** UPDATE @ 5:00pm, 9/10/25: The meeting was cancelled for lack of quorum. They will need to hustle to get another meeting (or two) scheduled if the committee hopes to put anything together to guide the City Council before it has to start making decisions on OCPA. **

Yes, I am well aware there was a City Council meeting last night. However, it was an “adjourned” meeting — meaning all they did was finish up the items they failed to get through last Tuesday, including the proposal to create a city-managed registry of all rental properties as well as closing out the discussion of the City’s response to the Trump Administration’s immigration policies.

Both passed, by the way, with the Council voting 5-2 (Pettis and Buley voting no) on both instructing the Staff to bring forward a rental registry and taking some fairly bold steps on immigration: establishing a $200,000 immigration legal defense fund, ratifying the $100,000 of mutual aid funding to the Enough for All Fund and the Someone Cares Soup Kitchen from a few meetings back (and thus curing their prior Brown Act violation), and instructing the City’s lawyers to file an amicus brief in the Perdomo v. Noem case.

Unpacking all that is a task for another day, though it’s definitely another “YOLO” moment for our (temporarily reformed) Democratic majority.

Instead, I’d rather preview a more bespoke public meeting happening today, which is the upcoming Finance and Pension Advisory Committee (FiPAC) meeting scheduled to take place at 4:00pm.

Why drill down on the exceedingly spare agenda of a somewhat obscure committee?

Well, because if you live in Costa Mesa, this meeting might be the start of paying more to live here.

FiPAC Double Header, Part I: OCPA

As the first item of new business, the FiPAC will discuss the City’s potential entry into the Orange County Power Authority as a new member city. As you might recall from prior posts about OCPA (here, here and here), OCPA is a strange beast. Not exactly a power company (it doesn’t generate any electricity or maintain any electrical lines), not exactly a government entity (you can’t vote for OCPA’s board members, they’re selected by each member city’s councils), and not exactly a nonprofit (it is a “non-for-profit”, which means it uses its profits to benefit its members rather than society generally), OCPA essentially acts as a middle-man in the energy markets and purports to offer cities a way to either allow their residents to cut their energy costs or buy a “greener” mix of energy for their households.

In theory.

The OCPA matter is coming before the FiPAC in large part because Council Member Arlis Reynolds and other members of the City Council requested that the FiPAC review the matter before the City Council evaluates the paperwork to formally join OCPA. Which is great… except I’m not sure they actually have anything to review. It was only seven days ago that the City Council reviewed the scant materials provided by OCPA itself. Setting aside that such materials were obviously self-serving, they omitted two glaringly important details: how much would joining OCPA cost the city, and how much is this going to cost the Costa Mesa ratepayer?

How, or whether, the Costa Mesa city staff has managed to pull that information together in just over a week, I don’t know.

So while sending the OCPA proposal to the FiPAC sounds good in theory, its review won’t mean much if it isn’t given any meaningful information about costs to evaluate. While I won’t be there, I sincerely hope the following questions are asked and authoritatively answered before FiPAC is required to render its verdict to the City Council:

• How much does it cost existing member cities to administer its membership in OCPA in terms of staff time?
• How much more would the City pay for electricity on OCPA’s Select Rate plan compared to its existing arrangements with Southern California Edison (SCE)?
• Would the city be permitted to switch from the Select Rate to the Basic Rate (or the 100% renewable Sustainable Rate, for that matter), and under what circumstances?
• How would this switch affect the City’s largest employers and businesses, and have they been consulted about the change?
• How much more per year, in dollar terms, would a typical Costa Mesa residential ratepayer pay on the Select Plan as opposed to the current default SCE plan?
• What is the current distribution of rates being paid in current OCPA member cities, and how do those rates compare to the default rates? For example, Fullerton’s entry into OCPA opted all city ratepayers into the OCPA Select Rate, which is OCPA’s middle tier rate and slightly more expensive than SCE’s default rate (this is also the rate proposed to be Costa Mesa’s default rate). Since then, how many of Fullerton’s ratepayers opted to (1) switch to OCPA’s lower cost “basic” rate, (2) switch to OCPA’s higher cost “sustainable” rate, or (3) leave OCPA entirely and return to SCE?
  • Once those numbers are obtained, are they surprising given Fullerton’s demographics? For example, an estimated 27% of Fullerton’s households are severely rent burdened (meaning they spend more than 50% of their household income on housing costs). If far fewer than 27% of Fullerton households have switched to the lowest cost Basic plan, would that be surprising? Why might that be the case?
• Would there be any way to automatically enroll residents in the Basic plan rather than the Select plan, and if not, what does that tell FiPAC about OCPA’s business model?
• What reserves would the City have to consider keeping on its books to hedge against the possibility that a future City Council may decide to withdraw? Consider the following obligation placed on withdrawing members under the OCPA Joint Powers Agreement (JPA) which every member city must sign:
  
