HomeMy WebLinkAbout4/13/2016 - STAFF REPORTS - 00 Jay Thompson
From: Judy Deertrack <Judydeertrack@gmail.com>
Sent: Tuesday, April 12, 2016 3:01 PM
To: Jay Thompson;J.R. Roberts; Geoff Kors; Robert Moon; David Ready; Douglas C. Holland;
Linda Dixon
Subject: WED APRIL 13 2016/CLOSED SESSION AGENDA/COMMENTS
Attachments: 2016.04.13 AGENDA Special Meeting City Mgr, City Atty Empl Evaluation.pdf;
PUBLICATION City of Bell (City Mgr).pdf; PUBLICATION Corruption on Steroids- CITY OF
BELL.pdf
To the City Administrators
City of Palm Springs, CA
REQUEST FOR VIDEO OR AUDIO TRANSCRIPTION OF CLOSED SESSION PUBLIC
COMMENT SESSION AND REPORTING SESSION
Dear Folks,
I would like to request that the City immediately provide for either audio or video transcription of the
Closed Session Public Comment Session and the subsequent Reporting Session from this point
forward, beginning with the Closed Session set for tomorrow night, April 13, 2016, at 6PM for the
employment review of the City Manager and City Attorney, and following thereafter for all
subsequent Closed Session meetings, as a matter of City Policy.
I know this upcoming agenda item tomorrow on closed session for the city council is very sensitive
because it is a personnel issue and has received unusual levels of public scrutiny. Once again, I want
to offer all of you my support and understanding. Working in government and having every action
under close public scrutiny is sometimes very painful, but the scrutiny and transparency are always
very necessary. I hope the privilege of public service is some kind of compensation. Once again I
thank each and every one of you for your hard work and dedication to the public interest.
I am a member of the Transparency Sub-Committee on Ethics, Transparency and Government
Reform under the direction of Council Member Geoff Kors and Mayor Robert Moon. However, my
comments in this letter are on my own behalf and do not reflect a meeting or deliberation from the
Sub-Committee itself.
I wanted to carefully distinguish that point, and I have included a carbon copy of this communication
to Ms. Linda Dixon, the Chair of the Transparency Sub-Committee. I would like to say, however, that
our Sub-Committee will be making ultimate recommendations to the City of Palm Springs on issues
under the Brown Act, including Closed Session Transparency.
I truly do not doubt that this request for recordation would be an ultimate recommendation of the
SubCommittee anyway, since we are looking closely at the Sunshine Laws. But my personal concern
(away from our Task Force) is because the earlier failure to record closed session discussions in the
past have left gaps in the public record, and an inappropriate reliance upon how comprehensive or
accurate the Minutes of the Session are.
In no way are the Minutes a substitute for actually recording matters brought forth in public
testimony, with the staff, City Attorney, and City Council discussion and responses.
Two examples of this are:
(1) the Closed Session Public Comment on March 2, 2016, wherein there was a full discussion by me
on Public Commentary (with response from the City Attorney and City Council) on the potential
conflicts of interest inherent in having current advisors to the City remain as advisors when they were
signatories to the contracts under investigation in the FBI search warrant. The responses and
decision that night not to take this under advisement, or even not to reveal to me and others that the
city had actually hired Mr. Pacheco, was very telling, and now seems very inappropriate to me. All of
this should have been recorded and subject to scrutiny.
(2) the original Closed Session on September 2, 2015, when Mr. Pacheco was hired by the City as a
legal advisor on the FBI probe, with an absence of reporting out, or any reflection in the Minutes of
the decision. The failure to report out of session appears a clear Brown Act Violation, and may
implicate the validity of the contract with Mr. Pacheco. It would be helpful to have a video or audio
transcript of the session, because all of this might ultimately be under review as a Brown Act
Violation. The public record should be impeccable and comprehensive.
I cannot stress enough -- and this is very typical of my personal style, I advocate for better practices
and greater transparency and public involvement. Sometimes I question whether a particular
individual is more or less able or competent to be the person in charge....without degrading them
personally, or questioning their worth or ethics as a human being. I just want the City to know my
opinion on this Closed Session Matter for tomorrow night is to leave personnel choices to the City
Council -- except for one very strong qualifier. That qualifier breaks the bank on this issue,
unfortunately. I actually apologize to both City Manager Ready and City Attorney Holland, for my
recommendation. It is painful to me, because I am fond of both of you on a personal level, but this
is my best advice to the City.
I do believe it is inappropriate for City Manager David Ready and City Attorney Doug Holland to
continue as advisors because of the FBI probe on September 1, 2015; because of the subsequent
and continuing breaches of the Brown Act; the size of entitlements granted to Mr. Wessman after
September 1st; the evidence on the Search Warrant of Mr. Wessman's implication and the size and
nature of contractual violations, with the advisors as signatories; the reluctance to subsequently audit
or review practices in a comprehensive manner after a raid; or to promptly and subsequently review
compromised personnel for conflicts of interest or misconduct; the pressure to proceed on
entitlements despite public controversy and pending indictment; the failure to confer with the Public
Corruption Task Force; the transfer of subsidies between hotels on the Downtown Plan after the
lapse of the ordinance on the hotel incentive program; allowing permits for footings on a hotel that
had never been approved; and the existence of a strong, close, and traditional working relationship
between Mr. Wessman and personnel at City Hall; all of this with evidence from the FBI Search
Warrants that the Downtown Project and many others, may be implicated for bribery or conflict of
interest -- all of these conditions create a new threshold of scrutiny!
2
It is clearly in the best interests of the City, without reference to the skills or competence of the City
Manager or the City Attorney, to now consider in full whether the two, almost sole advisors to the
City Council, are appropriate persons to continue as advisors when the City is sitting in such an
unknown and unexplored position.
I always believe every person out there in City Hall is doing the best of their ability out of a true love
and concern for this City. So, please take my recommendations with this in mind. Transparency is a
big commitment, because it does expose all of us to criticism, and at times, it leads to issues of
employment review.
When I raise the issue of potential conflicts of interest in ongoing advice to city council, it is with
absolutely no judgement or harshness towards the individuals involved. City Manager Ready and City
Attorney Doug Holland have consistently treated me with the greatest of courtesy, respect, and
professionalism.
I am infinitely grateful to both of you for that, and anytime I have run into either of you in the halls
or I see you at a meeting, I have nothing on a personal level but good feelings. I know we differ in
critical areas on professional issues, but those are always, in my mind, honorable disagreements. So,
I make my comments with no small amount of discomfort and sadness.
I have attached two very important Case Studies from the City of Bell that needs immediate scrutiny,
and which I believe sheds important light on the criteria the City Council should use to determine
how to proceed post-subpoena and pre-indictment.
With regard,
Judy Deertrack
760 325 4290
3
CORRUPTION ON STEROIDS'
The Bell Scandal From The Legal Perspective
By: David J. Aleshire, Esq. and Anthony R. Taylor, Esq.2
I. INTRODUCTION: THE SCANDAL AND RECALL
Starting with the publication of an article in the Los Angeles Times on July 14, 20103
concerning the excessive salary of Bell Chief Administrative Officer ("CAO") Robert Rizzo, the
City of Bell became the national poster child for municipal corruption and self-dealing public
officials. The media focus brought to light a series of shocking stories: A city administrator making
$787,637, four managers among the 25 highest paid in the state, City Council salaries of$100,000
when state law only permitted$400/month for a City of Bell's size(Gov't Code Section 36516), a
City program providing loans to almost 50 employees and a charter adopted with only 500 votes.
All of this excess was occurring in a 37,000-population city near downtown Los Angeles, a city
which is over 90%Hispanic,with median household income of approximately$37,000,only 40%of
the statewide average;and unemployment 60%greater than the statewide average. The property tax
burden was reported by the Los Angeles Times to be the second highest in Los Angeles County.
The sad plight of the community with such self-serving leadership was exemplified by the Mayor
when to press inquiries voicing community rage,he gave thejustification"In a troubled city,the city
council should get paid a little more" (LA Times, June 24, 2010).
The City's situation quickly spun out of control. The State Controller began four in depth
audits of the City,and the District Attorney indicted 8 Bell officials including four of the five sitting
Councilmembers. The Attorney General commenced an action to recover excessive and illegal
salaries, block excessive pensions based on the illegal salaries, and to actually put the City into a
form of receivership for the reason that the direction of the City could not be left with the then
serving Councilmembers. In fact, for almost 6 months the former City Council did not even meet
and bills could only be paid through irregular procedures.
