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The Decade Of The 2010s

This Is Why The Decade Of The 2010s Is Important

Do not suffer your good nature…to say yes when you ought to say no.”

—George Washington

As the 21st century teeters between the 2010s and the 2020s, it’s a perfect time to take stock of an eventful decade. Over the last ten years, several key events changed Ventura forever.  Let’s look at what happened and the effect these incidents had.

How We’ll Remember The 2010s

We’ll remember the 2010s as a decade that began with the city struggling to get out of a recession, followed by ten years of decisions made with good intentions gone wrong. Bureaucrats and politicians pushed their agendas on the city. And like Sisyphus pushing the boulder up the hill, we kept falling backward.

Leadership circus of the 2010sIt’s remarkable that the city accomplished anything in the 2010s. We had three City Managers and three Interim City Managers. No one person was in the role for more than three years. Turnover created a leadership vacuum that minimized any chance for meaningful change.

Key Events In The Decade Of The 2010s

The 2010s started as “business as usual.” Then the Thomas Fire happened. Citizens quickly became interested in how the Ventura would handle two issues: public safety during and after the fire, and rebuilding. After twelve months of intense interest, citizens have returned to “business as usual.”

Here are the key events of the decade: the Thomas Fire, December 2017; the Wishtoyo Consent Decree, 2012; Pension Inflation, 2010-2019; Homelessness, 2010-2019; the Anthony Mele, Jr. murder, April 2018; Brooks Institute’s failure, 2016; the WAV Building, 2012; Ventura’s Grand Jury Finding against Ventura’s building & safety inspectors, 2013; and district elections. Let’s look at what happened in each case and how it affects you.

The Thomas Fire

Thomas Fire was the biggest event of the 2010s

The biggest misfortune in Ventura’s history was the Thomas Fire, which began on December 4, 2017. The fire destroyed 535 structures in the city, displacing hundreds of residents and impacting everyone’s lives.

During the fire, Ventura’s public safety performed admirably. Despite the widespread devastation, police and fire protected the lives of everyone living in the city. Evacuations were orderly, albeit slow. There were many stories of heroic efforts by police and fire going beyond the call of duty.

Other aspects of the city’s performance didn’t go so well. Several groups pilloried Ventura Water for inadequate water supply to fire hydrants in the affected areas. An investigation is on-going. So are lawsuits.

The City Council added to the misery of the victims in an example of good intentions gone bad. The Council waffled on second-story height restrictions for rebuilding victims’ homes. Indecisiveness delayed the rebuilding process for many. They attempted to please fire victims wanting to improve their homes and doing so delayed rebuilding for everyone.

After two years, only 80 families have returned to their rebuilt homes.

The Wishtoyo Consent Decree

Wishtoyo Decree in the 2010sThe Consent Decree stems from a federal complaint filed by Whistoya Foundation [WISHTOYA VS. CITY OF SAN BUENAVENTURA, CASE NO. CV 10-02072]. The Consent Decree requires Ventura to stop putting 100% of its treated wastewater into the Santa Clara River estuary. The city must divert a percentage of the 7.5 million gallons-per-day starting in 2025. The balance must be redirected by 2030. That decree is silent on how and where Ventura diverts the wastewater.

Ventura Water seized the opportunity to make the city the first to use recycled wastewater for drinking. Ventura Water calls the project VenturaWaterPure. No cities in the world have used recycled water except Windhoek, Namibia and a small town in Texas. Neither place had other water options.

Ventura Water has confused the City Council by combining two different ideas to falsely heighten the urgency to drink wastewater.

VenturaWaterPure will cost $1 billion over 30 years. That’s a considerable sum of money for the community to absorb. Expect your water bill to double to pay for VenturaWaterPure’s infrastructure alone. Remember, water costs already went up by $220 million with water and wastewater increases in 2012-13.

The Wishtoyo Consent Decree is a fiscal calamity for the city. More cost-effective options exist, but the City Council and Ventura Water fail to consider them. Times change. Circumstances change. Now is the time to reconsider options to be sure we’re making the best choice available.

Pension Inflation Throughout The 2010s

Pensions in the 2010sRetirement pensions are the city’s number one problem. Ventura currently has a $215.1 million unfunded pension liability, and that number continues to grow. CalPERS (the California Public Employees retirement fund) demands rapidly increasing contributions from Ventura. We will have permanent increases of at least $2 million per year for five to six consecutive years.

We respect the work city employees do. There is no denying that fire and police preform a vital job that is both dangerous and requires a high level of training and responsibility. Our concern is not about their work. It’s about the structure by which their retirement is accumulated and paid after retirement.

It is undeniable that city employees’ retirement pensions are crowding out the city’s ability to provide the service itself. Moreover, chronic underfunding of pensions will eventually hit a breaking point jeopardizing the employees’ benefits too. Expect your taxes to increase (á la Measure O) and the services the city provides to decrease.

Homelessness In Ventura In The 2010s

You may remember Dwight D. Eisenhower’s Farewell Speech when he described the Military-Industrial Complex. Now, we have something new, the Homelessness-Industrial Complex. Today’s Homelessness-Industrial Complex shares some of the same characteristics as the Military-Industrial Complex. There is an alliance of special interests. It includes government bureaucracies, homeless advocacy groups operating through nonprofit entities, and large government contractors, especially construction companies and land development firms.

Here’s how the process works: Developers accept public money to build projects to house the homeless – either “bridge housing,” or “permanent supportive housing.” Cities and counties collect building fees and hire bureaucrats for oversight. The projects are then handed off to nonprofits with long term contracts to run them.

Homelessness mushroomed in the 2010sSounds good, right? That is until you see the price tag. Developers don’t just build housing projects; they construct ridiculously overpriced, overbuilt housing projects. (Keep in mind Ventura’s permitting fees and stringent building codes). Cities and counties create massive bureaucracies. The nonprofits don’t just run these projects; they operate vast bureaucratic empires. These fiefdoms have overhead, marketing budgets, and executive salaries that do nothing for the homeless. They do not overpay the workers in the shelter.

