REBUTTAL

The Newport Coast Committee of 2000 was truly disappointed by your

editorial of Feb. 12 (“Newport Coast should calm the waters”). It

demonstrated a misunderstanding of the history between Newport Coast

residents and the city and an inadequate understanding of the issues.

The editorial stated that the “single biggest snag” in the annexation

negotiations was “the Coast residents’ desire for tax relief.” This is

inaccurate. In two years of negotiations, both City Mangers Kevin Murphy

and Homer Bludau, along with Assistant City Manager Dave Kiff repeatedly

assured us that the city would use all the Irvine Ranch Water District

settlement proceeds for reducing assessment district taxes in the Newport

Coast.

Just three months ago, Bludau and Kiff prepared a proposal showing 80%

going to the Newport Coast and 20% going to the city. True, one of our

original goals was tax reduction, but only if it still provided the city

with excess tax revenue. This could be used to fix the city’s existing

and aging infrastructure. Early on, the city told us it could not support

a rebate derived from excess tax revenue. Consequently, the city offered

to use all the water district settlement proceeds to reduce our

assessment district taxes.

Both sides always referred to this arrangement as a “win-win” situation

-- the Newport Coast would get some much needed tax relief and the city

would get some much needed tax revenue. Again, this idea was the city’s

proposal, not ours.

Where does this information appear in any of the Daily Pilot’s articles

or editorials? City officials have acknowledged that our tax structure is

highly inequitable, and have recognized that it should find a way to

address the inequities. Our tax bills contain $170 million of assessment

district bonds, and approximately $30 million in Mello-Roos taxes, which

were predicated upon projections for student population figures into the

Newport-Mesa Unified School District that have never materialized, and

which were overstated by about 400%.

There are also water district taxes, and recently it has been suggested

that the Newport Coast be included in the general obligation bond that is

being proposed by the Newport-Mesa district. In reality, the biggest snag

in the negotiations was Kevin Murphy’s departure, which caused Dave Kiff

and the City Council to suspend our talks for four to five months until a

new city manager was hired and new council members were elected. When we

finally resumed talks, the city decided to disregard all of our

previously agreed upon points, to withdraw all of its offers and to

return the negotiations back to square one. We had negotiated in good

faith and had reached the point where we felt a deal was imminent.

None of these “snags” were our doing. It was unfair for the Daily Pilot

to pin any delay on Newport Coast residents. Elsewhere, the editorial

again unfairly and incorrectly stated, “it seemed as though the Newport

Coast residents’ high demands could never be met.” What “high demands”

were being referred to? We never placed any demands whatsoever on the

city. However, if you are referring to the $25 million from the water

district deal, this was never our demand, but rather it was the city’s

offer, which we feel the city should honor.

You then characterized our response to the settlement simply as a demand

that the city “give (us) all the money...” and continued with, “This has

been a consistent attitude. While city officials work to meet their

demands, the residents often refuse to budge at all.” This is pure

fiction. We have never refused to budge and have always been extremely

flexible in the negotiations. In an Oct. 22 letter, Bludau thanked us for

our “patience and cooperation.”

Finally, your editorial suggested that $11 million of the $25 million

should be used to pay off an existing water bond used for a Newport Beach

ground water project. First, as Kiff can attest, in over two years of

negotiations, the city never advanced this position. Second, money spent

on the ground water project bond already provides benefits to existing

residents of the city of Newport Beach. It provides cheaper water to them

by recharging the city’s ground water wells, thus alleviating the need to

purchase much more expensive water from the Metropolitan Water District.

Some of this water project money was spent 30 years ago for equipment

whose useful life has expired. However, if any sizable amount of money

was spent 30 years ago in anticipation of annexation, then we must

question the planning competence of the city. Remember, the contractual

agreements between the city and the water district (leading to the recent

settlement) were signed in 1972 and 1973 (28 and 27 years ago,

respectively) and anticipated that if annexation ever occurred, it would

take place in the far distant future.

Consequently, it is illogical to argue that Newport Coast residents

should compensate the city for money spent on water facilities prior to

the 1972 and 1973 agreements, which are now defunct.

Moreover, the editorial’s premise that Newport Coast residents should pay

for water facilities even though the city will not be providing water and

sewer service to the Newport Coast is equally illogical. Usually, one

pays for something that they get rather than something that they do not

get. There was never any guarantee that annexation would ever occur, so

for the city to have allegedly spent money in anticipation of it -- 30

years too soon -- just does not make sense. This argument, which the

editorial so naively advances, is nothing short of revisionist history.

Someone has come up with quite a creative position that, in all

probability, lacks any factual support. The Daily Pilot should have asked

the city how could there have been two years of intensive discussions

with our committee, yet reimbursement for oversized water facilities was

never mentioned? This strikes us as extremely suspicious. The first time

our committee ever heard of this concept was in your editorial.

Concerning annexation, it is true that the city can annex around the

current residents of the Newport Coast and keep all the money. However,

this would violate verbal and written assurances given to us by the city

that it would not attempt a hostile annexation.

In the previously mentioned letter of Oct. 20, Bludau stated, “I wanted

to pass along my pledge that the city will not complete ... the proposed

reorganization ... until this term sheet is agreed to by both parties. In

other words ... we will wait until the Newport Coast Committee of 2000

and the city have come to an agreement on our outstanding issues...” Of

course, city officials did not offer a copy of this letter to the Daily

Pilot, because to do so would make them look like the bad guys, rather

than the Newport Coast residents who, unfortunately, received the unfair

treatment in your editorial.

THE NEWPORT COAST

COMMITTEE 0F 2000