Morro Bay Harbor Board weighs alleged misuse of funds

December 6, 2013

IMG_1873By JOSH FRIEDMAN

The Morro Bay Harbor Advisory Board discussed allegations Thursday that the city misappropriated funds from the outfall lease agreement for the Morro Bay Power Plant.

For nearly a decade, owners of the Morro Bay Power Plant have paid the city approximately $800,000 annually in order to pipe cooling water through state granted tidelands that the city leases. The city considers about $250,000 of those funds to be rent and $500,000 to be a Community Development Fund payment, which goes to the general fund.

The state land grant requires all activity on the tidelands to promote public use of the area, and city policy states that all revenue from tidelands leases must go to the Harbor Fund.

California State Lands Commission spokesperson Sheri Pemberton told CalCoastNews several times that Morro Bay is under investigation for misappropriation of funds from the power plant.

On Thursday, Harbor Department Director Eric Endersby delivered a report to the Harbor Board on the alleged misuse of funds.

“It’s been reported to State Lands, and State Lands has an investigation,” Endersby said.

Harbor Board member Bill Luffee said he wanted to make sure that the allegations of misuse of funds were addressed in public.

“I’d just hate to see us because of an interpretation have some money that would needed to be refunded,” Luffee said. “I just want to make sure that we don’t get blindsided just like the city of Atascadero, where they received money for rebuilding and all of a sudden now I think FEMA wants $2.9 million.”

Harbor Board chair Jeff Eckles responded that there is no State Lands investigation.

“It also has been reported on or speculated that city is under investigation, which is completely false,” Eckles said. “Two individuals out of millions of people that live in this state reported what they thought were concerns to the State Lands Commission.”

Eckles referenced a memorandum submitted to the city council by City Manager Andrea Lueker. The memorandum stated that, based on Lueker’s communication with Pemberton, the allegations of misuse of funds are under review by State Lands and have not risen to the level of an investigation.

Lueker did not state in her memorandum, nor in her response to CalCoastNews questions, what the Community Development Fund is. The fund does not appear in Morro Bay budgets over the last decade.

Endersby said Thursday that the Community Development Fund pertains to power plant impacts on infrastructure, sewer and water.

He also said that the city’s interpretation of the Community Development Fund payment is that the money does not need to go to the harbor, but he would gladly accept it if it did.

“It would be great if I could get $500,000 for each of the last 10 years,” Endersby said. “I don’t think it’s going to happen.”

In recent years, harbor facilities have degraded, and the city has delayed repairs and upgrades.

The North T Pier has broken support beams and needs significant repair in order to meet code requirements. Basic repairs cost more than $400,000, and the city has been discussing making them for six or seven years, Endersby said.

The city is also in the process of acquiring a new harbor patrol boat.

One of the current harbor patrol boats has a list, meaning it tilts to one side as it moves. The boat previously suffered a hole in its bottom, and repairs resulted in one side becoming heavier than the other, according to harbor patrol officers.

The city did not allocate funds for the new boat until after a harbor patrol officer brought the issue to the city council.

Prior to becoming mayor, Jamie Irons also addressed the city council about the degradation of the harbor.

“He hoped that council would propose a long range plan that would restore the harbor’s infrastructure as well as the Harbor Department itself and then design an organization to fulfill that,” minutes for the March 13, 2012 council meeting state.

The Morro Bay Power Plant is expected to close in February. The city will receive its 2014 outfall lease and Community Development Fund payments in January and may receive them again in 2015, but thereafter the revenue will disappear.

If State Lands were to find that Morro Bay misused the Community Development Fund payments, it could recommend punishments ranging from repayment of the funds to revocation of the land grant by the Legislature.

 


74 Comments

  1. mb20 says:

    Anyone know the results from closed session?

    I missed it driving home from work. Thanks.

    Like or Dislike: Thumb up 3 Thumb down 0

  2. mbactivist1 says:

    Given some of the claims made in recent posts, I think it’s time for some facts and common sense. It has been alleged that the power plant’s $250,000 annual rent is 8% of the appraised value of the land, which would make the value of that land $3,125,000. That makes no sense.

    First of all, unlike the lease sites on the Embarcadero, this land happens to be designated as Environmentally Sensitive Habitat Area (ESHA). That means, basically, that the land has no commercial value.

