Some folks have been asking about the fate of the idiotic “boutique” hotel project that had morphed into a hideously overbuilt hotel/apartment hippogriff that is twice the allowable density permitted per the City’s own Transportation Center Specific Plan. Of course the project was never contemplated at all in the Specific Plan, so who cares, right? Fullerton being Fullerton.
In an act of utter incompetence the City actually rushed the approval to transfer of title to the land, before the deal had received final approval. Then they gave it away the land for pennies on the dollar.
Friends may recall our last October post in which we discovered that the new “developer,” one Johnny Lu of TA Westpark LLC, was way upside down on loans he had somehow leveraged on apartment blocks in Irvine and was in default.
You may also recall that Lu started shifting the property to different corporations, the first of which, a Delaware corporation, was non-existent. And just for grins, Mr. Lu changed the property description, too, when he later deeded it back to his California Corporation.
Anyhow, it looks like Johnny has finally created and recorded the appropriately named Delaware corporation in March – only two years too late, but, hey, not bad for Fullerton, right?
There has been nothing but radio silence from City Hall as to the status of Mr. Lu and whether he has met any of the stipulated deadlines in the Development and Disposition Agreement, but as we have learned in the case of the Florentine/Marovich sidewalk heist, contractual obligations mean nothing when the “I Can’t Believe It’s a Law Firm” of Jones & Mayer is your City Attorney. Recently, cluelessly verbose Shana Charles indicated that the project was still alive and well. She didn’t mention Mr. Lu’s financial embarrassment, but then nobody else has, either.
And now for some sadly interesting news. It turns out the original Founding Father of the boutique hotel concept, Craig Hostert of West Park Development – the guy who sold the idea to Jennifer Fitzgerald, Jan Flory, Jesus Quirk Silva, Ahmad Zahra, Bruce Whitaker, et. al. – died in late May.
Hostert
Poor guy. He went to his Reward after getting pushed out of his own scheme, and sticking us with the appalling, metastasized mess the concept has predictably morphed into; showing that once again, no bad idea goes unappreciated in downtown Fullerton. Being Fullerton, of course.
Last Tuesday the Fullerton City Council voted 4-1 to approve the ’24-’25 city budget. Whitaker, as usual voted no. The budget projects big deficits as we’ve already heard.
After that the Council was presented with “revenue enhancement” ideas – the same old nonsense that we’ve already talked about, here. At first these ideas were simply floated to make it look like somebody had given some thought to find other ways, however silly, to address the tsunami of red ink; but in reality the point was to push a general sales tax, a movement that had been subtly going on for many months.
However the proposals agendized last Tuesday did not include a sales tax this fall, a sure indicator that the City Manager has polled the Council and knows he doesn’t have the votes to put it on the ballot. But that didn’t stop Councilmembers Charles and Zahra from pitching and pitching and pitching the idea; and finally supporting each other to get the issue of a sales tax on the an agenda, pronto, in time to schedule it for the November election.
But before that happened the public was treated to some of the most blatant and self serving re-writing of Fullerton history I have ever heard.
If I knew what I was talking about this wouldn’t be Fullerton!
Shana Charles started off with long-winded blabbering that was irrelevant, self-contradictory, confusing, and erroneous. Of course – “decimated” staff, the ill-effects of right-sizing,” reduced response times – the usual liberal litany of problems were simply meant as an introduction to the sales tax proposal. Her complaint was that previous councils had made mistakes, not by exercising fiscal restraint, but by “cutting to the bone.”
Charles then lauded the wonderful benefits that the City of Placentia derived from it’s Measure U sales tax that saved it, having declared bankruptcy – a statement completely false. She failed to mention the fact that Placentia has saved millions by getting their “fire fighters” out of the paramedic business, an idea of which her Fullerton fire fighter union pals are terrified.
While patting herself on the back for very recent staff and service level increases, she failed to see the rich irony of her own incompetence on the edge of a precipice: a situation well-understood when she voted for last year’s budget.
More economic development, better wardrobe…
If Charles blathered nonsense, Zahra just lied about Fullerton’s recent fiscal history, most likely because he has been on the City Council for 6 years, and has his greasy fingerprints all over the budgetary disaster.
According to Zahra, our problem reaches back decades and only now is the Council addressing the problem. Of course our City Councils have made bad decisions over the years, but the current disaster is of very recent vintage and has also occurred while he has been on the City Council.
For several years in the mid and late teens Fullerton was dipping into reserve funds to pay the freight, even as Zahra’s allies Jan Flory and Jennifer Fitzgerald and Jesus Quirk- Silva were lying to the public about the budget being balanced. It wasn’t. In fact the City continued in its cavalier way until Fred Jung and Nick Dunlap joined Bruce Whitaker on the council in 2020.