Set Up For Failure

Ventura selected Mercy House from Orange County to run its homeless shelter. Larry Haynes, Marcy House’s president, said in a speech in Ventura, “Housing is, ‘An inalienable right.’”

Mr. Haynes believes a cornerstone to Mercy House’s success in Ventura depends on developing affordable housing. Herein lies the rub. If Ventura doesn’t build affordable housing, how does that impact Mercy House’s performance? Affordable housing isn’t something Ventura has been able to do historically. “It makes it harder,” he said.

The City of Ventura has 555 homeless people. Of those, 387 are unsheltered. The Homeless Shelter will house 55 people from Ventura, leaving 332 people vulnerable.

Ventura will spend $712,000 each year for its 55 beds in the new homeless shelter. That equates to $12,945 per bed per year. And if what Mr. Haynes says is true, expect the city to pay more and more on homelessness and less on other services.

Anthony Mele, Jr. Murder

Jamal Jackson stabbed Anthony Mele, Jr. to death on Ventura’s Promenade in April 2018, thrusting the city into the national news.

Jackson was a repeat offender and was homeless. Many citizens jumbled his criminal act and his impoverished state. Of Ventura’s 555 homeless, 85 (32.7%) have mental health problems, and 93 (35.8%) have substance abuse problems.

The crime prompted an immediate reaction by Ventura Police. First, patrols along the promenade increased. At first, two officers patrolled the boardwalk 20 hours per day. Shortly after that, police expanded the patrol radius to include downtown. In July 2018, the City Council approved funds to continue the patrols. Now two officers patrol 12 hours per day. Arrest data increased since the incident. Ventura Police still deal with a significant number of recidivist criminal homeless.

Following the incident, the Police department reviewed its procedures. Chief Ken Corney admitted poor judgment. Substituting video monitoring for an officer responding was not the right choice.

Since then, there have been changes to the security camera monitoring. The changes include:

Extra cameras, active surveillance, more training, changes in monitoring policy, and re-prioritization of Calls for Service response. The review also concluded that the police adequately prioritized the call when it came in.

Public outcry diminished, but the problem of criminal vagrancy continues beyond the 2010s.

Real Estate Blunders Throughout The 2010s

2010s

The city mismanages taxpayer money on real estate deal routinely. In the past decade, there have been several notable instances: Brooks Institute, the WAV Building, the Harbor Church and the city parking garage. In each case, the mistakes have cost taxpayers’ money.

Brooks Institute

With Brooks Institute, the City Council believed relocating the school downtown would benefit the city. The City Council’s good intention went wrong. Brooks Institute was financially insolvent. It pulled out of town contractors and the city money.

The folks at City Hall tried hard to put on a brave and jubilant face in trying to explain why their decision to accept $71,000 to settle a lawsuit against Brooks Institute is a victory. Readers of this letter know better. The settlement does not even cover the rents and security deposit that Brooks was to have paid in the first six months of their lease. Nor does it account for the future lost rents and property damages. By our best estimate, the city lost well over $261,000 in this settlement.

The WAV Building

Ventura completed construction on the WAV (Working Artists of Ventura) Building at the beginning of the decade. The building included 82 low income and subsidized housing units, commercial spaces and 13 condos for sale at market rate.

What did the WAV Building cost? $55 million according to the city.  That figure is too low, however. It doesn’t consider the cost of the 1.7 acres of city-owned property Ventura sold to the developer for $1. It also doesn’t include the $1.5 million in deferred permit fees. A reasonable estimate put this at $65 million.

The city acquired tax money from many sources to pay for construction, but it was not enough. Then city officials did something devious to finance completing construction. They took $1 million from the Ventura Water funds, transferred it to the Public Art Fund, then loaned the money to the project. Even worse, the city subordinated the loan to a $4.5 million mortgage from Chase. Selling the 13 condos for between $725,000 to $850,000 each would repay the city’s inter-department loan.

2010sThe concept flopped. The condos finally sold in 2018 for a fraction of what the city hoped to get. Buyers paid $413,000-$470,000 for the units. Once the sale completed, the mortgage holder, Chase, was repaid both principal and interest. Ventura Water was left holding the bag, however, for the $1 million “loaned” to the city. The city received only $105,893 from the sale of the condos after paying the Construction Loan, sales commissions, sales expenses, the City Deferred Impact Fee Loan and the developer.

What’s more, the city loaned $2 million to the Regional Development Agency (RDA) to build the WAV project. The city expected to be repaid $1 million before the California Assembly eliminated RDAs statewide. Ventura wrote off $1 million when the RDA disappeared. Ventura is pursuing the outstanding principal and interest through the Recognized Obligation Payment Schedule (ROPS), but has received nothing so far.

All totaled, Ventura lost $1,894,107 on the sale of the condos.

Former Mayor Bill Fulton projected the project would “produce 25,000 visitors a year and would stimulate the local economy, resulting in $75,000,000 in new investments.” He also said the city used no local tax dollars to build the WAV Building.

The reality is that most of the money came from Federal and State taxes. But the funds noted above came from the city, plus another $334,176 to offset various construction fees.

As for the $75 million in new investment, we will never know because the estimator, Bill Fulton, left town.

At the time, we noted our elected representatives lack the understanding, the capacity to ask the more profound questions or political will to stop these types of actions.

Harbor Church

The city paid church officials $2.3 million to buy the Harbor Church property in 2016. City Hall and Harbor Church agreed the value of both the land and the church building was $1.6 million. The actual sales price included an extra $700,000 to pay the Church to move. By any measure, Ventura overpaid for the property.

Downtown Parking Garage

And there was a mistake with the city parking garage—the city grants private, reserved parking spaces to select businesses downtown as an incentive to operate. The city approved ten parking spaces to entice Cinemark Theaters to remain downtown. The trouble was when Lure Restaurant opened at 66 California, and the city staff provided them the same ten spots. This may not seem like a big blunder, but it shows that the city is inept at managing real estate, or the staff lacks good leadership to make sure mistakes don’t occur.

