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Tuesday, February 06, 2007 | Quick City-Chargers Huddle

Several elected officials met with representatives of the Chargers football club Friday, but the leaders described the meeting as being informal and said there were no new negotiations regarding the team’s existing lease or its now-defunct ballot proposal for a new stadium.

Mayor Jerry Sanders, City Attorney Mike Aguirre, Council President Scott Peters and Councilwoman Donna Frye said nothing very newsworthy came from the meeting, but that it was a “listening session,” where both the city and the Chargers shared information about their current situations.

“Part of the purpose of this, besides just hearing information that we already knew, was to reestablish a connection as far as communication that might not have been there in the past,” said Frye, whose council district includes Qualcomm Stadium.

The Chargers announced last Monday that they would not be asking voters in November to approve a ballot measure where the team builds a stadium in exchange for land at the Qualcomm site that would be developed into condos.

— EVAN McLAUGHLIN

MP-Zero

We know about the notorious pension funding agreements in 1996 and 2002 known as MP-1 and MP-2 respectively, but outside consultants from Navigant dug up an earlier arrangement where the retirement system allowed the city relief from its pension bill at the same time new benefits were granted.

In 1991, the city raised retirement benefits for workers when the retirement board allowed the city to change the accounting method that would be used when calculating the city’s bill so that it offered more short-term relief.

The Navigant consultants cite a memo from that year that laid out how the benefit enhancements agreed to in labor negotiations were contingent upon the retirement board’s approval to change the payment schedule.

“This is the earliest instance Navigant Consulting has identified where the SDCERS’ Board agreed to lower the City’s contribution levels at the same time the City increased benefits for SDCERS’ members, resulting in the SDCERS’ Board positioned in the middle of labor negotiations,” the report reads.

A description of the 1991 deal can be found on page 31 here.

Check the “This Just In” entry from 2:38 p.m. for more on the Navigant report.

— EVAN McLAUGHLIN

Second Week Sales Spike

Sharon Hanley, a real estate agent in Oceanside who compiles a weekly report on San Diego real estate sales traffic, said the second week of 2006 has seen a small spike in new home sales, a sign she said is encouraging.

The drop of good news comes on top of waves of chatter about a flattening real estate market and speculation that the region could be bracing itself for a sharp downturn in housing prices.

Hanley stressed that sales are “not up a hugely significant amount,” and are “about par for the course for this time of year.” January is traditionally a strong month for sales, she said.

Hanley said the true test will come at the end of next week, when analysts will have a good picture of overall January sales. Those are the numbers everyone is waiting to see, she said.

— WILL CARLESS

Board Games

Consultants investigating the city’s troubled pension fund offered a stern rebuke of the retirement system’s past climate and culture and told the new pension board it has an obligation to remedy the funds’ “unsoundness” in a report released today.

The report found that the pension board repeatedly violated city and state law in the 1990s and early 2000s, specifically when it approved deals in 1996 and 2002 that allowed the city to annually shortchange its pension fund at the same time it boosted employee benefits.

The study reprised a topic now very familiar to city government, as numerous investigative reports and criminal charges have been filed in relation to the two pension deals that have led to the city’s fiscal crisis and a pension deficit estimated to be approaching $2 billion.

Is the first analysis to be independently sanctioned by the new pension board and added another opinion on the stack of analyses opining that many of the city’s pension board’s previous dealings were illegal or deceptive.

However, it didn’t analyze a number of topics central to the system, such as the personal culpability of individual officials, possible criminal behavior, and the questioned legality of benefit enhancements given in the pension deals.

The report also concluded:

— The San Diego City Employees’ Retirement System’s annual financial disclosures to the public and investors contained misleading information regarding the funding of the pension system, as did annual reports from its actuary.

— Special benefits given to employees and union presidents have jeopardized the tax-exempt status of the fund with the Internal Revenue Service, a violation that could bring about the taxation of retirees’ checks.

— The city and pension system used investment earnings to pay additional benefits and administrative expenses, when earning should have entered the fund to keep it sound.

— The top staff of SDCERS received, on average, annual pay increases of 8 percent.

