Imagine, you don’t have any food. You can’t pay your rent and you can’t earn any more money. You’re tapped out. A stranger comes along and offers to try and get money from sources that owe you money but you are unaware of and are unable to collect yourself. In return the stranger wants to collect .15 cents for every dollar she collects for you. If the stranger can’t get any money, then you don’t pay any money; However, if the stranger obtains any money, you get 85 cents of every dollar. You don’t have to do anything. No brainer? You are in a financial crisis and possibly can get .85 cents on every dollar owed to you that you didn’t know how to collect.
The reason for the hypothetical is to illustrate what two members of our City Council did at the last City Council meeting.
The city of Seal Beach is in dire financial straits. There is not enough revenue to cover expenditures. This is despite extraordinary efforts by City Manager Jill Ingram, Finance Director Victoria Beatley and all department heads. This alarming picture is before addressing a much needed increase in police officers.
How can we get more revenue into the City? Well, at the last City Council meeting, the City Council had an opportunity to explore getting additional revenue into the city’s coffers by approving a contract with MPA, an oil revenue consultant, where he estimates there is between $10-12 million of oil revenue owed to the City. The contract called for MPA to get $.15 for every dollar the City realized from its efforts. Let me repeat, this possible oil revenue would provide much needed money and at no outlay by the City or any of its residents. (MPA was also willing to take on this job as a set contract or hourly amount but Seal Beach doesn’t have any money so MPA offered to do the job on a contingency.)
Regrettably, the City Council deadlocked on this issue and the City will not be exploring this zero expense outlay with the upside of getting additional revenue to the City. The question is, “How did the council deadlock?” First, council member Moore recused himself. Then despite a heroic effort by Mayor Pro-Tem Deaton with unwavering support of council member Massa-Lavitt, Mayor Varipapa and council member Sustarsic inexplicitly voted against the contract to bring revenue into the City. Sustarsic mentioned something about “transparency” but couldn’t explain what she meant, (She knew of this contract and the basic terms for over 6 months.) Varipapa said he didn’t like the consultant getting $.15 of every dollar even though the alternative was to get nothing. Mayor Pro-Tem Deaton unsuccessfully argued to Varipapa and Sustarsic that voting “no” meant losing $.85 of every dollar that the City is currently not getting and desperately needs. Mayor Pro-Tem Deaton also pointed out that a statute of limitations is in effect and that every day that goes by is another day we lose potential revenue that the City can never recover.
Mayor Varipapa and council member Sustarsic were unmoved and voted against entering into the contract. It seemed that they were more intent on voting “no” than what the upside would be for the City and its residents.
But wait! The mayor was not done with his incomprehensible behavior. He then brought up hiring another oil contractor (Clarke & Greene) at a cost of $45,000 to see if they could find any oil revenue for the City. No guarantee of any revenue to the City, mind you, just a $45,000 outlay by the City. Deaton quickly pointed out that the City has a budget deficit for 2018-19 and asked where the City could get the money. Varipapa replied “we will get it someplace”. This was a slap in the face to all of the hard work the City staff accomplished in cutting the budget where they were eliminating services and positions to save a $1,000 here and a $1,000 there. However, the mayor can be cavalier and say we will find $45,000 someplace. Maybe the mayor could find the $45,000 in the police department’s budget since he was the only dissenting vote when the council approved the funding for two much needed police officers by borrowing money from the swimming pool fund which was suggested would be repaid, with interest, from the oil revenue money. Maybe the mayor was tipping his hand when he voted against the funding of the police officers.
The mayor then made a motion to expend the $45,000 to hire oil consultant Clarke & Greene, which was seconded by Sustarsic. Astonishingly, the mayor said that if the $45,000 consultant Clarke & Greene could not find oil revenue for the City he would agree to go with MPA (up to a year later!). This motion was also deadlocked at 2-2 with council member Moore recused. The original oil consultant, MPA, had agreed that his contract was non-exclusive meaning that other consultants could investigate oil revenue simultaneously with him! So why not sign the contract with MPA, at no cost, and (if the mayor and Sustarsic want) simultaneously explore finding $45,000 to retain Clarke & Greene?
Mayor, please explain the downside here? You are willing to contract with MPA but only after you spend $45,000 the city doesn’t have, wait up to a year and then you are willing to sign a contract with MPA. Following the mayor’s rationale he’s not adverse to signing a contract with MPA; he just wants to wait for up to a year and spend $45,000 that the city doesn’t have, before he is willing to have the contract signed with MPA. Question? Who makes up all the revenue that the City loses by waiting for up to a year, or more, before the City starts collecting oil revenue because the Statute of Limitations precludes the City from going back and getting this money? Also, why didn’t mayor Varipapa or council member Sustarsic ask to have the Clarke & Greene proposal (submitted to the City, May 19, 2017) put on the agenda at a prior council meeting? Why did they wait until the MPA contract was on the agenda before they brought up the Clarke & Greene proposal? Just asking.
Mayor, you use analogies relating to how you run your household when you have budgetary constraints. Use one here, relating back to the hypothetical. Would you be willing to wait a year and spend $45,000 that you don’t have or accept $.85 on the dollar, with no cash outlay, and start getting a revenue stream to eat and pay your bills? As mayor pro-tem Deaton said this is a “no brainer”!
Not done yet! The mayor and council member Sustarsic then voted in favor of the City exploring putting a sales tax increase on the November ballot which will affect all Seal Beach residents! So, let’s recap. Varipapa and Sustarsic vote “no” on contracting with MPA which doesn’t cost the City any money with the upside that the City will be paid $.85 on every dollar the consultant finds. Varipapa and Sustarsic vote in favor of expending $45,000 for Clarke & Greene with no guarantee of obtaining any money (and could take up to a year.). Additionally, Clarke & Greene would charge the City an hourly fee to capture the oil revenue after identifying the whereabouts of the revenue. Lastly, they both vote in favor of a sales tax increase. I’m hoping that when Varipapa and Sustarsic read this they will come to their senses, get this issue back on the agenda and vote, this time keeping the residents of Seal Beach in mind instead of some special interest group that may be influencing them.
To be clear, I have met Mayor Varipapa and council member Sustarsic and they are fine people and good citizens. I haven’t met Mr. Kirste or anyone from MPA or anyone from Clarke & Greene. I am a concerned resident, with no agenda, that wants to see a vibrant financially stable Seal Beach and not be subject to a County takeover if Seal Beach is forced to declare bankruptcy.
Council member Sustarsic said she is transparent, fiscally responsible and does what’s best for the residents of Seal Beach. Well, council member Sustarsic it’s time to be transparent and fiscally responsible and for the mayor to be transparent and fiscally responsible as well. We need to get much needed revenue into the City, and we need it NOW!
Jim Brady is a Seal Beach resident.
