Audit Reveals False Claims

Audit Reveals False Claims
by Larry Gilbert

Following are my public comments from the Mar. 17 Mission Viejo city council meeting.

Happy Saint Patrick's Day. Over the past two months, I have conducted an audit of the 2012 Improve Don't Move and commercial permit fee waiver programs. The reason it is ongoing is that the city had claimed specific valuations and savings in the Annual Report booklets yet has failed to provide any backup documentation to substantiate the reported numbers which also appeared in council member Ury's 2012 candidate statement.

As a result of my Jannuary Public Records request, the city provided a 30-page report of residential permit numbers and a second printout with 11 pages of commercial permits. Neither printout reflects the valuations, business names or street addresses to verify the published data.

We are being lied to. In the city's 2012 Annual Report booklet it states: "In 2012, the city rolled out residential and commercial programs that saved homeowners and businesses millions through building permit fee waivers." Yet the same booklet shows total savings of $468,048,. along with a combined valuation of $28 million.

For starters, they ignore the ongoing permit activity in the city. In fact, the city reported a 10% increase in permit activity in the year after the programs ended. What you try to capture is the bounce, not assuming zero activity, which is what the city and member Ury did.

As to specifics. The residential program was flawed. Almost $4 million of the renovation activity was for Vista del Lago apartments, which are owned by a S&P 500 Chicago REIT. Equity Residential shareholders surely do not live in the complex or this city. The city did not request using local merchants for all building materials nor local contractors if the objective was to boost our local ROI. A similar story is Finesterra on the Lake, whose improvements exceeded $1 million and Aliso Villas reroofing at $675,000. My research of the residential activity is incomplete as I lack permit valuations. What I can report is that the manager of our Building Department admitted that he increased the valuations between 10% and 15% as some applicants may have low-balled the valuations of their projects.

As to the commercial, Nordstrom's had a $4.3 million, two-level tenant improvement at the Shops. They were not sitting around waiting for a fee reduction to save $7,100 when competing in a tough market. The Buy Buy Baby big-box store in the Freeway Center invested $1.2 million and saved $2,653. I believe they occupy the Comp USA building, which was vacant for a few years. A dozen commercial properties listed a combined valuation of $7.8 million and saved $21,402. To discount commercial properties permits, where the owners generally upgrade, was a waste of taxpayer dollars, especially as we pay the Charles Abbott contractors 58% of the regular permit fees.

The Mar. 17 council meeting video can be viewed at