Wednesday, August 31, 2011

Pierce Michael Kavanagh is a tal ented San Diego surfer/filmmaker. His recent film Man u fac­tur ing Stoke raises ques tions about the toxic chem i cals used in the surf board indus try and asks us all: How can we make a dif fer ence for the envi ron ment? Pierce speaks to us about his inspi ra tion for the film and his cur rent obses sion for bodysurfing.
Save the date for the 2011 Cardiff Surf Classic & Rerip Green Fest on Saturday & Sunday, September 17 & 18 from 8am-5pm at Cardiff Seaside Beach. Vendor spots are still available by clicking here.

Monday, August 29, 2011

Getting Spiffy

I gotta say, the poor infrastructure of Leucadia Blvd and Hwy 101 has been a main theme of this blog since the start. It's crazy to see all this work happening.

Leucadia Blvd becoming pedestrian friendly

Wow! This is impressive.

Sunday, August 28, 2011

Saturday, August 27, 2011

Cargo Bikes


An invite to Sol Beach,supported by our hometown crew members and for funky leucadians who are ready for utility biking:

The 1st Annual Velo Hangar/Alternabike Taco Social

Share · Public Event

Sunday, August 28 · 3:00pm - 9:00pm
The Hangar
637 Valley Avenue #C
Solana Beach, CA

If you've been in witness protection for the past 9 months & don't know current events... Velo Hangar & Alternabike have joined forces to create San Diego's 1st no nonsense bike shop. Service based (Customer & Repair), we will be carrying parts and accessories as well as nutrition. VH logoed product will be available shortly as well. We have espresso & wifi available to our guests & a spacious back patio to relax on before/during & after your rides. AlternaBike is importing Euro cargo bikes from Denmark & Holland plus a few from the good ole USA.

There have been rumors of a cargo bike TT as well... Bring your helmets. We will be providing Tacos from Rudy's Taco Shop & an assortment of beverages. I'll post more specifics as we get closer to the day.

Hope to see everyone there!!

**Parking is a little tricky but, doable. We have several reserved spaces on the property. You can also park at the La Colonia County Park just down the block. You can also park on Genevieve, Juanita & Vera Streets

City improves leucadia

Friday, August 26, 2011

Things to do

For more info, Hosted by one of those pesky Leucadians.

Before that,

City Ventures and KPRI are having a little concert tomorrow at noon.

From the inbox:

Encinitas Neighbor Rancho Santa Fe

RSF organized as a big fat HOA and even has lots of employees and a big process for approving developments. They even have an design review board.

The Art Jury in Rancho Santa Fe, to this day, still reviews every proposed development or significant change in a property and gives its approval or not.

A decision by the Art Jury was once challenged by a homeowner who was unsuccessful in his litigation.

“The court ruled that beauty is in the eye of the beholder,” Smith said.

The eye that decides the beauty belongs to the community and the Art Jury, the court decided.
This high rent low density area of the county is where people who can live just about anywhere choose to opt into.

Thursday, August 25, 2011

Jacobson Replaced

Last night the council filled the empty space on the art commission that Alice Jacobson created by made by jumping over to the enviro commission.

The entire council voted for the belly dancer.

Jacobson's appointment has been criticized because she did not have the professional experience that other applicants offered. A related viewpoint was published in the coast news (it provides the candidate's applications).

More important than creating a panel of experts is to create a panel of citizen representatives that are very interested and willing and able to do the research and joint deliberation. We are suppose to have a staff to help provide support on technical details and we have a populace that can bring ideas to the commission. The commissions should be reflective of population to some degree. That means the board shouldn't consist of professionals from a related field.

Should the planning commission consist of 5 professional developers?

We should be looking to build commissions with people that have different perspectives, who do their homework and are there for the purpose of the commission rather than resume building.

That means the council should also be asking questions like, have you ever contributed to the commission you want to join in the past? Have you attended and spoke at one of the meetings? Can you demonstrate your interest in the subject matter? Can you demonstrate your willingness to do the homework?

Tuesday, August 23, 2011

Every Issue to Be Consumed by the Pension Monster

If you only care about your one issue then you also care about the pension issue and just don't know it yet.

From the In Box:

Is the Mayor still listening to the Fed? Aging baby boomers may hold down U.S. stock values for the next two decades as they sell their investments to finance retirement, according to a paper from the Federal Reserve Bank of San Francisco.

    “U.S. equity values have been closely related to demographic trends in the past half century,” adviser Zheng Liu and researcher Mark Spiegel wrote in a paper released by the bank today. “In the context of the impending retirement of baby boomers over the next two decades, this correlation portends  poorly for equity values.”

