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Roundtable: City Budget, Unspent Utility Funds, Del Mar Fairgrounds

February 24, 2012 1:33 p.m.

Guests: Scott Lewis, CEO, Voiceofsandiego.org

Ricky Young, watchdog editor, U-T San Diego

Jonathan Horn, reporter, U-T San Diego

Related Story: Roundtable: City Budget News, Fairgrounds Board Views, Water Users' Dues

Transcript:

This is a rush transcript created by a contractor for KPBS to improve accessibility for the deaf and hard-of-hearing. Please refer to the media file as the formal record of this interview. Opinions expressed by guests during interviews reflect the guest’s individual views and do not necessarily represent those of KPBS staff, members or its sponsors.

Read Transcript

PENNER: Is this Friday, February 24th, I'm Gloria Penner. With me today at the Roundtable are Scott Lewis, CEO of VoiceofSanDiego.org. So good to see you.

LEWIS: Good to see you, thank you.

PENNER: And Ricky Young, watchdog editor at UT San Diego. Ricky, as always, I'm glad you're with us.

YOUNG: Good morning, Gloria. Oh, good afternoon, I'm sorry!

PENNER: Oh, it is, you're right. Used to be morning. And Jonathan Horn, who is here for his debut, and he's a reporter with the UT San Diego. And you cover the North County.

HORN: Absolutely, Del Mar, Solana beach, and Encinitas. Thanks for having me.

PENNER: You're welcome: Yesterday, mayor Jerry Sanders announced that San Diego will end this fiscal year with I surplus of $16.5 million, and this after years of threatened and real cuts in city services because revenues fell behind expenses. Well, why didn't we know this was coming? Where did the actual gains come from, and is this really a repair of the structural budget deficit? So I'm going to ask you, our listeners, are you feeling more optimistic now that the announcement has been made? And we start with Scott Lewis. Scott, Jerry Sanders promised to end the budget crisis when he first took office. Is it clear that he's delivered on that promise?

LEWIS: I think you have to think about what's happened. Look at the -- the city is required to balance its budget every year. So to say the city has balanced its budget is an interesting, major announcement to have. What he's talking about is the structural budget deficit. And I talked about that a few times, and that means there's the fact that the city was not set up to take in as much money as it was set up to spend. And so every year when they went through that process of conforming to the law to spend as much as they are set up --

PENNER: Well, while you're coughing I'll pick it up while you're -- oh, you're okay.

LEWIS: Yeah, to every year before this, what they were doing is gimmicks and games. And 1-time revenues to stuff the pig into the hose. And when it was done, you would always say, well, you just did gimmicks, you just did tricks to get us through this, and they'd say, no, no, this was a good process. So by saying that they've solved the structural budget deficit, they're admitting that in the past they did use these gimmicks. The and other thing that also kind of struck me about this is that they'll wave this in front of a lot of people's faces and say, look, we solved the structural budget deficit. You've got fewer reasons to complain about the city. But it was them who --

PENNER: Them meaning?

LEWIS: The city and the mayor's office who less than two years ago said that we needed to pass tax increases in order to protect our very vital city services, libraries and such. Look, this is a good deal. What they've done is finally arc lined revenues with expenses not only this year but ongoing, they say. It's a very big deal. And they won't apparently be doing those gimmicks and those tricks that they did to get the budget done in the last few years.

PENNER: Is that the most important part of this, that they're not going to be doing those tricks?

LEWIS: That's important to me. What will be important to the residents is that their library hours look like they might go up. The rec centers hours might go up. Problem is, there's a lot of structural issues too, the city's structure, its facility, its streets, its infrastructure is crumbling still. Wee not even spending enough to keep it at the 78 that it is at right now. So there's a long way to go.

PENNER: Do you agree? Our listeners. 1-888-895-5727. Ricky, why is it that we didn't have any sign this was coming or did we? To me, it was kind of a surprise announcement. We were alerted by e-mails from the mayor's office that he was going to make an announcement. That was it. That was the beginning of it.

YOUNG: Well, there have been some positive signs for a while. You know, the investments of the pension fund doing better, sore the city had to kick in less for pensions.