1 "Corruption on Steroids"is a phrase originally used by former Los Angeles District Attorney Steve
Cooley to describe the Bell corruption scandal in 2010. That phrase has since become a common
description used by many to describe the Bell scandal and it provides an appropriate title to this
whitepaper.
2 The bios for the authors are included at the end of this whitepaper.
3 L.A. Times reporters Jeff Gottlieb and Ruben Vives were awarded the Pulitzer Prize for Public
Service in 2011 for their efforts to expose the corruption scandal in Bell.
01135.0050/240595.4 -1-
The firm of Aleshire&Wynder,LLP("A&W")was formed in February 2003 by a group of
public law lawyers some of whom had represented cities for over three decades. David Aleshire was
a founding name partner and the son of City Manager Frank Aleshire who started in the profession in
19504. David Aleshire felt that some public service-oriented entity needed to assist the residents in
the recall effort then being discussed to show that public servants would stand forth against the
dispute brought down on all public officials in Bell. A&W volunteered over $70,000 worth of
services to assist the grassroots community organization of BASTA which gathered 4,000 signatures
in 30 days and qualified the Recall Measure for the March 2011 ballot. In the combined regular
municipal election and recall election, all five of the Councilmembers were replaced.
After a competitive selection process, on July 28, 2011, David Aleshire and A&W began
serving Bell as its first permanent city attorney since the corruption scandal. The attorneys of A&W
have represented the City in virtually all of its various legal matters since that time: from its regular
matters including contracts, planning, labor and employment, and risk management; to its highly
unusual matters such as malpractice actions against former professional advisors,to bond workouts
(including the workout of the $35 Million Dexia Bond matter), SEC and IRS investigations, to
pension matters dealing with CalPERS actions against former officials, to the Supplemental
Retirement Plan,and indemnification claims by former officials who became known as the"Bell 8".
Besides defending itself against over$70 Million in liability claims,the City also needed to
spearhead an unprecedented effort to recover from the financial losses the City incurred during the
corruption scandal. Those financial losses are difficult to quantify because of the lack of
recordkeeping at the City during the corruption scandal. Over$12 Million is estimated to have been
expended during the corruption scandal for the illegal compensation and benefits paid to former
officials.
The recovery matters included, for example, litigation against former city officials and
recovery of retirement monies paid for with City funds to former officials and professional
negligence claims against lawyers and auditors. After over three years of hard fought legal battles,
4 Frank D. Aleshire (1925-2000) a WWII pilot, was member of ICMA for 35 years and served as
Assistant City Manager in Ontario 1950-55, first City Manager La Puente 1955-57, first City
Manager Pico Rivera 1957-64, City Manager Palm Springs 1964-73, Chief Administrative Officer
San Diego County 1973-75;City Manager Scottsdale 1976-80;City Manager Carlsbad 1980-88;the
first city manager in Temecula in 1990. This paper is dedicated to Frank and the dedicated public
servants with whom he served for 35 years.
01135.0050/240595.4 -2-
the City has recovered over $10 Million to date and the City is now on stable financial ground.
While Bell has turned the corner away from insolvency,the City's recovery efforts continue to this
day. This paper will outline how a legal strategic plan was developed and what some of the major
successes have been.
I1. DEVELOPING A LEGAL STRATEGIC PLANS
When commencing legal services for the City in July 2011,a year after the LA Times began
exposing the scandal, it was soon revealed that even with the media exposure and the numerous
complex investigations and reports which had been issued, the problems were far more pervasive
and difficult than anyone could have supposed. In fact,in trying to develop a remedial action plan,
we were dealing with the classic case, in the words of Donald Rumsfeld6, of the "unknown
unknowns." There was no list of claims,no evaluation of threat,and not even any understanding of
the City's financial capability as no audits had been performed in two years. Accordingly no
realistic budget was even possible.
This world of unknowns lacked any structure whatsoever, something of an anathema to an
attorney and something we have never experienced in over 30 years serving as City Attorney or
Assistant in 12 cities. Consider the following pieces of normal municipal structure lacking in Bell:
(1) No Management Team. Many top managers had left the City and were under
indictment. Some of those that remained were under suspicion. There was no management and not
even good sources of oral history.
(2) Unknown Finances. No audits had been done in two years and the prior auditor was
under scrutiny by the State Controller and Attorney General. Without legitimate audits,there could
be no real budget. Ultimately when the unaudited back years of 2010-2013 were audited, it was
5 Nothing in this whitepaper discusses anything that is confidential or attomey-client privileged in
any manner. Rather, this whitepaper is written concerning matters that were handled in public
proceedings and discussed previously in public documents. This whitepaper is written from an
academic perspective only. Nothing herein should be relied on as legal advice for any specific legal
matter. No compensation was paid to the authors for this whitepaper.
6 Secretary of Defense Rumsfeld speculated in February 2002 that there are the known knows,the
known unknowns, but the most dangerous problems are the unknown unknowns, perfectly
illustrated, as it turns out, by Bell.
01135.0050/240595.4 -3-
revealed that the City's reserves had disappeared and that on June 30, 2013, the City balance had
been a negative$1.458M.
(3) No Written Rules Procedures. Compared with normal cities,there were almost no
written rules and procedures. The Rizzo regime evidently found written procedures constraining,
and limiting "ad hoc" "problem-solving". Businesses paid ad hoc fees for permits and approvals
(based on capacity to pay some said).As an example,the City's three bargaining units had no active
MOUs at the time when the scandal broke; and two of the three bargaining groups never had an
MOU.
(4) Legal Claims. Initially it was unclear what were all the legal claims and challenges
facing the City and,in fact,more were developing from the various investigations being performed,
and would be generated by our offensive efforts to recover monies for the City. Given these
unknown unknowns, there was obviously no strategic plan to deal with these matters.
(5) Lack of Technology. There had been no effort to invest in technology or modernize
the City's current operating systems. A&W's efforts to discover records and information to defend
the City ultimately led to our having to install document management personnel in City Hall to start
organizing the City's document systems.7
(6) Lack of Transparency. As the prior administration had operated on the basis of
secrecy,the City was not transparent, had no adequate web site,did not operate in accordance with
the Public Records Act,and simply lied to the public when confronted. Accordingly,there was deep
public suspicion and anger besetting everything the City did. The public was impatient and expected
problems to be immediately corrected. Early Council meetings were very unruly even though the
Councilmembers were news
(7) Council Experience. None of the five council members had ever been on a City
Council. It was similar in this respect to a new council for a newly formed city, except that this
7 Michael Kratzer was hired by Aleshire&Wynder, LLP in April of 2012 to specifically assist city
staff with collecting and managing the documentation in Bell after the disruption in document
management occurred in Bell because of the corruption scandal. He was instrumental in his efforts
in assisting city staff and we thank him for it.
s We applaud the efforts by the new Council in these early times after the corruption scandal became
public.
01135.0050240595.4 -4-
Council assumed office with a suspicious populace and devastated organizational culture. The
Council's attitudes and aspirations for their community,and determination to achieve justice were,
of course, vital to our efforts, but there were no experienced senior council members for the new
ones to learn from; certainly a new experience for us.
So our world of unknown unknowns,left virtually no island of solid ground from which we
could start our voyage. We were in a place we had never been in our 30-plus-year career, and
probably few have. As the unknowns above began to reveal themselves,it was probably a blessing
that we could not see the full picture in the beginning.
I11. DEVELOPING THE STRATEGIC PLAN.
Dave Aleshire had been a Scoutmaster of Boy Scout Troops for over 20 years.When telling
his high school age boys how to build their Eagle Scout project, Dave would tell them not to be
overwhelmed with the complexity of the thing or the fears, but to just pick a place to start and do
something,and develop momentum as you move forward from piece to piece. This is the same way
we created a strategic plan in Bell.
(1) Legal Fees. We did not know initially how extensive all the legal claims were,and
we did not know that the City was falling day by day into a deficit in terms of cash reserves, but it
was clear that the legal claims could overwhelm the City. Moreover, we were going to be
confronting an array of legal experts from small firms working on contingency to giant international
firms such as Gibson Dunn&Crutcher. We had initially bid relatively low rates to the City, $155
per hour for general services and $195 for litigation. We also knew that the prior interim City
Attorney firm,Meyers Nave,Riback,Silver&Wilson had charged about$2M fora year of services.