   The equity-price-to-earnings ratio of U.S. stocks tripled from 1981 to 2000 as Americans born between 1946 and 1964 reached their peak working ages, Liu and Spiegel said. Overseas investors’ demand for U.S. stocks might help mitigate the effect of a baby-boomers’ sell-off, yet the impact would probably be limited, they said. “Foreign demand for U.S. equities is unlikely to offset price declines resulting from a sell-off by U.S. nationals,”they said.

On top of this from Chris Street:

The three largest California public retiree plans (CalPERS, CalSTRS, and UCRS) that administer pensions of approximately 2.6 million State and Local public current and retired employees have been under tremendous scrutiny since last year’s release of the Stanford University Institute for Public Policy report: “Going For Broke”. The study concluded that California retirement plans liability was under-funded by over $500 billion. The report blamed most of the shortfall on the pension plan’s expectation of future annual investment returns of 7.75%; versus a realistic expectation of a 4.14% annual return. The cabal of California politicians, bureaucrats, and crony consultants that justified granting lucrative benefits to employees while failing to contribute enough to support the true pension costs; solemnly dismissed the Stanford report as unsophisticated reflections by academics. But now that a swarm of local governments want to abandon the floundering retirement trusts; the State plans are only willing to credit a 3.8% expected return. If the California State pension plans adopted the same 3.8% rate they are only willing to credit when participants want to leave; their published $288 billion in pension shortfall would metastasize into an $884 billion California State insolvency.

Translation: The 7.75% ROR that the city allows CalPERS to use is not conservative.

It doesn’t take a Stanford MBA to realize producing consistently high investment returns since 2007 has been a difficult in the extreme. The California State pension plans that currently control $432 billion in assets, suffered a $109.7 billion in losses during the 2008 to 2009 recession. Pension plans normally require employers and their employees to mutually increase contributions to make up pension shortfalls. But public pension plans are notorious for not requiring employees to make significant contribution. California police, prison guards, firemen, and lifeguards can retire at age 50, but have never been required to contribute to fund pensions. With headlines that California plans are in big trouble; many government agencies applied to withdrawal from the State plans. But as calculated below; compounding investments at 7.75% grows to more than three times the amount of compounding investments at a 3.8% rate of return.

Play with the calculator at Chris's site here.
articleimg1 California Admits To Almost $1 Trillion Of Unfunded  Pensionsarticleimg2 California Admits To Almost $1 Trillion Of Unfunded  Pensions
When I was elected as Treasurer of Orange County, California in 2006, I was flabbergasted to discover that the County’s $8 billion of retirement investments was covertly leveraged up by $22 billion of derivatives. I quickly learned that many unions see pension benefits as contracted rights; and pension investing as a no risk crap-shoot for extraordinary returns. If the pension investment returns sky-rocket, the unions will bargain for increased benefits. If the pension investment returns crash; the public employees are protected by rock-solid contract law that prevents any reduction in benefits. In 2007, I was fortunate to gain the support of enough OC Pension Trustees to reduce speculative derivative use by 90%. At the time, Trustees for the California public pension plans solemnly dismissed Orange County as unsophisticated. Shortly thereafter the stock market crashed and the State Pension Trustees stopped making comments.

Once famous as the Golden State for leading the nation in high tech growth industries that provided excellent wages; California is now tarnished for having the second highest unemployment and worst state credit rating in the nation. Forbes recently quoted a top venture capitalist that compared the California business climate to France: “I try not to hire here, and I certainly would not launch a company here. But the wine is good.” Tripling of the burden for under-funded pension liability to almost $1 trillion will probably ruin the taste of California wine for most taxpayers.

More Fun Stuff

In Motion Trio and Semisi & FulaBula live


Duck Waddle's Emporium
414 N. Coast Hwy. 101, Encinitas, (Leucadia)
One block south of the Pannikin
23' south of Lou's Records
Friday, August 26th 7:00 pm

In Motion Trio, The award winning local jazz combo, will perform this Friday evening, August 26, in the Salon @ The DUCK. The In Motion Trio is an instrumental jazz group that delivers steamy Afro-Beat grooves and an eclectic blend of funk. They received the "Best Jazz Artist" award at the recent 2011 San Diego Music Awards. Doors open at 7:00, show starts at 8:00. Suggested donation $5.00. Please join us Friday night for this magical event. Please arrive early as seating is limited.

Also, get there early to catch opening set from Semisi & FulaBula, San Diego's best and most entertaining Polynesian rock group!!!