Let me count the ways…
Zahra related how he, as a precinct-walking candidate, noted how people wanted better roads and how his predecessors had promised them, too, but that they failed. He didn’t note the fact that Fullerton’s public safety employees were hogging up bigger and bigger shares of the budget – as they still do.
The subject of Zahra’s failed 2020 Measure S sales tax came up, a sore subject, apparently, since his underserved constituents in D5 voted for it. So let us not stop from revisiting it, and right now! Charles chimed in that well she people she spoke to voted against it because there was no sunset provision, and, get this – because there was no oversight committee!
As an aside, I have to share that Zahra made an hilarious little speech about he could not support an infrastructure improvement bond because voting for municipal debt would keep him awake at night!
It’s not rocket science…
Bruce Whitaker made just about the only insightful comment of the discussion, namely: that cities can control costs but they can’t control revenue, an observation that flies in the face of the revenue enhancement propaganda, but that is perfectly true. As has been stated here before: nobody even knows if an Economic Development Manager even pays for himself in terms of incremental tax increase.
I will wrap this up by acknowledging a Zoom caller who actually did make a good revenue enhancing and who identified a huge fiscal problem: downtown Fullerton, the annual sinkhole that makes millions for the scofflaw club owners and that leaves the taxpayers with a $1,500,000 bill. He suggested a special assessment on these eager party entrepreneurs to pay for the havoc their booze and their customers cause. Not surprisingly, none of the council members even mentioned the problem. They never do.
The Fullerton City Council is holding a special meeting tonight – a 2024-25 Budget “workshop.” No work will get done but there will be shopping going on as staff begins its formal press to raise a sales tax.
There is a lot of self-serving verbiage about how well our City staff has performed its tasks up ’til now, but then the hard reality hits because budget numbers can’t pat themselves on the back.
There are some harrowing numbers in the proposed budget – including a $9,400,000 draw-down from strategic reserves. This means of course, that the budget is no where near balanced as City Hall apologists like Jennifer Fitzgerald and Jan Flory claimed when they ran the place into the red almost every year.
M. Eric Levitt. Will he save us from ourselves?
Let’s let our City Manager, Eric Levitt tell the tale:
“Financial Stability. The City has been able to over the last two years (for the first time in recent history of the City) to reach and maintain a 17% contingency reserve level. This budget maintains that reserve level; however due to an operating deficit, we will be utilizing one-time excess reserves this year and coming close to that 17% level in FY 2024-25 and below that in years beyond next year“
Read. Weep.
The overall picture gets even worse as the levels of reserves slowly dwindle away. After this year Fullerton continues to be upside from $7.5 to $8.8 million each year until the end of the dismal decade. We are not favored with the running reserve funds balances.
Infrastructure is supposedly a big deal. Which reminds me of a quotation attributed to Mark Twain: Everybody talks about the weather but nobody does anything about it. But this year we are told, we can push get going on our deteriorating infrastructure along by borrowing! Once again let’s heed the words of Mr. Levitt:
“I have also put together a strategy to increase that funding level to closer to $14 million over the next four years through the use of financing. However, there are both upsides and downsides to this approach which will be discussed with you in more detail at today’s presentation.“
Now this should be a red flag: borrowing to perform maintenance, a basic accounting no-no. And what form will the borrowing take? Not a municipal bond, you can be sure, It would likely be by selling certificates of participation or some other dodge to avoid municipal debt restrictions. Here’s the table that shows our Maintenance of Effort (MOE) shortfall without financing.
Now we all know that interest payments are made by somebody, somewhere, and that somebody is you and me. We get to pay the interest on debt incurred by years of municipal mismanagement by people like Joe Felz and Ken Domer and Jeff Collier who get to sail off to a glorious and massively pensioned retirement at 55 years of age.
And finally, to circle back to the story lead, here’s a distasteful nugget carefully slipped into the City Manager’s report:
“Staff recommends City Council review options over the next year to stabilize the budget and ensure the City remains financially sound.“
Jesus H. There it is. Not quite explicitly stated, but we know very well where this is going. Another general sales tax effort, just like the ill-fated Measure S of four years ago. The seeds for this have already been planted, of course, in a nasty little taxpayer-funded fishing expedition in the guise of a community survey. Last November I regaled the Friends with this slimy maneuver, here.
How did things get so bad?
By the way, this is exactly the same process City Hall rolled out four years ago. And we will be told By Ahmad Zahra, Shana Charles and Vivian Jaramillo that if we don’t pony up we will be morally deficient.
