This Beaumont City Council is Honoring our Commitment

In May of 2015, from the findings of an independent audit the new council ordered immediately after taking office, we learned the city’s reserves were gone. Were they stolen, embezzled, misappropriated, or all of the above? The city’s financial director, William Aylward, resigned days before the independent audit was to be released to the public. In December 2017, he was one of the 6 Beaumont officials to have plead guilty to committing a felony. Aylward had not been following sound accounting policies and his records would be incomplete at best. Our problem was that many of the records he and Kapanicas would have kept were in the hands of the DA. We feared we would soon be facing bankruptcy.

The mismanagement by previous councils and Kapanicas resulted in awarding lucrative, non-competitive contracts to Urban Logic Consultants whose principals are also now admitted felons. Decisions made by Kapanicas, with direction from the City Council, were putting the interests of Kapanicas and ULC ahead of the citizens of Beaumont. While other cities were cutting staff and services during the 2008 recession, Kapanicas was boasting that City of Beaumont was the only city not laying off employees. He convinced council to spend more than a quarter of a million dollars year after year for summer concerts even though reserves were being used to hide deficit spending. Annual deficits were in the millions during Kapanicas’ final years.

There have been repeated claims by Elizabeth Libi Uremovic of hundreds of millions of dollars stolen from the citizens of Beaumont, this is not true. I addressed this in a post on my OurFocusOurKids.com blog $400 MIL MISSING - $350 MIL EMBEZZLED FROM CFD BONDS. Claims have also been made that the principals of Urban Logic, Dillon, Eggers, and Moorjani, along with help from Kapanicas, stole $42 million from the citizens of Beaumont. Some would have you believe they took the $42 million in TUMF monies loaded it in a truck and drove it out of town.  This perception is inaccurate, it arises from a misconception about the basis for the criminal charges that resulted in conviction of the former principals of Urban Logic Consultants.

The main thrust of the charges filed by the DA against Dillon, Egger and Moorjani were as follows:

The city was a voluntary member of WRCOG (Western Riverside Council of Government) which with the passage of Measure A, voters had authorized to establish a TUMF (Transportation Uniform Mitigation Fee) program to address the need for regional transportation infrastructure. This was a voluntary program but a city had to join in order to receive the Measure A 1/2 cent sales tax revenue. Beaumont's council decided to participate and adopted a TUMF ordinance requiring TUMF funds to be collected from developers and remitted to WRCOG to pay for regional transportation projects. ULC principals knew the TUMF program would result in other engineering firms competitively bidding for design and management of regional projects. if the city retained control of the projects, ULC's contract with Beaumont guaranteed they would earn up to 9% of the project costs. ULC principals‎ used their positions as city officials to influence the city to divert TUMF money away from WRCOG to local city projects and their firm received millions. 

Influencing decisions where ULC had a financial interest, violated govt code section 1090, this is what the ULC principals were convicted of. The criminal defendants have been ordered to collectively pay about $11.2 million in restitution. In addition, the city has pending lawsuits against Urban Logic Consultants and also the former City Attorney. We also have a $15 million claim against the city's theft and dishonest insurance policy and are working on additional possible claims against other parties that we cannot discuss at this time.

Our agreement with WRCOG requires the first $9 million we receive in loss recovery from the criminal defendants, lawsuits and other claims, be submitted to WRCOG and credited towards settling our debt. After that amount was reached, we began sharing in future loss recovery dollars. However, if we had not been able to meet the minimum $9 million requirement within 5 years, we would have to begin paying a guaranteed amount.

Some have criticized the DA and the City for settling for too little. The DA recognizes no criminal trial presented to a jury is a sure thing. Even if you prevail, it could be years before the city or WRCOG would see any of the funds. The plea deals reached between the DA and the convicted felons resulted in their restitution coming from cash and assets already frozen by the court, meaning a shorter recovery time. As a result of the plea bargains, the guarantee of the first $9 million of loss recovery has been met and nothing will be paid out of Beaumont's general fund. Protecting the general fund was a primary goal of the city council.

