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The City Should Get Out of the Property Rental Business

May 21, 2018/in Newsletters/by VREG Editors

“We need leadership. We don’t need a doubling down on the failed politics of the past.” —Paul Ryan

505 Poli building. Crime lab in the lower right corner.

City Council Makes The First Step Toward Dealing with Surplus Building

To get realistic information for the City Council to decide about 505 Poli, Councilmember Mike Tracy presented a motion to seek advice from a licensed commercial realtor. Councilmember Jim Monahan seconded the motion. The Council unanimously agreed after City Attorney evaluated the right to sell the property, to seek advice from a licensed commercial realtor. The goal is to “determine (the) value of 505 Poli Street including the Crime Lab (appraisal and parking analysis study). Then to decide on disposition (of the property).”

Good decision.

Why The City Should Get Out Of The Property Rental Business

The 505 Poli building adjacent to City Hall exemplifies why the City of Ventura should not be in the property rental business. The city owns several properties. Ventura needs some to house various city departments and needs others for future use. However, the city owns and operates some for the sole purpose of generating income — rental income property.

Citizens have a right to expect the city to manage 505 Poli wisely.

When public money is used to buy rental income property, citizens have a right to expect the city will manage the investment wisely. Acquiring and operating such property requires knowledge and expertise to protect the investment. In the case of our city, the City Council makes the decisions. They rely on the City Manager and city personnel for sound advice.

Here’s the rub. Ventura city personnel have demonstrated historically—and continue to show, as we will later explain—that they do not have the knowledge or experience needed to assist the City Council in making decisions in such matters.

Why The City’s Bad At Property Rental

There are four major issues with city-owned rental income property:

First, the daily maintenance and management of these properties require constant attention. Buildings cost money to operate with or without a tenant and thus are a continual liability and drain on public resources. Private owners use qualified property managers to manage their property. If those managers are not able to produce any income to the owner after expenses, the owner fires them.

Should Ventura be in the property rental business at all?

Second, the city does not have a structured professional approach to operations and tenant management. It is merely an additional task for someone in some department to look at in and among all of their other daily tasks, which staffers usually place behind the immediate problem of the day. Income property must be monitored and requires constant professional attention. Fail in that task, and the supposed investment will fail. The Brooks Institute rental at 505 Poli was a debacle and is the perfect example of why the City Council should not rely on city staff for help in trying to operate such property. Still, they persist.

Third, properties are acquired and operated long past their usefulness to our city. Once the city uses taxpayer money to pay for the property, the City Council and city staff blot the investment out of their minds. If the property is not producing the expected income or outlived its purpose, it should be placed on the market and sold. To spend taxpayer’s funds without any concept to how much the city has already spent on past failed projects for the same property is wrong.

Finally, the City believes that it is acceptable to compete with private free enterprise and offer free rent or discounted rent for city-owned buildings and property acquired with taxpayer money. Private property owners are encouraged to invest in Ventura, but why would anyone make such an investment when the City is a major competitor? It is unfair competition and constitutes a misuse of taxpayer’s funds.

The City Council needs to address these problems.

505 Poli Confirms That Ventura Is Bad At The Property Rental Business

Appraised for $3.55 million in Sept. 2005, the City of Ventura acquired it in November 2006 for $4.03 million. Our then-City Manager pushed the acquisition. The Council followed his advice. To fund the purchase $1.23 million in General Funds were used together with another $2.8 million from a particular service fund — Workers Compensation Fund. The use of the Workers Comp funds should have been a warning to the City Council. That fund pays for future worker’s compensation claims. The interim City Manager, Johnnie Johnson, exposed that budget manipulation when he advised the City Council in 2012 of a $5 million deficit.

Just why the City Council thought “robbing Peter to pay Paul” was a good idea defies logic.

Questions remain as to how much the city has spent to acquire, improve and maintain 505 Poli.

Then there is the building itself. The City accepted the premise—and the adjacent old County crime laboratory which was part of the deal—knowing that asbestos filled this old Ferro-cement structure. The removal of asbestos and hazardous material remediation in the crime laboratory alone was estimated to cost $500,000-$700,000. The list of deficiencies abounded—seismic conditions, old air conditioning systems, old electrical systems and a 60-year-old elevator that hinders tenant usage.

In 2006, City staff advised the City Council that if they decided to buy the property, the city would get a return from the investment in 6.3 to 8.8 years. There was no return on the investment. The building was repurposed to provide free or low rent to new tech startup companies. City staff reckoned that if the startups succeeded they would do business in Ventura and bring jobs to the community. The City Council allocated another $5 million for that purpose. However, aside from the single success of Trade Desk, the project failed.

