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STEVE STEWART, Dana Point
Our City Council had an opportunity at their meeting on Dec. 5 to make a financially prudent decision with taxpayer interests in mind. Unfortunately, some members of our current Council seldom miss an opportunity to do the wrong thing with city funds. This time, three Council members—Muller, Viczorek and Wyatt—ignored the extensive Financial Review Committee (FRC) work on vehicle acquisition policy in favor of more expensive and wasteful city staff recommendations. In a second motion, all except Debra Lewis, voted to abdicate their policy setting responsibility on the matter, instead giving this authority solely to the City Manager.
Said City staff recommendations include leasing rather than buying all vehicles, including 14 that are only driven 5,000 miles annually and will be replaced after only five years in service. That is clearly not cost effective and the FRC did extensive work to prove it, only to be ignored by a majority of Council members.
Financial Review Committee members are city residents/taxpayers with extensive financial experience. Their analysis and advice could help bring an end to Dana Point’s longstanding pattern of bad financial decisions, such as the $20 million Lantern District street project, the Bridge to Nowhere and the multimillion-dollar Strands Gate debacle. These mistakes help to explain why our city is facing a projected $2 million structural deficit by 2021.
Council members, and City staff, owe residents the due care to listen to the citizens who sit on the FRC. The Council and staff need to show us they have learned lessons about efficient and effective spending. Judging by their Dec. 5 decision on vehicle policy, that is not happening and voters will have an opportunity to correct that problem in November 2018.
Just another in a long line of wasteful financial decisions. It’s not just that Muller, Viczorek and Tomlinson make bad decisions, it’s that they refuse to even question or analyze the issues before them. Strandsgate, attorney costs, review of service contracts, and now auto policy.
Is it that they don’t want to do the work to study these issues, or do they have a vested interest in maintaining the status quo? Either way, they are wasting our money. Their out of control spending is doing real damage to our city.
It was Muller, Viczorek, and Wyatt, not Muller, Viczorek and Tomlinson, who voted to lease vs buy. Their justification was primarily because of the long payback time of leasing vs buying. Numbers between 23 and over 30 were submitted as the time in years it would take to recoup the approx $1 million invested in purchasing autos. It was a close call either way. I would have gone for the lease option, but questioned more closely the need for 26 vehicles.
When are the prominent pro-H supporters going to take responsibility for decreasing city revenue, and thus lowering the surplus or increasing the deficit, as the result of Measure H’s passage? Probably never.
Sounds like two of the ex-Mayors cronies crying. They fail to mention, they both supported H and since then we have grown by how much? Plus, do both of you really want to cut our police budget? Like the now ex-mayor wanted? Both of you, and the ex-Mayor have been saying the somethings for over a year. Is Big Buck paying you two? I know he is the funding behind the ex-Mayor. The truth needs to come out about who has thrown this town into us vs. them, is it big Buck and who is behind big Buck? Follow the money.
Is there a motive for ignoring obvious financial waste and mismanagement? Watch them pose as fiscal conservatives when they run for reelection in 2018. I dont think Dana Point voters will fall for that this time. There is too much evidence and many more people who see what has been going on.
According to Buck Hill’s comments at the Sept 19th CC meeting, DP is doing great. Since he’s one of the leaders of the pro-H crowd, it’s hard to understand what you guys are complaining about.
Here’s a more or less verbatim quote of part of his statement, which starts at the 53:53 mark. On the city website, go to Department >> City Clerk >> Streaming Video to view:
“Dana Point had an outstanding year, particularly versus its plan in the last year, FY17, which just ended. So, one of the measures is how much money do we have in our various funds and bank accounts… We ended up with a significant overrun versus our budget. We now have total funds available to Dana Point of $28.478 million at the end of the year. That compares with about a $35, $37 million annual expenditure and income. So that’s a tremendous amount, we’re in a safe financial position. And that was $7.5 million better, in terms of our fund balance, than we forecast in our budget. And unfortunately that forecast was done in the May – June period. So, it’s a huge miss to our forecast, but it’s good news.“
LTR – with a planned deficit for FY2018 of $4.7 milllion, fed in part by expenditures previously planned for FY2017 that were rolled forward, there is still not much to cheer about. Nine of the past 10 years the city has spent more than it took in. Mr Hill was speaking to a moment in time re the budget and certainly not applauding our future outlook which is grim. All the more reason to save money on city attorney and auto finance. Thankfully after Mr Hill’s leadership of Measure H we are not stuck with the awful and unfair situation that Measure I would have imposed on our city’s finances.
Nice spin, except that later on in the Sept 19th meeting, under questioning by Mr Muller, Mr Killebrew stated that we’re from $500K to $700K better off than budgeted, not the $7.5 million number just given by Mr Hill. So Mr Hill was off by over a factor of 10.
Then 7 weeks later at the Nov 7th meeting, Mr Hill stated our city is “running out of money”. So according to him, in at most 7 weeks, we’ve gone from being in a “safe financial position” to “running out of money”.
In the last mtg, in the discussion about auto leasing, did you hear numbers from 23 to over 30 years as the time it would take to recoup the approx $1 million required for purchasing vehicles vs leasing? If we’re “running out of money” like Mr Hill claimed, maybe leasing was the better option. At the very least it’s a close call.
“That is clearly not cost effective and the FRC did extensive work to prove it, only to be ignored by a majority of Council members.”
Where can we find this analysis? Maybe a couple scenarios next to each other?
I would like to think this decision would be easy, and based purely on total cost in present value terms.
The information can be found in the Financial Review Committees minutes from their 8-29 meeting along with the 3 motions passed by FRC relative to this issue. The minutes are on the city website and an analysis of lease vs buy done by one of the members is half way down the page.