Well, good luck Friends. This is going to be a long year and you can bet the farm that we will be asked to pick up the check – again.
I’ve been watching Fullerton politics and governance for for a long time – since 2008 or 2009, in fact. One thing that has consistently struck me is the way in which Fullerton’s elected officials have completely and almost happily abdicated their responsibility to determine the direction of policy.
It has always been the goal, in principle if not in practice in modern representative democracy, that policy would be established by electeds, and administrated through a protected civil service bureaucracy.
Determining policy – the philosophical direction you want the town to take – isn’t easy in the “City Manager” form of government, a form deliberately created to remove any sort of executive authority from elected representatives. But with that set-up came something else, too: the difficulty of people’s representatives in establishing policy direction, and doing it without violating the Brown Act strictures on open meetings.
Nevertheless, the responsibility is still there, even if it easier to have photo ops, and ribbon cuttings and the like. Sadly our electeds have failed; failed with remarkable banality and complacency. Former Councilman and Fullerton Police Chief Pat McKinley once illustrated the point when challenged for his “failure to lead.” He exclaimed that councilmen weren’t there to lead – that was the City Manager’s job.
Lately the policy role abdication has been seen with the regurgitated, spit out, re-consumed and regurgitated again noise ordinance, an ongoing embarrassment that has plagued honest citizens for over fifteen years. I read the staff report on the recent noise effort, a report that justifies a decision to actually increase acceptable levels, protect offenders by including an ambient noise mask, and locates the noise metering away from the source whence it can be muddled by an equally noisy neighbor.
The staff report is nothing but a list of events that have occurred since 2009 when the City Council last expressed a coherent position. Nowhere in the staff report is there any discussion on the policy decisions behind any of the activities. Why not? Because there weren’t any. In the same way that the incredibly costly, drunken binge known as Downtown Fullerton has escaped any intelligent policy conversation, the noise nuisance issue, a subset of the former, has evaded policy discussion as City staff – behind the scenes – has diligently avoided doing anything to enforce existing code, and worked very hard to reduce the requirements.
So what has happened is a vacuum in which each new action seems disembodied from policy conversation; that’s because it is. And our council steadfastly refused to have an open and honest conversation of what it wants, abdicating its responsibilities.
One size fits all…
There is a long list of issues that our elected representatives should be addressing from an overarching policy level and aren’t. This sort of thing takes thought; and some hard work in ascertaining whether your city employees are really doing the thing you want; or not, as in the case of the Trail to Nowhere. It’s easier just to ram through the Consent Calendar on the nod, rubberstamp the ridiculous, clean your plate like good kids, and move on to the photo ops and the trophy ceremonies.
When thinking about the Trail to Nowhere it seemed to me that I had seen this same sort of thing before. Then it struck me. Of course.
An expensive and unnecessary project that dragged out for years, and that was supposed to be paid for with other people’s money, “free money” as it is known in City Hall, I recalled.
It may have been expensive, but it sure was unnecessary…
I remembered because I wrote about it, here. The second elevator towers at the Fullerton train station, a project so ridiculously over-engineered, so expensive, so reliant on phony ridership projections and so expensive and mismanaged that it ended up raiding Fullerton’s own Capital Budget to the tune of $600,000. In the end no one knows how much was actually spent on that boondoggle when everything was said and done. But one good thing that came out of it was teaching me to appreciate how things are done in Fullerton, and how there isn’t one cent’s worth of accountability on the part of anybody.
If the Trail to Nowhere actually ever gets built but is way over budget, unused, unmaintained and falls into decrepitude, who will stand up to take responsibility? Not the City Council who approved it without question. Not City staff – the chief architects of this disaster in-waiting are already gone– nor will the City Manager, who will be gone as soon as his pension formula tops him out. None of the people stirred up to insult and harangue the City Council will be in evidence and the proprietors of the Fullerton Observer, if they are still around annoying people, will not be searching for those accountable. No one else will be, either.
Maybe the less said, the better…
Remember the multi-million dollar Poison Park intergenerational fiasco? Has anybody ever taken responsibility for that poster child of bureaucratic incompetence and political indifference? Of course not. That would be a horrible precedent. Fullerton.
Over the past two decades FFFF has documented the mess our City government has made of the financial sinkhole know as Downtown Fullerton; how laws and rules have been ignored to help the myriad bar owners, and how what is undoubtedly a fiscal municipal liability continues to be characterized as some sort of wonderful accomplishment.
