An Update: The Notices of Intention to Circulate Recall Petitions in the Proposed San Bernardino Recall 2013

I’m not sure why this was not posted at the time, but for historical interest, here is a post that supposed to appear in 2013.

By Michael Reiter, Attorney at Law

San Bernardino Residents For Responsible Government, the political action committee behind the proposed recall,  contacted me today regarding the last post on the Notices of Intention to Circulate Recall Petitions in the Proposed San Bernardino Recall for November 5, 2013.

The Petitions were drafted by Michael L. Allan, a Pasadena attorney.  The decision to use process servers was also his decision.  The rest of the petitions will be released to the public on Monday, as listed on their website.  They say they have not filed the petitions against Wendy McCammack and Rikke Van Johnson yet. San Bernardino Residents For Responsible Government says they are giving the office holders 14 days to respond to the petitions.

Per the Charter of the City of San Bernardino, Section 122:

Within seven (7) days after the filing of the notice of

intention, the officer sought to be recalled may file with the City Clerk an answer in

not more than 500 words to the statement of the proponents and if an answer is

filed, shall serve a copy thereof, personally or by certified mail, on one of the

proponents named in the notice of intention. At the time the proponents publish

the notice and statement referred to above, the officer sought to be recalled may

have the answer published at his/her expense. If the answer is to be published the

officer shall file with the City Clerk at the time the answer is filed a statement

declaring his/her intent that the answer be published. The statement and answer

are intended solely for the information of the voters and no insufficiency in the form

or substance thereof shall affect the validity of the election or proceedings. The

notice and statement as referred to above, and the answer, if it is to be published

shall be published at least once in a newspaper of general circulation, as described

in Sections 6000 to 6066 of the Government Code, adjudicated as such.

Seven (7) days after the publication of the notice, statement and answer, if it

is to be published, the recall petition may be circulated and signed.

The information you obtain at this blog is not, nor is it intended to be, legal advice. No attorney-client relationship is established by reading or commenting on this blog. You should consult an attorney for advice regarding your individual situation.

Copyright 2013 Michael Reiter, Attorney at Law

Michael Reiter is a partner with Cole Huber LLP

2855 E. Guasti Road, Suite 402

Ontario, CA 91761

When Does the Brown Act Allow A Council or Board To Meet Outside the Jurisdiction?

By Michael Reiter, Attorney at Law

The Ralph M. Brown Act codified at Government Code section 54950 et seq., California’s open meeting law gives the public the opportunity to know what their elected officials are doing, and requires their meetings to be open and public.

When does the Brown Act allow a Council or Board to meet outside their jurisdiction?

Generally, the Brown Act does not allow legislative bodies to meet outside their jurisdiction “Regular and special meetings of the legislative body shall be held within the boundaries of the territory over which the local agency exercises jurisdiction . . .”  Government Code section 54954(b).

However, there are the exceptions listed in the same section:

(1) Comply with state or federal law or court order, or attend a judicial or administrative proceeding to which the local agency is a party.

(2) Inspect real or personal property which cannot be conveniently brought within the boundaries of the territory over which the local agency exercises jurisdiction provided that the topic of the meeting is limited to items directly related to the real or personal property.

(3) Participate in meetings or discussions of multiagency significance that are outside the boundaries of a local agency’s jurisdiction. However, any meeting or discussion held pursuant to this subdivision shall take place within the jurisdiction of one of the participating local agencies and be noticed by all participating agencies as provided for in this chapter.

(4) Meet in the closest meeting facility if the local agency has no meeting facility within the boundaries of the territory over which the local agency exercises jurisdiction, or at the principal office of the local agency if that office is located outside the territory over which the agency exercises jurisdiction.

(5) Meet outside their immediate jurisdiction with elected or appointed officials of the United States or the State of California when a local meeting would be impractical, solely to discuss a legislative or regulatory issue affecting the local agency and over which the federal or state officials have jurisdiction.

(6) Meet outside their immediate jurisdiction if the meeting takes place in or nearby a facility owned by the agency, provided that the topic of the meeting is limited to items directly related to the facility.

(7) Visit the office of the local agency’s legal counsel for a closed session on pending litigation held pursuant to Section 54956.9, when to do so would reduce legal fees or costs.

There are also special rules for school boards:

(c) Meetings of the governing board of a school district shall be held within the district, except under the circumstances enumerated in subdivision (b), or to do any of the following:

(1) Attend a conference on nonadversarial collective bargaining techniques.

(2) Interview members of the public residing in another district with reference to the trustees’ potential employment of an applicant for the position of the superintendent of the district.

(3) Interview a potential employee from another district.  Government Code section 54954(c).

Also, Joint Powers Authority have special rules.

(d) Meetings of a joint powers authority shall occur within the territory of at least one of its member agencies, or as provided in subdivision (b). However, a joint powers authority which has members throughout the state may meet at any facility in the state which complies with the requirements of Section 54961. Government Code section 54954(d).

Practically, it can be very difficult for a legislative body to meet outside its jurisdiction. For one, politically, it looks like the agency is hiding something.

The information you obtain at this blog is not, nor is it intended to be, legal advice. No attorney-client relationship is established by reading or commenting on this blog. You should consult an attorney for advice regarding your individual situation.

Copyright 2013 Michael Reiter, Attorney at Law

Michael Reiter is a partner with Cole Huber LLP

2855 E. Guasti Road, Suite 402

Ontario, CA 91761

The Notices of Intention to Circulate Recall Petitions in the Proposed San Bernardino Recall 2013

By Michael Reiter, Attorney at Law

Below are four of the Notices of Intention to Circulate A Recall Petition, or at least unexecuted and undated versions.  The originals were in PDF format which were printed with the home addresses of the petition signers were crudely redacted using a Sharpie Magnum Permanent Marker, and rescanned into PDF.