So within a month we decided to hold our bills to $100,000 per month and also drop our rates by
about $10 per hour. In our first year the limitation of $100,000 per month led to writing off
$256,000 in legal fees and our effective rate including all the complex litigation averaged$149 per
hour. Additionally, the $10 per hour discount, and other write offs, meant that over the first two
years of services,we charged the City over$1 M less in fees than our contract would have permitted
(ultimately about a 20% discount).
After the first year,with the litigation load becoming heavier,it was clear we could not keep
writing off all fees over$100,000 per month. At that point however we were already seeing the light
at the end of the tunnel,and it seemed we had good chances of beginning to recover funds. The City
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Manager suggested deferring fees in excess of the $100,000 per month, and getting paid out of
recoveries. We agreed to do this,and each month's statement showed the accounts and amount were
we were deferring. We did not get any extra contingent fees or even interest on the deferrals. By the
end of the year the deferred fees amounted to over$1M—in essence an interest free loan by our firm
to the City. So in the second year our fees were$2.3M,but$1M of this was deferred and by the end
of the year we had brought in over$I OM, and so,happily, we did recover our$IM of fee deferral.
Thus, one element of our strategic plan was to reduce fees and defer collection so that the
City did not have to devote 25% of its budget to paying for litigation. Other parts of the strategic
plan included the following.
(2) Lone Term. Any strategy had to be one that would work long term based on the
City's resources. We could not start on a path and then have to abandon it as not sustainable and
waste our limited resources. We needed a broad strategic view of the legal conflicts.
(3) Prioritize Leeal Actions—Litigate,Settle,Defer. Besides controlling our costs and
having a long term view, the next important strategy was to evaluate every case in our developing
caseload, which, including administrative actions, was over 60 cases. The cases were evaluated
based on: (i) reward based on the potential amount to be recovered or lost, (ii) the likelihood of
success based on the law,(iii)the cost of litigation, (iv)the length of litigation,and(v)the strength
and strategy of the opposition. Based on these factors the cases were categorized: Litigate; Settle;
Defer. For example,we placed an emphasis on litigating some of the malpractice matters against the
former audit firm and city attorney because of the chances of recovery. On the other hand, an
international bank, Dexia, had a claim against the City for $38M in a failed bond transaction and
obviously had deep pockets to litigate. Here our emphasis was to find an acceptable settlement
concept as we could easily burn up all our litigation budget fighting with this entity. In one of our
few disappointments,we had to abandon claims against the City's bond counsel on the issuance of
$l OOM in debt over a number of years as their legal counsel, one of the biggest firms in the US,
buried us in a high cost competition which in short order became our most expensive case. In the
deferral area, we had numerous claims against the Bell 8 former public officials and used tolling
'Total legal fees were$1.163M FY 2011-12;$2.323M FY 2012-13;$1.476 FY 2013-14 and at mid-
year FY 2014-15 only $508,368 and may finally fall under SIM. The category we classify as
"corruption matters"was$1.8M of the FY 212-13 budget(almost 80%)and at the current mid-year
(Jan 1, 2015) is down to $162,996, almost a third of the legal budget.
01135.0050/240595.4 -6-
agreements to put most of the civil matters on hold as we felt we could let the District Attorney and
the County taxpayers carry the laboring oar in the criminal prosecutions and reach civil settlements
thereafter. The tolling agreement was a very effective mechanism for us in staging our legal fights.
There was simply not enough money to litigate all matters without sending the City down the path of
Stockton to bankruptcy.
(4) Administrative Agencies. We needed to take account that the natures of our
adversaries were different—from down beaten former officials with limited resources to banks and
law firms. But perhaps some of the most important entities were administrative agencies funded by
taxpayers other than those in Bell. To the federal agencies like the SEC and IRS,and state agencies
like the State Controller,Attorney General,Department of Corporations,we kept beating the same
drum: "Bell is not the criminal, it was the management team and councilmembers in power. Now
there is new management,and any penalties or damages assessed now will be paid by the taxpayers
and residents of Bell, an improvised community which has been betrayed once by its leaders, and
could now be penalized again by an unthinking rule-obsessed bureaucracy"10. One part of this was
that we had to show ourselves to be different leaders to the bureaucracy than the former leaders. So
instead of typical lawyers stonewalling over producing documents,or being too busy,we attempted
to establish good relations with all governmental agencies. Our reasoning was that unlike most of
our private adversaries, there was no reason we had to be adverse to the government. Although,
there was some frustration in all of this, as a bureaucracy can't wholly change its stripes, on the
whole, this was a successful strategy. One illustration was that the IRS told us we could be
penalized $6M due to not spending the proceeds of a tax exempt bond issue appropriately(where
delays were due to in part to the disruption of management cause by the scandal),but we ultimately
settled paying only $257,000. Another example was in our changing the City's position from
opposing the Attorney General's efforts to put the City into receivership to supporting their efforts to
get restitution from the Bell 8. This ultimately led to two Court of Appeal decisions which will
forever help public agencies fight officials who are seeking indemnification for their illegal acts.
(5) Transparency. While fighting these legal battles, Bell embraced a new era of
transparency in the City starting in 2011 and continuing through the present time. Under
10 Interestingly, this was also our theme in court and the judicial establishment almost universally
showed great heart and sympathy for this theme.
01135.0050/240595.4 -7-
California's open meeting law for public agencies,the Ralph M. Brown Act, litigation matters can
be discussed behind closed doors (which are referred to as closed sessions)." Most cities in
California conduct discussions concerning litigation matters entirely in closed session and could
even approve a settlement agreement in closed session(reporting out the vote).
After the corruption scandal became public in 2010, the community in Bell demanded
transparency in all city affairs. By 2011, those matters included litigation matters and recovery
efforts by the City from the scandal. Besides the dealing with a suspicious public,we realized that
our bills would be skyrocketing,and unless the public had a general understanding of all the matters
we were involved with, and the challenges there would be a public revolt.
Accordingly to increase the level in transparency in Bell during these recovery efforts,status
reports for all litigation matters were presented through written reports and detailed PowerPoint
presentations to the City Council and to the public at Council meetings. Additional legal documents
were placed on the City's web site. At least annually we prepare extensive budget reports on the
status of all accounts. Finally,public reports were made when significant events occurred and all
settlement agreements were approved at public meetings. The public has been kept fully informed,
or at least as much as possible without undermining our legal strategies.
The reward for this effort was that despite spending some$5.47M over almost four years in
these legal battles, our legal effort has been generally publicly supported in the community.
IV. ACCOMPLISHMENTS
The implementation of this strategic plan has brought us a level of success we truly could not
have anticipated in July 2011. Attached as Exhibit Aare summaries showing some$75M in liability
avoided. In Fiscal Year 2013-14, the City collected some $25M in revenue, which besides the
settlements and recoveries,included a$15M sale of property for a major facility bringing hundreds
of new jobs to the City. Major accomplishments include the following:
(1) Rizzo/Snaccia/Adams Indemnity and Pension Claims. These former employees
claimed some $6M in future unfunded pension benefits based on their final salaries. The City
defended on the basis that the final contracts were not properly authorized and the salaries were
excessive, and that the pensions should be based on the last properly authorized contracts in 2003.
Rizzo claimed a salary of$58,000 per month($700,000 annually) while Spaccia claimed$38,000
1� California Government Code Section 54956.9(d).
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per month($456,000 annually). The City prevailed reducing the pension liability to a salary level of
approximately 25%(Rizzo) and 18% (Spaccia)of what was being claimed. Rizzo settled actually
paying the City approximately $250,000 from his ICMA retirement accounts while Spaccia is
appealing. Rizzo and Spaccia also sued for unpaid wages and benefits and defense costs ($3.5M
Rizzo;$1.5M Spaccia). In Adams's case,the determination was that none of his salary for pension
purposes should be based on his time with Bell meaning the City had no unfunded liability.
Additionally,as a part of the settlement,Adams actually repaid the City$215,000 in excessive salary
and abandoned his claim for reimbursement of$500,000 in legal fees,and for another$800,000 in
unpaid wages, benefits and lifetime medical (total $1.3M). Restitution awarded the City should
exceed$15 M.