Ruthless Hippy at-large

Monday, August 22, 2011

Leucadia Art Walk

click image for full view

Sunday, August 21, 2011

Encinitas Ranch Golf Course - Response to LSOP

From the in box,


1.     The Development Agreement was the document that underpinned the incorporation of the Ecke property into the City of Encinitas and allowed the development 900+ homes, the golf course, and the shopping center.  There was a vote on the agreement, but how could the electorate understand it when those involved in drafting it on the city side didn’t.  Councilman James Bond recently said he never really understood it, yet he voted to approve it.  Everyone was thinking of the project itself, not the Development Agreement.  Who was the special counsel?  Did he really protect the interests of the city?  The result was certainly in favor of Carltas/Ecke.
2.     The ERGA board consists of the City Manager, Director of Engineering, Director of Parks and Recreation,  one appointment by the City Manager, and one appointment  by Carltas/Ecke.  Does anyone believe that Carltas/Ecke wouldn’t appoint a strong advocate of its own interests?  John White and Chris Calkins of Carltas have been present at many ERGA board meeting.  Were they only casual observers?
3.     There is more than one CFD bond with Mello-Roos assessments.  CFD #1 was for infrastructure improvement on Leucadia Blvd. and Quail Gardens Dr.  Wouldn't a portion of that apply to the Town Center since Leucadia Blvd. was extended to El Camino Real to benefit the center?   ERGA benefited and pays an assessment.  However ERGA has no involvement with the other CFD bonds .  Of course these other bonds have fixed assessments because there is no complicated excess and surplus net revenue details for paying CFD #1 and the sales tax advance.  What exactly are the obligations of the Town Center under all bonds?
4.     There is a “look back catch up” period of five years for payment of the CDF #1 assessments.  Any debit remaining on the books disappears the sixth year.  If the bad performance of the golf course continues for an extended period, the homeowners may not get any reductions.  With the bleaker economic outlook the big question of a default arises on the Golf Course Revenue Bond.  ERGA has sole responsibility for payment.  It looks as if the real reason for setting up the contingency fund by appropriating the CDF #1 money is to prevent a default in case ERGA income continues dropping and operating expenses rise.  Is this legal under the Development Agreement?

No mention was made of the Joint Power Agreement between SDWD and ERGA.  This is supposed to be mutually beneficial, but SDWD ends up subsidizing the reclaimed water cost and perhaps covering costs in other ways.  Add together the golf patrons, Encinitas Ranch residents, and SDWD ratepayers, it seems that Carltas/Ecke almost got the benefits of a golf course for the Encinitas Ranch project without really paying for it.  Yes, Carltas/Ecke dedicated the golf course land to the city and built the course, but expected to get reimbursed through the complicated Development Agreement over the its lifetime.  This private/public enterprise got derailed by the Great Recession, and Carltas/Ecke looks to be protecting its position vis a vis the citizens of Encinitas.  How does diverting CFD  money for a contingency fund and  a five-year suspension of payment of the sales tax advance, in reality a loan from the city, benefit anyone but Carltas/Ecke?

Cowboy Carlos

In more exciting news, there is no sign that ERGA is considering a global warming policy for the golf course. One enviro-golfer had been hoping the course would ban players who arrived via motorized vehicles, including buses, and the course would end the use of motorized golf carts.

Magic sand appears from nowhere

Thursday, August 18, 2011

The Law Shouldn't be a Secret

The latest housing proposal for the old Pacific View Elementary School site failed to gain favor Wednesday night with a majority of the Encinitas City Council.

The next battle over the prime coastal property's future is likely to occur in a courtroom, proponents and opponents said after the council's 2-2 vote on a rezoning request, which would have allowed the housing proposal to proceed. The council needed a super majority vote to approve the request.

Read more:

From reports sent to me last night:
The city attorney spent some effort explaining the law for Jerome Stocks. On issues where the law is important to the issue the City Attorney should submit a written analysis as part of the staff report, beforehand.

Sevearal times I've brought up open government law violation issues and the city attorney either remains silent or says he will secretly tell the council what the law says. The law shouldn't be a secret. If the city is in violation of the law, the response should not be to keep it a secret, it should be to correct the problem.

Recommendations: 1. More open legal analysis from the city attorney as part of the staff reports (that's what we pay him for). 2. End secrecy of what the law is.

Oh, and after a year at city hall how come Gaspar can't vote on an item? She wasn't on the council when the city first voted to keep the streets report secret, but she had no problem voting on that. Isn't that a little inconsistent? Some thing's up.

This is part of the coast news coverage:
Councilwoman Kristin Gaspar recused herself because she reasoned that she wasn’t a council member when the issue first began, much to the dismay of at least two council members and a public speaker.