Matt Foulkes. The spin out left casualties…
Planning Directors and Redevelopment Drones came and went: Dudley, Zur Schmied, Zelenka, Haluza, White, Foulkes, each one as useless as the one that came before, and each willing to put the scofflaws’ interest ahead of the citizens.’ To be fair, the political interference was there, too, nowhere better exemplified than in the case of our now-departed Mayor-for-Hire, Jennifer Fitzgerald, who had a for sale sign on her back. And of course City Attorney Dick Jones was there every step of the way to add obfuscating smoke into the downtown atmosphere.
Staying awake long enough to break the law…
Nowhere is the Fullerton downtown dysfunction better seen than in the complete hash the bureaucrats in City Hall have made of the noise situation. At first, the noise ordinance was simply ignored by the cops and by code enforcement. And for the past 15 years the City has made a concerted effort to allow amplified outdoor music downtown, to delay action (we’re still studying it), and to water down whatever official rules were on the books.
For the past four years nothing has happened and of course the nightclub operators have continued to take advantage of Fullerton’s de facto unwillingness to enforce anything.
And now the issue has finally resurfaced yet again, and once again the effort is likely not to work for us, but essentially, to admit defeat and allow the raucous free-for all to become official.
In December a new stab at a noise ordinance addressing outdoor music was placed on the table in front of the City Council.
Evidently the proposed ordinance was so bad that the our otherwise malleable City Council turned it back for rework. I don’t know what was in it because the City Clerk’s webpage doesn’t work. But supposedly the thing will be coming back on Tuesday the 29th and hopefully we will be able to see what sort of surrender our staff is coming up with.
By now Fullerton City Hall is aware that their partner in a boutique hotel/apartment high-rise on Santa Fe Avenue, TA Westpark LLC, is in trouble. TA Westpark Fullerton., AKA Johnny Lu has defaulted on a massive loan, previously borrowed to complete projects in Irvine.
Why is Johnny smiling?
The fallout from this embarrassment remains unknown, although there are plenty of questions that need to be answered, and sooner rather than later.
One of the questions involves the transfer of the public property ownership at the site to TA Westpark Fullerton, LLC before proper project approval, a desperate, and of course, totally unnecessary act. And the actual documents supporting ownership of the land in question need to be examined, too.
On December 22, 2022 the City sold the land at a huge discount to Lu. Check out the grant deed:
By now Craig Hostert, whose brain-child the boutique hotel was, is scratched out and TA Westpark Fullerton, LLC, a Delaware corporation, is the proud owner of the land and the transfer is signed by a “managing partner” of a whole other entity – “TA Partners.” Looks like Hosteret was bought out or walked away, abandoning his baby.
But, as they say in the infomercial, wait, there’s more. A quick check of the State of Delaware’s corporations roster doesn’t turn up any results for TA Westpark Fullerton, LLC. Hmm.
No responsive records…
And here’s something else. A few months later a new grant deed was promulgated and recorded at the County of Orange. Here, the hard to find Delaware corporation deeds the land in question over to TA Westpark Fullerton, LLC, a California corporation.
Something is odd here, and it’s not just the amateur hour handwritten changes on the original deed. Did the City sell this property to a non-existent corporate entity? If so, hasn’t some sort of fraud occurred? Why the shell game here, and could the original deed be considered invalid in retrospect?
No, I wasn’t asleep. I was praying…
We could ask these question of Dick Jones of the “I Can’t Believe It’s a Law Firm” law firm, because I doubt the City Council will make inquiries of their ace lawyer. Getting an honest answer from ol’ marble mouth? A rare and precious jewel.
Some might think this entire fiasco is going to get worse before it gets better. I’m not sure how that’s possible.
Friends probably remember that FFFF has been relentlessly critical of the dubious scheme approved by our City Council to underwrite a downtown boutique hotel and uber-dense apartment project on a parking lot owned by the City and used by Metrolink commuters.
Here’s a reminder: three councilmembers Bruce Whitaker, Shana Charles and Ahmad Zahra voted to sell this property to a developer for a mere $1.4 million (less site material removal) while simultaneously time jacking up the value of the land by approving density 2.5 times the limit specified in the Transportation Center Specific Plan. It was a gift of public funds at least ten million dollars.
Here’s the fun part. The original and completely unqualified baby daddy of the project, Craig Hostert, didn’t have the wherewithal to make the deal. After years of failing to perform on his Exclusive Negotiating Agreement and numerous extensions, Hostert’s West Park Investments, LLC joined its non-existent forces with TA Partners Development of Irvine, Johnny Lu, proprietor.
Mr. Lu, the new face of the project, appeared at council meetings to seal the deal with a ration of gobbledygook bullshit.
Now it appears that Mr. Lu may not have been the best choice of partner according to the Real Deal Real Estate News.
Why is Johnny smiling?