Six years later, in February 2012, the Ventura Chamber of Commerce agreed to pay $1,000 cash per month for the first floor. In March & April 2013, the Trade Desk leased the 4th and 5th floors for $6,025 a month at which time the City Council spent another $62,750 in improvements. Trade Desk left and in Feb. 2016, the city then tried to lease the two top floors to Brooks Institute. Demolition proceeded on those two floors, and since Brooks Institute defaulted, those floors have been vacant. They remain empty today.

By this simple accounting, the City of Ventura has spent or is obligated to pay an additional $4.6 to $5.0 million with no net rental income to justify the investment over the last 12 years.

Spending More Money Won’t Fix What’s Bad About Ventura’s Property Rental

The latest proposal put forward by the Public Works Department recommends the city sink more money into the building. On April 16, 2018, the city staff recommended the City Council spend another $2.0 million to build tenant improvements on the 4th and 5th floor of 505 Poli. That report contained a lot of facts and figures but was notable for the lack of a feasibility study.

City staff suggested in the report were that if the City Council spends the money, 505 Poli would then be considered a Class A property rental property and would rent for $3 a square foot because of its downtown location. There was no rental comparison survey to support the plan. There was no vacancy survey included. The report also ignored the fact that vacancy is running at 25% citywide on commercial property. The entire argument assumes that if “we build it, they will come.” The recommendation also suggests our city would receive a monthly income of $53,413 after the improvements at 100% occupancy. Great promise, but it lacked facts and is unrealistic.

Then something happened in the city staff presentation that further demonstrated how they lack the knowledge and experience to guide the City Council on rental properties. The Public Works presenter hinted a possible tenant would take the space and finance the tenant improvements in exchange for significantly reduced rent. Almost immediately, Jeff Lambert, the Community Development Director, corrected that information. The potential new tenant had pulled out earlier that week. There were no interested parties, at this time. It was apparent these two departments were not communicating, and the facts were not straight before asking the City Council to spend $2 million.

Editors Comments

We recommend several things about 505 Poli and city-owned real estate in general.

First, the City Council should follow up on how much taxpayers have spent to acquire, improve and maintain 505 Poli. The total amount may surprise some of them.

Second, the City Council should hold the city staff to a higher level of thoroughness and professionalism before recommending spending taxpayer money.

Third, and most importantly, city government should get out of the property rental income business and find a qualified, reputable real estate company to lease and manage all city-owned rental property.

Insist The City Council Heeds The Input Of Outside Consultants Before Deciding What To Do On 505 Poli

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, Deputy Mayor
Cheryl Heitmann		Jim Monahan
Erik Nasarenko		Mike Tracy
Christy Weir

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

February 20, 2018/in Newsletters/by VREG Editors

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.

Neal Andrews, Mayor		Matt LaVere, Deputy Mayor
Cheryl Heitmann		Jim Monahan
Erik Nasarenko		Mike Tracy
Christy Weir

For more information like this, subscribe to our newsletter, Res Publica. Click here to enter your name and email address.

How To Make The Most Powerful Job In Ventura Government More Accountable.

January 11, 2018/in Newsletters/by VREG Editors

“Those who do not remember the past are condemned to repeat it.”

—George Santayana

Here we go again. Ventura is hiring its fourth City Manager since 2000.

You’ve undoubtedly told our children or grandchildren, “Haste makes waste.” It’s sound advice; especially when you want to prevent them from making a mistake. The same advice holds true for Ventura’s City Council when hiring our next City Manager. A hasty decision now leads to adverse consequences in the future.

The City Manager is the most powerful role in Ventura’s city government. He controls millions of dollars and impacts Ventura for years to come. He does this with little oversight by a part-time City Council. And history shows the Council lacks sound financial judgment when overseeing him. Voters know even less about how the City Manager does his job.

A Chance For The Council To Start Fresh

This City Council faces its most important decision—selecting the next City Manager. It’s no easy task. The new manager will be responsible for healing Ventura after the Thomas Fire. No prior City Manager has faced such a daunting task.

The Council should act slowly, boldly and thoughtfully when hiring. They should think creatively and progressively as they make their selection.