Houlihan asked the city attorney for clarification about the circumstances for recusal and questioned whether Gaspar met the standard. City Attorney Glen Sabine said since no legal precedent existed for recusal barring a conflict of interest, it was up to the individual member to decide whether they were competent enough to participate in the matter.

Bond added that when he first decided to run for City Council he didn’t know where city hall was located, but that didn’t preclude him from voting on matters before the council.

Read more: Coast News Group - Divided council rejects rezoning

Eek. Then there is this from the UT:

Gaspar, reached Thursday, declined to say how she would have voted on the Pacific View rezone, but said she stood by her decision to recuse herself.

“I was not going to simply step in to cast a vote. I have to make sure there really is an independent proposal coming forward,” said Gaspar, a former board member on the Encinitas Education Foundation, a private, nonprofit that supports Encinitas Union.

It is one thing to say that you should not be allowed to pull the level and have your vote counted. It is another thing to decline to state how you would have voted (and why). This should be no surprise. Gaspar has a history of declining to state her views. Kinda makes it hard for public policy driven democracy to work.

Recommendation: Voters should back policy oriented candidates with the conviction to at least DISCUSS their positions.

Tuesday, August 16, 2011

Monday, August 15, 2011

Bond's Best Friend Ben

The Mayor relies on the government's chief cheerleader for setting budgetary assumptions. Well...

There are many who think the structural problem with our economy is just consumer psychology.

Qatar is the worlds most optimistic country and that is why they are super rich!

Ben Bernanke's job description includes using jedi mind tricks aimed at getting consumers to use their credit cards as much as possible. I was totally wrong. I didn't think anyone actually fell for it.

Here is the Mayor talking about the most delicate part of the budget process.

Get Microsoft Silverlight

I've not had time to write this up, but I should leave some tracks behind for others to follow.

1. If they had fully vetted (as a serious effort) the assumptions, that stuff, and the stuff the Mayor says they are relying on should be documented. At least it should be referenced. If its there, well I suck. I didn't see it this year and I have exhaustfully searched in previous years.

2. The city projected a relatively snappy sales tax increase for this year. How was that conservative?

3. The city has not always got the projections right (At least our CFO Gaspar should have known that).

4. Just before the peak of housing, the city's assumptions were based on the stated position that home prices would not fall, even though it was a raging bubble, but listening to cheerleaders is easier than doing asset valuation analysis.

5. SANDAG modeling should not be swallowed whole. As a member of ITOC it was within our mandate to review some of their models. I did. SANDAG relied heavily on autoregressive forecast models that were seriously overfit (R2>95%). Those familiar with developing forecast models will not be surprised that the predictions didn't work as well as expected, especially in a time of mechanistic flux.

The city should rely on good mechanistic forecasts, not on the unquestioned authority of others.

6. The city does not use the best guess. They should be. When they do,  they should not be basing their budgets on what is expected, but rather what can be counted on with high certainty. The difference is huge. They should also do sensitivity analysis with horizons out to as far as they are carrying current liabilities.

7. The most important projection has ALWAYS been the elephant in the room. It is not sales tax. It is not property tax. It is rate of return that the highly mismanaged CALPERS is providing the city on its pension fund. Get that wrong and it WILL results in layoffs and park closures IN THE FUTURE. It is not something that will be fixable.

I mentioned this and the general response is, well we don't calculate that number. Uhm, but we are the ones on the hook for that liability. It is not a conservative estimate. You can't find an annuity for anything close to CALPERS' "conservative" estimate. It now turns out that even CALPERS thinks their assumptions are too optimistic, but they don't want to change it because of political reasons.

8. As for the roads report. Nobody got in contact with me. Deferred maintenance of streets ends up costing future taxpayers more to repair. The city is underfunding roads maintenance and have done all they can to push that issue off as long as possible. It is not an issue of "perfection" of our streets. It is an issue of the ethical treatment of future residents. If the roads get bumpy... it is already too late.

It was insane that Bond and Maggie would spin the fact of the accumulation of deferred maintenance.

more later...

Saturday, August 13, 2011

Kids like it

You've got to be a serious art snob to not realize the best PUBLIC art has come from the public. The public loves this!!!

This stuff has for the most part been genuine, meaningful, entertaining, and inspirational to the public. This reflects our community. Lemonade out of (government sponsored) lemons.

Lots of places throw art at its community. Encinitas is on the map when it comes to art from its community.

You can not say that about the "magic carpet ride", which was well crafted. The Cardiff Kook came across as reflective of the community as an airport trinket AND it depicts someone having trouble managing his surfboard (at best, what is the guy doing anyways?). Surfers see it right away. No matter how tempting, you can't respond by saying screw the surfers, it just doesn't compute given the context and composition.

