Legal Fees Or Legal Fiasco?

Today’s Orange County Register article, Legal Fees Climb As City Fights Election Lawsuit closed with this comment, “This is a very sad waste of taxpayer money,” Murdock said. “The hypocrisy is sad.”

Murdock MPT 2This from the guy who failed to disclose his leadership of the Breans Against Measures T & U PAC… and who was sanctioned/fined $2,000 by the FPPC for it. This from the guy who thinks it’s okay to spend taxpayer money to join his buddies on an all expenses paid vacation. This from the guy who has no clue how the City really spends it’s money or if it does so wisely.

While the article about the lawsuit and subsequent legal fees is essentially accurate on most counts, I believed there was a need for some serious filling in of the gaps. This morning I had a lengthy meeting about this with Chris Haire, the OCR staff writer, and, for the most part, he understood where I was coming from. When the final appellate decision is rendered, watch for Chris to cover it… early next year I’ll wager.

Was the legal expense absolutely necessary?

In a word, no. The city was informed by letter of their alleged violation of election law, the forbidden alteration of documents submitted to the Registrar of Voters, with more than sufficient time to rectify their error, at no cost.

tim_2aI guess the City Manager and City Attorney felt there was no reason to respond. I don’t know how you would describe this conduct, but I call it arrogant and inappropriate.

This wasn’t a simple typo folks. It was a purposeful alteration of the true attribution of statements opposing Measures T and U. Leaving off the name of none other than the guy who got fined for hiding his connection to the PAC opposing Measures T and U. Coincidence?

The smoke and mirrors continues.

Portraying the case as moot and again pointing the finger at Steve Vargas as the cause of this expensive legal battle, City Attorney James Markman craftily redirects attention away from himself and the huge fees his firm has charged the city to handle the case.

Personally, I don’t believe either the casual dismissal of the suit’s significance or the continued character assassination of Mr. Vargas to be right or true.

Let’s take a closer look at the fees.

jmarkman_bAs reported by Markman and City Finance Director Bill Gallardo, the fees to date are approximately $154,000.

What? Are you flippin’ kidding me?

Markman’s rate, as I recall, hovers around $500/hour… but there are two other attorneys from his office involved, and I’m assuming paraprofessional or clerical staff as well.

So, let’s adjust the rate down to a more believable average of $300/hour. That’s 513+ hours to reach an invoice for $154,000.

In 40 hour weeks, that’s a total of 12.8 weeks… over three months of doing nothing but working on this single case. Protected by work product or attorney/client privilege, we’ll likely never know how Markman’s firm came up with that figure. But you can’t convince me that it’s fair or reasonable.

Instead of handing Markman’s firm a raise, Council should have asked the question, “How in the h_ll can you explain this?”

Why is this not a moot point?

politician_liar_150Like raising kids, parents need to determine if an unacceptable act is due to childish misbehavior or willful disobedience. Given that the alleged violation occurred on two documents, on two occasions and is eerily similar to the lack of transparency regarding leadership of the Breans Against Measures T & U PAC, I’m thinking this looks a lot like willful disobedience.

Never mind that the election is long past. Who knows how this might have effected voter’s or not? Having found that the City did alter documents when it had no right to do so, a line needs to be drawn in the sand that says, “Don’t do this again or you will face more serious consequences.”

Where would you rather spend the $154,000?

An email I received when the first hint of the story broke posed, “With $2.50 senior meals now the bitcoin of the realm in Brea, how many senior meals could be provided with the wasted legal defense fees related to the Measure T & U lawsuits?”

Good question Mr. Remains Anonymous… damned good question.


BOUSD Is After Your Wallet Again.

OCR staff writer Chris Haire published the following today.

(Undoubtedly from a district press release.) “District Survey: The Brea Olinda Unified School District recently released a community survey in which 53 percent of the 350 respondents said the district is heading in the right direction; 78 percent said the quality of education is excellent or good. A majority also said the district needs more money. The margin of error was 5.2 percent.”

wallet2Whether the results are projectable will be the first issue raised. Here’s a basic research truism: when three people answer a question and 2 say no, the result of 67% is projectable to that group of three people… not to the larger population from which the sample was selected. The margin of error comes into play.

The MSE (Maximum Sampling Error), in this case ±5.2%, adjusts with sample quantity in a non-linear manner and it can make a big difference in how you interpret a statistic.

Painting the picture with their favorite colors.

The BOUSD and their consultant, no surprise here, will naturally characterize the survey results in a manner that supports their aspirations of successfully launching a school bond measure on the 2014 ballot. A modestly conservative interpretation of the same results is hardly as encouraging.

Twisting the numbers to suit their agenda.

If, as reported, 53% of the sample said the district is heading in the right direction (a concept that was not clearly defined to those taking the survey by the way), there is a 95% probability that the opinions of the entire population (in this case high propensity voters) would range between 47.8% to 58.2%.

Theoretically, the same holds true for each inquiry and it’s results. It is as legitimate to interpret, in this survey, that a majority (more than 50%) would feel that the district is NOT heading in the right direction.

brea_HSThe statement that “a majority” said that the district needs more money is misleading at best. Various dollar amounts (ranging from $129 million to $45 million) were suggested in the survey. Only when Yes and Maybe are added together does a supportive response emerge.