We’ve believed the city should get out of the real estate business throughout the 2010s. The litany of poor decisions grows. Ventura owns commercial real estate throughout the city. As these examples demonstrate, the city has not made responsible decisions regarding these properties. At the very least, the city should seek advice from licensed realtors and experts whenever making a real estate decision.

Grand Jury Finding

The 2011-2012 Ventura County Grand Jury opened an inquiry and issued a report condemning the City of Ventura’s Code Enforcement practices. The report addresses the aggressive collection of fees by Code Enforcement, motivated by the need to raise more revenue.

Ventura's Code Enforcement Scrutinized in the 2010sCity government and Code Enforcement officers serve a valuable and essential service to our community until they start acting like bullies with their use of force, intimidation, abuse of power and excessive punishment of the citizenry.

At the time, the city’s response to this report demonstrated their lack of understanding or constituted a brazen and irresponsible attempt to obfuscate the truth when they dismissed the report as vague. It was not.

For much of the 2010s, citizens overlooked or forgot the Grand Jury’s report until we had the Thomas Fire. Suddenly, city permitting and inspection of new buildings was of paramount importance. Sadly, stories from the fire’s victims indicate nothing has changed at City Hall.

District Elections

City Council Candidates will serve by district after the 2010s

For the first time in Ventura’s history, voting districts divide the city. The districting forced Mayor Neal Andrews and Councilmember Mike Tracy to retire. Councilmember Jim Monahan decided to retire after forty years of service. New Councilmembers are bringing fresh perspective and energy to the Council. They also are facing a steep learning curve to be effective.

Governing by districts means inexperienced new Councilmembers will lead the city. Inexperience leads to two possible outcomes. First, existing Councilmembers and city staff may marginalize them until they gain experience and knowledge. Second, the new City Manager and the city staff may take more control without voter accountability. Neither of these is good.

Citizens will now expect their elected officials to represent their district’s interests. As a result, concern for the city as a whole may take a backseat to districtwide issues. The loss of a citywide perspective on the Council is distressing.

Nowhere was this more evident than in the first forum for District 1 candidates. Citizens expressed concern for a Westside pool, learning how governing by districts will work, affordable housing and labor force opportunities. Very few of these issues aligned with what the outgoing City Councilmembers thought was most important: 1) growth 2) water 3) homelessness and 4) staff accountability.

Editor’s Comments

We will remember the 2010s as one of the most significant decades in Ventura’s history. It was a decade that saw our city leaders allow uninformed good intentions to overrule good governing. As a result, the city finds itself with budget deficits for the next five years. This is due, in part, to a growing pension debt obligation. The city is poised to pass along the most substantial rate increase for water in its history. The money the city spends on homelessness will grow. So, it shouldn’t come as a surprise that the city will have to raise taxes, cut services or a combination of the two.

The groundwork laid by city leaders in the 2010s provides a shaky foundation for the 2020s. The specter of higher taxes and reduced city services looms. Several things must happen to overcome the city’s current situation.

First, The City Council must have a cohesive, long-term vision. That vision must focus on the fundamentals of governing: public safety, maintained streets, safe neighborhoods, clean, affordable water, and business growth. In the early 2010s, the Council had a vision, but it didn’t concentrate on the fundamentals. As a result, the Council left the city with the Wishtoyo Consent Decree and the WAV Building. From 2013 on, the Council was divided and lacked any vision. The landmark accomplishment of those Councils was to push the Measure O sales tax increase. Yet, if you ask ordinary citizens how the extra money helps them, they’d be hard-pressed to answer.

Second, Ventura must retain a City Manager for more than three years. The City Manager leads the city staff to fulfill the City Council’s vision. Constant turnover disrupts that vision. A City Manager needs time to build a team and get them performing at a high level. We hope our current City Manager, Alex McIntyre, will have the opportunity to show the city what he’s capable of doing.

Third, voters must get involved. District voting means every vote is more important than it’s ever been. Your vote is one in 15,000 potential voters in your district. Your ballot carries more value than it did when we had citywide elections and your vote was one of 64,976. If the city is to overcome the current obstacles, we can’t have districts in which only 3,781 voters cast ballots.

Tell City Council, “Don’t Repeat The Mistakes Of The 2010s.”

Below you’ll find the photos of our current City Council. Click on any Councilmember’s photo and you’ll open your email program ready to write directly to that Councilmember.

Councilmembers
Councilmembers
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Brooks Institute Settlement

Is The City Hiding The Truth From You About Brooks Institute?

Three things cannot be long hidden: the sun, the moon, and the truth. —Buddha

 

The City Cuts And Runs On Brooks Institute Debacle

Citizens Short Changed

The folks at City Hall are trying hard to put on a brave and jubilant face in trying to explain why their decision to accept $71,000 to settle a lawsuit against Brooks Institute is a victory. Readers of this letter know better. The settlement does not even cover the rents and security deposit that Brooks was to have paid in the first 6 months of their lease or the future lost rents and property damages.

By our best estimate, there was $61,000 in lost rent Brooks Institute was to pay under the lease for 6 months in 2016. Also there is the $200,000 it will cost in tenant improvements to return the space to leasable condition. Add to that the undisclosed amount the city spent in legal fees and staff time to reach this point, there is well over $261,000 lost in this settlement.

History of Events

The Brooks Institute example is a case study in ineptitude

On March 1, 2016, after meeting with the then Mayor of Ventura and downtown property owners, Brooks executed an office lease for the 4th and 5th floors at 505 Poli Street, behind City Hall. That lease was for a period of 6 months with provisions of four -1 year options to extend.

The contract expressly provides that concurrent with the signing of the lease with Brooks, prior to their taking take possession, had to first pay a security deposit of $10,181.20, first months rent of $10,181.20 and last months rent of $17,390.65, for a total of $37,753.05.