The fact so many of the details of the statue are "just wrong" and this was not recognized by the artist, civic, city or county sponsors symbolized the LOSS of our soulful beach town character and a transition to a shallow poser community that had no idea about the sensibilities of the surf community they were trying to capitalize upon. In many ways the statue does actually capture the horrifying evolution of our community.

Making things even more risky, its real tough to celebrate a community that has a long history of desiring not to be celebrated (they should have known this). The magic carpet ride was thrown at the community and told to like it because we don't know art.

The statue would never have passed the public smell test if this PUBLIC art had been put out for REAL public review (BEFORE IT WAS TOO LATE). It saddens me to say that the 5 council members did not learn their lesson and made the same procedural error with the swamis carving (it will be there for years).

I know what a competent surfer looks like. I also know which art draws the crowds and which draws scoffs.

On the flip-side of things, because the county and the city have not done what needs to be done on the pension issues, there won't be much money available for bad government art in the future.

100s of adults like it

Roundabout Glory

Just got back from an extended stay on Kauai. They've recently added a roundabout in Poipu, right next to the fire station. Its at the intersection of Poipu and Lawai Road (a lot of Leucadian have connections to Kauai and will know this intersection).



Our friends said it was put in for the new shopping mall and a big subdivision that connects into the intersection on the west. The waits at the intersection would have been too long for the shoppers and the new homes, without changing the intersection. The roundabout worked great. Traffic smoothly transitioned into and out the intersection with only mild acceleration/deceleration. Rarely did you have to stop, but when there were bursts of traffic people did have to stop and wait to go against the dominant flow (myth busted: no stopping with roundabouts). The radius seemed larger than ones in Encinitas. For an intersection with light traffic and with people frequently turning down any of the exits, the round about was the clear winner.

As for being the best for CO2 emissions, roundabouts can not logically be the universal best solution (but, so what, a lot of public policy is based on vehicle miles traveled, not CO2 emitted. Did you know that?). As for the problem of slowing down emergency response, the response looks like it will be hit with only a small new delay when going only one of the four directions. If there were ten roundabouts in a row, and especially if they all had really small radii, that might sum to a delay that shouldn't be dismissed.

I got the following link in my in box while I was on Kauai.

USA Today: Fire Departments and New Urbanies at Odds
Urban villages, quaint and pedestrian-friendly developments embraced by environmentalists, are sparking opposition from fire officials who say the streets are too narrow for their fire engines.

The popularity of such residential complexes sprouting throughout suburbia is forcing a rethinking of street design so the villages can accommodate both emergency responders and a desire for more intimate neighborhoods...

[I've never understood the hope that we will get a small town social dynamic by becoming embedded in a bigger social network. I've never seen the claim backed by data either. Anyone seen it?]

"It's far different than it was 10 years ago because people have actually started talking," says Jim Tidwell, a former chief of the Fort Worth Fire Department and a member of the city's planning commission. "Let's try to find a solution."

U.S. guidelines set by the International Code Council call for 20-foot-wide streets, but individual communities can adopt the codes and regulations they want. Some require 24-foot widths.

In sprawling suburbs where fire stations serve a vast area, departments opt for large trucks that can respond to a variety of calls. Because many suburban subdivisions are closed off by cul-de-sacs and have only one way in and out, firetrucks need wide streets to get their apparatus in and out.

Groups such as the Congress for New Urbanism, a non-profit that promotes the health and environmental benefits of walkable neighborhoods, are turning up the pressure to come up with guidelines that can accommodate urban villages without jeopardizing fire safety.

[Moonlight lofts was smart growth/new urbanism. It didn't appear that anyone walked for utility trips or didn't use their auto as a primary means of transport among inhabitants of moonlight lofts. Then there is, Billions have been spent on transit-friendly housing, but it appears people aren't leaving their cars behind.]

•The Environmental Protection Agency, the Congress for New Urbanism and fire marshals across the USA have partnered on an Emergency Response & Street Design Initiative.

"As our streets grew and as our budgets grew, our equipment grew," says Charles Marohn, a Minnesota engineer and one of the founders of the Strong Towns blog, which comments on the financial implications of development. "As cities are forced to contract, we're finding we can't afford the system we've created."

Proponents of narrower streets say they reduce car and pedestrian accidents because traffic slows when streets are not as wide.

[Curved and narrow streets doesn't seem to solve the speeding/safety concerns in Cardiff.]

•One of the techniques for creating narrow, calm roadways and still provide emergency access are drivable sidewalks and roll-down curbs, Tidwell says.

"It restricts normal traffic to the width of a lane," he says, but wider vehicles can straddle sidewalks.