LEWIS: Just not an increase as much as they thought. It was about the same, but --

YOUNG: Well, that affects the budget, doesn't it? To put in less? So there were signs like that. The economy has been improving. There's been an up-tick in sales tax revenue, this sort of thing. So there were signs that this was coming. It ended up more dramatic than we thought it would be.

PENNER: Do you sense then that this is all coming from increased tax revenues or might, for example, the fact that the stock market has gone up pretty consistently over the last year made a difference too?

LEWIS: I think it's all part of a picture of just things are getting better, and a rising tide floats all boats, as I think I've heard Tony Perry say on this show a number of times. But has there been some change in the structure of city government? I don't think so. The people who have been on this show and elsewhere say that we have a structural budget deficit, and there's a fundamental problem with the way the city is set up, I haven't seen fundamental changes in how the city is set up. I've seen some budget cuts, some 1-time revenues used to get through some tough year, and it looks to me like the solution has final he come as it might come for families in San Diego County where the economy is better, and therefore it's easier for them to afford their budgets.

PENNER: Well, Jon, you've heard what your colleagues have had to say about library hours extended and people are seeing services restored. But what about the backlog of Streep repair projects? I'm sure you've been hearing about that.

HORN: Well, what's one of the first things that we saw on our website after we posted the story is you have these lines in your article about library services and rec centers reopening up. But you look down at what people say, "fix the roads." So people are complaining about the roads being in shambles. We pay a lot of gas taxes. The prices are going up. That's certainly something on people's minds.

PENNER: Well, who establishes these priority, Scott? Who decided it was going to be the library hours and the rec hours and 15 more cadets in the police academy and a better fire alert system? Who decides that?

LEWIS: Well, this is his priority, his proposal. The purse string are controlled by the City Council, and the City Council will decide in coming months in April. They will decide exactly where that money goes. So it could change. I think everybody would agree, perhaps with the core priorities, maybe tweak it a little bit. I think the key is, it wasn't that long ago that the mayor was denying that there was even a structural budget deficit. So to come out and say that not only is there one but it has been taken care of, I think is indicative of just how big this revenue surge has been. And it has been a revenue surge. It's hotel taxes. The city pays its bills with three main sources for its general fund. Hotel room taxes, so people who stay at hotel rooms, property taxes, and it's sales taxes. And so if the economy is improving, that's where that money is coming, and they accounted from conservative numbers, and is this the benefit you get from being conservative.

PENNER: I've got to ask you this, what about the redevelopment funds that would have gone to the redevelopment agency what is now basically eliminated?

LEWIS: We have to get the actual numbers. What he had was a show yesterday. So let's get the numbers and we'll break it down. There has been talk. Donna Frye ran for years on the notion that there was a lot of money owed to the City of San Diego from the redevelopment agency, which includes projects all across -- areas all across the city. So are we going to start getting some of that money back that she said was owed? Are we going to start to see a benefit from downtown paying its fair share of property taxes? They haven't unwound anything yet.

PENNER: Ricky?

YOUNG: I think it's too soon to say that the redevelopment had an impact on this. That's still being unwound. There's, like, $6 billion in liabilities I think that they're still trying to sort out from the city's shutdown of the redevelopment agency. So I don't think they've booked that revenue in this sudden surplus.

LEWIS: But that would be ironic.

PENNER: The people of San Diego are going to have a say in what goes on in the City of San Diego assuming that the dispute is revolved over the ballot initiative to substitute 401K plans for pension plans for new city hires. Politically, what might this mean to that ballot initiative if people are going to sit back, relax, and say, okay, no problem here. Of the city has balanced its budget. So why should I worry about changing the pension?

LEWIS: I think supporters will say, look, you shouldn't be paying people or compensating them more than what the market will demand, and this is still a reform that needs to go forward. That's what they'll say. But again, the key to remember about that pension reform is that it affects only new hires. There are provisions that it would freeze the pensionable pay for current employees. That's something that the City Council can do right now every year. And it doesn't actually freeze it. It recommends that the City Council do that every year. So I think they're going to say, look, there still needs to be changing that take place, because if we can free up more money, we can have more services.