The money was never paid. Yet the City allowed Brooks and their contractors’ access to enter the premises to tear out the offices in the building and start building out their new space. City personnel knew it. Engineering plans and permits were expedited and the work commenced.

It was never completed. Brooks walked away from the project in August, 2016. No rent was paid for July through December, 2016. An additional loss of $61,087.20.

On December 22, 2016, the City Attorney filed a complaint seeking damages for lost rents and security deposit ($84,936), the cost of repairing and restoring the property destroyed by Brooks in starting to perform tenant improvements (according to proof at trial) attorneys fees and punitive damages.

That lawsuit was against Brooks Holdings, LLC., Green Planet Inc., dba GPHomestay, a Massachusetts Corporation, and Xinwie Lin, the primary stockholder of Green Planet. The only person that signed the leases agreement with the City was Edward M. Clift as President of Brooks Holdings, LLC. This company had been formed, one year before, to acquire a bankrupt Brooks Institute of Technology.    Nobody else signed any agreements, contracts or guarantees.

Brooks Institute paid no money to the City for rent, no money for a security deposit and no money to restore the tenant improvement their contractor destroyed at 505 Poli.

A Lease “Approved As To Form” by City Attorney

To further compound this enormous error, the written lease agreement did not have any provisions for a performance bond and no performance guarantees signed by Green Planet or Ms. Xinwie Lin. They all orally assured our Mayor, the city staff and the City Council that they were financially sound and would bring a thriving school of higher learning to the community for many years. You know, “trust us”, our word is our bond.

City Attorney Gregory Diaz closes the book on Brooks institute

Those promises and assurances proved false and evaporated after 4 months. City leaders were blinded by glittering opportunity, dollar signs and the prospects that all of this wonderful development would come to the downtown. City leaders were so caught up in this “wonderful idea” that economic reality was ignored.

When the City Attorney, the same person who negotiated this settlement, signs a lease as “Approved As To Form”, does he have a responsibility to ask why the lease didn’t have any guarantees or bonds?

We may never get an accurate reporting of what the damages are in fact. Loss of future rents from other potential tenants, costs of repairing the property and legal costs. We were assured however that “the City is conducting a through process review to determine what caused the delay to collect the amount due from Brooks, and that we (they) will also be developing a better administrative process to prevent this from happening in the future. The City takes this issue seriously and we (they) strive to promote transparency at the highest level”. Now, City Attorney Gregory Diaz tells the Ventura County Star, “This matter is now closed.”

To our knowledge, the city never informed the public of the results of that review process. In fact, no one knows if the city actually performed the review.

The only noble gesture in this entire debacle was the public apology of then City Manager, Mark Watkins, who accepted full responsibility. He has since retired. As for a certain member of the City Council, they were not quite so noble, quickly throwing anyone and everyone under the bus in attempt to divert attention from their foolish folly.

Call for Action

Demand accountability from city officials.

Brooks Institute is a case study in ineptitude. Only this time it’s different. We can hold city officials to their promise. City staff committed to investigate the process thoroughly and make changes. Ask to see the results of that investigation. Ask to look at the changes to the review process the city implemented as a result of that investigation.

Click on any one of the pictures of City Councilmembers below. Your email program will open automatically. Write to your elected officials. Demand to learn what changes the city’s made following the Brooks Institute breakdown. It’s your right as a citizen to know the city is working in your best interest. It’s your right to know how they are changing to prevent it from happening again.

Editors’ Comment

In the private sector, when a so-called “good deal” goes bad for lack of common sense and due diligence people are deservedly fired.. In the public sector there are zero consequences, only platitudes and assurances “that this will never happen again” or “we will strive to promote transparency.”

The City Council directly hires two people, the City Manager and the City Attorney. While the City Manager recently retired/resigned, after the Brooks Institute debacle, the City Attorney should be under greater scrutiny.

Demand To Know What Changes Have Been Made To The Real Estate Process As A Result Of Brooks Institute

Below you’ll find the photos of our current City Council. Click on any Councilmember’s photo and you’ll open your email program so you can write directly to that Councilmember.

Let them know what you’re thinking. Tell them what they’re doing right and what they could improve upon. Share your opinion. Not participating in government weakens our democracy because our city government isn’t working for all of us.

Neal Andrews, Mayor

Matt LaVere, Ventura City Council

Matt LaVere, Deputy Mayor

Cheryl Heitmann

Jim Monahan

Erik Nasarenko

Mike Tracy

Christy Weir

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three unaddresed issue

Unaddressed Issues That Threaten Ventura’s Quality Of Life

overcoming unaddressed issue

Three unaddressed issues will be difficult to overcome.

VREG’s STATE OF THE CITY

[THE UNADDRESSED ISSUES MAYOR NASARENKO NEGLECTED TO DISCUSS]

No doubt that Ventura is a magnificent place to call home. On many aspects, VREG agrees on more points with our Mayor and City Council, than disagree. Ventura’s citizens are proud of our fine police force and our fire department. Our city employees are a dedicated group of men and women, who work hard and serve the community well.

THREE UNADDRESSED ISSUES

Some issues Mayor Nasarenko highlighted in his State-of-the-City speech are ones VREG has written about for years. Ventura has several issues that need attention before they grow out of control.

Mayor Nasarenko identified water and pensions among those issues in the State-of-the-City. The impending Brooks Institute lawsuit was conveniently overlooked. The mayor was short on details on how to solve them.

WATER: UNADDRESSED ISSUE #1

overcoming unaddressed issue

Water has been an unaddressed issue for over 37 years.

For 150 years, Ventura has failed to find an alternative source for water. In fact, with the loss of the Ventura River water wells, there are fewer resources. In 1972, Ventura opted to import 10,000 acre feet of water from the north. Ventura has paid and continues to pay for that every year without any pipeline with which to receive it. In 1989, the community faced a drought, and 52% elected to pursue desalinization. 48% chose to build a pipeline as an alternative. For the last 26 years, nothing has happened.

