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Did Mendo Really Go To Far?

According to the feds, yes.

But first, the Board had to pick two of three applicants for the two open seats on the Retirement Board.

Incumbent Bob Mirata was unanimously re-appointed without much comment. That left former Willits City Councilman, Bruce Alfano, and local financial gadfly John Sakowicz for the remaining seat.

Mr. Alfano told the Board that he had a legal degree, that he “knows what’s going on in the pension fund,” that he has experience with disability applications and with both public and non-profit organizational management, including budget experience. He also described himself as a “friend of [former County Auditor] Dennis Huey.”

In other words, Mr. Alfano was the establishment candidate.

When asked if he’d support using some of pension funds for local investments, Alfano said, “It’s worth looking at.”

Sako said he thought that maybe 5% of the $400-plus million pension fund — around $20 million or so — should be used to jumpstart the local economy because banks are so tight with credit these days.

Supervisor Pinches’ only question of the applicants was how they would approach hiring a replacement for Retirement Fund Administrator Jim Andersen. This was the first time Mr. Andersen’s pending departure had been publicly mentioned — whether Andersen is retiring, quitting or being pushed out remains a mystery, but if he was retiring or quitting for another job that fact would be announced, or will be soon.

Alfano said he’d look for experience and someone who’d tell the truth to the Board.

Sako said he’d want someone who was independent and not from the limited pool of state retirement administrators who are stuck in the status quo.

Supervisor Dan Hamburg was worried that Sakowicz might still think that some kind of criminal investigation should be done to find out how the pension fund got on life support: “I would like to ask you about your request for a forensic audit,” said Hamburg. “Would that be something that if you are chosen to be on the Retirement Board, will you seek a forensic audit to determine whether there was any misfeasance or malfeasance on the part of Mendocino County officials with respect to the retirement system and how it has been administered?”

Sakowicz was ready. “That's a good question,” Sako replied. “I was hoping that one of the Supervisors would raise it. So thank you. I think I'm over that stage right now. I think it would be counterproductive and also expensive. I think we know where we stand. I think we have a good and accurate picture right now.”

Nobody asked Sako why he'd changed his mind.

Sako said that his priorities would be “quantifying the county’s underpayment as a result of Buck’s incompetence, for lack of a better word — I won't use misconduct or anything like that — we don't know that number for sure; it’s somewhere between $650,000 and $700,000 that this board will have to come up with to fund the underpayment. We also need to quantify what the employees overpaid. I don't think we know that yet. How are we going to handle that? Do we refund the money? And if so, is it on a tax-deferred or tax exempt basis?” Sako said he was also interested in dealing with the question of how much the County may have to pay for retiree health insurance promised to employees hired before 1998. “We need to quantify the unfunded pension liability,” Sako added. “The European banks are deciding right now whether or not they will bail out Greece. They are meeting right now. If they decide not to, that could trigger another financial collapse.” Which, he grandly if not grandiosely suggested would ripple even our little fiscal pond here in Mendocino County.

Sako is fascinated by the looming financial apocalypse. “We need to look at market theories. There is huge volatility in the markets. Another system of portfolio management needs to be looked at. We need to identify and quantify the operational risks in our plan and come up with ways of mitigating that risk.”

In the past, Sako has proposed investing in gold, in offshore hedge funds, and other unconventional methods of increasing the value of Mendo’s portfolio.

Sako also had a list of suggestions he’d propose to the Retirement board: a permanent audit committee, monthly reports to the Supes, a phased retirement system, a reduction of the pension obligation for new hires.

“I'm a little bit surprised that I'm considering Mr. Sakowicz,” said Hamburg, laughing a bit. “I sort of think he does a good job and a bad job. I really value Mr. Sakowicz’s sort of ability to think creatively and to think outside the box in terms of his views on the economy and I think those directly influence the way he would perform his duties on the retirement board and I think he has shown that both in his radio program and in the things he's written. Obviously he's a very bright man. He is somebody who's thought about these things for many decades. I guess my major concern with you Mr. Sakowicz is how well you would work with the overall board and I say that really thinking of the very -- almost merciless criticism of the Retirement Board. I think it's fine to criticize the Retirement Board, but I kind of felt like some of it has been a little bit over the top. Mr. Alfano is a little more like the existing board whereas Mr. Sakowicz is more of a wildcard. Being somewhat of a wildcard myself I'm always attracted to wildcards. I think we should reappoint Mr. Mirata and I'm surprised at myself to be somewhat perplexed over who the other appointee should be.”