Balancing these goals will not be easy. The Council will feel internal and external pressure to act quickly. They’ll want to fill the vacant position right away to provide leadership at City Hall. And, citizens will demand someone to manage the Thomas Fire recovery. The search firm Ventura hired will add to the external pressure, too. Ventura pays the search firm when the new City Manager accepts the job. Typically, the fee is three months of the City Manager’s starting salary. In this case, it’s $60,500. The search firm will want the City Council to act quickly, so it gets paid.

The Council must resist the urge to succumb to the pressure.

We Know Poor Choices Lead To Financial Disaster

The tenure of the past three city managers keeps getting shorter.

The City Council does a poor job overseeing the City Manager. Former City Manager Rick Cole moved $7.5 million from the Public Liability Fund, Workers’ Compensation Fund and Information Technology Fund to other areas in the budget to make it appear as if the city’s budget was balanced. Either the Council didn’t catch the manipulation or was unwilling to investigate further.

A city manager could confuse the city council in the past.

Former City Manager Donna Landeros reallocated $9 million earmarked for the proposed Convention Center for various city programs, and nobody knows what happened to the money.

And, most recently, retiring City Manager Mark Watkins acted as the chief cheerleader on Measure O. He touted the money was for city services when the truth is it will eventually go towards employees’ pensions.

Even the City Council’s most recent hiring decision costs taxpayers money. The Council erred in the transition to Mark Watkins from Rick Cole. Cole received total salary and benefits of $189,341 along with a housing allowance to move to the city. When Watkins came in, he didn’t need a housing allowance because he already lived in Ventura. Rather than save that money, the Council chose to increase his salary and bonus to $242,059. The $52,718 increase impacts the city’s future financial condition negatively. At the time, Councilmember Christy Weir claimed hiring Mr. Watkins would save the city more money than the rise in his salary. The figures don’t bear that out over the four years he served in the role.

What’s more, Mr. Watkins is to receive his retirement pension based on his highest salary. At 56 years old, Watkins will receive retirement pension based on his $242,059 salary.

Greater Transparency Is The Key

Past City Managers had a bureaucratic background. Some argue requiring bureaucratic experience makes sense. Bureaucrats are the antithesis of transparent, though. They operate out of sight of the voters. This lack of transparency was disastrous for Ventura. Here’s why.

The city manager would be more accountable with published standards of performance.

A bureaucrat measures success by how large a team he manages. He’s driven to increase budgets to protect that organization. A more massive government usually equates to increased regulation. Rarely is that beneficial to citizens.

Also, a bureaucrat that is friendly towards and advocates for the city staff is not impartial. He will be reluctant to reduce expenses, eliminate unnecessary work, redirect work to private entities or minimize long-term staff costs. Bloated staff costs taxpayers money.

Finally, a bureaucrat negotiates his retirement when negotiating for the staff because he participates in the same plan. Human nature being what it is, the City Manager will likely bargain less vigorously, creating a conflict of interest.

Transparency begins with knowing how the City Manager is performing. The city should use Standards of Performance (SOPs) to measure achievement. Currently, the City Manager doesn’t have SOPs listed on its website. The Council should prepare SOPs, and the city should post them for the public to review. What’s more, the City Manager’s accomplishments should be in the public record. Citizens deserve a yardstick to measure if the city is meeting the City Council’s directives.

How to be more transparent when selecting the next City Manager:

Publish the screening criteria the City Council gave to the search firm to select candidates
Reevaluate the job qualifications and look outside of municipal government.
Post the Standards of Performance. Establish measurable performance levels on a regular review schedule.
Establish a Blue-ribbon committee to provide the Council strict salary and bonus guidelines.
Verify a candidate’s financial management expertise. The candidate must provide clear and incontrovertible evidence.
Insist on community outreach success from the candidates. The job description doesn’t list this as one of the primary duties.

Editors’ Comments

Hiring the next City Manager is paramount, and citizen input is a must.

Tell The City Council Not To Act Hastily

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.

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 makes us worse because our city government isn’t working for all of us.

Neal Andrews, Mayor		Matt LaVere, Deputy Mayor
Cheryl Heitmann		Jim Monahan
Erik Nasarenko		Mike Tracy
Christy Weir

For more information like this, subscribe to our newsletter, Res Publica. Click here to enter your name and email address.

How To Connect To Your 2018 Ventura City Councilmembers

January 2, 2018/in General News/by VREG Editors

To make democracy work, we must be a nation of participants, not simply observers.
—Louis L’Amour

Our federalist system gives us many opportunities to participate in our democracy. Some forms of participation are more common than others. And some citizens participate more than others, but almost everyone has a voice in government.