Now, with another 7-year drought which may be ending, a recent editorial in the Ventura County Star on the water crisis states:

“The department’s poor handling of Ventura’s water has created an avoidable “perfect storm.

“The loss of Lake Casitas water will force it to adapt cross-town pipelines and start pumping east-side water to the west side to meet demand. Continued implementation of the horribly timed housing boom on the east side will further exacerbate water shortages and leave residents with high-priced/low-quality water and not enough of it.

“Meanwhile, the city is frantically trying to dig replacement wells rather than moving ahead with new ones, and consumers’ water bills will go even higher to offset that cost.”

In January, the Ventura City Council authorized a $430,976 study (or as low as $297,176 depending upon the results of the engineering study) to research the cost to connect to the State Water Project. The State Water Project that has existed for 46 years. Yet, Ventura cannot use it without extra infrastructure.

CITY COUNCIL NOT CONSIDERING ALL AVAILABLE OPTIONS

Our Mayor has also shared that Ventura is looking at potential sites for a water reuse plant. Dubbed the Ventura Water Pure, the plant is an advanced treatment facility. It will take 8 years to build the treatment facility. Projected costs range between $120 million and $142 million.

Water from this treatment facility could cost less than state water and would be more reliable. It is also about half the cost of energy-intensive desalinated water. From the start, such a plant could yield about one fourth of the city’s current annual water demand. According to our Mayor, the plant could later expand to meet future supply needs of Ventura.

One advantage of connecting to the State Water Project is that it will not take 8 years like the Ventura Water Pure plant will require.

Is there another water rate increase in the offering?

PENSIONS: UNADDRESSED ISSUE #2

overcoming unaddressed issue

Pensions are an unaddressed issue Ventura struggles with.

CalPERS annual billing for pensions is rising faster than employee contributions. As a result, the city continues to lose ground on employee pensions. The city’s annual cost of $16 million is projected to be $25 million by 2023. Ventura’s CalPERS payments are rising at over $1 million per year. Because CalPERS lowered its rate of return to 7% from 7.5%, add another $750,000 to the $1 million annually.

While our Mayor acknowledges the problem, he offers no solutions.

BROOKS INSTITUTE LAWSUIT: UNADDRESSED ISSUE #3

In August 2016, VREG concluded a lawsuit over Brooks Institute was inevitable. The lawsuit will come at taxpayer expense. The City Council and the City Manager downplayed the possibility at the time. This may have been an attempt to deflect the seriousness of the problem.

Fast forward to Feb. 8, 2017, one week before the Mayor’s State of the City. Ventura is now suing Brooks.

Editors’ Comments:

City government tries its best to serve our citizens.  Like any community, there are also areas that either need improvement or simply require attention before big troubles get out of control. This is a collective reminder that we, as a community, through our elected officials, still have work to do in vital areas in order to sustain our way of life.

THINK VENTURA SHOULD TACKLE AT LEAST ONE UNADDRESSED ISSUE?

[WRITE YOUR COUNCILMEMBER]

Click on the photo of a Councilmember to send him or her a direct email.

Erik Nasarenko,
Mayor

Neal Andrews,
Deputy Mayor

Cheryl Heitmann

Matt LaVere, Ventura City Council

Matt LaVere

Jim Monahan

Mike Tracy

Christy Weir

Editors:

R. Alviani          K. Corse          T. Cook         B. Frank
J. Tingstrom    R. McCord       S. Doll          C. Kistner

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Will The Trade Desk be another real estate blunder?

Is Ventura Poised To Commit Another Real Estate Blunder With The Trade Desk?

“ONLY THE MEDIOCRE ARE ALWAYS AT THEIR BEST”
—Jean Giroudoux

WILL VENTURA CITY GOVERNMENT EVER LEARN?

It’s déjâ vu all over again. Once again the past rears its ugly head. Only this time will the City Council be wise

The Trade Desk may not be the best deal for texpayers

Is The Trade Desk real estate deal a gift of taxpayer money to a private company?

enough to learn from its past mistakes? There are some things this Council and this city staff are not qualified to evaluate fully.

Among the first issues facing the 2017 Ventura City Council is a real estate transaction. Ventura is selling four parcels of  City-owned, prime downtown public property. The properties for sale are at 535 East Main Street.

The fact that the City is pursuing the sale of surplus land is commendable. Selling these properties should be open and transparent. To do otherwise, invites the possible perception of favoritism or mismanagement of public funds. Proper evaluations, bidding and screening needs to happen.

CITY STAFF PROPOSES A NEW DEAL 

Community Development Director, Jeff Lambert, presented a new real estate deal on November 15, 2016. He asked the City Council to approve the sale of a large, downtown city parking lot. The proposed buyer is a company called The Trade Desk. The Trade Desk wants to build a headquarters office building. The proposed offer was $1 million ($24 dollars a square foot).

City staff steered the selection of The Trade Desk as the sole qualified bidder. The City Council depended upon the recommendations of City Staff.

Four months earlier, the City Council relied on city staff’s recommendations on another deal. The city staff did an incomplete analysis before recommending the Brooks Institute project. They compounded this mistake by failing to collect deposits and rent. The Brooks Institute deal fell apart.

This time, the City Council was close to selecting The Trade Desk in another real estate deal. They almost decided without benefit of an independent financial analysis or a professional appraisal.

WHY THE TRADE DESK?

The Trade Desk is a Ventura success story. Does that entitle the company to favorable treatment from city government?

The Trade Desk is a success story many citizens do not know about. The City of Ventura funded an incubator business startup program. They used $5 million of taxpayer’s dollars to seed the fund. The Trade Desk was a beneficiary of the subsidized program. The Trade Desk is a large tech company that brought new jobs to Ventura. The company achieved early success. With their success, the Trade Desk went public and the stockholders have made millions. A true success story for Ventura.