(2) Dexia Litieation The City issued$35M in bonds in 2007 supported by a lease of 3
parcels(23 acres)to BNSF. The lease was voided in 2008 when following a lawsuit challenging the
transaction,the court ruled that the City had failed to comply with CEQA. Accordingly,Dexia who
had bought the bonds,sued the City in October 2011 for$38M in damages,and sought to foreclose
on the property and obtain recovery against the City for the deficiency between the value of the
property and Dexia's losses and the City Attorney who had given no pending litigation opinion.
After lengthy litigation, the parties reached a potential settlement based on accomplishing the
development of the property to obtain a maximum property value, within a six month period. In
April 2013 City received an offer from developer P1 Bell to buy the property. During the six
months,with staff,we negotiated a purchase agreement,development agreement and environmental
approvals, and overcame two lawsuits against the Project. The City's liability was completely
eliminated and the City received an additional $15.5M for sale of an additional parcel to the
Developer.
(3) Malpractice. The City sued various entities for malpractice, including the former
City Attorney. The City claimed that the former City Attorney failed to advise as to the existence of
litigation in the Dexia bond issue, failed to prevent the excessive compensation schemes or the
improper employee loan program, and had conflict issues in the dual representation of Bell and
Maywood. After engaging in extensive mediation,a settlement of$2.5M was reached.Additionally
the City had hired a contingent fee lawyer who would have obtained 25% of the settlement. We
negotiated a$300,000 buyout of that contract preserving for the City the bulk of the settlement. Our
01135.0050240595.4 -9-
legal fees ended up being about $250,000 at our discounted rates, so not only less than the 25%
contingent fee,but less than the buyout. In fact,our arrangement saved the City an estimated$1M in
what the fees would have been.
(4) Malpractice Claim:Former City Auditor. The City used an audit firm to perform
its audits since 1994, including the years preceding the corruption scandal. The State Controller
investigated the audit practices and issued a review report in December 2010 (Quality Control
Review for Audit of City of Bell and Agency for FY June 30,2009)finding 97 audit violations,and
that the City's internal controls did not comply with audit standards resulting in excessive
compensation,illegal taxes,mismanaged bond funds and questionable contracts and land practices.
Thereafter the Attorney General conducted a disciplinary action before the State Board of
Accountancy resulting in a two year probationary supervision of the auditor's license and an
assessment of fines and fees amounting to$300,000. The City made a claim against the audit firm
for malpractice related to the foregoing. After mediation,a settlement agreement was reached and
the audit firm agreed to pay the City $3M.
(5) Supplemental Retirement Plan("SRP"). This Plan was created in 2003 to provide
management employees and councilmembers enhanced pension and life-time medical benefits and
was terminated by the new Council in April 2011. Liabilities under the Plan were almost$6M but
the City's contributions were insufficient and there was over $3M in unfunded liability. Five
employees receiving benefits sued the City in September 2012 for the termination of benefits in the
Ramirez v.City Of Bell,Case No.BC474118("Ramirez')case. The City wan a summary judgment
motion on January 2013 ruling that the Plan was not legally established. Wells Fargo administrated
the Plan and claimed$750,000 in legal fees due to all the Bell 8 litigation and records requests by
investigating agencies. The City brought 41 plan participants into the matter through a second
lawsuit filed,City Of Bell v.Avila,Case No.BC491531 ("Avila'). Although an appeal was filed of
our victory in Ramirez, we negotiated settlements with the parties in both actions. This resulted in
$4.8M being paid by Wells Fargo to the City. Settlement payouts of over$I M have been made with
virtually all claimants. Surplus funds will be used to pay the obligations of the members of the Bell
8 who are participants in the Plan. The Wells Fargo claim was negotiated down to about half of the
claim.
01135.0050/240595.4 -10-
(6) Werrlein. In or around September 2010 the City stopped payment on a note in
connection with the 2009 $4.6M purchase of the Western Auto property, a property on the City's
key downtown intersection and owned by the Pete Werrlein Children's Private Annuity Trust
("Trust"). The City could not afford the payments and the purchase price was excessive(in total the
City would have paid$7M). This transaction was highlighted in the State Controller's report. The
Trust sued the City to foreclose,but the City obtained a stay, and thereafter negotiated a settlement
approved by the court on September 19,2013 which will allow the City to buy the property and find
a developer for the property. The City will pay $2.5M over 10 years at 5% interest(reducing the
aggregate price paid to$4M,a$3M reduction). This transaction was a part of a judicially approved
settlement agreement allowing the City to still utilize redeveloped funds despite the dissolution or
redevelopment by ABx 126 in June 2011. Accordingly,the General Fund cost is zero.
(7) General Obligation Bond Workout(2007). Some$50M in bonds were issued for
the Sports Complex and community facilities to be repaid with property taxes.Property taxes would
have been the second highest in LA County and would have increased 70%to repay the bonds. A
workout was accomplished through a tender offer which acquired 50%of the bonds, and$20M in
unspent proceeds were used to defease the bonds, so that property tax increases were avoided.
(8) SECARS Matters. We have spent a great deal of time coordinating with these
agencies on their administrative investigations as to(i)possible misrepresentations or omissions in
its disclosure to securities market, and (ii) failure to spend money timely on tax exempt projects.
The IRS initially suggested that the City's liability exceed$6M. Moreover, if the IRS determined
the bonds to be taxable we would have been exposed to litigation by all bondholders for damages. In
2014 a settlement was reached where the City paid $257,000 and thus eliminated the exposure of
$6M and claims by bondholders.
(9) Other Matters. Two vendors, DJ Engineering and Fisher Associates sought to
recover some $300,000 for contractual services they had provided, but the cases were either
dismissed or abandoned when the judge ruled that the City could not be forced to pay where no
properly authorized written contract was in place. A Sergeant in the Police Department resigned and
sued the City claiming constructive termination due to his whistleblowing activities. He claimed
$3M in damages,and at mediation,the mediator recommended settlement at$1.6M. Ultimately,we
01135.0050/240595.4 -1 1-
negotiated a settlement and reinstatement agreement dated August 1,2012 and paid approximately
$500,000 in lost wages and attorney fees,probably avoiding S 1M in liability. Additionally,we have
extensively investigated the City's insurance coverage to determine whether there is coverage for
some of the improper acts of the former public officials. In December 2012, we obtained from
Alliant a payment of$1M, the full amount of the policy limits.
V. THE BELL CORRUPTION SCANDAL BROUGHT ABOUT CHANGES IN
CALIFORNIA LAW WHICH WILL BENEFIT PUBLIC AGENCIES IN THE
FUTURE
Bell has changed the legal landscape in California concurring public corruption. Although
Bell's legal battles over the corruption scandal resulted in victories, ultimately all public agencies in
California have benefited. A primary reason is due to two cases decided at the Court of Appeal.
These very significant cases in 2013 resulted in two published opinions in the wake of the Bell
corruption scandal. These decisions are"published"meaning that they can be cited as binding legal
precedent within the State of California and the United States. These published Court of Appeal
decisions will impact how future corruption scandals throughout the country are resolved by the
courts in the future.
The first published decision is People ex rel. Harris v.Rizzo (2013) 214 Cal.AppAth 921.
This decision allowed the California Attorney General to pursue claims against the corrupt former
officials in Bell. Before that decision was issued,the trial court had taken the view that the Attorney
General could not pursue litigation against the corrupt former officials in Bell.
The background for this case is that on September 15,2010 the California Attorney General
filed this civil action("AG Lawsuit")against Robert Rizzo,Angela Spaccia,Randy Adams and the
former Bell City Council,alleging violations of various state laws pertaining to the waste of public
funds,conflict of interest,and breach of fiduciary duty and violation of public trust. Approximately
one month after the AG Lawsuit was filed,on October 15,2010 Robert Rizzo countered this lawsuit
by suing the City of Bell and seeking indemnity from the City under the terms of his employment
contract with the City and under sections of the Government Code and Labor Code,and payment of
his legal fees and costs in defending the lawsuits filed against him by the Attorney General and the
District Attorney. Shortly thereafter,on November 24,2010 the City countered with its own lawsuit
against Robert Rizzo.
01135.0050/240595.4 -12-
The AG's complaint was subsequently dismissed by the trial judge. One of the main reasons
why the trial court indicated it was dismissing the lawsuit was because the AG lacked standing to
argue the case for the City and that the AG was barred from doing so under separation of powers.
The AG appealed the trial court's dismissal of its complaint to the Court of Appeal.