Steve and Jay: Seems like you must be in the same camp as Mr. Hill, Ms. Lewis and the ex FRC member Ms. Nelson – my question to you all:
What is the goal of the anti-development group that you all represent?
It’s been over a year since you won on H and I have not seen anything else proposed for downtown. So I guess you won, I see no development, so we receive less revenue.
Do you believe that revenue just grows on trees?
Don’t you think at some point you would have to increase revenue, somehow, some way?
Especially in order to pay for Mr. Hill’s train horn, at over $17,000 a year, and the beautification of Pines Park for Ms. Nelson? And the 42% we spend on Capo (42% over a 10 year period, which also included the Lantern District capital budget, which ran $20 million. In regards to the street maintenance budget, Capo receives over 63%)
Also, all of your friends have just pounded Muller, Tomlinson, Viczorek and now Wyatt, who nominated Mr. Hill to FRC, and now realizes Mr. Hill’s analysis is, and has always been, wrong. Yet, most of the decisions happened long before any of them sat on the council. So they are to blame?
Story is getting old. What is the vision of your group? And, who is behind it?
There is a huge disparity between the FY 2017 budget and actual results causing many to overlook the underlying facts. The FY 2017 budget projected a deficit of $7.7 million while the results showed a deficit of only $350,000, a huge improvement: General Fund revenue was $2.1 Million over budget, General Fund expenditures were under budget by $2.3 Million and Capital Improvements and other spendable funds were under budget by $3.0 Million. The total increase in spendable funds was $7.4 Million over budget.
Many of the favorable results, however, were rolled over to increase the spending in the FY 2018 budget, resulting in a projected deficit of $4.1 Million for FY 2018. Deficits have occurred in eight out of the last 9 years, as reported on page 82 of the Certified Annual Financial Report. Deficit spending undermines the financial health of the city.
The budgets need to be much more accurate as a basis for sound financial management of the City. Otherwise the City Council cannot make informed decisions. The Certified Annual Financial Results have only become available nearly 6 months after the end of the FY 2017 fiscal year ending June 30th. For effective management, results should be compared to the budgeted amounts throughout the year.
Well, I always though finance was fact based with assumptions on future income/expenses. I guess it’s like a lot of things. A malleable bludgeon to be used in politics. I guess we residents are going to have to break down and read the budget nd either rightly or wrongly make our own assesments. It seems odd that when I watch the City Council meetings the discussion on finance goes by so quickly relative to it’s significance in the health of the city. Either we’re running a deficit, are balanced or in surplus. Can’t that be settled factually? What about an outside audit or am I asking for something that will add a ridiculous expense? The name calling is getting really old.
Quick review on the original topic, conceptually I agree with the analysis on the spreadsheet from Nelson; which is basically……. other things being equal, anytime somebody charges you more to finance something than you think you can make on your own money, you buy it.
No argument here.
Although I do wish we had some comments from the FRC folks or city staff included within the notes. Was there any discussion amongst the FRC members? I don’t see anything within the meeting minutes. I can’t believe some folks wouldn’t bring up the obvious items for clarification:
1. This analysis doesn’t appear to include a fair estimate for maintenance costs, or other items deemed as benefits from the city staff. Probably need to include some estimate for those costs in owning scenario. Those bullet points from the staff member seems fair to me, and those are costs which need to be included.
2. Do we really engage in projects based off a 1 and ¾ return? Is that common for our city? I can’t believe anyone would discount at that value. Is that the average return of our most riskless investment? Or is that our portfolio?
These may seem like small questions, but really can tweak the model pretty quickly. And if someone writes that city staff and leaders have outright chosen to spend more money than needed, well I would expect some clarification on the obvious issues within the meeting notes…
Do any FRC members read these letters? Any ever respond? And if all costs are associated within the model, and the WACC is ok, then the letter is correct, why in the hell are we not buying them?
Michael – The salient fact here is that you do not need a discounted cash flow analysis to see that someone leasing cars for 5 years that will only be driven 5,000 miles per year is wasting funds. Cars with that kind of usage should be purchased and held for many more years. Also you have to ask why, if usage for that particular car is only 5,000 miles year, do we even need it at all? The city inventory of cars and the mileages and annual use rate for those vehicles that was part of this study demonstrates an ongoing lack of concern for expense management. Taxpayer funds are being conspicuously wasted. Consider also the FRC analysis of in house counsel vs the present contract with Rutan and Tucker. We are overspending on legal expense by far more than we waste on vehicles annually.
Steve, I will look into the other items you referenced. I find it interesting.
But you did write up an article specifically identifying the lease vs. buy decision as a waste of money. Please don’t say a quick analysis isn’t needed. Something like this is a perfect opportunity to make a purely analytical decision. I’m not sure your knowledge on the scenario model, so my questions are to the larger group. (LTR/Jay/FactChecker/Day,etc)
The attachments up on the website from Nelson I thought was great. I question whether it included all relevant benefits from leasing as identified from city staff. Does it?
I don’t attend the meetings, but the document from the city and from the FRC seemed to have been created separately, without agreement on the assumptions. Is that correct?
I’m just wondering how the discussion unfolded. Was the analysis from Nelson really used as a helpful tool for the residents? Or was it created as something to point towards to hammer the Council?
LTR? Fact Checker? Day? Jay Sowell?
Mr. Frost: Looking at numerous documents from previous FRC meetings and notes from emails between Nelson/Hill and Lewis, they seem to indicate that most of these numbers are made up – not city numbers or staff projections,- just random projections anyone can make up. Seems like most of the numbers all year long fit into that category – make stuff up, scream and resist (and make up excuses for why the numbers you made up are wrong) and go after the same three council members, everyday. (now its four members, they seem to have lost Wyatt or did Wyatt just wake up?)