‘We’re going to run out of cash’: 2017 North Bay fire victims’ trust administrator talks fund gap, public criticism
The Fire Victim Trust has the systems in place to settle the financial claims of long-suffering victims of the 2017 North Bay firestorm and the 2018 Camp Fire by the end of the year — if it only had the money — the fund’s administrator said Friday amid fresh debate over the pace of distributions and the trust’s operating expenses.
But the fund, which was supposed to amount to $13.5 billion, has always been handicapped by a controversial deal struck during Pacific Gas and Electric Company’s bankruptcy where the utility made half of its $13.5 billion payment in stock shares. The company’s stock price has remained depressed, leaving the Fire Victim Trust unable to sell shares sufficient to make fire victims whole.
Over the 15 months since it began taking claims, the trust has processed them for around 65% of the fire victims — roughly 162,000 claims — trust administrator and retired appellate judge John Trotter said in an interview Friday. The fund was formed in July 2020, but did not begin taking claims until March 2021, Trotter said.
It was created to address the losses of as many as 70,000 people in connection with 24 different fires.
“This is going as quickly and probably more quickly than we imagined,” he said, rejecting criticism that the fund has been slow to pay victims but quick to rack up high administrative fees.
The trust, however, is only paying 45% of a claim’s value in an effort to preserve funds until it can sell PG&E stock to cover the difference. “Sooner or later, we're going to run out of cash,” Trotter said.
Trotter’s interview with The Press Democrat comes six weeks after a Fire Victim Trust lobbying effort to persuade state officials to help make up its funding gap got off to a rocky public start, with the sudden end of a $15,000-a-month lobbying contract with Patrick McCallum, a 2017 Tubbs fire victim and retired higher education lobbyist who is at the center of a Sonoma State University sexual harassment scandal.
It also comes amid fresh debate over the trust’s spending on operating expenses, compared to what critics see as an excruciating pace toward even partially compensating those who lost everything to fires sparked by PG&E equipment. Trotter sparred publicly last week with Butte County supervisors and the editorial board of the Chico Enterprise Record over spending that includes his $125,000 a month salary.
The trust faces other questions about its spending in the federal bankruptcy court in San Francsico.
Judge Dennis Montali, who appointed Trotter, has scheduled a Tuesday hearing to discuss a request by 2017 Tubbs Fire victim and advocate Will Abrams that seeks more detailed financial disclosures from the trust.
“We were sold a $13.5 billion settlement that would be managed and administered in a trust on our behalf with appropriate oversight and transparency,” Abrams said in a statement to The Press Democrat, but “this has not occurred in any way, shape or form.
“While many victims live hand-to-mouth and await money to rebuild their homes and their lives, the Fire Victim Trust has been leveraged to benefit investors, attorneys and other stakeholders on our backs and through a veil of secrecy,” he said.
But Trotter appeared unconcerned by those criticisms Friday.
He said the $93 million the trust has spent to date on administration, consulting, lobbying and legal fees was part of an expensive process to build a more than 400-employee system dedicated to evaluating and paying claims. Critics, he added, misunderstand the scale and challenge of the effort.
“The trust’s job is not to answer criticisms, the trust’s job is to pay the victims,” he said. “People who criticize, they're free to criticize. I would hope that they knew a little bit more than they seem to know ... my concern is the victims.”
To pay victims more than 45% of their claims’ value may require a state intervention, and goodwill from lawmakers, however. McCallum told The Press Democrat the trust was seeking a loan of as much as $1.5 billion, from state coffers flush with a $100 billion surplus. Such a loan would allow the trust to continue paying victims while waiting for PG&E stock prices to improve.
If the stock value reached a level where the trust could sell its shares for a profit, the fund could then reimburse the state for the loan — taking the burden of the controversial bankruptcy deal off victims’ shoulders.
The trust cut ties with McCallum a day after two prominent North Bay lawmakers told The Press Democrat he should not be a voice for wildfire victims amid allegations of sexual harassment made against him by several female employees of Sonoma State.
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