City Attorney James F. Penman

View this document on Scribd

The reasons for the recall are listed by Scott Beard, the proponent, Wendy McCammack’s appointment to the City of San Bernardino Planning Commission, Rialto-based developer, and Seventh Ward resident:

The grounds for the recall are as follows: Mr. Penman is the duly elected City Attorney, and as such is accountable for the actions of that office and of his subordinates. Mr. Penman has been derelict in his official duties by failing to properly enforce the law regarding personal use of public property by members of the Common Council. In addition, Mr. Penman’s office’s selective enforcement of City codes and his failure to timely update and codify city codes, ordinances, and other matters lawfully passed by the City Council has created confusion and insecurity in the City’s residents and businesses regarding accuracy of the City’s published law.

Council Member Virginia Marquez, First Ward

View this document on Scribd

The reasons listed for the recall in the Notice of Intention are listed by the proponent, Christian Fernando Flores (who was reported in the Sun as a student at California State University, San Bernardino):

The grounds for the recall are as follows: Council Member Marquez was elected to office
in November of 2009 and has since that time has failed to protect the health, safety, and welfare
of the residents of the City of San Bernardino and demonstrated dereliction to the duties of her
elected office by making fiscally irresponsible votes and by supporting fiscally irresponsible
program leading to the misuse of the City’s General Fund. Council Member Marquez’s actions
and failures to act, have propelled the City of San Bernardino into financial crisis, and have led
to the filing for protection under Chapter 9 of the federal bankruptcy laws by the City. The City
of San Bernardino is currently the object of nation-wide ridicule as a result of the mishandling of
the bankruptcy and its proceedings.

Further, Council Member Marquez has violated the public trust by repeatedly failing to
reach consensus with the other members of the San Bernardino City Council on basic issues of
City finances, and ignored advice of the City’s Executive Staff for the previous two years
regarding financial concerns. Her actions have led to massive reductions in City services and
police and fire personnel, causing an increase in crime rates, businesses leaving the City, and
contributed to overall blight within the City.

Council Member Fred Shorret:

View this document on Scribd

The proponent of the recall against Fred Shorett, 4th Ward Council Member, Stephen T. Dawson, who is the chairperson of the United  Transportation Union, states:

The grounds for the recall are as follows: Council Member Shorett was elected to office in March of 2009 and has since that time has failed to protect the health, safety, and welfare of the residents of the City of San Bernardino and demonstrated dereliction to the duties of his elected office by making fiscally irresponsible votes and by supporting fiscally irresponsible program leading to the misuse of the City’s General Fund. Council Member Shorett’s actions and failures to act have propelled the City of San Bernardino into financial crisis, and have led to the filing for protection under Chapter 9 of the federal bankruptcy laws by the City.
Further, Council Member Shorett has violated the public trust by repeatedly failing to reach consensus with the other members of the San Bernardino City Council on basic issues of City finances which would allow the City of San Bernardino to emerge from the bankruptcy proceedings and begin revival of its economy. The City of San Bernardino is currently the object of nation-wide ridicule as a result of the mishandling of the bankruptcy and its proceedings.

Mayor Patrick J. Morris:

View this document on Scribd

Scott Beard, also the proponent of the recall against City Attorney James F. Penman, gives these reasons:

The grounds for the recall are as follows: Mayor Morris was elected to office in February of 2006 and has since that time has failed to protect the health, safety, and welfare of the residents of the City of San Bernardino and demonstrated dereliction to the duties of his elected office by failing to veto fiscally irresponsible votes and fiscally irresponsible programs leading to the misuse of the City’s General Fund. Mayor Morris’s [sic] failures to act have propelled the City of San Bernardino into financial crisis, and have led to the filing for protection under Chapter 9 of the federal bankruptcy laws by the City.
Further, Mayor Morris has violated the public trust by repeatedly failing to facilitate consensus with the members of the San Bernardino City Council on basic issues of City finances, and ignored advice of the City’s Executive Staff for the previous two years regarding financial concerns. His action and inaction have led to massive reductions in City services and police and fire personnel, causing an increase in crime rates, businesses leaving the City, and contributed to overall blight within the City.

The original PDFs, which are not the embedded redacted versions you see here, have some metadata that explains a little about the origin of the PDFs that were obtained. The Notice of Intent  involving Mayor Patrick J. Morris was created on April 28, 2013 at 10:04:50 PM, with the application being Microsoft Word 2010, with “Michael” listed as the author.  The Notice of Intent to Virginia Marquez  was titled C:\My Files000 — SanBernardinoMatter\NOI.2013.1stWard(Marquez).wpd, also authored by “Michael.”  It was created on April 28, 2013 at 2:19:17 PM.  The original file was on WordPerfect (as you can see by the extension), but the PDF was created by Acrobat Distiller 9.0.0. The Fred Shorret document was created by Microsoft Word 2010, also authored by “Michael.”  It was created on April 28, 2013 at 3:40:59.  The City Attorney James F. Penman document was also on Word 2010, on April 28, 2013, at 10:00:13.

What does this metadata mean?  That whoever created the PDF (but not necessarily the author of the petitions), was named Michael, and that at least one of the documents was created on WordPerfect.  WordPerfect is, or was, largely used by attorneys. No conclusions can be drawn from this metadata.  The Michael may refer to Michael McKinney, the Orange County-based publicist for the recall proponents.  It could be someone else entirely.

Unfortunately, the petitions to recall Second Ward Council Member Robert Jenkins, Third Ward Council Member John Valdivia, Fifth Ward Council Member Chas Kelley, Sixth Ward Council Member and Mayoral Candidate Rikke Van Johnson and Seventh Ward Council Member Wendy McCammack were unavailable.

The information you obtain at this blog is not, nor is it intended to be, legal advice. No attorney-client relationship is established by reading or commenting on this blog. You should consult an attorney for advice regarding your individual situation.

