CORI CHOICE ENERGY IN CRISIS

I urge each of you to look at the attached. Tomorrow night at your City Council an agenda item is attached asking "We the people" of Carlsbad to extend multi-million dollar loan guarantees to Solana Beach and Del Mar to keep Cori Choice Energy from imploding.

And yes, I will say "I told you so" because back in early 2019, I warned in post after post after post, that Community Choice Aggregation was not an enterprise to be entered into blindly.

I was publically ridiculed by the Councilwoman at her "town halls", even beat down by Cori on her official page. I offered detailed inquiries based on well-sourced industry publications. CCE has always concerned me based on my business experience. I have seen how a deregulated energy industry performs when its market forces were unleashed on a heinously regulated industry. Prices dropped, and Clean energy choices abound for consumers. Though occasionally a very mixed bag, deregulation of the airlines (Ted Kennedy was the sponsor in Congress), and the breakup of the old Bell System have resulted in cheaper plane tickets for consumers. The array of telecommunication choices in the market speak for themselves.

So why should the Carlsbad City Council prop up Coti Choice Energy? My Short Answer is, they should not. The argument that it will lower your bill is more flawed today than when I wrote in early 2019. Obviously, energy costs have wildly fluctuated on the downside this year, but with a recovery post-pandemic, it is utterly insane to assert that a joint powers deal between Carlsbad and its tiny partners will save enough money for consumers to offset the "exit fee" charged by SD G&E. The CCE program has been troubled from its start in Solana Beach, and DelMar has been threatening to bail from Cori's "Good Ship Lollipop" for weeks. Both want Carlsbad to essentially refund the 'start-up" monies they kicked into the till due to COVID-19. In Carlsbad, 13 people lost their jobs due to the same revenue challenges facing our supplicant junior partners including vanished TOT and sales taxes. 

The last time the Cori choice energy bunch met, they were busy building their infrastructure, adding administrative load into the folly. Also on the agenda was an item that would have San Diego's Community Aggregate buy the electrons for the local "Clean Energy Alliance." That would beg the question of why would you as a taxpayer or consumer want to pay for the added expense just so Cori could be (as usual) the bride at the wedding, or in this case the corpse at the funeral? If you are Cori the answer is simple, for in an alliance with San Diego she is a bit player. Only in this way could she be the star of the show,

Last year the best case scenario you were presented projected at best the cost of a tall latte at La Costa Coffee Company. Today SD G&E and its Northern Neighbors see municipalities acting as consumers, and dumping their own Clean Energy Alliances for the old investor-owned utilities? Along with the deceptive name of the "Clean Energy Alliance" comes the truth that on the energy spot markets, yesterday's hydroelectric based supplier will still fill orders exceeding their stated capacity with energy sourced from fossils.

I have been waiting for years for the "battery farm" Cori promised, that was said to be a windfall of revenue for Carlsbad. One would have thought that the $2.4 million (or more) Cori is asking to be kicked back to her allies in Solana Beach and Del Mar, would be chump change by now. This is shaping up to be Cori's version of the Iraq war of 2003, the only thing we are missing is a tailhook landing.  

BEST FRIENDS FOREVER

I was interested to read a Coast News story on the District 1 campaign that noted issues pursuant to Carlsbad's own Councilwoman Corinne Lenee Schumacher sharing a Campaign Headquarters with 76th District Assemblywoman (then candidate) Tasha Boerner Horvath in 2018.

With the help of a local accounting guru, we took a look. As you may recall, Councilwoman Schumacher was subsequently employed by the Assemblywoman in 2019. The reasons for her departure we’ve been given state that there was either a) a belated recognition by both parties the optics were awful or b) Cori scorched some serious earth with her co-workers. Whatever the case, Tasha donated $250.00 for the Cori campaign in 2020.

OVERVIEW

When Cori and Tasha ran in their respective elected offices in 2018, their headquarters separate suites in the same building. A review of the financials shows that Cori never paid rent for her suite. Tasha actually paid the rent and all of the insurance for the joint campaign. Assemblywoman Boerner-Horvath tried to attribute half of the rent to Cori as an "in-kind" donation. She actually screwed up. Generally Accepted Accounting Practices and election law junkies will note that instead of attributing half of the rent to Cori on her financial reports, she attributed ALL of the rent to Cori.

The two campaigns also had several other shared expenses that should have been either split between the campaigns or paid for individually. The financials show that instead these were commonly paid were paid for in full by either Cori or Tasha including the gala "grand opening" party thrown for them by one of their common donors amongst their galaxy of building trade unions.

ANALYSIS

Cori Schumacher ran for Mayor in 2018. Until July 2018 she campaigned without a campaign headquarters office space for several months. At that juncture, Cori and Tasha Boehner-Horvath (then a Candidate for the 76th Assembly district moved into the same building at 570 Laguna Drive in Carlsbad. Tasha is in Suite A and Cori is in Suite B. This address is an office building. It has two distinctly separate suites that share a common wall. Each suite had its own front door and its own back door. Each suite had separate dedicated maildrop just outside the front door. By any common interpretation, these were separate office suites. 

Upon procurement of the office space, money moves from Tasha’s campaign to the property owner for rent. Cori’s report shows no outlays for her office space. Several office-related expenses that accounting principles scream that should have been paid for separately are being paid for very “creatively” between the two campaigns. 

The rent paid to the property owner by Tasha totals $600 per month. That number is far removed from the fair market value of office space in Central Carlsbad. Then the Boerner Horvath financials show credits to the Schumacher campaign in $600 increments for “in-kind” rent. Even if the rent was really $600, Tasha is enriching Cori’s campaign beyond the appropriate amount. 

TIMELINE

4/20/18 – The Boerner Horvath campaign needs a cash infusion. Tasha loans her campaign $5000.