Meet Your 2018 City Councilmembers

We have a new Ventura City Council for 2018. We have one new Councilmember and six incumbents. Each of them has an email account with the city. Not everyone knows how to contact them, though.

Click On A Councilmembers Photo To Email

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.

Let then know what you’re thinking. Tell them what they’re doing right and what they could improve upon. No matter what you write, however, share your opinion. Not participating in government makes us worse because our city government isn’t working for all of us.

Neal Andrews, Mayor		Matt LaVere, Deputy Mayor
Cheryl Heitmann		Jim Monahan
Erik Nasarenko		Mike Tracy
Christy Weir

For more information like this, subscribe to our newsletter, Res Publica. Click here to enter your name and email address.

The Council Mustn’t Fail The Victims Of The Thomas Fire

December 17, 2017/in Newsletters/by VREG Editors

The Thomas Fire consumed over 400 residences in Ventura

At the December 11th Ventura City Council meeting on the Thomas Fire, there was total cooperation and support of all City departments, County of Ventura, State of California, Cal Fire and every other state and local agency present and committed to protecting our health and welfare. The heroic efforts are endless and stories of individuals, going above and beyond, will follow for weeks, months and maybe years.

At the meeting, the keywords were:

Patience
Understanding
Closure

Hurdles will be:

Things will not happen as quickly we think it should
Air quality
Toxins
Unsafe partial structures

Several stages will take place before the actual rebuilding begins. In the meantime, all city services, police, fire, public works, water, etc., will continue, giving most of us a sense of returning to normalcy.

Firefighters and first-responders performed admirably during the Thomas Fire

We are utterly grateful for the first responders and thoroughly sympathetic to those who have lost so much. This article is about moving forward.

Take Bold Steps Now For the Thomas Fire Victims

Ventura only needs to look at the recent actions in the City of Santa Rosa, to help prepare for the massive undertaking of rebuilding over 500 new homes.

Taken from an interview with the Santa Rosa Mayor:

Santa Rosa Mayor Chris Coursey surveys the damage from fires in October 2017

‘In 90 days I expect the rebuilding process to be well underway, with at least some homes under construction. The Santa Rosa City Council has established what essentially is a “second” planning department to deal specifically with rebuilding, which will smooth and shorten the permit process to get construction underway faster, and speed the inspection process to help builders keep their work moving.’

In Santa Rosa, the mayor was asked: How is red tape being cut to expedite rebuilding?

‘In Santa Rosa, we adopted our “Resilient City” ordinance to issue building permits over the counter, without extensive review, to anyone wanting to rebuild within their home’s prior footprint.
Design review will be limited to a staff determination rather than requiring a public hearing. Second units will be allowed on the property so homeowners can live on site while rebuilding their homes.

‘And as noted earlier, a separate “Resilient City” planning department has been created to specifically deal with rebuild projects, ensuring that firestorm recovery doesn’t have to compete with the day-to-day planning needs of city government.’

For decades, Ventura is infamous in its slowness to approve and issue building permits. The Form-Based Code concept became known as “Ventura, Building One Project at a Time.” Attempts to change this system have been mostly unsuccessful. It has not been a priority.

We have Sacramento to thank for more of the regulatory hurdles that add to this cumbersome and wearisome process. The City of Ventura may not be able to change the regulations and fiats issued by the Sacramento political folks, but we can change the time it takes to review and issue permits.

A Tale of Two Cities

As an example of sending a mixed message, Ventura Community Director Jeff Lambert told a town hall meeting of Keller-Williams realtors:

“We are looking at least six months before construction can begin. If you are planning on rebuilding your home and seeking temporary housing, it would be best to secure a place for at least a year if not 18 months to 2 years if possible. There is no definite timeline at this point, and it would be better to seek a longer lease than a shorter one…”

It is true that Ventura is moving into “untested waters,” but in times of a terrible disaster, business, as usual, is not an option for Local Ventura politics.

We have many experienced and licensed builders, plumbers, electricians and engineers in this City who are qualified to assist in this process.

EDITORS COMMENT

We urge the City Council to immediately:

Modifying and reducing the building permit and fee schedule is a positive step. However, Insurance companies will likely pay building and permit fees. After the rebuild, if the prior resident remains in the house for a year or two, reimbursing those costs may be in order but not as up-front fee elimination.
Require all building plans for single-family homes and related structures to review and permits issued within 90 to 120 days of application.
Allow local Ventura engineers and approved professionals in the construction industry to review and certify that the technical requirements of the uniform building codes have been met, and require city staff to accept these certifications in approving or disapproving plans submitted to building and safety.
Outsource the construction process so qualified professionals may review building plans and to conduct building inspections for better cost efficiency. Hiring more city employees causes long-term costs that are difficult to control and reduce once the projects are resolved.
Contact Santa Rosa city officials to learn from their experience.