    Second, let’s compare that $250,000 rent to rents paid for other lease sites that DO have commercial value, and thus would have a much higher fair market value. Rents for the other sites are online at http://www.morro-bay.ca.us/DocumentCenter/View/6781

    The document appears to list all of the sites except the power plant outfall. The highest rent I saw in that document for any other single site was for the Boatyard shopping center – $61,185.04 – WAY less than the $250,000 paid by the power plant for the little strip of ESHA land needed for a pipe to carry water to the ocean.

    According to the City Web site, “There are approximately 50 Tidelands lease-sites managed by the Harbor Department” I don’t have the total of lease site rents for the current fiscal year, but let’s just look at a fairly recent year for which the total was easy obtainable.

    According to a Harbor Director staff report dated September 14, 2009, “Overall Tidelands Lease Site rents in FY07-08 were approximately $1.45 million.” During that year, the power plant lease site rent was $250,000. That means the power plant paid over 17 percent of the total of all rents paid by the holders of all 50 lease sites – and the plant paid that for a small strip of land without commercial value.

    Some residents report that Schultz said that the actual value of the lease was $5,000, based on the area that the pipeline occupied underneath the sand. Using that figure and the 8%-of-appraised-value formula, the annual rent should be $400, not $250,000. The original 50 year lease site annual rent was, I believe, $100 (up to the time when the lease expired in 2004).

    That made for quite a jump when the rent suddenly went up to $250,000 and the power plant also had to give the City the annual $750,000 CDF payment. Plus, there was the $7 million worth of property that Duke Energy had to cough up it if wanted to have the outfall lease extended. Remember PG&E had already given gave the Vet’s Hall property to the city for the lease.

    Anyway, getting back to the allegation made by another poster that $250,000 is 8% of the appraised value of the outfall lease land. Does that allegation make any logical sense? Obviously, it does not.

    Like or Dislike: Thumb up 4 Thumb down 10

    • SLOthinker says:

      MBACT, I agree with most of what you said, however, I’m totally lost on what you would like to see happen. Do you with that the harbor department was not getting the 250K and the city 500K+ every year and all that property? I don’t think you want the city to refund Duke/Dynegy.

      Like or Dislike: Thumb up 3 Thumb down 3

      • mbactivist1 says:

        The terms in the agreement to lease and the lease were negotiated by one person, who insisted they were legal, and who was considered the City’s expert on legal matters.

        If the State Lands Commission decides the terms were not legal, I hope they will have mercy on the rest of us and will not take any action that would harm the City. I would like them to simply state that this kind of agreement is not consistent with State law and that in the future, the City must abide by the rules.

        As for Duke Energy, they signed the agreement and the lease, possibly because the cost of fighting the City on the outfall charges would have been greater than just paying them. Since they did sign, I think they would look rather ridiculous if they tried now to get their money back and obviously, I hope they will not.

        Of course, none of us has any control over this. The State Lands Commission and Duke will decide on their own what they want to do or not do.

        Like or Dislike: Thumb up 4 Thumb down 7

        • Human Reason says:

          The terms of the agreement were negotiated by a team consisting of two council members, 5 staff, outside legal councsel and the city attorney. The agreement was then shared with SLC Executive Director Curtis Folsom and finally approved by The entire City Council in open session. SLC will ultimately state the City did absolutely nothing wrong and charged the correct amount.

          Like or Dislike: Thumb up 7 Thumb down 3

  3. Human Reason says:

    Nothing will ever come of this. The issue is so well documented in the City files. Just do a public records request on this issue if you want to verify any of the following and the City will provide you with proof.

    In 2001 and 2002, the City Attorney, City Staff and Outside Counsel (Sheppard Mullin) fo met with SLC Executive Director Curtis Folsom and SLC Staff and Counsel to discuss rental amounts the City could charge Duke Energy for the Outfall Pipeline.

    SLC position was that the California Code of Regulations allowed for “2 cents per diameter inch per lineal foot” to be charged for pipeline rent. This is how SLC was approving all of their leases at that time. Under this formula the City was only going to be able to charge the City approximately $5,000 per year for the outfall pipeline. It was Duke’s position that this was all the City was entitled to under State Law.

    The City told Duke that it would not enter into a lease for $5000 per year and that it was going to have to vacate the tidelands trust property. The City demanded that Duke pay the same amount as other leaseholders pay in MB, 8% of the appraised value of the leased land. Based upon City appraisals of land values at that time, the amount the City demanded was $250,000.

