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Home My WebLink About07/06/01 B A K E R S F I E L D CITY MANAGER'S OFFICE MEMORANDUM July 6, 2001 TO: Honorable Mayor and City Council FROM: Alan Tandy, City Manager /~7"D.~/ SUBJECT: General Information 1. Next Tuesday, we will have an all day session with HOK to go over numbers and program for the stadium. That work is preparatory to them making a presentation to City Council on July 18th. 2. I will be attending the Large Cities Executive Forum in Winnipeg next Wednesday through Saturday. During my absence, Alan Christensen will be in charge, and the office will have my phone number in case you should need to contact me. 3. The California League indicates they received a "very incomplete" application for ownership transfer. They are to notify the Moses group of the areas of inadequacy. 4. In 1999, the City provided a $250,000 loan to Pleasant Holidays for a term of five years. The agreement states that a portion of the loan would be forgiven each year the company meets certain hiring goals. Since the company has met those goals again for the second year of the agreement, 20% of the loan, $50,000, will be forgiven. More details are included in the attached memo from EDCD. 5. We are pleased to provide you with the list of "High Five" nominees and winners for the second quarter of 2001; it is indicative of the many dedicated individuals employed by the City who go the extra mile in their jobs. 6. The legal opinion on the County's claim that we owe them $1.3 million is enclosed. Unfortunately, the City Attorney's opinion is that we do owe the money. 7. We had to make a refundable deposit of $24,500 to PG&E to design a move of a gas line that runs under the stadium site. The actual move, if necessary, will be covered under our franchise. The deposit is a new policy of theirs, resulting from the energy crisis, that we did not anticipate. 8. The monthly activity report from Recreation and Parks is enclosed. Honorable Mayor and City Council July 6, 2001 Page 2 9. Responses to Council requests are enclosed, as follows: Councilmember Carson · Status of request to research relocation of fire stations to improve response time and services; · Schedule IGRC Committee meeting and provide information regarding empowerment zones; · Installation of handicapped ramps at 6th and P Streets; Councilmember Benham · Report explaining options available to save the Carriage Masters building from demolition; · Updated compliance report regarding trash/debris at the Montgomery Ward parking lot behind Rancho Bakersfield Motel; · Updated compliance report regarding apartment buildings at 1701-1801 Canter Way; · Workshop scheduled for 7/18/01 Council meeting regarding curbside recycling; · Letter to CalTrans regarding feasibility of planting trees near on-ramps on Freeway 99; Councilmember Maggard · Residential refuse issues (includes responses to requests from Councilmembers Couch and Salvaggio) feasibility of privatizing curbside pickups for individuals who wish to pay for that service; Review of document submitted by citizen regarding reduction of service rate adjustment; Provide response to citizen regarding her comments at 6/27/01 Council meeting pertaining to recycling; Councilmember Couch · Status of request from citizen regarding "Cops, Cars, and Kids Event"; · Investigation of offer regarding central heating and cooling system rebate; · Complaints regarding lighting at hot dog establishment located in the County; · Status of citizen request for potential stop sign and speed/vandalism monitoring at Saddle Drive and River Rock; · Contact property owner regarding an annexation request contingent on the property becoming commercial; Councilmember Salvaggio · Status of weed abatement on four lots at 2200 block of Castro Lane; · Report on estimated completion date of traffic signal at Monitor and Fairview; · Review of animal incident relating to death of citizen's dog attacked by pit bull dogs. AT:rs cc: Department Heads Pam McCarthy, City Clerk Trudy Slater, Administrative Analyst BAKERSFIELD Economic and Community Development Department MEMORANDUM TO: Alan Tandy, City Manager July 6, 2001 FROM: Donna L. Kunz, Economic Development Director SUBJECT: Employment Status for Pleasant ltolidays Agreement No. 99-175 between the City of Bakersfield and Pleasant Holidays provided a $250,000 loan to the company for a term of five years. Twenty percent of the loan will be forgiven for each year the company met all terms and conditions of the agreement. These terms included: · hiring 150 workers within the first five years, with 50 new jobs in Year 1, and 25 jobs in each of the following four years. · of those workers hired, at least 51% must be low- and moderate-income individuals for each of the first five years of the agreement. Exercising this forgiveness is a ministerial action and, thus, requires no Council action. Based upon the report submitted to our office from the company, the company has exceeded both conditions. For the second year of the agreement, the company employed 150 new hires, and 70.67% of these hires were low- and moderate-income individuals. Therefore, Pleasant Holidays has met the terms and conditions required in the agreement and qualifies to have 20%, or $50,000, of the loan amount forgiven for the second year of the agreement. I propose we send a letter like we have to other companies, which merely reflects the ministerial action of the debt forgiveness. With approval from you, we will immediately mail the letter. B A K E R S F I E L D OFFICE OF THE CITY MANAGER MEMORANDUM July 6, 2001 TO: Honorable Mayor and City Council FROM: ~)(..~da Smiley, Office Administrator - Public Relations SUBJECT: Employee Incentive Program The Employee Incentive Committee is happy to provide the list of High Five nominees and winners for the second quarter of 2001. All winners are noted by an asterisk (*). All of these individuals were recognized by their peers, supervisors, or members of the public for exceptional work and/or customer service. By being nominated, each employee is automatically inducted into the "High Five Club" for the fiscal year and is recognized at the annual Employee Breakfast. In addition, each winner has their choice a number of $10 gift certificates. All nominees and winners are also recognized monthly in the City's employee newsletter. We applaud these individuals for a job well done. Attachments 2001 HIGH FIVE AWARD April Nominee Title Dept Date Nominator Comments 1 Aflague, Annette Telecomm I PD 04/06/01 Amber Lawrence Spent a lot of time assisting another division with a much needed project. (PD memo) 2 Alger, Linda Bldg. Insp. II Dev. Services 04/25/01 Charles Webb Extremely professional, always goes above and beyond. 3 Anderberg, Nathan Officer PD 04/06/01 Amber Lawrence Aided LA.P.D. in apprehension of a dangerous suspect. (L.A.P.D. letter) 4 Bowers, Guy Trades Asst. PW / GS 04/25/01 City Clerk Staff Always pleasant, willing to work off hours to complete office remodel. 5 Burdick, Jeffrey Officer PD 04/06/01 Amber Lawrence Commendation from PD Operations Supr & citizen. (Internal PD memo) 6 Curry, Cathy Clk Typist I PW / Admin 03/26/01 Robert Tablit Handles all Construction tasks, orders supplies, takes calls, etc. 7 Eddy, Dennis Telecomm I PD 04/06/01 Amber Lawrence Spent a lot of time assisting another division with a much needed project. (PD memo) 8 Famsworth, Gina Telecomm II PD 04/06/01 Amber Lawrence Spent a lot of time assisting another division with a much needed project. (PD memo) 9 Ferguson, Andrew Officer PD 04/06/01 Amber Lawrence Commendation from PD Operations Supr & citizen. (Internal PD memo) 10 Gonzales, Mary Ellen Sec. II Risk Mgmt 04/20/01 Alan Christensen Served beyond the call of duty in the absence of a Risk Mgr. 11 Gonzales, Roy Maint. Crffwrkr PW / GS 04/25/01 City Clerk Staff Always pleasant, willing to work off hours to complete office remodel. 12 Graves, Darrel Eng. Tech II PW / Subd 04/12/01 John W. Stinson Rec'd call from local businessman complimenting Darrel on fast turn around of service. 13 Haddad, Manar Acct. Clerk I Risk Mgmt 04/17/01 Betty Wilson Been an inspiration to all; successfully organized accounts; hard worker; dedicated. 04/20/01 Alan Christensen Filled in very ably in the absence of direction from a full-time Risk Mgr. 14 Horcasitas, Janice Engineer II PW 04/17/01 Ed Murphy Strong team player w/Bldg Dept; always courteous, helpful, positive and fun. Phil Burns Strong team player w/Bldg Dept; always courteous, helpful, positive and fun. 15 Hurtado, Doretha Telecomm I PD 04/06/01 Amber Lawrence Spent a lot of time assisting another division with a much needed project. (PD memo) 16 Jamison, John Sr. Officer PD 04/06/01 Amber Lawrence Aided L.A.P.D. in apprehension of a dangerous suspect. (L.A.P.D. letter) 17 Long, Lois Acct. Clerk I Dev. Services 04/19/01 Melanie Dunwoody Prepared a flyer under a short deadline - has a commitment to help. 18 Lopez, Patty Telecomm I PD 04/06/01 Amber Lawrence Spent a lot of time assisting another division with a much needed project. (PD memo) 19 Luckhardt, Elizabeth Police Officer PD 04/19/01 Amber Lawrence Rec'd letter of thanks from a citizen whom she helped. 20 Magana, Susan Acct. Clerk I Fire 04/06/01 Leslie Devitt Lent materials for TV safety segment, and brought daughter in early to help. 21 McDougal, Judy PD Disp. II PD 04/13/01 Terrye Flowers Consistently hard working, rec'd commendations for professionalism. 22 Mercado, Sam Elec. Tech. II PW / GS 04/25/01 City Clerk Staff Always pleasant, willing to work off hours to complete office remodel. 23 Oldham, Delores Sec. I Clerk 04/20/01 Denise Sullivan Took time away from her own work to assist a fellow employee with a deadline. 24 Owens, Hilarie Telecomm I PD 04/06/01 Amber Lawrence Spent a lot of time assisting another division with a much needed project. (PD memo) 25 Poynor, Chuck Captain Fire 04/19/01 Leslie Devitt Took time to do follow-up work on day off - excellent customer service skills. 26 Rowland, Belinda Telecomm II PD 04/06/01 Amber Lawrence Spent a lot of time assisting another division with a much needed project. (PD memo) 27 Snyder, Rhenda Telecomm I PD 04/06/01 Amber Lawrence Spent a lot of time assisting another division with a much needed project. (PD memo) 28 Sorrell, Jennifer Telecomm I PD 04/06/01 Amber Lawrence Spent a lot of time assisting another division with a much needed project. (PD memo) 29 Sallivan, Denise Dep. City Clerk Clerk 04/24/01 Roberta Gafford Under difficult cimumstances, managed to complete agenda project. 30 Sullivan, Jamie Comm Ctr Supr PD 04/06/01 Amber Lawrence Spent a lot of time assisting another division with a much needed project. (PD memo) 31 Todd, Chuck Maint. Crftwrkr Fire 04/12/01 Cpt. James Adams Person to depend on to help with whatever is needed. 32 Traylor, Joel Info. Sys. An. MIS 04/19/01 Melanie Dunwoody Assisted with project under a short deadline; has helpful attitude. 33 Turner, Keitha Clk Typist I Clerk 04/20/01 Denise Sullivan Took time away from her own work to assist a fellow employee with a deadline. 34 Wilson, Betty Acct. Clerk II Risk Mgmt 04/20/01 Alan Chrlstensen Served well in the absence of a Risk Mgr.; helped overall in keeping dept. running. 35 Wines, Howard Hazmat Spec. Fire 04/20/01 Terri Elison Great informative presentation for Rec & Parks safety meeting. 36 Young, Ron Eng. Tech I PW / Subd 03/30/01 Conchita Walker Asset to the dept, always ready to help and eager to lenad a hand. 37 Zamora, Leslie CIk Typist I PD 04/18/01 · Bryan Lynn Worked.late to complete deadline. Went the extra mile. 2001 HIGH FIVE AWARD " MAY Nominee Title Dept Date Nominated by Comments I Anderberg, Joshua Police Officer PD 05/18/01 Amber Lawrence Rec'd thank you letter from citizen. ~ 2 Arriola, Ernie Supervisor PW / Streets 05/18/01 Rene Martinez Supportive with employee's need to work on Breakfast. 3 Branson, Darrin Acct. Clerk II PW / SW 05/18/01 Martha Haslebacher Fantastic job on PW budget presentation. * 4 Christensen, Alan Asst. CM CMO 05/02/01 EIC Support and dedication to committee's endeavors on behalf of employees. 5 Cegielski, Don Police Officer PD 05/22/01 Amber Lawrence Rec'd commendation from Supervisor. 6 Cohen, Linda Legal Sec. City Atty 05/18/01 Carroll Hayden Outstanding work with Employee Appreciation Breakfast. 7 Curry, Cathy Clerk Typist I PW / Admin 05/04/01 Jim Holladay Comes in early, stays late, dedicated, gives 120%. 8 Cruz, Nick Laborer Rec & Parks 05/02/01 Susan Roussel Went extra mile in re: Travelin Tunes; has a great attitude. 9 DeGeare, Don Police Lieut. PD 05/18/01 Amber Lawrence Rec'd commendation from Visalia Police Chief. 10 DeGeare, Mary Dectective PD 05/18/01 Carroll Hayden Outstanding work with Employee Appreciation Breakfast. '~11 Duey, Kade Dev. Associate EDCD 05/17/01 Hayward Cox Keeps his cool, remains professional, focuses on completion. 12 Dunwoody, Melanie Bus. Mgr. Dev. Services 05/18/01 Donna Kunz Helped supervise temporary staff while dept was on retreat. 13 Elison, Terri Supervisor I Rec & Parks 05/17/01 Sally Ihmels Worked on project that was not in job duties, and on day off. 14 Fishman, Luda Clerk Typist I City Atty 05/08/01 Alan Christensen Filled in w/Risk Mgmt taks without complaint or problems. 05/11/01 Debbie Taylor Always upbeat, friendly, responsive, informative, helpful. 15 Garcia, Eduardo Clerk Typist I PW / SW 05/18/01 Martha Haslebacher Fantastic job on used oil program, commendable Spanish language skills. 16 Garcia, Isaac Police Officer PD 05/14/01 Amber Lawrence Rec'd thank you letter from. citizen. 17 Goad, Ken Party Chief PW / Const 05/16/01 Howard Wines On short notice, helped find buried tanks for environmental assessment. 18 Gonzales, Mary Ellen Secretary II Risk Mgmt 05/25/01 Amber Lawrence Great job coordinating blood drive. 1 9 Goon, Ann Rev. Prg. Aide PW / SW 05/18/01 Martha Haslebacher Commitment to Recycling Program; got program going in short time frame. ~20 Grundeis, Glen Patrol Sgt. PD 05/23/01 Rachel Meek Promoted Law Enfomement Day via PSA on own time; very professional. 21 Hamer, Robert Mtr Swpr Op PW / Streets 05/18/01 Rene Martinez Provided valued personal property for use at Breakfast. 22 Hamish, John Swr Maintainer II PW / Streets 05/05/01 Rene Martinez Gave a quick response to motorist who needed help. 23 Hardin, Tom Lt. Equip Opr PW / Streets 05/18/01 Rene Martinez Helped transport supplies to Breakfast. 24 Hluza, Cindy Acct. Clerk II Water 05/18/01 Carroll Hayden Outstanding work with Employee Appreciation Breakfast. 25 Ihmels, Sally Supervisor Rec & Parks 05/18/01 Carroll Hayden Outstanding work with Employee Appreciation Breakfast. 26 Jordan, David Sr. Police Officer PD 05/14/01 Amber Lawrence Rec'd commendation from Police Chief. 27 Kibbey, Cathy Lab Tech PD 05/22/01 Amber Lawrence Rec'd commendation from Supervisor. 28 Kramer, Debbie Secretary II EDCD 05/15/01 Donna Barnes Can always be counted on to get the job done. 29 Larson, Holly Supervisor Rec & Parks 05/17/01 Sally Ihmels Worked on project that was not in job duties, and on day off. 30 Long, Lois Acct. Clerk I Dev. Services 05/01/01 Patricia Hock Hard worker; showed extra effort re: Charrette process. 31 Martinez, Rene Mtr Swpr Op PW / Streets 05/18/01 Carroll Hayden Outstanding work with Employee Appreciation Breakfast. 32 Martinez, Ruben Fleet Mechanic PW / Fleet 05/08/01 Bill Ware Went above and beyond to keep motorcycles running during training. 05/08/01 David Brantley Worked hard to keep old, broken motorcycles in running order for training. 33 McCormick, Terry Supervisor Rec & Parks 05/17/01 Sally Ihmels Worked on project that was not in job duties, and on day off. 05/18/01 Carroll Hayden Outstanding work with Employee Appreciation Breakfast. 34 McVicker, John Sr. Police Officer PD 05/22/01 Amber Lawrence Rec'd commendation from Supervisor. 35 Mills, Lonnie Police Officer PD 05/22/01 Amber Lawrence Rec'd commendation from Supervisor. 36 Mireles, Tony Swr Maintainer II PW / Streets 05/05/01 Rene Martinez Helped control the situation when a motorist needed help. 37 MIS 05/03/01 Tricia Richter Went extra mile with computer replacement, showed great patience. 38 Moore, Gary Sgt PD 05/23/01 Rachel Meek Spontaneously gave presentation to students after working an accident. 39 Offenburger, Angle Acct. Clerk II EDCD 05/01/01 Vince Zaragoza Very efficient, helpful, proactive and creative. 05/17/01 Rhonda Barnhard Great assistance with budget; took initiative to get things done. 40 Olsen, Ted Police Officer PD 05/14/01 Amber Lawrence Rec'd commendation from Police Chief. 41 Owens, Hilarie Dispatcher PD 05/17/01 Rhenda Snyder Typed and organized our GTA log for briefing. 42 Pacheco, Uriel Police Officer PD 05/14/01 Amber Lawrence Rec'd commendation from Police Chief. 43 Parks, Jean Secretary CMO 05/01/01 Carroll Hayden Helped out at the last minute with meeting preparations. 44 Placencia, Mimi HR Analyst HR 05/18/01 Carroll Hayden Outstanding work with Employee Appreciation Breakfast. 45 Powers, Amy Clerk Typist I PD 05/14/01 Robin Bice Does a job without being asked. Never hesitates to help others. 46 Richter, Tricia Dev. Associate EDCD 05/18/01 Carroll Hayden Outstanding work with Employee Appreciation Breakfast. 47 Rowland, Belinda Dispatcher PD 05/17/01 Rhenda Snyder Organized park permits. 48 Salazar, Jose Technician Rec & Parks 05/18/01 Rene Martinez Very helpful with Breakfast 49 Schimon, Eric Police Officer PD 05/22/01 Amber Lawrence Rec'd commendation from Supervisor. 50 Simmons, John Real Prp agent Prop Mgmt 05/17/01 Janice Horcasitas Always willing to help out Public Works Department. 51 Simpson, Cheryl Fin. Investigator Treasury 05/23/01 Bill Descary Instrumental in processing numerous permit applications in two days. 52 Smiley, Rhonda Off. Admin - PR CMO 05/18/01 Carroll Hayden Outstanding work with Employee Appreciation Breakfast. 53 Smith, Blaine Traffic Mot Officer PD 05/23/01 Rachel Meek Spontaneously gave presentation to students after working an accident. 54 Sullivan, Denise Dep. City Clerk Clerk 05/01/01 Roberta Gafford Completed huge laserfiche project, which took 10 months. 55 Sullivan, Jamie Comm. Supr PD 05/17/01 Rhenda Snyder Organized GTA rolodex, created file for GTA cards. 56 Taylor, Patti Comm. Rel Spec PD 05/18/01 Carroll Hayden Outstanding work with Employee Appreciation Breakfast. 57 Walker, Conchita Engineer II PW 05/18/01 Carroll Hayden Outstanding work with Employee Appreciation Breakfast. 58 Webb, Charles Dev. Associate EDCD 05/18/01 Janice Scanlon Put in a lot of time and effort with Southeast PAC. 59 Wells, Daniel Police Officer PD 05/14/01 Amber Lawrence Rec'd commendation from Police Chief. 60 Williams, Rick Supervisor PW / Const 05/16/01 Howard Wines Directed Party Chief to help with environmental project on short notice. 2001 HIGH FIVE AWARD June Nominee Title Dept Date Nominated by Comments 1 Alger, Linda Bldg Inspector Dev Services 06/20/01 Tricia Richter Went out of her way to assist with an inspection, and on short notice. 2 Branson, Darrin Acct. Clerk II PW / SW 06/05/01 Jacques LaRochelle Job well done regarding Department budget presentation to Council. 3 Crime Prevention/ D.A.R.E. PD 06/25/01 Matt Hilliard Crime Prevention and D.A.R.E. gave presentation to school children. 4 DeLeon, Rey Police Officer PD 06/25/01 Matt Hilliard Goes the extra mile with projects. 5 Fishman, Luda Clerk Typist City Attorney 06/15/01 Jim Eggert Went out of her way to assist with admin report process. 6 Flores, Juan Laborer Rec & Parks 06/18/01 Jan Fulton Went above and beyond with assistance; were cheerful, helpful, timely, quic~ 7 Floyd, Ryan Police Officer PD 06/20/01 Amber Lawrence Rec'd commendation from Captain Mahan. 8 Garcia, Robert J Police Officer PD 06/08/01 Amber Lawrence Rec'd letter of thanks from citizen. 9 Haddad, Manar Acct. Clerk I Risk 06/22/01 Terry McCormick Impressive work ethic; very thorough and dedicated. 10 Haven, Dawn Clerk Typist II HR 06/25/01 Terry McCormick Consistently pleasant and competent. 11 Henson, Roy Facility Worker PW / GS 05/28/01 Mimi Placencia Efficient with job duties related to conference room. 12 Jones, Bob Comm. Engineer PW / Telecom 06/26/01 Terry McCormick Promptly came to office; investigated and corrected problem. 13 Kennedy, Mike Data Proc. Mgr MIS 05/25/01 Mimi Placencia Always there when needed. 14 Kramer, Debbie Secretary II EDCD 05/31/01 Rhonda Barnhard Excellent job of managing multiple priorities in a busy office. 15 Lawson, Wayne Asst. Planner DS / Planning 06/12/01 Jim Eggert Rec'd e-mail of thanks from citizen. 16 Lopez, Tamra Bldg Prm Tech DS / Building 06/25/01 Delsa Trammell Always eager to help in any way. 17 Lowe, Shane Comp Draft Tech PW / Eng 06/11/01 Jacques LaRochelle Willingness to help, showed flexibility with Mongolian delegation. 18 May, Jason Firefighter Fire 06/10/01 Mike Walkley Outstanding efforts as a firefighter; goes above and beyond 19 Miller, Scott Sr. Police Officer PD 06/08/01 Amber Lawrence Rec'd letter of thanks from citizen. 20 Mojica, Maria HR Clerk HR 06/25/01 Terry McCormick Consistently helpful and professional, follows through & goes extra mile. 21 Morris, Sandy Comm. Srv Spec PD 06/25/01 Matt Hilliard Fine example of high quality, service oriented public service. 22 Offenburger, Angle Acct. Clerk II EDCD 06/12/01 Maribel Reyna Used personal PC to help with major project. 23 Pe[alez, Maria Admin. Asst. II PW/Admin 06/06/01 Denise Sullivan Always extremely helpful with translation requests. 24 Peterson, David Off. Sys Tech MIS 06/12/01 Rhonda Smiley On own initiative, helped with computer move in CMO. 25 Rodriguez, Ray Laborer Rec & Parks 06/21/01 Lee Ochoa Great attitude; relentless work ethic; comprehensive job knowledge. 26 Salazar, Jose Laborer Rec & Parks 06/18/01 Jan Fulton Went above and beyond with assistance; were cheerful, helpful, timely, quic~ 27 Slater, Trudy Admin. Analyst CMO 05/30/01 Klm Berrigan Went above and beyond in creation of Citywide newsletter. 28 Smith, Jack Sr. Police Officer PD 06/20/01 Amber Lawrence Rec'd thank you letter from Quailwood Elementary School. 29 Spayberry, Johnna Police Officer PD 06/08/01 Amber Lawrence Rec'd letter of thanks from citizen. 30 Stevenson, Dan Police Sergeant PD 06/20/01 Amber Lawrence Rec'd commendation from Captain Mahan. 31' Sullivan, Denise Dep City Clerk Clerk 06/11/01 Roberta Gafford Showed diligence & dedication towards completing a project on short notice. 