The Morning Report
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Tuesday, February 06, 2007 | Business Journal Announces Top 25 Wealthy San Diegans
Sunday, Nov. 6, 2005
Ernest Rady, who deals in office towers, moved up to first place ($2.3 billion) in the annual San Diego Business Journal survey of the region’s wealthiest. In second is Charles Brandes ($2 billion), an investment manager whose clients include the Sycuan Indian tribe.
Runners-up in the Business Journal’s top 25: Margaret Cargill, Sidney Frank, Irwin Jacobs, Ted Waitt, David Copley, Audrey Geisel, Katherine Loker, John Moores, William Lerach, Andrew Viterbi, Sol Price, Robert Sarver, Martin Wygod, Gerald Parsky, Conrad Prebys, Paul Jacobs, Richard Sulpizio, Walter Zable, Robert Price, Masood Tayebi, Robert Beyster, Jenny Craig and Richard Heckmann.
— VOICE STAFF
City Attorney Mike Aguirre has asked the county registrar to allow a him to assign a deputy from his office to monitor how votes from Tuesday’s election will be counted.
In a letter to County Registrar of Voters Mikel Hass, the city attorney said that he was concerned with the accuracy of how votes in the upcoming election will be tabulated.
“I know that you share my desire for a fair, efficient, and accurate voting and counting process, and I look forward to our working together to ensure we achieve this goal,” Aguirre stated.
The county uses Diebold AccuVote-OS optical scanning machines and activists asked Aguirre for more supervision of the vote-tallying process locally after various media reports nationwide questioned the accuracy of the Diebold machines.
Haas has said in prior interviews that the Diebold machines are accurate.
Read Aguirre’s letter here.
— EVAN McLAUGHLIN
Sanders to Purge Pierce-Like Donations
At a press conference Friday, mayoral candidate Jerry Sanders said his campaign had begun processing checks to refund the donations to his campaign that Frederick W. Pierce, IV, had given him and that more refunds may come.
Pierce, the former president of the San Diego City Employees’ Retirement System, had given maximum individual contributions to Sanders in both the primary and general campaign cycles. And on Wednesday, Pierce sent out an invitation to acquaintances to “join him” at a fundraiser for Sanders at a downtown restaurant.
Pierce was a central figure in the city’s retirement system and a fierce apologist for many of the actions of former and current pension officials — many of which Sanders himself has denounced over the campaign. Under Pierce’s command, the pension system’s assets failed to keep up with mounting liabilities and six of his former colleagues are facing felony conflict-of-interest charges brought by the district attorney.
Friday Sanders said Pierce would get his money back.
“We’ll also check to see if other people, that he put his name on that flyer and sent out to, need to have their funds refunded. But what it amounts to is Fred Pierce has no impact on what I do,” Sanders said.
— SCOTT LEWIS
Courts and Orders
In a recorded telephone message to San Diego voters, City Attorney Mike Aguirre said this:
“This is City Attorney Mike Aguirre. I have endorsed Donna Frye’s plan to resolve the city’s financial crisis. I did so because the Frye plan gets rid of illegal pension benefits by court order and establishes an honest way to fund the city’s legal pensions.”
In fact, both Frye’s plan and that of Jerry Sanders, her opponent, would “get rid of illegal pension benefits by court order.”
That is, it seems, the effect of a court order.
The main difference between the candidates on this point is that Frye says that upon taking over the mayor’s office, she would cease to recognize the allegedly illegal benefit levels and immediately cut the city’s payment to its pension fund. Despite multiple legal obstacles or the potential that an uncooperative city auditor could derail her efforts, Frye repeatedly blasts Sanders for not following her lead.
Today, Sanders is holding press conference to highlight the “fatal flaws” in Frye’s plan.
Frye has said that if a court refuses to follow her actions with a court order officially declaring the contracts that created those pension benefits illegal and void, there’s not much the city can do.
“In that case, it’s very likely the city would be facing bankruptcy,” Frye said in an interview.
— SCOTT LEWIS
Developing Story at Debate
The mayoral candidates laid out their vision for how the office of the city’s first strong-mayor will handle development and planning.
Jerry Sanders, who has enjoyed the backing of several individuals with real estate and development ties, said the city needs to streamline the processes by which everything from “a parade, a block party or building a bathroom on your house.”
“We need to work very closely with planning and development services, but also need to give builders a go-ahead instead of having them for five years …”
Sanders said bureaucracy has bogged down the way people do business in the city, relaying a conversation he had with a resident who was going to have to pay $30,000 for a parade permit.