Copyright 2013 Michael Reiter, Attorney at Law

Michael Reiter is a partner with Cole Huber LLP

2855 E. Guasti Road, Suite 402

Ontario, CA 91761

The Recall Process Under the Charter of the City of San Bernardino

By Michael Reiter, Attorney at Law

The current Charter of the City of San Bernardino, Article VII is entitled “Initiative, Referendum and Recall.”  Section 122 of the Charter reads (with annotations):

Section 122. The Recall. Proceedings may be commenced for recall of the

holder of any elective office of this City and the election of a successor of the

holder sought to be removed by the service, filing and publication of a notice of

intention to circulate a recall petition. Such proceedings may not be commenced

against the holder of an office unless, at the time of commencement, the holder

has held office for at least ninety days and no recall petition has been filed against

such holder within the preceding six months. A petition demanding the recall of the

officer sought to be recalled shall be submitted to the City Clerk. The petition shall

be signed by not less than fifteen percent (15%) of the voters of the City, or in the

case of a City Council Member elected by ward twenty-five percent (25%) of the

voters of that ward, according to the County Clerk’s last official report of

registration to the Secretary of State. No signature may be affixed to the petition

until the proponents have served, filed and published a notice of intention to

circulate a recall petition, containing the name of the officer sought to be recalled

and the title of his/her office, a statement in not more than 500 words of the

grounds on which the recall is sought, and the name and address of at least one,

but not more than five proponents. The notice of intention shall be served,

personally or by certified mail, on the officer sought to be recalled, and a copy

thereof with a certificate of the time and manner of service shall be filed with the

clerk of the legislative body. Within seven (7) days after the filing of the notice of

intention, the officer sought to be recalled may file with the City Clerk an answer in

not more than 500 words to the statement of the proponents and if an answer is

filed, shall serve a copy thereof, personally or by certified mail, on one of the

proponents named in the notice of intention. At the time the proponents publish

the notice and statement referred to above, the officer sought to be recalled may

have the answer published at his/her expense. If the answer is to be published the

officer shall file with the City Clerk at the time the answer is filed a statement

declaring his/her intent that the answer be published. The statement and answer

are intended solely for the information of the voters and no insufficiency in the form

or substance thereof shall affect the validity of the election or proceedings. The

notice and statement as referred to above, and the answer, if it is to be published

shall be published at least once in a newspaper of general circulation, as described

in Sections 6000 to 6066 of the Government Code, adjudicated as such.

Seven (7) days after the publication of the notice, statement and answer, if it

is to be published, the recall petition may be circulated and signed. The petition

shall bear a copy of the notice of intention, statement and answer, if any. If the

officer has not answered, the petition shall so state. Signatures shall be secured

and the petition filed within ninety (90) days from the filing of the notice of intention.

If such petition is not filed within the time permitted by this section, the same shall

be void for all purposes. The signatures to the petition need not all be appended to

one paper; but each signer shall add to his/her signature his/her place of

residence, giving the street and such other identification as may be required by the

registration law. One of the signers of each such paper shall make oath before an

officer qualified to administer oaths, that the statements therein made are true, and

that each signature to the paper appended, is the genuine signature of the person

whose name purports to be thereunto subscribed. Within thirty (30) days after the

date of filing such petition the City Clerk shall examine and ascertain whether or

not said petition is signed by the requisite number of qualified electors and, if

necessary, the Council shall allow extra help for that purpose, and the City Clerk

shall attach to said petition a certificate showing the result of said examination. If,

by the City Clerk’s certificate, the number of signatures on the petition is shown to

be insufficient, it shall be returned forthwith by the Clerk to the filer(s) thereof who

shall have an additional thirty (30) days from the date the petition is returned to

them by the Clerk to obtain the required number of signatures. The City Clerk shall,

within thirty (30) days after such additional thirty (30) day period to obtain

additional signatures, make like examination of said petition, and, if his/her

certificate shall show the same to be insufficient it shall be void for all purposes. If

the petition shall be found to be sufficient, the City Clerk shall submit the same to

the Council without delay and the Council shall thereupon order and fix a date for

holding said election, not less than fifty (50) days, nor more than seventy (70) days

from the date of the City Clerk’s certificate to the Council that a sufficient petition is

filed.

The ballots used when voting upon said proposed recall shall contain the

words “shall (title of office and the name of the person against whom the recall is

filed) be recalled?” and the words “yes” and “no.”

The Council and the City Clerk shall make, or cause to be made, publication

of notice and all arrangements for conducting, returning and declaring the results

of such election in the same manner as other City elections.

Qualified candidates to succeed the person against whom the recall is filed,

shall be listed on the ballot, except that the incumbent shall not be eligible to

succeed himself/herself in any such recall election.

In any such removal election, if a majority of the votes cast is for “yes” on

the question of whether or not the incumbent should be recalled, the candidate

receiving the highest number of votes shall be declared elected. The incumbent

shall thereupon be deemed removed from the office upon qualification of his/her

successor. In case the party who received the highest number of votes should fail

to qualify within ten (10) days after receiving notification of election, the office shall

be deemed vacant. The successor of any officer so removed shall hold office

during the unexpired term of his/her predecessor. (Effective March 16, 2005)

Any elected official in the City of San Bernardino can be recalled using this procedure.  The limitations are stated above in which the office holder must be in office at least 90 days, and no recall petition has been filed against the office holder in the preceding six months.  The elected officials of the City of San Bernardino are the Mayor, the seven members of the Common Council, the City Clerk, the City Treasurer, and the City Attorney.

The Municipal Code further gives the procedure for recall elections as follows:

2.56.160 Recall elections.

A recall election to remove an elected officer pursuant to Charter Section

122 shall be ordered, held and conducted and the result thereof made known and

declared in the same manner provided in this chapter for municipal primary and

general elections except as follows:

A. Time for Obtaining Signatures. Nomination papers shall be issued and

verification deputies appointed to obtain signatures to nomination papers of

any candidate at any time not earlier than the thirty-fifth day nor later than

five p.m. on the twenty-ninth day before the recall election.

B. Date filed with City Clerk. All nomination papers shall be filed with the City

Clerk not later than five p.m. on the twenty-ninth day before the recall

election.