    After long drawn out and hard fought negotiations, Duke finally caved and agreed to pay $250,000. It was the highest paid rent in the State for a pipeline per lineal foot. SLC Executive Director Curtis Folsom and SLC Staff called City Staff and congratulated them on such incredible success in negotiating this fee.

    The $500,000 per year payment had nothing to do with the outfall pipeline and was never part of any negotiations for the pipeline. The $ 500,000 payment was for mitigation impacts form the power plant and to gain City support for the modernization of the power plant. Again that is well documented in the many public meetings the City had and also can be confirmed with SLC Staff that were there at the time.

    You can call it bribery or extortion if you want, but you simple can’t call the $500,000 payment rent for the outfall pipeline. Under any calculation allowed by state law, you simple cannot reach a conclusion that the outfall pipeline is worth 1 million a year in rent. It’s not possible. It really is that simple.

    Like or Dislike: Thumb up 20 Thumb down 5

    • mb20 says:

      Thank you Human Resource, exactly how I remember it being!
      Maybe that will be the information in the next CCN article.

      Where’s mbactivist to find someway to spin this?

      Like or Dislike: Thumb up 8 Thumb down 6

      • mbactivist1 says:

        Gee, mb20, you missed me :) I am still reeling from human reason’s amazing feat of spinning (above). (s)he must have quite a case of vertigo right now.

        Let’s just wait and see what the State Lands Commission has to say. I will make a couple of points though. First, rent and revenue are not necessarily the same thing, and second, the Trib, the New Times, and one of your fogcutter buddies all said in writing that most or all of the $800,000 comes from the outfall lease. Why just argue with me? Go argue with them for awhile.

        Like or Dislike: Thumb up 3 Thumb down 12

        • mb20 says:

          http://www.morro-bay.ca.us/ArchiveCenter/ViewFile/Item/1698
          There you go

          5 minutes of research and I found the 12/5/12 city council meeting approving the lease. Which was the same lease used since 2004 for the most part.

          The outfall lease agreement and
          “AGREEMENT REGARDING POWER PLANT MODERNIZATION”

          If you read through it you will see:

          1. Rent for the OUTFALL lease will be $260,000 per year.

          2. CDF payment for $525,000 (which just became reserve fund over time.)
          Community development fund, think of it like giving to the city to win them over.

          3. Paying for the embarcadero property.

          4. Dynegy then gives part of that property to the city for the bike path.

          5. $35,000 to develop a program for convincing the city to let them reconstruct the plant more efficiently.

          6. $40,000 for fire.

          7. $35,000 to cover the legal fees used in the negotiations.

          AND IRONS GOT RID OF THE GUY THAT NEGOTIATED THAT DEAL.

          He saved the city $35,000 OF HIS OWN SALARY in his negotiations.
          So our city attorney actually was only paid $117,000 a year since 2004…

          $40,000 for fire… have you seen what our fire station looks like now?

          And that $525,000 was like, “lobbyist money,” and just part of the agreement regarding powerplant modernization.

          It was not part of the outfall lease and thats why the SLC’s “investigation,”
          is bogus.

          Like or Dislike: Thumb up 13 Thumb down 2

          • mbactivist1 says:

            Yes, mb20, I have seen all of that. I pulled those documents when the latest iteration of the lease was negotiated about a year ago because I was concerned about the use of the outfall for an increasing amount of desalination plant brine discharge.

            There are two documents, as you know. One contains the lease terms. The second is called “Agreement to Lease and Agreement Regarding Power Plant Modernization. Take a look at Article 4, section 4.2.3. It clearly ties the CDF payments to the outfall lease. that’s the part that I find most concerning.

            But again, let’s wait for the State Lands Commission. It will be their decision that counts.

            Like or Dislike: Thumb up 3 Thumb down 12

            • mb20 says:

              What are you talking about mbactivist?
              That is clearly in the agreement regarding plant modernization,
              and not part of the outfall lease.

              You can see it in the lease agreement I posted.

              Like or Dislike: Thumb up 10 Thumb down 2

              • mbactivist1 says:

                I am talking about the document titled, “Agreement to Lease and Agreement Regarding Power Plant Modernization”. That is one single document. If you will look at Mr. Schultz’s staff report dated December 3, 2012, you will find references to it, including this one, which is on the second page of the report (2nd paragraph):

                “City staff has now negotiated an extensino of the Outfall Lease Agreement and Agreement to Lease. The following terms and conditions have ben incorporated into the attached Atreement to Lease and Amended Outfall Lease.”

