HomeMy WebLinkAbout04-29-2014 Agenda & Backup City of San Bernardino
Volunteer Citizen-Based Charter Committee
Agenda
Time: 5:30 p.m. to 9 p.m.
Date: Tuesday, April 29, 2014
Place: EDA Board Room 201 N. E Street, San Bernardino, CA 92418
The City of San Bernardino recognizes its obligation to provide equal access to public services to those
individuals with disabilities. Please contact the City Clerk's Office (909) 384-5102) one working day prior to
the meeting for any requests for reasonable accommodation, to include interpreters.
Anyone who wishes to speak on an agenda item will be required to fill out a speaker slip. Speaker slips should be turned
in to the City Clerk,who will relay them to the Committee Chair person. Public comments for agenda items are limited to
three minutes per person.
ROLL CALL
PLEDGE OF ALLEGIANCE
.:HAIR'S COMMENTS
PUBLIC COMMENT (LIMIT 30 MINUTES)
ACTION ITEMS
1. Approval of minutes from meeting three
2. Follow-up on Committee Requests to City Manager from 4/22 meeting
• Fire call data
• 8-year history Police and Fire salary comparisons
• Comparison of City processes for determining salary adjustments
• Police and Fire attrition rate
• 10-year General Fund budgets (by department)
• 10-year overtime costs for Fire
3. Input from the department heads, city commissioners, employee groups and City Manager on
Charter changes that will most help the City financially.
• Allen Parker, City Manager, Human Resources and Police Officers Association regarding
mutually agreeable language modifications in Charter Section 186
• City Attorney Gary Saenz regarding clean-up language in Charter concerning the school district
• Civil Service regarding clean-up language to Section 254
• City Clerk Gigi Hanna with report on cost and efficiencies of consolidating with even year
elections, or keeping the primary and general election in the same calendar year
City of San Bernardino
Volunteer Citizen-Based Charter Committee
Agenda
4. Entertain additional specific proposals from Committee members for Charter review
5. Discuss and deal with "now"vs. "later" categorization and priority of consideration of Charter
change topics amongst the "now" category.
6. Discussion and consideration of the Charter discussion topics in order of their priorities
ADJOURN
The next meeting of the Volunteer Citizen-Based Charter Committee will be 5:30 p.m., Tuesday, April 29, 2014
in the EDA Board Room, 201 N. D. Street. Attendees are encouraged to park on the top floor of the City Hall
parking structure and access the EDA building from there.
Volunteer Citizen Based Charter Committee
Meeting 3 —Tuesday,April 22,2014
DRAFT Minutes
The meeting came to order at 5:30 p.m. in the EDA board room,with Committee members Dennis Baxter, Gary
Walbourne,Hillel Cohn, Michael Craft,Hardy Brown, Phil Savage, Tone, fierce and Gloria Harrison Present.
Committee member Casey Dailey arrived at 6 p.m. Also in attendancewe6 City Attorney Gary Saenz, City
Manager Allen Parker,Water Department General Manager Stac adt, Fire Chief Avery and Human
Resources Manager Helen Tran and City Clerk Gigi Hanna.
Committee chairman Phil Savage called the meeting to order amid lead the p1 of allegiance.
Clerk Hanna read the roll call.
One person requested to speak at Public Comment:
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Kathy Mallon, a San Bernardino resident since 2002 and a resident of the fifth ward, said understanding the role
! of the committee the impact it can have on San Bernardino's recovery has been challenging and watching the
meetings has not done much to answer her questions. The process is important,but the scattered approach and lack
of any substantial debate given the limited time frame, makes the challenge we face together daunting. The Charter
requires a systematic approach of review not a bucket list. If the goal is to create the best document possible, it
must first set forth what type of organizational structure will be used. Our current document is not precise enough
in this and that has led to a limited check and balance and chaos in the chain of command. The first order of
business for this group is to evaluate and determine the best form of government and then have the Charter laid out
to put in place the best principals and structure to make that possible. Then and only then will all other changes be
workable.Nothing in the Charter will ensure our success. If not well written it can hamper our success. The
Charter is the foundation;that's all it is. It is in the implementation,policy-making decisions and delivery of
service that will ensure our success. That responsibility lay with our elected representatives and us as citizens. The
Charter can and should create the check and balance system that protects the taxpayers and affords our elected the
means to provide service in an effective manner, with accountability paramount. The agenda document for today's
meeting makes it difficult to understand if my comments should be directed to a specific item, or general public
comment. It needs to be more specific and related to specific Charter sections so that my concerns,my studies, and
information can be specific to the matter being discussed. Until you do that,you cannot expect the public to be
engaged much because we don't know where you are going.
Action Item#1: Approval of the minutes for the first two meetings of the Charter Review Committee. The
minutes for both meetings were approved unanimously, as submitted.
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Action Item#2: Input from department heads, city commissioners, employee groups, and City Manager on
Charter changes that will most help the City financially.
City Manager Parker passed out a comparison of Public Safety Budget vs. Misc. Departments budgets over 20
years, and a Summary of Charter 186 costs from 2006-present. These were at the request of committee members in
the prior meeting(Attached). Parker said he would be presenting the historical information the committee
requested at the 4/15 meeting,but would not offer any opinion on the information. He read through the document.
Parker said that the difference between the amount of the budget dedicated to public safety versus other
departments had been consistent through the years,with public safety departments consuming about 2/3 of overall
budget expenditures. Hillel Cohn asked for comparisons with other cities in terms of what their percentages of
public safety budgets are. Parker said he did not feel that the percentage San Bernardino spends was unreasonable
and as times get tough cities start cutting parks and landscape maintenance budgets and public safety continues to
rise to the top and when times get tougher, cities look at fire and police budgets, but they are absolutely the last to
go in city budgets because they are they are the number one priority. He said it does not surprise him that the
amount is 2/3 of the budget; if you look at it just as a salary component and take out all other expenses, 3/ of all
salaries go toward public safety. He said that is not unusual; public safeis the biggest bite of the budget and it is
the biggest bite of the budget we are working on for 2014-15.
Tom Pierce asked for at least 10 years of data further breaking down the budgets of particular departments. He said
there seems to be a lot less money now for libraries and parks and street maintenance than before. Parker said he
could get it to the committee by the next meeting, that the data is available because it was compiled for the
bankruptcy and is also online on the city website.
Parker said the City had gone frp h 1,500 full time employees to slightly under 1,000 in three years.
Michael Raft asked how the city determined compensation and if the city used a matrix that ties certain technical
competencies fora job with the compensation level for the general employees.
Parker said held like to see it that way but if the employee is in civil service,the compensation is set and a lot of
our positions are classified through civil service. Performance based compensation,wherever the categories are,
does not exist in cities like this because they can't afford to pay it,he said. Salaries have been frozen for years
here;they haven't even gotten cost of living increases.
Gary Walboume asked whether any of the 30 percent of the staff cut was from Public safety. Parker replied that
Police is down about 100 people, Fire is down 30-40 people, Community Development and Planning lost many
employees,the City Manager's office staff was cut,the City Attorney has been cutting his budget since he came
on and the Parks and Recreation Department is devastated. Cuts have been across the board,he said.
Hardy Brown questioned whether public safety salaries should be in the Charter, or negotiated like all other
employee salaries. Putting it in the Charter means it is on automatic pilot,he said.
Gloria Harrison asked that data for other departments be included in Parker's report. Specifically, she asked for a
report on the decrease of each department's budget over 10 years, and the decrease in each department's positions
in the same 10 years.
Pierce said he would also like to see the average percentage change in salary for other departments, as it was
presented for fire and police. Human Resources Manager Helen Tran clarified that there had been no raises since
2008 for the non-public-safety employees. Pierce would like to see the numbers going back to at least 2005, if not
further, so he could see the trend over time in terms of making a comparison to how public safety employees have
fared versus other employees.
Parker said the City had been negotiating with police and talking about Section 186 and the police, in conjunction
with the City Manager's office,will present some jointly-suggested language changes to Section 186, at the next
meeting.
Pierce asked if there were similar discussions going on with Fire employees. Parker said that Fire at this point is
preferred not to negotiate. He said the City had spoken with the management group,but the fire union has not
come to the table about this at all.
(The following exchange happened after the discussion of elections at the meeting, but is being grouped with the
earlier discussion of Section 186 for greater clarity).
Tom Pierce asked if any of the cities used in the Section 186 comparison use a similar mechanism to determine
salaries or if all of them get comparison salary information and just use it in the negotiation process. Does anybody
else doing this? It should be pretty straightforward.
Mathis asked Parker what he and his staff is considering so that the committee understands what areas are possible
for the next meeting.
Parker said that there is language in 186 that ends up mandating overtime for fire that he wants to address, and
other language that ties management's hands in terms of contracting out and some of that is supported by city
attorney opinions. He said that he has asked the City Attorney to clarify Charter language so a legal opinion is not
necessary to interpret the Charter. We need a full set of tools to manage in today's economy and this Charter
doesn't give us that full set of tools,he said.
Saenz said the language in the Charter is always subject to interpretation. But the goal is having language that can
be interpreted reasonably into different matters. You want to be clear and concise when you draft new provisions.
He said some Charters have a blanket statement that applies to each of its sections that says that"This Charter
should be interpreted in a manner that enables the council rather than restricts the council while using their
discretion."The language is very important and I think it is advantageous to make it clear so it is not subject to
various interpretations and if the desire is to make the Charter more enabling than restrictive guide,then that can
be stated in the Charter itself.
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Dailey aid giving olic akers flexibility to set the best public policy available within the confines of what they
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have to work with is something to take very seriously. The ability to be flexible is important and he liked the idea
of explicit enabling legislation.
Parker passed out the language in Charter Section 186 that mandates overtime. He passed out the overtime costs
for the fire department for calendar year 2013 and said it was an explanation of how the Section 186 language on
overtime had manifested itself in the fire department,with a$1.68 million cost for basic overtime. (Both of these
documents are attached, and are also included in the Meeting two back-up files).
Fire Chief George Avery explained the different categories of overtime pay available to firefighters as listed on
Parker's document.
Pierce clarified that the total overtime cost for the department AOK was'$6.2 million and asked what percentage
of Fire Department wages are accounted for by overtime verses straight time.
Parker said total payroll for fire in 2013 was $22.6 million, with the annual salary was $14.2 million and overtime
was overtime was $6.2 million,making overtime compared to annual base salary equal to 43 percent, and 27
percent of overall payroll cost over time. The remaining $2.2 million in compensation covered leave pay off,
special compensation and fringe benefits, he said. Pierce asked for a list of what those other types of compensation
are, and whether they are negotiated.
Pierce asked for the data on that and asked if general employees get overtime. Parker said it is a rarity,but does
occur, especially in field operations,for response to storms, etc. He said as part of the 10-year look at salaries, he
could include numbers regarding overtime.
Parker said the City's consultant is analyzing fire staffing and stations and other issues, and the report is due at the
end of June, in a public presentation to the council.
Regarding Civil Service language, Parker said if he terminates an employee and the employee appeals the
decision and he is part of Civil Service, according to the language in the Charter,he continues to collect pay until
he has a hearing before the Civil Service commission, and that can take some time. If the Civil Service
Commission overturns his decision,had he not been paid,he would be entitled to back pay; if they sustain the
termination decision,three months' salary just walked out the door. Parker said he wants to change the language so
that once an employee is terminated, he is terminated and if it is overturned by the Civil Service Commission,then
he is entitled to back pay.
Cohn asked if there were viable alternatives to having a Civil Service Commission. Parker said some cities do and
others don't. He said 15 years ago most cities had Civil Service Commissions;today most management talk about
merit systems and many can be spelled out in ordinances and such.
Saenz explained that the Civil Service language is an example of the clean-up that the Charter needs for clarity,but
said that most of the clean-up would probably be better suited for a later consideration because of the timeframe
before the committee and the enormity of the task. You want to minimize the ambiguity, you want to clarify,you
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want to Y�simplify, you want to make it something that can be read by the citizens and the general public and
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understood.
Savage said he would like to recommend to the council that the Charter review continue after this particular effort
is over because many issues will take longer more in-depth study.
(The following exchange happened after the discussion of elections at the meeting, but is being grouped with the
earlier discussion of Civil Service for greater clarity).
Rebekah Kramer, Chief Examiner for Civil Service introduced herself and explained how the Civil Service board
works.