Now, almost three years after we discovered the true financial position of the city, there still is no clear answer to what happened to all of the money. We know much of it found its way into Urban Logic's profits through non-competitive contracts and inflated fees. We know ULC principals‎ used their positions as city officials to influence the city to divert TUMF money away from WRCOG to local city projects and their firm received millions because they admitted to it in their statements to the court. We know Aylward and Kapanicas helped by misappropriating and embezzling the funds to ULC because the admitted to it in their statements as part of their plea deals. Can we quantify the amount misappropriated? No. 

Every time the council makes decisions resulting in significant costs, decisions other cities make on a routine basis, we realize we are going to hear, "Why don't you go get more of the funds stolen by Kapanicas and the gang before asking more from the tax payers?". I want to assure our citizens we are doing everything we can to recoup our losses but we will never be able to make the city completely whole, even if we were able to quantify the financial damage caused by our predecessors.

We will do our best to continue to move our city forward which means making necessary, and often unpopular, decisions. Each of us made a commitment when we volunteered to serve our community to always put the interest of our city above the interests of all others. This Beaumont City Council is honoring its commitment.

 

 

A Tale of Two Projects

The City of Beaumont is taking on two of the most significant and costly projects in recent memory, probably in all of the city’s history, the Potrero Interchange and the Waste Water Treatment Plant (WWTP) expansion. Both projects will benefit the city but both projects have created a lot of discussion and some controversy, as expected. Following is a brief summary of the projects.

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Potrero Interchange

The city breaks ground this week on Phase 1 and Phase 1A of the Potrero interchange at State Hwy 60.

Phase 1 will involve constructing a 6-lane bridge with center median and bicycle lanes extending Potrero Blvd over SR 60; adding a ramp from Western Knolls to Potrero Blvd. The widening of SR 60 at Western Knolls and widening Potrero Blvd east and west of the new bridge are also included in Phase 1

Phase 1A consists of constructing acceleration and deceleration lanes.

Phase 2 Will include constructing partial cloverleaf interchange and ramps providing full freeway access (ingress and egress in both directions) and will be undertaken after the earlier phases have been completed.

More than $13 million-dollars of tax payers’ money had already been spent on this project for design, environmental and right of way acquisition of phases 1, 1A, & 2 before Kapanicas and Urban Logic Consultants (ULC) principals left town. Much of the money was directed towards contracts involving ULC. These contracts were awarded by previous councils without competitive bidding. The city most certainly paid too much for ULC's work.

Another $21.6 million is needed to complete phases 1 & 1A. $13.4 million in State and Federal Grant funding has been acquired leaving a funding gap of about $8.4 million. The city council approved the completion of phases 1 & 1A on one condition, the gap must be covered with cash from the property owners, those benefitting the most from the interchange, No more tax dollars would be spent to complete the first phase. The cash has been deposited by the land owners in the bank providing the city the working capital needed for construction. The city will use the cash to fund the construction and later will be reimbursed with the grant money through the Riverside County Transportation Commission (RCTC) the stewards of the government money.

The settlement of the WRCOG (Western Riverside Council of Governments) resulted in the City of Beaumont rejoining WRCOG's TUMF (Transportation Uniform Mitigation Fess) program and makes it possible for the city to apply for TUMF credits for the Potrero project. If the project is approved as TUMF eligible, property owners will receive credit towards their DIF (Development Impact Fees) , and if authorized by WRCOG, credit towards TUMF.

Phase 2 of the project doesn’t have a funding plan established as of today, although Phase 1 presents mobility and economic value as a stand-alone project. 

Completing phases 1 & 1A will open up the area south of SR 60 to economic development. This area has been zoned for commercial and industry and will provide much needed, long term tax revenue for the city. Completing phases 1 & 1A will not only secure the grant funding for Beaumont, it will guarantee the $13 million of tax payer funds already paid into this project will not be completely wasted.

The fact that land owners have provided the cash flow the city needs to move forward on the project and that no more tax dollars will be contributed to the first phase is a huge win for the citizens of Beaumont.

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The Waste Water Treatment Plant

The City's waste water treatment plant (WWTP) has reached 75% of its permitted capacity of 4 million gallons per day (mgd).  Per the City’s NPDES permit from the Regional Water Quality Control Board (Board), once the WWTP reaches 75% capacity the City must begin the process of planning and constructing an expansion to add capacity.  The Board’s Basin Plan establishes the discharge requirements for WWTPs within the watershed. 