C. Not earlier than the thirty-fifth day, nor later than the tenth day before a recall

election, the City Clerk shall publish a notice of the election at least once in

one or more newspapers published and circulated in the City. The notice

shall be headed “Notice of Election,” and shall contain a statement of:

1. The time of the election;

2. The offices to be filled, specifying full term or short term, as the case

may be;

3. The hours the polls will be open.

D. Absentee Ballots. Not earlier than the twenty-sixth day, nor later than the

seventh day before a recall election, any voter entitled to vote by absent

voter ballot as provided in Elections Code Section 14620 [See now §3003],

may file with the City Clerk either in person or by mail, his written application

for an absent voter’s ballot. The application shall be signed by the applicant,

shall show his place of residence, and shall make clear to the City Clerk the

applicant’s right to a ballot.

Applications received by the City Clerk hereunder on or after the

fortieth day but prior to the twenty-sixth day before election shall not be

returned to the sender, but shall be held by the City Clerk and processed by

him following the twenty-sixth day prior to election in the same manner as

if received at that time.

(Ord. 3601 (part), 1976; Ord. 2048 §10, 1954.

The information you obtain at this blog is not, nor is it intended to be, legal advice. No attorney-client relationship is established by reading or commenting on this blog. You should consult an attorney for advice regarding your individual situation.

Copyright 2013 Michael Reiter, Attorney at Law

Michael Reiter is a partner with Cole Huber LLP

2855 E. Guasti Road, Suite 402

Ontario, CA 91761

San Bernardino’s Fiscal Emergency Operation Plan Memo Dated July 23, 2012

By Michael Reiter, Attorney at Law

The City of San Bernardino recently released this memorandum.  The authors of the memorandum, dated July 23, 2012, are Interim City Manager Andrea Travis-Miller and Director of Finance Jason Simpson.  The memorandum is addressed to the Mayor and Common Council.

The summary on the first page says:

On July 18, 2012, the City Council directed the filing of a petition under Chapter 9 of the
United States Bankruptcy Code following the declaration of a fiscal emergency in the
City of San Bernardino. These actions were in response to findings that the financial
state of the City is such that the health, safety, and well-being of the residents of the
City will be jeopardized absent Chapter 9 bankruptcy protection.
This report proposes a Fiscal Emergency Operating Plan, which will enable the City to
operate while it is under Chapter 9 protection and includes recommendations for various
actions related to the City’s Preliminary FY 2012-13 General Fund Budget, which
combined will represent the City’s Financial Plan for FY 2012-13. This Fiscal
Emergency Operating Plan is necessary for the City to operate until the Pendency Plan
is developed under Chapter 9 and is presented for Council consideration as part of this
staff report.

This report covers the funding and operations of the City’s General Fund and does not
include any special purpose or restricted funds with the exception of capital projects.
The budgets for those funds will be provided to the Council by the end of August 2012.

Some other highlights:

From Page 2:

The Preliminary FY 2012-13 Budget has an operating shortfall of $45.8 million and does
not provide for any reserves nor does it address the estimated $18 million negative cash
balance in the General Fund. At Fiscal Year end, the negative cash is expected to grow
to $59.2 million in the absence of drastic measures to reduce the City’s obligations
through restructuring. The City’s financial situation is dire with no revenue or other
funding sources available to balance the City’s budget and address prior years’ deficits.

 

In bold, from Page 2:

The City must create a plan to emerge from this
fiscal crisis that is truly sustainable, with reliable ongoing revenues covering the
full operational costs, both direct and indirect, and sufficient reserves to weather
economic uncertainty, revenue fluctuations, and emergency spending
requirements.

From Page 3:

City staff will be reducing costs through the realignment of the organization and will
present a balanced budget for consideration by the Council during the coming weeks.
However, the actions to date have been insufficient and without further reduction of
costs through restructuring of obligations and severe service level reductions, the City
will be unable to adopt a balanced budget as required by the City’s Charter and the
State Constitution.

General Fund Negative Cash Balance of $18 million dollars as of June 30, 2012:

Overall, the balance of the City’s total cash and investment portfolio, as reported in the
most recent financial statements for the year ended June 30, 2012, (unaudited) was $27
million. Of this balance, 100% was held in restricted funds (assessment districts,
bonds, trust funds, special revenues, and tax measures), and the General Fund has a
negative cash balance of $18 million. While the City continues to hold investment
balances, the balances are from restricted sources not available for general operations.

City’s Unfunded liabilities of $296 million:

In addition to the City’s bonded indebtedness and lease obligations, unfunded liabilities
total approximately $296 million. Unfunded liabilities include unfunded pension
obligations of $195 million, retiree medical of $61 million, compensated absences of $20
million, general liability of $10 million, and worker’s compensation of $10 million.

Actions for the next three months:

The
remainder of the schedule details the actions proposed to be taken to meet the cash
flow needs of the City during this interim time frame. Measures proposed include:
1. Deferring debt and lease payments due in the First Quarter in the amount of
$3,556,972 until some later date. Debt and lease payments include payments for
Pension Bonds and Infrastructure Bank Loans.
2. Deferring the annual debt payment on the New World system in the amount of
$645,000.
3. Maintaining vacancies resulting in a savings of $531,000 per month in salaries,
$158,031 per month in PERS payments, $53,919 per month in health insurance
costs, and $9,200 per month in other benefit payments.
4. Continuing the employment concessions agreed to by the General Unit, Middle
Management Unit, and Management/Confidential Unit in the amount of
$2,994,764. The agreements with the Police Safety, Police Management, and
Fire Management have not expired, and there currently is no contract with the
Fire Union.
5. Deferring the ARC contribution for retiree health due in the First Quarter in the
amount of $2,219,332.
6. Deferring capital improvement projects for the foreseeable future.
Unfortunately, these measures are intended to enable the City to meet its obligations
over a 3-month period and will not result in a sustainable, balanced budget. City staff is
preparing a Pendency Plan which will serve as the budget until the bankruptcy court
approves a long-term Plan of Adjustment. Over the next 30 days, staff will work to
prepare a Pendency Plan that focuses the City’s limited resources on sustaining basic
service delivery, addressing contractual obligations, and establishing a fair,
compensation structure so the City can retain quality employees to provide essential
public services. The Pendency Plan will balance anticipated revenues against
expenditures through a restructuring of the organization and service delivery
necessary to reduce expenditures by roughly 30% of the Preliminary Budget.