The Civil Service board, five appointees by the mayor, is responsible for the independent review of classified
personnel issues in the city and if the board were not in place,the city would need another entity to provide that
service. The Civil Service Board is responsible for three primary areas related to classified employees: pre-
employment screening and testing; evidentiary hearings for classified employees in association with disciplinary
actions involving dismissal, demotions or suspensions; oversight and implementation of reduction in force lay-
offs. The board is aware of outdated language in section of article 13 of the Charter. Much of it is procedural in
nature and could be addressed administratively through the established rules. The board is supportive of clean-up
language,but it will take some time to provide feedback and will be considering the issue in late May for a long-
term study of the Charter.
Cohn asked about the background and experience of the Civil Service Board appointees. Kramer said there is not
set criteria for their background, but most have been involved in some capacity in terms of management/personnel,
or have worked with the city of San Bernardino.
Dennis Baxter asked how much overlay and duplication thereis between the Civil Service and the Human
Resources Department.
Kramer says they work hand in hand. Civil Service manages the classified positions,that they are posted and
tested for. Human Resources handles the unclassified positions,those working in the city manager office, or for
elected officials. HR deals with them once they have become an employee benefits, etc. whereas Civil Service
handles the issue when a disciplinary matter is at issue, or in a lay-off situation. Public Safety employees are under
classified service designation. HR also offers risk management, initial liability for the city as well as benefits for
all employees.
Cohn asked if the three classes of classified services—competitive,noncompetitive and labor class—as defined in
the Charter are still functional.
Kramer said yes they are functional,but may merit some review and consideration. She said the Civil Service
board would review the Charter in May and determine areas were the Civil Service section language could be
updated. That meeting would occur after the Charter Committee's deadline to report to the Council on May 19.
She said much of the changes would involve administrative efficiencies and cleaning up old language that does not
apply any more,but would not have a significant impact on city finances.
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If the city did not have a Civil Service commission, there would still need to be an independent body for
employees to take disciplinary appeals, separate from city personnel. Parker said non-Civil Service cities use a
merit system with personnel rules and regulations similar to those used in Civil Service situations,which allow for
an appeals process for those employees not represented by unions. Parker said there is more flexibility in
embedding employment procedures in ordinances rather than the Charter.
Parker said he would address the section of the Charter regarding pay for employees who have been terminated
and are appealing the decision at the next meeting. Kramer said it merited review as a cost-saving change to the
Charter.
Regarding the issue of elections, Clerk Hanna said she was hoping to have some concrete numbers to provide the
committee regarding elections,but had not yet received them from the County Registrar of voter specific to cost of
stand-alone versus consolidated elections. She said the city currently consolidates its odd-year election,with the
San Bernardino City Unified School District. Even numbered year elections have far greater number of
participants and there are some theories about whether even or odd-year election increase turnout, and whether it
adversely affects local candidates. She said she would review the liter ' e and be prepared to present that to the
committee the following week. But the city has historically had low votir turnout and more people go to the polls
in state and federal elections, a benefit of an even numbered year. Several cities have switched from odd to even
number elections,but only recently so the statistics of whether it increased turnout significantly, and whether that
turnout manifested in votes for local candidates, was unavailable. She said two clerks she'd spoken with felt that
the switch hurt local candidates,who had to work harder to be noticed against the cacophony of campaign
literature, lawn signs and ads presented in a state and federal election cycle. On the other hand, consolidating with
a large election spreads the cost for the candidates across a larger group,making it less expensive for candidate
statements.
She said that the city's elections are costing the city $235,000 to $260,000 depending on candidate or issues on the
ballot. If you have a run-off, it creates a stand-alone election,where San Bernardino pays the entire costs. The
special election in 2011 for Ward Two was $80,000. The run-off for mayor in 2014 was about$65,000. The cost
for getting an issue on the ballot is still under study,but Hanna said she would provide that to the committee with
her cost report from the registrar.
Cohn asked if there was a way to find out in an even year election if people vote the entire ballot or just those races
(the state and federal) at the top of the ballot. Hanna said she would include that in her literature search and report
back to the committee. Craft said he had the same concerns as Cohn.
Hanna said that the city's current system—where the primary municipal election is held in November and the run-
off held in February, creates some difficulty for candidates in reporting campaign contribution across two calendar
years. By having an election and run-off in the same year would be a far more efficient process, far easier for
candidates and less tiring for the voters. This would require some changes to the Municipal Code,however.
Hanna said an issue for the committee to consider,beyond cost savings,is efficiencies for the voters and the
candidates; the process will essentially remain the same for the Clerk's Office whatever the committee, and the
council decides.
Cohn said he would hope that the main concern would be to get a larger voter turnout for a greater representative
government. Savage said that would be a great result,but he was unsure how that would be achieved. Dailey said
efficiency and effectiveness and transparency are critical,but the voters need to have their voices heard and
national and state elections generate larger voter turnout.
Hanna said another issue to consider is voter fatigue with even and odd year elections, an issue that may be
addressed by switching to even year elections.
Savage wondered if the city changed to even year election would it want to encourage the San Bernardino City
Unified School District to do the same. Hanna said that would be up to the committee,but it might behoove them
because if the city chose to switch to even year elections,the school district would be left with stand-alone
elections in odd years.
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Cohn asked if bond issues do better in odd-year elections because there are fewer people voting. Harrison asked
for data about how local candidates do on ballots that include state and federal races.
Regarding the issue of the Water Department, General Manager Stacey Aldstadt read a statement regarding
potential fixes to the Charter issues and the Water Department, Charter Section 160 et seq. Her statement is
attached.
She said the Water Department has 100 percent authority to manage the sewer treatment facility,but no authority
or control over the collection system.Giving us the responsibility to make sure that the collection system gets up
to standard it should be at, I believe should come hand in hand with the authority to set rates. The sewer fund is
managed by the water department and supports the treatment facilities. The city manages the rates received from
sewer collection system and allocate those. Harrison asked if those funds came back to the water department.
Aldstadt said the water department receives all the funds related to the sewer treatment function,but none of those
related to the sewer collection function. In the past we became aware of the Sewer Funds had been used for other
purposes.
Baxter asked about the financial condition of the water department,to which Aldstadt answered that they"pay the
bills." He also asked how ones become a water commissioner. Aldstadt answered that it is by appointment of the
Mayor.
Michael Craft asked if San Bernardino processed waste water for other cities and if there was enough capacity in
the waste water treatment facility.
Aldstadt said that the city of highland is trying to determine how best to dispose of wastewater in a proposed
project called Harmony. The Harmony project will not max out our capacity at the secondary plant. However, it
will pose a problem for the collection system because Highland uses a trunk line that is near at-capacity,but that is
a collection issue,not a treatment issue.
Craft asked if the city gets fair market value for the wastewater it processes. Aldstadt said we do. He asked if the
city gets fair market value for the water it sells to other cities. Aldstadt said San Bernardino has emergency inner-
tie connections with virtually every city in the surrounding area and we serve that water at domestic rates, not
wholesale rates, in the even a neighboring city needs an emergency water supply. He said he didn't see any
discussion in the Charter that San Bernardino about San Bernardino water resources being the property of the
citizens.Aldstadt said that would not be consistent with California law because the constitution states that water is
a public resource of the state of California.
The trunk line has a reserve that the water department has managed. Residents of Highland that were residents
when the JPA was signed for East Highlands ranch,when that development was build the city and highland came
together to talk about concerns about capacity for the trunk line. Residents of that development pay a surcharge
that the water department collects, and if the capacity needs to be increased,the water department can draw down
on those funds. They have used money from that fund to do a capacity analysis of the trunk line.
Craft said he had heard that the equipment used to inspect the sewer lines was not as large as it should have been.
Aldstadt said the water department doesn't manage that system and does not know.
Mathis asked Aldstadt if she knew how much money had been transferred from the sewer fund and she said she
didn't know and that the person to ask is the city finance director. Parker said if the funds were placed into the
General Fund the independent audits currently taking place would find them. Walbourne asked if the audit would
find the Measure Z funds as well and Parker said that although they were sold on the basis of supporting police
and fire, the funds go into the general fund.
Aldstadt said she did not provide specific language for Charter change, but her general recommendations are in the
letter that she would submit to the record. She said she would defer to the City Attorney's office for specific
language.
Regarding the issue of the Police Officers Association, Steve Turner,president of the association,reiterated
what the CM said earlier we are the POA are working with the city in trying to come up with an agreement to
address the issues that have arisen out of Section 186. We're meeting had two meetings already and have more
planned. He wanted to speak to the document handed out by the city manager. He said that this is a ten year
document shows the budgeted positions for the Police department. The budgeted positions 340 to 318 is a
something everyone was concerned with. After that, the next two years,we the police officers association came
together with the city and agreed to zero out the 186 provision for two years. The budgeted position continued to
drop,to 246. The 3 percent salary increase for 2013-14 year is related to the two years with no salary increase. I
also think it is important to point out that the percentage changes in the salary keeps us average. The way I read
186 Section, it was the spirit of the section was to help this city retain their police officers. And if we can keep
them at average pay, it could prevent us from being a training ground. It costs the city about$100,000 to train a
police officer, which is why it is important when we hire an officer we retain them—because they are an
investment. In terms of percentages of budget, I think that for 60 percent an overall budget for public safety is a
healthy city. As you get to 70 percent of your budget,then the city has to make some cuts to areas they don't want
to and you start cutting back on filling potholes or repairing streetlights as quickly as possible or maintaining the
parks. 80 percent of the overall budget on public safety then your city is bankrupt. We are at 68 percent and we
moved from 64 to 68 percent.
Craft asked about the morale of officers.
Turner said morale is down and probably true for employees throughout the city,but in terms of the police
department, there is a collection of reasons,including the city is bankrupt, they are taking cuts in their pay, and the
situation is unstable. He said the POA is working hard to bring stability to its members. He said the Charter
Committee also impacts the morale of the officers.
Craft asked if the city is having difficulty attracting new offices.
Turner said he believes that may be an issue. He said that the cities which can pay higher than average pay will
attract the higher quality candidates. He said that candidates that San Bernardino attracts are the ones that have a
tough time finding jobs other places.
Pierce commented that the average pay for police officers seems good compared to other employees and asked
how large the applicant pool is when jobs are posted. Turner said he didn't have those numbers,but said that all
employees have different functions in the city and that this city has employees at all different levels and skill sets
and what is expected of a police officer is not the same as what is expected of other employees. Pierce said it was
difficult for him to why Section 186 is needed when the cities used to determine the median wage negotiate their
salaries; their salaries are negotiated and they define the average, so what would be the loss?
Turner answered that most cities establish wages much like the method used in Section 186,they do a comparative
study and if they don't bring the salary up,they will bring another part of the compensation package up, so overall
packages for that employee will be higher than what you find here in San Bernardino.
Pierce asked why the POA would not want to go to negotiation. If its all subject to negotiation and these other
cities are coming up with the average wages too, what's the loss?
Turner said the concern for the police officers is that they have had little success in the past convincing the city
that its benefits package is poor. When we are negotiating for benefits and comparing them to other cities, ours
suck compared to those and we don't get anywhere all we have left is Section 186 to at least average our base
salary, Turner said.
Pierce asked if part of the resistance of the city regarding benefits has to do with the salaries not being negotiated.
Turner said he did not know.
Parker said he thinks Section 186 represents a point of stability. The difficulty here is that for several years, crime
has been an issue, there is high turnover, causing morale issues,which, in turn, leads to understaffing. The chief
will tell you that 30 percent of his staff is not there at times. You go through cutbacks, lay off 500 people and
people get scared. The prior city council took money from police and fire, a non-negotiated take of their take-home
salary to pay their retirement. Section 186 amounts to a guarantee that they can get a raise through the Charter;we
feel much of this can be put into negotiation. They have asked for 6 year contracts,which is unheard of,because
they are looking for stability. This is a multi-year situation to determine how we address their concerns, given that
we are in bankruptcy and we don't have the money to address their issues. This is a last-ditch stand. I am empathic
about where they are coming from; in terms of negotiations we have asked them to be part of the solution, get rid
Cof the adversarial relationship,there's a lot going on and I think 186 is the tip of what is going on and it has a
strong meaning for them.
Cohn asked Turner for the pluses of working for San Bernardino Police Department,because there are still 246
still here. Is that because there is a guarantee of salary raise with 186?He also pointed out that the level of people's
salaries are often based on where they live,with those living near the beach making more than those living inland.
Turner said people become police officers because it is a profession they wanted to do for a long time and a lot of
police officers are loyal. There are people in the process of leaving;we are constantly losing police officers. But at
the same time we have young officers in the academy saying I'll work there. If we don't do anything about the pay
and stabilize it,we will become a training ground and we need to be cautious not to be the city that trains officers
that move one. But the reason they stay varies. Some like the action, the types of crime we have here. Or it could
be a multitude of reasons—close to home, etc. The current situation in San Bernardino makes it unique—as the
city stabilizes, you won't see the movement you see right now. Unless a decision is made to dramatically impact
the income of the police officers. People will go to other agencies when they can make more money. And when an
officer leaves this city,they have experience. g
Craft asked to know the attrition rate of police and fire personnel by the next meeting. Parker agreed to provide
that.