Under the City's new leadership, post the 2011 election, the City worked directly with the
AG's Office to urge the Court of Appeal to reverse the trial court's decision. The City made detailed
arguments in its briefing before the Court of Appeal focusing on the statutory construction of the
City's governing documents,its City Charter,and other legal arguments to urge the Court of Appeal
to allow the AG's lawsuit to proceed forward. On March 20, 2013, the Court of Appeal issued its
43-page published ruling reversing the trial court'sjudgment and remanding the matter to trial court
with instruction to reinstate the AG's lawsuit. This was a tremendous victory for the AG's Office
and for the City of Bell.
The legal significance of this opinion is that Attorney General's Offices can now assist cities
in recovering from corruption scandals. In many cases, a small public agency that has been
victimized by a corruption scandal and had its public funds looted by corrupt officials might not
have the necessary financial resources to fight its legal battles alone. City officials and State
officials can now work together through the court system to obtain justice for victim public agencies
and cities in the aftermath of a corruption scandal. An efficient use of public funds is accomplished
in this manner. Additionally, this approach harmonizes public administration between State and
local government in crisis situations stemming from a corruption scandal.
The second published decision is City of Bell v.Superior Court(2013)220 Cal.AppAth 236.
As discussed above, on October 15, 2010, Robert Rizzo sued the City of Bell seeking indemnity
from the City under the terns of his employment contract with the City and under sections of the
Government Code and Labor Code,and payment of his legal fees and costs in defending the lawsuits
filed against him by the Attorney General and the District Attorney. The trial court made rulings
adverse to Bell. Bell sought relief from the Court of Appeal. The Court of Appeal subsequently
issued a 37 page published opinion on October 4,2013 holding that Robert Rizzo was not entitled to
payment of his legal fees for his defense of criminal and civil litigation against him under his
contract with the City.
The significance of this Court of Appeal decision is that previously public agencies that were
victimized by corrupt officials were prevented from a practical standpoint from suing those corrupt
01135.00501240595.4 -13-
officials to recover the losses sustained by the public agency due to that official's corruption. Under
prior law,a corrupt official could turn around and claim that the public agency owed them a duty to
pay their legal fees and to indemnify them. This is exactly what Rizzo tried to do to Bell.
If a victimized public agency had to pay for a corrupt former official's indemnity and defense
claims, then from a practical standpoint no victimized public agency could recover from a corrupt
former official after a corruption scandal. This Court of Appeal decision allows public agencies to
pursue claims against corrupt officials without the official turning around and claiming that the
victimized public agency pay for its own recovery efforts.
Additionally,the California State Legislature enacted many changes in the law after the Bell
Scandal in an effort to prevent future corruption scandals. For example, Assembly Bill 1344,
approved by the Governor of California on October 9, 2011, enacted several reforms, including
among other reforms,requiring that cities provide notice of each council meeting and post agenda
packages on the city's Internet Web site, which was not previously required.
Also under AB 1344,cities can no longer hold a special meeting with only 24 hours' notice
to the public regarding the salary, salary schedule, or other form of compensation for any local
agency executive and those matters must instead be disclosed publicly with 72 hours' notice and
conducted at a regular city council meeting.
Effective January 1, 2012, Government Code Section 3511.2 provides that any contract
executed or renewed between a city and its executive manager cannot include an automatic renewal
of a contract that provides for an automatic increase in the level of compensation that exceeds a cost-
of-living adjustment and that contract or contract extension cannot provide a cash settlement that
exceeds 18 months of the salary and benefits to that executive employee.
Under recent pension reform in California since the Bell scandal,pension forfeiture statutes12
apply to all public employees including those hired before January 1,2013. Any current or future
public official or public employee convicted while carrying out their official duties, in seeking an
elected office or appointment or in connection with obtaining salary or pension benefits, will he
required to forfeit any pension or related benefits earned from earliest date of the commission of the
felony to the forfeiture date (meaning the date of the conviction). The felony must arise out of
conduct or in the performance of their official duties, but does not require it occur during normal
work hours.
u California Government Code sections 7522.72 and 7522.74
01135.0050/240595.4 -14-
In terms of other deferred compensation benefits,typically pension plans(such as 401(k)'s)
are judgment proof. Once a judgment is obtained, pension funds cannot be collected to pay the
amount owed to satisfy that judgment. However, Bell was able to recover in excess of$500,000
from deferred compensation plans held by former officials through various restitution awards and a
federal court action involving Rizzo's pension plans. Bell was able to do so by seeking recovery of
these monies prior to the entry of judgment in these actions as a claim to the recovery of public funds
and by obtaining a court ordered award of these funds that was agreed to by the subject officials
through those court actions.
VI. ADVOCACY FOR VICTIM PUBLIC AGENCIES IN CRIMINAL COURT
We applaud the efforts by Steve Cooley and the Los Angeles District Attorneys'Office in the
Bell Corruption Scandal. A critical part of our representation of Bell after the corruption scandal
was working closely with the District Attorney to obtain justice for the City. Justice includes
convictions that result in both jail sentences and a restitution order to pay back funds that were
misappropriated from a victimized city. We focused on taking a leading role concerning the
restitution component after the District Attorney obtained convictions. We helped ensure that the
current city officials and the community had a voice at the criminal sentencing and restitution
hearings.
At the sentencing and restitution hearings for the convicted former city officials,the current
city officials and residents had the opportunity to make public statements in court to the judge. We
worked closely with the current city officials and the residents to ensure their voices were heard in
court and to organize their presentations in court. We introduced each speaker at the sentencing
hearings to the judge and also argued ourselves for the maximum restitution recoveries allowed by
law at each of the seven restitution hearings. This was an incredibly rewarding experience to see the
voices of city officials and community members heard in court at each of the sentencing hearings.
Between April 2014 and July 2014,the City of Bell obtained criminal restitution awards for
millions of dollars against the convicted former officials. Specifically, the Court awarded Bell
approximately$8.8 Million in restitution against Robert Rizzo, $8.2 Million in restitution against
Angela Spaccia and approximately $1 Million combined against all of the convicted former Bell
City Council members, all payable to the City of Bell. We argued at all seven criminal restitution
hearings for the City of Bell to obtain these restitution orders.
01135.0050240595.4 -15-
Robert Rizzo's sentencing hearing was the most contentious of these restitution hearings.
Rizzo's attorney argued that Rizzo should receive credit for all of the recoveries Bell had as of that
time,April 2014,including credits of$5.5 Million for recoveries for professional negligence claims
against Bell's former city attorney firm and former city auditor, $1 Million received from an
insurance claim filed by Bell for employee theft during the corruption scandal and for other
recoveries. We countered these arguments in court and a heated court battle ensued between us and
Rizzo's attorney (see L.A. Times April 16, 2014 article). The trial court ruled against Rizzo and
granted Bell a full recovery for the restitution sought against Rizzo of over$8 Million.13
The restitution awards against Robert Rizzo and Angela Spaccia also included the release of
their claims to the Supplemental Retirement Fund based on their criminal convictions. The
Supplemental Retirement Plan("SRP")was created in 2003 to provide management employees and
former councilmembers enhanced pension and life-time medical benefits and was terminated by the
new City Council in April 2011. The criminal restitution order against Rizzo and Spaccia resulted in
the release of over$2 Million from the Supplemental Retirement Fund back to the City. Convicted
former city council members also agreed to relinquish a combined total of over$200,000 to Bell
from their retirement accounts under their criminal restitution orders.
VII. CONCLUSION
So then after 35 months, the world of unknown unknowns in Bell has receded and we are
back to a world of largely known knowns and known unknowns. Financially the City has completed
4 audits in 2 years and has gone from the then unknown deficit of$1.5M to over$22M in reserves.
The unwritten and unknown policies and practices are gone, filled in with new purchasing
ordinances and standards,negotiated and approved MOUs with the employee bargaining units,there
is a risk management function, and a council procedures manual. Some $75M of threatened
liabilities is gone and the outstanding case load has shrunk to a handful of cases—next year's legal
budget could be a quarter what it was 2 years ago. And not only has Bell's world become cleaner
and better, markers have been put down in the State at large which will benefit all communities:
judicial decisions stand as precedents to keep wrongdoers from raiding the city treasury, and state
law will require more disclosure and give citizens a greater opportunity to uncover abusive practices.