                That is an exact quote from the document. Note that it does not mention anything about plant modernization.

                He then lists the various terms, including terms of lease, outfall rent, and CDF payments.

                Amendments to each of the two documents, the “Outfall Lease document and the “Agreement to Lease and Agreement Regarding Power Plant Modernization” are attached to the staff report.

                All this is attached to the agenda for the December 5, 2012 special Council meeting.

                Like or Dislike: Thumb up 3 Thumb down 11

          • cowpetal says:

            The only special interest group operating in Morro Bay is Irons’ clique of backroom backers, led by lunatic fringers Winholtz and Stedjee, who Irons will have to disown if he wants to get re-elected. Extremists on both sides continue to spread misinformation and sow division to achieve their ends. I’m sorry, but the other 9,990 people in Morro Bay deserve better than going unled and misled by obsessed political infighters. Someone with a clear head and no agenda, representing only the best interests of the larger community, needs to step up next year at election time. But it doesn’t look like that’s going to happen.

            Like or Dislike: Thumb up 13 Thumb down 8

            • mbactivist1 says:

              OK, here we go. Someone who wants to run for Mayor is working to set the stage for his/her plans to come in and claim to be that clear head that is needed to save the town.

              It’s an interesting strategy – try to demonize BOTH sides and then come in as a sort of “third party candidate” – but the strategy isn’t going to fool either the “obsessed political infighters” or the other 9,990 people in town – way too obvious.

              I think I have a pretty good idea of who it is who has decided to employ this strategy – and am not surprised, given some of the recent commentary by that individual.

              Like or Dislike: Thumb up 4 Thumb down 10

    • clemente says:

      Just some silly rhetoric with the extortion claims. A company, regulated by the PUC and any number of other public agencies would not be able to be held hostage. The folks here that were happy to see Schultz won’t acknowledge that he did an outstanding job negotiating these agreements and that the City of Morro Bay benefited tremendously from his skill in doing so. The termination of Schultz is a tragic mistake.

      Like or Dislike: Thumb up 18 Thumb down 7

    • Human Reason says:

      Check out this SLC agenda and approval of a pipeline for Chevron last year in Morro Bay. The SLC negotiated a Fee of only 25,000 per year for their pipeline. Shouldn’t this article be on why the State is not doing their job.

      http://archives.slc.ca.gov/Meeting_Summaries/2012_Documents/05-24-12/Voting_Record.htm

      Like or Dislike: Thumb up 5 Thumb down 2

      • Human Reason says:

        It is number 60 on the agenda and with a little research you will find numerous other examples of minimum amounts of money collected by the SLC for pipeline rents ! Sad that reporters can’t do their own homework before writing an article. It really hurts your credibility on other articles.

        Like or Dislike: Thumb up 7 Thumb down 3

        • mbactivist1 says:

          The reporter did his homework regarding the subject lease site. What was charged elsewhere really isn’t pertinent to the central issue. Again, quite a feat of spinning – except that it won’t fool anyone.

          Like or Dislike: Thumb up 2 Thumb down 9

          • mb20 says:

            No he did not do his homework.

            In the first article he did not ask any city council members,
            or the harbor board, or really anyone but one person from the SLC whose job isn’t even to handle investigations.

            Then the second article comes back with the Harbor Board chair member saying there is no investigation, and the others saying, “We will look into it.”

            Lets see when the city council actually talks about this issue.

            A little bit of research would have clearly shown that this is entirely a non-issue. Disappointing by CCN to say the least.

            Like or Dislike: Thumb up 8 Thumb down 2

      • mbactivist1 says:

        You are only allowed to charge market value for those lease sites. Most likely, that is what the $25,000 was.

        Like or Dislike: Thumb up 2 Thumb down 5

        • Human Reason says:

          Another False statement by Mbact

          California of regulations states that the City has “broad discretion in all aspects of leasing including category of lease or permit and which use, method or amount of rental is most appropriate, whether competitive bidding should be used in awarding a lease, what term should apply, how rental should be adjusted during the term”.