— The retirement system used four different attorneys to analyze each of the city’s attempts to circumvent its payment obligations.

The outside consultants and attorneys told the pension board they have “an obligation to take steps to remedy the serious under funding and actuarial unsoundness of the Retirement System.”

They advised the new pension board to find a way to seek from the city the money it failed to contribute into the system dating back to 1996 — a sum that one plaintiffs’ attorney has put at $500 million. Additionally, consultants suggest that the pension board find a way to protect itself should the city file for bankruptcy.

The report, made public by the pension board this morning, states that the system currently has sufficient assets to pay benefits to retirees, despite its declining funding ratio. Strong investment returns have prevented the system from worse financial peril, the report says.

If you have a few hours and a sandwich, you can read the report by clicking here. Or, you can read Voice‘s Saturday addition for more complete coverage, reaction and whatever else we can conjure up.

ANDREW DONOHUE

Gin Is In

Alan Gin, professor of economics at the University of San Diego’s Burnham-Moores Center for Real Estate, will soon become source for the crack team at the Andersen Forecast at the University of California, Los Angeles.

The Andersen forecast has provided predictions about the economies of California and the United States for 50 years. The quarterly forecasts are very highly regarded by economists and real estate insiders in California and beyond.

Gin said he would be providing the forecast with information specific to San Diego County’s real estate market.

The economist was thrilled with the Andresen team’s decision to begin consulting him, which he said was made late last year.

“They’re a well respected organization,” said Gin. “UCLA is one of the top universities in the United States and I feel honored that they have come to me.”

“There’s lots of other universities in town that they could have gone to,” he added.

— WILL CARLESS

Pot Shots

Friday, Jan. 20, 2006 — 2:07 p.m.

The County of San Diego has filed a lawsuit against the state of California over the state’s medical marijuana laws.

Bill Horn, who is currently president of the San Diego Board of Supervisors, announced the commencement of the legal action, which has been on the cards for some time, earlier today.

Use of medical marijuana is allowed in California since state voters passed Proposition 215 in 1996. However, the county Board of Supervisors has stated again and again that it does not condone the use of marijuana under any circumstances.

Last year, the state asked the county to begin implementing an ID card system that would allow medical marijuana users to get their medicine in any city in the state. The county refused to implement the system, saying it conflicted with federal laws banning the use of marijuana for any purpose.

“The clash between state and federal laws has resulted in confusion and chaos,” a press release from Chairman Horn’s office quoted Supervisor Pam Slater-Price as saying. “If the County were to comply with State medical marijuana laws, we would facilitate the arrest of our own residents.  The County refuses to create such a reckless legal absurdity.  It is my sincere hope that the court will resolve this convoluted situation once and for all.”

The supervisors received congratulations from the federal drug tsar in Washington for making their stand.

The same press release quoted Horn as saying “While there are side issues on the use of so-called medical marijuana, including lack of documentation on its medical value and sales to non-medical users, our main concern is to determine the legality of the State law.” 

Local medical marijuana advocates have been dismayed by the county’s standpoint, and have launched their own legal effort, calling for term limits for San Diego county supervisors.

“At a time when drug cartels are flooding our streets with marijuana, and gang warfare is rampant, it’s impossible for the Board of Supervisors to give its blessing to the use of a drug that is forbidden by Federal law,” the press release quoted Horn as saying.

Several medical marijuana dispensaries were raided by the Drug Enforcement Agency in late 2005.

— WILL CARLESS

Brainy Brokers be Advised

The American Brokers Conduit, the wholesale division of American Home Mortgage Investment Corp., has just launched its 2006 series of advisor seminars.

The group will be holding a seminar in La Jolla on March 16. The seminars are aimed at helping brokers increase their loan origination numbers while maintaining a profitable business.

As the real estate market “cools,” experts are advising brokers to maintain a competitive edge by ensuring they are up to speed on market trends and new loan products available to borrowers. Most people in the business agree that there are going to be fewer loans around for a far larger number of mortgage brokers in 2006.

Anyone interested in attending the seminar, or other seminars including sessions in Sacramento, Fresno and San Ramon, can check out the American Brokers Conduit Web site at

— WILL CARLESS

Cuba Takes the Mound

Friday, Jan. 20, 2006 —11:20 a.m.