YOUNG: I think the surplus this year held against hundreds of millions of dollars of deficits that people have been hearing about for years and years and year, all of it blamed by certain ideologues ones on city life and city workers and city pensions, I don't think that's just going to be quickly washed away by this year's budget situation. I think there are people who signed these petitions and want this thing to pass and don't necessarily see this immediate budget situation as having an impact on that. There'll also be an interesting fallout, though. The other part of the political question is Carl DeMaio who's very closely tied with the pension reform initiative.

PENNER: Candidate for mayor of the City of San Diego when Jerry Sanders is termed out at the end of the year.

YOUNG: That's correct. And a member of the City Council. And if libraries start opening and rec centers start opening and people see things as better, a Merrill campaign paced on the city's all messed up, it'll be interesting to see how that plays out.

PENNER: That's fascinating when you think about that. Who might this benefit among the four mayoral candidates? I want to ask our listeners, what would you like to see the $16.5†million surplus spent on? Let's talk about the politics of it. Who might this benefit? The fact that things don't seem to be as bad as they did yesterday or on Tuesday.

LEWIS: Well, I think the first person that would come to mind with that question would be district attorney Bonnie Dumanis. He has been the one to most clearly associate herself with the current mayor and say that she will keep making foot steps in the sand where he left off, basically. That she's a competent manager, she's just going to get things done. And Carl DeMaio came out and said this was basically a dog and pony show to get people not focused on reform. And unfortunately, the mayor plays into that when he either says we have to do all these major reforms or we have to raise taxes and then says don't worry, we haven't done either of those yet, but everything is okay. Nathan Fletcher is like Bonnie Dumanis who is rub running for mayor, and he's cheered it a little bit, but he's got this thing saying well, now we need to look forward, and we need to decide what kind of city we want to be. And Bob Filner? Where is he? I have no idea. He's the absent candidate. His organization and his ambition and passion for this job has been really interesting to watch. He meant been out front. And I'm not he even knows what's going to happen yet. He talked about his own pension plan, and it hasn't come out yet.

PENNER: There are people who have made personal sacrifices during this budget crisis, for example the city employees. They sustained a 6% salary cut in 2009. When the mayor became mayor, he promised to cut costs at the city, and the big cut in front of us is that cut in salary. Can we expect that that's going to be redeemed, that we're going to see our city employees get their 6% back or maybe more?

HORN: I think it would be a prudent thing to wait on that, especially since you see that in the private sector when -- you know, the recession seems to end, sales seem to go up, but they're just a little bit reluctant to give those raises back. Because you don't want to put the cart before the horse. Let's see a couple of quarter, fiscal year quarter, go well. And then talk about it.

PENNER: And see meanwhile, city employees have to make due with their 6% cut.

HORN: A lot of people.

LEWIS: When we talk about those raises or freezing salaries, we're talking about across the board. Individuals can still be promoted, can still get step increases and still gain experience and benefits that come from that.

PENNER: So it isn't as bad as it appears.

LEWIS: Land it's not as good as it appears when you say you're freezing them too.

YOUNG: I do think the fact that Todd Gloria and Tony Young were there with the mayor yesterday not -- you know, and sort of supporting his priorities, not saying let's give money back to the employees, you might expect Democrats to be a little more pro laborer, and since they're not, I would say that's probably not the direction the city would go.

PENNER: Thank you very much for your thoughts.

[[[NEW SEGMENT]]].

PENNER: This is Midday Edition Roundtable, I'm Gloria Penner. I'm at the table with Ricky Young from the UT, and Scott Lewis from VoiceofSanDiego.org, and Jon Horn from the UT. And we're about to be talking about your water bills. Now there is talk among San Diego officials of another increase being considered. Yet questions have surfaced about how much money has already been raised in the last five years from the hikes that have already taken place, and how is it being spent. So those of you who use water, are you willing to spend more money for your water if a rate increase is really needed to keep water flowing through your faucet? And Ricky, is that the situation? Is that what the San Diego public utilities department is saying? Without more money athletic be an interruption or stoppage of water?

YOUNG: No, it's nothing like that. In a preliminary way, they've begun to study what they charge and what they bring in to see if they need I correction of some sort. The presumption is that they would be going out for another rate increase, depending on the results of that study. But the controversy brewing at the moment is over what they've done with the money from the last rate increase, there were four years worth of them approved. And I forget if it was in 2006 or 2007. But that was supposed to fund a billion dollars in water and waste water projects. But the spending is not exactly proceeding Apace, according to our friends at Investigative News Source right here at KPBS. And out of 111 projects promised, 39 of them are complete.