[The Encinitas FD had spoken publicly about roundabouts having a negative impact on response time. I don't know that there has been an official or justified reversal of their conclusions. Anyone know if they include roundabouts in their response time modeling?]

David Meyer->Shea Homes Density Bonus on Saxony

Dino Kook Diorama

Photo Pierce Kavanaghvia via The Leucadia Project

Jurassic Kook

An incredible new installation has appeared overnight at the Cardiff Kook.
First sharks and now Pteranodons. Oh my!
Photo by Cyrus Sutton

Thursday, August 11, 2011

RIP Summer

Summer Autio, a local beloved yoga instructor, has passed away after a battle with cancer. More info on

Wednesday, August 10, 2011

Homeowners Becoming Aware of ERGA

We've posted a bunch on ERGA and the ETA has been working on this for over a year. A year ago when Gaspar started coming to council meetings, ERGA was on one of the agendas. At the meeting I asked Gaspar if she had done her homework and what her recommendations were on the ERGA situation. She said she had done her homework and then refused to discuss the matter. It was made very clear a couple months ago, during a meeting on the subject, that she hadn't understood what was going on and that was after multiple more meetings on the subject. Gaspar lives in the Encinitas Ranch.

To: City Council Members

City Manager

From: The Encinitas Ranch Community Association

Date: July 11, 2011

Subject: Encinitas Ranch Development Agreement and

Encinitas Community Facilities District #1 Mello-Roos Taxes

The purpose of this memorandum is to formally request the Encinitas City Council take the following actions with respect to the above mentioned subject:

Rescind the Council decision of April 27 regarding the establishment of a new Encinitas Ranch Golf Authority (ERGA) contingency reserve fund. Further, if the council were to reconsider such a fund in later years, it should be undertaken only after all other obligations of ERGA have

1. Fund a comprehensive audit of the operations covered under the Developer Agreement, ERGA and CFD 1 since its inception and including all modifications and extensions.

a. Such an independent auditor to be expert in this area and to be approved by Encinitas Ranch HOA.

b. The terms of such audit to include a full accounting of monies transferred either from the Town Center or the Golf Course to the City, and those amounts of Mello Roos taxes paid as a result of Golf Club or Town Center operations.

c. The audit should also include the economic impact of any non-completed obligations of the developer under the original contract, and the consequences of any failure to pay bond or other obligations on the part of the developer.

2. Revise the composition of ERGA board to include representatives of the homeowners at risk.

Recent Encinitas City Council action has called into question the basic fairness and even handedness of the Encinitas Ranch Development Agreement (“Agreement”). Close scrutiny of the Agreement and its implementation suggests that an economic burden was illegally imposed on the individual home buyers within Community Facilities District No. 1 (“CFD 1”) without their full knowledge and consent.

The 500 homeowners of Encinitas Ranch have just learned how directly and significantly their individual Mello-Roos CFD 1 tax liability is tied to the economic performance of the City’s golf course and the privately owned Encinitas Town Center commercial area.

This revelation came as a complete and total surprise to the Encinitas Ranch homeowners. It is fair to say that it will come as an equal surprise to the other 424 homeowners who together with Encinitas Ranch make up the total 924 homes in CFD No. 1. The facts surrounding this economic link, together with the potential negative financial impact, came to light as a result of City Council action taken on April 27, 2011. Specifically, the City Council, at the request of the Encinitas Ranch Golf Authority (ERGA) and Carltas, approved staff recommendation that allowed the golf course to divert $100,000.00 a year for the next five years from funds that would otherwise be available to pay the golf course’s obligation to pay its annual share of the CFD No. 1 bill, thereby shifting responsibility to pay to the individual homeowners of CFD No. 1.

Irrespective of the fact that the action taken by the City Council on April 27 had a clearly defined potential for direct negative impact on the homeowners of Encinitas Ranch, absolutely no advance notice was given to the homeowners.

The action taken by the City Council on April 27 caused The Encinitas Ranch Community Association Board of Directors to launch an immediate investigation into the underlying circumstances, which of necessity led to a review of the original Encinitas Ranch Development Agreement, which is a document allegedly prepared by the private developer Carltas with apparently little City oversight. The Agreement provided in part for the development of a commercial area known as Encinitas Town Center, which is owned by the developer Carltas and others, and a golf course, which is owned by the City. In conjunction with the development of the golf course, the City created an entity known as Encinitas Ranch Golf Authority (ERGA), which is managed by a City-appointed board and whose sole function is to manage the golf course for the City. The ERGA board consists of five members, three of whom are city employees, one a Carltas employee and a fifth at-large member. There is absolutely no representation by or input from an Encinitas homeowner despite the fact that action taken by the ERGA board can have a direct impact on the financial wellbeing of the homeowners.