Frye, who earned her activist stripes as an environmentalist, said she is cautious about speeding up how developers do business. She said that builders now ask for amendments to community plans just to make their project fit.
“The best way to deal with streamlining development is to make sure developers actually have respect for communities and their community plans,” Frye said.
Read about how both candidates’ philosophy in planning and development.
— EVAN McLAUGHLIN
“Gloria, you’re assuming I’m going to play by your rules.”
Sanders: Taxpayers Will Choose When to Raise Taxes
Asked about his stance on taxes, Sanders said this:
“I’ve said from the very start that I would not ask taxpayers to raise taxes to bail the council out of the bad decisions they’ve made over the last five years. It’s not fair, it’s not effective, it’s not a good way to do business.
“Down the line — after we have got the city streamlined and the structure of the budget ordered so that we’re actually making the payments to the people we need to be making them to — if taxpayers will look at a tax increase for infrastructure for increased public safety, that will be up to taxpayers to go out when they have faith and confidence in the city of San Diego, which they do not have now, to go out and go to the ballot and move something like that along.”
— SCOTT LEWIS
Jessica Chang of Channel 4 asked the candidates to clarify their management style — specifically asking former police Chief Jerry Sanders about his suggestion that Ronne Froman, the current CEO of the local Red Cross, will handle the city’s operations if he is elected.
“I will have a strong No. 2. I think that’s absolutely critical to run the city on a day-to-day basis,” Sanders said, highlighting the three organizations — the San Diego Police Department, United Way and Red Cross — he has led.
“I’ve been a strong hands-on manager in each of those organizations,” Sanders said.
Frye responded that what Sanders was proposing with a “strong No. 2” was a “city-manager” type of government.
“The city of San Diego voters rejected the form of governance that my opponent is proposing be put in place,” Frye said.
— SCOTT LEWIS
Pension Gloves Come Off Early
Wednesday, Nov. 2, 2005 — 6:17 p.m.
To open the debate, KPBS’ Gloria Penner asked the candidates to attack the worst perceptions of their candidacies. She said Sanders’ was perceived as a “replica of [former mayor] Dick Murphy” and Frye as a “lightweight surfer chick.”
Sanders replied: “I don’t think that’s fair. Dick Murphy’s afraid to make decisions, he was a micro-manager who did things behind closed doors. My entire career has been about making tough decisions.”
Frye: “As far as my perception of being lightweight, anyone doing battle with me knows that ultimately I will prevail.”
— SCOTT LEWIS
Keep Browser on Voice Tonight
Turn to Voice of San Diego‘s “This Just In” for live analysis tonight of the mayoral debate, which will be held from 6 p.m. to 8 p.m.
You can watch the debate on your computer using this link. The debate will also be broadcast live by multiple TV and radio stations.
Mayoral candidates Jerry Sanders and Donna Frye will face questions from a panel of journalists, including Voice Staff Writer Andrew Donohue, who promises not to disappoint.
KPBS and Envision San Diego are hosting the debate, which is being sponsored by virtually every media outlet in the city, including Voice of San Diego.
“This Just In” will begin posting shortly after the event begins. Join us then.
Candidate Wants to Chase Out ‘Unfunded Overpromises’
A San Diego planning commissioner running for the vacant District 2 City Council seat challenged her competitors to pledge to not support any development that does not identify how infrastructure related to the project will be funded.
Carolyn Chase, who is among the 17 candidates vying to fill Michael Zucchet’s council seat, said the city government has, for a long time, been approving projects and programs without finding a funding source to pay for them.
She likened the recently proposed downtown community plan update to the city’s ongoing pension troubles, saying the underfunding associated with both are examples of the “Enron-by-the-Sea syndrome” that has crippled the city’s finances.
The plan update, which is expected to be heard by the City Council on Nov. 15, proposes to add 38,600 new residential units and nearly 29 million square feet of office space without including the necessary infrastructure and mitigation to support the growth in the environmental impact report, Chase said.
Likewise, the city’s pension plan has a funding shortfall of at least $1.37 billion and is the subject of several federal and local probes into the municipal government’s books.
Chase was joined by three of her competitors for the District 2 seat: graphic communication business owner Kathy Blavatt, real estate agent Phil Meinhardt and retired Salk Institute professor Ian Trowbridge. The three other candidates said they decided to sign a pledge promising “to intervene and repair the gap between planning for growth and the underfunding of infrastructure during the land use development process.”