Action Item#3: Discuss and deal with"now"vs. "later" categorization and priority if consideration of Charter
change topics amongst the"now" category.
OHanna said that the current topic matrix has been updated since the previous meeting,with the matrix including
specific civil service language,compensation for an employee while under the appeal process and language about
the Water Department.
The now bucket was reviewed, and the item to recommend no changes (#4 on the list)was taken off the list; the
item to replace the existing Charter with one essentially identical to another city's(#7 on the list)was placed in the
"later"bucket, as was the item to require employee benefits to show as line item in city budgets (0). The
committee asked that the issue of Chapter 186 be agendized for the next meeting. The now bucket was reviewed,
and the following items are in the committee's "now" bucket: Charter 186, Elections, Continuous Charter Review,
Remove School District language from the Charter; Reorganizing relationship between City Council,Mayor and
City Manager; Section 254, concerning compensation of employees going through Civil Service appeals; and the
recommendations from the Water Department to transfer the management and rate setting power for sere
collection and treatment to the Water Board of Commissioners.
Action Item#4: Discussion and consideration of the Charter discussion topics in order of their priorities.
The committee agreed that the prioritization of topics it would consider would be as follows:
1. Removing obsolete school District language from the Charter(Item#17 on the topics list)
2. Continuous Charter View (Item#3);
3. Updating the Civil Service language in Section 254 (Item#27);
4. Transfer the management of the sewer collection system and the power to set rates for sewer collection and
treatment to the Board of Water Commissioners (Item#28)
5. Consider Consolidating elections with even-year elections, and make the run-off to same year as the
primary (Item#2)
6. Charter Section 186 (Item#1)
7. Reorganizing the relationship between the City Council,Mayor and City Manager
The meeting adjourned at 9:10 p.m. The next meeting is set for 5:30 p.m. Tuesday,April 29, 2014 in the EDA
board room.
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PREPARED STATEMENT OF
STACEY ALDSTADT, GENERAL MANAGER,
SAN BERNARDINO MUNICIPAL WATER DEPT.
TO CHARTER REVIEW COMMITTEE
APRIL 22, 2014
10
STATEMENT TO CHARTER REVIEW COMMITTEE
Thank you for giving me the opportunity to talk with you about
the Water Department tonight. I will make my remarks short, so as
to give you the opportunity to ask any questions that you may have
about the Department. I will only be addressing the information
necessary at this time to discuss potential "fixes" to the Charter.
The pertinent sections of the City's charter, creating the Water
Department and its governance structure are Sections 160, et seq.
The Charter provides that the Board of Water Commissioners has
the authority to establish and collect all water rates and manage the
domestic water system. In addition to what I will call "original
jurisdiction" over the domestic water system, the Board of Water
Commissioners also has delegated powers to manage the sewer
treatment plants. Uniquely, the pipelines that deliver sewage to the
secondary treatment plant are maintained by the City's Public
Works department and capital projects to expand the sewer
collection system are managed by the City Engineer.
As a result of having "original jurisdiction" over the domestic
water system, the Board of Water Commissioners has the ability to
raise water rates. It is my opinion, based on extensive research,
that the reason for giving the Board the power to raise rates was to
keep the politics out of the operation of a critical health- and
safety-related utility. Elected officials may balk at the idea of
raising water rates, even if absolutely necessary to cover costs that
are driven by Federal and state regulations, and particularly in
election years.
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1 � Page
STATEMENT TO CHARTER REVIEW COMMITTEE
Water Department is solvent
The fact th at the W p , even as the rest of
the City is struggling in bankruptcy, attests to the wisdom of the
Charter's drafters in giving the Board of Water Commissioners the
ability to raise water rates. Those who worry that the Board will
impose unreasonably high rates can be reassured by a comparison
of San Bernardino's water rates to those of neighboring
jurisdictions: the rates are always in the mid- to low- range in the
area. And, of course, the Board must comply with the California
Constitution in providing a public hearing and opportunity to
protest that protects the community from rates in excess of the
costs of providing service.
Since the Management Partners study, which, frankly, has many
erroneous conclusions regarding the Water Department, one of
the study's recommendations seems to make a great deal of sense
and that is what I'm here to talk with you about tonight.
The sewer treatment function was delegated to the Board of Water
Commissioners by the Mayor and Common Council in 1974. It is
not a coincidence that this was the year that Congress passed the
Clean Water Act. The Act would dictate severe penalties and
possible criminal liability for violations and it was apparent that the
waste water treatment plant was going to require a lot of expensive
remediation to comply. In the 40 years that the Water Department
has been responsible for sewer treatment, the secondary treatment
facility has been in complete compliance with the Clean Water Act.
Because the Water Department was not granted "original
jurisdiction" over the sewer function, the Board of Water
21 Page
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STATEMENT TO CHARTER REVIEW COMMITTEE
Commissioners does not have the power to raise sewer rates. The
Board must review rate studies and then make a recommendation
to the Mayor and Common Council for rate increases. This
ratemaking structure is not ideal, for the same reason that elected
officials rarely enjoy supporting rate increases during election
years. Consequently, there is often a deficit in the Sewer Fund that
constricts our ability to manage the waste water system as
effectively as the water system.
It is absolutely critical to understand that San Bernardino's ability
to manage its water resources is inexorably tied to the waste water
resource. As anyone who has read a paper lately will tell you,
California is experiencing one of the worst droughts in its history.
The Bay-Delta, the source for imported water for recharging the
basil, is strained beyond its reliability due to water quality and
endangered species concerns. The only water resource that is
100% reliable, at a cost, is recycled water. The Water Department
has been planning a recycled water project for the last five years
and is in the midst of the environmental review process that will
allow it to move forward. And yet, the ability to fund the project is
completely compromised by a reluctance to raise rates, the only
way to fund the project now that San Bernardino's bankruptcy has
diminished the Department's ability to seek out bond issuers.
The Management Partners' study, prepared in 2007, noted that it
would make a great deal of sense to delegate the sewer collection
function to the Water Department. Doing so would free up
capacity in the Public Works department and in the engineering
31 Page
STATEMENT TO CHARTER REVIEW COMMITTEE
section. While the Department recognizes that this transfer of
responsibility makes sense from the City's perspective, it cannot be
done, should not be done, without raising sewer collection rates. It
appears that, in the months leading up to the bankruptcy filing, the
City used money from the sewer collection funds to pay for
General Fund obligations. The backlog of capital projects
(replacement of and expansion to the pipeline system) is
potentially huge. We don't know for sure the extent of necessary
rehabilitation because only 30% of the system has been videoed.
Federal and state regulations governing the maintenance of the
sewer collection system are extensive and also carry the potential
for fines, penalties and criminal sanctions.
With respect to ratemaking, the last time that sewer collection rates
were increased was in 2004} Last year, at the request of the City
Manager, Allen Parker, the Water Department proceeded with a
rate study for the sewer collection system. The Water Department
also prepared a rate study for the treatment system, because a
public hearing for a rate increase is something you don't want to
have to do twice, if you can avoid it. The rate study confirmed
what common sense told us — the sewer collection rates are not
enough to cover basic expenses.
All of this results in the Water Department's recommendation (a
recommendation that has been approved by the City Manager and
the former Mayor) that the sewer collection system be transferred
to the Water Department for management and the power to set
41 Pap,E
STATEMENT TO CHARTER REVIEW COMMITTEE
rates for both sewer treatment and sewer collection be granted to
the Board of Water Commissioners.
This concludes my prepared remarks. I am happy to answer any
questions that you may have about this recommendation or about
the functions of the Water Department.
5 Page
SAN BERNARDINO CHARTER COMMITTEE POSSIBLE CHANGE TOPICS -- April 29
Topic Now or Comments Discussion Priority
Later
1 Charter Section Now Discussion could include: repealing #6
186 Section 186, suspending the provision
until City financially sound-20% of
budget in reserves; or amending it re
"specific work shifts", comparable cities
definition, allowing cross-training&
services between police&fire, etc.;
Study Article 10 Section 180 General
supervision of police and fire
department and immediate supervision.
Review the 10 year study of Section 186
vs COLA. Do a'call by call'
comparison. How many fire calls,how
many medical emergencies,how many
medical-non emergency, etc. vs. the
comparable cities.
2 Elections Now Consolidate elections in even numbered #5
years; Change run-off elections to same
year as primary elections to simplify the
process for voters, candidates.
3 Eel Now In addition to specific recommendations #2
Continuous for November ballot,recommend(1)
Charter Review ongoing review by a City Charter
Committee for consideration by Council
in the future and (2) a City Policy of
regular periodic ongoing reviews.
4 Recommend Now Reeemmend no ehange to go en
5 Repeal Charter- Later
Become General
Law City
6 Eliminate Civil Later
Service
Department
(Remove from
Charter)
7 Replace existing Now
Charter with one Later
1 Based on three factors: (1) likelihood of improving City financially; (2) likelihood of city-wide
support; and(3)time for adequate review& analysis.)
Updated April 28, 2014
SAN BERNARDINO CHARTER COMMITTEE POSSIBLE CHANGE TOPICS --April 29
essentially
identical to
another City's
charter, such as
Riverside's
8 Require employee NOW
benefits to show Later
as line item in city
budgets
9 Convert Water Later
Dept to regular
dept of City
(Remove from
Charter)
10 Convert Library Later
Dept to regular
dept of City
(Remove from
Charter)
11 Reorganizing Now Analyze Article 5 Section 100 City #7
relationship manager duties
between City Article 4 Section 50 (Chief Executive
Council,Mayor Officer), Section 51 (appointments and
and City Manager vacancies); Section 52 (Supervision by
Mayor); Section 55 (City Attorney
position, duties and salary); Section 60
(City Clerk Appointment and duties);
Section 70 (Treasurer appointment and
duties)
12 Tie Council Later Council compensation needs to be
compensation and increased; Section 24A
benefits to be
same as general
law cities after
fiscally sound
(20%reserves)
13 8 year Term limits Later
for all elected
officials
14 Change legislative Later
power to
Community
Councils
15 Establish City Later
Public Bank
16 Remove Park Later
Updated April 28, 2014
SAN BERNARDINO CHARTER COMMITTEE POSSIBLE CHANGE TOPICS --April 29
Commission from
Charter
17 Remove School Now
District language
from Charter
18 Have Police& Later
Fire Chiefs
selected by City
Manager
19 Make City Later Article 13 Section 235
Attorney,
Treasurer&/or
Clerk appointed
rather than elected
20 Eliminate Ward Later
System-Possible
alternatives:
hybrid(residence
by wards, city
wide vote);
Cumulative
Voting
21 Change Section Later
241 so a 2nd legal
opinion to Mayor,
Council and City
Clerk need not be
approved by City
Attorney
22 Ward boundary Not Article 1 Section 3: Time and
changes discussed Boundaries change done at least every
yet ten years when the new census is
released
23 Salary of mayor Not Article 11 Section 24
should not be tied discussed
to any other group yet
24 Recalls Not Article 7
discussed
yet
25 Special funds to Not Article 8 Section 130 Revenue and
be considered discussed finances; Section 143-149 (Special
et funds,water, library, and sewer)
26 Water board Not Article 9 Section 160
compensation discussed
et
27 civil Service Now Continued compensation while under #3
Updated April 28, 2014
SAN BERNARDINO CHARTER COMMITTEE POSSIBLE CHANGE TOPICS --April 29
language Civil Service appeal
28 Water Department Now Transfer management of sewer #4
collection system to water department
and power to set rates for sewer
collection and treatment to the Board of
Water Commissioners
Updated April 28, 2014
D
Correspondence
Received by
O
Charter Committee, City Clerk
1 Notice of Intent to Circulate Petition
2 2014 APR 23 PH 2: 14
3
4 Notice is hereby given by the persons whose names appear hereon of their intention to
5 circulate the petition within the City of San Bernardino for the purpose of amending the Charter of
6 the City of San Bernardino regarding benefits for employees of the City of San Bernardino.
7
A statement of the reasons of the proposed action as contemplated in the petition is as
8
91 follows:The City of San Bernardino faces challenges attracting and retaining qualified employees
10 because of its descent into bankruptcy and lowered morale among existing employees.This Average
11 Benefits Amendment to the Charter of the City of San Bernardino will guarantee average benefits to
12
13 all employees of the City of San Bernardino,which will solve the problem of attracting and retaining
14 high quality employees and improve morale City-wide.