          Like or Dislike: Thumb up 8 Thumb down 3

          • mbactivist1 says:

            Please refer to the City’s Harbor Department Lease Management Policy. In the last paragraph on page 5, you will find the following:

            “Fair Market Rent: State Law requires that fair market rent be charged for use of the granted tidelands. Fair market rental shall be determined through the use of an independent appraiser to appraise the fair market value of the property and the City will set a minimum annual rent equal to 8% of the appraised value of the land or improvements if the improvements have reverted to the City.”

            Like or Dislike: Thumb up 2 Thumb down 7

            • mbactivist1 says:

              Just a quick additional note, Human Reason, there are special regulations that apply to tidelands grant lands that do not apply to leasing of property in other areas.

              Like or Dislike: Thumb up 2 Thumb down 6

              • Human Reason says:

                Haha once again you prove ignorance and bias. The California Code of Regulation I cite is the exact language that governs tidelands grant lands leases.

                Like or Dislike: Thumb up 4 Thumb down 1

            • Human Reason says:

              Thank you for proving my point. The fair market value equal to 8% of the appraised value was 250k. Documents prove that and that is what the City charged Duke.

              Like or Dislike: Thumb up 5 Thumb down 2

              • mbactivist1 says:

                Your version of things differs greatly from that of other people who also remember the proceedings. The appraised value of that little strip of land is not likely to be anywhere near $250,000, even in today’s dollars. One person I know actually heard a City staff member bragging that although the land was really only worth a few thousand dollars, the City had managed to extort a $250,000 rent from the power plant operator.

                What different people here in Morro Bay say doesn’t matter much now though. What matters is what the State Lands Commission says.

                Like or Dislike: Thumb up 3 Thumb down 5

    • SLOthinker says:

      Good research Human. I was the one saying it was extortion. It was just a figure of speech. The negotiations were tough, but legal.

      Like or Dislike: Thumb up 5 Thumb down 2

  4. SLOthinker says:

    A couple of things are wrong in the article. There is a payment due to the city in January, this will be the last payment. There is no chance of a payment in 2015.

    The payment in January is a 1 million dollar payment. 250K to the harbor, 750K to the city.

    Now if I was a clever lawyer for Dynegy, I might pay the 250K and say I’m disputing the rest and we’ll wait for the SLC “investigation” to play out. They could probably delay payment for years.

    Like or Dislike: Thumb up 8 Thumb down 5

    • mbactivist1 says:

      I looked at the agreement to lease and found this:

      “In the event of Permanent Cessation of Electrical Power Generation from the Existing Plant, as definedin Section 1.22, or if Duke is not able to use the Outfall Area due to inactions or circumstances beyond Duke’s control (including any agency or court decision or requirement to utilize alternative cooling technologies), Duke may terminate its obligation to make CDF payments hereunder by making a final annual CDF payment for the twelve (12) month period following such Permanent Cessation of Electrical Power Generation or such inability to use the Outfall Area, with a pro-rated credit being given to Duke for less than a full calendar year.”

      I believe they are to close in February, 2014. So, that 12-month period after cessation of power generation will run over into 2015. If they are doing payments on a calendar year basis (the agreement says they are due on or before January 21), then It seems like maybe there would be a small payment in January of 2015 for the last part of that 12-month period following cessation of plant operation.

      Like or Dislike: Thumb up 5 Thumb down 11

      • SLOthinker says:

        Good snooping.

        But it looks like you are quoting from one of the older versions. The last two have been between Dynegy and Morro Bay. The current one that was finalized by the last board said that Dynegy needed to notify the city by I believe last August if they planned to shutdown at the end of the year to avoid the 1 million payment. The deadline lapsed, so they owe for 2014. They have now notified the city, so that will be the last payment.

        Like or Dislike: Thumb up 5 Thumb down 2

        • mbactivist1 says:

          OK, SLOthinker. I was hoping we might get a small payment in January, 2015, and I think we still could, but it appears unlikely. The way I read the material below, it would only happen if the power plant keeps running past August 1, 2014. This is from the recent modifications to the original lease.

          “Commencing on January 1, 2014 Dynegy agrees to make an annual CDF payment to the City, due on or before January 21 of each year, for the then current year, in the fixed amount of FIVE HUNDERED TEWNTY FIVE THOUSAND DOLLARS ($525,000). This payment shall not be subject ot adjustment under Section 1.5 or otherwise through the 2017 payment. Pursuant to section 2.1(4) of the Outfall Lease, Exhibit A hereto, DYNEGY shall have the option to cancel the Agreement to Lease and Outfall Lease by written notice to the CITY by August 1 for the calendar year 2014 and February 28th of each following year to cancel any and all payments for the next calendar year.”