The information you obtain at this blog is not, nor is it intended to be, legal advice. No attorney-client relationship is established by reading or commenting on this blog. You should consult an attorney for advice regarding your individual situation.

Copyright 2012 Michael Reiter, Attorney at Law

Michael Reiter, Attorney at Law

A: 300 E. State St., Suite 517

Redlands, CA 92373-5235

T: (909) 296-6708

E: michael@michaelreiterlaw.com

W: http://michaelreiterlaw.com

The Wrong Answer to Post-Bankruptcy San Bernardino

By Michael Reiter, Attorney at Law

There is a lot of misinformation out there about the City of San Bernardino regarding proposed reform efforts to the system of government for the City of San Bernardino.

One was a suggestion to transform the City of San Bernardino from a Charter city to a general law city.  There are generally benefits to being a charter city in that you have a modicum more home rule then a general law city.  However, if people think that converting to a general law city will get rid of the ward system they are mistaken for two reasons.  First, general law cities can have elections by district.  Redlands (a general law city), briefly, had elections by district, and Colton, a general law city, still has districts.

Second, when City Attorney Penman suggested a charter measure to do away with the ward system, he was met with challenges from rights groups.  I believe that effort was before the California Voting Rights Act was passed, which makes it easier to prove dilution in an at-large election.

If the City of San Bernardino’s structure (the composite Strong Mayor, Strong City Manager, Strong Council Form of Government) is the problem, removing the Charter gives the residents less choice in creating a government. If this is just an end-run to trying to get rid of the elected City Attorney, the voters have already shown with the resounding defeats of Measures C and M that they do not want that.  Going to a general law council-manager form of government would not have prevented this kind of insolvency, because if there were illegal activities by staff, they council still would not detect it, and if the council refused to listen to staff regarding the need for cuts, it wouldn’t matter if they were elected according to general law or a charter.

The information you obtain at this blog is not, nor is it intended to be, legal advice. No attorney-client relationship is established by reading or commenting on this blog. You should consult an attorney for advice regarding your individual situation.

Copyright 2012 Michael Reiter, Attorney at Law

Michael Reiter, Attorney at Law

A: 300 E. State St., Suite 517

Redlands, CA 92373-5235

T: (909) 296-6708

E: michael@michaelreiterlaw.com

W: http://michaelreiterlaw.com

City of San Bernardino Bankruptcy: What Did They Know and When Did They Know It?

By Michael Reiter, Attorney at Law

We do not yet know the full story about what went wrong as far as misstatements or miscalculations (incompetence) or concealment (fraud) of numbers in the City of San Bernardino that led to the situation wherein the City of San Bernardino had or has, at some point, less than $150,000 in its bank account.

First, from primary sources, City staff (on July 9, 2012) stated that as of April 3, 2012, City staff was still misreporting the fund balance.

The Finance Department of the City of San Bernardino created a report, dated July 9, 2012 , Page 7:

Starting General Fund balance has been erroneously stated for the past 2 fiscal
years

Fiscal Year                                July 1st Audited Fund Balance              Staff Reported Fund Balance
FY 2009-2010                           $2,708,319                                                     $2,557,900
FY 2010-11                               $410,293                                                             $1,770,400
FY 2011 -12                              $(1 ,181,603)                                                       $2,044,100*
*Mid-Year report presented April 3, 2012.

Going back to the April 3, 2012 meeting in the City of San Bernardino’s online archives, I was unable to find any minutes after January 23, 2012.  Here is the April 3, 2012 Agenda for the Joint Adjourned Regular Meeting of the Mayor and Common Council.

In a staff report by Rebecca Garcia, through City Manager Charles McNeely, for Item 3A, the purpose of the workshop was to “Discuss proposed revenue enhancements and cost containment strategies and provide direction
as to measures to be researched and presented for further Council review, analysis and consideration at a future meeting.”  This staff report includes the chart that gives the $2,044,100 opening fund balance for FY 2011-2012, but also has a different number (then in the July 9, 2012 report) for 2010-2011: $2,998,000.

In the staff report by Jason Simpson, Director of Finance, for Item 1A,  on the April 3, 2012 agenda he warns on Page 10:

A major concern that needs to be noted is that the City’ s General Fund continues to be in an
increasing weakening condition and immediate changes need to be made to reverse this financial
condition, build the General Fund Reserve, and stabilize this fund. If these efforts are not made,
insolvency or bankruptcy may result. The Council has an opportunity to resolve the issue and
change the City’ s course. If not, control may be taken out of the Council’ s hands. [Emphasis Added]

However, on packet page 12, Jason Simpson’s report gives the opening fund balance for 2012 as $2,044,100.

Imran Ghori wrote an article published April 3, 2012 at 9:15 p.m., “San Bernardino: City Faces $3.8 millon shortfall[;] The decline in sales and property taxes are hurting the city, a mid-year budget report shows.”  The story starts:

San Bernardino could be headed for insolvency or bankruptcy if it’s not able to get its general fund budget under control, according to a mid-year budget report presented to the mayor and City Council on Tuesday. [Emphasis Added].

The first time the fund balance issue was in the traditional press is in The Sun, “San Bernardino facing bankruptcy if deep cuts aren’t made” by Ryan Hagen, posted online on July 7, 2012 at 8:13:10 p.m. PDT.  In the article, ”

“[Council member Wendy] McCammack also said she was troubled by the budget report’s note that the general fund’s starting balance has been erroneously stated for the past two fiscal years.

That reached a peak several months ago, when then-City Manager Charles McNeely said the fund had a balance of $2 million but the audited fund balance on July 1 turned out to be in the red by $1.2 million.

It appears that the first time that City Attorney James F. Penman mentioned, in public, that 13 out of 16 budgets may have been falsified (and I am paraphrasing from the press account) was at the July 9, 2012 Council Meeting.