13 Robert Rizzo received credit for approximately$250,000 he paid back to Bell in 2012 from his
retirement accounts under a court approved settlement of a federal lawsuit.
01135.0050/240595.4 -16-
What have been the most important factors in these accomplishments? Certainly we would
like to feel that good lawyering and being able to deal with a variety of legal issues is an ingredient.
Being a partner and willing to make some economic sacrifice helps as well. Of greater importance is
really a mindset, the quality of being able to see things whole14. In a complex setting of unknown
unknowns,starting on the problem at a logical place,keeping an open mind and reacting to new data
and events as they develop, and always keeping the long view in mind, is the needed mindset.
Probably one of our most difficult decisions was whether to become involved in the
malpractice action against the former city attorney, one of the best known and a highly respected
firms in our field. Initially we declined to take the case for the reasons that the City already had
retained a contingent fee lawyer, we had never handled such a case, and we didn't want to create a
negative relationship with colleagues. However,we did litigate the related Dexia case and over the
course of a year became very knowledgeable,about both matters,and ultimately critical of how the
malpractice matter was being handled. We negotiated a buyout of the contingent fee contract and at
our lesser rates,the City received$1 M more from the final settlement that they would have from the
contingent fee arrangement. The prior attorney actually received more in fees that we did from the
case. The City would have had to get a settlement of twice that which was offered to end up with the
same return if the contingent fee had been in place. So our willingness to adapt to the situation
benefitted the client,though it was an extremely difficult internal decision.
So adaptability and"seeing things whole"are important qualities in the unknown unknown
world. But exceeding even good lawyering, good organization and "seeing things whole" is the
concept of team,or the even broader concept of community. Though this paper has been focused on
the lawyer role,the turnaround of the organization was a joint effort. It started with some agitators
and was picked up by journalists and became a community organization,of which BASTA, led by
Cristine Garcia,who is now a member of the State Assembly, was the most prominent. However,
others leaders and organizations played their part,and the current council members came from these
community organizing efforts. Then the new Council selected a manager, Doug Willmore,and he
created an outstanding management team which has spent three years in the trenches fighting for
each improvement under enormous scrutiny. Doug is now moving on to fresh challenges with a
14"Seeing things whole"was seen as the initial goal quality of John Weeky Powell,the first man to
descent through the Grand Canyon in 1869, Seeing Things Whole,edited by William deBuys. "He
saw things whole. He drew his conclusions from the entirety of the puzzle, not piece by piece."
(p. 24).
01135.0050240595.4 -17-
new city, but he is an outstanding city manager and has left a mark in Bell which will be felt for
years to come. But, indeed, every City employee has felt the impact of the Bell scandal, the
community questioning and suspicious,and everyone who has kept coming back to work doing their
job has played their part in the restoration of Bell.
And while we have been part of a management,and even organizational team,in the end the
broader concept is one of community. In making all the decisions along the way, of maneuvering
through the unknown unknown, there are decisions made. The decisions are weighted by risk
factors; chances of success, costs, life experience of the judge, strength of the opposition. But
overarching is the commitment of the advocate. In the public arena, and particularly this case,we
had a whole community which felt abused. The sense of abuse was not created by the L.A. Times.
It existed for decades as the long-time community residents who had come to a small well-kept
community saw it decline from its height in the 1950s and 1960s to something lesser,not worthy to
raise and keep their children. The L.A. Times found this anger and formed it into a flood which
washed away the years of powerlessness and cynical self-dealing officials,so that Bell could take its
chance at a rebirth.
So in the end,all of this has been about rebirth and renewal,and justice and for the lawyers,
the new management team, and the organization, in the end, in each of the decisions we have
participated in, it has been about understanding this truth. And it comes from the community, the
demand for fairness and justice. Our new inexperienced council members,then,were not a liability
but the essential ingredient. They were our instant sounding board on what justice means in each
situation we presented to them. Of course,there were times where we settled and took less than we
felt we deserved. But overall,bit by bit justice has become real,defined by the decisions directed by
the Council for their community.
We the lawyers had to understand what justice was to the client, to the Council and
community — and we then had to explain it to judges, auditors, administrators, adversaries, and
reporters, and fight for it. And we also have been changed by this advocacy.
Public service is not the performance of a function, the shuffling of papers and receipt of a
check. It is certainly not the manipulation of a system to one's personal benefit. It is the serving of a
community, the creation of new resources, and capacity by the establishment of fair process, the
lifting of spirit,the teaching of a people of their power. Bell is not about the harm those who have
01135.0050/240595.4 -18-
lost the sense of public service can do, it is about the will to serve in each of us and how it can be
energized and directed to accomplish things the cynical heart cannot imaging.
People who understand this story can be changed. The whole system has cooperated to make
the hopes and dreams of Bell achievable. But the journey is never over. It is torus to continue on
absorbing this lesson. And for being allowed to participate in this journey, for our part, we are
grateful beyond expression, and expect to apply the lessons bestowed on us by the suffering
experienced by the citizens of Bell.
[END OF WHITEPAPER]
Ot 135,0050/240595.4 -19-
EXHIBIT A
SUMMARY OF RECOVERIES
(1) City Avoids Almost $70M in Liability and Recovers Over $10M in Revenue with
$18M in restitution awarded.
Focusing just on the 15 major matters, we can state that under the guidance of the City
Council and City Manager,through our litigation and settlements, we believe the City has avoided
$70M in liability as follows:
Matter Potential City Liability
1. Rizzo/Spaccia Pension Claims $ 6.000M
2. Adams Pension/Indemnity Claims $ 1.300M
3. Bell 8 Pension/Indemnity Claims $ 6.000M
4. Dexia claim against General Fund $38.000M
5. Werrlein claim for payment $ 7.000M
6. Vendor claims for payment $ .300M
7. Supplemental Retirement Obligations $ 7.350M
8. IRS Claim $ 6.000M
9. Cochran Claim $ 3.000M
$74.950M
Additionally,in terms of actual monies recovered,we believe we have brought in over$IOM
in revenue, with an additional $15.5M resulting from a sale of property as a part of the Dexia
transaction for a total monies to the City of$25.5M. On a non-monetary basis,through the 2007 GO
Bond workout, we avoided a 70% increase in property taxes to property owners, and we've
recovered the Werrlein property for the City's use in economic development. These benefits are real
but not translated into dollars. The breakdown in monies recovered is as follows
Matter Funds to City
1. Professional Negligence Settlements $ 5.500M
2. Supplemental Retirement $ 4.800M
3. Rizzo/former Council ICMA Funds $ .500M
4. Adams $ .215
5. Alliant 1.00OM
$14.209M
RESTITUTION
Matter/Criminal Trial Restitution
1. Robert Rizzo $ 8,845,229,80
2. Angela Spaccia $ 8,254,776.60
3. Victor Bello $ 177,634.03
4. Oscar Hernandez $ 241,331.83
5. Teresa Jacobo $ 242,229.37
6. George Cole $ 77,643.66
7, George Mirabal $ 242,293.48
$18,081,138.77
01135.0050/240595.4 -20-
ABOUT THE AUTHORS
The authors of this whitepaper are David J. Aleshire and Anthony R. Taylor.
David J. Aleshire was appointed as City Attorney of Bell in July 2011 as part of the reform
efforts by the new City Council after the corruption scandal. Aleshire&Wynder,LLP volunteered
its services to the citizen recall effort led by BASTA which gathered 4,000 signatures in a month and
carried out the recall. Mr. Aleshire has served the City of Bell as its City Attorney since that time
through the law firm he is the founding partner of, Aleshire &Wynder,LLP, a municipal law firm
based in Irvine, California.
The restoration of Bell is one of Mr.Aleshire's most important achievements in his nearly 40
years of practice in municipal law. In September 2014, the City of Bell adopted a proclamation
recognizing City Attorney David Aleshire for his service to the City of Bell.
Besides Bell,Mr. Aleshire serves as City Attorney in Signal Hill (since 1978) and Banning
(since 2008). He has long tenures as City Attorney of Palm Springs(15 years),Lawndale(17 years)
and Irwindale (10) and has served as City Attorney of six other cities (San Jacinto, City of Suisun
City, Cerritos, Norwalk, San Dimas and Irvine).
Mr.Aleshire graduated from UCLA with a J.D.in 1975 and M.A.in Urban Planning in 1976.
Prior to that,Mr.Aleshire graduated with a B.A.,Phi Beta Kappa,from Stanford University in 1972.