PENNER: So that's like 1/3.

YOUNG: That's right. Just over a third. Now, when you look at it by dollar value, they're a little further along on that list. But there are people saying that they should be fixing leaky pipes and things and doing these projects at a faster clip, and the fact that -- and in addition, because of the rate hikes and some other factors, they have $600†million stock piled in these accounts that are there to may for these projects, but not being spent as quickly as you might expect.

PENNER: Jon, what we're talking about is the public utilities department of the City of San Diego. And the public utilities department reports to the City of San Diego. And there actually is a committee that oversees the public utilities department. What responsibility does a City Council committee have to be sure that the money that's collected to fund old pipes, upgrade old pipes and old pumps really does get spent?

HORN: Not only that it does get spent, but also the money is kept in a safe place. And in case these projects may be in a backlog or take longer than usual, they need to keep that money there and keep the projects at a reasonable schedule. And just make sure that things are going responsibly and held in the correct manner to keep the public trust going.

YOUNG: Yeah, I don't want to pile onto the city too much. And on their behalf, they're in a catch 22 here. You don't often hear them criticized for not spending money enough, you know? And some of the surplus is built up because the projects ended up costing less than they had anticipated. They saved a lot of money because the depression in the economy, or I should say the recession, where they saved money and that is to some extent why that money is piling up there. It's a funny thing for them to be criticized for.

PENNER: This is true. However the president of the taxpayers' association said the 73 can't say how ratepayers' dollars from the last increase was spent. Isn't that essentially it? If we don't know how the money is being spend?

YOUNG: There's a lot of good accountability issues here where the city promised to do audits every year by independent auditors, and they have not done that. They're just now doing that four or five years after the fact. And the taxpayers' association is looking at whether those rate increases could legally be required to come down because they were only for a certain period of time. And the money hasn't been spent.

PENNER: Scott?

LEWIS: I think the city came with a rather blistering response to the story. And there's all kinds of ins and outs of it, but a couple of the points that were salient say only 39 of the projects represented were completed. But that's compared to some big projects compared to ones that weren't as big. The other being that the money is being -- it had been contracted out, but the invoices still have to come in. And just because the money is waiting to be spent on these things doesn't mean that the work is not done. Now, there's an issue of results. You have to show results. But just like you said, there's a lot of these projects that came in cheaper, and they can only use that money for other projects or to avoid future rate increases. And I think that's what they're planning.

YOUNG: And they have gotten results. In the story, we quoted some of the regulators. This all goes back tow regulators saying that they needed to clean up the system, not have so many leaks and this and that. And we quoted regulators in the story saying they did pretty much what we asked.

PENNER: At this point, I think there's consideration of bringing in some consultants. The council committee that's looking into hiring consulting. S to see whether another rate increase is needed. And one wonders if they're actually saving money on not doing projects or doing it more carefully, what would be the reason to have another rate increase?

HORN: Well, one of the things Ricky and I were talking about before we came here is not only did they increase the rate four years ago, but the rates are still that same rate even though they were supposed to expire in 2010. Why are they allowed to do that, and if the rates are still higher than what they used to be, why would they raise them again?

YOUNG: This is still being worked out. There was no explicit sunset. They approved four years of increases. The taxpayers association is trying to figure out a way to argue that at the end of those four years it should go down. But that remains in dispute.

LEWIS: The you can look at your water bill and say why are these rates increasing, and is this what we're talking about? I think a major portion of the rate increases you've seen in your home have to do with the actual cost of the water of the wholesalers from San Diego County water authority and the metropolitan water district. I'm not going to be an apologist for the city. They need to answer some questions, especially about the audits. But just the proportion of projects being done and the actual cost savings, and the amount of money in a bank account I don't think tell the whole story.

PENNER: Are you basically saying that. This investigative report didn't give us any new information that's useful?

LEWIS: I didn't say that at all. I liked reading it. But I'm just saying before we take a pitch fork to City Hall and say lower our water rates, there are some big, complex projects being done. They need to show results, and they need to do an audit and show they're doing them as fast as possible. But if they are saving money and can use that to avoid future rate increases, I think that's a benefit that they should be allotted for.