Supervisor Smith launched into one her irrelevant rambles: “Supervisor Brown raised the question of the expertise of having a physician on the board and this has been a long-standing practice of the retirement board. I don't believe there's anything, in fact I know, there’s nothing that says it needs to be that way. But ever since I've been on the retirement Board and for many years my understanding is prior to that there was a physician. And the physician was not there to make the decisions on the disability cases by any means, but sometimes you get diagrams, often you get lab reports—”

Newly installed Board Chair John McCowen made a valiant, if unsuccessful attempt to abbreviate Smith's free association: “Since we don't have a physician applying, then your point?”

Smith: “Well,” replied Smith in the voice of a person stating the obvious, “my point is that that has been a valuable role that a physician has played. And when the one physician and, I think, there were three I think, I can’t remember…”

McCowen: “But what's your solution to the problem?”

Smith: “Well, Mr. Hartley was able to find a medical community member, Dr. Coursey, who served very very well and has decided to –”

McCowen: “But what do we do now?”

Smith: “Yes, supervisor.”

McCowen: “Are you suggesting that we…?”

Smith: “Yes, Supervisor. I'm getting, I'm getting to that.”

McCowen: “I'm trying to get you there.”

Smith then took several more incoherent and irrelevant minutes to simply suggest delaying the appointment while they look for an MD.

McCowen: “I actually find myself tipping in Mr. Sakowicz’s favor. I think he gave me little bit better answer on the relationship of the board and the retirement board, but also the wealth of investment knowledge and background. I'm certain that if appointed he would be asking very key questions about the retirement portfolio and maybe there is no improvement possible but I think we would get every appropriate question out there on the table to know that we are going down the best path that we can. Although I agree that Mr. Sakowicz has been a sometimes harsh critic of the retirement board, I find that that has mellowed somewhat. For instance, the answer that he has gotten over the forensic audit of the $9.6 million because, although I think a lot of us, including members of the Retirement board, may agree that that in hindsight that may not have been an appropriate action, I think we pretty well understand what happened there and I don't know that there is anything really to be gained by probing further into it. I was also impressed by the amount of thought that had gone into developing the list of subject areas that he thinks the board should be looking into and I'm sure Mr. Alfano would be able to get up to speed on those issues but I think Mr. Sakowicz does have the advantage of having closely followed retirement issues for several years.”

Hamburg: “I’m not going to support the motion [to appoint both Mirata and Sakowicz]. I expect the motion to pass and I want Mr. Sakowicz to know that I wish him the very best as a retirement board member, but I don’t feel that I can support this motion. I do hope that John will prove me wrong and that he will be a— and I do think he will be a good member of the retirement board. I wish him the best of luck if this motion passes.”

The Motion passed 3-2, Smith and Hamburg dissenting.

* * *

On Tuesday, the Board, under pressure from the feds. gutted the County's unique marijuana cultivation ordinance (County Code section 9.31).

“Due to concerns expressed by federal authorities and the recent ruling in Pack v. Superior Court (City of Long Beach) [which ruled that local jurisdictions may not “permit” a federally illegal substance], it is my recommendation that the proposed edits to Chapter 9.31 be adopted,” said County Counsel Jeanine Nadel referring to the “edits” which eliminate permits and fees for medical pot growing in Mendocino County. “The edits as proposed eliminate the 99 plant exemption and requirements for permits and inspections. The ordinance amendment, if adopted, will still allow for the cultivation of no more than 25 marijuana plants per parcel for medical purposes only.”

Board Chair McCowen opened up public comment to a parade of some 30 people, all but two of whom were pot growers who enthusiastically supported the permit program, and wanted the County to either fight the feds or continue it on some kind of voluntary basis. (As Supervisor Hamburg pointed out, however, the County doesn’t need an “ordinance” for a voluntary program.)

But the “public” didn’t get the threats from the feds, the Board did. And, with the exception of Supervisor John Pinches, the outcome was foregone.

Asked to respond to the suggestions about a voluntary program, Ms. Nadel summarized what the feds had said: “Permitting and the collection of fees is problematic. You could go back to the Vroman/Craver era with their internal regulations. But you can’t collect fees without an ordinance. Collection of fees was part of federal concern.”