Anthony R. Taylor is a partner of Aleshire&Wynder,LLP. As part of the recovery efforts
for the City of Bell after the corruption scandal,Anthony R.Taylor was lead litigation counsel and
argued appeals for the City of Bell in People ex rel. Harris v. Rizzo (2013) 214 Cal.App.4th 921
(allowing recovery against former city officials after Attorney General's lawsuit was dismissed by
the trial court)and City of Bell v.Superior Court(2013) 220 Cal.AppAth 236 (holding that Robert
Rizzo was not entitled to payment of his legal fees for his defense of criminal and civil litigation
against him under his contract with the City).
Mr.Taylor also handled professional negligence claims for the City of Bell against its former
city attorney firm and former city auditor and recovered a combined total of $5.5 Million for the
City of Bell in those professional negligence matters.
Mr. Taylor argued at all seven criminal restitution hearings for the City of Bell to obtain
restitution awards against the convicted former officials. The Court awarded Bell approximately
$8.8 Million in restitution against Robert Rizzo, $8.2 Million in restitution against Angela Spaccia
01135.0050/240595.4 -21-
and approximately $1 Million combined against all of the convicted former Bell City Council
members, all payable to the City of Bell.
Mr. Taylor graduated with a B.S. from the University of Southern California, summa cum
laude and class valedictorian of the School of Public Administration in 1997.Continuing at USC,he
received his J.D. from USC Law School in 2000.
Mr.Taylor found his inspiration to serve cities from his parents and his upbringing in public
service. Mr. Taylor's father, Robert B. Taylor, was a distinguished LAPD officer and a retired
commander from the LAPD before becoming the Chief Probation Officer of Los Angeles County,
where he retired in 2010. Two members of Mr. Taylor's family were police officers that were
tragically killed in the line of duty. This whitepaper is dedicated to all public safety employees who
have made the ultimate sacrifice for our communities and to all of those who serve our communities
with honor.
01135.0050/240595.4 -22-
City of Bell—Reformed and Reborn
By Doug Willmore
City Manager, City of Bell
The 2010 scandal involving former elected and appointed officials in the City of Bell rocked the very
fabric of the community, and represented the worst form of abuse of the public trust and treasury.
While this dark chapter in Bells history will never be forgotten, it did serve as a wake-up call for the
citizens of our community to reclaim and reform their government.Just a few years later, we are proud
of the significant changes we've implemented to enhance transparency and accountability, institute
better governance, and restore our City's fiscal health. We have implemented many major changes
since 2010. We still have a lot of hard work to do... but we are proud of the City we're becoming.
When I started in June 2012 as the first full-time permanent City Manager in Bell since Robert Rizzo's
ouster,the operations of the City were in disarray. Despite the herculean efforts of interim City Manager
Arne Croce and his interim staff over the previous nine months,there was still much to be done,and the
City was teetering on the verge of insolvency and bankruptcy.
In addition,the State Controller's Office had come in to Bell shortly after the scandal broke and had
published a report on Bell's Administrative and Internal Accounting Controls in September 2010. It was
generally assumed by many in the press, by some Councilmembers, by the State and the State
Controller's Office,and by many citizens,that if Bell worked to correct all of the deficiencies listed in the
SCO's report,that its financial house would be put in order. Very quickly, I found the report to be
virtually useless as a roadmap for the urgent problems that Bell faced.
Arne and his brave crew had stepped in and put their fingers in as many leaking holes as possible and
they had helped slow the leaks.They had helped to build some rational operations back into City
government;they had led a complex and successful refunding of City wide debt that eliminated the
need for a massive tax increase(because of debt that Rizzo had issued and not paid for); and,they had
proposed (and the Council passed)the first rational and transparent annual budget that the City had
seen in years. But,the problems that Bell faced at that time were massive, and many were unknown.
And they were about to became even worse.
At the time Arne stepped in to help the City in the fall of 2011,the City was three years behind in annual
audits.As such,they didn't really know definitively what their financial position was.Thus,the great
work on the budget that they had passed was also based on some guesswork, i.e., namely that the fund
balances reflected in the City's records were accurate. Without an independent audit to confirm these
fund balances,we were essentially trying to steer the car using the rear view mirror. This was the same
situation that I inherited in June 2012. We would soon find out that the General Fund balance was
massively overstated.
In June of 2012,when I started in Bell,the City was three years behind in producing its annual
independent audits. It was many years behind in basic things like reconciling its bank statements. It was
months and months behind booking many basic financial transactions.There were, I believe,55
different lawsuits pending—a couple which had the capacity to bankrupt the City if the City came out on
the losing end.
So,within weeks of starting in Bell, and confronting the massive number of urgent financial, legal, and
governance issues, I tossed the normal "100-day plan"that any good Chief Executive has when starting a
new position out the window.Along with it, I tossed the SCO's "audit" out the window-the audit that
so many had placed so much faith in as a roadmap back failed to even address the most urgent issues
that the City faced. I also tossed out my early belief that settling all of Bell's lawsuits as quickly as
possible was going to be the right way to go.While I still believed that"a good settlement is better than
a good lawsuit," Bell's Council and citizens demanded justice,and justice is what they deserved.Settling
quickly—buying peace, if you will—would not produce the justice that the citizens deserved.
At the same time, after a thorough briefing from Bell's City Attorney(the incredibly capable and
committed law firm of Aleshire and Wynder), I quickly concluded that many of these lawsuits were
unlikely to be so easily settled. Many of the criminals that had preyed on Bell before the scandal (Rizzo,
Spaccia,etc.) were back to take another hunk out of Bell and had sued the City alleging improper
terminations and so on. Quite simply,the City was never going to pay any of them another dime and the
only way out of our predicament was to fight our way out. Robert Frost once said, "the best way out is
always through,"and I think that certainly described my realization. Our City Council concurred.
Through rapid triage and analysis with the City Attorney and the City Council in my first few weeks,we
created a rough action plan to address the key urgent priorities.
(1) Hire a talented and committed permanent group of Department Heads as quickly as possible.
(2) Fully commit to the legal fight and dig in for the long haul.The only way out was through-
(3) Complete the three years of past due financial audits as soon as possible. Preferably within a
year, although that looked to be impossible.
(4) Bring the daily financial transactions current. With many transactions months and years behind,
this would be a massive undertaking.
(5) Some how,some way,find a way to get out of the Dexia lawsuit. The City owed closed to$38M
in principle and interest to Dexia (a European bank) on a piece of property that Rizzo had
purchased in a misguided investment scheme that only had a market value of approximately
$21-23M. Dexia was suing for foreclosure and would then seek a deficiency judgment for the
remaining$15M. That deficiency judgment would surely bankrupt the City.
And do it all transparently.Sunshine is a good thing and especially for Bell at that time.The City Council
was committed to transparency and was supportive of almost everything that could be done to share
information with the public and to open up the doors of City Government so that anyone could see what
was going on.The above priorities became the key priorities that governed our actions over the
following 18 months.
However,the State Controller's Report didn't address any of the above listed priorities, and yet without
successfully addressing them, Bell would likely fall into insolvency. The SCO report would be useful much
later on in the process as we were able to tackle less important items, but it was utterly useless in
identifying the most urgent actions that needed to be taken in 2012.
Nevertheless, in early 2013,the SCO came back to do a follow up report.Their follow up report,
published in May 2013, eviscerated us for not following their guidelines and for not doing enough to
enact their recommendations. In the press release accompanying the report, State Controller John
Chaing said, "The City of Bell has made some progress since it ejected a corrupt city management two
years ago. But many of the same fiscal management and internal control lapses that allowed Bell to fail
its citizens in the past remain unaddressed today.This review does more than point out problems. It
serves as a blueprint to preventing the return of unlawful taxation, abusive spending and backroom
deal-making."
After the issuance of the new SCO report, SCO's press release, and SCO's news conference in May 2013,
headlines included the following in the LA Times: "Bell faces 'fiscal crisis'after corruption scandal,audit
finds."
The follow up SCO report had again missed the point. In my assessment, spending our time at that
moment trying to implement and correct the SCO recommendations would have been akin to
rearranging the deck chairs on the Titanic. The ship was sinking and following their recommendations
would not have kept the ship afloat.Curiously,and perhaps coincidently,the SCO issued their highly
critical follow up report on Bell at the same time that they were supporting a bill (AB941),which would
have extended their authority to identify mismanagement over cities.The SCO even mentioned the bill
in their press release regarding the report criticizing Bell and its management.