YOUNG: With the city it always comes down to trust. And this is an agency that has not built up a lot of trust with its public lately.

PENNER: In what way?

YOUNG: Kelly Thornton has done a couple of good stories about billing problems that are absolutely causing people to tear their hair out since the new computer system went in last July. This is an agency that was giving quote unquote performance bonuses to 90% of their employees for years. I think it's called the bin to gold be program, which the mayor now stopped. A lot of people were giving bonuses for performance, and if almost everyone in the department gets the bonus, it doesn't clearly seem tied to performance.

PENNER: I'm sure you've asked the question, or somebody from UT asked the question, of the public utilities department, how do you answer this?

YOUNG: Right. Well, they say they're doing a good job. And when you plush the toilet, the water goes down, and when you turn on the tap, the water comes out. And you can't really argue with that unless you're one of these people who is having severe billing issues or had their house washed away or flooded. So they say they're doing a good job. And I would think for much of the public, that's the case. But there are these trust issues. For a while, this goes back before my time, but one of the big issues the city got in trouble for back in the middle part of the last decade was taking water from these departments into the general fund as a sort of skimming operation that wasn't supposed to happen.

PENNER: Do you remember that, Scott?

LEWIS: That was a complex deal with attorneys and all kinds of things. I believe they've taken care of that. But --

YOUNG: I was just saying there's a history of trust issues with this department.

LEWIS: Absolutely. And then there's the actual infrastructure issues. When the power went out, the city let loose of its own bowels, and more than three million gallons poured into the ocean and sullied the shores. Are we going to be able to build the generating capacity, the stations that we need to make sure that doesn't happen? And those are part of the projects that might be funded with some of this excess that we've built up. Or do we give the rates back? There's all kinds of decisions. And that's why the story of valuable and illustrative. Let's see what the audit shows.

PENNER: We did mention that one candidate for city mayor that's Carl DeMaio, he sits on that council committee that oversees public utilities. How much of a political hot potato could this become for him?

HORN: I would echo what Ricky said, which is when people flush the toilet, they want it to work. When people pull the spigot, they want the water to come out. Unless you're having a billing issue or pulling your hair out, I think it's probably going to be okay for Carl DeMaio, so long people can live their daily lives and just make sure that when they want something from their sink, it's going to come out of the faucet.

PENNER: Okay. Well, we have a caller, and we'd like to welcome our caller.

NEW SPEAKER: Thanks very much. I'm a member of the independent rates oversight committee that oversees the public utilities department. Unfortunately, there's been so much misinformation on this program so far that it would be impossible for me to address all of it.

PENNER: Well, do what you can.

NEW SPEAKER: But fundamentally, I'd like to say with respect to the purchase content published by the UT this week, for which the UT is apparently not taking responsibility, it is frankly -- doesn't rise to the level of serious journalism. The bottom line is, there's no -- it's not reasonable to characterize as controversial a department that is executing on a rate case, and including rate increases that were scheduled and approved by the City Council. The fact that the department has been successful during this rate case in achieving lower than anticipated costs in constructing the necessary infrastructure and the approved infrastructure projects, the fact that the department has cut largely driven by the goal program has cut hundreds of positions, the fact the department has successfully defrayed rate payer costs by successfully obtaining grant money where they normally would have paid for other projects through borrowing, are the fact that the environment has been favorable, the fact they have refinanced all of the outstanding debt, all of these are greatly to the benefit of ratepayers.

PENNER: Okay, well, thank you very much for your call, Don, and for clarifying. And we want a response from Ricky Young.

YOUNG: I'm concerned with don's characterization of how the UT handles this content. We did pay to have the story in the paper, and we do take responsibility for it. That's why I'm sitting here talking about it. So I'm not really sure what he's talking about there. But some of the things he mentioned, for instance, the fact that the department saved money doing these projects, I sat right here and said that. It was all also in the story.

PENNER: You did say that?

YOUNG: I can't really take what he says point by point. He's mentioning some things the water department has done that he views as favorable. This was not an entire story about the water department and everything it's ever done. It was a story specifically looking at what they've done with the money from the rate increases, and I thought it was valuable.