32 Welty, Natalie Secretary II Mayor 05/31/01 Harvey Hall Rec'd letter of commendation from Mayor Hall. 33 Woolard, Bobby Police Officer PD 06/20/01 Amber Lawrence Rec'd commendation from Captain Mahan. MEMORANDUM July 3, 2001 TO: ALAN TANDY, CITY MANAGER BART J. THILTGEN, CITY ATTORNEY FROM: SUBJECT: OXY TAX REFUND Attached is a memorandum from Deputy City Attorney Walt Porr describing the statutory scheme associated with the County's collection and entitlement to a refund for supplemental taxes collected by the County on behalf of the City of Bakersfield. Interestingly, when a Supplemental Tax Roll is generated by the County (to assess and collect additional taxes when a property changes hands between the normal dates of property tax calculations), the revenue from the supplemental tax is distributed among all public entities within the County. This is why the City of Bakersfield received a tax distribution resulting from the sale of the Elk Hills property to Occidental Petroleum ("Oxy"). It has been asserted that the City's distribution resulted from some allocation of taxes associated with the sale from the United States to Oxy. In fact, this was not the case. Our distribution was statutorily required under the Supplemental Tax collection/distribution scheme. Normally, the City would not be entitled to any distribution from the regular property tax collection as Elk Hills is not within our jurisdiction. The Supplemental Tax Roll distribution is different, according to statute. Based upon our reading of the statutes, and associated case law, it is our opinion that the County is legally authorized to collect the refund monies from the entities to which it was distributed. In addition, the County is authorized to offset such amount from any property tax distribution it would normally be making in its function as tax collector for the City. BJT:alj Attachment cc: Gregory Klimko, Finance Director S:\Finance\MEMOS\Oxy Tax Refund.wpd MEMORANDUM June 26, 2001 TO: BART J. THILTGEN, CITY ATTORNEY ,// FROM: WALTER H. PORR, JR., DEPUTY CITY ATTORNEY~'~ SUBJECT: OCCIDENTAL PETROLEUM TAX REFUND ~ Revenue and Taxation Code section 5096 Provides for the refund of taxes which are erroneously or illegally collected, illegally assessed or levied, or which are paid on an assessment in excess of the equalized value of the property as determined pursuant to Section 1613 by the County Board of Equalization, which is what happened in this case. Revenue and Taxation Code section 5097.2 provides for the refund of taxes paid where the amount paid exceeds the amount due on the property as a result of a reduction attributable to a hearing before an Assessment Appeals Board, which is, again, what happened in this case. Revenue and Taxation Code section 5099 provides that the refund ordered by the Board of Supervisors may include County taxes "and taxes collected by County Officers for a city..." (Emphasis added.) Revenue and Taxation Code section 5101 provides in pertinent part that refunds ordered in respect of chartered cities shall be paid in the manner provided for their payment in the charter ordinances of the city. With respect to the relationship between the City of Bakersfield and the County of Kern in the context of tax collections, Article 5, Section 50 of the Charter of the City of Bakersfield provides that the Council shall have power to avail itself by ordinance of any law of the State of California whereby assessments may be made by the Assessor of the County in which the City of Bakersfield is situated and taxes may be collected by the Tax Collector of said County for and on behalf of the City of Bakersfield. Consistent with this Charter provision, Bakersfield Municipal Code section 3.28.650.A provides that the duties of Tax Collector for the City of Bakersfield with respect to the assessment of property in the City for purposes of equalization shall be performed by the Officers of the County. S:~Attorney\MEMOS\ThiltgenMemo. OccidentalPetTaxRefund.wpd BART J. THILTGEN, CITY ATTORNEY June 26, 2001 Page 2 Two leading cases which deal with the County as the agent of the City for purposes of tax collection are Los Angeles County v. Superior Court in and for Los Angeles County (1941) 17 Cal.2d 707 and In Re County of Orange, Debtor, County of Orange v. Merrill Lynch & Co., Inc., Adversarial Proceeding No. SA 95-1045 JR, 199 B.R. 1005. Copies of both cases are attached hereto. The long and the short of these cases is that, in this context, the County Tax Collector is an agent of the City collecting the City's portions of.the taxes on behalf of the City. When sued for a refund, the County Tax Collector stands in the shoes of the City as the City's taxing agent. Thus, the County not only represents itself in tax refund cases, but any and all of the taxing entities on whose behalf it collects the taxes. The implications from the cited statutes and from these cases could not be more clear. Where a tax refund is ordered and the taxes to be refunded were disbursed to one or more public entities or agencies in addition to the County, a pro rata refund based upon the tax income distributed necessarily follows. Likewise, this refund would include interest for the time that the money was available to and being used by the City. WHP:alj Attachments S:~Attorney\MEMOS\Thiltgen Memo. OccidentalPetTax Refund.wpd Page 2 Citation KeyCite History Rank 1 of 1 Database 112 P.2d 10 CA-CS (Cite as: 17 Cal.2d 707, 112 P.2d 10) Supreme Court of California. LOS ANGELES COUNTY et al. V. SUPERIOR COURT IN AND FOR LOS ANGELES COUNTY. S. F. 16293. April 16, 1941. In Bank. Original proceeding by the County of Los Angeles and the City of Los Angeles for a writ of prohibition, restraining the Superior Court in and for the County of LOs Angeles from trying certain tax refund actions against such county without first joining the City of Los Angeles and others as ad~ditional parties defendant. Alternative writ discharged, and peremptory writ denied. West Headnotes [1] Prohibition ~28 314k28 Most Cited Cases In original prohibition proceeding by coUnty and city to restrain superior court from trying tax refund actions against county without joining citY, school districts, and junior college district as additional parties defendant, where no claim of misjoinder or defect of parties was raised by demurrer and no application to intervene was made by city or such districts, sole question is whether such entities are.indispensable parties in sense that service on them or their appearance is essential to court's jurisdiction to proceed in such actions, for prohibition will not lie unless procedural defect of parties is jurisdictional. Code Civ. Proc. §§ 387, 389, 430,-434; Poi.Code, § 3804 (repealed. See Revenue and TaxatiOn Code, §§ 5096-5102). [2] Statutes ~219(3) 361k219(3) Most Cited Cases (Formerly 361k219) [2] Administrative Law and Procedure ~301 15Ak301 Most Cited Cases While a course of administrative procedure or administrative construction of statute does not acquire legal sanction merely because of long usage, it will be accorded great respect by courts and upheld, if not clearly erroneous. [3] Taxation ~543(5) 371k543(5) Most Cited Cases The statute empowering county treasurer, bY order of board of supervisors, to ~ Copr. © West 2001 No Claim to Orig. U.S. Govt. Works Page 3 112 P.2d 10 (Cite as: 17 Cal.2d 707, 112 P.2d 10) make refunds of erroneously or illegally collected taxes from moneys in his possession, belonging to appropriate funds of political entities for which taxes were levied, authorizes county to appear in and defend suits for tax refunds on behalf of other entities whose taxing functions have been transferred to and consolidated with those of county. Poi.Code, § 3804 (repealed. See Revenue and Taxation Code, §~ 5096-5102); Const. art. 11, § 6. [4] Constitutional Law ~63(3) 92k63(3) Most Cited Cases [4] Taxation ~28 371k28 Most Cited Cases Construction of statute, empowering county treasurer to make refunds of erroneously or illegally collected taxes from moneys in his possession belonging to appropriate funds of political entities for which taxes were levied, as authorizing county to defend suits for such refunds on behalf of other entities whose taxing functions have been consolidated with those of county, does not render it unconstitutional as delegating power to levy taxes or perform municipal functionS. Poi.Code, § 3804 (repealed. See Revenue and Taxation Code, §§ 5096-5102); Const. art. 11, §§ 6, 8, 13. [5] Municipal Corporations ~977 268k977 Most Cited Cases A city, availing itself of constitutional privilege of consolidating its taxing function with county tax system, delegated to county, by virtue of statute, city's right to appear and defend tax refund suits, regardless of whether city as such had power to delegate such right. Poi.Code, § 3804 (repealed. See Revenue and Taxation Code, §§ 5096-5102); const, art. 11, § 6. [6] Municipal Corporations 268k62 Most Cited Cases One governmental agency, such as county, may properly be empowered by statute to perform functions for another such agency, such as city. [7] Municipal Corporations ~977 268k977 Most Cited Cases A city ordinance, requiring that all suits for refund of city t.axes be brought against city and defended by city attorney and revoking prior transfer of city's taxing power or function to county, did not withdraw statutory delegation to county of right to defend suits for refunds with respect to tax collections and tax years prior to effective date of ordinance. Poi.Code, § 3804 (repealed. See Revenue and Taxation Code, §§ 5096-5102). [8] Municipal Corporations ~956(1) Copr. © West 2001 No Claim to Orig. U.S. Govt. Works Page 4 112 P.2d 10 (Cite as: 17 Cal.2d 707, 112 P.2d 10) 268k956(1) Most Cited Cases A transfer to, and assumption by, county of city taxing functions, pursuant to city ordinance and charter provisions authorized by constitution, imports full consolidation of such functions with, and city's acceptance of, statutory scheme setting up and regulating county tax system. Const. art. 11, ~ 6. [9] Municipal Corporations ~m956(t) 268k956(1) Most Cited Cases A city transferring its taxing functions to county by ordinance and charter provisions, as aufhorized by Constitution, should not be permitted to limit county's powers and duties in'relation to taxpayers.by other such provisions. Const. art. 11, § 6.. [10] Municipal Corporations ~971(1) 268k971(1) Most Cited Cases [10] Municipal Corporations ~977 268k977 Most Cited Cases [10] Municipal Corporations ~978(1) 268k978(1) Most Cited Cases A city adopting tax system of county, officers of which assumed city tax functions, must be held to have accepted such system charged with all incidents created by valid~statutory and constitutional provisions applicable to county assessment, collection and refund of taxes, including county's rights to make refunds in proper cases without city's approval and to defend refund suits, pay judgments, and secure reimbursement under statutory recoupment provisions. Poi.Code, § 3804 (repealed. See Revenue and Taxation Code, §§ 5096- 5102); Const. art. 11, § 6. [11] Officers and Public Employees ~30.5 283k30.5 Most Cited Cases (Formerly 283k30) Where a public officer is declared by law to be also, ex officio, incumbent of another public office, the two offices are distinct and separate. [12] Officers and Public Employees ~30.5 283k30.5 Most Cited Cases (Formerly 283k30) The fact that two offices, held by public officer declared by law to be ex officio incumbent of the other office, are separate and distinct, does not bar such officer from acting in dual capacity and representing more than one political entity at same time, as where taxing functions are delegated to county Copr. © West 2001 No Claim to Orig. U.S. Govt. Works Page 5 112 P.2d 10 (Cite as: 17 Cal.2d 707, 112 P.2d 10) officers by city and other political entities. Const. art. 11, § 6. [13] Counties ~m193 104k193 Most Cited cases [13] Counties ~194 104k194 Most Cited Cases [13] Counties ~195 104k195 Most Cited Cases In consolidation of taxing functions of city and other political entities with county tax system, county officers do not lose their identity as such by holding, ex officio, other public offices, but act in dual capacity, and, through them, county becomes bailee or trustee of other entities tax'funds deposited in county treasury. Const. art. 11, § 6. [14] Taxation ~535 371k535 Most Cited Cases [14] Taxation ~543(5) 371k543(5) Most Cited Cases [14] Taxation ~913(1) 371k913(1) Most cited Cases A county, with tax system of which taxing functions of city and other political entities have been consolidated, is empowered by statute, through its board of supervisors and treasurer, to make tax refunds from moneys in his possession belonging to other entities, recoup from such entities, and defend actions for refunds. Poi.Code, § 3804 (repealed. See Revenue and Taxation Code, §§ 5096-5102); Const. art. 11, § 6. [15] Taxation ~543(8) 371k543 (8) Most Cited Cases In actions against county for refunds of taxes collected by it for city and other political entities consolidating their taxing functions with county tax system, statutory provisions ~for·recoupment of moneys rsfunded from such entities merge in and become part of judgments allowing refunds, regardless of whether language of judgments is general in scope or expressly incorporates terms of statute. Poi.Code, § 3804 (repealed. See Revenue and Taxation Code, §§ 5096-5102); Const. art. 11,~ § 6. [16] Taxation ~543(5) 371k543(5) Most Cited Cases The statute, empowering county treasurer, by order of board of supervisors, to Copr. © West 2001 No Claim to Orig. U.S. Govt. Works Page 6 112 P.2d 10 (Cite as: 17 Cal.2d 707, 112 P.2d 10) make refunds of erroneously or illegally collected taxes from any moneys in his possession, belonging to appropriate funds of political entities for which taxes were levied, and recoup from such entities, simply authorizes county, with tax system of which taxing functions of other political entities have been consolidated, to defend tax refund actions, both on its own behalf and as alter ego of entities affected by refunding claims, so that such entities are not "indispensable parties" defendant in such actions. Code Civ. Proc. § 389; Poi.Code, § 3804 (repealed. See Revenue and Taxation Code, §§ 5096- 5102); Const. art. 11, § 6. Taxation ~m543(5) 371k543(5) Most Cited Cases Where action brought by 29 federal savings and loan associations and mutual share companies involved question of law common to all plaintiffs as to validity of assessments under franchise tax, and decision of question of law involved necessarily would determine rights of all plaintiffs, there was not misjoinder of parties plaintiff. Gen. Laws, Act 8488, § 8(j); Code Civ. Proc.§ 378. *'12 *70'9 J. H. O'Connor, Co. Counsel, S. V. O. Prichard, Asst. Co. Counsel, and A. Curtis Smith Deputy Co. CounSel, all of Los Angeles, for petitioner Los Angeles County. Ray L. Chesebro, City Atty., Leon T. David, Asst. City Atty., and Franklin W. Peck, Deputy City Atty., all of Los Angeles, for petitioner City of Los Angeles. Holbrook & Tarr, of Los Angeles, for respondent. CARTER, Justice. By this proceeding in prohibition, petitioners County of Los Angeles and City of Los Angeles seek to restrain respondent Superior Court.from trying 100 or more tax actions wherein the county is named as sole defendant, without first joining as additional parties defendant, the City of Los Angeles, the Los Angeles City School District, Los Angeles City High School District, and Los Angeles City JuniOr College District. ~ ~ The actions were brought under section 3804 of the Political Code by respective claimants numbering upwards of $1,500, to procure the refund of an aggregate amount of approximately'S4,000,000, representing taxes alleged to have been erroneously levied for the fiscal or tax years 1933-1934, 1934-1935, and 1935-1936, as a result of improper budgeting practices on the part of the named entities. Three of the causes, typical of all of them except for variations as to year, rates, figures, and items of tax, were set for trial, and the remaining cases were grouped according to years, and consolidated for trial in such manner that all cases involving taxes for the same fiscal year would be heard together. All of the taxes had been collected by county officers and had long since been paid over to the respective entities entitled to receive the same. Prior to the date set for trial of the first three causes, defendant county moved the court in each of the actions for an order to bring in the City of Los Angeles and other named entities as Parties defendant. The ground of the motions was that a complete determination of the controversy could not be had without the Copr. © West 2001 No Claim to Orig. U.S. Govt. Works Page 7 112 P.2d 10 (Cite as: 17 Cal.2d 707, '710, 112 P.2d 10, *'12) presence of said entities and without -710 prejudice to their rights. On August 4, 1939, each and all of the motions were denied. This proceeding followed. [i] At the outset it may be noted that the problem presented is purely one of compulsory and not of permissive joinder. Sec. 389, Code Civ. Proc. Concededly the absent parties are interested in the issues and subject matter of the actions and might properly have been joined as defendants therein (Brill v. County of Los Angeles, 16 Cal.2d 726, 108 P.2d 443), but no claim of misjoinder or defect of parties was raised by demurrer (sec. 430, 434, Code Civ. Proc.), nor was application to intervene made by any of said entities (sec. 387, Code Civ. Proc.). The sole question, therefore, is *'13 whether those entities are 'indispensable parties' in the sense that service upon them or their appearance is essential to the jurisdiction of the court to proceed in the actions, for unless the procedural defect of parties is jurisdictional, prohibition will not lie. Ambassador Pet. Co. v. Superior Court, 208 Cal. 667, 284 P. 445; Morrow v. Superior Court, 9 Cal.App.2d 16, 26, 48 P.2d 188, 50 P'.2d 66; Bank of California v. Superior Court, Cai.Sup., 106 P.2d 879. Reference may be had to the case last cited for a full discussion of the distinction between proDer Parties, necessary parties, and those persons coming within a special classification of necessary parties, to which the term 'indispensable' is appropriate. Many years prior to the period of this litigation the county officers had been entrusted with the duty of assessing and collecting taxes for the city and other entities. By appropriate ordinance and charter provisions, as sanctioned by section 6 of article XI of the state Constitution, the taxing functions of the city had been transferred to and consolidated with the county system. Brill v. County of Los Angeles, supra. City Ordinance 40302, as amended by ordinance 45027, approved November 14, 1922, among other things provided: 'Any taxes, together with any penalties thereon heretofore or hereafter paid for the use of or on behalf of the City of Los Angeles may be refunded by the County Auditor in all cases where a refund of county taxes and penalties thereon is provided for under the provisions of Part III, Title IX of the Political Code of the State of California.' · 711 Part III, title' IX of the Political Code contained section 3804 (now sec. 5096 et seq., Revenue and Taxation Code, St.1939, p. i370 et s~q.) purSuant to which the tax actions here involved were instituted. That statute empowered the county treasurer, by order of the board of supervisors, to make refunds of erroneously or illegally collected taxes from any moneys in his possession belonging to appropriate funds of the entities on whose behalf the taxes had been levied. A similar and concurrent remedy was afforded by section 3819, also found in part III, title IX of the Political Code. Section 3819 expresslY names the county as the party against whom the refund action should bebrought, and the implication of section 3804 was to the same effect. Although section 3819 was amended in 1937 (Stats.1937, chap. 185, p. 480; see, also, sec. 5138, Revenue and Taxation Code, St.1939, p. 1372) to require the joinder of other entities as parties to the refund suit, during the period here involved neither statute provided for such joinder, and concededly there was no other statute expressly authorizing the maintenance of a suit for refund directly against said entities. For a period of over twenty years it had been an accepted administrative procedure for the county, without reference to or joinder of the other entities Copr. © West 2001 No Claim to Orig. U.S. Govt. Works Page 8 112 P.2d 10 (Cite as: 17 Cal.2d 707, '711, 112 P.2d 10, *'13) concerned, to prosecute suits for the recovery of taxes levied on behalf of said entities, and also to make refunds of taxes illegally exacted by them, to defend suits for refund, pay judgments, and offset such payments against moneys due the entities from appropriate funds in the possession of the county treasurer. As early as 1893, a suit for the recovery of state and county taxes was brought under section 3804, as it then read, against the county as sold defendant. .This court, noting that there was no allegation in the complaint that the state had received any portion of the tax, declined to uphold the contention, raised by demurrer, that the state was a necessary party. Hayes v. Los Angeles County, 99 Cal. 74, 33 P. 766. Illustrative of a .suit under special statute brought by the county as sole party plaintiff to recover unsecured personal property taxes levied on its own behalf and that of the city and school districts, is County of Los Angeles v. Los Angeles Junk Co., 8 Cal.App.2d 136, 47. P.2d 309. In County of San Diego v. Croghan, 2 Cal.App.2d 494, 38 P.2d 474, where taxes collected for several entities by county officials had been embezzled by a county officer, it was held that the county, '712 without joining the other entities concerned, might .properly sue the defaulting officer and his bondsman. Apparently no difficulty was experienced in bringing these past controversies to a complete determination with the county as sole party plaintiff Or defendant. So far as refunds are concerned, if the absent entities suffered prejudice by this long established procedure, they were strangely lax in pressing the point. [2] [3] [4] While a course of administrative procedure, or an administrative construction of a statute, does not acquire legal sanction merely by reason of long usage, it will be accorded great respect by the courts, and will be upheld, if not clearly erroneous. Bodinson Mfg. Co. v. California E. Comm., 17 Cal.2d 321, 109 P.2d 935; Carter v. Comm. on Qualifications etc., *'14 14 Cal.2d 179, 185, 93 P2d 140, and cases cited. Here the administrative conception of section 3804 as contemplating a defense by the county of actions for tax refunds is clearly correct. While, as above noted, the statute does not expressly designate who shall be the party or parties defendant to such an action, its provisions as a whole, setting up a complete system for the handling and payment of refunds by county officers, and for recoupment from appropriate funds of other entities, admit of no other construction than that the county is thereby authorized to appear and defend suits for refund on behalf of those other entities whose taxing functions have been transferred to and consolidated with those of the'county, and whose adoption of the county system has included the assessment and collection of taxes and the refund procedure. There is nothing in this construction of the statute which renders it unconstitutional under section 13 of article XI of the Constitution of this state particularly when that section is read in the light of sections 6 and 8 of the same article. [5][6] The city argues that even if it be conceded that in adopting the county tax system, it also adopted the county refund procedure, it did not and constitutionally could not have delegated to the county its right to appear and defend itself against suit. The answer to this argument is that regardless of whether the city, as a city, would have had power to'delegate its right, the delegation was in fact made, either directly or impliedly, by virtue of the terms of the statute, at the time the city availed itself of the privilege of consolidating its '713 taxing'function with the county system. One governmental Copr. © West 2001 No Claim to Orig. U.S. Govt. Works Page 9 112 P.2d 10 (Cite as: 17 Cal.2d 707, '713, 112 P.2d 10, *'14) agency may properly be so empowered to perform functions for another. Such a joint exercise of powers was upheld in the late case of City of Oakland v. Williams, 15 Cal.2d 542, 103 P.2d 168. [7] But, even so, the city contends, the scope of the delegation is defined by pertinent ordinance and charter provisions and it cannot exceed the limits thus. specified. Therefore, citing section 342 of the charter, which in part declares, 'Until otherwise provided by ordinance, the city shall continue to use' the county system, the city points out that on December 5, 1936, there became effective Ordinance 77,155, which expressly provided that all suits for the refund of city taxes should be 'brought against the city' and 'be defended by the city attorney', and that the prior transfer, if any, to the county of any such power or function was revoked. Even if it be conceded, says the city, that in 1925, when the charter was adopted, charter sections 342 and 2(ll)t adopted Political Code section 3804 in its entirety, and ordinances passed pursuant thereto effected a complete transfer of the taxing function, then by the same token and under the same charter sections, the scope of the transfer was limited and the delegation previously made, if any, of the right to appear