As far as what did people know and when did they know it, the rest is from press articles. This article, from public radio station KPCC, “San Bernardino authorities confirm probe into city finances” by Steven Cuevas with Nick Roman, posted 6:00 a.m. on Friday, July 13, 2012 says:

Before the San Bernardino City Council’s bankruptcy vote Tuesday, City Attorney Jim Penman announced that unidentified city administrators had cooked the books to make it appear the city had more cash in reserve than it actually had.

The alleged deceit was uncovered during an audit by new finance staff working under interim city manager Laura Travis-Miller, who took over four months ago.

. . .

Sixth District [sic] councilman Rikke van [sic] Johnson said Penman gave a short briefing to council members prior to the council’s emergency budget meeting Tuesday. But he said it was short on details.

“It wasn’t nothing as far as, ‘OK, this year that happened’ or ‘that year, this happened’ or anything like that,” said Van [sic] Johnson.

“There wasn’t no specifics, other than he said that it’s under investigation. And unfortunately, what was said in that so-called briefing should have stayed in that so-called briefing and went to the right parties. Because we’re dealing with an even bigger issue then that that as far as bankruptcy. All the sudden your issue becomes the lead issue when it shouldn’t be.”

Presumably, this information was given in closed session.
This blog piece comes from an interview yesterday with Interim City Manager Andrea Travis-Miller:  The piece appears in the Los Angeles Times Blog LA NOW, posted July 13, 2012 at 7:25, by Abby Sewell and Phil Willon, labled “Criminal Probe

Miller said the city’s financial problems had been evident for many years, but the full scope was not evident until more recently, when she and the new finance director took a hard look at the books.

She said there had been inaccurate financial reporting in the city for many years, which delayed the process of understanding the full financial picture, but she said she had not seen evidence of deliberate wrongdoing.

“I have not found that there’s anything more than negligence, maybe sloppiness,” she said, adding that staffers at the time were stretched thin because of cuts.

Andrea Travis-Miller became acting City Manager on May 8, 2012, but was assistant before.  Jason Simpson began work on March 28, 2012.  So, if the quotes from Andrea Travis-Miller are correct, the problem was found sometime between March 28, 2012 and when the July 9, 2012 report was posted.

Bankruptcy was first mentioned in the April 3, 2012 staff report.  The misstating of the fund balance was found some time after March 28, 2012, but not reported on April 3, 2012 by Jason Simpson in his staff report.  The first public document showing the wrong data for two years was in a report for the July 9, 2012 meeting.  Time will tell  what they knew, and when they knew it.

The information you obtain at this blog is not, nor is it intended to be, legal advice. No attorney-client relationship is established by reading or commenting on this blog. You should consult an attorney for advice regarding your individual situation.

Copyright 2012 Michael Reiter, Attorney at Law

Michael Reiter, Attorney at Law

A: 300 E. State St., Suite 517

Redlands, CA 92373-5235

T: (909) 296-6708

E: michael@michaelreiterlaw.com

W: http://michaelreiterlaw.com

What Charter Reform Measures Might Have Helped the City of San Bernardino Avoid Bankruptcy? An Elected Auditor and an Elected City Prosecutor.

By Michael Reiter, Attorney at Law

We do not yet know the full story about what went wrong as far as misstatements or miscalculations (incompetence) or concealment (fraud) of numbers in the City of San Bernardino that led to the situation wherein the City of San Bernardino had or has, at some point, less than $150,000 in its bank account.  Some political campaigns in San Bernardino County have more than that in their accounts right now.

The Finance Department of the City of San Bernardino created a report, dated July 9, 2012, that blames, on page 1 in the Executive Summary:

. . . the City is still facing insolvency due to a variety of issues including accounting errors, deficit spending, lack of revenue growth, and increases in pension and debt costs.

Something went wrong with the way government is supposed to work, with checks and balances regarding these unspecified accounting errors.

The Charter of the City of San Bernardino has a variety of checks and balances, and there are also external checks and balances in the municipal system of government from California law and to some extent in Federal law.

Within today’s Charter, there are eleven elected officials in the City of San Bernardino: Council members from seven geographical wards, an elected Mayor, an elected City Clerk, an elected City Treasurer, and an elected City Attorney. However, the structure if the City lacks an appropriate check and balance to find either a well-concealed fraud, or even a miscalculation of numbers that appeared on financial reports but did not reflect actual amounts.

Here is the problem, from the same July 9, 2012 report, Page 7:

Starting General Fund balance has been erroneously stated for the past 2 fiscal
years

Fiscal Year                                July 1st Audited Fund Balance              Staff Reported Fund Balance
FY 2009-2010                           $2,708,319                                                     $2,557,9oo
FY 2010-11                               $410,293                                                             $1,770,400
FY 2011 -12                              $(1 ,181,603)                                                       $2,044,100*
*Mid-Year report presented April 3, 2012.

Shouldn’t an audit have found the problem? Maybe, but if there was actual fraud, it can be difficult to find because some skilled in financial deceit can falsify document to make the numbers match up.  Even if a skilled City Council member with a background in accounting exists, they probably won’t find the discrepancy.   However, from these numbers, it seems that an audit did catch these numbers, though it doesn’t say when and who it was reported to.

What about the City Treasurer?    The Treasurer’s Duties are:

The Treasurer shall receive and pay out all moneys belonging to the City, and shall keep an account of all receipts and expenditures, under such rules and regulations as may be prescribed. He/She shall make a
monthly statement to the Mayor and Common Council of the receipts and expenditures of the preceding month, and shall perform all duties required of him/her by law and the Mayor and the Common Council. He/She shall not pay out any monies belonging to the City except on claims presented, allowed and submitted in the manner provided by this Charter.   Charter section 70.

However, if numbers are falsified by members of the Finance Department (which the Charter gives day-to-day supervision to the City Manager), the City Treasurer’s Office may not catch the problem.

What then, is the answer?  Part 1, Create a City Auditor, like the City of Los Angeles Controller, that is elected and has the power to audit, investigate, and request prosecution or discipline according to the needs of the situation.