In 2015, the Board adopted a Basin Plan that requires the City to reduce the total dissolved solids (TDS or salts) in the WWTP discharge and future recycled water.  The City has selected to implement reverse osmosis treatment to reduce TDS, and the Board has issued a compliance order establishing mandatory timelines for the completion of the WWTP expansion and TDS treatment.  The reverse osmosis treatment removes TDS from the water and creates a brine waste product that must be disposed of.  The deadline for complying with the order before fines will be assessed against the City is to have the new treatment facilities operational by 2020 and mitigate for excess TDS complete by August 2025. Also, a failure to comply by the deadline could result in a cease and desist order from the State, which could lead to a moratorium against all development, residential, retail and commercial. This result is not acceptable.

The WWTP expansion and salt mitigation facilities will cost the City approximately $110 million, $65 million for the plant expansion and another $45 million for a brine disposal pipeline to connect to the Inland Empire Brine Line (IEBL).  The City’s brine line will be 12-inch diameter and 23-miles long.  It will be constructed from the City’s WWTP to San Bernardino where it will connect to the IEBL.  The IEBL pipeline extends from San Bernardino to Orange County Sanitation District’s (OCSD’s) treatment facility in Fountain Valley.  The brine disposal cost includes the purchase of pipeline capacity in the IEBL as well as treatment capacity at OCSD’s facility.   The existing sewer rates will provide the debt service to fund the plant expansion but does not cover the cost of the brine disposal facilities or connecting to the IEBL.

The decision to increase sewer rates on a community who has already given so much and have been so damaged by the previous council and administration is not an easy one for this council to make. We have already increased sewer connection fees on homes developed in the future from $3,194 to $5,125 per home to ensure that the new developments pay their share of the costs. Unfortunately, the City won't be able to cover the costs without a rate increase.

The City Council has directed staff to begin the Prop 218 legal process to raise sewer rates to meet the cost to comply with the Santa Ana Regional Board's order. This process requires a notification of the fee increase followed by a public hearing 45 days later and an opportunity for rate payers to protest in writing. If more than 50% of the rate payers file a protest, the increase will not be implemented. There are so many important questions that need to be answered that the City Council instructed the staff to go above and beyond the legal requirement and hold community meetings to address everyone's concerns. The first meeting was held earlier this month and the next meeting will be on February 15th. I urge you to get involved and make your voices heard.

Our predecessors obviously should have planned better for the expansion and brine removal. They talked about it for years but didn't responsibly manage our resources to make it happen. This council is committed to reverse the practices of the past and provide our community with a transparent and responsible government. Every decision this council has made has been in meeting this commitment.

Three years ago the city was on the brink of bankruptcy. We were facing judgements, pending lawsuits and RDA (Redevelopment Agency) obligations - all totaling more than $100 million. Now we are operating under balanced budgets; rebuilding reserves; and are completing long overdue projects promised by previous councils and administrations. 

This was not all done by the council alone. We have assembled an outstanding team that has made our amazing rate of recovery possible. We have made the difficult decisions to put the future of the City of Beaumont above all other concerns. We have come a long way towards reaching our goals and we still have a ways to go. We know what needs to be done and we are committed to getting the job done. 

Rebuild Beaumont

In 1993, the City of Beaumont was in serious financial trouble, and considering bankruptcy. The City Council hired Urban Logic, a consulting firm from Temecula, to take over control. UL's 3 principals, Dave Dillon, Ernie Eggers and Deepak Moorjani assumed the roles as directors of Planning, Public Works and Economic Development. They hired the City Manager of Calimesa, Alan Kapanicas, to serve as a consultant City Manager for Beaumont.

Beaumont's leaders told the 8,000 plus citizens they were going to grow Beaumont out of its financial crisis by building homes. The council created a city-wide Community Facilities District, CFD 93-1, made possible by the State's Mello-Roos law. The plan was to enable developers to build infrastructure for housing projects and be reimbursed by bond proceeds paid for by future homeowners' fees. This meant developers enjoyed lower investment risk and higher return on their investment than they could achieve in neighboring cities. Home development in Beaumont boomed until the housing crisis and recession of 2008.