          It looks like he is saying that just for 2014, they have until August to cancel the use of the outfall. So, it looks like the only way we would get that payment in 2015 is if the power plant operators keep the plant open past August 1, 2014 and thus cannot cancel the outfall lease before then. Is it possible that they might stay open longer than they said they would? Who knows? They do seem to have had a difficult time making up their minds whether to stay open or to close.

          It also looks like the power plant operators and Schultz both knew that the plant was likely to shut down in 2014 – but then, we have all been expecting that it would happen sooner rather than later.

          Like or Dislike: Thumb up 4 Thumb down 3

  5. Rambunctious says:

    Who’s the Rat? lol this is getting ridicules, I can’t wait to see the next accusation that someone pulls out of their errrr ummm hat regarding our fine former city counsel men and women. It’s as if someone is working off of the talking points of Irons and Co election platforms.

    Like or Dislike: Thumb up 14 Thumb down 13

    • mbactivist1 says:

      I reread the article a couple of times and I don’t see any attacks on former Council members. It does say that after someone brought a safety concern to the Council, the concern was addressed. That doesn’t seem to indicate that the Council members did something wrong, but rather that they had not previously heard about the problem.

      Like or Dislike: Thumb up 9 Thumb down 9

      • Rambunctious says:

        I reread my post and I did not see the word attack anywhere.

        Like or Dislike: Thumb up 5 Thumb down 4

        • mbactivist1 says:

          So true, rambunctious. You said, “accusation”. A lot of people would consider accusations to be attacks, especially if they don’t think the accusations are warranted.

          Like or Dislike: Thumb up 6 Thumb down 6

  6. SLOthinker says:

    Jeff is right that this is not going anywhere.

    The harbor department is not going to get any more money out of this. The outfall lease was clearly defined as 250K. The other 500K was extortion by the city to get them to sign the lease.

    If somehow this was found to be below board. What would likely happen is Duke/Dynegy would sue to get there money back.

    Is that really what mbact, Irons and crew want to see happen?

    Like or Dislike: Thumb up 9 Thumb down 4

    • mbactivist1 says:

      The main, or perhaps the only illegal part seems to be how the City used the money after it was received from the power plant operators – not the amount that the City got them to pay.

      The question seems to be whether the $500k “extortion” money can be considered proceeds from the lease. A lot of people say it can.

      Like or Dislike: Thumb up 7 Thumb down 11

      • coco says:

        who is the extortionist/blackmailer

        Like or Dislike: Thumb up 1 Thumb down 3

        • mbactivist1 says:

          I believe that would be the person who negotiated the agreement with Duke Energy and later Dynegy – the former Morro Bay City Attorney. Several people have told me that he bragged about how much money he got out of them.

          The potential problem with that is that the law says you can’t charge more than market value for the tidelands lease sites. $750,000 is a lot of money for such a small piece of real estate.

          Like or Dislike: Thumb up 5 Thumb down 7

          • coco says:

            Wow- lets hope that because of the former city attorney
            playing fast and loose, that Duke and Dynegy don’t sue to have their moneyreturned for over paying to the City and Harbor Fund.
            The former city attorney should be responsible for putting the City in this
            position, since he was being paid to avoid situations like this,
            and not to have risked putting the City’s neck in a ringer.

            Like or Dislike: Thumb up 6 Thumb down 7

          • mb20 says:

            Literally nothing is coming of this, there is nothing in the lease suggesting that more then the 250k must go to the tidelands trust.

            Even if there was it would only result in Dynegy getting money back from the reserve fund. Which is highly unlikely.

            This whole article is based on two complaints from citizens who understand very little from the lease.

            Don’t you think Leuker, Schultz, and Eckles know much more about the lease then two random people?

            Like or Dislike: Thumb up 6 Thumb down 4

            • mbactivist1 says:

              What suggests that more than the $250,000 must go to the tidelands trust lands is State law.

              The $500,000 payments could very easily be considered revenues from the outfall lease. The law says that any revenues from tidelands grant lands must stay with those lands. It can be argued pretty convincingly that, since the power company had to pay the $500,000 if it wanted that lease, the $500,000 is revenue from the lease. That is the central issue.

