, (iii) paid investment banking fees, and (iv) gambled the proceeds on products that beget even more fees for bankers.”

That seems pretty clear to me, even a housewife can see what’s going on here. You must wonder, are there kickbacks to city staffers? 

Crane concludes, “POBs are meritless products deliberately misnamed by bankers in search of fees. Just say no.”

That’s right, say it loud, and say it now. Besides sending emails to your newly elected “fiscally conservative” council, you can comment in the consent agenda at Chico Engaged:

https://chico-ca.granicusideas.com/meetings/349-12-slash-1-slash-20-postponed-to-12-slash-8-slash-20-city-council-meeting/agenda_items/5fbdb04ff395e7fe1d013e64-2-consent-agenda-all-matters-listed-under-the

And, Mike Wolcott is looking for “Pro vs Con” writers to argue issues like this – you can reach him at mwolcott@chicoer.com

Sean Morgan’s temper just cost the city of Chico $50,000

6 Dec

I won’t rehash the incident, but want to call Sean Morgan on the carpet for costing the city $50,000.

https://www.mynspr.org/post/city-chico-settles-lawsuit-over-man-s-arrest-during-city-council-meeting#stream/0

He could have let Mark Herrera have his 3 minutes – 3 minutes! – to express his feelings about a local political action committee, but Sean Morgan lost his temper and had the man arrested. Why? Because Herrera was insulting local political gadfly Rob Berry. “Human paraquat”. Not even an obscenity. I could think of other insults – how about, “PG&E LAWYER!” When I mentioned that in another blog Berry actually came to my mailbox flailing and simpering. I won’t let him threaten me again. You worked for PG&E and you know it Rob, it’s right in your “Linked In”. 

But Morgan gets a lot of money from Berry and his friends, so he thinks he is entitled to have somebody arrested for an insult. Then Morgan went on to libel Herrera by declaring him drunk in public just because the man has a different point of view. Is that what we can expect from our new “fiscally conservative” council? 

Morgan’s the same guy who, when faced with a line at a local fast food joint, hurled a half-empty coffee cup at the counter, exclaimed the “f” word, and stomped out. This guy and his friends are now running our city. That would include little miss pawn star Teri Dubose. 

Sean, you need to keep your head, cause if you cost us any more money, I’m going to sue you. I really think you should pony up the $50,000 out of your own pocket. 

And here’s a stinger – that $50 grand doesn’t include attorney’s fees. 

While our town struggles with financial insolvency and sagging infrastructure, the staffers responsible skip off to another town, at a higher salary, with their pensions intact

3 Dec

A few points I’d like to make clear about POBs:

  1. amount to millions in new debt, with interest
  2. success dependent on the stock market, just like CalPERS investments
  3. don’t need voter approval but the voters/taxpayers will be on the hook for the payment
  4. POBs are guaranteed – that means, the payments come out of the General Fund at the expense of infrastructure and services
  5. without true pension reform POBs will lead to insolvency and bankruptcy – as was the case in Stockton and San Bernardino

Here’s a shocking article about San Bernardino, 

San Bernardino deficits grow after bankruptcy

What I get from this article, is that the police unions are the biggest threat to financial solvency facing California cities. They demand higher salaries and refuse to pay a sustainable share of their pensions costs. Instead of asking for concessions from the highest paid public employees in the state, “Stockton said from the outset pensions are necessary to be competitive in the job market, particularly for police.”  Vallejo backed down from pension reform after being threatened by CalPERS. 

Chico City Council has done same. When I asked my district rep Kasey Reynolds why such a high salary for the new police chief (higher than the departing chief), she responded, “ I just looked at other communities that are like size and their Chiefs are 20-40k higher.”  I sent her the publicpay.gov records for Chico and Sacramento – yeah, Sacramento salaries are a little higher, but city of Chico pays more of the pensions. If we are going to continue to offer these crazy salaries, Chico cops need to pay more toward their pensions. I never got any response from Reynolds.  They hired the chief above the old salary and just recently approved a new contract for CPOA without asking any concessions. 

So, letter writer Steve Wolfe is correct – our elected officials are complicit with our city employees in driving our town into the financial abyss. He’s right again when he predicts the city will pursue a new revenue scheme.  A POB would be just the vehicle to take us down! Here’s my response. 

Steve Wolfe is right – the city is seeking a new revenue measure. At the Finance Committee meeting September 23, a consultant was asked to pitch Pension Obligation Bonds to the full Chico City council. Staff said the bond could be implemented as early as January 2021 because POBs don’t require voter approval. 

POBs are a way of borrowing money to pay bills, while hoping to re-invest the borrowed money, producing a profit used not only to service the bond but to pay off the pension liability. If this outright gamble doesn’t work out, the taxpayers are on the hook not only for the unfunded pension liability, but the additional bond debt. POBs put Stockton and San Bernardino into bankruptcy.

This bond will not appear on your property taxes, it appears in the form of sagging infrastructure and service cuts – these bonds are guaranteed, bond holders take priority over our streets, our parks, our sewers and even public safety needs. 

Instead of taking on new debt, we must reduce the long-term cost of public pensions for future employees. That’s not happening.  With emergency powers, the city manager hired three new positions this year at $100,000+ salaries. New hires are paid more than predecessors.  There’s no accountability for these decisions.  While our town struggles with financial insolvency and sagging infrastructure, the staffers responsible skip off to another town, at a higher salary, with their pensions intact. 

Contact your new, “fiscally conservative” council super majority, and tell them what you think.