IF YOU NEED ANY MORE PROOF THAT FULLERTON IS NOT RUN FOR THE BENEFIT OF ITS CITIZENS, YOU NOW HAVE IT! by Barry Levinson

Below is a copy of what I handed out during Agenda Item No. 7 – Brea Dam Recreation Area at tonight’s park and rec commission meeting. It provides proof that the Management Agreement deal we entered into with American Golf in December 2010 will cost the taxpayers between………………

4,000,000 to 5,000,000 dollars in lost net revenue (think net income) over 20 years over the lease contract already in place.

This raises serious questions about how the Park and Recreation Department has been managed and calls into question our city leadership all the way up to the City Manager. It is now time for the City to answer questions honestly and with much specificity. Please review the below carefully.

Fullerton Park and Recreation’s director Hugo Curiel and manager Alice Loya

Please note that there was no discussion about this handout except for my description and summary of it. With the exception of Commissioner Silva, who reluctantly spoke out of order and after the proceedings were over and his vote was cast, and myself, all other Commissioners present voted to Receive and File my document and the attached presentation of the department. Yes we have major problems with our City Government.

Denial, denial, denial and then Receive and File.

Fitzgerald appointee who motioned to bury all of this information with no discussion or action-introducing Gretchen Cox

Ms. Gretchen Cox, appointed by Mayor Fitzgerald attempted to have it Received and Filed without any discussion from the department, the public or any members of the commission.

Rubber stamp Commissioner Savage

Rubber stamp Commissioner Lang Mcnab

Rubber stamp Commissioner Stanford

MS LOYA’S 11/2/2010 COUNCIL PRESENTATION

CORRECTING MS. LOYA’S PRESENTATION

LEASE

MANAGEMENT
AGREEMENT

MANAGEMENT AGREEMENT – USING CORRECT AMOUNTS
FOR MANAGEMENT FEE & PRINCIPAL & INTEREST COSTS

GROSS REVENUE

$2,230,000

LESS:

OPERATING COSTS

$1,140,000

CITY LEASE REVENUE

$420,000

–

AM. GOLF M. FEE

–

$500,000

$670,000

RZEDB DEBT

–

$36,520

$203,323

*Average cost to city for principal and

interest over 20 years of the bond

including 45% federal interest rebate.

NET REVENUE

$670,000

American

$553,480

CITY

$216,677

Actual Average City Revenue earned

Golf

under Management Agreement.

Average yearly loss for city by changing from former Lease agreement to Management agreement ($420,000 – $216,677) = $203,323

Overstatement of average net revenues under the Management agreement = $553,400 less $216,667 = $336,332.

Alice Loya claimed on 11/2/10 before council that the Mngmnt. A. would net an additional $133,480 dollars to the city while in fact it lost $203,323 dollars.

* Total series A Principal $2,705,000/20 years = $135,250 + (total series A interest $2,475,381/20 years = $123,769 x .55 = $68,073) = $203,323.

Therefore, Ms Loya’s presentation to the council that this change from a lease agreement to a management agreement would over the course of the bond bring in more revenue to the city was in fact not correct.

Over the course of the 20-year life of the RZED Bond, the city will loose conservatively at least 4,000,000 dollars in net revenue and at the same time it takes on liablilites that did not exist under the former lease agreement.

Please also note that under the lease agreement city revenues would have increased based on the increased gross revenues from the golf course which was already up over 13% from FY 2011 to FY 2014/2015 as reported by Ms. Loya in January, making this an even worse deal than the numbers above show

Finally, the amount Ms. Loya presented to the committee last month for the Management fee for FY 2014/2015 of $587,000 is understated by $103,302 as the correct amount is actually $690,302 ($670,000 in base year times three one percent annual increases per contract terms.)

The RZED Bond Debt amount per Ms. Loya is also grossly understated. The correct amount is (100K principal + ($185,550 int. X .55 = $102,053) = $202,053 and not $107,000 as Ms. Loya reported to this committee last month.

Conclusion: The numbers as presented by Alice Loya to council on 11/2/2010 and on 01/11/2016, to the Park and Recreation Committee, misrepresent the financial benefit of the Management Agreeement (M.A.) over the former lease agreement. This resulted in the council approving a M.A. that will cost the taxpayers 4 to 5 million dollars in lost net revenue over 20 years.