and defend refund suits was withdrawn by the enactment of ordinance 77,155. It will be noted that the ordinance took effect subsequent to the tax collections and tax years'here involved, without retroactive operation which would affect the status of the parties to the tax actions here in question. Moreover, it is extremely doubtful that the remedy afforded by section 3804 can validly be curtailed by city ordinance. [8] [9] [10] No authority is cited which would sanction a partial.consolidation and partial acceptance by the city of the county taxing system, permitting the city to avail itself of all advantages of the. transfer and at the same time, if it so elects, to reject all disadvantages and relieve itself of all burdens not to its liking. The transfer to and assumption by the county of the city taxing functions imports a full consolidation and an acceptance by the city of the statutory scheme setting up and regulating the county system. Any other method would hamper'the county officers in their execution of city functions. It would also lead to confusion and injustice in dealings with taxpayers, who are confronted with a '714 combined tax roll calling for payment of a single sum covering both county, city and school district taxes, without any inkling of varying rights and regulations of the several entities concerned. The city therefore should not be permitted, by charter and ordinance provisions, to limit the powers and duties of the county in relation to ~taxpayers. When the city adopted the county system, and the county officers assumed the city functions, the city must be held to have necessarily accepted the county system, charged with all the incidents thereof .created by valid statutory and constitutional provisions applicable to county assessment, collection, and refund of taxes, including the right on the part of the county to make refunds in proper cases without approval of the city and to defend refund suits, pay *'15 judgments, and secure reimbursement under the recoupment provisions inqorporated in section 3804. [11][12] The contention is made by petitioners, and argued under five or more subdivisions of their joint brief, that the county is without interest in the litigation because the only delegation of functions authorized by the Copr. © West 2001 No Claim to Orig. U.S. Govt. Works Page 10 112 P.2d 10 (Cite as: 17 Cal.2d 707, '714, 112 P.2d 10, *'15) constitutional, statutory, charter, and ordinance provisions, is a delegation to 'county officers', as distinguished from the 'county' as an entity. For example, article XI, section 6 of the Constitution authorizes the performance by 'county officers' of transferred municipal functions, and section 3804 provides for refunds and recoupment by the county treasurer on order of the board of supervisors. In executing the delegated functions, it is said, the County officers do not represent the county, but act solely as ex officio officers of the city or other entity which has made the transfer, and they are subject to its charter, ordinance, and regulatory enactments. Therefore, according to petitioners, the county is not a necessary party defendant to a refund suit; neither are the collecting officers who have paid over the tax funds to the entity on whose behalf they were collected, i. e., county officers acting as ex officio officers'of the city or other entity (Sheehan v. Board of Police Com'rs, 188 Cal. 525, 206 P. 70; Hartford Fire Ins. Co. v. Jordan, 168 Cal. 270, 142 P. 839; Craig v. Boone, 146 Cal. 718, 81 P. 22; Spencer v~ City of Los Angeles, 180 Cal. 103, 179 P. 163; Elberg v. San Luis Obisp, 112 Cal. 316, 41 P. 475, 44 P. 572; Pacific, etc., Co. v. County of San Diego, 112 Cal. 314, 41 P. 423, '715 44 P. 571; Madary v. City of Fresno, 20 Cal.App. 91, 128 P. 340); but the only proper and indispensable parties are the taxing entities. True it has been held that where a public officer is declared by law by virtue of his office to be also, ex officio, the incumbent of another public office, the two offices are distinct and separate (Union Bank & Trust Co. v. Los Angeles County, 2 Cal.App.2d 600, 38 P.2d 442), and it was declared in the early case of Madary v. City of Fresno, supra [20 Cal.App. 91, 128 P.. 342], that in discharging taxing functions for other entities, county officers !become or are ex officiis officers' of the respective entities. The fact, however, that the offices so held are separate and distinct does not bar the officers from acting in a dual capacity, and, if such is the case, from representing more than the One entity at the same time. That such a dual representation occurs where taxing functions are delegated to county officers was brought out clearly in the cases of Pomona City School Dist. v. Payne, 9 Cal.App.2d 510, 50 P.2d 822, and City of Fullerton v. County of Orange, 140 Cal.App. 464, 35 P.2d 397,' 400. In the latter case the city sued the county for the recovery of certain funds representing tax penalties and interest collected by county officers exercising delegated city taxing functions, which funds had been diverted by the officers to the county treasury, without remittance to the city. In discussing the status of the officers and the funds, and the applicability of the statute of limitations, the court said: 'In some states the duty of collecting taxes for municipalities of certain classes is performed by county officers. When the county officers act in this capacity for~a city they are ex officiis officers of that city. Madary v. City of Fresno, 20 Cal.App. 91, 128 P. 340.' They become, by law, the agents of the city to collect the taxes for the city. They do not lose their identity as county officers. Although they act for the city, they are county officers, performing a county function imposed upon them by law. The trial court in the case of City of Centerville v. Turner County, 23.S.D. 424, 122 N.W. 350, 351, found, upon facts quite similar to the instant case, that the defendant county 'is made by law the agent of the plaintiff to collect, and enforce the collection of, the said taxes, and the relationship existing between the plaintiff and '716 Copr. © West 2001 No Claim to Orig. U.S. Govt. Works Page 11 112 P. 2d 10 (Cite as: 17 Cal.2d 707, '716, 119. P.9.d 10, *'15) defendant is a fiduciary one, and the said taxes when so collected by the county became, and is, a trust fund in the possession of the said county acting as a trustee of an express trust. ' * * * The primary object of the statute, which authorized the defendant county to collect the taxes for the city of Fullerton and other cities, is to provide a means whereby the work and expense of collecting taxes by city officers may be eliminated. Moore v. City of San Diego, 90 Cal.App. 242, 265 P. 864.~ The work done by the county officers is paid for by the city, not to the officers performing the services, but to the county itself. The county officers, when performing under the provisions of the statute are, as we have indicated, performing a county function for which the county' receives payment from the city. The relationship existing between the county and city is an implied or constructive *'16 trust, an involuntary trust arising by operation of law, and the county is entitled to claim the benefit of the statute of limitations.' In Pomona City School Dist. v. Payne, supra, plaintiff school district sought a writ of mandate commanding the Los Angeles county auditor and treasurer to allow it credit for bank interest earned by district funds in the 'custody of the county treasury. Directing entry of a judgment for plaintiff, the court said [9 Cal.'App.2d 510, 50 P.2d 824]: 'Defendants emphasize the language of the statute that the interest earned shall belong to and shall be paid into the fund of the public body 'represented by the officer making such deposit. ' The money is deposited by the county treasurer. It is pointed out, therefore, that the interest belongs to the county, being the public body 'represented by' the county treasurer who made the deposit. This is too narrow a construction of the words 'represented by.' Certainly the county treasurer, as custodian of school funds, 'represents, ' i. e., 'exercises power derived from another' (Davis v. Davis, 26 Cal. 23, 85 Am. Dec. 157), the school district whose funds are in his care, and acts as its agent, and is ex officio treasurer for the school district. * * * The reasonable and equitable rule is that the county is simply ~he agent of the school district, the bailee or trustee of the funds deposited in its care, and as such bailee and trustee it cannot allocate to itself, nor enrich its own coffers with, the interest increments upon the money placed in_its custody, by its bailor and trustor. ' [13] [14] '717 The above authorities not only answer completely petitioners' contention that when county officers take on the role of ex officio officers of another entity, they shed their status as representatives of the county, but also petitioners' further contention that under section 3804 no recoupment is provided to the 'county' as such, and the funds of the entities are never actually in possession of the 'county', but only of the 'county officers' In the consolidation of taxing functions, the county officers do not lose their identity as such by holding, ex officio, the other public offices thrust upon them, but they act in a dual capacity, and through them the county becomes the bailee or trustee of tax funds of other entities deposited in its treasury. By the same token the county, through its said officers, is empowered by section 3804 to make refunds, to receive the benefit of the recoupment provisions, and to defend actions for refund. The cases of Pacific Mutual, etc., v. County of 'San Diego, 1896, and Elberg v. Copr. © West 2001 No 'Claim to Orig. U.S. Govt. Works Page 12 112 P. 2d 10 (Cite as: 17 Cal.2d 707, '717, 112 P.2d 10, *'16) County of San Luis Obispo, supra, strongly relied upon by petitioners, are not controlling. Those actions for refund were brought pursuant to section 3819, which at the time provided no method by which the county could secure reimbursement for repayments made to taxpayers. Therefore it was held that in such situation it would be manifestly unjust to allow a recovery against the county, and the county was not a proper party defendant. Madary v. City of Fresno, supra, 1912, also cited by petitioners, is not in point. That was a suit for refund brought against the city, not an action under section 3804, supra. The question of whether the plaintiff might have had a right of action against the county or joined the county as a party defendant was not determined. [15] [16] For purposes of this proceeding, it~is only necessary to determine whether a cause of action lies against the county which may be fully determined without the presence of or prejudice to the rights of other entities concerned. Questions respecting the extent of the county's liability, if any, or the claimants' right to proceed directly against the entities,, or the latters' right to intervene, are not involved. But nevertheless it may be noted that were it not for the relief sanctioned by section 3804, no suit for refund could be maintained against the county as a collecting agent or representative of the entities, unless such suit were commenced before '718 the remittance to the respective entities of the moneys collected for them, for obviously the county could not be required to pay refunds for the entities out of its own funds. Spencer v. City of Los Angeles, supra, 180 Cal. at page 117, 179 P. 163; Craig v. Boone, supra. It would appear, therefore, that in an action against the county under section 3804, the recoupment provisions merge in and become-part of any judgment allowing a refund, regardless of whether the language of the judgment is general in scope or expressly incorporates the terms of the statute. In short, the effect of the statute is simply to authorize the county, where there has been a 'consolidation of taxing functions, to defend actions for refund both on its own behalf and as the alter ego of the en~ities affected by the refunding claim. So far as the county is concerned *~17 such a controversy may be completely determined without the presence of other entities or prejudice to their rights. The alternative writ is discharged, and a peremptory writ is-denied. We concur: SHENK, J.; CURTIS,' J.; THOMPSON, Justice pro tern.; TUTTLE, Justice pro tern. END OF DOCUMENT Copr. © West 2001 No Claim to Orig. U.S. Govt. Works · ~ Page 2 Citation KeyCite Citing Rank 1 of 1 Database 191 B.R. 1005 FBKR-CS 35 Collier Bankr. Cas.2d '593 (Cite as: 191 B.R. 1005) United States Bankruptcy Court, C.D. California. In re COUNTY OF ORANGE, a political subdivision of the State of California, Debtor. COUNTY OF ORANGE, a political subdivision of the State'of California, and John M.W. Moorlach, in his official capacity as Treasurer-Tax Collector of the County of Orange, Plaintiffs, v. MERRILL LYNCH & CO., INC., a Delaware corporation; Merrill Lynch., Pierce, Fenner & Smith, Inc., a Delaware corporation; Merrill Lynch Government Securities, Inc., a Delaware corporation; Merrill. Lynch Capital Services, Inc., a Delaware corporation; Merrill Lynch Money Markets, Inc., a Delaware Corporation, Defendants. Bankruptcy No. SA 94-22272 JR. Adv. No. SA 95-1045 JR. Jan. 24, 1996. Debtor county and its treasurer-tax collector filed complaint against investment company, alleging that investment company had asserted informal proof of claim against county by refusing to return marketable securities belonging to county, and that county was entitled to proceeds from liquidated securities and other damages. Investment company moved to dismiss for failure to state claims upon which relief could be granted. The Bankruptcy Court, John E. Ryan, J., held that: (1) county was express or implied trustee of funds deposited by public entities into county treasury; (2) for purposes of motion to dismiss, at time of bankruptcy filing, securities in investment company's possession were county property, given county's status as trustee; (3) state statute dictating priority of distribution of property held in trust by county conflicted with, and thus was preempted by, federal bankruptcy-Law; (4) -Chapter 9 provisions did-not preclude preemption of state statute; (5) county's allegations established assertion of informal proofs of claim by investment company against county, so as to permit county to challenge claims; and (6) county was not judicially estopped from asserting its claims and counterclaims against investment company. Motion to dismiss claims and counterclaims denied. West Headnotes [1] Bankruptcy ~=m2163 51k2163 Most Cited Cases [1] Federal Civil Procedure ~m1829 170Ak1829 Most Cited Cases All allegations of fact in complaint are assumed to be true and are considered in Copr. © West 2001 No Claim to Orig. U.S. Govt. Works Page .3 191 B.R. 1005 (Cite as: 191 B.R. 1005) light most favorable to plaintiff. Fed. Rules Civ. Proc.Rule 12(b) (6), 28 U.S.C.A .; Fed. Rules Bankr. Proc.Rule 7012, 11 U.S.C.A. [2] Bankruptcy ~:m2162 51k2162 Most Cited Cases · [2] Federal Civil Procedure ~1772 170Ak1772 Most Cited Cases Motion to dismiss for failure t© State a claim is viewed with disfavor and is rarely granted. Fed. Rules Civ. Proc. Rule 12(b) (6), 28 U.S.C.A.; Fed. Rules Bankr. Proc. Rule 7012, 11 U.S.C.A. [3] Bankruptcy ~z~2162 51k2162 Most Cited Cases [3] Federal Civil Procedure ~1772 170Ak1772 Most Cited Cases Party moving to dismiss complaint for failure to state a claim can prevail only if it appears beyond all doubt that plaintiffs can prove no set of facts in support of their claims that would entitle plaintiffs to relief. Fed. Rules Bankr. Proc. Rule 7012, 11 U.S.C.A. [4] Bankruptcy ~2162 51k2162 Most Cited Cases [4] Federal Civil Procedure ~:m1829 170Ak1829 Most Cited Cases 'Any reasonable inferences based on allegations in complaint must be. construed in 'light most favorable to plaintiff in ruling on motion to dismiss complaint for failure to state a claim. Fed. Rules Civ. Proc.Rule 12(b) (6)~, 28 U.S.C.A.; Fed. Rules'Bankr. Proc.Rule 7012, 11 U.S.C.A. [5] Bankruptcy ~m2162 51k2162 Most Cited Cases County debtor claiming property interest in securities being held by investment company at time bankruptcy petition was filed, on ground that securities were purchased with funds from commingled county accounts, including investment pool funds for which county was trustee, and that trust funds used to acquire securities were not traceable, stated cause of action against investment company based on company's failure to return securities or proceeds of securities. Fed. Rules Civ. Proc.Rule 12(b) (6), 28 U.S.C.A.; Fed. Rules Bankr. Proc.Rule 7012, 11 U.S.C.A. [6] Bankruptcy ~z~2543 Copr. © West 2001 No Claim to Orig. U.S. Govt. Works Page 4 191 B.R. 1005 (Cite as: 191 B.R. 1005) 51k2543 Most Cited Cases [6] Bankruptcy ~2547 51k2547 Most Cited Cases State law determines whether trust exists in federal bankruptcy proceedings. [7] Trusts ~30.5(1) 390k30.5(1) Most Cited Cases Trust was created under state law when public entities ~eposited their funds into county treasury pursuant to statute stating that such funds would be deemed to be held in truest by county treasurer on behalf of depositors. West's Ann.Cal.Gov. Code§ 27100.1. [8] Counties ~161 i04k161 Most Cited Cases Under state law, county was express or implied trustee of trust created when public entities deposited funds into county treasury, even though statute indicated that such funds were held in trust by county treasurer; county treasurer represented county in carrying out trust obligations imposed by statute, and retained status as county officer while performing trust duties on behalf of public agencies that deposited funds with him. West's Ann. Cal.Gov. Code §§ 27100.1, 53684. [9] Bankruptcy ~2534 51k2534 Most Cited Cases Federal bankruptcy law governed determination of county debtor's property interests in securities, and any proceeds from sale of such securities, that were allegedly purchased with funds from commingled county accounts, including an investment pool for which county was trustee, and being held by investment company as collateral when county filed bankruptcy petition; federal law Dreempted state statute setting priority for noncounty participants in investment pool. West's Ann. Cal.Gov. Code§ 27100.1. [10] Bankruptcy ~2543 51k2543 Most Cited Cases Under federal bankruptcy law, creditor beneficiary of insolvent trustee debtor must be able to trace its funds; otherwise, funds become property of debtor. [11] Bankruptcy ~2543 51k2543 Most Cited Cases When trustee debtor is insolvent and trust beneficiaries cannot trace their funds, beneficiaries must stand in position of general creditors. Copr. © West 2001 No Claim to Orig. U.S. Govt. Works Page 5 191 B.R. 1005 (Cite as: 191 B.R. 1005) [12] Bankruptcy ~m2543 51k2543 Most Cited Cases Requirement that beneficiary of insolvent trustee debtor must be able to trace its funds to claim any property of debtor applies to insolvent debtor trustees of both express and implied trusts. [13] Bankruptcy ~m2543 51k2543 Most Cited Cases To extent that state statute was intended to eliminate requirement that beneficiary of insolvent trustee debtor must be able to trace its funds to claim any property of debtor in providing that ~unds held in trust by county treasurer on behalf of depositing governmental entities or public officials did not become funds or assets of county and that no debtor-creditor ~elationship was created between depositor and county, it created special class of creditors in conflict with federal bankruptcy law's priority scheme and was preempted by federal law. West's Ann. Cal.Gov. Code§ 27100.1. [14] Bankruptcy ~m2002 51k2002 Most Cited Cases When state law conflicts with federal bankruptcy law, state law is preempted. [15] Bankruptcy ~2543 51k2543 Most Cited Cases [15] Bankruptcy ~2547 51k2547 Most Cited Cases State trust law must be applied in manner consistent with federal bankruptcy policy. U.S.C.A. Const. Art. 1, § 8, cl. 4; Art. 6, § 1 et seq. [16] Bankruptcy ~2951 51k2951 Most Cited Cases State legislature cannot rewrite bankruptcy priorities. [17] Bankruptcy ~3481 51k3481 Most Cited Cases Provision indicating that Chapter 9 does not limit or impair power of state to control municipality in exercise of its Political or governmental powers did not preclude preemption of state statute purporting to establish as special class of creditors governmental entities and public officials who deposited funds with county treasurer; statute's preemption did not affect county's operations or ability to provide services. Bankr.Code, 11 U.S.C.A. § 903; West's Ann.Cal.Gov. Code§ 27100.1. Copr. © West 2001 No Claim to Orig. U.S. Govt. Works Page 6 191 B.R. 1005 (Cite as: 191 B.R. 1005) [18] BankruPtcy ~3481 51k3481 Most Cited Cases Congress did not leave to states .determination of what constituted property of debtor municipalities by excluding from Chapter 9 provision defining property of estate, and thus preemption of state statute that conflicted with federal bankruptcy priority provisions was not precluded by exclusion; provisions applicable to Chapter 9 proceedingS that invalidate state property rights, such as certain statutory liens created by state law and consensual security interests with respect to property received postpetition demonstrated that Congress did not intend to grant states complete freedom to define property interests of debtor municipalities. Bankr. Code, 11 U.S.C.A. §§ 541, 545, 552, 901 et seq.; West's Ann. Cal.Gov. Code§ 27100.1. [19] Bankruptcy ~3481 51k3481 Most Cited Cases Chapter 9 dictates priorities among creditors, and therefore state statute setting priority determination for beneficiaries of trust over which municipal debtor was trustee could be preempted by federal bankruptcy law, even though portions of Bankruptcy Code's general priorities provision were not incorporated into chapter. Bankr.Code, 11 U.S.C.A. §§ 507(a), 901 et seq.; West's Ann. Cal.Gov. Code§ 27100.1. [20] Bankruptcy ~:~3481 51k3481 Most Cited Cases Bankruptcy court cannot interfere with debtor municipality's ability to continue its operations or dictate what type of services or level of services debtor municipality may provide. Bankr. Code, 11 U.S.C.A. § 903. [21] Bankruptcy ~:~2580.1 51k2580.1 Most Cited Cases State statutory liens are property rights. Bankr. Code, 11 U.S.C.A. § 545. [22] Bankruptcy ~2572 51k2572 Most Cited Cases Security interests are property rights that are usually defined by state law. Bankr.Code, 11 U.S.C.A. § 552(b) (2). [23] Bankruptcy ~z:2951 51k2951 Most Cited Cases Uniform bankruptcy code necessitates that federal law control creditor priorities. Copr. © West 2001 No Claim to Orig. U.S. Govt. Works Page 7 191 B.R. 1005 (Cite as: 191 B.R. 1005) [24] Bankruptcy ~3481 51k3481 Most Cited Cases States voluntarily agree to permit their counties to file bankruptcy under chapter governing municipalities. Bankr. Code, 11 U.S.C.A. §§ 109(c) (2), 901 et seq. [25] Bankruptcy ~2965 51k2965 Most Cited Cases Conflict mandating preemption existed between federal bankruptcy code provision requiring that administrative expenses be paid above all other creditors and state statute that eliminated requirement under which beneficiary of insolvent trustee debtor must be able to trace its funds to claim any property of debtor, inasmuch as beneficiaries of insolvent trustee debtor-could potentially claim, under statute, all funds of such a debtor that commingled his trust assets~and estate assets. Bankr.Code, 11 U.S.C.A. § 507(a) (1); West's Ann. Cal.Gov. Code§ 27100.1. [26] Bankruptcy ~=m2902 51k2902 Most Cited Cases Debtor county's allegations that investment company, which'held securities in which debtor county claimed an interest, sent letter to debtor county, asserting that debtor county owed various debts to company and that company intended to obtain satisfaction of such debts from proceeds of disputed securities, showed investment company asserted informal proof of claim against debtor county so as to allow debtor county to challenge claim. [27] Bankruptcy ~2902 51k2902 Most Cited Cases Allegations that investment company undertook self-help actions-of seizing liquidation proceeds from sale of securities in which debtor county claimed an interest established assertion of informal proof of claim against debtor county so as to permit debtor county'to challenge claim. [28] Bankruptcy ~=~2535(3) 51k2535(3) Most Cited Cases Debtor county was not judicially estopped from asserting ownership of securities or proceeds of securities held by investment company by denial of ownership in prior litigation, inasmuch as county's oWnership capacities regarding securities at issue were different in prior litigation, and thus county did not take contrary position in arguing that it owned securities in present litigation. [293 Estoppel ~=m68(2) 156k68(2) Most Cited Cases Copr. © West 2001 No Claim to Orig. U.S. Govt. Works Page 8 191 B.R. 1005 (Cite as: 191 B.R. 1005) Doctrine of "judicial estoppel" is invoked to preclude party from abusing judicial process by taking inconsistent positions in same litigation. [30] Estoppel ~52(1) 156k52(1) Most Cited Cases Court invokes judicial estoppel at its discretion. '1008 Bruc'e Bennett and Michael Hennigan of Hennigan, Mercer & Bennett, Los Angeles, CA, for Orange County. Ronald L. Olson and Dennis C. Brown of Munger, Tolles& Olson, Los Angeles, CA, for Merrill Lynch.