The U.S. Treasury Department issued a license to Cuba Friday that affords the communist nation’s baseball players the right to play in the World Baseball Classic.

The 16-team tournament culminates at Petco Park on March 18 and 20, when the top four teams play in the semifinals, and the top two square off in the final game.

Cuba was previously denied a permit to play as the result of a longstanding trade embargo that prohibits Cuba from receiving any revenue from the United States.

Treasury Department officials told The Associated Press that the agreement does not allow Fidel Castro’s regime to reap any fiduciary gain.

After Cuba was denied its initial permit, Castro offered to donate the funds generated from the tournament to Hurricane Katrina victims.

The International Baseball Federation had threatened that if Cuba was denied entrance into the games, it would remove its sanction from the tournament —a move that could have forced Major League Baseball to cancel the event altogether.

Today’s announcement 

— SAM HODGSON

Do You Swear?

The two councilmen-elect are to drop their suffixes Monday and be sworn in as official city councilmen during an afternoon hearing of the City Council.

Kevin Faulconer and Ben Hueso prevailed in special elections earlier this month to capture the District 2 and 8 council races, respectively. They replace Michael Zucchet and Ralph Inzunza, who were convicted of corruption charges this summer in connection with the strip-club industry. (Seven of the nine charges against Zucchet have since been thrown out by a judge and the Solicitor General’s Office will decide whether to appeal.)

The two new politicians will have little time to settle in, as they will be up for reelection in the June primary.

— ANDREW DONOHUE

Pension Board Pressure

Mayor Jerry Sanders told the six mayor-nominated trustees of the pension board to step down last week. This week, union officials — including one whose criminal conflict-of-interest case is headed for trial — are telling them to stay put.

In a memo to pension board President Peter Preovolos, former pension board trustee Sharon Wilkinson urges Preovolos to encourage his colleagues not to resign. Wilkinson is one of six former pension trustees charged by the District Attorney’s Office for criminal conflict-of-interest violations.

“It would be tragic to see all of your collective hard work be undone by not following through and completing the important initiatives you have undertaken,” she wrote in a memo dated Wednesday. “What the Mayor has proposed is the equivalent of a hostile takeover of your Board which will certainly NOT be in the best interest of the Members. Please fight this takeover with everything you’ve got.”

Wilkinson represented the Municipal Employees Association on the pension board when it approved a 2002 pact that allowed the city to forgo a budget-busting pension payment. Prosecutors say pension benefit enhancements granted to employees were used to entice the pension trustees into supporting the deal and that the trustees violated the law by approving a contract that benefited them personally.

The pact drew public attention to the pension board and in 2004 voters approved a proposition that changed the composition of the pension board. Until that proposition, union members and city officials controlled a majority of the pension board, raising concerns that pension funding decisions were made on the basis of what was good for unions and the city, not for the financial health of the pension plan. The proposition gave majority power to seven mayor-nominated financial experts from outside city government.

A second memo to trustees, written by city employee Adrienne Turner and copied to the MEA, ends with what appears to be a little bit of a threat:

“A resignation now, which could open the door for a takeover, might be deemed a breach your fiduciary duty to the members.”

The two memos were sent to pension trustees in one e-mail yesterday.

— ANDREW DONOHUE

Wouldn’t it be Grand?

Thursday, Jan. 19, 2006 — 12:59 p.m.

Ever want to spend your days making couch-cushion change for investigating city government?

Sorry, Voice doesn’t have any staff openings right now, but maybe you can try your sleuthing skills on the county grand jury.

Applications to sit on the panel, which probes several public agencies in the county, are due Friday. The county grand jury’s purpose is to ensure the county is being governed efficiently and that taxpayer funds are being handled honestly.

Superior Court judges will nominate applicants for a random drawing, and those chosen will serve for one year, beginning July 1. The grand jurors stipends are $24 a day, plus vehicle mileage and parking.

— EVAN McLAUGHLIN

Resetting the Board Game

Medical marijuana advocates have launched a petition drive to a put an initiative before voters that, if approved, would bar members of the San Diego County Board of Supervisors from serving longer than two four-year terms.