Another non-surprise, the BOUSD “favored” figure of $78 million got the highest response, 27% Yes, 28% Maybe. That 55%, considering the margin of error, pushes the credibility of calling the response a majority. When one adds together the No and Maybe Not in that inquiry, the response is equally ambivalent. The “I Don’t Care” response received 9%. What does that tell you?

If one takes all of the statistics into consideration, including the very small sample size relative to the large demographic group used, and factors in the stinging loss the BOUSD was handed on Measure E in 2012… I doubt they will succeed in burdening an already heavily indebted homeowner population (still paying off millions from the ’99 school bond with no idea where the money was spent) with a new bond measure in 2014.

NoE_02How much of the ’99 bond has yet to be paid? Millions? Yes. What is it costing the average Brea homeowner every year? Hundreds, if not thousands? Yes.

Will Brea’s homeowners really be willing to double down on the BOUSD and it’s money hungry Board of Directors to the tune of almost another $100 million dollars?

I’m betting the answer is no.

Mr. Haire, in the future I wish you would seek input from both sides of an issue before publishing a public relations piece like that which appeared today.


In a rare exhibition of fiscal sensibility, the BOUSD tonight dismissed an agenda item to continue their pursuit of a new school bond (spending an additional $64,000 on the Lew Edwards Group). This was accomplished because no one would move or second the item for consideration.

Vigilance is still the byword however. And the 2014 elections should be a clean sweep of all the old deadwood.


It’s Not About Water Rights.

Recent OCR articles by both Chris Haire and Terri Daxon have addressed Brea’s recent acquisition of Cal Domestic water rights. The question regarding who has the authority to spend Brea’s money and what the real issue is in acquiring water rights seems to have gotten overlooked in the swarm of facts and figures.

The acquisition of water rights and preferred stock, from Cal Domestic and the Metropolitan Water District, has long appeared to be complicated, if for no other reason than to dissuade the public from taking a closer look at the process. While both writers got the essentials correct, here’s an executive summary.

Water rights – distilled.

December 2011 – Council approves an $8.1 million purchase of rights for 665 acre feet of water. Pay once, get the water every year in perpetuity. Cost for water is locked in, cost to deliver can and does rise annually.

This purchase is made by transferring $5.6 million from Brea’s General and Risk Management Funds to the Water Fund. This is called a “loan” – at an interest rate of 2.17% for seven years. So far we’ve paid back about $1 million. I don’t know why it’s called a loan. The balance, $2.5 million, was already available in the Water Fund.

bill_gallardoJune 2013 – Jim Byerumm, Cal Domestic’s General Manager alerts Charlie View and Bill Gallardo of the availability of rights for an additional 225 acre feet.

Internal discussions ensue, excluding Council. Brea’s bid of $3.4 million, made without Council authorization, by Charlie View and Bill Gallardo is accepted by Cal Domestic.

Believing that there were still Water Funds available from the original transfer (loan) and approval given in 2011, View and Gallardo completed the transaction without giving Council so much as a courtesy heads-up.

After their oversight was discovered, the Cal Domestic invoice was ultimately paid using a $1.2 million credit from Cal Domestic’s terminated Capital Improvement Fund (accrued because we’d overpaid for almost 18 months) and $2.2 million from the Water Fund.

The error on the parts of View and Gallardo, in memory and judgement, involves $3.4 million, not $2.2 million as reported. Also, the fact that we paid Cal Domestic’s Capital Improvement Fund $70 thousand a month for a year and a half after they terminated the fund deserves some discussion, too. How many errors like this are going on? Why aren’t audits catching this sort of blunder?

The whole affair was discovered by Council member Simonoff, who set in motion the process that brought the matter into Council study session. Apparently Garcia and Murdock believe that being in the room is sufficient to allow them partial credit.

I disagree, but that’s another blog.

Now having retroactively covered their assets and having called in independent auditors to review both purchases to ensure there are no further problems, plus doubling the staff required to closely oversee transactions of this sort in the future, Gallardo suggests that Brea is pretty much out of the woods.

I wouldn’t be too sure about that.

No data trail, the real problem.

According to Bill Gallardo, none of this process is documented in any fashion prior to Cal Domestic submitting their invoice!

Not the notification of availability. Not the confirmation of interest. Not the details of negotiation, i.e. bids, counter bids, stipulations and contracts. Nothing. Not who was involved. Not how business was transacted. Nothing.

No other purchase or financial commitment made by the city, to the best of my knowledge, is conducted in such an unacceptable, loosey goosey manner. You know why? Because we’re in charge! We make the rules.

CA_SealWhen it comes to water rights apparently there are no rules. We can’t even demand a paper trail from Cal Domestic because we have no authority over them. Only the State of California does.

Instead of sending a representative to Washington to wade in on immigration issues, instead of sending an entourage half way around the world to watch a folkloric event and do a lot of sightseeing, maybe we should send someone to Sacramento to rattle Governor Brown’s cage on this.

falls_640tim_2aIf Brea is really a corporation, how about asking our “CEO” to start acting like he’s running a corporation.

After all, every glitch in this whole water rights matter circles right back to his office.

Where was he in this process? On vacation… again?