~ MEMORANDUM OPINION JOHN E. RYAN, Bankruptcy Judge. On November 13, 1995, Merrill Lynch & Co., Inc., Merrill Lynch, Pierce, Fenner & Smith, Inc., Merrill Lynch Government Securities, Inc., Merrill Lynch Capital Services, Inc., and Merrill Lynch Money Markets, Inc. (collectively "Merrill Lynch") filed a motion to dismiss (the "Motion") the second amended complaint (the "Complaint") filed by the County of Orange (the "County") and John M.W. Moorlach ("Moorlach"). On November 20, 1995, the County and Moorlach ("Plaintiffs") filed their opposition to the Motion. On December 1, 1995, after extensive argument on the Motion, I issued an oral decision to the parties denying the Motion and indicated that a written opinion would follow. JURISDICTION This court has jurisdiction over this case pursuant to 28 U.S.C. § 1334(a) (West 1995) (the district courts shall have original and exclusive jurisdiction of all cases under Title 11), 28 U.S.C. § 157(a) (West 1995) (authorizing the district courts to.refer all Title 11 Cases and proceedings to the bankruptcy '1009 judges for the Central District of California), and General Order No. 266, dated October 9, 1984 (referring all Title 11 cases and proceedings to the bankruptcy judges -~for the Central District of California). This matter is a core proceeding pursuant to 28 U.S.C. §§ 157(b) (2) (A), (B), (C), (E), (K) & (0) (West 1995). STATEMENT OF FACTS On December 6, 1994, the County filed its chapter 9 bankruptcy.petition. On October 25, 1995, the County and Moorlach, acting in his official capacity as Treasurer-Tax Collector of the County, filed the'Complaint against Merrill Lynch claiming, in part, that by refusing to return approximately $1.6 billion of marketable securities that belonged to the County, Merrill Lynch asserted an informal proof of claim against the County and the County is entitled to the proceeds from these liquidated securities as well as interest and any other consequential damages that resulted from Merrill Lynch's conduct. On November 13, 1995, Merrill Lynch filed the Motion arguing that the Complaint should be dismissed for failure to state claims upon which relief can be granted. Merrill Lynch contends that the securities were not property of the County and it did not assert an informal proof of claim against the County or any of the County's property. Copr. © West 2001 No Claim to Orig. U.S. Govt. Works Page 9 191 B.R. 1005 (Cite as: 191 B.R. 1005, '1009) On December 1, 1995, I held a hearing and issued an oral decision denying the Motion, indicating that I would issue a written opinion setting forth my reasoning. PROPER LEGAL STANDARD [1][2] All allegations of fact in the Complaint are assumed to be true and are considered in a light most favorable to Plaintiffs. Fresher v. Shell Oil Co., 846 F.2d 45, 46 (9th Cir.1988); Western Reserve Oil and Gas Co. v. New, 765 F.2d 1428, 1430 (9th Cir.1985), cert. denied, 474 U.S. 1056, 106 S.Ct. 795, 88 L.Ed.2d 773 (1986); Love v. United States, 915 F.2d 1242, 1245 (9th Cir.1989); Gibson v. United States, 781 F.2d 1334, 1337 (9th Cir.1986); Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957). "It is axiomatic that ' [t]he motion to dismiss for failure to state a claim is viewed with disfavor and is rarely granted.' " Hall v. City of Santa Barbara, 833 F..2d 1270, 1274 (9th Cir.1986) (quoting 5 Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1357, at 598 (1969)). [3] .Merrill Lynch can only prevail on the Motion if it appears beyond all doubt that Plaintiffs can prove no set of facts in support of their claims that would entitle the County to relief. Arcade Water Dist. v. United States, 940 F.2d 1265, 1267 (9th Cir.1991); Gibson, 781 F.2d at 1337 (quoting Conley, 355 U~S. at 45, 78 S.Ct. at 101-02). DISCUSSION I. Alleged Facts in the Complaint That Must be Treated as True for the Purposes of Merrill Lynch's Motion to Dismiss. Before analyzing the merits of the Motion, it is important to understand the complex facts asserted in the Complaint that must be treated as true for the purposes of the Motion. Western Reserve Oil, 765 F.2d 'at 1430. In the Complaint, Plaintiffs allege that commencing on July 1, 1991 and continuing through at least December 6, 1994 (the "Time Period"), former County Treasurer Robert Citron ("Citron") entered into hundreds of reverse repurchase agreements ("Repos") with Merrill Lynch [FN1] pursuant to the "Master Repurchase Agreements" (the "MRAs"). Second Am. Compl. ~ 18. FN1. Because in the ComDlaint Plaintiffs define "Merrill Lynch" as-all named defendants, at times, it is unclear whether Plaintiffs are referring to all the named defendants as to each and every allegation. However, Plaintiffs do assert that each named.defendant either sold securities to the County or illegally extended Credit to the County to enable the purchase of securities. Second Am. Compl. ~ 6-10. Plaintiffs also allege that "[a]t all times, each defendant was acting as agent of each of the remaining co- defendants; each defendant acted within the course, scope and authority of that relationship; and, as a result, the defendants are jointly and severally liable for all acts [stated in the Complaint]." Id. ~ 11. Plaintiffs contend that under the terms of the Repos, "the County agreed to transfer possession of securities to Merrill Lynch,~ in *1010 exchange for cash, and simultaneously obligated itself to later repay [sic] the cash plus interest -in exchange for a return of possession of the identical securities." Id. Plaintiffs assert that both the County and Merrill Lynch recognized and treated Copr. © West 200i No Claim to Orig. U.S. Govt. Works Page 10 191 B.R. 1005 (Cite as: 191 B.R. 1005, *1010) the Repos as full-recourse, secured loans that obligated the County. Id. ~ 19, 22, 26 & Ex. 23 at 175. Under the MRAs, Plaintiffs allege that "Merrill LYnch was not authorized to sell the securities held in its possession, and was obligated to return to the County possession of the same securities that the County had transferred to Merrill Lynch." Id. ~ 21 (emphasis in original). Additionally, the County entered into agreements with Merrill Lynch under a Securities Loan Agreement (the "SLA") which was executed on May 10, 1993. Id. ~ 24. Plaintiffs contend that all agreements drafted pursuant to the SLA were virtually identical to the Repos entered into pursuant to the MRAs. Id. [FN2] FN2. Hereinafter, references to the "Repos" means those agreements entered into between the County and Merrill Lynch pursuant to the MRAs and/or the SLA. See id. ~ 24. During the Time Period, Plaintiffs allege that on a daily basis, the County and other entities (including but not limited to broker dealers, the United States government, the state of California, California governmental agencies, and various local governmental entities located within and outside t~e County) placed funds into the County's bank accounts. The vast majority of these funds were deposited, wired, or otherwise transferred into the County's two primary bank accounts. These two accounts were the Concentration Account and the Custodial Account (the "Accounts"). Id. ~ 28. Plaintiffs characterize all the funds received by the County into the following four categories: "County Moneys," "Non- County Deposited.Moneys," "Non-County Invested Moneys," and "Other Moneys." Id. ~ 29-33. Plaintiffs allege that all the securities in the Custodial Account were identified as propertY of the County. Id. ~ 47. Plaintiffs state that the County regularly deposited County funds and funds that were held in trust in'to the Accounts. On a daily basis, funds were transferred between the Accounts. Id. ~ 28 & 34. Plaintiffs assert that as a result of this massive commingling, the Accounts represented an undifferentiable mass of funds at all times. Accordingly, tracing of individual funds was impossible. Id. ~ 28, 36 & 37. Plaintiffs contend that Merrill. Lynch was aware of this commingling. Id. ~ 38 & 43. Fundsin the Custodial Account were used for many purposes, including payments on the Repos and the purchasing of additional securities. Id. ~ 45 & 46. Plaintiffs allege that nearly all the securities acquired by the County were held in the Custodial Account until the securities were "sold, matured, and/or purportedly transferred to a broker-dealer under a reverse repurchase agreement," id. ~ 47, and that all, or nearly all, of the securities acquired by the County were acquired by the withdrawal of funds from the Custodial Account. Id. ~ 50. Plaintiffs state that as a result of the massive commingling and inability of any entity to trace its funds in the Accounts, it is impossible to establish that any securities are legally or equitably the property of any entity other than the County or that any alleged trust funds were used for any particular purpose. Id. ~ 49-53. AdditiOnally, Plaintiffs assert that tracing specific trust funds to any particular securities is impossible because daily investment decisions by the County were generally made on the basis of the commingled mass of funds available Copr. © West 2001 No Claim to Orig. U.S. Govt. Works Page 11 191 B.R. 1005 (Cite as: '191 B.R. 1005, '1010) in the Accounts. Id. ~ 52. As a result of this massive commingling and inability to trace the various funds (trust funds and nontrust funds, County funds and non-CoUnty funds) that were placed in the Accounts, the County contends that all the securities purchased from the commingled funds in the Accounts became the property of the County when it filed its chapter 9 petition. Id. ~ 53. Plaintiffs argue that Merrill Lynch permitted, encouraged, and advised Citron to pursue an unlawful, speculative scheme that included the borrowing, primarily through short-term Repos, of billions of dollars and *1011 the transfer of billions of dollars of securities owned by the County to Merrill Lynch. As a result of this investment strategy, the County suffered catastrophic losses in 1994. Id. ~ 74-77, 83-88. See also id. ~ 89- 98, 103-26. Plaintiffs state that by June 30, 1991, Citron had obligated the County to repay approximately $1.8 billion pursuant to the Repos. Additionally, by June 30, 1992, Citron had obligated the County to repay approximately $4 billion. By June 30, 1993, this amount was $7.6 billion. Id. ~ 93. Plaintiffs also claim that from 1993 to early 1994, "Merrill Lynch'fraudulently recommended that the County enter into eight 'reverse to maturity' transactions under which Merrill Lynch loaned the County the aggregate amount of $800 million." Id. ~ 97; .see also id. ~ 99-102. Plaintiffs state that, as of the petition date,' the Repos between the County and Merrill Lynch obligated the County to repay approximately $2.4 billion to Merrill Lynch including the $800 million in "reverse to maturity" transactions. Id. ~ 96. Plaintiffs contend that the County provided Merrill Lynch with custody of the County's securities, aggregating $2.4 billion, as collateral for these varioUs, illegal obligations. Id. ~ 96. Beginning just prior to the County's bankruptcy filing and concluding on approximately December 8, 1994, various-broker-dealers holding the County's securities as collateral for the Repos liquidated most of the County's portfolio. The County sought protection from this court (in the form of an order allowing the orderly disposition of' securities) to preserve the value of its remaining portfolio. Id. ~ 128. At the time of the bankruptcy filing, Plaintiffs allege that Merrill Lynch possessed approximately $1.6 billion in marketable securities that had been transferred to it by the County under the Repos. The County.alleges that it owned 100% of these securities. Id. ~ 129. Plaintiffs also assert that Merrill Lynch has refused to return these securities or to remit proceeds from the sale of the securities to the County despite the County's demands upon Merrill Lynch for the return of the County's property. Id. Plaintiffs further claim that in a letter dated December 15, 1994 (the "Letter"), Merrill Lynch asserted that the County owed more than $1.6 billion to Merrill Lynch pursuant to certain Repos and Merrill Lynch intended to obtain satisfaction of the debt. Id. ~ 131-32. Plaintiffs contend that through the Letter, Merrill Lynch asserted an informal proof of claim against the County. Id. ~ 131-32 & Ex. 3 at 113-15. Plaintiffs further contend that Merrill Lynch's seizure and application of the proceeds of the sale of the securities in Merrill Lynch's possession also constituted an informal proof of claim against the County because the securities were the Copr. © West 2001 No Claim to Orig. U.S. Govt. Works Page 12 191 B.R. 1005 (Cite as: 191 B.R. 1005, '1011) property of the County. Id. ~ 132. Plaintiffs allege that by January 12, 1995, Merrill Lynch had retained approximately $1.4 billion of the proceeds from the County's securities, and closings were pending on approximately $250 million of the County's remaining securities. Id. ~ 131. [4] For the purposes of the Motion, Plaintiffs' allegations in the Complaint must be treated as true. Any reasonable inferences based on these allegations must also be construed in a light most favorable to the County. Arcade Water Dist., 940 F.2d at 1267. II. The Complaint States Claims Upon Which Relief can be Granted; Therefore, Merrill Lynch's Motion is Denied. Merrill Lynch asserts in the Motion that the Complaint fails to state claims [FN3] upon '1012 which relief can.be granted, because the securities involved in the underlying transactions were never'property of the County. Merrill Lynch argues that California Government Code ("Cal.Gov. Code".) § 27100.1 [FN4] requires that the County Treasurer, not the County, [FN5] hold in trust all funds deposited by non-County participants in the investment pool (the "OCIP") and th~ trust nature of these funds is not destroyed by the County's bankruptcy filing regardless of the level of commingling of County and non-County funds in the OCIP, the solvency of the County, or the inability to trace the trust funds in the OCIP. Mot.Dismiss Second Am. Compl. at 22. FN3. The Complaint specifically alleges six claims (the "Claims") and six counterclaims (the "Counterclaims"). The Claims alleged by the County are: for a determination pursuant to '11 U.S.C. § 502(b) that Merrill Lynch's claims against the County are not allowable and are unenforceable because the claims are based on ultra vires and void Repos, Second Am. Compl. ~ 133-37 (First Claim); for a determination pursuant to 11 U.S.C. § 502(b) that Merrill Lynch's claims against the County are unenforceable and not allowable because the County is entitled to a setoff exceeding any of Merrill Lynch's claim amounts, id. ~ 145-50 (Second Claim); for a determination pursuant to 11 U.S.C. § 510(c) (1) and any applicable state law that any allowable claim of Merrill Lynch against the County's property is equitably subordinated to all allowed claims.of the County's other creditors, id. ~ 159-66 (Third Claim); for a determination that the property Merrill Lynch controls pursuant to the Repos is the CoUnty's property, id. ~ 177-84 (Fourth Claim); for enforcement of the automatic stay under ll.U.S.C. §§ 362 & 922, id. ~ 195-211 (Fifth Claim); and for avoidance.of unauthorized, postpetition transfers under 11 U,S.C. § 549, id. ~ 230-40 (Sixth Claim). The Counterclaims alleged by the County are: for restitution for violations of California Constitution, Article XVI, § 18 and California Government Code §§ 23006, 25256 & 29120, id. ~ 254- 69 (First Counterclaim); for restitution for violations of California Government Code §§ 27000, 53601 & 53635, id. ~ 270-87 (Second Counterclaim); for damages for breach of a fiduciary duty, id. ~ 288- 96 (Third Counterclaim); for damages for aiding and abetting a breach of fiduciary duty owed by Citron to the County, id. ~ 297-307 (Fourth Counterclaim); for damages for conspiracy to make unauthorized use of Copr. © West 2001 No Claim to Orig. U.S. Govt. Works Page 13 191 B.R. 1005 (Cite as: 191 B.R. 1005, -1012) public funds, id. ~ 308-22 (Fifth Counterclaim); and for fraud and for damages for violations of federal securities law, the California Corporations Code, and'the California Business and Professions Code, id. ~ 323-44 (Sixth Counterclaim). In the Complaint, Plaintiffs also assert six alternative claims based on the premise that the County is solely the trustee and not the owner of the securities withheld by Merrill Lynch. Id. ~ 138-44, 151-58, 167-76, 185-94, 212-29 & 241-52. The County argues that the Counterclaims would survive under ~his alternative premise. Pls.' Opp'n Mot. Dismiss at 33 & n. 30. Because I hold that the Complaint through the Claims and Counterclaims sufficiently alleges claims upon which relief can be granted, I will not examine the merits of the County's alternative trustee claims and theories. FN4. Cal.Gov. Code§ 27100.1 states: Notwithstanding any other provision of law, when any public entity or any public official acting in a fiduciary capacity, who is required by law to deposit funds into the county treasury, makes a deposit, those funds shall be deemed to be held in trust by the county treasurer on behalf of the depositing entity or public official. The funds shall not be deemed funds or assets of the county and the relationship of the depositing entity or public official and the county shall not be one of creditor-debtor. Cal.Gov't Code § 27100.1 (West Supp.1995). FN5. Merrill Lynch asserts that the County is not the'trustee of funds deposited under ~ 27100.1. Merrill Lynch argues that only 'the County Treasurer, presumably acting in some type of individual capacity, is the trustee of funds deposited by public entities under § 27100.1; therefore, an essential prerequisite to the filing of the Complaint has not been satisfied by the County.' Mot.Dismiss Second Am. Compl. at 23-25; Reply Mem. Supp.Mot.Dismiss Second Am. Compl. at 20. Merrill Lynch also argues that even if the securities in the OCIP are property of the County, judicial estoppel prevents the County from asserting this legal argument in light of its previous positions in other proceedings in this bankruptcy case. Merrill Lynch states that "[h]aving repeatedly represented to this Court and the Superior Court that it does not own the property in the pool, and having'benefitted from that representation, the County cannot now reverse its position and contend that it does." Id. at 17. Additionally, Merrill Lynch contends that all the Counterclaims must be dismissed because Merrill Lynch never asserted a claim against the County or any property of the County. Merrill Lynch alleges that absent a finding that it asserted a proof of claim against the County, the Counterclaims should be treated as claims that must be dismissed because this court lacks jurisdiction over the alleged causes of action. Id. Plaintiffs respond that Ninth Circuit and California state law are directly contrary to Merrill Lynch's position. The County argues that when "an insolvent trustee-debtor controls assets that are the untraceable product of a commingled mass of the debtor's own moneys and trust moneys, the assets are 'property of the Copr. © West 2001 No Claim to Orig. U.S. Govt. Works Page 14 191 B.R. 1005 (Cite as: 191 B.R. 1005, '1012) debtor' and therefore subject to the bankruptcy court's equitable jurisdiction '1013 to ensure an appropriate distribution to the debtor's.general creditors." ?ls.' Opp'n Mot.Dismiss Second Am. Compl. at 2 (emphasis in original). Plaintiffs further argue that Cal.Gov. Code§ 27100.1 does not change this basic proposition. Plaintiffs assert that "§ 27100.1 only establishes the existence of a trust relationship and identifies the initial trust res. The statute has no impact on the requirement that a trust beneficiary must trace from the initial trust res to particular assets controlled by an insolvent, commingling trustee." Id. at 2-3; see also id. at 9-10. [FN6] FN6. The County does make the alternative argument ~that to the extent that Merrill Lynch's interpretation of CalGov. Code§ 27100.1 is correct, § 27100.1 is in direct conflict with federal bankruptcy law and should be preempted.' Pls.' Opp'n Mot.Dismiss Second Am. Compl. at 10-14. Plaintiffs also assert that the County is not judicially estopped from bringing the claims stated in the Complaint becauSe "there is no legal inconsistency between the Court's conclusion [in previous hearings concerning different litigation in this case] that the County did not own certain securities in the County's 'individual' capacity and the County's consistently taken position that the disputed securities are property of the County." Id. at 19. With respect to this court's jurisdiction over the Claims and Counterclaims, Plaintiffs contend that Merrill Lynch's actions constituted an informal proof of claim; therefore, this court has proper jurisdiction to hear all the causes of action stated in the Complaint. Id. at 3, 22-26. [5] Plaintiffs' assertion that, at the time of the bankruptcy filing, the securities in the possession of Merrill Lynch were property of the County is not inconsistent with controlling federal bankruptcy law. If the facts alleged in the Complaint are true, the securities in Merrill Lynch's possession pursuant to the Repos became property of the County upon its chapter 9 filing. The County has pled sufficient facts to allege that Merrill Lynch filed an informal proof of claim against the County, and the County is not judicially estopped from asserting any of the Claims or Counterclaims in the Complaint. A. Plaintiffs' Assertion That the County is a Trustee of Funds Deposited Into the Accounts Under Cal.Gov. Code§ 27100.1 is not Contrary to California law. [6] State law determines whether a trust exists in federal bankruptcy proceedings. Danning v. Bozek (In re Bullion Reserve of N. Am.), 836 F.2d 1214, 1217-18 (9th Cir.1988'); Toys "R" Us, Inc. v. Esgro, Inc. (Matter of Esgro, Inc.), 645 F.2d 794, 797 (9th Cir.1981); Elliott v. Bumb, 356 F.2d 749, 753 (9th Cir.), cert. denied, 385 U.S. 829, 87 S.Ct. 67, 17 L.Ed.2d 66 (1966). Merrill Lynch and Plaintiffs agree that when public entities deposited funds into the County treasury, a trust was created under Cal.Gov. Code§ 27100.1; however, the parties disagree over who is the trustee of those funds. Merrill Lynch asserts that under § 27100.1, the County Treasurer. alone is the trustee. It relies primarily on the language of § 27100.1 which states that "those funds [deposited by the public entity] shall be deemed to be held in trust by the county treasurer." Cal.Gov't Code § 27100.1. (West Supp.1995). The County responds that "when a California statute imposes a duty on a county official, Copr. © West 