ATTACHMENT:

Fullerton Golf Course Management Agreement 12/01/10, Page 12 of 23

reports of claims activities on a schedule and in a format reasonably acceptable to the City. City understands and agrees that with respect to all policies of insurance required under this Article 4 (whether such policies are maintained by City or by AGC), the portion of any losses, damages, and expenses paid with respect to such claims which is subject to a deductible amount or a self- insurance or a self-assumption amount shall be the sole responsibility of City. If at any time during the term of this Agreement, City desires to assume responsibility for handling of claims, the parties may amend this provision as provided in Section 11.8, subject to (i) the approval of the applicable insurance companies, and (ii) the reasonable approval of AGC.

ARTICLE 5 – MANAGEMENT FEES

In addition to the costs and expenses to be reimbursed to AGC pursuant to this Agreement, City shall pay AGC the Management Fee computed and payable as follows:

5.1 Management Fee. In consideration of AGC’s services during the Operating Period, City shall pay to AGC a “Management Fee.” For the first twelve (12) months of the term of this Agreement, the Management Fee shall equal Six Hundred Seventy Thousand Dollars ($670,000) per annum (i.e., Fifty Five Thousand Eight Hundred Thirty Three Dollars and Thirty Three Cents ($55,833.33) per month). The Management Fee shall increase on each anniversary of the Effective Date (until termination of this Agreement) by one percent (1%) of the Management Fee in effect immediately prior to the applicable increase. The Management Fee shall be paid to AGC, in equal monthly installments, in accordance with Section 5.2 of this Agreement.

5.2 Payment Schedule. If the Commencement Date does not fall on the first day of the month, then the Management Fee for the first partial month of the Operating Period shall be the pro-rata portion of the Management Fee and such amount shall be payable on the Commencement Date. Commencing with the first full month of the Operating Period, City shall pay AGC the Management Fee monthly in advance on the first day of the month to which it pertains.

ARTICLE 6 – ACCOUNTS; WORKING FUNDS; RECORDS AND REPORTS

6.1 Bank Accounts. City shall establish bank accounts for the Facility at a banking institution or institutions reasonably selected by City, (which banking institution or institutions shall have branches located in close proximity to the Facility), such accounts to be in City’s name (the “City Accounts”). AGC shall also establish bank accounts for the Facility at a banking institution or institutions reasonably approved by City, (which banking institution or institutions shall have branches located in close proximity to the Facility), such accounts to be in City’s name (the “Facility Accounts”). AGC will deposit into the City Accounts all monies received by AGC from the operation of the Facility. City shall deposit all funds required to be furnished by City as working funds under Section 6.3 of this Agreement into the Facility Accounts, and AGC will disburse those monies from the Facility Accounts only for the purposes set forth in Section 6.2. Notwithstanding the provisions of the foregoing, AGC shall be entitled to maintain funds in reasonable amounts in “cash register banks” or in petty cash funds at the Facility.

03674-00081/1753550.8 12

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#1 by Barry Levinson on March 25, 2016 - 10:14 am

It is now 11 full days since I gave and provided copies of my detailed presentation with support for my calculations. It showed that over a 20 year period of the bond issue (used to finance the Fullerton Golf Course irrigation system), that without major changes to our Management Agreement with the American Golf Corporation, the cost to taxpayers will be between 4 to 5 million dollars. Since that time not one person from the Parks and Recreation Department or from the City Manager’s Office or from my fellow Committee members has contacted me to ask me any questions or to discuss my troubling findings. It is now 10 days since I gave a shortened i.e. 3 minute presentation during public comments in front of our Fullerton City Council. Again, not one council member, not one member from the City of Fullerton Government has attempted to contact me with any follow-up questions or a request to discuss these troubling findings with me. Council member Whitaker did text me a week later asking for a copy of my presentation and I responded the same day that an official copy was already given to the city at the Park and Recreation meeting and that it was also available online at fullertoninfomrer.com and linked to my Facebook page as well. In addition, fullertoninformer.com has the original video of my complete presentation during the last Park and Recreation Committee meeting. The only question I have for all the referenced people above is WHY the silence? I sincerely hope that a discussion will be started by one or more council members at the next Fullerton Council meeting and that it will be placed on the agenda at a future council meeting to be discussed formally and with much specificity. It is also my hope that all questions that I have raised are answered completely and honestly by those involved, which would include Alice Loya and then Acting City Manager Joe Felz (who signed the contract in question for the city). The citizens of Fullerton deserve full disclosure. Unless the city can demonstrate with supporting documentation that my concerns are totally baseless, action on this item must occur sooner rather than later.

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#2 by Reality Is..... on March 25, 2016 - 2:10 pm

LOL crickets. Always will be.

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#3 by Anonymous on March 25, 2016 - 3:33 pm

This is getting really hilarious. When are you going to start shedding tears in public over being ignored? I hope Joe films your breakdown – that might be the only video of his worth watching.

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