As part of the Agreement, a Mello-Roos special tax district, CFD 1, was created to provide the funding for the infrastructure and other specified amenities associated with the development. CFD 1 calls for the levying of an annual tax on all property owners in the district, with the exception of the golf course, which is technically not part of CFD 1.

However, pursuant to an Amendment to the Agreement, the golf course is legally obligated to pay a specified share (14%) of the total CFD 1 annual bill. This obligation resulted from the fact that the golf course is a clear and substantial beneficiary of the CFD 1 infrastructure. Also, unknown to the district’s homeowners until this recent investigation is a proviso that the golf course only has to pay its annual obligation to the extent that its revenue exceeds a defined amount. As exemplified by the City Council’s action of April 27, that amount can be manipulated to the homeowner’s detriment by re-defining the terms. The net effect of the April 27 City Council was to create a new layer of expense under the guise of establishing a contingency reserve despite the fact that the golf course already had three separate reserve funds totaling over $800,000.00 and more than adequate insurance coverage in the event of an undefined catastrophic event.

The Encinitas Town Center, which is a privately owned commercial enterprise, is part of CFD 1 and is therefore subject to an annual CFD 1 special tax obligation. The Town Center is a major beneficiary of infrastructure paid for by CFD 1 and should bear a fair share of the cost. However, like the golf course, it appears that the Town Center only has to pay its CFD 1 obligation if its retail sale revenue exceeds a defined amount. If the Town Center has a bad economic year and does not pay its annual bill, the unpaid amount will be passed on to the homeowners.

No such forgiveness provision exists for homeowners. If a homeowner has a bad year, no matter how bad, he/she will be required to pay the bill in full and may even have to pay a pro-rata share of the golf course and/or Town Center obligation. Moreover, it appears that if these entities have a surplus year, the excess may go to the city or private investors, and are not used to mitigate homeowner burden in poorly performing years.

The Agreement requires that each homebuyer be given notice regarding the existence of a special tax district such as CFD 1 and, to the best of our knowledge, which notice was given by each merchant builder. However, absolutely no notice whatsoever was given regarding the fact that what each homebuyer actually paid from year to year was tied to the economic performance of the golf course and the Town Center.

Even the administration of CFD 1 gives reason for concern. The finance manager for the City is also the administrator for CFD 1 and the finance officer for ERGA. The overlapping relationship between the CFD 1 administrator and the finance officer for ERGA would appear to raise a conflict of interest issue from the point of view of CFD 1 homeowners. This conflict presumably wearing all three hats, advised the City Council to approve ERGA’s request to create a new contingency reserve to the financial detriment of the CFD 1 homeowners. Mr. Lembach was unequivocally advocating for the benefit of ERGA.

There appears to be no independent oversight regarding the administration of CFD 1. No governmental agency, entity or individual has that responsibility. The CFD 1 administrator seems to have unfettered discretion, which is of particular concern when one considers the potential for bias based upon the duties of that position.

As part of its investigation into the above discussed matters, the Encinitas Ranch HOA Board looked at and considered the financial performance record of the golf course. Although the golf course is a for profit business, it has realized very little profit over the years and has lost money in recent years. Certainly, the overall economic downturn has had an impact, but there was probably reason for concern before the downturn. Because of the potential for shifting financial burdens resulting from poor economic performance, homeowners in CFD 1 are justifiably concerned about what would happen if the golf course was a complete economic failure and went bankrupt.

Would the golf course’s obligation to pay 14% of the annual CFD 1 bill shift entirely to the CFD 1 residential property owners? This question was asked at a recent information meeting attended by City representatives and Encinitas Ranch Community Association representatives. The question was put to Mr. Lembach, and he either didn’t know the answer or

didn’t want to answer because he gave no answer. This is a significant concern to homeowners.

The residential property owners in CFD 1 are entitled to answers. If the answers show that the residential property owners would bear the cost of the golf course and/or retail elements’ failure, this would represent yet another example of lack of notice regarding CFD 1 liability.

Please respond to the Encinitas Ranch Community Association’s request for the actions outlined above within 30 days from the date of this memorandum.

We'll post up some links on ERGA in the next few days.

Sunday, August 07, 2011

Stop Tax on the 'net guy at Target

What do you guys think? Should you only pay tax when you buy a t-shirt inside the brick and mortar Surfy Surfy Surf Shop and not when you shop the Surfy Surfy online store?