2001 No Claim to Orig. U.S. Govt. Works Page 15 191 B.R. 1005 (Cite as: 191 B.R. 1005, '1013) that duty is imposed on the County i~self." Pls.' Opp'n Mot.Dismiss Second Am. Compl. ~at 14. [7] [8] I hold that under Cal.Gov. Code§ 27100.1 a trust was created when public entities deposited their funds into the County treasury, and the County was either an express or implied trustee of those funds under California law. 1. Under California law, the County was either an express or implied trustee for the trust established pursuant to § 27100.1. A county treasurer is an officer of the county for which he/she is appointed or elected. Cal.Gov't Code § 24000(f) (West 1994). In its landmark case defining public/county officers, the California Supreme Court held: · 1014 A public officer is a public agent, and as such acts only on behalf of his principal, the public, whose sanction is generally considered as necessary to give the act performed by the officer the authority and power of a public act or law. The most general characteristic of a public [county] officer which distinguishes him from a mere employee, is that a public duty is delegated and intrusted [sic] to him, as agent, the performance of which is anexercise of a part of the government.al functions of the particular political unit for which he, as agent, is acting .... As a matter of course, in keeping with these definitions, a county officer is a public officer ... and is selected by the political subdivision of the state called the 'county' to represent that governmental unit, continuously and as part of the regular and permanent administration of public power, in carrying out certain acts with the performance of which it is charged on behalf of the public. Coulter v. Pool, 187 Cal. 181, 187, 201 P. 120 (1921) (citations omitted) (emphasis added); see also Dibb v. County of San Diego, 8 Cal.4th 1200, 1212, 36 Cal.Rptr.2d 55, 884 P.2d 1003 (1994); Spreckels v. Graham, 194 Cal. 516, 530, 228 P. 1040 (1924); Sheboygan County v. Parker, 70 U.S. (3'Wall.) 93, 18 L.Ed. 33 (1865). When Citron received funds pursuant to CalGov. ~ 53684, [FN7] he represented the County i~ carrying out the trust obligations imposed by § 27100.1. The County's assertion that it was a trustee of those funds is not inconsistent with California law. The County, through its representative, Citron, had express trustee~responsibilities to the beneficiaries of the § 27100.1 trust. FN7. Cal.Gov. Code§ 53684 permits local public agencies to deposit their excess funds in the local county treasury. Cal.Gov't Code § 53684 (West Supp.1995). Interestingly, § 53684 states that local agencies may only do this with the consent of the county treasurer. Applying Merrill Lynch's analysis of § 27100.1 to § 53684, local agencies would not need the consent of the County to deposit funds with the County treasurer. Theoretically, the County treasurer would be able to authorize deposits by local public agencies into the County treasury over the County's objections. Obviously, the state legislature could not have intended this result. Alternatively, -the County is an implied trustee of the § 27100.1 trust. In City of Fullerton v. County of Orange, 140 Cal.App. 464, 35 P.2d 397 (1934), the California appellate court examined the legal status of county officers when they Copr. © West 2001 No Claim to Orig. U.S. Govt. Works Page 16 191 B.R. 1005 (Cite as: 191 B.R. 1005, '1014) perform additional functions imposed by law. Id. at 470- 72, 35 P.2d 397. The court noted that when county officers collect taxes for a city'under state law, the county officers "are ex-officiis officers of that city. They become by law, the agents of the city to collect the taxes for the city. They do not lose their identity as county officers. Although they act for the city, they are county officers, performing a county function imposed upon them by law." Id. at 470, 35 P.2d 397. (citation omitted) (emphasis added). The court also stated that in this situation the "the relationship between the county and the city is an implied or constructive' trust, an involuntary trust arising by operation of law .... " Id. at 472, 35 P.2d 397 (emphasis added). In County of Los Angeles v. Superior Court, 17 Cal.2d 707, 112 P.2d 10 (1941), the California Supreme Court relied primarily on City of Fullerton in holding that "county officers do not lose their identi'ty as such by holding, ex-officio, the other public offices thrust upon them, but they act in a dual capacity, and through them the county becomes the bailee or trustee-'of tax funds of other entities deposited in its treasury." Id. at 717, 112 P.2d 10 (emphasis added). See also County of San Diego v. Croghan, 2 Cal.App.2d 494, 497-98, 38 P.2d 474 (1934) (statutory delegation of responsibility to a county treasurer to collect taxes for other public entities establishes that the county is either a trustee or a bailee). Like the situations in City of Fullerton and County of Los Angeles, Citron acted as trustee for the public agencies that deposited funds with him under state law. Citron, however, retained his status as a county officer while performing these trustee duties. Section 27100.1 did not require that Citron act 'solely in his individual capacity while carrying out his responsibilities. Because Citron was an agent for the County during the entire Time Period, California law imposed · 1015 trustee responsibilities on the County. See City of Fullerton, 140' Cal.App. at 472, 35 P.2d 397; County of Los Angeles, 17 Cal.2d at 715-17, 112 P.2d 10; see also City of Centerville v. Turner County, 25 S.D. 300, 126 N.W. 605, 606 (1910). [9] Having established that § 27100.1 created a trust in which the County had trustee duties and responsibilities to the beneficiaries of the OCIP, Plaintiffs argue that federal bankruptcy law governs the determination of the County's property interests to the securities, and any proceeds from the sale of such securities, that Merrill Lynch held when the bankruptcy was filed. Merrill Lynch responds that California law should control this determination and § 27100.1 is clear on its face that Citron held the securities in trust for the OCIP par ti cipan t s. B. Cal.Gov. Code§ 27100.1 is in Direct Conflict with Federal Bankruptcy Law, Because it Dictates the Priority of Distribution to a Special Class of Creditors Over Other Creditor Classes. On its face, ~ 27100.1 creates a trust for funds deposited with a county treasurer by non-county entities irrespective of conflicting federal bankruptcy law. In essence, § 27100.1 seeks to establish a priority for non-county trust participants regardless of the claims other county creditors might have to the same assets. This directly conflicts with federal bankruptcy law and the goal of a fair and equitable distribution to all creditors of a bankrupt's estate. Copr. © West 2001 No Claim to Orig. U.S. Govt. Works Page 17 191 B.R. 1005 (Cite as: 191 B.R. 1005, '1015) Elliott, 356 F.2d at 755; In re Bullion Reserve, 836 F.2d at 1218; First Fed. of Michigan v. Barrow, 878 F.2d 912, 915 (6th Cir. 1989). [10] Under federal bankruptcy law, a creditor beneficiary of an insolvent, trustee debtor must be able to trace its funds otherwise the funds become property of the debtor. In re Bullion Reserve, 836 F.2d at 1218; Elliott, 356 F.2d at 754-55; Barrow, 878 F.2d at 915 ("Accordingly, having asserted a constructive trust of which they were beneficiaries, the appellants assumed the burden of identifying the sums of their entitlements by tracing the trust funds through ... [the insolvent, trustee debtor's] commingled accounts."); Sender v. The Nancy Elizabeth R. Heggland Family Trust & Radoy W. Heggland (In re Hedged- Inv. Assocs., Inc.), '48 F~3d 470, 474 (10th Cir. 1995) ("When property of the estate is alleged to be held in trust, the burden rests upon the claimant to establish the original trust relationship. He must prove his title, identify the trust fund or property in the estate, and if such fund or property has been mingled with the general property of the debtor, the claimant must sufficiently trace the property.") (quoting 4 Collier on Bankruptcy ~ 541.13 (15th ed. 1994)); see also Sonnenschein v. Reliance Ins. Co., 353 F.2d 935, 937 (2d Cir. 1965); Merrill v. Abbott (In re Indep. Clearing House Co.), 77 B.R. 843, 854 (Bankr. D.Utah 1987) (holding in the context of a Ponzi scheme that "when a debtor obtains money by fraud and mingles it with other money ... the money is 'property' of the debtor"). [11] In Bullion Reserve, the Ninth Circuit addressed this precise point. It held that a beneficiary of an insolvent, trustee debtor must be able to trace its funds in order to claim any property of the debtor. Absent this tracing, all the fUnds shall be treated as property of the debtor to guarantee the equal treatment of creditors under the Bankruptcy Code (the "Code"). [FNS] In re Bullion Reserve, 836 F.2d at 1218. When a trustee debtor is insolvent and the beneficiaries cannot trace their funds, the beneficiaries must stand in the position of general creditors. Barrow, 878 F.2d at 915; [FNg] see also State of Wisconsin v. Reese (In re Kennedy & Cohen, Inc.), 612 F.2d 963, 966 (5th '1016 Cir.), cert. denied, 449 U.S. 833, 101 S.Ct. 103, 66 L.Ed.2d 38 (1980); Gulf Petroleum v. Collazo, 316 F.2d 257, 262 (lst Cir. 1963); John Deere Plow Co. v. McDavid, 137 F. 802, 812 (8th Cir. 1905). Any other result would destroy the level playing field for creditors established by the Code. FN8. The Code is set forth in 11 U.S.C. §§ 101-1330 (West 1995). FN9. The Sixth Circuit stated in Barrow that: Once the trust relationship has been established, one claiming as cestui que trust thereunder must identify the trust fund or property in the estate, and, if such. fund or property has been mingled with the general property of the debtor, sufficiently trace the trust property. If the trust fund or property cannot be identified in its original or substituted form, the cestui becomes merely a general creditor of the estate. Barrow, 878 F.2d at 915 (quoting 4 Collier on Bankruptcy ~ 541.13 (15th ed. 1988) ). Copr. © West 2001 No Claim to Orig. U.S. Govt. Works Page 18 191 B.R. 1005 (Cite as: 191 B.R. 1005, '1016) Merrill Lynch argues that "California Supreme Court precedent establishes that where trust funds are commingled with purported nontrust funds, the result is not that the County owns all the funds in the pool, but instead that it owns none of those funds." Mot.Dismiss Second Am. Compl. at 4. Merrill Lynch relies on Tretheway v. Tretheway, 16 Cal.2d 133, 104 P.2d 1033 (1940), and some related cases for this proposition. Tretheway and its progeny, however, involve solvent, debtor trustees. The rule delineated in Tretheway makes sense for solvent, debtor trustees, because sufficient assets exist to pay trust beneficiaries and trustee creditors in full. Tracing is not essential, because no creditor group suffers at the hands of another. Obviously, this is not the case with an insolvent, trustee debtor. [FNiO] The Ninth Circuit recognized this crucial difference; this is why Bullion Reserve and its related cases require tracing when the trustee debtor is insolvent. [FNll] FNiO. InterestinglY, absent § 27100.1, California state law does not conflict with federal bankruptcy law and requires a beneficiary of an insolvent, trustee debtor to trace 'any funds that he intends to claim as his property. Kobida v. Hinkelmann, 53 Cal.App.2d 186, 195, 127 P.2d 657 (1942) (noting that when a trustee is insolvent, and the rights of other creditors are involved, a beneficiary must trace his funds through a trustee's commingled account). FNll. Likewise, the other major cases that Merrill Lynch cites are unhelpful, 'because they primarily involve state law interpretation of trust issues and consider the tracing issue solely in the context of solvent trustees. See, e.g., Levy v. Drew, 4 Cal.2d 456, 50 P.2d 435 (1935); Cent. Nat'l Bank of Baltimore v. Connecticut Mut. Life Ins. Co., 104 U.S. 54, 26 L.Ed. 693 (1881); Kinert v. Wright, 81 Cal.App.2d 919, 185 P.2d 364 (1947). Merrill Lynch also argues that the rule requiring tracing ininsolvent, debtor trustees situations only applies in constructive, implied trustee situations. Rep.Mem. Supp. Mot.Dismiss Second Am. Compl. at 7. In other words, Merrill Lynch asserts that Bullion Reserve does not apply to express trusts. This contention conflicts with dicta in the Bullion Reserve opinion that states ."[m]oreover, even if an express trust were created, [the beneficiary] ... would still have a duty under federal bankruptcy law to trace his funds to the bullion he received. Such a tracing requirement is necessary to further the Bankruptcy Code's policy of equal distribution among similar situated creditors." In re Bullion Reserve, 836 F.2d at 1218; see also In re Hedged-Inv. Assocs., Inc., 48 F.3d at 474. [12] Logically, there should be no difference regarding tracing for an insolvent, debtor trustee whose duties arise Out of an express trust as opposed to an implied trust. The tracing requirement is necessary to ensure the Code's policy of equal distribution among similarly situated creditors. In re Bullion Reserve, 836 F.2d at 1218. Giving effect to [the state law under scrutiny] ~... would open the door to state creation of priorities in favor of various classes of creditors by labeling such Copr. © West 2001 No Claim to Orig. U.S. Govt. Works Page 19 191 B.R. 1005 (Cite as: 191 B.R. 1005, '1016) priorities as 'trusts.' This would tend to thwart or obstruct the scheme of federal bankruptcy .... We cannot believe ... that Congress contemplated that if trust funds are commingled with other assets of one subsequently declared bankrupt under federal law, a state statute may impress a trust on all assets of the bankrupt's estate to the extent of the amount due the beneficiary. Elliott, 356 F.2d at 755. Accordingly, the tracing requirement applies to insolvent, debtor trustees of both express and implied trusts. In re Bullion Reserve, 836 F.2d at 1218. [13] To the extent that § 27100.1 was intended to eliminate tracing when a debtor trustee is insolvent, it conflicts with federal bankruptcy law. The California state legislature passed § 27100.1 in response to concerns expressed when Butte County considered filing bankruptcy,, see Req. Judicial Not. Supp. Mot.Dismiss Second Am. Compl., Ex. B at 5-46 (numerous documents containing '1017 an exhaustive exploration of the legislative history of Cal.Gov. Code§ 27100.1), and the need to make sure tha't the funds of depositing entities would not be considered property of a bankrupt county. Id.; see also Cal.Gov't Code § 27100.1 (WeSt SUpp.1995) ("The funds shall not be deemed funds or assets of the county and the relationship of the depositing entity or public official and the county shall not be one of creditor-debtor."). [FN12] FN12. In the entire legislative history of § 27100.1, no discussion of the law's potential conflict with federal bankruptcy law is evident. [14] When a state .law conflicts with federal bankruptcy law, the state law 'is preempted. Elliott, 356 F.2d at 755 ("If state law is contrary to federal bankruptcy law, the state law must yield."). Therefore, to the extent that § 27100.1 creates a special class of creditors (i.e., non-County governmental entities) in conflict with the priority scheme in the Code, it is preempted by federal law. [15] State trust law must be applied in a manner consistent with federal bankruptcy policy. This essential legal principle is founded in the United States Constitution. The Constitution states that "Congress shall have the power ... [rio establish ... uniform Laws on the subject of Bankruptcies throughout the United States." U.S'. Const., art. I, § 8(4). The Constitution also states that the laws of the United States made in pursuance of the Constitution "shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the contrary notwithstanding." U.S. Const., art. VI. [16] The California legislature cannot rewrite bankruptcy priorities. [FN13] "/The Code] explicitly defined the 'order of creditor priority and declared the congressional intent of federal supremacy over declared but conflicting state law orders of priority." Barrow, 878 F.2d at 915. See Elliott, 356 F.2d at 754-55 ("Congress has made even clearer its intent that state law shall not be permitted to confer preference on one class of creditors of one adjudged bankrupt under federal law even though the state may have the highest public purpose in. attempting to do so."); In re Bullion Reserve, 836 F.2d at 1218. See also In re Kennedy & Cohen, Inc.,. 612 F.2d at 966. Copr. © West 2001 No Claim to Orig. U.S. Govt. Works Page 20 191 B.R. 1005 (Cite as: 191 B.R. 1005, '1017) FN13. This point is universally recognized by the courts and legal scholars. See, e.g., 3 Collier on Bankruptcy ~ 507.02 (15th ed. 1995) ("State legislatures cannot create bankruptcy priorities.") . C. Chapter 9 Does Not Require a Different Result from General Bankruptcy Law for an Insolvent, Debtor Trustee. [17] [18] [19] Merrill Lynch asserts that "even if this Court were otherwise free to override state law by invoking federal policy, it is not free to do so under Chapter 9." Mot.Dismiss Second Am. Compl. at 12. Merrill Lynch argues that Code § 903 prevents this court from preempting § 27100.1. Merrill Lynch also asserts that under chapter 9, Congress "invited the states to determine for themselves what shall constitute 'property of the debtor .... ' " Reply Mem. Supp. Mot.Dismiss Second Am. Compl. at 9. Merrill Lynch supports this. argument by pointing out that Congress did not incorporate Code § 541 [FN14] into chapter 9. See 11 U.S.C. § 901 (West 1995). Additionally, Merrill Lynch contends that chapter 9 does not "dictate priorities among creditors, since § 901 of the Bankruptcy Code does not incorporate § 507[ (a) (2)- (a) (9) ] ... into Chapter 9." Id. at 6. [FN15] FN14. Code § 541 is but one section that defines what is and is not property of the estate. See 11 U.S.C. § 541 (West 1995). Section 541 is not incorporated into chapter 9. See 11 U.S.C. § 901 (West 1995).. FN15. Section 507(a) delineates certain priorities that apply in distributing assets of the estate. See 11 U.S.C. ~ 507(a) (West 1995). Section 901 states that only § 507(a)(1), and not §~ 507(a)(2) through (a) (9), of the Code may be applied in a chapter 9 proceeding. See 11 U.S.C. § 901 (West 1995). Merrill Lynch cites no case law for its contention that chapter 9 eliminates federal priorities and defers to state law with respect to the fair distribution of a municipality"s property; rather, Merrill Lynch contends that. solely chapter 9's failure to incorporate Code §§ 541 and 507(a)(2) through (a) (9) demonstrates its assertions. · 1018 1. Code § 903 does not prohibit federal bankruptcy law from preempting Cal.Gov. Code § 27100.1. Code §- 903 is designed to ensure that chapter 9 does not prevent the State from acting in its exercise of the political or governmental powers of the debtor- muni cipal i ry. [Section 903] contemplates absolutely no interference with the operation of the. municipality and the provision of governmental services .... Because the municipality is a creation of state law and operates by virtue of the delegation of power from the state, it would probably be an unconstitutional interference with the sovereignty of the 'state if ... [§ 903] attempted to give the judge any power to determine whether the petitioner should continue to operate, or what level of services or tylDe of services the petitioner should provide. 121 Cong. Rec. H39413 (daily ed. Dec. 9, 1975) (statement of Representative Copr. © West 2001 No Claim to Orig. U.S. Govt. Works Page 21 191 B.R. 1005 (Cite as: 191 B.R. 1005, '1018) Edwards about the intent of Bankruptcy Code § 903). [20] This court cannot interfere with the County's ability to continue its operations or dictate what type of services or level of services the debtor municipality may provide. Federal preemption of CalGov. § 27100.1 does not affect the County's operations or the ability of the County to provide services. Accordingly, Code § 903 does not prevent federal bankruptcy laws from preempting . ~ 27100.1. 2. The absence of § 541 in chapter 9 does not mean that Congress /eft all property right determinations to the states. Congress had good reasons for excluding ~ 541 from chapter 9, and its absence does not necessarily lead to the conclusion that Congress left all property right determinations to the states. Most of the provisions of § 541 are inapplicable to a chapter 9 debtor, and those that are arguably applicable are otherwise covered in the avoidance provisions incorporated in chapter 9. The absence of § 541 does not conclusively establish that Congress intehded to overrule general bankruptcy law regarding the status of commingled assets of an insolvent, trustee deb t or. a. Several sections of the Code that are applicable to chapter 9 invalidate or alter state property rights. The weakness of Merrill Lynch's argument that by excluding § 541 from the Code Congress invited the states to define their property rights in a chapter 9 proceeding is demonstrated by the many Code provisions, which ARE applicable to chapter 9, invalidating state property rights. These provisions demonstrate that Congress did not grant states complete freedom to define the property interests of' chapter 9 debtors. [21] [22] For example, Code § 545, which is specifically made applicable to chapter 9 in § 901, invalidates certain statutory liens created by state law. [FN16] State statutory liens are property rights. Another example is Code § 552. Section 552 invalidates all consensual 'security interests with respect to property received post-petition. Security interests are property rights that are usually defined by state law. Section 552 (b) (2) offers a compelling example of Congressional intent not to let states decide freely what shall be property of the debtor. [FN17] FN16. With regards to § 545, Collier's notes that: [s] tatutory liens may, however, easily become a means of frustrating the bankruptcy scheme of distribution, which recognizes but a limited number of priorities superior to the right of the general creditors to pro rata distribution. Congress recognized in 1938 that some limitation should be imposed on the enforcement of statutory liens in bankruptcy .... The imposition 'of these limitations is the function of section 545. 4 Collier on Bankruptcy ~ 545.01 (3) (15th ed. 1995). FN17. Section 552(b)(2) states: [Except as provided in other specific code sections] if the debtor and an entity entered into a security agreement before the commencement of the case and if the security interest created by such security agreement extends to property of the debtor acquired before Copr. © West 2001 No Claim to Orig. U.S. Govt. Works Page 22 191 B.R. 1005 (Citeas: 191 B.R. 1005, -1018) the commencement of the case and to amounts pai'd as rents of such property ... then such security interest extends to such rents ... acquired by the estate after the commencement of the case to the extent provided in such security agreement, .except to any extent that the court, after notice and hearing and based on the equities.of the case, orders otherwise. 