15 Attached as Exhibit"A" is the written text of the proposed charter amendment.
16 The proponents also request that a ballot title and summary be prepared by the City Attorney.
17
The names and addresses of the people proposing the measure are Joseph M.Arnett, 1681 Echo
18
19 Drive, San Bernardino,California 92404 and Patrick T.Major, 1167 Shady Creek Drive, San
20 Bernardino,California 92407.
21
22
Date:April 23,2014
23 J eph .Arnett
24 roponent
25 Date: April 23,2014
atrick T. Major
26 Proponent
27
28
1
NOTICE OF INTENT TO CIRCULATE PETITION
i
I
1 Exhibit A.
2
1
3 Section 1. Section 232 of the Charter of the City of San Bernardino is added to read:
± 4 "Section 232.Average Benefits.In order for the City to recruit and retain qualified employees,it
i
5
shall offer average benefits to those offered by comparison similar-sized cities,as described below.If average
6
benefits increase,then the City shall pay the increase.If the average benefits decrease,then the benefits paid
7
by the City shall decrease.
8
9 A.Every Full-Time Permanent Employee shall receive average benefits as found in comparison
10 similar-sized cities in San Bernardino,Riverside,and Los Angeles Counties."Comparison similar-sized cities"
11 shall be those within the listed counties,with a population range between 100,000 less than the City's current
12 population and cities with a population 100,000 more than the City's current population.The City's current
i
13 population shall be based upon the most recent State of California Department of Finance estimate of city
14 populations,and the comparison similar-sized cities'population shall be based on the same estimates.
15 `°B.Benefits defined.Benefits shall be defined as all compensation,other than base wages, including,
16
but not limited to educational(advancement,continuing education,certification,and qualifications)pay,
17
longevity pay,residence pay,language incentives,health fitness,team member assignment,additional job
18
duties,hazard pay, sick pay,vacation pay,holiday pay,insurance,bereavement pay,family leave,personal
19
20 leave,medical or health coverage,disability insurance,retirement medical,life insurance,and educational
i 21 time-off.If a comparison similar-sized city shall lack a comparable benefit,that benefit shall not be compared
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22 and that city shall be left out of the average. If a comparison similar-sized city has a benefit not currently
23 offered to the City's employees,the average benefit shall be offered to the City's employees after the survey is
24 complete.
25 C.Formula.Medical,educational,and any other monetary benefit shall be calculated as the average
26 benefit value per employee,by department,by identifying the sum of each leave type on August 1st of each
27
year applied to employees within the same department of the comparison similar-sized cities.All other
28
benefits provided by hours shall be calculated by identifying the sum of each leave type on August 1 st of each
1
PROPOSED CHARTER AMENDMENT A
I year by number of hours,and then converted to dollars based on the average hourly rate of employees within
2 the same department of comparison similar-sized cities.Once the numbers are calculated for each of the
3 comparison similar-sized cities,they shall be averaged to determine the amount per employee per department
4 to determine average benefits.
5 D. Cafeteria Plan.Once determined,the average benefits shall be offered to employees in a cafeteria
6
plan from which an employee can choose the benefits which suit the employee's needs.
7
E.Annual Survey. The survey shall be completed by the City Manager and ratified by the Mayor and
8
Common Council annually by October 1st.If the survey is delayed,each employee shall be entitled to the
i amount of any increase,if any,retroactively to October 1st."
i 10
11
12 Section 2.This amendment to the Charter of the City of San Bernardino and each and every section and
13 provision hereof shall take effect when accepted and filed by the Secretary of State,pursuant to Government
14 Code Section 34459.
15
16
Section 3.This amendment to the Charter of the City of San Bernardino is severable and if any sentence,
17
section,or other part of this charter amendment should be found to be invalid,such invalidity shall not affect
18
the remaining provisions and the remaining provisions shall continue in full force and effect.
19
20
21 Section 4.If any other measure,appearing on the same ballot as this measure,addresses the same subject
22 matter in a way that conflicts with the treatment of the subject matter in this measure,and if each measure is
23 approved by a majority vote of those voting on each measure,then as to the conflicting subject matter,the
24 measure with the highest affirmative vote shall prevail,and the measure with the lowest affirmative vote shall
25 be deemed disapproved as to the conflicting subject matter.
26
27
28
2
PROPOSED CHARTER AMENDMENT A
1 Notice of Intent to Circulate.Petition
2 2Qi4 APR 23 PM'2. 3
3
4 Notice is hereby given by the person whose name appears hereon of their intention to
i
i
5 circulate the petition within the City of San Bernardino for the purpose of amending the Charter of
6 the City of San Bernardino regarding corruption in the City of San Bernardino.
7
A statement of the reasons of the proposed action as contemplated in the petition is as
8
9
follows: The City of San Bernardino faces corruption every day that caused its bankruptcy. The City
10 is both financially and morally bankrupt. This Anti-Corruption Amendment to the Charter of the City
11 of San Bernardino will cure the culture of corruption endemic within City Hall.
12
Attached as Exhibit"A"is the written text of the proposed charter amendment.
13
14 The proponent also requests that a ballot title and summary be prepared by the City Attorney.
15 The name and address of the person proposing the measure is Randall L.Wilson,6247
Q
16 Woodpine Avenue, San Bernardino, California 92407.
17
18
19 Date: April 23,2014
Ran l L. ilson
20 Pr ponent
21
22
23
24
25
26
1 27
28
I
NOTICE OF INTENT TO CIRCULATE PETITION
1 Exhibit A.
2
3 Section 1. Section 243 of the Charter of the City of San Bernardino is amended to read:
4 "Section 243.Anti-Corruption.To prevent the culture of corruption in the City,the People of San
5
Bernardino enact the following anti-corruption measures:
6
A.Nepotism.Neither the Common Council,the Board of Water Commissioners,the Free Public
7
Library Board of Trustees,the Civil Service Board,nor any elective officer,nor the City Manager,nor the
8
4 Civil Service Chief Examiner,shall recommend for hire,appoint,hire or confirm the hiring or appointment to
10 a salaried or volunteer position,under the City government or any of its components,any person who is a
11 relative by blood or marriage within the third degree of any one or more of the members of such Common
12 Council,member of a component board,any elected official of the City,the City Manager or the Civil Service
13 Chief Examiner,nor shall any department head or other officer recommend for appointment or appoint any
14 relative of such department head or other officer within such degree to any such position,
15 This provision shall not affect the employment or promotional status of a person who has attained a
� s p p
16
salaried position with the City prior to the existence of a situation contemplated by this provision;however,
17
those persons with appointive powers and/or supervisorial powers in such a situation shall disqualify
� 18
themselves from all decisions affecting the employment and promotional status of such person.
19
20 B.Conflict of Interest Contributions.It shall be a misdemeanor,punishable by removal from office,a
21 fine of$1,000,and/or one year in jail,for an officer to make or participate in a governmental decision
22 regarding any entitlement or discretionary action involving land use,planning or development in which the
23 officer received political contributions of$100 or more within a five year period from a land owner,developer,
24 partner,or consultant,connected to land use,planning,development entitlement,or other discretionary land
25 use action.
26 C.No Spoils of Office.Any person,firm,corporation or any other entity,which donates$500 or more
27 (either monetary or in-kind)to the campaign of any City officer shall be prohibited within five years from
28
gaining employment,a consulting position,paid or unpaid,or a contract from the City at the time the City
1
PROPOSED CHARTER AMENDMENT B
i
I officer is in office.Violation of this provision shall be a misdemeanor,punishable by removal from office,a
2 fine of$1,000,and/or one year in jail.
3 D.The City Attorney shall investigate and prosecute violations of this Section.If the City Attorney
4 fails to discharge the City Attorney's duty under this Subsection,the District Attorney,Attorney General, or
5
any qualified elector of the City shall be empowered to bring civil suit to remove any violator from office."
6
7 Section 2.This amendment to the Charter of the City of San Bernardino and each and every section and
8 provision hereof shall take effect when accepted and filed by the Secretary of State,pursuant to Government
9 Code Section 34459.
10
s
11
Section 3.This amendment to the Charter of the City of San Bernardino is severable and if any sentence,
12
section,or other part of this charter amendment should be found to be invalid,such invalidity shall not affect
13
the remaining provisions and the remaining provisions shall continue in full force and effect.
14
15
16 Section 4.If any other measure,appearing on the same ballot as this measure,addresses the same subject
17 matter in a way that conflicts with the treatment of the subject matter in this measure,and if each measure is
18 approved by a majority vote of those voting on each measure,then as to the conflicting subject matter,the
19 measure with the highest affirmative vote shall prevail,and the measure with the lowest affirmative vote shall
20 be deemed disapproved as to the conflicting subject matter.
21
22
23
24
25
26
27
28
2
PROPOSED CHARTER AMENDMENT B
Private Economic Zones - "PET'
A Proposal for the City of San Bernardino, to Revive
Economic Activity
Created by Brian G. Hannemann
Attorney at Law
1042 N. Mountain Ave., #B-222
Upland, CA 91786
(909) 980-7878
Executive Summary:
The basic framework for a workable, immediate and long term solution to economic
malaise is to penalize corruption, and reward honest effort.
First,political power must be dispersed. Second, competition,honest competition(as
opposed to crony-capitalism and too-big-to-fail kleptocracy)must be encouraged with proper
incentives. Third, the financial reward structure must be reformed to eliminate the present
property-tax/sales-tax systems, in favor of a pure merit/profit-based economically efficient
system. Fourth,proper political reforms must occur, or else the system will once again
degenerate back into cronyism and kleptocracy.
The creation of Private Economic Zones ["PEZ"] can produce guaranteed revenue for the
City. The concept is that the City will grant an exclusive license to the high bidder, for use of a
block of City-owned land, one square mile [640 acres], for a duration of ten years, allowing the
PEZ owner to engage in commerce,whether commercial,retail, industrial or agricultural,within
the PEZ, such economic activity largely free from governmental red tape. Traditional laws will
apply, such as restrictions upon vice, or other illegal activity.
The City earns guaranteed revenue, and shares in the upside of the economic activity with
the PEZ. The trade off is that the City cannot meddle and force the PEZ owner to engage in
endless red tape, delays, and blindly stumbling within an indecipherable bureacratic maze. This
frees the PEZ owner to engage in commerce, immediately, to produce economic activity,
including much-needed jobs,while the PEZ owner enjoys streamlined operation free from
meddlesome bureaucracy,with its attendant delays, fees, and economically stifling red tape.
The City's many interested constituency groups, such as police, fire,public workers,
CalPers, and other secured creditors enjoy a guaranteed income stream, for no outlay of any
public funds whatsoever.
As a test concept, if it fails,nothing has been lost,because the land was sitting idle
anyway. At least this way there is a chance for improvement,where none exist now.
Private Economic Zones-A Proposal for the City of San Bernardino,to Revive Economic Activity,by Brian G.Hannemann,Esq. Page I of 15
If the concept proves successful,then it can be replicated, and lead to an economic
recovery.
I. Introduction
"San Bernardino is a city located in the Riverside-San Bernardino metropolitan area
(sometimes called the Inland Empire), and serves as the county seat of San Bernardino County,
California,United States. As one of the Inland Empire's anchor cities, located 65 miles east of
Los Angeles, San Bernardino spans 81 square miles (2 10 km2) on the floor of the San
Bernardino Valley, and has a population of 209,924 as of the 2010 census.[3] San Bernardino is
the 17th largest city in California, and the 99th largest city in the United States.
The California State University, San Bernardino is located in the northeastern part of the
city. The university also hosts the Coussoulis Arena. Other attractions in San Bernardino include
the Fox Performing Arts Center,the McDonald's Museum,which is located on the original site
of the world's first McDonald's (at 34.1255°N 117.2946°W),the California Theatre,the San
Bernardino Mountains and The San Manuel Amphitheater, the largest outdoor amphitheater in
the United States. In addition,the city is home to the Inland Empire 66ers of San Bernardino
baseball team,they play their home games at San Manuel Stadium in downtown San
Bernardino.[4]
In July 2012, San Bernardino became the second-largest city ever to file for protection
under Chapter 9 of the U.S. Bankruptcy code, exceeded only by Stockton, California,which filed
earlier that same month.[5] San Bernardino is the poorest city of its population size in California,
and the second poorest in the US next to Detroit."
(From Wiki: http://en.wikipedia.org/wiki/San Bernardino, California)
II. Dearth of Economic Activity
San Bernardino is the poorest city of its size in California; and second poorest in the
entire United States, next to Detroit. Wow,notoriety in a big way. Almost as poor as Detroit.