The Controller in Los Angeles, per the Los Angeles City Charter, has these duties:

Sec. 260.  Auditor and General Accountant.

The Controller shall be the auditor and general accountant of the City and shall exercise a general supervision over the accounts of all offices, departments, boards and employees of the City charged in any manner with the receipt, collection or disbursement of the money of the City.  The Controller shall be elected as provided in Section 202.

Sec. 261.  Powers and Duties.

The Controller shall:

(a)     appoint assistants, deputies, clerks and other persons as the Council shall prescribe by ordinance;

(b)     prescribe the method of keeping all accounts of the offices, departments, boards or employees of the City in accordance with generally accepted accounting principles, except that any change of the system of accounting shall first be authorized by the Council;

(c)     regularly review the accounting practices of offices and departments and upon finding serious failings in accounting practices, be empowered to take charge of the accounting function, and thereafter assist the office or department in implementing appropriate accounting standards and practices;

(d)     maintain a complete set of accounts which shall be deemed the official books and accounts of the City, which shall show at all times the financial condition of the City, the state of each fund, including funds of departments responsible for managing their own funds, the source from which all money was derived and for what purposes all money has been expended;

(e)     in compliance with generally accepted government auditing standards, audit all departments and offices of the City, including proprietary departments, where any City funds are either received or expended; be entitled to obtain access to all department records and personnel in order to carry out this function; establish an auditing cycle to ensure that the performance, programs and activities of every department are audited on a regular basis, and promptly provide completed audit reports to the Mayor, Council, and City Attorney and make those reports available to the public;

(f)     maintain a reconciliation between the accounts in all offices and departments with the accounts in the Controller’s office, and from time to time, verify the condition of all City funds in the City Treasury, and report to the Mayor and Council thereon;

(g)     allocate among the several respective funds all public money at any time in the City Treasury not otherwise specifically allocated and appropriated by law or ordinance, and promptly notify the Treasurer of the allocation or appropriation;

(h)     report to the Mayor and Council, at times established by law, the condition of each fund, and make other reports as the Mayor or Council requests;

(i)     maintain each fund on a parity with its obligations at all times by transferring from the Reserve Fund as a loan to any fund which may become depleted through tardy receipt of revenues, and upon receipt of revenues sufficient to make an allocation as will restore each fund to parity, retransfer the amount of the loan to the Reserve Fund;

(j)     monitor the level of debt incurred by the City and report periodically to the Mayor and Council on City debt; and

(k)     conduct performance audits of all departments and may conduct performance audits of City programs, including suggesting plans for the improvement and management of the revenues and expenditures of the City.  Nothing in this subsection shall preclude the Mayor or Council from conducting management studies or other review of departmental operations.

Sec. 262.  Approval of Demands on Treasury.

(a)     The Controller shall, prior to approval of any demand, make inspection as to the quality, quantity and condition of services, labor, materials, supplies or equipment received by any office or department of the City, and approve before payment all demands drawn upon the Treasury if the Controller has adequate evidence that:

(1)     the demand has been approved by every board, officer or employee whose approval is required by the Charter or ordinance;

(2)     the goods or services have been provided, except that advance payment may be authorized by ordinance for specified categories of goods and services;

(3)     the payment is lawful;

(4)     the appropriation for the goods or services has been made;

(5)     the prices charged are reasonable;

(6)     the quantity, quality and prices correspond with the original specifications, orders or contracts; and

(7)     any additional criteria established by ordinance have been satisfied.

(b)     Notwithstanding subsection (a), the Controller shall delegate to the various offices and departments the duties of inspection of goods and services and approval of demands, in accordance with methods for inspection and approval established by the Controller, but the Controller may suspend the authority delegated pursuant to this subsection upon a finding of abuse of that authority or on a determination that the office or department lacks adequate controls to exercise that authority properly.  In the event of suspension of the authority delegated pursuant to this subsection, the Controller shall assist the office or department to achieve adequate controls and standards prior to reinstatement of that authority to the office or department.

(c)     The Controller shall withhold approval of any demand, in whole or in part, if there is a question as to whether it is improper, illegal, or unauthorized, and immediately file a report with the Mayor and Council stating the objections to the demand.  The Council shall promptly consider the report and may overrule or sustain the objections of the Controller.

(d)     The Controller shall keep a record of all demands on the Treasury approved by the Controller and of all demands to which objections have been made and overruled.

Sec. 263.  Approval of Expenses of Controller.

All demands for the expenses of the office of the Controller shall, before payment, be presented to the Mayor, who shall have the same powers as to approval or disapproval as are exercised by the Controller in the case of other demands. The action of the Mayor shall be subject to review by the Council.

Sec. 264.  Reduction of Demand on Treasury.

No demand upon the Treasury shall be allowed by the Controller in favor of any person or entity indebted to the City without first deducting the amount of the indebtedness, to the extent permitted by law.

Sec. 265.  Payment of Bonds.

Nothing in this Article shall be construed as interfering with or preventing the payment by the Treasurer of principal and interest on bonds payable by the City in accordance with the California Constitution, laws and ordinances authorizing the issuance and payment of those bonds.

Sec. 266.  Periodic Surveys of Proprietary Departments.

(a)     The Controller, Council and Mayor shall jointly cause, at least once in every five years, an industrial, economic and administrative survey to be made of the business and property of each of the Harbor, Water and Power and Airports Departments and shall select an independent qualified industrial engineer or organization specializing in such surveys to conduct the survey.  The cost of each survey shall be paid for from the funds of the surveyed department.

(b)     Each survey shall be made in consultation with the Mayor and City Council to ascertain if the surveyed department is operating in the most efficient and economical manner.

(c)     A copy of the report of each survey shall be transmitted to the Mayor, Council, and board of the surveyed department and shall be made available to the public.