PENNER: Thank you very much, again, don. If are your call. UT editorial, Jon, calls for an independent audit to answer the questions raised in the investigative report. How unusual would it be for a city department to be independently audited?

HORN: That's hay good question. I think well, I don't think. If there is some sort of check and balance with the private sector for an independent auditor to come in, and the officials think it's worth it. They should do it.

YOUNG: The city has had a number of outside independent audits of different parts of its programs. And it wouldn't be that unusual, and in fact, it was promised when the mayor was trying to build support for these rate increases.

PENNER: Meanwhile, that City Council committee that I talked about is looking at hiring a consultant to see whether another rate increase is needed. And the question is, you know, how much money will be spent on consultants to evaluate whether we should be paying more for our water?

LEWIS: Well, you have to make these decisions on data and on facts. And so if you need to hire somebody to come in and look at the issue, and give you that data, and then you have to make the case to the public. We don't put up rate increases to a public vote for a very, you know, pretty good reason. Basically that you can't allow the public to reject a vital increase that would mean we don't get water. On the other hand, that requires a tremendous amount of trust. And as Ricky says, if it's true that they're losing trust, then they're going to need to make pay very public case for it. On the other hand, you also -- we need to also have a better and more organic understanding of all of these numbers, and whether we should be outraged by them or whether it's a snapshot in time as the mayor's office says. And we'll check back, and they'll have spent $300†million and are we going to be more money or what? I think the question is are the pump stations going to get built? Are the backup generators going to get built? We need to see results.

PENNER: Thank you very much for that discussion.

[[[NEW SEGMENT]]].

PENNER: This is Midday Edition Roundtable. I'm Gloria Penner. I'm at the Roundtable today with Jon Horn from UT San Diego, and with Scott Lewis from VoiceofSanDiego.org. And Ricky Young from -- also from UT San Diego. Coming up, we're going to talk about what's going on at the Del Mar fair board. But first, along came an e-mail that Ricky Young got from Darren Pudgil who works with the mayor having to do with balancing the budget.

YOUNG: Just briefly, Gloria. I said the city has not had any major structural reforms. What I meant by that was a lot of this discussion has centered around -- you know, regarding fixing the structural budget deficit, has centered around we need a tax hike, a lot of people calling for more revenue. I did say we have had some budget cuts. Daren wanted to make sure they got credit for that. Business process reengineering has saved millions, managed competition, $5†million a year. They're not just sitting there, twiddling their thumbs. I would agree with that. Of the mayor's office has done some thing, the city has done some things. What I meant was when people call for structural reform, a lot of times that's a code word for we need more revenue. And in fact the mayor tried to get that, and it didn't come through.

PENNER: I'm sure Darren Pudgil is very happy you referred to his e-mail. Now, when the owner of chino farms in Rancho Santa Fe submitted his resignation as a Del Mar fair board member, he said he thought his contribution would be in organic farm, that's his specialty. And apparently it didn't work out that way. Jonathan, clarify for us, what is the role of the fair board?

HORN: If you trace the mission of the Fairgrounds back, it's fairs and agriculture dating back to 1936. The Del Mar fair board is a group of nine people appointed by the governor to four-year terms. They're unpaid but they do get parking spots up front at the fair. And they do get into events and into the turf club. And they make these policy decisions about what kind of events to do with this 400-acre venue.

PENNER: And that's it?

HORN: That's it.

PENNER: Where's the power?

HORN: The power is they make the decisions with what goes on at the venue, whether it's events or concerts or future projects they approved in April†2010 a master plan that calls for new exhibit halls. Those are first years old, they're leaky, they want to do that. Increased parking. At one time, they proposed a hotel, which they've taken off the table because the neighboring cities were not very happy with that.

PENNER: But generally, and let me ask this of you, Scott, generally power leads to money or money leads to power. There's usually some relationship been power and money here. These people are --

LEWIS: No, everything is principles and peace and happiness, right?
[ LAUGHTER ]

LEWIS: Oh, of course, being able to control public purse strings, it's become very clear to me over the last year, that politics is all about who gets the money, not whether there's money. And I think that's the case here. Go ahead.