              Like or Dislike: Thumb up 3 Thumb down 5

              • mb20 says:

                That $500,000 was for getting the support of the city to add and restructure the plant so it would still be effective. Basically like lobbying to the city of Morro Bay.

                It was not part of the outfall lease.

                Unfortunately people like yourself destroyed this and we will no longer have the revenue that was so vital to the city.

                However, this investigation with the SLC is completely bogus for that exact reason.

                Like or Dislike: Thumb up 2 Thumb down 2

          • Human Reason says:

            California Code of Regulations states the City has “broad discretion in all aspects of leasing including category of lease or permit and which use, method or amount of rental is most appropriate, whether competitive bidding should be used in awarding a lease, what term should apply, how rental should be adjusted during the term…”

            The Lease was negotiated by the City Attorney and Outside Council and a subcommittee of 2 Council members. The Lease was then approved in open session by the entire council after a public hearing.

            The agreement was negotiated at arms length and under no circumstances will the City have to pay it back to the power plant’

            Why do you just make stuff up as you go along.

            Like or Dislike: Thumb up 5 Thumb down 0

    • taxpayer says:

      This was all done in public at the time of the negotiations. The pro Irons people don’t care what lies they have to start or how much money it costs the citizens of Morro Bay. After we’re all bankrupt, they’ll just move away.

      Like or Dislike: Thumb up 13 Thumb down 9

      • mbactivist1 says:

        That seems pretty over the top, taxpayer. I can’t imagine that anybody would want this to come out badly for Morro Bay and its residents. We all want the town to be financially secure. People only disagree on how we should achieve that.

        I have asked around and nobody seems to know who asked the State Lands Commission about the Community Development Fund payments. Maybe it was someone who thought the money should be going to the Harbor Department instead of the General Fund.

        Given what Mr. Friedman has written about the T-pier and that harbor patrol boat that had a hole in it and now lists to one side, it sounds like there are some issues there. I would not like to be out on the water, need help, and have to depend on a boat that is not “ship shape”. Neither would I want to be a harbor patrol officer and be out there in a boat that is defective. This is, as I’m sure you know, a very, very dangerous harbor.

        Like or Dislike: Thumb up 4 Thumb down 10

        • expat says:

          From what I understand, the patrol boat in question had been in bad shape for a long time. It had been repaired but the repairs were made “on the cheap” with the Harbor Department being warned that the repairs were not adequate.. The Harbor Department then OK’d the boat for use. Some time thereafter the patrol boat at speed (it was on an emergency call) literally folded at the bow waterline section. The Harbor patrol folks on board were very lucky.. The boat was then sent to the original builder for additional repairs…But, it was found to have a 15-degree list when putback in the water and run……Think of driving your car with both tires on the drivers side flat.. Poor decisions on the part of the Harbor Department.

          Like or Dislike: Thumb up 5 Thumb down 2

          • mbactivist1 says:

            Very scary, expat. Part of the boat fell apart while it was out on the water on an emergency call? If it was on an emergency call, I assume it would be considered a rescue boat.

            How could the Harbor Department, which is supposedly run by persons who know about boats, allow the Harbor Patrol Officers to be risking their lives in an unsafe boat (having been notified that repairs were not adequate) – and how could we have been depending on an unsafe boat for use in rescue operations?

            Again, very scary – for the Officers AND for people needing to be rescued,

            Like or Dislike: Thumb up 5 Thumb down 6

      • coco says:

        Was there transparency in the previous councils?
        Seems that Morro Bay’s former city attorney Rob Schultz once stated was, tell the
        public as little as necessary.

        Like or Dislike: Thumb up 5 Thumb down 8

  7. mb20 says:

    “It also has been reported on or speculated that city is under investigation, which is completely false,” Eckles said. “Two individuals out of millions of people that live in this state reported what they thought were concerns to the State Lands Commission.”

    Reads a little but differently then the last article.

    Like or Dislike: Thumb up 9 Thumb down 5

    • Public_Parent says:

      ….says Jeff Eckles, who may be running for election against Irons.

      The article also reads:

      “California State Lands Commission spokesperson Sheri Pemberton told CalCoastNews several times that Morro Bay is under investigation for misappropriation of funds from the power plant”.