It seems that Johnny has gotten himself in over his head on two projects in Irvine, including second bridge loans that he has now defaulted on. And of course Sunayana Thomas, Fullerton’s crack “business development” director seemingly failed to inform the City Council of Mr. Lu’s impending financial embarrassment, something that should have been revealed in even a cursory perusal of TA Partners’ asset to debt ratio and its balance sheet.
And then, of course there is the problem with the completely incompetent concept of rushing the approval to transfer of title to the land, before the deal had received final approval.
By now the Council has possibly, though not necessarily been informed by the Fullerton City Manager, Eric Leavitt, of the problem, but where does the deal stand? Title to the property has been transferred from the City to and through Lu’s companies*, presumably for the original sale amount. But if TA Partners can’t perform, will the City get its now very valuable property back, or will it be encumbered by bankruptcy receivers? Will the City, in order to save face as it always has, permit Mr. Lu to assign his rights and interests to another party as a face-saving strategy? If that happens, will the original bad idea still go forward, or will the Council approve something even worse as a sop to a new developer so to avoid admitting their horrible mistake in the first place?
You can try asking Whitaker, Charles, or Zahra, the architects of this inexcusable and completely avoidable mess, but don’t hold your breath waiting for a response.
It could be. Last post I described how the the UP Park was contaminated and shut down for remediation just after $2 million were sunk into building a park. Nobody in the City bothered to do an Environmental Analysis.
I asked, rhetorically, whether the rest of the long UP right-of-way had been subsequently tested for toxins in light of the fact that trichloroethylene (TCE) had been detected on the property at 311 South Highland Avenue, a property adjacent to the proposed Trail to Nowhere. It seems that some years ago the Hughes Corporation used the solvent to clean up the circuit boards they made at this location, and the EPA still regards it as an active site.
A trail runs through it…
A little digging uncovered the fact that ground zero seems to be the west end of the property where testing has been periodically done in the area of a likely dump site for the nasty TCE toxin. Apparently there are several monitoring wells located in the yellow areas circled in red in the image below.
Please note the proximity to the Trail to Nowhere of the wells in the lower left. 15 feet? 10 feet? 5ft? Surely somebody in the Parks or Engineering Departments gave thought to this when the Trail to Nowhere concept was developed; when the grant application was made; even when the proposed project budget was laid out. No? If not, why not? How could they not have known? The EPA has recognized this as a site of TCE ground water contamination where a toxic plume is heading southward – under the proposed trail.
At this point questions are starting to pile up. Questions that may have uncomfortable answers.
We are fortunate that Messrs. Dunlap, Jung and Whitaker have put the kibosh on the silly and wasteful Trail to Nowhere proposal for other common sensical reasons. And yet there remains the problem about lack of disclosure to our elected officials in their decision making process, and perhaps even in the grant application itself.
A few weeks ago the Daily Titan published an article about how, in a few years, Fullerton is going to be running in the red. Deep red. City projections point to being upside down $19 million between 2024 and 2028. Now that’s not very good, is it?
Here’s the grim forecast:
Going the wrong way…
Naturally, the article quickly devolved into a vehicle for advocating the hiring of more people and paying them more, replete with completely fraudulent comparative pay statistics. On hand were Ahmad Zahra and his helper Shana Charles to bleat about unfilled positions and service deficits, always the first opening salvo in a new tax proposal – like the one Zahra pushed hard in 2020.
The head and the hat were a perfect fit.
Doug Chaffee, the senile Fourth District Supervisor of Orange County and a former Fullerton mayor contributed this gem to the conversation: “I think I would have been a little heavier on keeping our staff because they are the lifeblood of the city. They do the work.” Uh, huh. He failed to mention his own inept culpability in mismanaging Fullerton’s budget for years.
Gimme some of that do-re-mi to waste…
Hilariously, Zahra seems to think the phrase “economic development” has some sort of talismanic quality, as if there were anything City Hall could do to produce it. It never worked during the heyday of Redevelopment and it won’t do anything now. It’s just a shiny distraction that can’t even pay for the bumblers who are paid, and paid very well, to pursue it.
What economic development really means is a focus on increasing tax revenue to pay for the salaries and benefits of public employees and their bloated, guaranteed pensions. It would be refreshing if just once elected folks thought about less about raising revenue and more about living within budgetary constraints.
Mayor Fred Jung calmly opined that Fullerton has adequate reserves to handle the tsunami of red ink coming his way, but this is not reassuring. Fullerton went through the same crimson bath during the Fitzgerald/Chaffee/Quirk-Silva/Flory/Zahra regime, and anybody who thinks Fullerton is better off for the deficit spending it is a damn fool.
