Jerry Hill drops AB650

By on Mon, June 22, 2009

AB650, the bill to give Half Moon Bay some assistance with the settlement it agreed to pay developer Chop Keenan, is officially dead. The bill’s sponsor, Assembly member Jerry Hill, say he will no longer pursue passage of the bill.

"Unfortunately, the collective actions of the City Council last week and the recent announcement that the city would not file for bankruptcy, coupled with the $20 billion state budget deficit impacted the willingness of my legislative colleagues to support AB 650," said the bill’s sponsor, Assembly member Jerry Hill.

At last week’s city council meeting, the city council agreed to a $15 million bond to pay the settlement, and raised the salaries of several key city employees.

It’s difficult not to comment.

An important point here is that in the selling of AB1991, right after the city agreed to the settlement, there was a great deal of talk about bankruptcy. It was one of the big reasons Senator Leland Yee cited for his initial support of the bill.

In the last month, the city has revealed that it is nowhere near bankruptcy and that in the opinion of their attorneys, the same ones that put together the settlement, they never had a shot at legally declaring bankruptcy.

The state has many cities on the brink of bankruptcy and it would be difficult for an assembly member or senator representing one of those cities to support a bailout for the relatively well-off Half Moon Bay.

AND, once again there are those pesky pay raises (while others are being furloughed). It just gets bitter and bitter.

It was just “gridlock” Jerry and “ye” old man wasting the taxpayers time instead of advancing the general welfare of California citizens!

The two didn’t have time to settle the budget and were distracted by the paid special interests calling on their becjk and call offices.

Yee and Hill should settle the budget or resign and let’s get people in there that can do the job on time and within the pay as you go budget.

By the way, if the “johnny come lately” city council doesn’t get the cash up front to pay Keenan the $18 million on the due date, they should lose their jobs or resign and HMB should lose its city status. 

I have a hunch the bonds will be worthless junk bonds and you will owe Chop the $41 million and you will never be able to pay off the $18 plus $20+ million in interest.

I can hear mayor Jonh Muller saying to god mother of the 1990s, Council Member Naomi Patridge, somewhat like the refrain from Oliver Hardy who said to Stan Laurel ... Heres “another fine mess [you] got me into…”

I wouldn’t buy your bonds!  Then again, I don’t have to!

The minute our highly paid attorneys were told by the majority of our city council that bankruptcy was not on the table, HMB’s S&P ratings were too high, and the city was solvent (thanks to the city staff layoffs), of course we weren’t going to get any money from Sacramento.

This action shouldn’t surprise anyone.

Parr starts a piece: “Jerry Hill drops AB650”.

The second of three paragraphs in his piece quotes Assembly member Hill as follows: “Unfortunately, the collective actions of the City Council last week and the recent announcement that the city would not file for bankruptcy, coupled with the $20 billion state budget deficit impacted the willingness of my legislative colleagues to support AB 650,” said the bill’s sponsor, Assembly member Jerry Hill.”

Then, a mere 14 minutes later, Parr posts to his own thread as follows: “In the last month, the city has revealed that it is nowhere near bankruptcy and that in the opinion of their attorneys, the same ones that put together the settlement, they never had a shot at legally declaring bankruptcy.”

Now, it’s not unusual for Parr to post to his own threads. It happens all the time. It’s his site, his sandbox, and he can do what he pleases with it; but I feel somewhat compelled to at least set the record straight.

Parr writes the second paragraph of his thread quoting Assembly member Hill, yet in his follow-up post he seems to contradict his thread.

Parr appears to imply that “they [HMB] never had a shot at legally declaring bankruptcy”, even mentioning that the current counsel is the same counsel we had during the settlement negotiations (which is accurate).

So, what is Parr really putting out there? I’m not a mind reader and couldn’t begin to state what Parr was thinking, but based on his remarks it would appear that he is saying that he feels bankruptcy was never even close to an option for HMB, which most might take to mean the HMB Council members, along with the legal team are liars. It just can’t be both ways.

Painting a more robust and accurate picture would have been a better course of action for Parr, but again that’s not the case. Had he asked my opinion prior to his post, I would have reminded Mr. Parr of the Council action on March 17th (I believe). That was the meeting where our Interim City Manager announced, and the Council approved, the termination of 19 City employee positions. That very difficult action reduced our budget expenditures by $1.75 Million, in anticipation and preparation for the S&P Rating (AA-; Investment Grade) that followed shortly after. But for that action, the City would have qualified for Junk Bonds, if lucky.

So, I would say that Parr’s comments are misleading, at best, and missing some of the more important facts that color the complete, real picture.

I doubt Hill was pleased with the pay increases that were forthcoming from the Council, but make no mistake, ‘freeing up’ $1.75 Million was the move that took us from Junk to Investment Grade, which took bankruptcy and threw it right out the window.

We have become accustomed to seeing inconvenient facts disregarded or simply left out by Parr, which is why I don’t visit this site very often anymore (let alone post to it).

George wishes to “set the record straight.”

Ok, let’s rewind to January 2008, when HMB’s newly hired hot-shot lawyer John Knox told citizens at a public meeting that HMB’s chances of winning on an appeal of the Beachwood decision were “very good.” Later, at the direction of the Old Guard City Council, Knox then proceeded to help broker the give-away settlement to Chop Keenan that was announced on April Fool’s Day 2008.

The City’s lawyers (including Knox) recently claimed that bankruptcy was not a legally feasible option for HMB because the City would not be rendered “insolvent” by paying off Keenan, i.e., the City has the financial ability to pay off Keenan without sacrificing essential public services.

