Item number 9 on the agenda of the July 16 Fullerton City Council Meeting is a resolution approving the issuance of millions of dollars in Judgement Obligation Bonds to replenish the city’s Liability Insurance Fund. The City Manager’s Summary included at the beginning of the 135 page staff report explains that “In 2012 the City paid over $ 7 million in legal settlements to various parties, depleting cash in the Liability Insurance Fund.” The Discussion section is somewhat less explicit:
“In 2012 the City settled two large legal cases for a combined payout of $ 7 million. The first was the Verona Slopes case (Hanson v City of Fullerton) involving eminent domain, which had been lingering for decades and was settled for $ 6 million. The second was a settlement totaling $ 1 million for another liability case. These payments depleted all cash in the Liability Insurance Fund.”
The $ 1 million settlement obliquely described as “another liability case” is presumably the payout to Cathy Thomas, whose son Kelly was beaten to death by officers of the Fullerton Police Department in 2011.
The Verona Slopes settlement, referred to as having been “lingering for decades,” was not actually filed until 2008, although the trail widening by the city that was alleged to have eventually resulted in the collapsing of the slopes below homes on Verona Dr. occurred in 1989.
A city press release about the settlement outlines a somewhat convoluted deal whereby the city might possibly recover some of the $ 6 million payout from the slopes settlement, but if that has happened, it hasn’t stopped the city from having to fill a $ 7 million hole in the Liability Insurance Fund.
The resolution will allow the sale of up to $ 7.75 million in bonds at an interest rate up to 6 %, issued over 20 year period. The debt service payments are expected to cost the General Fund $ 550,000 per year. Mistakes made in the present cost the taxpayers far into the future. How much more could we have done with an extra half million dollars per year for the next twenty years? Next time the city can’t afford something, let’s think about where this money went.