What, if any, are the significant commonalities,then,between the cities of San
Bernardino and Detroit, and what are the major differences? Let me say the obvious, and try to
draw cultural and economic conclusions.
Demographics of San Bernardino show non-hispanic whites declined from 65%to 19%
in 40 years. Correlation does not equal causation. But,the demographic changes show a
dramatic shift in racial composition.
The cop-out answer is to blame racism as a reason for economic malaise, and conjure up
a grandiose government-based solution. This always involves forced taxpayer re-distribution
lorded over by corrupted, elected and appointed bureaucrats. This inevitably fails miserably and
which everyone KNOWS will fail miserably,but yet the same trite and tired"government-based,
Private Economic Zones-A Proposal for the City of San Bernardino,to Revive Economic Activity,by Brian G.Hanemann,Esq. Page 2 of 15
1
-k
3
taxpayer-funded"solutions" are tried time and time again. Why? Why not something different?
Power,that is why. Getting elected to a government position in a poor community is a
golden ticket to unimaginable wealth,through corruption, kickbacks,bribes, graft, glad-handing,
extortion,what have you. The news stories are so regular, that when a new corruption scandal
breaks,no one bats an eye. Why is that?
Not many citizens will fight"the man"of"City Hall," so it is easy to garner enough
critical mass of voters to influence the outcomes. Look at the corruption that has so thoroughly
infiltrated San Bernardino politics. Lawsuits are still pending, states' evidence has been
unearthed, immunity waivers have been granted,but still,the corruption exists.
Have racial demographics been constant for 40 years? No.
Have other demographics been constant for 40 years? No.
Have business conditions been constant for 40 years? No.
Then what HAS been constant for 40 years?
What is a solid indicator, then, showing why economic activity has declined steadily over
the past 40 years?
Simple: government intrusion(lack of freedom to pursue and engage in productive
economic opportunities) coupled with rampant corruption.
Government intrusion is far-reaching and never, ever pulls back save for revolution.
Government red-tape and mind-numbing regulations and ordinances have killed business
creation. Private business and private jobs create tax revenues. Government jobs and
government regulations kill private business and decrease government revenues. Why is that so
impossible to articulate or understand by those in power? Umm, simple. Admitting it means
that those in charge are hopelessly corrupt. So here we are.
Corruption has poisoned the system from top to bottom, for a generation. Corruption has
killed a once thriving,vital city like San Bernardino. Others will follow soon, more later. Who
is to blame? Ask who benefits from the corruption and the answer is obvious.
Who benefits from corruption,the people in charge of the local government offices, or
the honest folks, like employers,businesses and tax payers?
Corruption enriches the few, at the expense of the many. The system will not change
until the incentives are changed. Change the incentives and corruption will disappear like a bad
dream at sunrise. For the citizens of San Bernardino,rooting out and eliminating corruption is
now imminently possible, thanks to the courageous vote to seek bankruptcy protection from
decades of financial mismanagement and corruption.
Private Economic Zones-A Proposal for the City of San Bernardino,to Revive Economic Activity,by Brian G.Hannemann,Esq. Page 3 of 15
Before any praise is heaped upon those currently in office who voted to file bankruptcy,
remember that had the city simply defaulted,those in charge would be blamed and may have
been charged with crimes. Recognizing the imminent financial collapse, those in office did what
politicians normally do: they voted to save their own skins at the expense of others. In this case,
thankfully,no more can-kicking could avoid the financial collapse, and they had no choice but to
vote for bankruptcy. The only game left is now who to blame for the collapse. Stay tuned as
litigation develops on that issue.
So,the solution, as I see it, starts with the question of how to reduce government
intrusion, and its effect, corruption. So,the question simplifies itself: What can be done to fix
or change the system which rewards corruption and penalizes honest effort? Change the
incentives,that's what.
III. The Solution
The basic framework for a workable,immediate and long term solution to economic
malaise is to penalize corruption, and reward honest effort. It seems obvious,but how to
implement such a system?
First,political power must be dispersed. Second, competition,honest competition(as
opposed to crony-capitalism and too-big-to-fail kleptocracy)must be encouraged with proper
incentives. Third,the financial reward structure must be reformed to eliminate the present
property-tax/sales-tax systems, in favor of a pure merit/profit-based economically efficient
system. Fourth,proper political reforms must occur, or else the system will once again
degenerate back into cronyism and kleptocracy. I address each of these in order.
A. First, political power must be dispersed.
What do I mean? Easy. Open up the city charter to a convention. Let all the people have
input on amending the governing documents. My proposal will create dozens of neighborhood
political units, each with a single representative. The representative must actually LIVE in the
neighborhood to be eligible to represent it. The entire assembly of neighborhood representatives
will then, once every four years,vote on board of governors, containing at least eight but not
more than 15 governors,who themselves will face the voters in a retention election every year.
Each voter gets to vote for no more than the actual number of sitting governors. Anyone can run
to be elected to the board of governors, too. The winners are the ones with the most votes,
simple as that. There are no term limits.
Once elected,the members of the board of governors themselves vote for an executive
board,which has a succession plan: President, President-Elect, Vice President, Treasurer,
Secretary. An executive board member is first elected to the position of secretary, and the
succession plan is then Treasurer, VP, Pres-Elect then Pres.,whereby one starts on the executive
board as the secretary,then each year,provided they are re-elected by the board, each executive
board member rotates upwards into a new position. The outgoing president is then not eligible
for reelection to the executive board,but can stay on the board of governors or resign. Past
presidents are entitled to vote on the executive committee.
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Transparency is also critical. The executive board alone hires various city government
heads, at their own sole discretion. For example, if they want a police chief, funded by tax payer
dollars,then the executive board can hire one. Same for fire, sewer, etc. If they want simply an
executive director in charge of all administration,then the executive board can hire someone and
some staff. Simply that.
The executive board alone approves all contracts, for all city-funded expenditures. All
proposals and contracts are published on the internet. Any individual or company receiving tax
payer funds must be listed on the internet, including name, telephone number, address, email
address, and service or product provided, and contract to which the tax payer funds have been
authorized, as well as the contract duration and terms. Names, dates,places, all information not
of a trade secret are required to be published on the internet There is no municipal borrowing on
a secured basis allowed. Any borrowing at all, for any reason at all, if pursued, is purely
unsecured,non-recourse,privately funded and competitively bid. No more encumbering current
taxpayers with bond payments. No borrowing on a secured basis means that the city must live
within its means. This fixes the chronic problem of overspending. The city now has the choice to
increase revenues or decrease spending to fund projects or services expenditures. Wow,what a
radical concept? Living within one's means, simple as that.
The executive board alone is responsible for management, retention and disposition of all
city-owned assets. If the executive board wants to sell an asset,they alone can do so. Same for
buying or leasing.
All fundin g for current services is from current revenues. If revenues decline,then
services must be cut, or revenues will have to be increased. Long term capital projects must
require a revenue stream, funded with current revenues. All contracts for routine services are
short, one year duration maximum. All contracts are competitively bid. There are no public
employee unions. Those public employee unions that still exist are allowed to bid just like any
other group. There are no publicly-funded retirement pensions.
This solution provides a steady governing body,with enough transparency to be
workable. Runaway spending is curtailed, as there in no incentive to do it. Politicians are not
able to trade votes for money,because there are too many others in the voting scheme. If there is
corruption, all of the board members face expulsion in the next election. There are checks and
balances. It is not perfect, but what is? It eliminates the graft, corruption and vote-buying. That
solves most of the problems right there.
The solution is so simple,yet radical: open up ALL government-provided services to
private bidding,with elimination of all wage,hour,union or any other restrictions upon bidding.
Is it not obvious?
B. Second, competition, honest competition, as opposed to crony-capitalism and too-big-to-
fail kleptocracy must be encouraged with proper incentives.
This solution naturally follows from elimination of cronyism and secretive,back-room
deal making with public funds. Public employee unions must be forced to compete. If the public
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employee unions cannot win a competitively bid contract, then so be it. That goes for the police,
fire, district attorneys,public defenders, all of them. How can it be that government jobs are so
miserable and undesirable that no one wants one,yet there are no job postings at all? If public
employee pensions are eliminated altogether, and the existing ones are dumped into 401k style,
with no employer match,with no lifetime health care,with benefits payable as defined
contribution as opposed to defined benefit,with early, lump sum payouts for anyone who wants
one now,the costs would plummet, solving the problem overnight. Why has this not been tried?
Easy,public unions are too powerful, and only a bankruptcy judge can match and defeat the
unions' massive,perpetual power. So,bankruptcy is the first step in the right direction.
If the existing public employee union manages to win a contract,then the union dues
must not be forcibly withdrawn from the paycheck. The employee must instead voluntarily pay
the union separately. This would gradually diminish the strength of the unions, and would lead
to reforms all over the state, since they would no longer have the ability to buy politicians who
pay back their union-based benefactors with sweetheart deals that only drain the public coffers.
The incentive structure works perfectly. Since there is open, and I mean intemet-based,
open to the world transparency, contracts that get awarded will be fair for the world to see. If
some competitor thinks they can do it better, or cheaper, then they can submit a bid and compete
fairly, for a maximum of one year. If someone fails, or drops out, or fails,then the next bidder
steps right on up, and so on.
For example, if the local county sheriff thinks his organization can do a better job of
policing the city,then let the sheriff post a competitive bid. Let a competing jurisdiction bid for
it. Let a private company, comprised of POST-certified employees bid. Open it up to
competition. Won't competitive pressures upon the actual police officers lead to a more civilized
patrol force? Who says this system will not work? Has it been tried anywhere else? If not,why
not? If it was,why did it not succeed? Maybe the solution is to have a small,permanent staff of
paid, salaried officers, supplemented by contract employees on an as needed basis? Why cannot
a private company bid to staff-up during periods of overtime needs, instead of the public
employees getting two and three times their annual salary worth of overtime (and additionally
getting huge, lottery-style size lodestar amounts added to their pensions)?
Why cannot the fire department use volunteers, like the old days? Why are firemen
making$100's of thousands of dollars every year when they fight not a single fire or respond to
not a single call? Which private company would not bid HALF this amount to staff up DOUBLE
the number of firefighters? Is it so radically difficult to be a fireman? Then why are there not
TONS of job openings if the job is so damn difficult and miserable? Why are there plenty of job
openings for soldiers,who risk their lives in a combat zone, living in tents and subsisting out in
the elements,but none for fireman who live and sleep in air conditioned fortresses, and yet
firemen get paid orders of magnitude more than soldiers?
Privatization and competitive bidding for year-long contracts are the solutions on this
point.
kaw, C. Third, the financial reward structure must be reformed to eliminate the present
Private Economic Zones-A Proposal for the City of San Bernardino,to Revive Economic Activity,by Brian G.Hannemann,Esq. Page 6 of 15
property-tax/sales-tax systems,in favor of a pure merit/profit-based economic efficiency
system.
Quite a mouthful here, I know,but this IS a radical idea.
Why can't the city create a special economic zone. I call it a Private Economic Zone
("PEZ"). I liken them to the fiefdoms of old. One square mile, at least in size, 640 acres,
preferably larger. San Bernardino is 81 square miles. I have personally seen at least ten square
miles of junk yards littering the landscape, so this is an easy start. The city converts an existing
parcel of land to a PEZ,using one of the old junk yards, or dilapidated industrial building, or an
abandoned,tax-lien encumbered lot, or an old unused, forgotten parking lot, one of those things
will do nicely.
There should be a simple start, and nothing grandiose. There should not be an oversized
attempt at gargantuan reform, such as eminent domain of the poverty-stricken, dilapidated
downtown area. Eminent domain could be used later, after the concept is proven effective.
There could be a PEZ zone for agricultural use, one for industrial, etc., depending upon
the wishes of the executive board. More PEZ's could be created for other needs as the executive
board deems necessary. Remember,the citizens vote for individuals to sit upon the board of
governors. The board of governors elects the executive board,which then determines which type
PEZ's and how many to create. The public gets input on the PEZ's by way of voting.
n t dependent on taxing Here is the rationale. Cities have grow too d p g roductive economic p
activity, (sales tax,business tax,hotel tax, etc.)to the point that no sane businessperson will open
up in the city, and also to the extent that as economic conditions deteriorate, existing businesses
leave.
That only ratchets up the tax pressures on existing businesses,who leave, and the cycle
worsens. If anyone doubts this premise,then please explain why San Bernardino filed
bankruptcy? Was it because as taxes increased that revenues increased, or was it that as
businesses fled, tax revenues decreased,prompting city officials to increase taxes, forcing more
business to flee, etc.?