But wait, weren’t we told last spring that the sky would fall if the City had to actually pay off Keenan the $18 million settlement?  Didn’t the Old Guard City Council and Police Union rep A.J. Johnson parade before the state legislature in Sacramento last spring and claim that the City would cease to function properly unless Keenan’s blank check development bill (AB 1991) was passed?

It turns out that the drama over AB 1991 was all a charade. A few months ago, the Old Guard City Council further demonstrated that there was no need for a state bailout when they awarded a big increase in pay and benefits to the Police Chief and the City Manager. Then, last week, they approved another increase in pay and benefits for the City Manager.

State Assembly Member Jerry Hill has apparently been paying attention. Perhaps he decided to kill the latest bailout bill when he saw that the City’s “leaders” have been crying poverty while handing out over-generous pay raises to top staff members. Why does HMB deserve a bailout from scarce taxpayer funds when the City Council obviously cannot be trusted to act in a fiscally responsible manner with its own money?

Nothing has changed between April, 2008 and today.

The city didn’t fall into a pot of new money. It didn’t get a new legal team with a fancy new interpretation of the bankruptcy law. God knows the bond market didn’t get any more liquid. This was always Plan B.

If the city and its investment bankers modeled out the scenarios, as they would have been irresponsible not to do, there was one called “AB1991 Fails”, and it contained the following:

<li>Cut expenses</li>
<li>Float a bond.</li>
<li>Recoup a chunk of the money by developing Beachwood.</li>

As I wrote when the city brought out Orrick to defend the plan on May 19, 2009:

  Mark Levinson, a bankruptcy attorney with Orrick, said that the city will not be able to get out of its obligation to Keenan by declaring bankruptcy, because “you have the ability to solve the problem [by issuing bonds] and you’re choosing not to do it”.
  Levinson’s advice was to pay the judgement and not spend more money on lawyers, saying “John (Knox) and I are really expensive”. He noted that if the city does not pay Keenan by August 29, it will owe 6% interest on $18 million going back to December 2007—another $2 million.

Mr. Levinson didn’t learn any new tricks between April 2008 and May 2009, so this must have been the advice the city got when they agreed to the settlement.

It’s backwards to suggest that the layoffs in city hall made the bond possible. When the city decided in April 2008 that it would pay a settlement that required a bond, that made the city hall cuts inevitable.

Welcome to Plan B.

As Barry says, we are now in “Plan B.” Never underestimate the many-moves-ahead planning of politicians and their lawyers.

As I wrote many times last year,  basic fiduciary duty required the City Council to have a plan in place to pay the $18 million settlement to Keenan before they agreed to such a settlement.

So when the City Council (represented by Muller and McClung) stood before the state legislature in the spring of 2008 claiming that the City needed AB 1991 in order to survive, they were not telling the truth.

“Had he asked my opinion prior to his post,...”

And the reason to do this was…?

As Kevin Lansing points out, the assertions of politicians and their lawyers are all suspect in circumstances like this. That goes for the current ones on financial solvency, as well. The bankruptcy talk may or may not be back within a few years.

We in Montara and Moss Beach are so blessed to not be part of Half Moon Bay, even considering the county’s continuing incompetence in governing our area.

“Half Moon Bay Interim City Manager Michael Dolder is disappointed with the decision but said the city will now take ownership of the land in September.”

Gee, now all we need is for Mayor Muller and the City Council to direct the Planning Commission and their engineering department to submit bids to place some shovel ready, hungry out of work citizens to get that Beechwood Park built by the start of next summer’s Little League season!

Does anyone want to lay odd it will take three years…; 5 years… or God knows how long it will take! 

The mayor and council should give HMB citizens a date and a montly progress report on the building of this park starting with the council metting in October 2009!  We need an audit and compliancee review on this project to provide transparency and oversight like everything they do to discharge their duties, tasks ansd responsibilities!

We know they bothched the Keenan permits, the city raises for the manager… and cutting employees from the executive branch!

The pinnicle of arrogance is for Mayor Muller to say “the decision as to what to do with the 24-acre Beachwood property will come with time. There’s no rush,” he said.

It was a big deal to HMB last week - you didn’t get what you wanted, so now there is no rush - that is butt-covering BS lies.

You HMB politicians are so conflicted in your values - OK…  No park, so sell it?  When?  You know you can can knock a little money off that new found bond early!  Sell it at auction in October and make sure you don’t cook the books with a shill of a buyer and keep your ethics intact or you will be in court again.

So when are you going to build that important Beechwood Park?  That is a lot more imortant than salary increases - maybe you could save those increases wages and perks and place them into a saving account for the park.

In the meantime, build a fence to keep out of the slimy wetlands so you don’t distroy the natural habitat.  Protect the gofers, field mice and salamanders and let them be without issung them permits to build their new homes.

Don’t even go to a developer to build homes More slimy thinking will result in more litigation with the green friendly snake huggers…!  They have HMB on the run now ad you just may default on the bonds if you can even sell them.  Are they going to be tax free?

Now throw out the council the next chance you get or demand some resignations…, just to embarrass them.

As for Jeryy Hill and Yee: what a crock of BS tro parse that he withdrew his legislation - AB 650 because of a couple of raises after a few cuts to city employees.  His legislation was DOA because he was in gridlock on the budget that is as much his problem as it is the legislatures responsibility to pay as you go or raise taxes and no one wants to bight that bullet. Save the safety net for only the vegetative welfare recept. Drop drug diversion from the corts - they are a failure, cut the commissions and especially the pay and junkets….