The Trade Desk wants to enjoy the city’s largess, again. This time, they want to buy city property for their headquarters at below fair market value. Their business success should not cloud City Hall’s judgment. City Hall should not sell public property at a discounted price.

DOES THIS DEAL PASS THE SMELL TEST?

A first whiff of impropriety surfaced during the election. The Trade Desk donated $7,000 to support the successful city-backed ½¢ sales tax measure.

Another whiff arises with regards to the questions the city asked to approve The Trade Desk. A close examination of the specific judging criteria reveals the questions were subjective.

Of the three bids submitted, city staff selected The Trade Desk as the most qualified bidder. In its proposal, The Trade Desk offered $1,000,000 in cash for the properties.

The city purchased the properties for $618,000 in 1997. The city valued the properties at $1,684,000 in the original proposal. They base their estimate on a 6 year old value (10/25/10) comparable price for a city parking lot. The city’s valuation is $40 per square foot.

A QUESTION FROM THE AUDIENCE SLOWED DOWN THE PROCESS

The third impression of impropriety is how much the city valued the property. The city valued the property at $40 per square foot based on a 6-year old comparable property. In the same council meeting, city staff urged the Council to buy another parking lot for $64 per square foot. City staff recommended buying the parking lot for $64 per square foot. This established a new comparable price.  The new comp values the parcels at 535 East Main Street at more than $1,684,000.

The City Council seemed oblivious to the conflicting valuations. A citizen in the audience brought it to the Council’s attention. Only then did the City Council call for an independent appraisal.

It’s a mistake to sell The Trade Desk these downtown lots for $1 million, when the true value is closer to $2 million.

GIFT OF PUBLIC FUNDS?

You decide if The Trade Desk real estate deal is in Ventura’s best interest.

The city staff recommended to City Council to sell the property at a price below market value. This is another real estate blunder the staff made in 2016. In essence, it would be a gift of public money through the sale of property for less than market value. The sale would enrich The Trade Desk’s shareholders on the back of Ventura’s taxpayers.

The final whiff of impropriety appeared in the handling of the finances. Ventura city staff was willing to accept $50,000 in escrow from The Trade Desk. The Trade Desk estimates it will spend $15 million to develop the property. The deposit works out to 0.3% of the total value of the project. Such a small deposit amount should have concerned city staff.  One would think they would have learned from their prior mistakes. Not accepting an adequate deposit was a pitfall in the Brooks Institute situation.

EDITORS COMMENT

MOVING FORWARD RECOMMENDATIONS

Negotiations continue with The Trade Desk. Yet, the openness and transparency of this transaction remains in question.

To avoid any appearance of impropriety, Ventura should request new proposals for the property. The city must get an appraisal by an independent, certified commercial real estate appraiser. The sale price must be equal or higher than the appraised value. The city must make new bids public. And the final offer must generate a better return to Ventura’s citizens.

The successful bidder should make  a good faith, earnest deposit. In the event the transaction doesn’t move forward, a deposit protects Ventura’s citizens. The deposit would cover any loss of value or cost to return the property to its current state.          

Editors:

R. Alviani          K. Corse          T. Cook         B. Frank
J. Tingstrom    R. McCord       S. Doll          C. Kistner

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Brooks Institute Fiasco Exemplifies Ventura’s Bad Money Management

“EVERYONE’S ENTITLED TO THEIR OWN OPINION, BUT NOT THEIR OWN FACTS” —Daniel Patrick Moynihan

 Brooks Institute continues to be an issue

Ventura’s City Council’s bad deal with Brooks Institute exposes its lack of financial understanding. The Council

Brooks Institute closure exemplifies Ventura’s bad financial management.

and the city staff are scrambling to cover up those flaws. They’re feeding voters information designed to distract the public from the real issues. Ventura city staff believes it did enough due diligence. They’re trying to sell that opinion as fact in a Ventura Breeze article dated Sept. 13, 2016. The city staff’s facts ignore economic reality, though.  Follow the money and you will always find the truth. Brooks Institute is no exception.

Everyone’s entitled to their own opinion, but not their own facts

Venturans for Responsible and Efficient Government (VREG) followed the money trail. VREG filed a Freedom of Information Act request with the city. The city provided the documents they evaluated to extend Brooks Institute a 46-month lease. What VREG learned reveals incompetence and lack of understanding.

W Brooks Institute is not an isolated problem; it’s a symptom of a larger problem. It shows the city council’s inability to manage taxpayer money. Brooks Institute surfaced at a time when the city is asking for another $270 million in taxes from Measure O.

Discovering The Cracks in the Foundation of the City’s Due Diligence

Brooks Institute exposed the cracks in the city’s procedures.

The city provided four foundational documents used to check Brooks Institute Holdings, LLC. The city staff believes these documents showed Brooks Institute was a good “risk.” In the private sector, these documents would have been insufficient.  Here is why.

1)    GP Homestay’s Commitment Letter Is Meaningless from a Financial Perspective

GP Homestay, Brooks Institute’s parent company, provided Ventura a ‘letter of guarantee.’ City Manager Mark Watkins announced this at the September 12, 2016 City Council meeting. The decision makers considered this meaningful in the decision to lease to Brooks. The letter has many shortcomings, though.

First, GP Homestay wrote the letter to a third party,not to the City of Ventura or any entity related to the Brooks Institute lease. GP Homestay wrote it to the WASC Senior College and University Commission on January 15, 2016. WASC Senior College and University Commission is an accreditation organization for Brooks Institute’s curriculum.

Second, nobody signed the letter. It is of no value to the City of Ventura as a basis for financial support, or to any of the other groups or businesses defrauded by Brooks.

Brooks Institute parent company, GPHomestay, took advantage of Ventura and its contractors.

Third, the contents of the letter are not something the city can depend on. The letter states, “Green Planet guarantees continued financial support for the proposed period of financial losses prior to reaching the break-even balance between revenues and expenses in 2020.”