The four candidates offered solutions to the underfunding of infrastructure, saying that the city should demand that the developers pay their fair share in impact fees to pay for parking and that redevelopment projects should be scaled back to ensure that the city isn’t cut out of the windfall of higher property values because of tax-increment financing.
They also urged the council to postpone the downtown community plan update until the vacant offices of the mayor and council Districts 2 and 8 — which both encompass downtown neighborhoods — are filled.
Small businessman David Diehl, attorney Tim Rutherford and public relations executive Kevin Faulconer also signed the pledge, Chase said, although none attended Chase’s news conference Wednesday afternoon.
— EVAN McLAUGHLIN
Katrina Victims Starting Over
Wednesday, Nov. 2, 2005 — 2:35 p.m.
Remeika and Danny Daniels, who came to San Diego after their lives were ripped apart by Hurricane Katrina, have finally found an apartment and have moved in. The apartment is in Vista, and the family is delighted to finally have a real home after living in hotels for almost two months.
The couple found accommodation through the charity Jewish Family Services, who they said have done a wonderful job with helping them piece their lives back together.
Remeika Daniels said she has not heard from businessman David Perez, who flew her to San Diego in September, since a meeting with him on Sept. 13. She said she still hasn’t received the $1,000 Perez initially promised her.
Getting into an apartment is the first step toward starting a new life, Remeika said. Next step is to find jobs for her and her husband and to get a computer for the family (any donations are greatly appreciated). Having a roof over her head feels great, she said, and she’s grateful for all the help she has received from San Diego.
— WILL CARLESS
Former police Chief Jerry Sanders announced Wednesday morning a laundry list of tasks he plans to undertake within his first 90 days in office if victorious in Tuesday’s special election.
On the to-do list: Resolving conflicts between the city’s laws for the transition to a strong-mayor form of government; asking the City Council to put two amendments on the ballot to allow privatization of city services and to force all future pension benefit enhancements to be approved by voters; begin negotiating in January with the city’s labor unions toward restructuring labor contracts; begin an inventory of city-owned property; develop a customer satisfaction survey to provide input on departmental performance; promulgate an ethics and customer service code to reshape institutional culture at City Hall.
Sanders also said he would order department heads to prepare to cut 10 percent of non-public safety employees should unions not agree to further concessions in labor contracts.
“I think it will take time to negotiate these so we will know at the end of the negotiating process whether we will have to do the 10 percent cuts, which will be in time for the next fiscal year,” he said.
Fiscal year 2006 begins July 1.
Sanders said voters deserve to hold the next mayor accountable. He didn’t give specifics on how success will be measured for his “timeline for change,” but said he expected to be held accountable by the press and through conversations with the public.
— ANDREW DONOHUE
City Team to Tackle Chargers Proposal
Several city officials will join a hired sports consultant to negotiate with the Chargers on the football team’s proposal for a new stadium.
Sports business consultant Paul Jacobs will advise an ad hoc group of city officers to discuss the team’s proposal to build a new facility on the city-owned Qualcomm Stadium site. Councilmembers Donna Frye and Scott Peters, a City Auditor’s Office representative, the next mayor or his or her appointee and City Attorney Mike Aguirre will sit on the panel. Councilman Tony Young will serve as an alternate.
Jacobs, a former executive vice president for the Colorado Rockies baseball franchise, will be contracted by the city for an amount not to exceed $100,000.
Representatives for the Chargers have said publicly that they are having trouble attracting a development partner to help undertake the construction of a new $450 million football stadium because of San Diego city government’s various legal and political challenges. The football club has proposed asking city voters to transfer 60 acres of public land to the team in exchange for footing the bill for a new stadium plus $350 million in infrastructure and road, although the team is not required to do so under their current agreement with the city.
The Chargers’ ballot initiative is expected to be voted on in November 2006.
— EVAN McLAUGHLIN
Frye’s Auditor Problem
Mayoral candidate Donna Frye on Tuesday tried to explain away an obstacle to implementing the centerpiece of her financial recovery plan.
Frye, a city councilwoman, has said that immediately upon taking office, she will force the city to stop recognizing allegedly illegal pension benefits enjoyed by city employees.
Frye says the plan will save the city $50 million annually. But such a drastic move would require the cooperation of the city’s auditor.
Because the city will be switching to a strong-mayor form of governance, the auditor will report to the mayor and Frye has said that she would fire an auditor who didn’t cooperate. But the auditor, under the new government, will also have the right to appeal his or her dismissal to the City Council. A City Council hostile to Frye’s pension benefit move might reinstate the dismissed auditor.