HORN: 1 of the things about getting on the fair board, even though it's unpaid, it's a very coveted position. Some of these people have donated thousands of dollars to gubernatorial campaigns to get on this board. Lisa Barkett, $25,000 to Jerry Brown, and she got appointed after he took office. It's a mixed bag. But there is a history of making financial contributions to governors. To get on this board. And again they do have a lot of high-profile guests come into the turf club and enjoy a lot of these events. One of the things about tickets is they get them in multiples of six to these concerts. Because they're boxes and they're great views. And that's a great thing to do.

PENNER: When you talk about all the decisions that this 9-member board makes, one wonders whether it should be doing all its business in public. And that's part of the issue here. So let me ask our listeners about that. Do you feel from what you know about the Del Mar fair board, and what goes on with the fair board, that it is transparent enough? That it is doing its business in public?

HORN: I would say that the Fairgrounds, it has become a more transparent since these five board members have been appointed. They've always had public meetings, they've always posted their agendas. The meetings you can go to, you can do public records act requests with the agency. Tom chino wanted 2-person meetings to be held in public. And under the open meeting act, that's not required. . It's only when it's three or more so they did make these 3-person committees and held them in open session. What Tom chino was asking for was not required under the law in the end. And several City Councils have 2-person committees that meet with other cities and they do that just fine under the Brown Act.

PENNER: It sounds like what he's saying has a lot to do with what Scott brought up which is all about principles. This is a man who apparently is so principled that he had a sense of who his functions should be on the board.

YOUNG: He shed a fair amount of light. In particular, he brought forth this state audit that showed that the Fairgrounds was giving, I think, $500,000 worth of vacation payouts to its employees to help them get through in the bad economy.

PENNER: How does that work?

YOUNG: If they had vacation built up, instead of taking the vacation, they get a cashout of it on top of their salary.

PENNER: But they don't get the vacation.

YOUNG: That's right. That's not something that's widely done in the private sector, I don't think, because the net effect is a salary increase as compared to if they took the time off. But that may be a very nice thing to do, it may be fine, except the state said they're not supposed to be doing that! And that's what this audit said, is knock it off. And chino or someone called for the employees to be asked to give that money back because it was improperly awarded. That's a big thing that he shed light on before riding off into the sunset there. And Jonathan has written about that a couple of times in our paper. He's always written about these tickets that were given out. You asked about transparency at the fair board, one thing they're not very transparent about is they get these free tickets, they take people in the boxes, then they didn't even say who they were taking. Now under pressure from activist Ian Trobridge, and the state fair political practices commission, they replaced names of people, but they don't say who those people are, what is their business affiliation, what benefit is that to the fair. And the issue there, if there isn't a legitimate purpose for it, it could be considered a gift of public funds or taxable income that they would have to report.

PENNER: Well speaking of that, apparently the fair political practices commission decided not to sanction those board members who had received free tickets themselves.

HORN: That's true. But the Fairgrounds is going to get a warning letter from the commission to just say report this more thoroughly in the future. Adam day who's the president of the fair board has five kids.

PENNER: Is he an appointee of Jerry Brown?

HORN: No, he is not. He's a previous appointee, and one of three board members who is serving on an expired term. So he can be removed by the governor at any time. Adam day listed 12 tickets to the Bruno Mars concert for immediate family on his original disclosure form. And then on his second one, he said five for more family, and seven for one of his colleague's at Sequan that again, this is a very new requirement. It dates back to 2008. The FPPC.

PENNER: It doesn't sound new to me, four years?

HORN: Fair enough. No pun intended. But these Anaheim City Council and Orange County fair board members were taking hundreds of thousands of dollars going to these concerts, and the FPcc said the $420 gift limit applies to them. So maybe it's only a year or two that they have had to post that online.

PENNER: This isn't limited to the Del Mar fair board though, is it, Scott? You've covered other public entities where free tickets were sort of just out there.

LEWIS: Well, yeah, and I think the question of where it crosses the line is a very interesting one. In south bay, free gifts and things really crossed the line. You got to disclose these things, there's limits. You can't agree to do anything in exchange for getting them, that sort of thing. But then I think this is part of a larger -- we're talking about trust issues with agencies, Del Mar and the Fairgrounds have a very odd relationship. The Del Martians around it are uncomfortable with all the things that come in, all the things that happen there. But they also want to make sure that it's limited like it is. So this is all part of that, I think a culture of instability in that region as people try to --

PENNER: But it's been there for years and year the.