Or was it because the tired,worn out model of taxing the productive to pay for expensive
public services, expenditures not challenged by private, competitive bidding, including public
employees who enjoy excessive compensation,benefits and job protections, finally pushed
expenses beyond revenues and thereby bankrupting the city? Go look at the bankruptcy filings
before sounding off with something stupid.
It is obvious that the former tax model is broken and needs to be revisited.
What is the harm of trying something new, in a small way, and see if it works?
0 Here is how it works. The PEZ is set up by the city executive board. The city exempts
the PEZ from ALL local ordinances, every single one. There are no zoning restrictions. Any and
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all land use restrictions, limitations of any kind, are waived. The city's governing documents are
amended to reflect these protections. The city is tasked to and must obtain county and state
waivers in similar fashion,before any other steps can be taken with respect to the PEZ. The city
guarantees to defend and indemnify the PEZ against state or federal intrusion of any kind, either
by lawsuit or otherwise. Any federal challenges to the PEZ's are rejected out of hand by the
Tenth Amendment, state sovereignty arguments. The city actively protects the perimeter of the
PEZ's from intrusion by the feds, or any others. The PEZ's are,basically sovereign zones, free
from disruption by anyone.
Once the PEZ concept is in place, and protections from federal intrusion are in place, then
the real miracle can occur. There maybe only one PEZ, or multiples, depending upon how much
real property there is available for use for a PEZ. There are no mineral rights allowed on a PEZ.
The real property belongs to the city in fee simple. Real property taxes are paid on the PEZ by
the city.
The right to operate a PEZ is given to an individual, called a Director,by way of license,
valid for ten years,non-revocable except for nonpayment of license fees. To obtain a a PEZ
license, one must be the high bidder. The PEZ license is put up for auction, competitively bid, in
person, solely by individuals. Entities are not allowed to bid. The winner is named the Director
of the PEZ.
The winner of the PEZ license is listed in public, on the internet, including name, address,
telephone number. The entire list and ranking of PEZ bids is posted on the internet. Any winner
of an auction for a PEZ must immediately renounce and waive any public pension,benefit or
position. Anyone holding a public office,whether elected or appointed or a board position is
ineligible from bidding for a PEZ license for 20 years after leaving public office or a board
position. Anyone receiving a public pension must renounce and forever waive any further
benefits, for life, or be ineligible to hold a PEZ license. The winner is forbidden from thereafter
holding any public office within the City, from serving on the board of governors, from bidding
upon any city-awarded contract or holding an interest, at all,in any entity filing or winning a bid
for any city-awarded contract, forever.
The winner of a PEZ auction is not allowed to hold more than one PEZ license at a time.
The winner can bid again at the end of 10 years. A PEZ license cannot be encumbered, sold,
loaned or hypothecated. If the holder of the PEZ license becomes incapacitated for any reason,
death included,the PEZ license is revoked automatically and is awarded to the next bidder in
line.
The holder of a PEZ license [the Director] is solely obligated to pay the yearly license fee.
The payment can occur in any lawful currency, or physical gold or silver priced in terms of
lawful currency, the currency of which is to be determined solely by city. (Any risk of deflating
currency can be hedged by payment of the fee in ounces of physical gold or silver,thus allowing
the holder of a PEZ license to manage risk of currency deflation, or collapse, or hyperinflation).
The yearly license fee amount is set at a sliding scale,with a minimum amount per year
set by the city, such amount to be determined and announced before the commencement of the
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PEZ auction. Bidders at the auction bid to pay the minimum yearly license fee,which remains
fixed at the minimum for the duration of the license. The yearly license fee amount is due and
payable one month after the completion of the calendar year.
The PEZ license holder is obligated to pay the city a percentage of revenues generated
within the PEZ zone, at a rate set by the city before commencement of the PEZ auction,to be
offset against the minimum license fee amount bid at auction. (Example: the yearly license fee is
bid and awarded to the high bidder at$10,000 per year. The PEZ rate is set by the City before
the auction at 2%. If economic activity within the PEZ was $20,000,the license fee for that year
would be $10,000. If the following year,the economic activity was $2,000,000,then the license
fee for that year would be $40,000). The City could further agree,before the commencement of
the auction,to incentivize the Director and to create economic activity,by placing either a cap on
the license fee, or a performance-bonus diminishing rate structure.
Economic activity within the PEZ is regulated solely by the Director, and no one else.
All economic activity occurring within the PEZ is public record, and all merchants and
individuals must post their balance sheets, income statement, and payment history of all fees to
the Director on line. All records are open and available to public inspection at any time.
Any workers hired to work within the PEZ must pay hourly income taxes to the City at
the rate of 2%. All paychecks are posted on line and are public record.
Workers are all deemed employees, subject to mandatory w-2 wage withholding,payable
hourly to the IRS. All workers are at will,hourly employees,with no minimum wage rules, or
hourly limits or restrictions,meal and rest breaks, or overtime or wage and hour laws. There is
no workers' compensation system, or laws which apply in the PEZ, except at the sole discretion
of the Director. There are no labor unions. There is no collective bargaining. There are no
sexual harassment laws, discrimination laws, disability or accommodation laws, except at the
sole discretion of the Director.
Think of the incentives. The workers enjoy the ability to work, at a straight 2%rate.
Everyone knows what everyone else makes, so wage competition will be fair. Performers will be
rewarded with good pay, and will be sought after, creating upward mobility and pay raises.
Promotions will leave vacancies,which will need to be filled, and those competing for the open
positions will know the prior position pay rate so competition can fill the jobs,not cronyism and
connections.
The federal government will still get their pound of flesh(render unto Caesar, after all),
but there are no other taxes, such as state, county, sales, etc. The Director can spur economic
activity within the PEZ by luring businesses to the PEZ by offering a lower tax rate environment,
free of burdensome rules and red tape. There are no building permits or fees. Any structures
must only be approved by the Director.
There are no government bureaucracies intermeddling, slowing things down. There are
no power hungry government workers looking to enforce silly,job-killing rules or regulations. If
workers do not like it there, they can leave. However, all payroll information is public record. If
Private Economic Zones-A Proposal for the City of San Bernardino,to Revive Economic Activity,by Brian G.Hannemann,Esq. Page 9 of 15
an employer is not paying a fair wage, everyone will know it. If employers do not like it there
they can leave. If business owners do not like it there they can leave. One can invest capital,
create an asset, and rent it to a productive business. The Director can establish rents, leases, etc.,
at the Director's sole discretion.
This creates the incentive for the Director to provide a proper environment for the capital
investments,businesses and the workers. The Director still has to pay a license fee to the City,
and the Director needs economic activity to occur within the PEZ in order to fund the license fee,
so the Director has every incentive to address and meet all the needs of the workers and the
businesses within the PEZ.
Since there is no local government red tape, or delays, or committees, or DMV-like
indifference, and since there is but one person ultimately responsible to pay the license fee,the
Director can cut through the red-tape and solve problems without delay, decisively, and run the
PEZ however he or she sees fit.
Within the PEZ, no one can tell the Director what to do, or how to do it, or issue any
regulations or taxes of any kind. Only the Director can set such rules within the PEZ. No liens
can attach to any economic activity within the PEZ. No rule enforcement of any nature at all
can occur within the PEZ,save for legal dispute procedures as enforced by the
Commission. (More on this below).
There is no private banking within the PEZ. There is no fiat creation, or loans. The
Director alone is empowered to set the legal tender,whether it be currency, gold or silver coins
within the PEZ. Anyone wishing to conduct business within the PEZ,whether business or
employees within the PEZ, or customers who come into patronize the businesses within the PEZ,
can use the currency or gold and silver at the Director's sole discretion.
Currency for payment of employee wages is determined at Director's sole discretion. To
the extent wages are paid in physical gold or silver,the City agrees to indemnify and defend the
Director for all IRS actions of any nature whatsoever and to make good upon for any IRS claim
of withholding should then existing legal currency be devalued, collapse or hyperinflate.
The Director alone is responsible to measure economic activity in a manner determined
by the city prior to commencement of the auction. For example, if the PEZ is deemed a physical
product manufacturing zone by the city,then the economic value could be measured in gross
sales priced in then existing legal currency. If the PEZ were an agricultural zone,then the
economic activity could be measured in standard agricultural output terms, for example. Only
productive output is deemed economic activity. Any economic activity that is in turn invested
within the PEZ as a capital improvement is not subject to the licensing fee. There is no fee to be
levied upon capital investment,building of structures, construction of works of improvement,
etc. All works of improvement belong to the City at the completion of the PEZ. The bidder
would know this in advance of the commencement of the auction.
Again,think of the incentives. If the Director is sitting on a huge cash position from the
economic activity within the PEZ, some of the cash can be put to use for capital improvement,
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thus minimizing the licensing fee owed to the City. The decision to engage in a capital
improvement rests solely with the Director, and not with elected,public officials who are corrupt
and will steer projects to cronys or otherwise enrich themselves at the public's expense. The
Director can either pay the license fee, or invest in a capital improvement. Either way, the
City gets the licensing fee, or the capital improvement. The economic benefit devolves to
the City, and does not leave the PEZ or the City.
The failure to pay the PEZ license fee in a timely fashion results in revocation of the
license without further notice or hearing. To the extent the PEZ license fee is unpaid, for any
reason at all,the next incoming PEZ license holder is obligated to pay forthwith the prior year
license fee or relinquish the PEZ license to the next highest bidder.
The PEZ license holder is not allowed to encumber the PEZ in any way shape or form to
pay the license fee.
So,why would one want to win a PEZ auction? Simple. Economic freedom. What
if Apple's CEO put up an Apple factory within one of the PEZ's? What if GM or Ford, or
Chrysler put up a factory within the PEZ?
What if a restaurant operator put up a restaurant within the PEZ? A movie theatre?
What if the Director was libertarian? Sure,there are constraints on vice,but what if the
Director allowed businesses to come pouring in, like a medicinal marijuana shop? Or an
internet-based college with minimal admission requirements? Or a drug and alcohol in-patient
rehab facility? Or a nursing home?
What if the Director allowed for controversial things, like a gay wedding chapel? Or a
Mosque? Or an Anti-American, hatred spewing, overthrow the government free speech think
tank?
Who cares? Is this not about economic activity,pursued with the desire for
freedom, as the Declaration of Independence and the US Constitution supposedly
guarantee? Why not let the market place sort it out, by creating a profit incentive free
from corrupt politicians?
Would not the City and thereby, the citizens, gain from many PEZ's? From the revenues
of the PEZ's,the City could then fund services to help the citizens„ right? If any of the citizens
of the City did not like the activity that was occurring within the PEZ, the citizen would be free
from going there, so what is the harm? The citizen could move away to another city and not be
bothered at all, too.
The citizens stand to gain the benefits from the economic activity occurring within the
PEZ. Is it not time we give some freedoms to the productive instead of incessantly focusing
upon the downtrodden and unproductive who only stand to benefit and not lose at all from
increased economic activity anyway?
Private Economic Zones-A Proposal for the City of San Bernardino,to Revive Economic Activity,by Brian G.Hannemann,Esq. Page 11 of 15
3
} The PEZ license holder basically gets to operate the PEZ as a sovereign economic zone,
with the upside economic benefits shared by the PEZ license holder and the City. Whatever
happens in the PEZ is free from all taxation of any form. That, I am certain, is the only
method to stimulate both job creation and increased productive economic activity.
a
The Director would also have to obtain a suitable police presence, and could either pay
1 for outside forces, or do it in house, or bid it out. What's wrong with that? Same for fire
protection,utilities, etc. All costs for the PEZ would be paid for by the Director. Hence the
Director would have every incentive to keep costs low,rather than the bloated system we now
have. If the Director was too cheap, and did not provide suitable services,business would either
flee, or not come in the first place. If there were crimes committed,the Director would have to
make good for the losses, or suffer revenue loss when the business owner left the PEZ, of from
decrease in economic activity occasioned by the public's perception of the increase in crime.
The PEZ's are one solution, radical I know, but still, something worth looking at.
D. Fourth, proper political reforms must occur, or else the system will once again
degenerate back into cronyism and kleptocracy.
This one is easy. Remove the revolving door between private enterprise and government.
Those drawn to private enterprise should stay where they thrive. Those who wish to serve,
should have no Eve-like enticements to stray from their choice to work in the public sector.
For those who chose government service fine. But there will be no get-rich-quick
g g q
method to turn those years of government service into lucrative slush funds or a cushy private
position after leaving government service.