This suggests two important facts. One, GP Homestay didn’t expect Brooks Institute Holdings, LLC to be profitable during the entire term of the lease.  Two, after 2020, Green Planet could withdraw any financial support. These are hardly the assurances on which to base a 46-month lease, nor do they guarantee any payment.

2)    Brooks Institute’s Loan Agreement with GP Homestay Arrives after the Fact

The city provided a loan agreement for $2.5 million dated March 28, 2016 between GP Homestay and Brooks Institute Holdings, LLC. This document is worthless from a financial perspective for several reasons.

First, the loan agreement is actually for a line of credit. There is nothing that indicates that the line of credit was ever signed or if Brooks Institute drew from it.

Second, nobody from GP Homestay signed the line of credit document. An unsigned document is worthless. It is unenforceable and not the basis for granting a 46-month lease.

Third, and most important, the date on the document is 33 days after the start of the signed lease. It could not have been available for the City Council to review while doing their due diligence.

The city approved the lease on February 22, 2016—more than a month before this document. So this document could not have factored into the decision to lease to Brooks Institute.

3)    Dissecting Green Planet, Inc.’s Consolidated Opening Statement Balance Sheet

Green Planet, Inc. provided a consolidated statement to the city to support a 46-month lease. The statement dates back to June 16, 2015, making it eight months old at the time the city issued the lease.

Green Planet, Inc. consolidated statement includes six other corporations.  To understand Brooks Institute Holdings, LLC, the city would have to separate out each of these corporations. That’s impossible with this statement. So, depending on this document for financial information would have been a waste of time. To cap it off, Green Planet, Inc. did not provide any guarantees to the city of the Lease Agreement or the construction period. This document doesn’t support the decision to lease space to Brooks Institute Holdings, LLC.

4)    Brooks Institute Holdings, LLC Financial Documents Don’t Paint a Pretty Picture

The financial statements Brooks Institute Holdings, LLC provided lacked substance. First, the statements covered four months. Brooks Institute Holdings, LLC only existed since March 2, 2015.

Upon examining the financial statements, several irregularities signaled danger and demanded further questions. For instance, Brooks Institute Holdings, LLC’s available cash. Brooks would have had only $403,805 in cash if it paid all current liabilities. The balance sheet showed a cash balance of $2,750,598 and Current Liabilities of $2,346,793.

This statement was seven months old when the City Council discussed the lease agreement. Yet the city didn’t verify Brooks Institute’s available cash by demanding bank statements. The city had no way to know how much cash Brooks had available.

The Statement of Income showed a Net Operating Loss of $21,531. GP Homestay expected this loss and future losses until the year 2020, as they stated in their letter. Yet, the Statement of Income is misleading. The Statement of Income shows Net Income of $1,738,026. This is the result of the acquisition of the school valued at $1,759,557. The only reason it showed a Net Income was due to the value it placed on acquiring itself. An acquisition is a one-time, extraordinary event. It does not show true profitability.

The Scramble to Cover Up the Flaws

The city began spinning the story soon after Brooks Institute closed its doors. First, there was City Manager Mark Watkins’ public mea culpa in the Ventura County Star. In it, he stated the city erred on execution on Brooks Institute by not collecting rents and fees. Next, there was an article in the Ventura Breeze by “City Staff” (whoever that is). It read, “As part of the City’s due diligence in determining the viability of the lease, the City was provided access to Brooks’ and its parent company’s (GPHomestay) confidential financial information. Based on that review it was determined that Brooks was solvent.”  City Staff hoped nobody would discover the truth by examining the financial statements. Finally, there is Councilmember Cheryl Heitmann’s plea. She urged the city to get out in front of the problem at the September 12, 2016 council. She reckoned citizens were forming their own opinions without the city’s input.

The city’s rush to move Brooks Institute downtown forced city staff to cut corners.

The truth will out. The city was eager to do the lease with Brooks Institute. The city did a minimal review to rush the deal. After the fact, the City Manager admitted errors in the process. He stopped short of saying the city approved the lease without proper supporting documents. And the city failed to ask and answer many questions before it signed the lease. Even a cursory examination revealed Brooks had only $403,805 in cash. Brooks lacked enough funds to remodel the City site, let alone several other locations.

This situation will take years to resolve. Here’s what we do know now. Brooks Institute closed. The city has unpaid rents. Brooks stiffed contractors for tenant improvements they completed. The city will have to renovate the buildings Brooks leased to lease them to someone else. Brooks Institute Holdings, LLC didn’t couldn’t fulfill its obligations on the 46-month lease agreement. And, neither the city staff or the City Council researched enough before issuing a long-term lease agreement.

These are the facts. The city is trying to distract the public by zeroing in on the amount of money the city lost. The City Council and the City Manager want voters to believe the losses were $70,000. That amount of money is significant in itself. It may not be the full extent of the city’s exposure to losses, though. The real exposure is closer to $1,095,000. There is the $70,000 in lost rents from Brooks Institute. There is also the $825,000 mechanic’s lien by the contractors that the city refuses to pay. There will likely be legal costs to defend that position. Finally, it will cost $200,000 to return the sites into leasable condition according to Mark Watkins.

Editor’s Comments

The city played fast and loose with taxpayer money on the Brooks Institute deal. The city made several public apologies. They sympathized with the Brooks Institute students and facility over their loss. Yet, they admitted no wrongdoing. There was no apology to the City Council for making them look foolish and uninformed. But, worst of all, the city didn’t apologize to the taxpayers. It’s the taxpayers who pay for the city’s mistakes.

With or without an apology, though, one thing remains clear. The city has mismanaged taxpayer money on Brooks Institute. The situation demonstrates city staff and City Council’s incompetence or lack of understanding. So, it would be imprudent or foolhardy to trust this City Council with another $270 million through Measure O.  Don’t give city government more money until they show they can spend the money they have. Vote No on O.