  “[A withdrawing Party] also shall be responsible liable to the Authority for (a) any damages, losses, or costs incurred by the Authority which result directly from the Party’s withdrawal or termination, including, but not limited to, costs arising from the resale of capacity, electricity, or any attribute thereof no longer needed to serve such Party’s load, and removal of customers from the CCA Program resulting from the withdrawal or termination of the Party; and (b) any costs or obligations associated with the Party’s participation in any program in accordance with the program’s terms, provided such costs or obligations were incurred prior to the withdrawal of the Party.”
  
  That’s what we call in the business an undefined liability. It is completely unknowable today the amount of money the City would have to pay under this clause to get out of OCPA if it so chose. It could be zero, it could be millions.
• Finally, the JPA doesn’t really say what happens if OCPA goes belly up. Sure, it assures its members that OCPA doesn’t have the power to compel them to may any payments or contributions, and it has other provisions that state that it will carry sufficient insurance to indemnify members against any unexpected costs or liabilities. But in the worst case scenario, what happens if OCPA’s debtors can’t be satisfied by OCPA’s insurance policies? Could the member cities be left holding the bag?

I’m sure the capable members of the FiPAC will have even more questions. But the most important thing is that FiPAC should withhold its recommendation until its questions are fully answered. This is just too important of a decision to have the analysis put on a rushed timeline.

FiPAC Double Header, Part II: New Taxes?

This brings us to the second, tantalizingly vague agenda item, which simply reads: “2026 elections”. What could that mean?

I have a somewhat educated but still pretty out-there guess.

I suspect it means new taxes.

As you know, Costa Mesa has been in something of a revenue crunch in the last 12-18 months. This softening of city revenue has had major effects on the budget and has caused Staff to cut its outlook for 2025-2026 significantly compared to prior years.

While the City Council wrangled over various programs to scale back or even to cut to address these issues, some of them grumbled that the city wasn’t raising enough revenue in the first place. There have been multiple calls from the dais for Staff to look into raising the city’s transient occupancy tax (TOT), and both council and public comments have taken aim at the City’s business license fee.

And of course there is always the sales tax. Many cities in Orange County have been raising or attempting to raise their sales taxes in recent years, including Orange, San Clemente, Westminster, La Habra and Buena Park. Sales tax increases have also been floated in the city councils of Huntington Beach and Fullerton in anticipation of the 2026 election.

So we wouldn’t be alone in thinking about tax increases. In fact, I expect the City will conclude it has to raise one or multiple of these taxes, or even find new sources of revenue, in the coming years. Economists are already using the dreaded “stagflation” word to color their forecasts for Southern California. Add in the collapse of the local home selling market post-Pandemic and we have a recipe for really, really poor steady-state revenue growth, especially from our property tax base (recall that, thanks to Proposition 13, property taxes can’t reset to market values unless a sale or substantial renovation takes place; no sales, no tax basis reset, no meaningful revenue growth).

So which would it be? I would think the Costa Mesa City Council would be smart enough to avoid a broad base tax increase like the sales tax, especially when they are considering an energy rate hike that would hit every Costa Mesa resident in almost the same breath.

Which means businesses, particularly businesses in the hospitality industry, need to start paying attention. I think a transient occupancy tax hike is very, very likely to make it onto the ballot in 2026.

But I’ve been wrong before. Maybe the FiPAC has something completely different in mind. So stayed tuned for updates.