Asked about the potential obstacle to her plan, Frye parried the question.
“We could probably think up a whole lot of worst-case scenarios that I might run into but my hope would be that working together with not only the council but the city attorney that we would cease to recognize the illegally granted benefits,” Frye said.
On top of the uncooperative auditor, Frye said she might face other problems implementing her plan:
“I could be hit by a tree, too,” she said.
Pay Debt with Debt?
San Diego City Councilwoman Donna Frye introduced a prominent local economist to attack her rival Jerry Sanders’ plans to, among other things, raise money for the beleaguered pension plan through the bond market.
Professor Ross M. Starr from the economics department at the University of California, San Diego appeared with Frye outside of City Hall Wednesday and told a group of gathered reporters that “there’s no such thing as a free lunch.”
Starr said it is not a good idea to issue pension obligation bonds to help diminish the city’s shortfall in its pension system — estimated at more than $1.37 billion.
“San Diego cannot borrow in a tax-exempt fashion in the public financial markets. In that situation, the only way to float pension obligation bonds is through a private placement at a premium interest rate and that means that generations to come will be paying down the debt accumulated at extraordinary interest rates under this plan,” Starr said.
A municipality can receive immediate funds to invest in its pension fund by agreeing to pay it back to investors over many years — sometimes decades. The pension obligation bonds, as those issuances are known, can be used to solidify a fund and prevent it from losing more money than the interest on those bonds.
Sanders, the city’s former police chief, and his campaign dispatched Carl DeMaio, a consultant with The Performance Institute, to respond to Frye’s afternoon news conference.
DeMaio said he agrees that Sanders’ should not support issuing pension obligation bonds.
“I would agree with that, absent a comprehensive solution and absent a public vote the city should not do pension obligation bonds,” DeMaio said.
But DeMaio said he still supports Sanders’ overall financial plan. And that Frye’s suggestion she will likely push for a half-cent sales tax increase over 10 years is unacceptable. The tax increase would raise $110 million a year.
“I don’t see the same specificity on management reforms in Frye’s plan as I see in Jerry’s plan and [Frye’s] $1.1 billion tax increase will virtually guarantee real reform at the city is off the table,” DeMaio said.
Victory, Mexican Style
Graham McMillan, who said last month that two Tijuana police officers extorted $400 from him, has been reimbursed.
Though McMillan said he has no way of knowing whether, as promised, the money was withdrawn from the paychecks of the officers in question, he is nevertheless pleased to see justice done.
McMillan’s case has also been taken up by three citizens groups in Tijuana, who have written a letter to the Tijuana chief of police on McMillan’s behalf and are also seeking a meeting with the police chief.
Those three groups, Consejo Ciudadano Por La Transparencia y El Combate a la Corrupción (Citizens Council for Transparency and the Fight Against Corruption, Tijuana En Marcha (Tijuana On the March), and Comite Ciudadano Estatal de la PGR (Citizens State Committee for the Federal Attorneys Office), are calling for the firing of the two police officers.
McMillan said he’s confident that the groups, which he said have won numerous battles with the Tijuana police before, will prevail in their goals.
— WILL CARLESS
Frye Tries to Leverage New Poll
City Councilwoman Donna Frye is touting the results of a Channel 10 KGTV poll to appeal to her supporters to raise $20,000 over the final week leading up to the election.
In a week, city residents will choose between Frye and former police Chief Jerry Sanders for mayor.
A SurveyUSA poll commissioned by KGTV showed Frye with support from 48 percent of those questioned compared to 50 percent who say they support Sanders.
Frye’s standing in the SurveyUSA poll is down, however, from what it was last month. And a competing poll from the firm Datamar recently showed Sanders’ lead at 52 percent to 39 percent.
— SCOTT LEWIS
Officials Prepping for Consultant Showdown Tuesday
City Attorney Mike Aguirre has summoned all 50 city subpoena coordinators and other employees from the city’s data processing arm to appear at City Council on Tuesday.
He plans to use the employees to call into question recent statements by the city’s audit committee that its investigation into allegations of wrongdoing will be delayed because of technical problems with the city’s document production.
The subpoena coordinators supervise the production of documents in relation to subpoenas that have been delivered to City Hall by the many investigating groups, including the U.S. Attorney’s Office and the Securities and Exchange Commission.
This summer, the City Council chose to hear monthly updates from the throng of consultants working on its long-delayed 2003 audit and the related investigation into allegations of wrongdoing. The regular reports have since turned into a series of very public confrontations between Aguirre and the audit committee, led by former SEC Chairman Arthur Levitt for risk management firm Kroll, Inc.