Times of crisis require significant measures to address that emergency. The citizens in this community who suffered in this disaster need all the help they can get.

Have An Opinion? Share It With A City Councilmember.

Click on the photo of any Councilmember listed below to email them directly.

Neal Andrews, Mayor		Matt LaVere, Deputy Mayor
Cheryl Heitmann		Jim Monahan
Erik Nasarenko		Mike Tracy
Christy Weir

For more information like this, subscribe to our newsletter, Res Publica. Click here to enter your name and email address.

Ventura’s Water Supply Jeopardized by Years of Mistakes

May 22, 2017/in Newsletters/by VREG Editors

Whiskey is for drinking. Water is for fighting. —Mark Twain

Ventura could lose one-third of its water supply because of legal maneuvering and backdoor negotiating. As it is, Venturans pay too much for water and could pay even more in three years.

CITY COUNCIL APPROVES WATER RIGHTS CONTRACT

[RESULTS OF NEW AGREEMENT]

Casitas Water District negotiated a favorable water contract with Ventura after threatening a lawsuit.

On May 8, 2017, the public learned that a new contract between the City of Ventura and the Casitas Municipal Water District has been approved and executed by the City Council. That new contract places Ventura in jeopardy of losing all rights to water from Lake Casitas.

To maintain its current water rights, Ventura must reach Water Balance by 2020. To achieve water balance, Ventura must find an additional source of water.

The expedient solution is to exercise Ventura’s option to use State Water. The city currently pays $1.2 million per year for that option (which the city never used) and has been paying for that option since the mid-70s. If Ventura does not tap into the State Water Pipeline within three years, Ventura’s water situation will be in dire straits.

NEW CONTRACT IS TOO VAGUE

The old 1995 Contract with Casitas Water allowed for a minimum of 6,000-acre feet of water per year. That water could be used in the western part of Ventura (everything west of Mills Road) and the eastern part of the city, if necessary. Under the new agreement, that changed.

The new contract does not specify the amount of water Ventura’s entitled to receive. Instead, the “projected water demand of the prior year” will determine the amount (Article 4.1). That projected demand will come from Ventura’s annual water report. Should Casitas dispute the amount of water, it opens the Ventura up to a possible “Dispute Resolution.”

What determines the projected water demand of the prior year? Who determines that amount? Do both Ventura Water and Casitas Water have to agree on the volume before the start of each year? There are too many unanswered questions for this agreement to be tenable, and the fact that the Ventura Water Commission recently “received” but did not approve the 2017 report is not encouraging.

NO SCIENCE IN THE COMPREHENSIVE WATER REPORT

Ventura Water provides no accurate estimate of available water in the Comprehensive Water Resources Report.

The Ventura Water Department provided inaccurate and incomplete information in the Comprehensive Water Resources Report dated April 7, 2017. That data formed the basis of the Contract with Casitas Water District.

The financial statements used are suspect because of misleading expenditures. Other assumptions such as using the average water demand are questionable, too. The report includes no real science-based estimates of current water availability or capacity. And there are no timelines for water delivery improvements.

This same report also lists the use of sewer recycled water as a reliable source for potable water in the city. Ventura Water’s General Manager authored that report. She subsequently quit her job and moved to the City of Angels after submitting the report.

THE NEW AGREEMENT PUTS EAST VENTURA AT A DISADVANTAGE

East Ventura could lose 1/3 of its water in 2020.

The 1995 Contract allowed Ventura to blend Casitas water with the East End water. Water from the lake was used to mix with water from eastern wells to achieve better quality. Casitas considered the use of their water for that purpose as “rental water.” Ventura was required to return it or to pay for it. The new contract does not allow Ventura to use water in the East End.

Ventura may only use Casitas water within the Casitas District (western part of the City). If Ventura uses Casitas water outside the Casitas District in any one year, then Ventura must reduce the amount of water it uses in the western part of the city until it achieves “water balance.”

If Ventura fails to reach Water Balance within a 12-month period, Casitas may terminate the Water Services Agreement. Overnight, Ventura would lose approximately one-third of the water needed to run the city. Those living on the East side will suffer the most from the loss.