Eckes to Help Grow Local

Thursday, August 04, 2011

Candidates Get Started

Leucadia's future is driven by what happens at city hall. The next council will have enormous decisions on how the city will deal with its liabilities (infrastructure maintenance, bond debt, and retiree debt). It will also decide if the city goes for more urbanization and whether or not it will address environmental issues superficially or with substance.

Alice Jacobson is widely rumored to still want a seat on the city council. Its just a rumor, but the really really awkward jumps she's been making across city commissions looks more like resume padding than genuine interest and commitment.

Last time Alice ran she trumpted her experience on planning boards/commission and charity work. But did she do a good job on the planning commission? How does the charity work relate to her public policy and public administration positions? If Alice runs she probably will have the city's insiders crowd and money to pump a Gaspar style election. Little grassroots campaign support, mostly people with monetary interest and personal friends. That's just the prediction.

Lisa Shaffer is definitely running. She has been active in a diverse set of public policy issues pertaining to the city. She's published her views and spoken in front of council, most recently asking the city stop spending money trying to keep the roads report secret. Lisa is well known among city watchers and comes across as genuine, because she speaks up and is open about her positions. She says she is strongly motivated to run by the lack of transparency and manipulative way the city council has been operating.

She's got a Phd in public policy and is involved in a sustainability program at UCSD. She's already cleared next summer for campaigning and reduced her work load in the following fall. She knows what she's getting into and is ready to make it happen.


Elizabeth Shaney also announced she is going to run. She has little record in terms of public policy or involvement in city government. 

She says she has more time now and wants to use that time to make changes in our community.

Her campaign facebook page reads:
It's time to refocus on what is important to those of us who live in Encinitas! We are a family based community, we are an environment loving community, we are a creative community. Let's not pass up opportunities that the Surfing Mary had to offer our community. Let's get going on the Hall project and think outside the box on how to do it cleanly and with partners. Let's be conscious about our development, to encourage growth and the character of our communities.

Let's hope this campaign is about public policy and not an ASB popularity contest.

Monday, August 01, 2011

Check your blindspot

SciAm ran a column on beliefs this month. It made me think about much of the public's understanding of Leucadia issues. Excerpts below.

We form our beliefs for a variety of subjective, emotional and psychological reasons in the context of environments created by family, friends, colleagues, culture and society at large. After forming our beliefs, we then defend, justify and rationalize them with a host of intellectual reasons, cogent arguments and rational explanations. Beliefs come first; explanations for beliefs follow. In my new book The Believing Brain (Holt, 2011), I call this process, wherein our perceptions about reality are dependent on the beliefs that we hold about it, belief-dependent realism. Reality exists independent of human minds, but our understanding of it depends on the beliefs we hold at any given time.

Once we form beliefs and make commitments to them, we maintain and reinforce them through a number of powerful cognitive biases that distort our percepts to fit belief concepts. Among them are:

Anchoring Bias. Relying too heavily on one reference anchor or piece of information when making decisions.
Authority Bias. Valuing the opinions of an authority, especially in the evaluation of something we know little about.
Belief Bias. Evaluating the strength of an argument based on the believability of its conclusion.
Confirmation Bias. Seeking and finding confirming evidence in support of already existing beliefs and ignoring or reinterpreting disconfirming evidence.

On top of all these biases, there is the in-group bias, in which we place more value on the beliefs of those whom we perceive to be fellow members of our group and less on the beliefs of those from different groups. This is a result of our evolved tribal brains leading us not only to place such value judgment on beliefs but also to demonize and dismiss them as nonsense or evil, or both.

Belief-dependent realism is driven even deeper by a meta-bias called the bias blind spot, or the tendency to recognize the power of cognitive biases in other people but to be blind to their influence on our own beliefs. Even scientists are not immune, subject to experimenter-expectation bias, or the tendency for observers to notice, select and publish data that agree with their expectations for the outcome of an experiment and to ignore, discard or disbelieve data that do not.
This dependency on belief and its host of psychological biases is why, in science, we have built-in self-correcting machinery. Strict double-blind controls are required, in which neither the subjects nor the experimenters know the conditions during data collection. Collaboration with colleagues is vital. Results are vetted at conferences and in peer-reviewed journals. Research is replicated in other laboratories [maybe]. Disconfirming evidence and contradictory interpretations of data are included in the analysis. If you don’t seek data and arguments against your theory, someone else will, usually with great glee and in a public forum. This is why skepticism is a sine qua non of science, the only escape we have from the belief-dependent realism trap created by our believing brains.

We should embrace processes that challenge each other's beliefs. It can result in better understanding and help shrink our blind spot.   

Nobody gets it right all the time. Be wary of leaders who avoid challenges to their positions.

See also: Roots of disagreement.