>> Right. Well, the struggle is for power over this institution. So what you're seeing is the consequences of that struggle. These are symptoms of that fight.

HORN: And I think you're going to start to see a more collaborative effort between dell mar, Solana beach, and the San Diegito JPA, which is this coalition that manages the Fairgrounds' wet lands. According to Adam day, they've also invested $150,000 to come up with a plan with Del Mar and Solana beach on how to bring people to the fair through public transportation. And it got really bad a few days last year, especially when they had the international beer fest and the gospel fest on the same day, and they had to take the step of closing Via de la Valle.

PENNER: There was a point when Del Mar was thinking, the city of Del Mar was thinking of buying the Fairgrounds.

HORN: They're still thinking about it.

PENNER: Are they? Is there any movement in that direction?

HORN: Well, the movement is that they still want to do it. And so while legislation has expired regarding just that sale, it doesn't mean that it's off the table. If the governor came out and said I want to sell the Del Mar Fairgrounds, Senator Kehoe or someone on their side would introduce that legislation because there's no point in putting it through the legislature, if you know the governor's going to veto it.

PENNER: I want to get back to Tom chino. We let him slip by there. But he said he was the target of an attack saying he was leaking confidential information. What was going on with the board that this situation would have exploded as it did?

YOUNG: His personal attorney is connected sort of peripherally to a case by this wetlands group that Jonathan mentioned against the Fairgrounds. And either out of true concern of a conflict of interest or just because he was irritating people at the board, this leaked out and was portrayed as a conflict of interest. And I think that may in the end contributed to him leaving.

HORN: These people are not paid. And Tom chino is not the guy that's going to --

PENNER: But are they political? Other than giving money to Jerry Brown, are they political?

HORN: Tom chino was one of the few people on the board that was registered as an independent. And he did not give any money to Jerry Brown. So while, yes, a lot of these public are political, Tom chino, I would say, was Apolitical.

YOUNG: And I think it's a very political board. Adam day is a planning commissioner for the county of San Diego. I think politics tend to enter into all of this, especially when there's political appointments involved.

PENNER: Well, this board has a history of being low-profile. It's not low-profile anymore. Why this change to a board that new makes the news?

HORN: That's a really good question. I think that one of the things is there are a group of journalists that attend the meetings. Myself, people from the coast news.

PENNER: Is that new? Had the journalists not attended MEETINGS before?

HORN: I couldn't tell you that. But I've been covering them since January 2010, and so one of the things is that they are becoming more transparent. And I think what's going on is that the city of Del Mar and the city of Solana beach and the JPA are putting pressure on these people because journalists always covered those City Councils. And when they take the affirmative step to sue the Fairgrounds over a master plan for expansion, they automatically become the news. So you're forced to go cover them. And so I think the city has told the governor's office about what was going on in terms of behavior of the fair board. Adam day once compared the sale to maggots festering in a closet.

Were who were the maggots?

HORN: The city of Del Mar. Of and the secrecy that they were -- the secrecy that they were meeting about this sale in closed session and not holding it openly. Those kinds of things got quoted and made it to the governor. And to be fair to Adam day, these people are doing a fine job of managing a venue for the 3.3 million people in San Diego that do go to the fair. And that's what most people really care about. They keep setting attendance records year after year.

PENNER: Final comment?

LEWIS: Whenever you see something like this arise seemingly randomly at a public agency or a nonprofit or something like that, it's because strive has broken out, because there's struggle for control, because there's politics and problems and people accusing things, and that attracts journalists which help settle the arguments.

PENNER: Stir the waters!

LEWIS: We sometimes stir the waters and document the conflicts, which adds up more. So there is a power struggle for control of this major entity, one of the most valuable pieces of land in the country, I bet. And so of course it's going to have strive and intrigue. And I enjoy reading it.

PENNER: You get the last few seconds, Ricky.

YOUNG: Well, it'll just be interesting to see what happens from here, who the gubernatorial appointments are to replace chino, and maybe that other guy, Alpert.

PENNER: DD Albert's husband.

HORN: Michael Albert.

YOUNG: Speaking of politics. And whether this trend toward openness continues.

PENNER: Thank you very much, gentlemen.