The audit committee, which is investigating possible illegal acts in the pension system and the wastewater department, is scheduled to return to council chambers Tuesday for its next update.
In an internal e-mail to department heads, City Manager Lamont Ewell objected to Aguirre’s request that subpoena coordinators show at council chambers Tuesday. “Let me be very clear…I am not inclined to participate in pseudo court room games crafted by aguirre! Unlike the City Attorneys office, we have critical work that is to be accomplished each day.”
“Tomorrow,” said Aguirre, “we present the truth for the first time about Kroll — with a small ‘k.’” He then abruptly hung up.
— ANDREW DONOHUE
Ousting Aguirre Denied for Now
At least one part of a sweeping lawsuit filed by the police union over the city’s pension dealings was tentatively thrown out, according to a preliminary judgment released Monday.
The Police Officers Association sought to remove City Attorney Mike Aguirre from office for allegedly improperly engaging in collective bargaining with municipal unions, but the union will probably be denied that request at a hearing in federal court scheduled for Tuesday at 9 a.m.
The city, its retirement system and more than two dozen officials hailing from both agencies were sued by the union in August for agreements that were struck in 1996 and 2002 that allowed the city to underfund its employee pension system.
Aguirre knew about the underfunding, a union attorney argues, and tried to get city workers to “abandon vested pension benefits” for a $650 million bribe during a conference call he held with union leaders in January, a month after he took over as city attorney. Additionally, the city attorney was not authorized to collectively bargain on behalf of the city, the suit states.
— EVAN McLAUGHLIN
San Diego in the News: Pensions, Again.
Monday, Oct. 31 — 4:02 p.m.
Here’s a question for you: If the national media wrote a story about pensions and didn’t mention San Diego, would anyone read it?
In the latest and one of the most comprehensive treatments of the theme to date, The New York Times Magazine touches on San Diego’s ills as part of a mammoth profile of pension problems, public and private, titled “The End of Pensions.”
“In San Diego, pension abuse has effectively bankrupted the city,” the article reads. Local government-watcher Carl DeMaio told The Times, “There is a San Diego brewing in every community.”
One of the most interesting tidbits in the article has a striking similarity to San Diego’s situation: In 1959, carmaker Studebaker and the United Auto Workers union made a deal. The company, which was financially troubled, increased employees’ retirement benefits for the third time in six years. Union leaders, in exchange, allowed the company to spread its costly pension payments off into the future.
The result: The company collapsed four years later, according to The Times.
— ANDREW DONOHUE
Will City Pay Atheist’s Legal Bills?
Monday, Oct. 31, 2005 — 4:01 p.m.
Attorneys for supporters of the Mount Soledad Cross argued before Superior Court Judge Patricia Yim Cowett this morning that they should be allowed to appeal her decision that Proposition A is unconstitutional.
The proposition, which would have transferred the Mount Soledad Memorial to the federal government, passed by almost 76 percent of the vote in the July 26 special election. In early October, Cowett ruled that the proposition was unconstitutional, and therefore invalid and unenforceable.
Lawyers for Myke Shelby and Phil Thalheimer argued that they should be allowed to appeal the judge’s decision because they are aggrieved parties in the ruling.
Cowett refused to rule on the motion. Attorneys for the parties have said they will appeal that decision.
On the same issue, James McElroy, who represents Philip Paulson — an atheist and veteran who made the original complaint against the cross – said he will file an attorney’s fees motion against the city at some point. Myke Shelby’s attorney, Bob Ottilie, said those fees could amount to more than $200,000. McElroy said he’s not yet sure how much the court will award him.
— WILL CARLESS
Monday Morning Trivia: The Answer
Q: City Attorney Mike Aguirre is related to a pop musician who had a big hit in England in 2003. Who is it?
A: Gary Jules, who had a hit with a cover of the Tears For Fears song “Mad World.” He is Aguirre’s nephew.
Fortune: San Diego Housing Bubble May Burst?
Fortune magazine recently published an article about the possibility of the so-called “bubble” bursting in the nation’s real estate market. It highlighted San Diego as one of the regions facing a possible dramatic decline in home prices.
— SCOTT LEWIS
Monday Morning Trivia
Monday, Oct. 31, 2005 — 9:35 a.m.
City Attorney Mike Aguirre is related to a pop musician who had a big hit in England in 2003. Who is it?
Check “This Just In” at 4 p.m. for the answer. E-mail Voice at