Medical pot proponents said they are pushing for the term limits because of a lawsuit the county board filed in an effort to overturn California’s medical marijuana laws. The Board of Supervisors’ lawsuit shows that the current supervisors — all of whom have held office for at least three consecutive terms — are out of touch, the advocates said.

The County Supervisors, a majority of whom supported the lawsuit, argue that a state law requesting them to hand out ID cards to medical marijuana users puts them at odds with federal laws banning the use of marijuana for medicinal purposes.

The term-limit sponsors cited a poll that found 78 percent of county voters disagree with the board’s use of taxpayer money to sue the state over its medical marijuana laws. In the same Evans/McDonough Company survey, 84 percent said they would support limiting supervisors’ board tenure to eight years.

— EVAN McLAUGHLIN

University Fees Hit Plateau

Gov. Arnold Schwarzenegger said Wednesday that he wants in-state tuition at the University of California and California State Universities to stay level after four straight years of student fee increases.

While speaking at UCSD, Schwarzenegger said that he has set aside the amount needed to maintain tuition at its current levels. His speech prefaced a two-day meeting of the UC Board of Regents.

At least $130 million was added to the UC and CSU budgets in Schwarzenegger’s January budget proposal after the universities’ sustained cuts during the economic slowdown of the past few years. The governor will provide a May revision to his initial plan and the state Legislature is supposed to pass a budget by June 30.

— EVAN McLAUGHLIN

Downtown condo numbers

Wednesday, Jan. 18, 2006 – 12:20 p.m.

A weekly report compiled by Lew Breeze, a downtown realtor, shows 497 condos listed for sale in downtown San Diego on the Multiple Listing Service.

That’s up slightly from 486 condos available last week. The median price of a condo in the 92101 ZIP code is $649,500 in the third week of 2006, down very slightly from $650,000 in the second week of 2006.

The amount of inventory on the market has been gradually increasing since the end of 2005, while the median price of condos has been steadily dropping since December 2005.

The list of condos for sale can be viewed at http://www.92101.info.

— WILL CARLESS

Voice of… Al Aksa?

The militant Palestinian faction Hamas has been running a radio station since 2003 called the Voice of Al Aksa, The New York Times reports today.

The radio station, which the Times says has “quickly become one of the most popular radio stations in the Gaza Strip,” was the forerunner to a new television station, Al Aksa TV, also run by Hamas.

It is unknown whether the name Voice of San Diego was inspired by the radio show, though editors at the Web site said this was unlikely.

— WILL CARLESS

City Probe Gets $10M More

The City Council authorized an additional $10 million Tuesday for the private consultants preparing an investigation into allegations of wrongdoing at City Hall, further extending a two-year-old probe that has engaged a long list of consultants and cost the cash-strapped city tens of millions of dollars.

The allocation allows consultants from Kroll Inc. to continue an investigation that is vital to the city’s financial restoration, but that has been mired by delays, cost overruns and other problems.

The money is slated to come from $20 million in unexpected property tax revenue reaped by the city in a year in which it also had to cut basic services to deal with a deepening pension deficit and the additional costs of legal and consultant fees tied to investigations into its pension system, wastewater department and financial reporting system. 

“I don’t think any of us are happy with the way the events have unfolded but at the end of the day this is a business decision that I feel compelled to make considering the circumstances,” said Mayor Jerry Sanders.

The city’s outside auditors, KPMG, have refused to certify the long-delayed audit of the 2003 financial statement absent an independent investigation into alleged illegal acts by city officials. The audit has been suspended because of questions surrounding the veracity of the city’s financial disclosures to investors.

Without the audit, the city’s credit rating will remain frozen, as will its access to Wall Street and the cash needed for vital infrastructure projects.

Please read Voice’s Wednesday edition for full coverage of this story.

ANDREW DONOHUE

DA: ID Theft Flowed from Water Department

Tuesday, Jan. 17, 2005 – 4:05 p.m.

An employee of the city government has been arrested for stealing the personal information of four San Diegans after gaining access to the billing system used by the city’s Water Department.

