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Newport council members defend handling of city finances

As in most cities, campaign signs have multiplied on lawns and street poles in Newport Beach. Knocks at the door have become expected. A candidates forum seems to occur every few days.

Among the pamphlets and speeches, strong critiques of recent management of city finances have emerged. The comments apparently have frustrated current City Council members, who fashioned their own forum Tuesday — a council study session — to make their case.

“Any person who says that the spending [in] Newport Beach is out of control is just plain wrong,” said Councilman Mike Henn, who will be termed out this year. “It is a silly statement.”

The discussion arose at the request of Mayor Rush Hill, the only council member up for reelection in November. He had called for a review of the city’s debt — a topic about which “we’re reading a lot today,” he said.

Deputy Finance Director Dan Matusiewicz and City Manager Dave Kiff delivered an optimistic report, punctuated by leading questions and abbreviated tirades from council members.

Resident and council watchdog Jim Mosher said “having this glowing review hastily prepared at this exact moment smacks of a campaign stunt. And I would question whether a campaign stunt to benefit one of the candidates over his opponents is a proper use of public funds.”

Topics discussed included why city pension liabilities should not be paid down all at once, even if the resources were available to do so. (Liability can reemerge; the city is instead focused on putting in the right amount at the right time, Kiff said.)

Council members also discussed how a certain amount of debt can be “prudent.” (It contributes to necessary funding for projects that improve the city’s property values, Matusiewicz said.)

“We’ve been asked, ‘Why not retire the Civic Center debt now?’” Matusiewicz said.

To do so would trigger $44 million in early-redemption premiums, sacrifice a subsidy and reduce rainy-day funds, he said. It also would wreck the facilities financial plan, meaning projects would need to be delayed, he added.

“Let’s just stop there,” interjected Councilman Keith Curry, who is seeking a seat in the state Assembly. “Several candidates … in this [council] election have suggested that the thing for us to do is to sell city assets, city property, city real estate, and use those proceeds to pay down our debt.”

His comment brought to mind the former City Hall site, which was leased this month to a hotel developer. At a forum this week, several candidates said they believed it should have been sold.

Curry reiterated why he believes that paying off the debt now is a bad idea and could be viewed as “financial malpractice.”


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