11 U..S.C. ~ 552(b)(2) (West 1995). Section 552(b)(2) was recently added to the Code under the Bankruptcy Reform Act of 1994. See Pub. L. No. 103-394, 108 .Stat. 4106 (enacted on October 22, 1994, effective in cases commenced on or after the date of enactment). · 1019 [Section 552(b)(2) was added] to deal with the confusion about the applicability of the exception in former subsection (b) to rents. In particular, in Burner v. United States [440 U.S. 48, 49, 99 S.Ct. 914, 915, 59 L.Ed.2d 136 (1979) ], the United States Supreme Court held that a mortgagee's right to rents should be decided under state law and 'that courts 'should take whatever steps are necessary to ensure that the mortgagee is afforded in federal bankruptcy court the same protection he would under state law if no bankruptcy has ensued.' Moreover, former section 552(b) expresSly stated that the creditor's rights to rents was dependent on 'applicable nonbankruptcy law ...' Thus in determining whether a creditor had a postpetition interest in rents generated from property acquired prepetition, many courts analyzed whether the creditor had perfected its interests in rents under applicable state law. Subsection (b) (2) does not refer to applicable nonbankruptcy law and is in~ended to provide a creditor with a valid postpetition interests in rents notwithstanding its failure to perfect its security interests under applicable state law. 4 Collier on Bankruptcy ~ 552.03 (15th ed. 1995) (emphasis added). In determining what provisions of the Code would apply to a chapter 9 debtor, Congress did not leave it to the states to determine absolutely those property rights. [FN18] These examples rebut Merrill Lynch's contention that by excluding § 541 from chapter 9, Congress intended all property rights to be determined in accordance with state law irrespective of the impact on key bankruptcy goals such as the fair and equitable treatment of a debtor's creditors. FN18. Besides the two sections mentioned, there are several additional Code provisions, specifically incorporated into chapter 9, that affect state property rights and support the idea that Congress did not invite states to determine absolutely their property rights in chapter 9. For example, 347(b) controls the distribution of property that has not been claimed at the expiration of the time allotted for participation in the plan in a case under chapter 9. Any 'security, money, or other property' remaining unclaimed reverts to the debtor or the entity which has acquired the assets of the debtor under the plan .... Corresponding provisions in the Bankruptcy Act, Section 96(d) with regard to the adjustment of debts of a municipality ... were found to be constitutional, notwithstanding their effect upon the vested rights of those parties preempted from participation in distribution under the plan. Copr. © West 2001 No Claim to Orig. U.S. Govt. Works Page 23 191 B.R. 1005 (Cite as: 191 B.R. 1005, '1019) 2 Collier on Bankruptcy ~ 347.04 (15th ed. 1995) (emphasis added). See In re Grand Rapids R. Co., 28 F. Supp. 802, 803 (W.D.Mich.1939) ("It is urged that the unknown bondholders have vested in the securities and that to turn the unclaimed securities over to the reorganized debtor would result in the unjust enrichment of the known bondholders .... III t was the clear intent of Congress to provide a limitation ... within which security holders shall present or surrender their securities. The fact that this provision affects vested rights does not render it unconstitutional. The power of Congress to enact bankruptcy laws necessarily implies the power to affect -vested rights of many kinds."). 3. The absence of §§ 507(a)(2) through (a) (9) in chapter 9 does not mean that Congress intended to eliminate the priority scheme for chapter 9 deb tors. Likewise, With regards to § 507(a), the failure to include §§ 507(a)(2) through (a) (9) makes sense in light of the relevance of §§ 507(a)(2) through (a) (9) to chapter 9. For example, § 507(a)(7) involves allowed claims of a spouse. Obviously, this is irrelevant to a municipal debtor and does not need to be 'incorporated into'chapter 9. [FN19] Accordingly, '1020 there are valid reasons why Congress only incorporated § 507(a)(1) into chapter 9, and those reasons do not lead to the conclusion that Congress intended to eliminate federal priorities under chapter 9. FN19. Likewise §§ 507(a) (5), (a) (6), (a) (8) and (a) (9) are not applicable to a chapter 9 debtor. See 11 U.S.C. §§ 507(a)(5) (unsecured claims of persons engaged in the production of grain against a debtor who owns or operates a grain storage facility or for persons engaged as a U.S. fisherman against a debtor who has acquired fish or fish produce from a fisherman ), (a) (6) (unsecured claims against a debtor up to $1,800 for individuals who deposited such money with the debtor prior to the commencement of the case in connection with the purchase, lease, or rental of property or the purchase of services for the personal family or household use of such individual that were not provided), (a) (8) (allowed unsecured claims of a governmental unit) & (a) (9) (allowed unsecured claims based upon a commitment by the debtor to a federal depository institutions regulatory agency to maintain the capital of an insured depository institution) (West 1995). As to §§ 507(a)(3) & (a) (4), their inclusion into chapter 9 would cause potential interference in the relationship between the municipality and its employees (e.g., collective bargaining agreements) . This affects the ability of a municipality to continue its operations. These two sections potentially conflict with § 903 and the 10th Amendment; therefore, Congress excluded them from a chapter 9 bankruptcy. See 11 U.S.C. §§ 507(a) (3) & (a) (4) (West 1995). Compare with 11 U.S.C. § 903 (West 1995). The sparse case law on chapter 9 is in support of this 'position. In In re Sanitary & Improvement Dist., No. 7, 98 B.R. 970 (Bankr. D.Neb.1989), the court held that a plan of adjustment that did not recognize 'a state priority of Copr. © West 2001 No Claim to Orig. U.S. Govt. Works Page 24 191 B.R. 1005 (Cite as: 191 B.R. 1005, '1020) bondholders before warrantholders, and which impaired the rights of some bondholders, would be permitted under chapter 9. Id. at 974. See also Sanitary Improvement Dist. v. First Nat'l Bank of Aurora, 73 B.R. 205 (Bankr. D.Neb.1986), afl'd, 79 B.R. 877 (D.Neb.1987). a. Chapter 9 incorporates priority schemes into its provisions despite the absence of Code ~§ 507(a)(2) through (a) (9). Chapter 9 incorporates many provisions of the Code that prioritize creditors to ensure a fair distribution. Additionally, many of the provisions in chapter 9 depend upon the prioritizing of creditors. For example, § 943 (a) (7) permits confirmation of a plan of adjustment only if "it is in the best interests of creditors and is feasible." 11 U.S.C. § 947(a) (7) (West 1995).' [While the best interests of the creditors test is an elusive standard in Chapter 9] nevertheless the concept is not without meaning .... The concept should be interpreted to mean that the plan must be Detter than the alternative that creditors have. In the chapter 9 context, the alternative is dismissal of the case, permitting every creditor to fend for itself in the race to obtain the mandamus remedy and to collect the proceeds .... [The courts] must apply the test to require a reasonable effort by the municipal debtor that i's a better alternative to the creditors than dismissal of the case. 4 Collier on Bankruptcy, ~ 943.03 (7) (15th ed. 1995) (emphasis added). If states could rewrite priorities in chapter 9, this test would become extremely difficult to satisfy. Section 901 also applies §§ 364 (c), 364 (d), and 364 (e) to a chapter 9 bankruptcy. These three sections extend priority to creditors of the chapter 9 debtor who are willing to provide a debtor with additional credit. For example, § 364 (c) grants a "superpriority" status for an entity extending credit to the debtor if a debtor is unable to obtain credit under other provisions of the Code. Clearly, based on these examples, chapter 9 establishes priorities that bind creditors of a debtor. [FN20] FN20. There are many more examples of chapter 9 's reliance on fair prioritizing to ensure equal distribution to all creditors. Section 1129(b) (1), incorporated into chapter 9 by § 901, requires the court to determine that the plan does not discriminate unfairly and is equitable. Applying this standard in plan confirmation hearings requires this court to make determinations regarding the fairness of distributions in accordance wi th traditional priority schemes. Chapter 9, through § 901, also incorporates Code § 544. Section 544 confers on the debtor (or trustee) strong-arm powers to avoid certain transfers. Courts have recognized that the debtor/trustee's strong-arm powers serve essentially "to marshal all of the debtor's assets, including some the debtor could not recover, in order to enhance resources available to the pool of creditors." When exercising ~ 544 's avoidance powers, courts have held that the debtor/ trustee "is not asserting a 'cause of action belonging to the debtor, but is acting in a representative capacity on behalf of all the creditors." Copr. © West 2001 No Claim to Orig. U.S. Govt. Works Page 25 191 B.R. 1005 (Cite as: 191 B.R. 1005, '1020) Fairbanks Steam Shovel Co. v. Wills, 240 U.S. 642, 648, 36 S.Ct. 466, 468-69, 60 L.Ed. 841 (1916); Barrow, 878 F.2d at 916-17. In applying § 544 to a chapter 9, Congress was ensuring that the creditors received all the funds that the municipal debtor could reach. It defies logic to assert that Congress was concerned with increasing the estate for all creditors in chapter 9, while at the same time permitting the individual states to dictate the playing field. If chapter 9 permitted states to'define all properties of the debtor in bankruptcy regardless of the situation and to rewrite bankruptcy priorities, then chapter 9 would become a balkanized landscape of questionable value. Moreover, chapter 9 would violate the constitutional mandate for uniform bankruptcy laws. See U.S. Const., art. I, § 8. · 1021 Reserving to bankruptcy law the setting of priorities in chapter 9 does not unnecessarily impinge on states' rights or the abi'lity of a municipal debtor to provide important services to the public. Nor does this principle conflict with Code ~ 903, which reserves to the state the power to control the municipal debtor in the exercise of its political or governmental powers. See 11 U.S.C. 903 (West 1995); see also, supra section II.C.1. Furthermore, pursuant to Code § 109 (c) (2), a municipal debtor must be specifically authorized.by state law to file a chapter 9. See 11 U.S.C. 109(c) (2) (West 1995). CalGov. Code§ 53760 specifically authorizes counties i.n California to file a chapter 9 case. See Cal. Gov't Code § 53760 (West 1994). By authorizing the use of chapter 9 by its municipalities, California must accept chapter 9 in its totality; it cannot cherry pick what it likes while disregarding the rest. The right to discharge is not a benefit without burdens. As the court in In re City of Columbia Falls, Montana, Special Improvement Dist., No. 25, 143 B.R. 750, 759 (Bankr. D.Mont.1992), held in approving a chapter 9 plan of adjustment where the. plan did not pay prepetition bondholders the full amount of their claim with interest in contravention of state law, "to create a federal statute based upon a theory that federal intervention was necessary to permit adjustment, of a municipality's debts and then to prohibit the municipality from adjusting such debts is not, in the point of the view of this Court, a logical or necessary result." Id. (quoting Sanitary & Improvement Dist., No. 7, 98 B.R. at 974). The court specifically concluded'that bankruptcy law supersedes the state law requiring the full payment of bondholders prepetition claims. Id. at 757. [FN21] FN21. The court went on to note that: Far from interfering with the ability of the state ... to control its municipalities, it is concluded ... [that the state] has affirmed that its municipalities may avail themselves of the benefits of the federal bankruptcy process, including the modification of these sorts of debts [i.e., property rights], and such does not interfere with the power of the state ... to control a municipality or in the exercise of the political or governmental, powers of such municiPality. In re City of Columbia Falls, 143 B.R. at 760. Copr. © West 2001 No Claim to Orig. U.S. Govt. Works Page 26 191 B.R. 1005 (Cite as: 191 B.R. 1005, '10~.1) [23] [24] Chapter 9 does not permit individual states to override the priority scheme that is inherent in the Code. A uniform bankruptcy code necessitates that federal law control creditor priorities. States voluntarily agree to permit their counties to file chapter 9. See Vineyard v. McKenzie (In re Quality Holstein Leasing), 752 F.2d 1009, 1014 n. 10 (5th Cir. 1985) ("State law defining property rights may not, of course, go so far as to manipulate bankruptcy priorities. "); see also Jackson, Bankruptcy, Non- Bankruptcy Entitlements, and the Creditors' Bargain, 91 Yale L.J. 857, 901- 06 (1982). "It is equally clear that the Bankruptcy Act of 1978 explicitly defined the order of creditor priority and declared the congressional intent of federal supremacy over declared but conflicting state law." Barrow, 878 F.2d at 915; see also In re Bullion Reserve, 836 F.2d at 1214; In re Kennedy & Cohen, Inc., 612 F.2d at 963; Gulf'Petroleum, 316 F.2d at 257; Elliott, 356 F.2d at 749. It is speculation at best to conclude that by not incorporating § 541 of the Code into chapter 9, Congress intended to grant to the' states the authority to determine what is property of the chapter 9 debtor. Additionally, simply because Congress did not incorporate § 507(a)(2) through (a) (9) into chapter 9 does not lead to the sweeping, and potentially chaotic, conclusion that Congress intended to eliminate the federal priority scheme in chapter 9. D. Assuming Merrill~Lynch's Interpretation of Chapter 9 is Correct, § 27100.1 Would Still Conflict with Federal Bankruptcy Law, Because it Elevates the Beneficiaries of a Trust to a Position of Priority Over the Administrative Expenses of an Insolvent, Trustee. Debtor. [25] Even if Merrill Lynch's unsupported interpretation of Chapter 9 was correct, Cal. Gov. Code§ 27100.1 would still be preempted by federal bankruptcy law.. As noted, Merrill Lynch argues that in exempting certain provisions of the Code from chapter 9, Congress invited states to define the debtor municipality's property rights, and Congress intentionally*lO22 eliminated any priority scheme, except for § 507(a)(1). [FN22] FN22. Section 507 (a) (1) is incorporated into chapter 9 by Bankruptcy Code § 901. Merrill LYnch argues that it is the one priority scheme that applies among creditors in a chapter 9. Reply Mem. Supp.Mot.Dismiss Second Am. Compl. at 6. If Cal.Gov. Code ~ 27100.1 is applied in the manner Merrill Lynch proposes, the beneficiaries of an insolvent, trustee debtor could potentially claim all the funds of an insolvent, debtor trustee who commingled his trust assets and estate assets. This would violate § 507(a)(1) which requires that administrative expenses be paid above all other creditors. Merrill Lynch's argument regarding the reach and extent of chapter 9, even if correct, still puts § 27100.1 in direct conflict with federal bankruptcy law. For all the reasons stated in sections II.C and II.D of this opinion, I find that ~ 27100.1~conflicts with the supremacy clause and federal bankruptcy law. E. Plaintiffs Have Pled Sufficient Facts in the Complaint to Allege that Merrill Lynch Asserted an Informal Proof of Claim Against Property of the County. [26] [27] Merrill Lynch also argues that it never asserted a proof of claim Copr. © West 2001 No Claim to Orig. U.S. Govt. Works · Page 27 191 B.R. 1005 (Cite as: 191 B.R. 1005, '1022) against the County; therefore, the Claims and Counterclaims that the County asserted in the Complaint must be dismissed. Mot.Dismiss Second Am. Compl. at 21-22. Plaintiffs respond that: the Complaint properly alleges Merrill Lynch's two informal proofs of claim against the County: (1) Merrill Lynch's December 15, 1994 letter to the County asserting that the County owed various debts to Merrill Lynch based on the County's full recourse undertakings and asserting that Merrill Lynch intended to obta'in satisfaction of these obligations, at least in part, from the proceeds of the disputed securities, and (2) Merrill Lynch's subsequent seizure of the liquidation proceeds to satisfy the County's purported obligations. Pls.' Opp'n Mot.Dismiss Second Am. Compl. at 22. When viewing the allegations in the Complaint in a light most favorable to the plaintiffs, Fresher, 846 F.2d at 46, Plaintiffs have asserted enough facts, which if true, would show that Merrill Lynch asserted an informal Proof of claim against the County. Merrill Lynch states that "[t]he case law universally holds that a party may not challenge the allowability of a claim unless and until a claim is actually filed." Mot.Dismiss Second Am. Compl. at 21. However, Ninth Circuit law does not support this assertion. In Sambo's Restaurants, Inc. v. Wheeler (In re Sambo's Restaurant), 754 F.2d 811, 816 (1985), the Ninth Circuit held that a letter to a debtor/trustee "was a sufficient informal proof of claim, amendable after the bar date, because it was intended to and did set out a claim against the estate .... [A]n informal proof of claim need not appear on the bankruptcy court's record or in its files." Id. (construing County of Napa 'v. Franciscan Vineyards, 597 F.2d 181, 182-83 (gth Cir. 1979), cert. denied, 445 U.S. 915, 100 S.Ct. 1274, 63 L.Ed.2d 598 (1980)); see also Anderson-Walker Indus., Inc. v. Lafayette Metals, Inc. (In re Anderson- Walker Indus.), 798 F.2d 1285, 1287-88 (9th Cir. 1986)! In re B.C. Enter., Ltd., 160 B.R. 827, 832 (Bankr. D.Ariz.1993). The parties disagree as to whether the Letter states an explicit demand showing the nature and amount of the claim against the estateand evidences an intent to hold the debtor liable; however, I need not determine the issue at this time. Because the allegations in the Complaint must be treated as true, [FN23] Plaintiffs have pled successfully that Merrill Lynch asserted an informal proof of claim against the County in the Letter. FN23. Allegations in the Complaint must ~,be treated as true. Western Reserve Oil, 765 F.2d at 1430. A motion to dismiss should not be granted unless "it appears beyond doubt that plaintiff can prove no set of facts in support of [its] claim which would entitle [it] to relief." Love, 915 F.2d at 1245. Because the Complaint successfully alleges that the securities, or proceeds thereof, in Merrill Lynch's possession were property of the County, the Complaint. also sufficiently '1023 alleges that the self-help actions undertaken by Merrill Lynch constitute .the assertion of an informal proof of claim against the County. The Ninth Circuit has held that a post-petition offset of bankruptcy estate property is the functional equivalent of filing a proof of claim in the bankruptcy estate. Sullivan v. Town & Country Home Nursing Servs., Inc. (In re Copr. © West 2001 No Claim to Orig. U.S. Govt. Works 191 B.R. 1005 Page 28 (Cite as: 191 B.R. 1005, '1023) Town & Country Nursing Servs., Inc.), 963 F.2d 1146, 1153 (gth Cir. i991); see also United States v. Fingers, 170 B.R. 419, 427 (S.D.Cal.1994). Assuming that the securities in Merrill Lynch's possession were County property, Merrill Lynch's liquidation of the securities and retention of the proceeds would be the functional equivalent of filing ~a proof of claim against the Count]/. III. Plaintiffs are not Judicially Estopped From Asserting Ownership to the Securities or to the Proceeds of the Sale of the Securities Held by Merrill Lynch Pursuant to the Repos. [28] Merrill Lynch also argues that the County is estopped from asserting ownership to the securities or the proceeds of the securities that were in Merrill Lynch's possession, because of prior inconsistent positions that the County has taken in related litigation before this court. [FN24] Mot.Dismiss Second Am. Compl. at 15-19. Plaintiffs respond that the County has not ~taken prior inconsistent positions in the other proceedings related to this case. Pls.' Opp'n Mot.Dismiss Second Am. Compl. at 17-22. FN24. The main proceeding that Merrill Lynch claims the County asserted a contrary position involves the County's position with respect to the offset sought by the Federal National Mortgage Association ("FNMA"). See Fed. Nat '1 Mortgage Ass'n v. County of Orange (In re County of Orange), 183 B.R. 609, 616-17 (Bankr. C.D.Cal.1995) . [29] [30] The doctrine of judicial estoppel is invoked to preclude a party from abusing the judicial process by taking inconsistent positions in .the same litigation. United States v. Garcia, 37 F.3d 1359, 1366 (9th Cir. 1994); Yanez v. United States, 989 F.2d 323, 326 (9th Cir. 1993), appeal after remand, Yanez v. United 'States, 63 F.3d 870 (gth Cir. 1995). A court inVOkes judicial estoppel at its discretion. Garcia, 37 F.3d at 1366-67. There are two different views concerning the application of judicial estoppel in the circuit courts today. Under the majority view, judicial estoppel does not apply unless the assertion inconsistent with the claim made in the subsequent litigation 'was adopted in some manner by the court in the prior litigation. ' Under the minority view, judicial estoppel can apply even when a party was unsuccessful in asserting its position in the prior judicial proceeding, 'if the court determines that the alleged offending party engaged in 'fast and loose' behavior which undermined the integrity of the court.' Britton. v. Co-op. Banking Group, 4 F.3d 742, 744 (9th Cir. 1993) (quoting Ryan v. Loui (In re Corey), 892 F.2d 829, 836 (9th Cir. 1989)); see also Garcia, 37 F.3d at 1366-67. As the Ninth Circuit noted in Garcia, it has not yet adopted either view. Garcia, 37 F.3d at 1367. [FN25] FN25. The Sixth Circuit in examining this issue has also held that "[j]udicial estoppel will be invoked against the government when it conducts what 'appears to be a knowing assault upon the' integrity of the judicial system.' ... [E]ven when invoked, [judicial estoppel] should be construed narrowly against the government .... " United States v. Owens, 54 F.3d 271, Copr. © West 2001 No Claim to Orig. U.S. Govt. Works Page 29 191 B.R. 1005 (Cite as: 191 B.R. 1005, -1023) 275 (6th Cir. 1995) .