7/3/2018– Tasha Boerner Horvath pays $600 for office rent to the landlord. Tasha then provides $600 to Cori as an “in-kind” contribution. Separately, Tasha pays the landlord $300, which may have been some kind of security deposit and again provides that amount to Cori as an “in-kind” contribution for rent. The landlord is the Virginia H. Murphy Trust. Again the financial reports indicate that the total rent paid for both offices combined is $600.

From July through October, only Tasha’s campaign pays rent on this property. Cori does not directly reimburse Tasha for the office rent in this period. Instead, Tasha pays the full rent to the landowner and then attributes the full rent to Cori as an “in-kind” contribution in the reportage. There are discrepancies between the campaigns regarding when these “in-kind” payments were received and paid.

7/16/18 – Cori’s campaign financials note the International Brotherhood of Electrical Workers provided Cori with an “in-kind contribution” of $138.18 in used office furniture. Horvath never discloses anything about office furniture on her reports, leaving it is unclear whether or not this donation was shared with Horvath.

7/25/18 – Cori discloses a “non-monetary contribution” from Robin Hanson for $138.18, described as a bin for office landscape clean up. Given their joint tenancy, the Boerner Horvath campaign also benefitted from this donation. It only appears on Schumacher’s disclosure.

Interestingly in the 7/1 to 9/22 reporting period, Cori pays a security deposit and gas and electric through 9/22 for the joint office totaling $305.50. Throughout the rest of their joint tenancy, the two campaigns remain in their office space. Tasha pays some SDG&E bills and Cori pays some, but they are clearly paying for the other’s utilities throughout. Tasha regularly makes “in-kind” contributions to Cori for this joint expense. 

8/1/18 – Tasha pays Cori’s rent of $600. Tasha and Cori’s reports both note this as an “in-kind” donation to Cori, as does Cori’s though the dates are discrepant.

8/4/18 – Both candidates advertise on Facebook that they are having their own individual “Office Grand Opening.” Each notes the address with their individual Suite numbers. Tasha advertises Cori will be a “special guest” at Tasha’s party. Cori states she will have some “special guests”. Tasha does not disclose any expenses from the event or any “in-kind” donation of food or drinks.

Cori discloses that the San Diego County Building Trades Council Family Housing Corporation, based in National City, provided $682.39 for her event. It’s clear this is a joint event. these events happened together. Both campaigns should be reporting an “in-kind” donation for half of the costs of the event. Neither did.

8/10/18 – Cori notes that one Vickey Syage provided an $80 “in-kind” donation of landscaping materials for office/yard cleanup. As with Robin Hansen’s in-kind donation of the garbage bin, this needs to be reported by both campaigns as a joint expense.

8/29/19 – Boerner Horvath’s campaign pays $435.40 to Sacco & Sacco Insurance Brokers for ALL of the insurance for the joint offices. Schumacher’s campaign directly never pays for the property insurance

8/31/18 – TBH pays the $600 rent. Her filings note this as another “in-kind” contribution to Cori, as does Cori.

9/12/18 – Cori pays for the internet access for both offices for $142.47 (3 payments of $47.49 each for July, August, and September of 2018). Sometime in the 7/1/- 9/22 reporting period, Cori pays $374.91 to Spectrum business for “office internet and phones”. Tasha does not disclose either expense or “in-kind” donations of telecom costs. 

These are apparently the phones used by both candidates for phone banking. Both campaigns advertise phone bank occurring at their joint campaign headquarters on their Facebook pages, obviously, both have phones. Those phones need to be separately accounted for, as a shared expense between two separate campaigns.

10/1/18 – Tasha pays the $600 rent for both campaigns. Both filings note this as an “in-kind” contribution to Cori.

10/15/18 – Schumacher’s campaign pays $47.49 for internet access for Boerner Horvath. During the 7/1 – 9/22 reporting period, Schumacher also pays Spectrum Business $124.97 for the joint internet expenses.

During the 10/2 – 12/31 reporting period, Cori pays Junk King $400.00 to haul away the “unusable office furniture.” Tasha doesn’t pay for any of the removals. As an aside, it’s ironic that a self-declared “deficit hawk”, fiscal conservative, and “deep state warrior” would drop $400 to have $138.18 worth of used furniture hauled away. Waste Management commonly executes “large item pick-ups” for free.

10/21/18 – 12/31/18 - Boerner-Horvath’s disclosure for the reporting period states that Tasha has credit card payments due for $600 to Call Hub (phone banking, robo-texts, and robocalls.) and $165.74 to Waste Management. Waste Management expense is apparently for trash service at the office. Schumacher should have been paying for this shared common expense, but it does not appear on her disclosures. if Call Hub also performed phone banking, texting, and robocalls for Cori, both “GAPP” and campaign finance laws clearly direct that the Schumacher campaign had to disclose that expense and its payment via Tasha’s credit card. The same disclosure indicates Tasha paid another $100 directly to Call Hub for office services. If these services jointly were utilized a disclosure is mandated.

12/27/18 - Tasha Boerner-Horvath receives a $440 refund from the office landlord. If Cori Schumacher actually was really paying rent through “in-kind” contributions, then Cori is entitled to half of that refund. Filings indicate no record of Boerner- Horvath disclosing any other monies sent to Cori or of Cori receiving these funds.

CONCLUSIONS

Despite the flood of donations into the Boerner-Horvath campaign that autumn, until the 12/31/18 reporting cycle, the campaign was said to be $16,000 in debt. Tasha loaned her campaign $5000 in 2018 and that loan was repaid long after the campaign. If this is to be believed the Boerner-Horvath campaign did not have the funds to support paying Cori Schumacher campaign’s rent and insurance throughout their joint office tenancy during the 2018 campaign.