Supervisor Smith: “We pushed the envelope with fees and permits. We should have approached this as a land use issue and code enforcement. We can only collect to recover cost. We can’t connect the fees to the permit process.”

Supervisors Hamburg, Pinches and McCowen each offered their views of the quandary the County is in.

Hamburg: “I don't think anyone on this board dislikes the federal government more than me. On many many levels. This is just one of them. I think it's outrageous that the Obama administration started off with a policy of states rights regarding marijuana. And they did that shortly after Obama took office in 09. I remember [Attorney General] Eric Holder holding a press conference in which he said only in situations where both federal and state law were being disobeyed would the administration go after medical marijuana. Obviously, that position has changed. We can conjecture about why. But it's pretty clear that there has been an about-face. We in Mendocino County, and I think to some degree because of being out front and I think, I've said this many many times, Chairman McCowen, Sheriff Allman and others have really stepped up and have really tried to do something reasonable and something responsible and we have been met with threats by the federal government. If I were a private citizen I would be railing against the federal government and saying we should put every last resource this county has to fighting the feds and asserting the rights of the people of the County. But a fight between Mendocino County and the federal government makes David and Goliath look like a fair fight. I've always said that if Mendocino County is going to step to the fore and be a leader in many areas, in 9.31 type ordinances and other types of ways to regularize and normalize and hopefully someday decriminalize and legalize marijuana, and I'm not just talking about medical marijuana, I'm talking about marijuana in general, if that was ever going to happen it was going to take a combined effort. I am way too knowledgeable of the budgetary situation of our County and to think that you can carry a lawsuit against the federal government, even to the first court, let alone through the appeals that this would certainly lead to… If Lake County was with us, if San Diego County, if Alameda County, if even Humboldt County for god sakes — but we are kind of alone in this fight and I think the courage that has been shown by some Mendocino County officials in trying to get out in front of this issue and trying to deal with the health and safety issues has really created a level of exposure that I don't think we have the capacity to deal with. As a County supervisor I have to be concerned not with just people who are engaged in the cannabis industry, including the many people who benefit from the medicinal benefits of marijuana. I am intimately familiar with all its medicinal benefits from my own family. But there's more to Mendocino County and more to my responsibility as a supervisor than just the marijuana issue. There are 90,000 people in this county, many of whom depend on the largess of the federal government. We have a $230 million budget in this county. Only about a fourth of that is generated locally. The rest comes from state and federal sources. If we run afoul of the federal government I really fear as a citizen and as a supervisor that we would endanger programs that help people throughout this county. I don't see a way for myself as an individual supervisor to make that call for Mendocino County.”

Referring to various proposals suggested during public comment, Hamburg added, “What I'm hearing from County Counsel is that none of these things will really extricate us from the current situation that we’re in vis-a-vis these federal threats. So if somebody can show me a way out of this that won't endanger Mendocino County then I'm definitely willing to hear it. Otherwise I am going to follow the recommendations of County Counsel.”

Supervisor Pinches: “My personal view is that I don't think anybody who grows marijuana is an outlaw. Everything I thought about this and say is centered around that. Supervisor Hamburg points out that we are kind of out there. We can't even get our local congressman, both our lame-duck congressman or any of our future congressional candidates that's going to represent from Marin County to the Oregon border, the federal legislation that is proposed, for one of these state legislators — nobody will support us in our position. We are hanging out there. This marijuana issue has been going on for over 40 years. 40 years! Think about it. And we are still throwing people in jail over it. They're getting stopped in their cars and getting their money taken and their medicine taken. These are the same incidents that could have happened 40 years ago. Where have we really progressed in this?”