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Brooks Institute Is Ventura's Latest Failure

Remember Brooks Institute when you vote for Measure O in November

“WHEN IN DOUBT, DON’T”
—Benjamin Franklin

WAVE GOODBYE TO BROOKS INSTITUTE AND OUR TAX DOLLARS

The news in the last few weeks has reported the closure of Brooks Institute.  Everyone lost from this closure.  The students hopefully will find other institutions to complete their education and their teachers may find other positions, but the Citizens of Ventura are again holding the proverbial bag.

On August 20, 2016, The Ventura Star published an editorial about the role of city government in this matter, and it sums the situations up fairly well – “The City Council and city government appear to have given preferential treatment to a small but vocal constituency – and failed the rest of Ventura”.  We cannot improve on their conclusions except that it was all avoidable.  We can provide you with specific facts and information that we have garnered thus far so that when the bureaucratic spinning and finger pointing starts, you will be able to see it for what it is.

In February the City announced with great elation and fanfare that Brooks was coming to town. Councilwoman Heitmann led the parade as well as the City Economic Development Manager, Leigh Eisen. They extolled the prospects of increased revenue for the city and that downtown business would flourish.  Same hype surrounded the WAV (See our August 2011 letter published at August 2011 Newsletter).

Brooks Institute Unfinished Office Space

Brooks Institute left unfinished classroom space when the deal unraveled.

There were three sites leased, two private owner locations downtown and one behind City Hall.  The largest was the two top floors of a 5-story city office building at 505 Poli just behind City Hall.   There may have been two other private owner locations but that as yet has not been established.

Hope and promise filled City government.   Staff rushed to execute leases for the 505 Poli property.   Brooks Institute entered into a contract with a major contractor to demolish and build tenant improvements on the two top floors of 505 Poli at a contract price of $1.2 million. Tenants of those two floors were evicted; the contractor was permitted to fast track demolition and tenant improvements started.  When hazardous materials were found on site Building & Safety again fast tracked the work, which was promptly completed by Venterra, a hazardous materials remediation company, at an additional cost of $80,000.  Demolition was completed and 2/3 of the tenant improvements were built.  Then Brooks closed its doors and the project imploded.

THE PROJECT UNRAVELS

Brooks Institute paid no money to the City for rent, no money for a security deposit and no performance bonds or guarantees were put in place.  Reportedly $70,000 in back rent is due. Future rents are lost. The tenant improvements have yet to be completed. The Assistant City Manager tells us that it will only cost our City $200,000 to complete those improvements.

Unsurprisingly, within a matter of days, the facts have proven otherwise.  The contractor has filed a lien against the City for $825,000 for the work they and the subcontractors performed on City property, including the $80,000 cost of the removal of the hazardous materials.  Add lost rent to date, future lost rents the evicted tenants would have paid, the estimated cost to complete the tenant improvements and the damages causing the losses to swell to over $1.2 million.  Then there will be the legal costs to collect these losses, if possible, and to avoid liability.

The private property owner who also signed Brooks’ leases and started the work of providing tenant improvements in the downtown area was more fortunate.  He wisely obtained guarantees to protect himself.  Brooks Institute, owned by a Chinese owned company named Gphomestay, has lawyered up with an expensive LA firm. The contractor has lawyered up too but no word yet on what lawyer will try to pull the City’s chestnuts out of the fire.

The citizens of Ventura deserve to know why the taxpayer has once again been “hornswoggled[1]“.  Dreams, hopes and ideas for healthy economic growth are wonderful, but such things must be tempered with economic reality and good business sense.  When those are ignored the phrase “a fool and his money are soon parted” is apropos.

DEMAND THE TRUTH

The City Council has a lot to explain.  They were quick to ask the citizens of Ventura to increase taxes (Measure “O”).  They spent $118,000 of our tax money to hire public relations firms to convince 51% of the voters to vote yes on that measure thereby giving them more of our money.  Will they be as quick to take responsibility for another $1 million plus dollar loss?

No Deposit on Brooks Institute

Citizens should ask, “Who approved the Brooks Institute lease without asking for rent payments upon execution?”

This Council, particularly the two candidates seeking reelection in November, Councilwomen Weir and Heitmann, need to answer questions about their ability to conduct business on our behalf.  We must have representatives that are experienced and understand business. We, as a community, cannot afford losses of this magnitude and we certainly should not be handing the City Council another $270,000,000 over the next 25 years if they are not qualified.  By this recent action, this City Council is not capable of managing our tax money.

Other than “what were they thinking” here are questions EVERY citizen should be asking?

  1. Who approved this lease without asking for rent payments upon execution?
  2. Who reviewed and approved the terms of the lease with Brooks?
  3. Who made the decision to permit construction on City property  without a guarantee or performance bond in the event of default of Brooks Institute?
  4. Who performed the due diligence and examined the financial condition of Brooks Institute to determine their ability to perform under the terms of the lease?
  5. Who recommended the approval of this lease and its terms to the city Council?
  6. Shouldn’t those who made the decisions in this matter resign or be fired?

City Government’s response thus far is that they will sue Brooks to get our money. City officials continue to say they are surprised, shocked and disappointed. They should not be any of these things. This was all foreseeable based upon the financial condition and history of Brooks Institute. 

VREG is continuing to investigate this transaction and will report our findings in subsequent issues as new facts are discovered.

EDITORS COMMENT

In the private sector, when a so-called “good deal” goes bad for lack of due diligence people lose their jobs. In the public sector, nobody is held accountable and elected officials either choose not to run again, or they run and look for a fall guy.  

Just keep the BROOKS project in mind when you are asked to vote for Measure “O” in November; and, when voting to fill the three City Council seats that are open ask yourself if they are truly qualified.

Editors:

B. Alviani       K. Corse          T. Cook         B. Frank

J. Tingstrom R. McCord       S. Doll          C. Kistner

 

[1]Hornswoggle”, slang circa 1829.  A word to describe one who has been bamboozled.  Synonyms: dupe, fake out, fool, hoodwink, deceive, humbug, juggle, misguide, misinform, mislead, snooker, snow, spoof, string along, sucker, suck in, take in, trick

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