      Like or Dislike: Thumb up 10 Thumb down 4

      • Redsoxman says:

        ….and that would be “investigating” since 2011. I don’t think there’s a burner far enough on the back of the stove to show how important this “investigation” is to them……

        Like or Dislike: Thumb up 9 Thumb down 7

      • coco says:

        ignorance is bliss

        Like or Dislike: Thumb up 3 Thumb down 4

      • mb20 says:

        I had no idea he would consider running for mayor but I think he would be a good candidate, I hope he considers to run to take office in June!

        Like or Dislike: Thumb up 5 Thumb down 6

        • mbactivist1 says:

          Everybody I know has been well aware of this for months. He seems like a pleasant enough person, but seems to be closely tied to the special interest group that lost power in June, 2012.

          Like or Dislike: Thumb up 5 Thumb down 5

    • mbactivist1 says:

      Nice try, mb, but that material you quote is what Jeff Eckles said – NOT something the CCN reporter said.

      Paragraph 4 of the article states, “California State Lands Commission spokesperson Sheri Pemberton told CalCoastNews several times that Morro Bay is under investigation for misappropriation of funds from the power plant.”

      Note also that Morro Bay staff member Endersby said something quite different from what Eckles said: ““It’s been reported to State lands, and State lands has an investigation,” Endersby said.”

      Like or Dislike: Thumb up 9 Thumb down 9

      • mb20 says:

        Cause the harbor director is a lot less credible then a news organization…

        Yeah Endersby said, “It’s been reported,” it was reported by CCN and was 100% false. Did the tribune and CCN write articles about it? Yes. Were they wrong? Yes.

        Like or Dislike: Thumb up 6 Thumb down 4

    • coco says:

      eckles do your homework, get your facts straight

      Like or Dislike: Thumb up 3 Thumb down 8

      • mb20 says:

        You really have no idea what your talking about. Look at the leases and minutes from the council meetings and you will find that these two complaints are entirely wrong.

        Like or Dislike: Thumb up 3 Thumb down 3

        • coco says:

          eckles has nothing to do with the leases
          schultz/endersby handled the leases then they were taken to council for approval

          Like or Dislike: Thumb up 3 Thumb down 3

          • mb20 says:

            Eckles though is 100% right though with what he was talking about.
            These deals with Dynegy were decided in public comment and the 500,000 is not part of the outfall lease at all. But rather to get support from the city before restructuring of the plant needed to be done. Even though it never happenned. So Dynegy pretty much paid $500,000 for nothing.

            Like or Dislike: Thumb up 4 Thumb down 1

            • coco says:

              Great right off for Dynegy, that is if you are correct.
              I don’t believe a Morro Bay Harbor Advisory Board member Eckles
              would have anything to do with this lease negotiation between the
              the City and Dynegy.
              It was the former City Attorney Rob Schultz that did hot shot
              negotiating, not Eckles.

              Like or Dislike: Thumb up 2 Thumb down 2

              • mb20 says:

                Eckles still understands well what the outfall lease agreement means considering that it pertains to the budget that he must manage. He read this lease agreement,

                http://www.morro-bay.ca.us/ArchiveCenter/ViewFile/Item/1698

                and is aware that the rest of these claims are pointless.

                Like or Dislike: Thumb up 4 Thumb down 2

                • taxpayer says:

                  In fairness, Eckles may understand the lease agreement but he manages no budget. He is merely on the Harbor Board which is purely advisory to the City Council. I think you may have meant Endersby, who is the Harbor Director.

                  Like or Dislike: Thumb up 2 Thumb down 1

  8. mb20 says:

    If you actually go down in this document a few pages
    http://www.morro-bay.ca.us/ArchiveCenter/ViewFile/Item/1698

    You will see, “Amendments to the November 15, 2004 agreement to lease and AGREEMENT REGARDING POWER PLANT MODERNIZATION.”

    That is what the CDF is, not part of the outfall lease.
    And that is why there will be nothing to come of this SLC “investigation.”

    That is where the $525,000 comes from mbactivist. Riddle me that.

    Like or Dislike: Thumb up 2 Thumb down 2

  9. clemente says:

    Do you accuse everyone that is articulate and presents facts of being Rob?

    Like or Dislike: Thumb up 3 Thumb down 2

  10. mb20 says:

    Ha I like your reasoning, “He’s logical so he must be Rob Schultz.”

    Like or Dislike: Thumb up 3 Thumb down 2

  11. coco says:

    sorry meant, cowpetal: puff up, cream puff

    Like or Dislike: Thumb up 1 Thumb down 1

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