State Senator John Moorlach warns of the dire financial issues facing numerous OC cities as a result of recession-related losses in their public pension plans, in this week’s Leader Board (see page 53).
For many cities facing lowered returns, higher required payments, and a steep drop in tax revenue the past few months, “the most likely outcome is filing for Chapter 9 bankruptcy restructuring,” says Moorlach, who has been there before, presciently warning of the county’s own fiscal house of cards prior to its infamous 1994 bankruptcy.
It’s the second such pension fund wake-up call we’ve run this month; on May 4 Chapman’s Jim Doti and Fadel Lawandy sounded similar alarms for cities including Anaheim, Garden Grove, Orange and Santa Ana.
The duo estimated a negative 15% annual return on investments for public pension plan managers like CalPERS for the 2020-21 fiscal year.
The warnings are getting national attention now, Doti notes: the Wall Street Journal last week highlighted a record decline for public pension funds, a 13.2% drop in the three months ended March 31. It’s the biggest one-quarter drop in over 40 years of tracking the data.
Absent a quick economic recovery, “pension losses are poised to drive up already-burdensome retirement costs for governments,” the story notes.
Doti doesn’t just read the WSJ and OCBJ, he writes at both papers too.
A May 4 WSJ article from the president emeritus and his Chapman colleague Laurence Iannaccone examines why there’s still shortages of germ-killing rubbing alcohol on store shelves during the coronavirus pandemic—despite the fact that the “U.S. is, by far, the world’s largest producer of alcohol.”
Long story short: government missteps. Rules by the FDA and Bureau of Alcohol, Tobacco, Firearms and Explosives have largely kept ethanol-based rubbing alcohol out of stores (hand sanitizers largely use isopropyl alcohol instead, which is harder to come by), despite huge stockpiles of ethanol, they say.
Office designs of the near future—factoring in new social distancing measures, increased work-from-home options, and other COVID-19-related safety issues—are tackled in several features in this week’s edition.
Some real estate execs point to decreased space needs as a likely outcome from the pandemic, although architecture icon Carl McLarand and his son Matt, president of Irvine’s MVE & Partners, don’t see the crisis causing too much upheaval long term.
There’s “still going to be a preference to work in a communal area to share ideas with each other,” Matt tells our Peter J. Brennan. “It’s a little bit more difficult to be collaborative on a computer at home.” See page 16 for more.
OC’s gotten off relatively lightly in terms of COVID-19 case counts. The county’s oft-derided lack of density and use of public transit is likely a factor, especially when compared to what’s seen in L.A. and other metro areas.
The same factors could bode well for the future of the area’s business community, Lincoln Property’s Parke Miller tells our Katie Murar.
“Companies may look to relocate or expand their footprints in a place like Orange County, which is widely viewed as a market with an excellent business climate, talented people and a super high quality of life, that is not as reliant on density factors like population and mass transit like other markets may be,” Miller said.