(quoting Reynolds v. Comm'r of Internal Revenue, 861 F.2d 469, 474 (6th Cir. 1988)). See also Heckler v. Community Health Servs., 467 U.S. 51, 60, 104 S.Ct. 2218, 2224, 81 L.Ed.2d 42 ~(1984). Regardless of which view of judicial estoppel is applied, the County is not estopped from asserting the allegations contained in the Complaint. The Complaint is not inconsistent with prior positions taken by the County in other litigation in this bankruptcy. In the FNMA litigation, the County argued that the FNMA debts lacked the requisite mutuality with the County debt. [FN26] See In re ,1024 County of Orange, 183 B.R. at 616-17. This court ultimately held that FNMA' could not satisfy the "capacity" element because the County did not own the FNMA notes individually. Id. FN26..Under applicable law, the requisite mutuality is not present unless "/the debts subject to the offset are] due to and from the same persons in the same capacity." Prudential Reinsurance Co. v. Superior Court, 3 Cal.4th 1118, 1127, 14 Cal.Rptr.2d 749, 842 P.2d 48 (1992); England v. Indus. Comm'n of Utah (In re Visiting Home Services, Inc.), 643 F.2d 1356, 1360 (9th Cir. 1981) . There is no inconsistency between this argument and the County's ownership allegations in the Complaint that depend on post-petition events. Prior to the bankruptcy, the County had trustee responsibilities and partial ownership interests regarding funds and securities managed by Citron. It .did not have the right to treat the commingled funds and securities as its own property. The fili'ng of bankruptcy triggered the County's right to claim ownership of the securities pursuant to Ninth Circuit law. In short, the capacities of the County regarding the ownership of the securities in the FNMA litigation and in this litigation are not the same. The County has not taken a contrary position before this court, and application of the judicial estoppel doctrine is unwarran ted. CONCLUSION Because the County has sufficiently pled ownership of the securit'ies when the bankruptcy was filed and the assertion of an informal claim in the bankruptcy case by Merrill Lynch, ~Merrill Lynch's motion to dismiss the Claims and the Counterclaims is denied. This memorandum opinion shall supplement my findings of facts and conclusions of law stated on the record on December 1, 1995 in support of. my Order Denying Motion of Merrill Lynch to Dismiss the County and Moorlach's Second Amended Complain t. END OF DOCUMENT Copr. © West 2001 No Claim to Orig. U.S. Govt. Works I , ' ! DEPARTMENT OF RECREATION AND PARKS DATE: July 5, 2001 TO: Alan Tandy, City Manager FROM: Stan Ford, Director of Recreation and Parks SUBJECT: Monthly Report for June Attached are the monthly activity reports for each division. Of note in June was: Aquatic Safety Audit: Staff earned their highest rating ever, exceeds standards, which is also the highest possible. In addition, each guard tested earned a perfect score of 100%. Grants: The department received $15,000 from the California Department of Forestry for tree planting. We're Still Growing: Three additional areas were accepted for maintenance. c: Citizens Community Services Advisory Committee CITY OF BAKERSFIELD Recreation &Parlcs June 2001 Monthly Report Submitted by: David Stricker, Acting Supervisor Josh Romine, Acting Recreation Specialist AQUATICS AQUATICS STAFF One hundred and twenty-two aquatics staff began working at our nine aquatic facilities on Monday, June 18, 2001. AQUATICS TRAINING Every aquatic staff member attended one three day orientation in addition to the required Ellis & Associates Lifeguard and Swim Instructor training before beginning work this summer. The orientation was conducted between June 11 through June 16, 2001. The topics included in the training were guest service, cardiopulmonary resuscitation, first aid, water rescue skills, sun safety, teamwork, risk management, policies and procedures with Select Personnel Services, facility operation, sexual harassment, and cultural diversity. ELLIS & ASSOCIATES An unannounced observational audit was conducted on June 26, 2001. Our team received the highest possible rating of "exceeds standards" in every area audited by Ellis & Associates. This is especially notable due to the fact that over 80% of the aquatics staff are first-year lifeguards. AQUATIC ATTENDANCE See following pages 2001 SUMMER AQUATICS RECREATION SWIM ATTENDANCE TOTALS JUNE 2001 JUNE 2000 BEALE 1316 ~ 1547 JASTRO 1018 ~8~9 JEFFERSON 2930 : ~ ~2898. ~,~.; MLK 1607 PLANZ 1299 ?.; ,;~1078 i, ..i:~798 SAUNDERS 797 SlEMON 1201 SlLVERCREEK 1840 WAYSIDE 1100 ;::. ,, ~ ~_~ TOTALS 13,108 12,552 SCHOOL PASSES (#'s are incorporated into Rec. Swim figures) June 22-28 F~ASSES USED 580 PASSES NOT USED 5420 TOTALS 6000 EMERGENCY MANAGEMENT JUNE 2001 JUNE 2000 RESCUES 15 12 ACCIDENTS 95 68 INCIDENTS 31 28 TOTALS 141 108 2001 SUMMER AQUATICS AQUATIC PROGRAM ATTENDANCE TOTALS SESSION #1 June 18-June 29 Preschool ~ 7 ~ 2~5 8 8 32 73 148 Journey 21 45 52 96 303 535 ~ ~ .... ~' ' 5 ~ 6 11 24 9 Challenge ......... ~= Adult ~~~ ~ ~ ;~~ 2 ~~ 11 ~ 13 4 P~. Lessons~ ~~. :.-~ ~ ~~,~ ~~ ~~ 10 I 10 12 Swim Team ~~ 111 I 53 ~ 19 86 94 92 ~ 455 472 TOTALS 13 147 88 40s3 ~.9 ~70 27s ~0 I ~48 ~2s4 CITY OF BAKERSFIELD Recreation &Parlcs June 2001 Monthly Report Submitted by: Henry Shipes, Recreation Supervisor Summer Game Centers The summer game centers opened on Monday, June 18th at five citywide locations. Sites include Wayside School/Wayside Park, Franklin School/ Jastro Park, Nichols School/Siemon Park, Jefferson School/Jefferson Park and Greenfield Jr. High School. The centers provide supervised recreational activities for children ages 6 to 14, Monday thru Friday from 9:00am to 4:00pm. The site at Greenfield Jr. High is open, Monday thru Friday from 1:00pm to 7:00pm. Activities offered at the sites include music, movies, drama, games, sports, arts and crafts, weekly tournaments, swimming, special events and excursions. Free lunch is available for program participants at Greenfield, Jefferson and Wayside game center sites. Game Centers Attendance Figures: Site Monthly Attendance Wayside School/Wayside Park 746 Franklin School/Jastro Park 401 Nichols School/Siemon Park 270 Jefferson School/Jefferson Park 162 Greenfield Jr. High School 205 UPCOMING ACTIVITIES The game centers will feature many exciting activities during next month, highlighted by guest speakers, a talent contest, tournaments and a carnival. CITY OF BA KERSFIEL D Recreation &Parlcs June 2001 Monthly Report Silver Creek Community Center After School Programs Keep America Beautiful Program Leisure Classes Submitted by: Terri Elison, Recreation Supervisor Colleen Cashmore, Recreation Specialist Bakersfield B.E.S.T. After School Program All Greenfield after school programs ended their programs on Tuesday, June 5th. Every site had a big party for their students. Program evaluations were handed out to all parents of the participants, Greenfield Site Managers, and staff. Overall, the responses were very positive. Mrs. Tracy Davis commented, "My child has benefitted from this program. He feels secure, safe, and it has helped build up his self-esteem." Ms. Imelda Garina said, "This program is a great program for kids to help them improve their grades as well as social skills. The sports program really helps them with team work". Silver Creek After School Pro.qram Participants celebrated the end of the school year with a big party on June 7th. Parents were pleased with this program and we received comments such as the one made by Alma Gonzalez, "1 was very happy with the after school program at Silver Creek. I never worried about my children after I saw how the staff related to the children". Keep America Beautiful Program We received a "A Growing Together" grant from the National Tree Trust. This will enable us to provide children in the Greenfield After School Program an opportunity to explore the benefits of trees in our environment. This grant will provide services to 850 children. The Keep Bakersfield Beautiful Committee is working hard on completing the task for certification in October. The Litter Solid Waste Survey is to be completed for the city by the end of August. Plans are being made for an city wide event in October where the Keep America Beautiful Program and Keep California Beautiful Program will be present. ATTENDANCE FIGURES Activity Monthly Attendance TOTAL YEAR Greenfield Union School District Fairview ............................................................. 359 18,119 Kendrick ............................................................ 523 23,838 McKee ............................................................... 1312 34,828 Palla .................................................................. 611 34,403 Plantation .......................................................... 472 22,829 Planz ................................................................. 318 19,666 Silver Creek After School Program ................ 53 2,152 (4-days only Mon. - Thurs) TOTAL ATTENDANCE AFTER SCHOOL PROGRAMS ....... 3,648 155,835 Silver Creek Rentals ................................................... $1044.00 (F~guro soo, .o, ,.c,,,do do,o,i,,i The Silver Creek multi-purpose room and or pavilion was rented 6 times during the month of June. The center was rented for two school parties, a cancer survivor party, family reunion, and two company parties. Total attendance was 915. Classes at Silver Creek: Classes at Other Facilities Ballet & Gym ............................... 128 Tennis (Siemon Park) Pressed Flower Workshop .......... 13 ('Children) ..................... 80 Cheerleading ............................... 127 (Adult) .......................... no class Clogging ...................................... 104 Jazzercise ................................... 105 Dog Obedience ........................... 52 Karate .......................................... 264 Kardio-Kick .................................. 72 Dance & Gym (Tiny Tots) ........... 132 Scapbooking .............................. 20 Tennis Lessons(Children) ............160 Registrations Taken: 680 Tennis Lessons(Adults) ................ 64 Number of Guests Served in Calligraphy Workshop .................. 3 office: 839 Cycling I ...................................... 4 Latin Dance ................................. no class Watercolor ................................... no class Upholstery ................................... 36 TOTAL ........... 1364 Silver Creek Day Camp ........................ 510 Session 1 ...... 51 The Silver Creek Day Camp started June 18th. The theme was "Slippery, Slimey, Science" and highlights included field trips to Wind Wolves Reserve and FACT Bird Sanctuary; two special speakers, Paul Graham, our Department's Urban Forester, and Karen Chaney from Kern Schools Federal Credit Union; science projects,' swim lessons, started the Book Blast Reading Program, and the "Don't Laugh At Me Program and lots of games, camp songs, and crafts. Mini Hawk Sports Camp ...................... 12 This sports camp for 4 to 7 year olds targeted teaching basketball, soccer, and baseball. Everyone enjoyed the individual attention they received from the counselors and each participant received a mini-basketball and t-shirt. Attendance Silver Creek Center: Rentals ......................................... 915 After School Program ................... 53 Classes ........................................ 1,284 Meetings & Trainings ................... 193 T-Ball Program ............................. 560 Day Camp .................................... 510 Mini Sports Camp ......................... 60 TOTAL .................... 3,475 C1TY OF.BAIi ERSFIEI D Recreo. fton &Par JUNE 2001 MONTHLY REPORT ADULT AND YOUTH SPORTS SUBMITTED BY: Dean Jones, Supervisor I Kevin Ross, Program Coordinator ADULT SPORTS The adult softball league started on June 11, we are using three soi~ball diamonds this season due to an increase in teams. The three diamonds are, Beach, Wayside and Dr. Martin Luther King Jr. Divisions Mens division 46 Co. Ed division. 23 We also provide umpires and field preparation for the Law League which began on June 19. There are 8 teams in that league. YOUTH SPORTS Summer league basketball League play began on June 11. All high schools in the Bakersfield high school district is participating. Varsity boys 10 teams Junior Varsity boys 12 teams Freshmen boys 11 teams All games are played at East Bakersfield High School Summer league football The passing leagues began on June 13, originally they were scheduled for Bakersfield high school due to construction on campus we moved the league to Centennial High and Highland High schools. Varsity only 13 teams Tee-Ball League began on June 9, all games are played at Silvercreek. To enhance the quality of the program we conducted a fundamentals clinic. It was well received by parents and the participants. A special thanks to North, Centennial and Garces high schools for providing baseball players to help conduct the clinic. Total: 140 participants CITY OF BAKERSFIELD Recreation &Parks. June 2001 Monthly Report Dr. Martin Luther King, Jr. Community Center Submitted by: Linda McVicker, Recreation Supervisor Jeannette Triscuit, Recreation Specialist Dr. Martin Luther King Community Center With the onset of summer the center has been extremely busy. A week long staff training was held at the center for the Aquatics staff, the Game Center staff, the Silver Creek staff and the Camp King staff-: The center co-sponsors a free lunch program with the City School District. This program averages 260 participants a day. The Camp King program began on June 18'h. We have 100 children attending on a daily basis. Our theme for the week of June 18th was Sports week. We held tournaments and had coaches from the community talk with the campers. Our theme tbr the week of June 25th was Be Kind to Animals week. We had the 4H come and give a demonstration on how to care for rabbits. Cal States FACT demonstrated how to care for Owls and the children read stories about animals and talked about how to care for pets. We also had a Fireman take to the campers about how to be safe on the 4'h of July. Mlk Attendance Figures: Activity Monthly Attendance Morning Fitness Room Closed until Aug. due to Camp Afternoon Fitness Room 514 Gmne Room 713 G10n 1,603 Children's Dance Troupe Closed until Aug. summer break Saturday Tennis 50 Aerobics 84 Sunday Adult Basketball 96 Camp King 974 Internet 208 Free Lunch Program 2609 RENTALS ATTENDANCE AND FIGURES: DATE AGENCY ATTENDANCE June 9 Graduation Party 75 June ! 1 - 16 Camp Training 159 June 11 - 16 Swim Training (David) 300 Lowell Neighborhood Community Center The Lowell Summer Program began on June 18'h. Their theme for the first week was Buzz into Summer, and the second week was Sun-Fun-Stay-Play. Activities include free swimming at the Dr. Martin Luther King Jr. Center, parachute games, foil art, and making banana pudding. CITY OF BAKERSFIELD Recreation &Par PARKS DIVISION JUNE 2001, MONTHLY REPORT NEW PARKWAY PARKING In conjunction with Streets Division, Recreation and Parks staff teamed up to complete a new parking 'facility for users of the Kern River Parkway. Located on the north side of Stockdale Highway immediately across from Cal State Bakersfield, the new lot provides 116 parking spaces encompassed by 23 freshly planted Valley Oak trees. A new irrigation system was made possible by Water Department's extension of water service to the site. Hydroseeding 20,000 square feet of turf between the parking lot and Stockdale Highway will accent the green belt look provide by neighboring medians. TOUCH UP WORK Four replacement trees were installed on the south side of the recently completed Fleet Services facility located behind Bakersfield Police Department. These Bradford Pear trees will offer spring blossoms, shade during summer, and brilliant colors each fall. As important as the aesthetics is concern for proper tree specie for the site. In this case, the Bradford Pear is a moderate size tree capable of tlourishing within the confines of surrounding hardscape. With recent completion of Bakersfield Art Museum's remodel, park personnel replanted entry hmdscaping along thc lizncc linc at thc north side of'thc premises. Thc addition of new shrubs will compliment the mature garden setting. DR. MARTIN LUTHER KING CENTER Final touches to the exterior painting project tbr Dr. Martin Luther King, Jr. Center occurred in mid June. We found the contractor very cooperative in working around items such as pool deck repair, keeping the entry available ~br thcility users, and the big day when hundreds of school children engulfed the neighborhood ibllowing the last day of school. Kudos to Recreation Supervisor Linda McVicker for finalizin~ color selection. The new look is quite impressive and made even more so by the reflection offered from the now filled swimming pool. CLEARANCING FOR SAFETY Tree section staff responded to request from Solid Waste Division to provide tree clearancing for alleys in east Bakersfield. Boundaries were established to include Union Avenue to Beale Avenue and Highway 178 to Bernard Street. Staff pruned for safety clearance to enable larger vehicles such as refuse collection tracks to negotiate alley ways without contacting and possibly damaging either trees or City vehicles. Projects such as this and large Code Enfrbrcement calls are routinely routed to Recreation and Parks. These projects are in addition to regular maintenance operations. Additional acreage canvassed by projects such as these are not included within acreage reports typically submitted as Recreation and Parks domain. CHECKS IN THE MAIL Actually the news is better than the title. Recreation and Parks received a $15,000 check from California Department of Forestry for a second grant to plant trees within existing parks. The additional funds will be put to use this thll with planting programs coordinated by our Urban Forester, Paul Graham. As previously mentioned, the combined grants provides $25,000 to this department to implement new tree planting projects. A DIFFERENT LOOK After numerous replanting efforts, two test programs were initiated for redesign of residential comer landscaping. The repeat problem is shrubs and ground cover in many areas of the southwest were repeat victims of either foot traffic from persons taking short cuts or more nefarious and deliberate acts of vandalism. Two test locations are Beau Maison at Hagin Oaks and Spring Creek Loop at Harris. The new design is a simple approach of utilizing larger shrubs nearer to walls which surround pcrilnctcrs of residential developments with turf replacing the smaller shrubs or ground cover immediately behind the sidewalk. The first comment heard from an area resident was quite fhvorable in both the approach to fixing the problem while also acknowledging" I know you have replanted the area at least five times since I have lived here .... and that's a conservative number". We have initiated steps to meet with representatives of various school districts to explore the opportunity to relocate certain bus stops in order to relieve some of the pedestrian traffic. Monthly Report/June 2001 Final Acceptance: Tract 5658 Unit One sump landscaping on Remington Park Dr. & Verpolo Way Acceptance Date: 6-11-01 acreage: .1518 Tract 5077 Grand Canyon Dr. eastside wall north of Vista Montana Dr. Acceptance Date: 6-22-01 acreage: .0733 Tract 5943 Riverlakes Dr. westside wall between Skye Isle Way & Links Dr. Acceptance Date: 6-25-01 acreage: .3865 Park Site in the River Oaks Development Phase 1&2 Acceptance Date: 6-11-01 *Hardscape Only Maintenance Period: Tract 5929 Panorama Dr. northside wall west of Thorner St. and sump landscaping on Eagle Ridge St. & Morning Dr. Acceptance Date: 6-4-01 Tract 5430 Phase F&G Grand Lakes Ave. and Brandy Rose St. eastside wall Acceptance Date: 6-14-01 Tract 5293 Grand Lakes Ave. and Coram Dr. westside wall Acceptance Date: 6-14-01 Tract 5961 Riverlakes Dr. westside wall between Links Dr. and Olive Dr. Acceptance Date: 6-21-01 BAKERSFIELD BAKERSFIELD FIRE DEPARTMENT TO: ALAN TANDY, CITY MANAGER FROM: RON FRAZE, FIRE CHIEF DATE: July 6, 2001 SUBJECT: RELOCATION OF FIRE STATIONS Council Referral No. WF0018923 / 001 (Ward 1) I Councilmember Carson requested that staff research the relocation of fire stations. I Staff is in the process of setting up a meeting with Councilmember Carson and the Bakersfield Police Department to get the full scope of Councilmember Carson's request. RF/kec BAKERSFIELD CITY MANAGER'S OFFICE MEMORANDUM June 19, 2001 TO: Alan Tandy, City Manager FROM: Alan Christensen, Assistant City Manager ~ SUBJECT: Referral WF00118922 - Empowerment Zones There are two parts to this referral: 1) Provide Councilmember Irma Carson with information on the Empowerment Zone program thru HUD. Attached is a memo from EDCD outlining the program benefits and application deadlines. 2) Set up an Intergovernmental Relations Committee (IGRC) meeting with the County to discuss the issue. Staff has contacted the county regarding a meeting. However, because of vacation schedules they are not available in July. City staff will be working to arrange an IGRC meeting and have county staff attend to answer questions regarding the Empowerment Zone program. BAKERSFIELD Economic and Community Development Department MEMORANDUM July 5, 2001 TO: DONNA KUNZ, ECONOMIC DEVELOPMENT DIRECTOR FROM: HAYWARD COX, DEVELOPMENT ASSOCIATE SUBJECT: HUD Informational Workshop on Round III Renewal Communities and £mpowerment Zones Application Process On June 27 and 28, 2001, Roy Hall and I attended the HUD workshop announcing the application process for Renewal Communities (RC) and round three Empowerment Zones (EZ) designation. Communities must meet certain thresholds to receive the RC or EZ designation. Once an area receives its EZ or RC designation, businesses that locate in these zones or employ people who live in those zones qualify for special federal tax credits. Applications are due no later than September 28, 2001. Renewal Communities (RC) The following requirements must be met to receive the Renewal Community designation: 1. A Coordinating Responsible Authority (CORA) must be formed to be the main contact with HUD. This agency should consist of organizations such as: · community, economic and business development agencies; · Local public health and social service departments; · Federal and State agencies; · Job support programs; faith-based organizations, residents, businesses, local nonprofit groups or resident associations, etc. 2. City and County must agree on the area to be nominated as an RC. City, County and State must then sign and submit nomination forms and certifications for the selected RC area. 3. The RC must consist of census tracts with a poverty rate of at least 20%, an unemployment rate of at least 9.4%, and 70% of residents in the area must be categorized as Iow income (income at or below 80% of median for the area). All figures are based on 1990 census data. 4. The RC area census tract boundary must be contiguous, and each census tract must meet the income, poverty and unemployment requirements set by HUD. Population of RC area cannot exceed 200,000 and must be more than 4,000. 5. A Course of Action document must be submitted with the application. The Course of Action is a document explaining how state and local governments will work with community-based dlk:C:~)ocuments and Settings~achrist&Local Settings\Temp\RC-EZ QWorskshop.wpd organizations to reduce burdens and to improve services for RC residents and businesses. This document must be signed by representatives of the nominating State and local governments and by the community-based organizations that are committed to achieving the goals of the Course of Action. The goals must include at least four of the following areas: reduce tax burdens; improve local services, reduce crime, involve community partners, gift of real property, reduce government requirements. 6. If our area is selected as an RC, the CoRA must develop and submit a draft Tax Incentive Utilization Plan (TIUP) within six months after designation. A final TIUP is required twelve months after an area is designated as an RC. HUD will award 40 RC designations in this round. Twenty of the designations will be given to communities HUD is not making funds available for RC's and EZ's in this round, only tax incentives, which can be significant to employers. Tax incentives include: Wage Credit, Work Opportunity Tax Credit, Increased 179 Expensing, Environmental Cleanup Deduction, Commercial Revitalization Deduction, Qualified Zone Bonds, Zero Capital Gain of RC Assets. Empowerment Zone (EZ) To receive the EZ designation the following requirements must be met: 1. Governance Board must be formed. It can be comprised of representatives from business, government, nonprofit organizations, educational institutions and faith-based organizations. 2. Nomination by State and at least one local government organization. 3. Strategic Plan Must address four key principles of EZ's. · Strategic Vision for Change · Community-Based Partnerships · Economic Opportunity · Sustainable Community Development 4. EZ's must not exceed 20 square miles, however contiguous area is not required. May also include up to 2000 acres outside the nominated area called developable sites (D-Sites). D- sites are not subject of poverty criteria. 5. All census tracts of the EZ must meet poverty criteria of at least 20%. HUD will designate only seven urban and two rural Empowerment Zones in this round of applications. Designations will extend for approximately eight years after designation. Each designation has it's own advantages and disincentives. The RC offers the least intensive application process; however, the collaboration between City, County and State to designate a contiguous area agreeable to all parties may prove to be challenging. EZ's allow the City to act independent of the county, but a comprehensive strategic plan is required which is a huge task, requiring significant staff time and collaboration with the CoRA that will be charged with carrying out the plan. Low income areas and residents stand to benefit from either designation. dllcC:\Documents and Settings~achfiste\Local Settings\Temp~RC-EZ QWorskshop.wpd · RECE VE BAKERSFIELD PUBLIC WORKS DEPARTMENT MEMORANDUM TO: ALAN TANDY, CITY MANAGER FROM: RAUL ROJAS, PUBLIC WORKS DIRECTOR DATE: JULY 5, 2001 SUBJECT: HANDICAPPED ACCESS Referral Record # WF0018911 / 00]. Councilmember Carson referred to Public Works the issue of handicapped access atI 6th and P Streets and requested a status report. / The project to install handicapped ramps at 6th and P Streets was completed on June 22, 2001. All four corners at this location can now be accessed by persons on wheelchairs. G:\GROUPDATXR¢ ferrals\Ca:son I X2001 'd4.andicapped Access. Carson. wpd B A K E R S F I E L D OFFICE OF THE CITY MANAGER MEMORANDUM July 6, 2001 TO: Honorable Mayor and City C0/,~~ ~/,,.