WATER PRICES NEEDLESSLY OVERPRICED

Based upon a very reliable source, who worked in the water community for the last four decades, management decisions by Ventura Water and City Hall over the past 25 years have led to monetary, clerical and water rights losses in the Ventura River. These bad choices forced consumers to pay higher fees even under drought conditions than they should have incurred.

THE CITY COUNCIL SNUBBED THE WATER COMMISSION

Ventura City Council didn’t seek the counsel of the Water Commission.

While we know the Ventura Water Commission does not have any rights or authority regarding contracts, their experience and knowledge could have been invaluable. But, the City of Ventura Water Commission never had the opportunity to review or discuss the Casitas Water Agreement. The City of Ventura never presented this contract to the commission and didn’t ask for their counsel.

Neutering the Water Commission is a recurring behavior for Ventura Water. The staff’s unwillingness to allow the Commission to do its job has existed for years. It appears they would prefer the Commission to rubber-stamp every decision. They are perturbed when the commission doesn’t do what they want. Given the poor decisions Ventura Water has made during the previous general manager’s tenure, it’s little wonder commissioners might be critical of every issue brought to them.

THE THREAT OF A LAWSUIT EXCLUDED THE WATER COMMISSION

Casitas Municipal Water District intended to sue Ventura’s water department and notified them of their intention according to the City Attorney. At that point, the attorneys determined that they would treat the new agreement as a pre-legal settlement, thereby closing negotiations to outside parties and masking all records or documents from public scrutiny.

Editors’ Comments

Casitas Water District could end up owning Ventura’s water rights for $2 million.

As part of the new contract, Casitas forgave an estimated $2 million debt (based upon 4000+ acre feet of water) Ventura Water owes for “rental water.” The Parties agree that as of the commencement of the Agreement, the City is in “water balance.” The City and Casitas are not subject any further legal or financial obligations under the 1995 agreement.

The success of this contract depends on whether Ventura can achieve water balance by 2020 by finding an alternative source of potable water. If that does not happen, Ventura faces the prospect of the termination of water from Casitas Water District.

If Ventura doesn’t find an alternative potable water source within three years and Casitas terminates this agreement, in effect Ventura will have sold its rights to Casitas Water for $2 million.

Ventura can only hope that the new Water Department management will provide full disclosure and transparency, and will lend its voice to the importation of 10,000-acre feet of water from the State Water Project. Forty-eight percent of the voters chose that option in the 1992 election.

Now, will the government listen?

Unaddressed Issues That Threaten Ventura’s Quality Of Life

February 28, 2017/in Newsletters/by VREG Editors

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

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

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
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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How To Contact Your 2017 Ventura City Councilmembers

February 1, 2017/in General News/by VREG Editors

To make democracy work, we must be a nation of participants, not simply observers.
—Louis L’Amour

Meet Your 2017 City Councilmembers

We have a new Ventura City Council for 2017. We have one new Councilmember and six incumbents. Each of them has an email account with the city. Not everyone knows how to contact them, though.

Click On A Councilmembers Photo To Email

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.

Erik Nasarenko, Mayor		Neal Andrews, Deputy Mayor
Cheryl Heitmann		Matt LaVere
Jim Monahan		Mike Tracy
Christy Weir

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Brooks Institute Fiasco Exemplifies Ventura’s Bad Money Management

November 1, 2016/in Newsletters/by VREG Editors

“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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Last Chance To Oppose Higher Water Rates

May 31, 2015/in Newsletters/by billfrank

Ventura Water aims to increase water rates unless citizens protest.

Act Now To Prevent Higher Water Rates!

Monday June 8th is your last day to act if you want to oppose an increase in water rates. Your protest must be filed with the City Clerk before 6 PM.

On this Monday, Ventura City Council will decide on whether to adopt the Ventura Water report , written by the Ventura Water General Manger, Shana Epstein. Click the Report Button to read the full report.

Water Rate Incease Report from Ventura Water

Click on the Report button to access the Water Rates Increase Report

She proposes to raise your water rates. If you use more that 6 HCF in any billing period you will pay more. If you use over 21 HCF, which is the average residential use in Ventura then will pay a lot more. This new rate is intended to coerce compliance.

Today we have enough water to meet the needs of our community. Nobody questions the need for all citizens to make an effort to conserve now against potential future water shortages but most however question the need for our City to adopt coercive and punitive measures.

This community will come together to meet this challenge, but never under the lash of government. If you wish to protest click on the protest icon.

Click on the Protest Button to access the Water Rates Increase Form.

Editors:

R. Alviani, K. Corse, T. Cook
J. Tingstrom, R. McCord, S. Doll

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