McCowen: “With regard to whether we are misleading our citizens in any way, as every applicant to the 9.31 program knows, they essentially acknowledge that they understand that the permits that were issued under California law and do not provide immunity from federal law. The real problem is that federal law and federal prohibition — I think we all recognize it's a failed program. If the intention is to limit the availability of drugs, particularly marijuana, if the intention of the massive amount of resources that the federal government can deploy against this is to keep it out of the hands of children, then it's a massive failure. In fact, I would argue that the effect on the program by providing an artificial price support system encourages further illegal production of marijuana, specifically for export to the black market or to the street corner where it is much more likely to fall into the hands of young people. By having an above-ground regulation we have a greater ability to control it, much as we do with alcohol and tobacco. Compare the statistics on how many people die every year from alcohol, how many people die every year from tobacco, or probably even coffee, then you wonder why this disproportionate attention to what is really a pretty benign substance by comparison. We do have to deal with the reality of federal prohibition and we do have to deal with the reality of the federal threat. We all have quite a bit of frustration here. Supervisor Smith and I spent the better part of a year developing amendments to 9.31 provided within updates of the 9.31 program. Although not everybody here initially supported it…”

Nadel: “I think the 99 plants is an issue. I agree that states rights are a legitimate argument that we could make, and that's why I'm not recommending the full repeal of 9.31. I think the board has the ability to regulate under general police powers, but I think the permit process, the collection of fees, that sort of thing is problematic. Certainly we could go back to the days when Sheriff Craver and DA Vroman had their own internal regulations, that is something the DA and the Sheriff have the ability to do now. But they don't have the ability to collect fees unless the Board of Supervisors authorizes those fees via a resolution. You cannot do that unless you have a legitimate basis to do so, specifically an ordinance. So that would be problematic in terms of the Sheriff having the ability to collect fees.”

McCowen: “The collection of fees was part of the federal concern, is that right?”

Nadel: “Yes.”

McCowen: “This is the action that the county needs to take to address the concerns that were brought up [by the feds]. We don't know if this actually addresses the federal concerns. But I think our best shot is to support this. I see County Counsel nodding her head. It will send a clear message if we vote unanimously in favor of this. I'm hoping that when we hit the button we will all be hitting the green button.”

Brown: “I hope you will join us Supervisor Pinches. I truly do.”

Pinches: “I am not going to grant that request, Carre. There are several reasons I don't support this. When it comes to the federal issue, we're going to call the feds and say well okay…”

McCowen: “We don't need the whole argument again.”

Pinches: “Well, if you give me a chance to…”

McCowen: I don't think you're going to change any minds. I have to be the Chair.”

Pinches: “We're just about to call up the federal government and say, well okay. We're not going to do the 99 plants anymore. So we're just going to do the 25 plants and so stay away from us. It's kind of like, like I say, it's kind of like telling a bank robber, well you can only do part of it… I think we should be consistent and tell the federal government, You know what? We tried to develop this process. We came up with a 9.31 ordinance that you didn't like for all the different reasons. Didn’t like our numbers. Didn’t like the money going to the sheriff's office…

McCowen: “Okay.”

Pinches: “But now, federal government, what I want to tell you is we're dropping the whole thing. You do what you think’s best. You're in charge. If you come—”

McCowen: “Okay, you've made your point. Thank you.”

Pinches: “Because there is a violation of states rights here.” (Applause from the audience.)

McCowen: “You haven't said anything new, either. I will take that applause as an endorsement of the supervisors’ comments and as a rejection of the federal government's position. But with that note, please…”

McCowen, exercising the prerogative of the chair to ramble on at length, continued, “There is still a lot of good in this ordinance. By preserving this ordinance, we preserve the framework of regulation, above ground, that this community has supported. The people here have stepped forward. It was a big step for each —”

Supervisor Smith, probably still irritated at McCowen’s attempt to cut her off the day before, testily interrupted: “Call the question.”

McCowen: “Thank you Supervisor Smith. I'm going to conclude my remarks. It was a big step for each of you to come forward to apply the program and we really changed the face of how things are done in this community. It was a unifying step for the community. It was positive all the way around…”

Smith, excitedly: “Excuse me! Counsel said you were supposed to stop! Counsel just said…”

McCowen: “Excuse me!”

Smith, screeching: “Counsel just said you were supposed to stop! Correct?”

Nadel (calmly): “Call the question.”

McCowen: “No. Call the question is a motion.”

Smith: “Oh please! Please! Please! This has been –”

McCowen: “Well, you are proving the point that by continuing disruption you often extend the time rather than shorten it, but we are going to vote by the button.”

Smith: “Thank you.”

McCowen: “And I think it's very clear where were going.”

Smith: “Yes!”

The motion to approve Nadel’s “edits” passed 4-1 with Supervisor Pinches dissenting.

McCowen concluded ironically: “I'd like to thank my colleagues for their respectful discourse here.”

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