Solution Part 2: Create an Elected City Prosecutor.  The City Attorney in San Bernardino is already the City prosecutor.  However, by splitting the functions, the City will have the best of both worlds.  An elected City Attorney will give advice to the City as an entity without the fear of being fired for not giving advice to the other elected officials in power, and a City prosecutor can prosecute violations of the Municipal Code and the areas of State law given by Charter or state law with the independence necessary, with the independently elected City Auditor, to root out these kinds of corruption.

If an elected City Attorney is an elected watchdog, a City Prosecutor would be doubly so.  The City Attorney’s client is the City of San Bernardino, the entity, and the City Attorney must protect the entity’s pocket book.  The role of exposing corruption sometimes is at odds with that goal.  Adding a separate elected City Prosecutor can rectify that situation and protect, in the long run, the People’s interest without regard to the City’s financial interest.

Of course, the bad numbers shown above do not add up to the alleged deficit, but if Council members were going on the correct numbers to start with, perhaps they would not have made the political choices that led to the fiscal emergency.

The information you obtain at this blog is not, nor is it intended to be, legal advice. No attorney-client relationship is established by reading or commenting on this blog. You should consult an attorney for advice regarding your individual situation.

Copyright 2012 Michael Reiter, Attorney at Law

Michael Reiter, Attorney at Law

A: 300 E. State St., Suite 517

Redlands, CA 92373-5235

T: (909) 296-6708

E: michael@michaelreiterlaw.com

W: http://michaelreiterlaw.com

Pete Aguilar For Congress (California Congressional District 31) Mailer Number One

By Michael Reiter, Attorney at Law

This post has a both a legal and a political bent, so let me start with the legal side.  I have written in the past about blind operators (specifically, in this post dated July 11, 2011):

I was a file clerk/runner for Milligan and Beswick in San Bernardino over twenty years ago.  Part of my job was to file pleadings with the court.  I became fairly intimate with the building at 351 North Arrowhead Avenue.  In the early 1990s, there were no metal detectors at the court.  You could easily run into the court and then back out.

I would sometimes get lunch for people in the office from the courthouse cafeteria.   It was run by a blind operator.   I would also sometimes buy snacks from the other blind operator (his sight was only somewhat impaired).  I remember buying popcorn, peanut M&Ms and six ounce Pepsi Colas in bottles (which by the early 1990s were not easy to come by) from the operator located next to the main stairway in the old courthouse.  I recall that he also sold hot dogs of the sort you could find in a movie theater.

Flash forward to 2012.  I first heard the story you will find bellow a few months ago, but here it is featured in the first Pete Aguilar for Congress mailer (that I have seen, anyway).

On the front is a picture of Redlands Mayor Pete Aguilar standing with his hands in his pockets in front of the San Bernardino County Courthouse at 351 North Arrowhead Avenue in San Bernardino.  The caption says “Pete Aguilar Learned Valuable Lessons in This Building” the bottom says “Learn more about Pete at www.peteaguilar.com”

View this document on Scribd

On the second page of the four page flier it says: “PETE AGUILAR. Mayor. Democrat.  Business Owner.”

View this document on Scribd

The second and third page has a picture of Pete Aguilar talking to three people in what appears to be a cafeteria.  The third page has the following pull quotes from Mayor Pete Aguilar:

“My FIRST JOB, as a teenager, was bussing tables and washing dishes at the San Bernardino County Courthouse Cafeteria.

“My grandfather, who was legally blind, managed the facility and manned the cash register.  He taught me the values of hard work, playing by the rules and helping others.

“Washington has lost those values.  Today, our politicians would rather pick fights than solve problems.

“I’m running for Congress to help small businesses, create jobs and protect Medicare for our seniors.  That’s the change that middle-class families need in Washington.”

– Pete Aguilar

View this document on Scribd

I first met Pete Aguilar after he was appointed to the Redlands City Council after the departure of  Susan Peppler, when he went to meet staff.  I was at the Council Meeting at which he was appointed, and I believe I sat either behind him and his wife Alisha and his very young (at the time) son Palmer, or in front of them.  That particular meeting was one of the most interesting I had ever attended, but that’s a post for a different time.  However, it appears we may have had a brush with each other decades earlier in the basement of the San Bernardino County Courthouse.

The final page is a picture of Pete Aguilar and his family, Palmer, Evan and Alisha.  The text says “Pete Aguilar, Leadership on Your Side” and “Pete Aguilar is a small business owner, Mayor of Redlands and a fourth generation resident of the Inland Empire.  He and his wife Alisha live in Redlands with their sons Evan and Palmer.”

View this document on Scribd

Copyright 2012 Michael Reiter, Attorney at Law (no claims to the flier, which was produced by and are owned by Pete Aguilar for U.S. Congress, and used pursuant to 17 United States Code section 107).

Finding Statements of Economic Interests Online at the Fair Political Practices Commission Website

By Michael Reiter, Attorney at Law

The Fair Political Practices Commission website has a page (which is remarkably difficult to find) which has state and local Form 700s, the Statements of Economic Interests.  There are local (city council member and mayoral) filings for 2010 at the site, but as of now, no 2011 (filed in 2012) filings at the state site.  You’ll have to go to the local entity to pick up a 2011 form for city council members, or other local public agency fillers.

The site gives this information:

One of the key themes of the Political Reform Act of 1974, is that documents such as SEIs and campaign statements are filed at the most decentralized level. This made sense at a time when it was easier to walk down to the City Clerk’s office, but with the Internet, there is greater access to these documents if they are maintained on a single website. The Commission hopes you find this resource useful. Please continue to check back as we update these pages.

Due to privacy concerns and out of an abundance of caution, the SEIs posted on the Commission’s website have the address, telephone and signature blocks redacted. Copies of the original forms are available for review or duplication.

The information you obtain at this blog is not, nor is it intended to be, legal advice. No attorney-client relationship is established by reading or commenting on this blog. You should consult an attorney for advice regarding your individual situation.

Copyright 2012 Michael Reiter, Attorney at Law

Michael Reiter, Attorney at Law

A: 300 E. State St., Suite 517

Redlands, CA 92373-5235

T: (909) 296-6708

E: michael@michaelreiterlaw.com

W: http://michaelreiterlaw.com