The mayor’s office and several city officials announced Tuesday that Jacqueline Lawrence will be arraigned in the afternoon for mail theft, forgery, identity theft and computer-related crimes after prosecutors alleged that she was stealing mail from the post office and water customers’ Social Security numbers from the city computers. Lawrence has been suspended without pay from her job in the city’s General Services Department, a spokeswoman for Mayor Jerry Sanders said.

The District Attorney’s Office said that Lawrence used the numbers and driver’s license data to purchase hundreds of dollars worth of products online, but said that more instances may have occurred as the investigation is ongoing.

Sanders said that city workers will be blocked from viewing the Social Security numbers and driver’s license numbers of individuals who are billed by the city.

Sanders added that any bad dealings of one worker should not reflect poorly on all city employees.

John Torell, the city’s in-house auditor, said his office has been working on how to address glitches in how the municipal government guards against fraud.

“Do we have only the data we need on these systems, and what can we do to ensure that the city employees and public only have access to data they need access to?” he said.

Torell said he should have suggestions to those questions in six to eight weeks.

Sanders said the city needed to make those assessments.

“My first question when I learned about this is, ‘why in the world do we need a Social Security number to get water?’” the mayor said.

EVAN McLAUGHLIN

Both Sides of the Mouth

Mayor Jerry Sanders, in his State of the City speech Thursday, raised a few eyebrows when he said this.

“The state has informed us that $300 million in improvements to our water-treatment plants must proceed immediately. This will necessitate water rate increases.”

Asked about this comment for a report published Monday in The San Diego Union-Tribune, Sanders said he wasn’t backtracking on his campaign promise for no new taxes. This is what the paper reported specifically:

“Sanders said he did not break his promise on taxes, noting that fees are collected for specific services while most taxes are taken for general purposes.”

But This Just In was pointed to a previous statement he made to the Union-Tribune on the issue during his campaign.

The paper had asked him this for a Q&A published Oct. 24:

“Are there any circumstances under which you would support tax and fee increases?”

And Sanders responded with this:

“There are no circumstances under which I would support taxpayers begin asked to bail out the City Council for poor decisions.”

Apparently, “there are no circumstances” is another way of saying “there are some circumstances.” Unless, of course, this rate increase isn’t a result of the City Council’s poor decisions.

Well, it wasn’t because of any of their good decisions. As Sanders points out in the speech, the city neglected important — and required — improvements to its sewer system as a result of the city’s “financial situation.” A situation Sanders himself said came about because of the underfunding of the city’s pension system, the lack of honesty on its financial disclosures and, well, I’ll let him tell it.

“…for years, important problems were swept under the rug by city government leaders.”

SCOTT LEWIS

Tick-Tock

Provisional rosters are due today for all teams that will participate in the World Baseball Classic this March.

Team USA announced 42 of its 60 picks last night, selecting San Diego Padres pitcher Jake Peavy as one of four starting pitchers on its roster.

The semifinals and finals will be played at Petco Park on March 18 and 20. Organizers tout the international tournament as the greatest collaboration of baseball players ever to compete at the international level.

But with the roster-clock ticking, Cuba is still awaiting a ruling from the U.S. Treasury department about whether it will be permitted to play. A longstanding trade embargo prevents the communist nation from collecting revenue from the United States. The department denied Major League Baseball’s preliminary plea for Cuba, but Fidel Castro has now pledged to donate all proceeds generated from the tournament to Hurricane Katrina victims.

The International Baseball Federation previously told MLB commissioner Bud Selig that if Cuba is not allowed to play, it would pull its sanction from the tournament. Many countries would be reluctant to participate without this sanction, and the tournament may be cancelled altogether because any countries that did play under these circumstances would face losing their rights to play at the international level, particularly in the Olympics.

— SAM HODGSON

Addendum to CBS

Fred Sainz, spokesman for Mayor Jerry Sanders, said the CBS report referenced in the “This Just In” entry below liberally edited an hour-and-a-half interview with the mayor and chose his most salacious quotes.

“Sometimes what you read or what you see is not all it actually was,” Sainz said. He added: “He believes the problems are highly workable.”

