Several Newport Beach residents joined together to file a lawsuit last week that claims the argument opposing a measure on the November ballot is misleading, the author is actually a supporter and that it’s just a ruse.
Former Mayors Mike Henn, Rush Hill, and Keith Curry, along with former Mayor Pro Tem and local leader Jean Watt, filed the lawsuit in Orange County Superior Court on July 19.
They argue that Bob Rush isn’t a “true opponent” and that his opposition argument is a “political ploy to deny true opponents of the measure the opportunity to be heard.”
He actually supports the measure and his opposing statement is meant to mislead and manipulate the voters, they claim in the lawsuit.
The ballot measure in question will ask Newport Beach voters if they would like to amend the city charter to require a public vote before taking on costly lease financing for major projects.
Council voted 6-1 on June 26 with Councilman Jeff Herdman dissenting.
The measure placed before the Newport Beach electorate in November will ask to amend the City Charter with language that would require 55 percent voter approval prior to issuing lease-revenue bonds, like Certificates Of Participation, greater than $50 million to finance capital projects.
In his opposing argument, Rush calls the proposed charter amendment a “good first step” that is “in the right direction,” but would instead prefer a 2/3 voter requirement and a $25 million threshold.
Rush spoke at Tuesday’s City Council meeting, saying the measure “doesn’t go far enough.”
“I think we need to go much further,” he said. “The community deserves to have a right of approval.”
That is not the argument of a group or entity that proposes rejecting the charter amendment, the lawsuit petitioners claim, that is the statement of an individual who wants the measure to pass. They ask that the entire argument be stricken.
In their argument of support, measure authors Mayor Marshall “Duffy” Duffield, and Councilmen Kevin Muldoon and Scott Peotter cite the COPs used to finance the civic center.
The library expansion, civic center and park project was funded with about $124 million in COPs, issued in November 2010. Total cost of the project was about $140 million.
“When a municipality seeks to fund large projects using debt financing without getting voter approval, they circumvent the 2/3rd popular vote required by Prop 13 to issue bonds by using COPs instead,” their supportive argument reads.
COPs don’t require a vote, but they have the same effect as bonds have of dedicating future revenue to make payments on the loan, Duffield, Muldoon, and Peotter state in their opinion.
Rush’s argument against the measure also mentions Prop 13, and he adds that, “unfortunately,” there are ways to circumvent the proposition’s 2/3 voter requirement.
He also mentions the civic center COPS.
“This was done without voter approval, using numerous city-owned properties as collateral,” Rush writes in his opposing opinion statement.
Both Rush in his opposition and the three Council members in their support statements claim the civic center COPS will cost taxpayers $8 million a year, ultimately paying more than $225 million for the project when it’s paid off in 2041.
“Voters should have the right to decide if they approve of borrowing large amounts of debt, against collateralized public assets, to pay for future projects,” Rush writes in his argument against the measure.
Rush is identified as president of the political action committee Newporters for Ethical Government on the measure’s opposition argument.
In the lawsuit, the four petitioners allege that the Newporters for Ethical Government is “not a bona fide association of citizens” as state election law requires. Rush is the sole member of the group, which was created on the same day as he submitted his argument, they claim in the lawsuit.
The group also claims that Rush’s statement has “numerous factual misstatements and inaccuracies which are intentionally designed to confuse and mislead the voter,” including that Rush writes two different figures for the amount of COPs used for the civic center.
The group, several of whom were on Council at the time, argues that the civic center COPs actually break down much differently.
“The true facts are that the city of Newport Beach actually incurred only $106,575,000 in new money obligations for the construction of the civic center… [and library expansion, parking structure and park project]. An additional $20,085,000 in existing Certificates of Participation bonds were rolled into, and refinanced by, the issuance of the new financing, thus actually saving the taxpayers of Newport Beach hundreds of thousands of dollars in interest and carry charges,” the lawsuit reads.
In the lawsuit, they also point out that Rush has supported the Council member authors in the past.
A hearing is set for Aug. 3.