UL's contract guaranteed the principals could charge the city up to 9% of the cost of each public project in Beaumont for "Plan Checking", "Construction Inspection" and "Public Works Construction Management". Developers would build their projects, UL would charge their fees, and once new homeowners were paying their Mello Roos taxes, proceeds from bonds would reimburse developers. This was all approved by the City Council.

The city wide CFD 93-1 was a first of its kind and may still be the only one in the State. Not only did it allow for low risk investment for developers, it provided access to funding for regional type transportation projects not specific to individual housing projects without voter approval.

UL and Kapanicas promised to provide infrastructure, sewer service, recycled water, fire and police service financed with development impact fees (DIF) and CFD taxes. UL's and Kapanicas' greed led to overpriced, non-competitive bid projects and directed millions of dollars in business to their private companies. Recycled water wasn't a priority; fire stations weren't built; and no fees were established for police services. However, UL still received inflated design and management fees for the infrastructure that was built.

In 2002, the voters of Riverside County approved an extension of the Measure A .5% sales tax for Transportation, passed in 1988 and set to expire in 2009. Along with extending the ½ percent sales tax, voters also approved a new program, the Transportation Uniform Mitigation Fee (TUMF). In order for a city to receive the additional ½ percent sales tax, it would have to participate in TUMF. Beaumont's city council agreed to participate and directed staff (Kapanicas and UL) to comply.

The WRCOG (Western Riverside Council of Governments) is charged with the administration of the TUMF program. A fee on new development, residential as well as non-residential is collected to assist in the building and improvement of the County’s regional arterial system to deal with the increased traffic from new development. Cities are responsible for collecting the TUMF fees from the developers and passing the revenue on to WRCOG.

UL and Kapanicas decided not to follow the council's direction; they did not collect the TUMF fees. UL retained local control of the transportation projects and continued to receive their fees. This lead to the WRCOG lawsuit resulting in a $43 million-dollar judgement against the city, about $60 million with interest.

The judgement was the catalyst leading voters to replace 3 incumbents in the 2014 election. The new council ordered independent audits which revealed the city had depleted its reserves and had been running multimillion dollar deficits for several years. The raids by the District Attorney's office soon followed and a year later Kapanicas, Dillon, Eggers and Moorjani, along with the former Finance Director and former City Attorney, were arrested.

In the two years following the raids, the City Council has hired a new City Attorney and new City Manager; reached a termination settlement with Kapanicas; settled the WRCOG lawsuit; resolved an SEC investigation; and referred one of its own members to the DA for illegal activities. This council has cleaned up corruption in Beaumont.

We still have many challenges facing us. Our sewer plant has reached 75% of its daily capacity and the Water Board has required a $100 million-dollar expansion to be completed and producing recycled water in less than 5 years. Our roads desperately need repair and our transportation networks are not able to handle the needs of the residents in what is still one of the fastest growing cities in California.

The actions of the previous administration under the oversight of previous councils left the city with no reserves and monumental challenges. Over the last two years we have started rebuilding financial reserves and working on needed transportation projects.

Many in our community are angry, I am too. They believe their hard-earned tax dollars have been wasted, misappropriated and embezzled. The recent plea deals by the criminals responsible prove they are right. So, what do we do now? We know what we need to do, we need to continue to rebuild Beaumont. Rebuild its infrastructure, its finances and its community's trust in its elected officials.

We recognize that the only way we move forward is by using the tools available to us to finance the projects our community needs to continue to move forward. We need to protect our city from stagnation. Our citizens moved to Beaumont because they believed in its potential. They made the largest investment most Americans make in their lifetimes, purchasing a home. Without sufficient infrastructure and responsible management of our resources, property values will evaporate and so will our families' futures.

Some voices on social media and on internet bulletin boards claim rebuilding Beaumont by asking its citizens to continue to invest in infrastructure that its city leadership should have already built makes us criminals. Is it criminal to recognize what needs to be done and finding solutions to get it done? I believe it would be more criminal to give up.