Similarly, those who wish to run a PEZ have to renounce all government benefits. There
is no way to double dip. Public pension retirees should retire,period. If they can work, then they
should not retire. Or if they do retire,they should not ask the taxpayers to fund their lavish
lifestyle while others are struggling. Enough is enough. Public pension retirees can still work
somewhere else besides the PEZ's if they wish.
Since there is transparency to all contracts, and all economic activity within the PEZ,
there should be no corruption, or almost none. If it emerges,then the citizens can vote the
governors out, and redo the offending contract where the corruption exists, since contracts are
limited to one year terms. Long term deals are only possible in the PEZ's,where maximizing
profit is the order of the day, not rewarding crony politicians and their enablers. No one is forced
to do business within the PEZ, so if there is corruption within the PEZ,the businesses and
employees will leave. No one gets to keep their capital improvement, so there is no incentive to
overdo things,with lavish, luxurious furnishings or wasteful expenditures. The City benefits
from the capital improvement no matter what. The graft, corruption,wasteful prevailing wage
schemes are eliminated. Union employees must produce value, or find that they have no work.
.AVON Those that are skilled, can freely engage in their craft, free from restrictive union bullying and
arcane,unproductive work rules.
Private Economic Zones-A Proposal for the City of San Bernardino,to Revive Economic Activity,by Brian G.Hannemann,Esq. Page 12 of 15
To the extent that the PEZ's prove workable,then they will increase in number and size,
based on eminent domain takings under the 5t''Amendment and the Kelo case. Where i
g e s the harm
in this? Turning unproductive land into productive land, employing the able-bodied, creating
revenue for the City,what is not to like? Fairness? Screams that the system will unfairly hinder
the downtrodden? How? More revenue to the City is like a big hit of crack to a junkie. The City
will spend and spend so long as revenue streams in. So what? If revenue keeps coming in,then
do not the citizens deserve to have more and better services, including to the downtrodden?
Raising revenues by increasing the incentives to the productive is what the USA is all about.
Who said a rising tide lifts all boats? Why not truly embrace the concept then?
Notably what will be occurring, is economic freedom. Freedom from corrupt
governments. The kind of freedom that only scares the elites, entrenched solely due to the
manipulations and class warfare. Freedom from stealth taxes like inflation, or fraud-like fiat
fractional reserve legal tender laws that only enrich the banker overlords.
Since there is no private banking allowed in the PEZ's, all merchants and businesses have
to survive based on provable methods and operations, and not from speculation or risk taking. If
lending occurs, it will be unsecured,non-recourse. Thus,there will be risk to the lenders. As
such, the lenders will have some skin in the game,but they will have no rights to seize property
or collateral. Who will lend then for capital formation, and deployment? Why, that is easy:
entrepreneurs,that's who. They will lend at higher rates, to reap a reward for the risk taken.
What is wrong with that? The alternative is that a business owner can deploy his or her own
capital, realize a reward, and not watch it all get confiscated and redistributed to the
unproductive.
The lenders will have to rely upon their own skill in selecting and managing risk, and not
from crony first-access-to-conjured-fiat schemes.
Where there is risk, there is reward. One need not take any risk, and one is free to do
business outside of the PEZ with all the attendant rules and regulations, and so-called
"protections" of the law. One can run to the safety of the government bosom. No one is forced
j to transact within the PEZ. It is purely voluntary. If the PEZ proves unmeritorious,that is, the
Director fails to pay the license fee, and no one else wants in,then the whole concept can be shut
down in only one year with minimal loss.
However, if the PEZ concept proves workable, that is, the license fee is timely paid,
businesses are created and hire workers, who make money and then buy things and
support their families, while the City's coffers fill with 2% of the wages generated by the
yearly license fee and from the labor of the productive, then why not support even more of
these throughout the City?
Public union employees can still find work,but they will have to compete for it. If what
they do for a living adds value, then there will be a ready place for them to work in the system. If
not, oh well. Get on public benefits,then. Let the productive work in the PEZ's and support the
idle then. At least this system is something that it sustainable rather than the broken tax system
in place now that punishes productive economic activity.
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Since there is no effective means for the cronyism to survive, it will die off, once and for
all. The kleptocracy will also fail,because only meritorious businesses will survive. There will
be no government subsidies, or government choosing winners and losers. The Director can do
that, if he or she wishes,but only for those that choose to participate in that particular PEZ. If the
Director chooses to subsidize a business, fine. Who cares? The Director can make that choice,
but the Director is still responsible to pay the licensing fee. Again, it is a win/win for all
concerned.
If someone feels slighted, or that it is unfair in a particular PEZ,then they can ask the
board of governors to open a new PEZ for public bidding, and then make a run at winning their
own bid where they can be the Director of their very own PEZ. What's wrong with that?
E. The Commission
As for the Commission, this concept is critical to the success of the PEZ. Any system
of governance to succeed must have due process in place and provide the perception of fairness.
Otherwise,the productive will choose another location to take risk. Why take risk if there is no
guarantee of fairness based on due process?
The Commission is established as a dispute resolution tool. It is essential to the
perception of fairness and the right to due process for a grievance. While the profit motive is
powerful, those involved in the PEZ's must have a means to address inter-PEZ grievances.
The system I envision is modeled upon swift,yet fair process, from neutral,yet wise
judges. It starts with the jurisdiction of the Director who exercises jurisdiction over the entirety
of the PEZ, from top to bottom, including upon each and every person located within the PEZ.
All persons and businesses physically present within the PEZ consent to jurisdiction by the
Director and the Commission. No exception.
The Director sets rules and enforces them at his or her own discretion. If anyone inside
the PEZ disagrees with a rule, or enforcement activity by the Director,the Director and all
participants within the PEZ agree to resolve ALL disputes, of any nature whatsoever before the
Commission.
The Commission is comprised of five Sworn Judges, each of which has to have not less
than ten years of judicial experience as a bench officer. The costs of the salaries of the members
of the Commission are to be paid by the PEZ, offset against the license fee (part of the license fee
includes the costs for paying the Commission expenses, including salaries of the judges on the
Commission). The presiding judge in the County has sole discretion to appoint the five judges
who sit on the Commission. The five judges who sit on the Commission vote once a year to
establish a presiding justice of the Commission,who sits as presiding justice for one year. The
presiding justice determines the order of deciding disputes,which Commission member will
preside over the dispute, and in the event of disagreement, in any manner whatsoever, the
decision of the presiding justice controls. There are no appeals whatsoever. All Commission
hearings,meetings, of any nature whatsoever,will be open to the public and will be streamed in
real time,to the internet.
Private Economic Zones-A Proposal for the City of San Bernardino,to Revive Economic Activity,by Brian G.Hannemann,Esq. Page 14 of 15
All disputes must be in writing, and must be stated on a single sheet of paper, double
spaced,no exceptions. All disputes are posted on line,with no confidentiality provisions at all
allowed. All oppositions must be in writing, and stated on a single sheet of paper, double spaced,
no exceptions. All oppositions are posted on line,with no confidentiality provisions at all
allowed. The dispute will be set for hearing within one week of filing. All hearings will be
conducted in public,with no limitations as to attendance or use of cameras or technology. The
hearings will be streamed real time to the internet and a public viewing monitor, open to the
public and for which there is no charge at all to view. There is a one month statute of limitations.
If the dispute is not formally presented to the Commission in timely manner, it is deemed waived
forever with no recourse. There are no rules relative to lawyers, or admission to practice before
the Commission. A party to a dispute may retain a lawyer if desired. A non-lawyer may
represent a party before the Commission.
At least one, and as many as five members of the Commission will hear oral argument,
which is limited to fifteen minutes per side. The oral argument will be scheduled to be heard
within sixty days maximum from the date of submission of the dispute. The Commission will
render written judgment within one week from the oral argument. All decisions are final,with
no right of appeal. A dispute may be settled before a decision is rendered by the Commission;
however, all terms of settlement must be in writing and are published on line and part of the
public record.
The Commission is empowered to render any and all legal remedies, including payment
of money damages, or expulsion from the PEZ. In the event that the Commission adjudicates
that a criminal act occurred, then the guilty party will be taken into custody by the Director,
expelled from the PEZ, and remanded in custody to the San Bernardino County Sheriff, subject
to criminal prosecution in State Court at the discretion of the District Attorney. If the guilty party
is physically absent from the PEZ, the Commission can render judgment notwithstanding the
failure to appear by the absent party. All decisions will be posted on line,maintained by the
Director for viewing by the public.
The Director, in his or her sole discretion,may remove any person from the PEZ at any
time, for any reason or no reason at all, subject to review by the Commission pursuant to the
dispute procedure.
IV. Conclusion
So,there you have it. My proposed solution to the economic malaise stagnating any
economic growth in San Bernardino.
This is the framework, and subject to revision, and is a work in progress. Maybe we can
solve this mess together.
Private Economic Zones-A Proposal for the City of San Bernardino,to Revive Economic Activity,by Brian G.Hannemann,Esq. Page 15 of 15
Continuous Charter Review
Addition to the Charter
Author Michael Craft
The three factors of prioritization of Charter Items:
1) Likelihood of improving the city financially;
2) Likelihood of city-wide support;
3) Time for adequate review and analysis;
Proposal: Continuous Charter Review
The Mayor and City Council shall appoint a volunteer based committee in January of odd
numbered years to review and suggest revisions to the Charter for the City of San Bernardino.
The purpose of assembling the committee in January of an odd numbered year is to allow the
committee sufficient time to consider the whole charter, create recommendations to the
mayor and common council, and allow the mayor and common council the opportunity to
discuss/debate the proposals and vote on them for the even number year November ballot.
The committee shall be comprised of one person representing each ward of the city; while the
mayor shall appoint two citizens to the San Bernardino City Charter Committee.
Upon the first meeting of the committee, a chairperson will be elected by the committee. The
chairperson will not vote, except in the event of a tie vote. The chair will guide the group's
discussions and keep them on topic and on schedule.
The committee will comply with all open meeting laws for the State of California.They also will
utilize Robert's Rules of Order as they conduct their meetings.
Fire Department Incident Counts
2012 Incident Counts
25,000
22,447
20,000 ----
15,000
10,000 ---- --
5,000 __ __.
2,483
863
Fire EMS Other*
2013 Incident Counts
30,000 __-_- ___ _ _--_-_..-_-_.
25,866
25,000 _ __ _ -..--__._.___.__.__.___.___._...._.__.
20,000
15,000
10,000
5,000 --_._ ------- ___.__-._-.___..._._.
___._ 2,784
1,030
0 -
Fire EMS Other*
*Other includes tech rescue, hazardous materials,false and normal alarms, citizen assist,etc.