- / FROM: Alan Tandy, City Manager ~//J / SUBJECT: Carriage Masters Councilmember Benham requested a positive report on what could be done to save the Carriage Masters building. This memo attempts to respond to that request. Background The Carriage Masters building is an auto repair shop that sits within the boundary of the Riverwalk Plaza (City Center) project. It is probably the only building in the project area with some design character, but it is not on any list of historic structures. Because of the design character of the building, the Architectural Review Committee .and Historic Preservation Commission asked that consideration be given to saving it. Ray Olmscheid expressed interest and investigated the possibility. It fell through for two reasons: First, it consumed 'two much parking which would have caused them a compliance problem. Secondly, and far more critical, we found out it is a URM, or Unreinforced Masonry, building. URM buildings are not in compliance with City codes. They are hazardous during earthquakes. There is a State law imposing upon the City a directive to get rid of them. For about five years, the City offered financial incentives to owners to tear down or retrofit them. About 87% of the inventory in Bakersfield has been retrofitted, torn down or is in process as a result of the State law and program. Carriage Masters is in the other 13%. Moving a URM building would not be technically feasible as the problem with them is potential collapse with movement. Carriage Master July 6, 2001 Page 2 Options Available to Save the Building 1) The City has a development agreement with the Olmscheid group that gives them the redevelopment rights to the area. Nothing about saving the Carriage House was in the DDA. Thus, until September 8th, it is Olmscheid's decision. We cannot unilaterally amend the DDA. I would expect that it might be possible to compensate Olmscheid enough to allow him to buy replacement parking and enough to cover the costs of retrofitting the URM building so that it could safely be used. Both figures would likely be six digit numbers, although no engineering estimate has been done on the Carriage Masters building to our knowledge. That assumes Olmscheid could find a tenant after retrofit. This is not Olmscheid's request. It 'is simply an option as to how it might theoretically be done. 2) If the Riverwalk Plaza project falls through and/or the development agreement expires, there would .be no acquisition and it could remain an auto repair shop as it now is. 3) If the Riverwalk Plaza project falls through and/or the development agreement expires, it might be possible for the City to interest another developer .in doing something with the structure. The financial issue of retrofitting the URM aspect would have to be dealt with. Without the surrounding Riverwalk Plaza's improvements, the surrounding properties would also impact our ability to find a willing developer. 4) Perhaps a potential compromise is to extract some of the design elements from the building and incorporate them with the design of the new structures that will go into the area. Olmscheid has expressed a willingness to look at that possibility. 5) If the Riverwalk Plaza project falls through, it might be possible for'the City to acquire it, correct the URM problems and retrofit it for office use - EDCD, Recreation and Parks, or the Convention and Visitor's Bureau, for example. Cost estimates have not been done. B A K E R S F I E L D ,J{~ 6 2{}0[ i TO: Alan Tandy, City Manager FROM:DATE: JaCkjuly 5,HardistY'2001 Development Services Dire~ SUBJECT: Council Referral No. WF0018917 / 001 Councilmember Benham requested staff provide an updated compliance report regarding removal of trash and debris from the Montgomery Ward parking lot and behind the Rancho Bakersfield Motel. On July 5, 2001, a notice of violation for weeds, junk and trash will be mailed to the property owner of the Rancho Bakersfield Motel. A reinspection of the property will be conducted on July 12, 2001. Montgomery Wards will also be issued violation notices for broken windows, weeds, junk and trash. A reinspection will be conducted on July 12, 2001. B A K E R S F I E L D .JUl 6 2 1' TO: Alan Tandy, Gity Manager FROM: Jack Hardisty, Development Services Dire or~/ /, DATE: July 5, 2001 SUBJECT: Council Referral No. WF0018918 - 1701-1801 Canter Way ICouncilmember Benham requested staff provide an updated compliance report I regarding removal of the apartment buildings at 1701-1801 Canter Way. I On June 29, 2001, a notice of violation for open vacant apartments, weeds, junk and trash was mailed to the property owner. A reinspection of the property will be conducted on July 6, 2001. The property was previously noticed for the same violations on March 1, 2001. The property owner abated the violations on April 16, 2001. Since that time, the fence on the west side of the property and some upstairs windows have been vandalized. The vacant church and vacant lots west of the apartments (5001 Ming Avenue) have also been issued violation notices for weeds, junk and trash. A reinspection will be conducted on July 6, 2001. As for the removal of the apartments, Mel Atkinson, representative for the church, had told Code Enforcement Officer Fenstermaker that they were looking into moving the building to an unknown location. We do not know for a fact that this will happen. Mel Atkinson abated the violations on April 16, 2001, and we assumed he was a reliable source. B A K E R S F I E L D ..... PUBLIC WORKS DEPARTMENT MEMORANDUM TO: ALAN TANDY, CITY MANAGER FROM: RAUL M. ROJAS, PUBLIC WORKS DIRECTOR DATE: JULY 5, 2001 SUBJECT: CURBSIDE RECYCLING Referral Record # WF0018906 Councilmember Benham requests a future workshop regarding curbside recycling and would also like information on how the City could pursue this type of program. This subject will be included in the July 18, 2001 City Council Workst~o£ on Landfill Fees and Wet Waste recycling options. G:\GROUPDA'r~Referrals\Benham2\Curbside Recycling_W F0018906,wpd B A K E R S F I E L D '~';'~"'~ PUBLIC WORKS DEPARTMENT MEMORANDUM TO: ALAN TANDY, CITY MANAGER FROM: RAUL M. ROJAS, PUBLIC WORKS DIRECTOR .~/ ~._.~ ~ DATE: JULY 5, 2001 SUBJECT: PLANTING TREES ON RAMPS Referral Record # WF0018920 Councilmember Benham requests staff prepare a letter to Caltrans regarding the feasibility of planting trees near the on-ramps on Freeway 99. Staff has written the requested letter. A copy of that letter is attached. G:\G ROUPDAIAReferrals\Benham2\PlantingTreesOn Ramps_WF0018920.wpd BAKERSFIELD PUBLIC WORKS DEPARTMENT 1501 TRUXTUN AVENUE BAKERSFIELD, CALIFORNIA 93301 (661) 326-3?24 RAUL M. ROJAS, DIRECTOR · CITY ENGINEER July 5, 2001 Mike Leonardo Director, District 6 Caltrans P. O. Box 12616 Fresno, CA 93728-2616 RE: Landscaping at Freeway Ramps in Bakersfield, California Dear Mr. Leonardo: The City of Bakersfield is hereby inquiring about the feasibility of planting additional trees within State owned right of way at various freeway on- and off-ramps within the metropolitan Bakersfield area. Specifically this inquiry regards SR99, but the City is also interested in upgrades to the landscaping at romps on SR178 and SR58. Please let us know the possibility of the State programming those improvements. We would also appreciate a description of the pmcedu re that would need to be followed should the City program funds for the installation of that enhanced landscaping. Thank you for your assistance with this request. Very truly yours, Raul M. Rojas Public Works Director ~.~/~d,~s'sistant Public Works Director c: Honorable Mayor and City Council Ted Wright S:~,PROJECTSWJ:{NOLD&,Caltrans L.andsca~ino07 5 01.wod B A K E R S F I E L D PUBLIC WORKS DEPARTMENT MEMORANDUM TO: ALAN TANDY, CITY MANAGER FROM: RAUL M. ROJAS, PUBLIC WORKS DIRECTOR DATE: JULY 6, 2001 SUBJECT: RESIDENTIAL REFUSE ISSUES Referral Record # WF0018907 ICouncilmemberCouch that Solid Waste Director Kevin Barnes look at the requests proposal submitted by Adam Cohen and report back to Council. Councilmember Salvaggio requests that staff provide copies of memorandums regarding curbside recycling to Ms. Hamilton and to provide a thoughtful response to he concerns. Councilmember Maggard requests that staff explore the feasibility of privatizing curbside pickup for individuals who wish to pay for this type of service and report back Council. 1. Staff has examined the document submitted by Mr. Adam Cohen titled "Proof for An Adjusted Residential Refuse Rate Increase of 1.1615%." The document simply illustrates how reducing the service rate adjustment by half would result in a reduction in the reserve balance. The reserve balance calculated by the document is slightly off, because two multiplication errors were made and two other residential revenue line items were left out. 2. Attached is a copy of the letter prepared for Susan Hamilton in response to the written comments presented by her at the June 27th Council meeting. 3. Per Councilmember Maggard's request, a discussion regarding privatized curbside recycling for individuals who wish to pay for it will be included in the curbside recycling workshop requested by Councilmember Benham. Attach. BAKERSFIELD PUBLIC WORKS DEPARTMENT 1501 TRUXTUN AVENUE BAKERSFIELD, CALIFORNIA 93301 (661) 326-3724 PAUL M. ROJAS, DIRECTOR · CITY ENGINEER ,July 3, 2001 Dear Ms. Hamilton: Thank you for your comments at the June 27th City Council meeting regarding recycling. In addition to my recent letter to you on the subject of recycling, I would like to offer the following points in response to your comments: The answer to your question about Bakersfield being the largest west coast city without curbside is, simply, economics. Drop off recycling systems used in Bakersfield cost about $60 per ton of recycled material. In comparison, curbside recycling collection costs range well over $100 per ton, regardless of location. Add the problem of not being able to save landfill fees for residential waste which is recycled (as we have discussed), and there is a large economic barrier. Since curbside recycling in Bakersfield would collect a relatively small percentage of waste at a cost of several million dollars, curbside isn't the logical first choice. In complying with recycling mandates, cities must follow a process prescribed by the state to evaluate and choose options, yet they have final responsibility for deciding what best suites their situation and needs. For example, many cities use very costly garbage sorting facilities instead of curbside or green waste programs. Bakersfield has chosen more economical programs. We also thank you for your support in rectifying the apparent discrepancy in the County landfill fee structure. While it is the County Board of Supervisors, and not the City Council, that sets these rates, we assure you that we are urging the County to heed our situation. And, while we do not have the County's full breakdown of which fees are forwhich services, I am preparing a presentation on the general structure of landfill fees for the 5:15 p.m. City Council workshop of July 18"'. If you cannot attend, please let me know and I will provide you a copy of the report. In short, the $57 annual land use fee is to cover County landfill construction, operation, environmental closure and monitoring, along with the County's household hazardous waste center and some recycling programs. G:~GRO U PDAT~Referrals~SalvaooT~200 ltHamilto~ Itr070601.wod July 3, 2001 Ms. Hamilton Page 2 You already understand the issue of cost-effectiveness between curbside and construction/demolition waste recycling, and your question about the source of funds for the new recycling project is a good one. The $184,000 you mention is from the City's Refuse Enterprise Fund, which is funded by both residential and commercial refuse service fees. The same 3.23 percent rate adjustment was applied to our commercial rates. We estimate that many will benefit from this project. It should result in less transportation cost and more convenience for do-it-yourselves, time and cost savings for construction/remodeling firms, and potential savings passed on to homeowners. As for entrepreneurs charging for recycling service on a voluntary subscription basis, this has been done to a limited extent. The service reportedly charged customers $10 per month. We have not heard of it lately. We will be examining the possibility of making recycling service available through the City's contract haulers. This may be part of the workshop on July 18~ which I mentioned earlier. If not, it will be on another date soon afterward. I look forward to hearing your opinion on this subject. Finally, I do not believe we can say that public funding of curbside recycling in Bakersfield "makes no sense whatsoever". It makes sense in certain ways, but not others. It may someday be necessary, depending on changing needs and waste generation pattems. Thus far, it has simply not been the most prudent economic choice. Thank you for your attention to these issues. Sincerely, Kevin Barnes Solid Waste Director G:tGROUPDA'l~Referrals~Salvaaa7~20Ol~Hamilton It]'O706Ol.wod From: Stan Ford To: Rhonda Smiley Date: 7/6/01 11:03AM Subject: Art Carlock - Referral Staff met with Mr. Carlock and is currently gathering additional information. Staff will be contacting the Downtown Business Association, determining potential event sites, discussing impact of the event on downtown with the PD, and researching impact of other issues. CC: Allen Abe M E M O R A N D U M July 5, 2001 TO: COUNCIL MEMBER DAVID R. COUCH FROM: BART J. THILTGEN, CITY ATTORNEY ~ ALAN D. DANIEL, DEPUTY CITY ATTORNE~Y./~"--'"-- Subject: AMERICAN AIR & HEATING OFFER COUNCIL REFERRAL NO. WF0018914 / 001 (WARD Council Member Couch requested that City Attorney Thiltgen look into the legitimacy of an offer regarding a Central Heating and Cooling System Rebate Program from American Air & Heating. Our office has reviewed the advertisement sent by American Air, Heating and Refrigeration (661-588-1776), and it does not appear to contain any illegal statements. The statement, 'Tm so confident that you will save at least 25% on your energy usage...I will pay you Double the Difference if you don't, the first year," appears to be an unenforceable offer on the part of the advertiser. We would have to review the actual contract which would be signed by the consumer in order to determine if the "Double the Difference" guarantee is something can be enforced. Because of the likelihood of additional details which would be contained in any contract between the consumer and this company, it is difficult to project whether an actual guarantee' is being offered in the advertisement. American Air, Heating and Refrigeration has been a member of the Better Business Bureau since December of 1996 and has agreed to comply with all the rules of the Better Business Bureau in conducting its operations and settling customer disputes, As of July 2, 2001, this company has a satisfactory rating from the BBB. BJT/ADD:dlr cc: Honorable Mayor and Council Members Alan Tandy, City Manager S:\COUNCIL\Referrals~AmericanAir&Heat.wpd ALAN TANDY, CITY MANAGER BAKERSFIELD TO: Alan Tandy, Oity Manager FROM: Jack Hardisty, Development Services Dir~r~ DATE: July 5, 2001 8UBJEGT: Oouncil Referral No. WF0018912 ICouncilmember Couch referred the issue of complaints he has received regarding hot dog establishments lighting and requested staff to look into this issue. The hot dog establishment in question is the Wienerschnitzel on Coffee Road which is located in the County. The supervisor in charge of plan check for the County was contacted. He stated that he would look into the problem but said he was sure that they had requirements for the lighting. !';!'. V ~'££: V.??y-'. .... BAKERSFIELD PUBLIC WORKS DEPARTMENT MEMORANDUM TO: ALAN TANDY, CITY MANAGER FROM: RAUL M. ROJAS, PUBLIC WORKS DIRECTOR DATE: JULY 2, 2001 SUBJECT: SPEEDING/VANDALISM Referral Record # WF0018916 - Ward 4 Councilmember Couch requests response to the request from a citizen regarding a potential stop sign on Saddle Drive and River Rock. Councilmember Couch also referred the issue of speeding and vandalism to the Police Department for monitoring. The Traffic Engineer contacted the resident regarding the stop sign request. A stop sign study will be performed in the next week and data analyzed. Speeding data will also be collected on Saddle Drive and given to the Police Department for their use in enforcing the residential speed limit of 25 miles per hour. G:tGROUPDAT1Referrals~Couch4~001~Speeding and Vandalism WF0018916.wpd B A K E R S F I E L D M E M O R A N D U M -- ~F~Y MANAGER'S TO: ALAN TANDY, GITY MANAGER ~/ FROM: JAOK HARDISTY, DEVELOPMENT SERVlOES DIRE DATE: July ~, 200~ BUBaEOT: ANNE~TION Oounoil Referral No. WF00~8913/00~ (Ward 4) Oounoilmember Oouoh requested that staff pursue a prope~y owner reoardin0 annexation to the Oity. Background: The property owner, David Bird, Successor Trustee of the Survivor's Trust of the David and Florence Bird Revocable Intervivos Trust dated June 5, 1992, submitted a letter indicating that he gave authorization to Mr. Floyd Hinesley to act on his behalf and to sign any and all necessary documents for the annexation and General Plan Amendment/Zone Changes. Mr. Hinesley had, at the time, an offer to purchase the property if the zoning were to be commercial. The Planning Commission and City Council denied the request for commercial. Recent Development: LAFCO contacted Floyd Hinesley who said since he did not get commercial, he was no longer interested in annexation. We discovered this and immediately sent a letter to the property owner. There was no other way to contact him (Mr. David Bird). No response from David Bird was received to date and LAFCO denied the annexation on June 26, 2001. JH:MO:pah P:\Corres\annexation ref 2.wpd p:\Corres\annexation ref 2.wpd BAKERSFIELD TO: Alan Tandy, City Manager FROM: Jack Hardisty, Development Services Dire o~~ ?' DATE: July 5, 2001 SUBJECT: Council Referral No. WF0018928 - 2200 block of Castro Lane Councilmember Salvaggio referred to Code Enforcement the issue of weed abatement on the four lots at 2200 block of Castro Lane and requested they be cleaned prior to July 4, 2001. On June 15, 2001 a complaint was received regarding weeds for the above location. A notice of violation was sent to the property owners. Three of the lots were abated by the owners (one of which belongs to the city). The last lot is owned by Mr. Clifford Work of Thebes, Illinois. Mr. Work stated he had not responded to the notice of violation because the property has been in escrow since April 20, 2001, and he had expected it to go to the new owner long ago. He offered to clean the lot but did not think he could arrange it before July 4, 2001. On July 3, 2001, an adequate firebreak was installed by Code Enforcement. BAKERSFIELD PUBLIC WORKS DEPARTMENT MEMORANDUM TO: ALAN TANDY, CITY MANAGER FROM: RAUL M. ROJAS, PUBLIC WORKS DIRECTOR DATE: JULY 2, 200'1 SUBJECT: TRAFFIC SIGNAL AT MONITOR Referral Record # WF0018929 - Ward 7 Councilmember Salvaggio request staff report on the estimated completion date of the traffic signal at Monitor and Fairview and the feasibility of its completion prior to school commencing. Staff submitted paperwork allowing the project to proceed with bidding and construction last month, and has not yet received approval of this submission. Staff contacted Caltrans personnel who requested one more document which was immediately faxed. Caltrans indicated that with this document, approval should be forthcoming next week. The poles for this project have already been ordered and were received last month. Federal projects require a 3 week bidding period so that award of the project is anticipated for the first council meeting in August. An expedited construction schedule will be specified in the contract documents so that construction can begin immediately after award of the contract. Therefore, the project will be under construction prior to school commencing. However, with the Federal advertising requirements, it is probably not feasible that the traffic signal will be completed prior to school commencing. G:\GROUPDAT~Referrals\Salvagg7~2OOl~Traffic Signal at Monitor WF0018929,wpd BAKERSFIELD CITY MANAGER'S OFFICE MEMORANDUM July 3, 2001 TO: ALAN TANDY, CITY MANAGER FROM: TRUDY SLATER, ADMINISTRATIVE ANALYST III ~ ~ SUBJECT: REFERRAL #WF0018925/001 RELATING TO PIT BULL INCIDENT At the City Council meeting of June 27, 2001, Councilmember Salvaggio asked staff to review an animal incident which led to the death of the dog of Mrs. Alice Peck of 4313 Axminster by two neighboring pit bulls. According to SPCA records, a call was placed on Sunday, June 24, to the Bakersfield Police Department by daughter Alicia who was pet sitting the family Schnauzer while her parents were on vacation. An SPCA animal control officer (ACO) responded to the report, finding that the Schnauzer had gotten out of its yard and was subsequently attacked and killed in a third-party yard by two pit bulls who had broken out of their fenced yard. The owner of the pit bulls, Joe Alvarado, 4405 Axminster, surrendered the two pit bulls to ACO T. Reed for euthanasia after securing them within his yard. ACO Reed offered removing the deceased dog but the daughter indicated she would take care of the disposition. The pit bulls were euthanized later the same day as the incident. Mr. Alvarado indicated to the ACO the puppies would be put up for sale when they were old enough. City regulations restrict the number of dogs per household to three. Puppies up to 12 weeks do not fall under this restriction. I called Mrs. Peck, who was unaware the pit bulls had been euthanized. She was understandably upset over the incident and indicated she felt there was a need for a pit bull ban in the City. She also indicated she felt the owner was breeding the dogs for financial gain. She indicated the owner still had pit bull puppies and asked if the owner could not be restricted from owning dogs. I explained that the City is prohibited from discriminating against any breed of dog. I also explained that the City's administrative hearing officer through the administrative potentially dangerous or vicious dog hearing process could impose restrictions upon dog owners but this situation would not apply as the animals had already been voluntarily given up for euthanasia. Mrs. Peck thanked me for my call and information. (P:\SPCA\M0107022) cc: City Manager Alan Tandy City Attorney Bart Thiltgen Deputy City Attorney Ginny Gennaro Cl~y oz Ba~ersIlel~ *REPRINT* ?-~. WORK REQUEST PAGE 1 ~Q/J~B: WF0018925 / 001 PROJECT: REQUEST DATE: 6_/.27/.01 PRINT DATE: 6 /29/01 CREW: PRINT TIME: 10:31:24 SCHEDULE DATES LOCATION: START DATE: 6/.27/.01 COMP DATE: 7/05/01 GEN. LOC: LOC ID: REF NBR: REQ DEPT: CITY COUNCIL REFERRAL PRIORITY: HIGH REQUESTOR: COUNCILMEMBER SALVAGGIO ORIGIN: CITY COUNCIL REFERRAL USER ID: DSULLIVAN AUTH: DSULLIVAN WORK TYPE: REFERRAL DESCRIPTION: DOG KILLED BY PIT BULLS REQUEST COMMENTS *DUAL REFERRAL TO T. 'SLATER, CITY MANAGER'S OFFICE (LEAD) AND GINNY GENNARO, CITY ATTORNEY'S OFFICE* SALVAGGIO REQUESTED THAT TRUDY SLATER AND GINNY GENNARO REVIEW THE ISSUE OF THE DOG, OWNED BY MRS. PECK. KILLED BY PIT BULL DOGS AND REQUESTED A REPORT BACK. THE PIT BULLS WERE REMOVED VOLUNTARILY; HOWEVER, THERE ARE NOW PUPPIES AT THE LOCATION. Job Order Descr~iption: DOG KILLED BY PIT BULLS Cat,egory co~e . : CITY MANAGER RMGR Task coae: . . : RESPONSE TO REFERRAL RESP Facil_ity ID . ..: Assigned Department: CITY MANAGER