This council will continue to move forward despite being called corrupt, dishonest and criminals. Every one of us knew what we were getting into when we volunteered to serve. We know it isn't going to get any easier but we know what we need to do. We will rebuild Beaumont.

Why Does Our Focus Our Kids Need a Fake News Section?

There are a couple of voices on social media platforms who are spinning fake news stories to try and convince citizens of Beaumont that all The City of Beaumont's current officials, elected and appointed, are continuing the corruption which resulted in 6 former officials pleading guilty to felony charges.

In 2014, I ran for the Beaumont city council. I had learned about the efforts of one of these individuals, a consultant, Elizabeth Uremovic, hired by a Beaumont business owner and a resident of nearby Cherry Valley, Judy Bingham. Ms. Uremovic was hired to search for the corruption Mrs. Bingham suspected had been existing in Beaumont for years.

I first met Mrs. Bingham sometime in 2013 when I reached out to her to find what was driving her and to ask her if she would share with me the information she was receiving through her public records request. This is when I first became acquainted with her consultant, "Libi". Shortly after we met, Mrs. Bingham and Ms. Uremovic worked with me to help me understand what they had uncovered. Shortly afterwards, Mrs. Bingham, along with a handful of other Pass area residents asked to meet with me. They encouraged me to run for City Council in 2014. Mrs. Bingham was one of the first financial contributors to my campaign. Contrary to additional false claims by Ms. Uremovic (Libi), Mrs. Bingham never asked me to return her contribution.

I was able to raise awareness through campaign mailings of the financial problems plaguing our city. The 2014 election resulted in the replacement of three incumbents with nearly 40 years of combined experience on the Beaumont City Council.

The new Council quickly exposed a shell company, The Steiner Group, set up by the former city manager, Alan Kapanicas, to funnel funds to the consulting firm, Urban Logic. Only a few weeks after The Steiner Group's President admitted in open council that Kapanicas had direct her to create the company, the Riverside District Attorney raided City Hall, the City Manager's personal residence, and the offices and homes of Urban Logic's principals. The three princiapls of Urban Logic had been acting as the City's major department heads beginning in 1993. In 2017, City Manager Alan Kapanicas and his Finance Director, William Aylward plead guilty to felonies including embezzlement and misappropriation of public funds. The principals of Urban Logic Dave Dillon, Deepak Moorjani and Ernie Eggers also plead guilty to committing felonies.

Days after the raids of City Hall, in the spring of 2015, the three new council members, along with two who had been serving before 2014, began moving quickly to replace the City Attorney and City Manager. The Finance Director and Chief of Police both resigned.

In the 2016 election, two new council members were elected to the council. In the summer of 2017, one of the council members elected in 2014, Mark Orozco, plead guilty to a felony charge of soliticiting a bribe. He was replaced by an appointed council member at the end of 2017. Beaumont's current council members, City Manager, City Attorney, and Finance Director had no affiliation with the City of Beaumont prior to 2014.

Ms. Uremovic and the friends of Kapanicas, once on different sides of the battlelines, have now joined forces to prevent the new leadership from rebuilding Beaumont. Their campaign involves posting fake news and making personal attacks against the good honest people who have stepped up to serve their community during its darkest hours.

Ms. Uremovic is using her early success in Beaumont to promote the services she offers online. On her business web site, she solicits residents in cities who believe there is corruption taking place in their city to hire her to investigate. One would think after uncovering the corruption in Beaumont, working with the City's staff and Council to pick up the pieces would be the best way to market her skills services to future customers. Instead, she is showing prospective clients that she cares nothing for their city and her goal would be to destroy their local government with no concern what happens then. I can't tell you why she has selected the business plan she has but her desperation to spin the fake news in Beaumont tells me she hasn't been able to gain very many new clients.

The friends of Kapanicas and the others, including a former council member, have a more straight forward agenda, they are motivated by revenge, and a desire to return to power. 

The Fake News section of my website will be dedicated to exposing the fake news articles from Ms. Uremovic and the others and present a focus on the facts. We need to continue rebuilding Beaumont and the trust of its citizens in its leaders.

Trust depends on truth.