— ANDREW DONOHUE

Mayor on CBS

A Friday broadcast of CBS Evening News focusing on governmental pension problems zoomed in on, where else, San Diego. Mayor Jerry Sanders was interviewed bayside with the city’s skyline as a backdrop.

“We’re on the verge of bankruptcy,” he said. The mayor also told CBS that about one-third of the city’s upcoming fiscal year 2007 budget will go to the pension system — a startling figure that refocuses the pension debate from scandal and investigations back to what the pension woes really mean for everyday San Diegans.

“What that means is services have to be cut,” Sanders said.

You can watch the broadcast here.

— ANDREW DONOHUE

The Week Ahead

Every week seems to be a busy week when it comes to investigations of City Hall and its pension fund. However, this week is especially busy. Although city government takes a break today because of the holiday, the City Council returns for its first public hearing in nearly a month Tuesday.

Its most watched item: a progress report and request for funding from the outside consultants who have long been at work on an investigation into allegations of wrongdoing.

Mayor Jerry Sanders is slated to propose a work plan to conclude the investigations, which have stretched on for nearly two years and are essential to the restoration of the city’s fiscal credibility. Without them, the city will continue without access to financial markets and the cash to complete basic and vital projects.

The consultants, known as the audit committee, are expected to ask for an additional $10 million to complete the investigation they began in February. A previous, unsuccessful investigation by a different firm began in February 2004.

The investigations have taken on a controversy of their own, but Council President Scott Peters said this week that he expects the council will authorize the funds.

The council hearing will be the first in San Diego’s modern history not to be presided over by the mayor (or an acting mayor), as the government begins its experiment with the strong-mayor lifestyle.

On Friday, the pension system’s very own audit committee (it’s kind of a trendy thing now) will release the top-secret results of its investigation into allegations of wrongdoing specific to the pension system.

Sources say that the pension board and staff will learn the report’s conclusions at the same time that the public does: when the report is made available during a Friday afternoon pension board hearing.

Check in with us throughout the week as these stories unfold.

— ANDREW DONOHUE

Downtown Community Plan Approved

The San Diego Planning Commission has provisionally approved the Centre City Development Corp.’s San Diego Downtown Community Plan Update by a vote of 4-1.

The plan will now be sent to the City Council for a vote on Jan. 31. The Planning Commission approved it with a number of recommendations and caveats, a spokesman for the CCDC said.

The Community Plan Update will take over from the previous plan, which was completed in 1992. It deals with a number of aspects of life in central San Diego, including parking, transportation, density, housing and zoning.

The updated plan takes into account a number of fundamental changes that have taken place in downtown San Diego, including the new ballpark. It also takes into consideration a far greater future population density based on current predictions.

The plan can be viewed at www.ccdc.com/planupdate. The CCDC encourages interested residents to attend the Jan. 31 meeting of the City Council.

— WILL CARLESS

Pension Case to Trial

A Superior Court judge decided Friday morning that there was sufficient reason to send the district attorney’s corruption case against six former retirement trustees to a full jury trial.

After nearly four weeks of pre-trial hearings, presiding Judge Frederic Link said there was probable cause to believe that the six defendants named in the prosecution could have had a criminal conflict of interest when they voted for a controversial pension funding arrangement.

The arrangement, known as Manager’s Proposal 2, granted increased pension benefits to employees while also allowing the city to forgo significant contributions to the pension system. The agreement, and one like it in 1996, is largely blamed for a pension deficit at the heart of the city’s fiscal crisis.

The six defendants are: Ron Saathoff, firefighter union president; John Torres, white-collar union vice president; Cathy Lexin, former city human resources manager; Terri Webster, former assistant auditor; Mary Vattimo, former treasurer; and Sharon Wilkinson, a city management analyst.

— EVAN McLAUGHLIN

Left Out from Story

In composing the story about Mayor Jerry Sanders’ State of the City speech late last night, Voice staff didn’t include a quote from City Attorney Mike Aguirre. However, the quote is worthy of airing:

“The mayor is definitely committed to reform,” Aguirre said. “What has been an albatross around the neck of lesser leaders has been a stimulant that has galvanized the mayor to be a bolder leader.”

— ANDREW DONOHUE

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