186 SALARY SURVEY COMPARISON CITIES (2006-CURRENT)
FY 2006/2007
FIRE SAFETY FIRE MGMT POLICE SAFETY POLICE MGMT
COSTA MESA CONCORD BURBANK BURBANK
DOWNEY GARDEN GROVE COSTA MESA CONCORD
DALEY CITY FAIRFIELD FAIRFIELD DOWNEY
ELK GROVE DOWNEY FULLERTON ESCONDIDO
GARDEN GROVE IRVINE GARDEN GROVE MORENO VALLEY
HAYWARD ELK GROVE IRVINE PASADENA
PASADENA OXNARD ORANGE POMONA
SALINAS SIMI VALLEY OXNARD SIMI VALLEY
SIMI VALLEY THOUSAND OAKS SIMI VALLEY TORRANCE
TORRANCE RICHMOND THOUSAND OAKS THOUSAND OAKS
FY 2007/2008
FIRE SAFETY FIRE MGMT POLICE SAFETY POLICE MGMT
COSTA MESA ANTIOCH COSTA MESA CARLSBAD
DOWNEY CONCORD PALMDALE CONCORD
DALY CITY DALY CITY MODESTO DOWNEY
ELK GROVE DOWNEY SANTA CLARITA FONTANA
GARDEN GROVE ELK GROVE IRVINE FULLERTON
FAIRFIELD FAIRFIELD POMONA IRVINE
PASADENA GARDEN GROVE DOWNEY MORENO VALLEY
ROSEVILLE HUNTINGTON BEACH WEST COVINA PASADENA
SANTA ROSA RICHMOND ELK GROVE POMONA
TORRANCE SANTA ROSA BURBANK SAN BUENA VENTURA
FY 2008/2009
FIRE SAFETY FIRE MGMT POLICE SAFETY POLICE MGMT
COSTA MESA ANTIOCH ANTIOCH DALY CITY
ELK GROVE BURBANK BURBANK FAIRFIELD
DALY CITY CONCORD DOWNEY GLENDALE
GARDEN GROVE DALY CITY ELK GROVE MORENO VALLEY
PASADENA FAIRFIELD GLENDALE ONTARIO
SALINAS GARDEN GROVE OXNARD ORANGE
SANTA ROSA OXNARD POMONA PASADENA
SIMI VALLEY PASADENA SIMI VALLEY POMONA
THOUSAND OAKS RICHMOND THOUSAND OAKS SAN BUENA VENTURA
TORRANCE SIMI VALLEY WEST COVINA THOUSAND OAKS
FY 2009/2010
FIRE SAFETY FIRE MGMT POLICE SAFETY POLICE MGMT
ELK GROVE POMONA ANTIOCH LANCASTER
FAIRFIELD SANTA CLARITA FONTANA MISSION VIEJO
GARDEN GROVE SOUTH GATE LANCASTER NORWALK
PASADENA COSTA MESA NORWALK PALMDALE
SALINAS SALINAS OXNARD PASADENA
SANTA ROSA GARDEN GROVE PALMDALE SANTA CLARITA
SIMI VALLEY WEST COVINA SAN BUENA VENTURA SUNNYVALE
THOUSAND OAKS ROSEVILLE SANTA CLARITA THOUSAND OAKS
TORRANCE BURBANK SIMI VALLEY VALLEJO
WEST COVINA VENTURA THOUSAND OAKS WEST COVINA
a
FY 2010/2011
FIRE SAFETY FIRE MGMT POLICE SAFETY POLICE MGMT
ELK GROVE ANTIOCH ANTIOCH ANTIOCH
FAIRFIELD CONCORD CONCORD CONCORD
HAYWARD COSTA MESA FONTANA FONTANA
HUNTINGTON BEACH DALY CITY MISSION VIEJO MISSION VIEJO
PASADENA GARDEN GROVE ORANGE ORANGE
ROSEVILLE ONTARIO OXNARD OXNARD
SALINAS PASADENA SAN BUENA VENTURA SAN BUENA VENTURA
SANTA ROSA SALINAS SANTA CLARITA SANTA CLARITA
SIMI VALLEY SAN BUENA VENTURA THOUSAND OAKS THOUSAND OAKS
VALLEJO WEST COVINA WEST COVINA WEST COVINA
FY 2011/2012
FIRE SAFETY FIRE MGMT POLICE SAFETY POLICE MGMT
ELK GROVE BURBANK CONCORD CONCORD
HAYWARD COSTA MESA FONTANA FONTANA
HUNTINGTON BEACH DALY CITY IRVINE IRVINE
IRVINE GARDEN GROVE LANCASTER LANCASTER
ORANGE ONTARIO NORWALK NORWALK
PASADENA ORANGE OXNARD OXNARD
ROSEVILLE PASADENA PALMDALE PALMDALE
SALINAS SAN BUENA VENTURA SAN BUENA VENTURA SAN BUENA VENTURA
SANTA ROSA TORRANCE SANTA CLARITA SANTA CLARITA
VALLEJO VALLEJO THOUSAND OAKS THOUSAND OAKS
FY 2012/2013
FIRE SAFETY FIRE MGMT POLICE SAFETY POLICE MGMT
DALY CITY BURBANK CONCORD COSTA MESA
ELK GROVE COSTA MESA FONTANA FULLERTON
GARDEN GROVE DALY CITY FULLERTON HAYWARD
HUNTINGTON BEACH GARDEN GROVE IRVINE HUNTINGTON BEACH
IRVINE ONTARIO LANCASTER MURRIETA
ORANGE ORANGE NORWALK POMONA
PASADENA PASADENA OCEANSIDE ROSEVILLE
ROSEVILLE RIALTO OXNARD SAN BUENA VENTURA
SALINAS SAN BUENA VENTURA PALMDALE SUNNYVALE
VALLEJO TORRANCE SANTA CLARITA THOUSAND OAKS
FY 2013/2014
FIRE SAFETY FIRE MGMT POLICE SAFETY POLICE MGMT
DALY CITY ANTIOCH FAIRFIELD COSTA MESA
ELK GROVE CORONA FULLERTON FAIRFIELD
GARDEN GROVE COSTA MESA GARDEN GROVE FULLERTON
HUNTINGTON BEACH GARDEN GROVE IRVINE HAYWARD
IRVINE ONTARIO LANCASTER HUNTINGTON BEACH
ORANGE ORANGE NORWALK MURRIETA
PASADENA OXNARD OCEANSIDE POMONA
ROSEVILLE SALINAS PALMDALE ROSEVILLE
SALINAS SAN BUENA VENTURA POMONA SAN BUENA VENTURA
VALLEJO TORRANCE SANTA CLARITA SANTA ROSA
i
SUMMARY OF CHARTER CITY PROVISIONS ESTABLISHING
EMPLOYEE SALARIES AND BENEFITS
Request for Information: During the April 22, 2014 meeting of the San Bernardino
Charter Committee, Committee Member Pierce requested information concerning
whether 186 Salary determination methodology was used by other Charter Cities to
establish salaries and other working conditions. In response to Committee Member
Pierce's request, staff reviewed applicable provisions of 22 comparable Charter cities
including those that had been used in previous 186 safety surveys. Those cities
included the following: Adelanto; Burbank; Downey; Fresno; Glendale; Hayward;
Huntington Beach; Irvine; Modesto; Pasadena; Pomona; Richmond; Riverside;
Roseville; Salinas; Santa Ana; Santa Rosa; Stockton; Sunnyvale; Torrance; Vallejo;
and, Ventura.
Summary of Review
1. None of the City Charters reviewed included extensive methodology for
determining salaries. All of the Charters reviewed provided language
wherein the "compensation of all City officers and employees shall be fixed by
the Council by ordinance or resolution."
• One City Charter provided that the City could "provide by ordinance or
resolution for the assignment and reassignment of functions, duties,
and compensation of all officers and employees, consistent with this
Charter."
• Another Charter provided that "It shall be the duty of all department
heads whether-appointed-or-elected,te-assistand-coope-rate-with-the` —
City Manager in administering the affairs of the City in the most
efficient, fiscally responsible, and harmonious manner consistent with
the duties as prescribed by law, City Charter, or by ordinance."
• Finally, one Charter set forth the following: "The Council shall by
ordinance provide the form of organization, through which the functions
of the City are to be administered. Any combination of duly authorized
duties, powers and functions which in the judgment of the Council will
provide the most efficient and economical service possible, consistent
with the public interest and in keeping with accepted principals of
municipal administration, may be authorized by such ordinance."
1
i
l
2. Only two of the Charters reviewed (City of Stockton and City of Fresno)
provided any standards for establishing salaries. Section 186 of the City of
San Bernardino's Charter provides that salaries for safety personnel shall be
set at the arithmetic average of the survey agencies and further establishes
specific benchmarks for motor cycle officer pay, working out of class, and
overtime requirements for fire safety employees. The Stockton Charter
provides standards for setting starting salaries for firefighters, while the
Fresno Charter provides that "city employees shall be paid not less than the
prevailing wage paid in private employment in the City of Fresno . . .".
Conclusions: Generally, for most cities, salaries, benefits, and other terms and
conditions of employment are established through the adoption of an ordinance or
resolution by the City Council following the collective bargaining process. In most public
agencies, salaries and benefits are established through surveys with other comparable
agencies. Comparable agencies are identified as those competing for employee
applicants from the same labor pool. Under State law, Cities are required to "meet and
confer" over compensation and terms and conditions of employment. The agreements
reached as a result of the collective bargaining process are then ratified by the
employee unions and adopted by resolution by the City Council. Consequently, most
Charters only provide "enabling" language, i.e., "the salaries shall be fixed by the
Council by resolution", deferring to the negotiation process to establish salaries,
benefits, and other terms and conditions of employment.
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Police Safety
Salary/Benefit Annually
Base Salary $21,932,484.00
Bilingual Pay ($50 mo.) $13,800.00
Motor Officer Pay(Hazard) ($50 mo.) $6,000.00
Post Basic ($200 mo.) $156,000.00
Post Advanced ($250 mo.) $327,000.00
Post Supervisory ($275 mo.) $79,200.00
Uniform Allowance $296,452.00
Pension/Retirement Benefit $6,117,528.00
Cafeteria/Health Benefit $2,216,286.00
Health Insurance Stippend $42,500.00
Medicare $340,452.00
Police Vacancies $1,740,641.00
Total Salary/Benefits $33,268,343.00
Information is based on 246 employees
1%w/o benefits=$230,986
1%w/benefits =$332,683
Fire Safety
Salary/Benefit Annually
Base Salary $11,482,260
Bilingual Pay $6,829
8%Admin Captain Pay $11,078
Lead Paramedic Pay $109,810
FF II Cert $17,452
Fire Officer Pay $132,031
Chief Officer $26,558
Arson Investigator $6,070
Haz Mat Specialist $5,312
Breathing Apparatus Pay $759
Uniforms* $64,401
Pension/Retirement Benefit $3,121,199
1959 Survivors Benefit $6,240
Cafeteria/Health Benefit $1,218,588
Health Insurance Stippend $10,000
Medicare $219,144
Vacancies $1,212,305
Total Salary/Benefits $17,650,036
Information based on 127 employees
1%w/o benefits=$124,214
1%w/benefits=$176,475
* 1 shirt/2 pants/work boots
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Article XIII
Miscellaneous
C-44
CURRENTLANGUAGE
Section 254. Discharge or Reduction of Compensation. No employee in
the classified service shall be discharged or reduced in rank or compensation until
he/she has been presented with reasons for such discharge or reduction in rank or
compensation specifically stated in writing and has been given an opportunity to be
heard before the Board in his/her own defense. The reason for such discharge or
reduction and any reply thereto by such employee, shall be in writing and filed with
the Civil Service Board. Verified written charges may be filed by any qualified
elector of the City of San Bernardino under such rules and regulations as may be
prescribed by the Civil Service Board. All charges shall be heard and trials had
under such rules as the Civil Service may prescribe. PROVIDED, that the
provisions of this section are at all times subject and subordinate to the provisions
of Section 256. (City Attorney Opinion No. 97-1; City Attorney Opinion No. 96-9; City Attorney
Opinion No. 96-5; City Attorney Opinion No. 95-11; City Attorney Opinion No. 95-10; City Attorney
Opinion No. 94-7; City Attorney Opinion No. 94-5.; City Attorney Opinion No. 93-8; City Attorney
Opinion No. 93-7; City Attorney Opinion No. 92-1; City Attorney Opinion No. 91-14; City Attorney
Opinion No. 91-8; City Attorney Opinion No. 91-4; City Attorney Opinion No. 90-32; City Attorney
Opinion No. 90-12; City Attorney Opinion No. 88-9)
Section 255. Appeal of Suspension. Any employee of any department in
the City in the classified service who is suspended, reduced in rank, or dismissed
from a department by the City Manager or by the Head of the Department, or by
any other authorized supervisor, may appeal from the decision of such officer to
the Civil Service Board, and such Board shall define the manner, time and place by
which such appeal shall be heard. The judgment of such board shall be final;
PROVIDED that the provisions of this section are at all times subject and
subordinate to the provisions of Section 256. (Livingstone v. MacGillivray(1934) 1 Cal.2d
546, 552, 553-554; City Attorney Opinion No. 96-9; City Attorney Opinion No. 95-10; City Attorney
Opinion No. 92-27; City Attorney Opinion No. 92-1; City Attorney Opinion No. 91-14; City Attorney
Opinion No. 91-8; City Attorney Opinion No. 88-9.)
PROPOSEDLANGUAGE
OPTION I — Removal of Language
Section 254. Discharge or Reduction of Compensation. No employee in the
classified service shall be discharged or reduced in rank or compensation until he/she
has been presented with reasons for such discharge or reduction in rank or
compensation specifically stated in writing
hoard befeFe the Board in hic/hor r,WR defeRSe. The reason for such discharge or
reduction and any reply thereto by such employee, shall be in writing and filed with the
Civil Service Board. Verified written charges may be filed by any qualified
elector of the City of San Bernardino under such rules and regulations as may be
prescribed by the Civil Service Board. All charges shall be heard and trials had under
such rules as the Civil Service may prescribe. PROVIDED, that the provisions of this
section are at all times subject and subordinate to the provisions of Section 256.
OPTION II — Revised Language
Section 254. Discharge or Reduction of Compensation. No employee in the
classified service shall be suspended, discharged or reduced in classification for
disciplinary reasons until the employee has been presented with the reasons for such
action specifically stated in writing. The reason for such discharge or reduction and any
reply thereto by the employee, shall be filed in writing with the Civil Service Board.
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