Nevertheless,our City Council wisely stayed the course despite the political fallout, backlash,and
pressure.And in the process,we have become one of the most transparent cities in the nation.
Enhancing Transparency
The City completely revamped its website to provide easily accessible information to the public.The
Sunshine Review, a non-profit that examines state and local government transparency,gave the new
website an "A-"for transparency.
• Budgets and budget related information: http://www.cityofbell.org/?navid=241
• Itemized spending(checkbook): http://www.cityofbell.org/?navid=183
• All elected, appointed and employee salary and compensation:
http://www.cityofbell.org/?navid=181
• City Contracts: http://www.cityofbell.org/?navid=178
• All council meeting information, including minutes and documents:
http://www.cityofbell.org/?NavlD=93
• The Municpal Code is now also on line: http://www.cityofbell,org/?NavlD=84
In the early fall of 2012, 1 was able to identify three professionals who were willing to come to Bell and
take on the challenge.The Council approved the appointment of all three:Josh Betta as Finance
Director; Pam Yugar as Community Services Director; and Joe Perez as Community Development
Director.All of them saw the challenge in rebuilding Bell as the key reason for them arriving.They
arrived with skills, passion,and commitment. And all three have produced amazing results in challenging
circumstances. And none more important than what Josh Betta has done in reforming Bell's Finance
Department.
Josh immediately jumped in and tackled the financial challenges that we faced. And within months, he
identified another key challenge:the City was virtually broke.While Arne and his team had worked with
the best numbers available in preparing the previous year's budget,we all assumed we had a General
Fund Balance of$1.2M to work with.While this isn't large, it still equaled reserves of close to 10%.
Nevertheless,while working with our outside auditors on the three past due audits,Josh came into my
office one day in early 2013 with alarming news.With the first draft of the audit for 2009/10 complete,
it became clear that our General Fund Balance was actually much closer to$200K, rather than $1.2M.
The City was virtually insolvent without even knowing it. It simply added to the challenges.
Along the way,one of the greatest and most steadfast partners that the City has had has been Dave
Aleshire,the City Attorney, and his stable of attorneys at Aleshire &Wynder. Not only has their work
been outstanding (and the outcomes demonstrate that), but also they have consistently done whatever
they could to help the City in any way possible. For example, in November 2012,with Bell hovering on
the verge of insolvency and litigation erupting all around us, Dave informed the City Council he was
planning on working on the more than 50 cases that we had, but withholding some of the billing until
we could afford to pay at a later date. We could afford to pay him approximately$100K per month, and
he held off on billing us anything over that.The delayed billings eventually totaled almost$1M a year
later.A year later(December 2013),after many successful recoveries,we could afford to pay his billings
and he was paid in full. I have never known or worked with a more committed group of attorneys than
those at Aleshire&Wynder,and the City of Bell will forever be in their debt.
At this writing, it has been the best of times and the worst of times as we continue rebuilding after the
Bell scandal. Today,with myriad, fast-paced events unknown to other cities behind us, including the
conviction and sentencing of the criminals that formerly directed the affairs of our municipality,the City
of Bell operates in the best of times--and possesses the brightest future-- having achieved complete
financial recovery.
During 2013 and 2014 the City collected $5.7 million in legal settlements from those who did wrong to
our community, and $4.8 million from the liquidation of an illegally devised supplemental retirement
program. We also collected$15.2 million from the sale of valuable land adjacent to 1-710, avoiding,at
the same time, a potential $15M deficiency judgment in the Dexia Credit matter that threatened our
solvency. In all,this$25.7 million one-time infusion of cash has created an enviable General Fund
reserve position of approximately 200%. We enter 2015 in possession of great optimism for our future.
The City has accomplished many financial improvements in the past 18 months that has brought us to
where we are today—proud and poised for the future. Accomplishments include:
• Completed the FY 2009/10, FY2010/11, FY 2011/12,and 2012/13 audits. Getting the audits up
to date is an enormous accomplishment and the single most important financial objective that the City
had. In addition,completing three audits in a little over a year's time is unheard of.
• Dexia bond workout—completing this settlement agreement saved the City from a potential
deficiency judgment of up to$15M, as well as started development on dormant City property,thus
generating revenue and jobs. 500,000 square feet of new space was completed in December 2014 and is
now fully occupied with more than 350 new jobs in that space.
• Financial transactions up to date—in June 2012, many financial transactions were behind. For
example, bank statements had not been reconciled for more than two years. All transactions have been
brought up to date in almost all areas.
The$25.6 million dollars collected in 2013 and 2014 in settlements with those that damaged our
community and a land sale are important one-time events in this community's history. Within a 10-
month period our reserve ratio went from-10%(as measured at June 30, 2013)to an estimated 200%at
this writing. We find ourselves in a unique position of purchasing power that will likely never occur
again. How we apply what we have in reserves will be an ongoing matter of policy consideration. There
is not a "right" response to this positive dilemma, but we will be guided by a desire to achieve a balance
between re-investment in our City and the maintenance of a high-level of set-aside reserves.
However,the City's Finances are complex. Revenues and expenditures of the City are accounted for in
thirty-six different funds. Our chief objective continues to be that of normalizing the General Fund and
Risk Management Fund.The City has undergone such shocking changes, imbalances, events,and
pressures that it's still difficult to know what will be"normal"going forward. Completing four financial
audits within an 18-month period has brought us to a place where we now know what assets and
liabilities we face. And, it helps immeasurably as well that the majority of scandal-related activities--
lawsuits, investigations,etc.—are behind us.
But our goal is still for the City to establish an ongoing,sustainable balance between expenditures and
revenue for years to come. This is called structural balance,and it is what we know our community
expects of us. This will be challenging for Bell, and will require difficult choices, but it is possible.
Challenges We Confront
The City of Bell will not become a model city government with further cost reduction; we run a bare
bones operation now. We expect to employ aggressive economic development strategies, some of
which are already in progress,to create a five-to seven-year return on investment. I have stated to our
City Council previously, "we cannot cut our way to prosperity".Thus,the only way out of the economic
hole that the City is in is to build our way out.
This said,some significant threats lie before us.
(1)CalPERS recently published financial projections relative to proposed risk pooling changes. The
combined impact to our Safety and Miscellaneous employee retirement plans in the proposal suggests a
$500,000 contribution increase from the City within the next six years. The proposal equates to a
devastating 33%increase in cash contributions annually.
(2)This past year the City was also blindsided by the unannounced, unilateral decision of the California
Department of Finance and Los Angeles County to withhold an estimated $900,000 in pension override
tax. The State recaptured a portion of the City's pension tax (around$900,000 per year),which was
allocated to the redevelopment agency and provided to the City to pay for its pension bonds and
pension obligations. The decision results from an aggressive and what we believe to be an erroneous
interpretation of California redevelopment dissolution law. Yet, nevertheless,they have taken it.
(3) While Rizzo and his cronies gave great time and effort to schemes designed to enhance their
paychecks,the City of Bell's commercial infrastructure was ignored,and surrounding communities
advanced as retail providers.Today, as a result, the City's General Fund is extremely dependent on an
abnormally high 10% utility users tax.Again, we have to grow our way out. In the many discussions that
we have had with analysts and developers,we believe that we have development opportunities that will
grow our commercial tax base. But realizing those opportunities will take investments from the City.
(4)As to ongoing annual revenue sources,the City receives only 5.4%of the property tax levy, has little
sales tax generators (generating only$1.5 million annually in a City of approximately 37,000 population;
Sales tax leakage is more than 90%)and depends significantly on its regressive utility user's tax(10%)for
implementing its still threadbare budget and providing services.
(5) Due to the dwindling commercial tax base that Robert Rizzo allowed to crumble over his almost 20
year tenure, most of the City's largest retail sales tax payers are gas stations. Moreover,the tax burden,
described by the LA Times in 2010 as the second largest in LA County, is still unsustainable for the
residents. The general obligation and pension ad valorem tax burden, currently.341%, is unsustainable
for the residents median income of only$38,400. Under the prior administration,the City entered into
$100 Million of new debt within a 7-year period. The past criminal behavior has resulted in increased
pressure from burdened residents to create a rebate or payoff program. These pressures,coupled with
the fact that a portion of the pension tax now gets distributed to other taxing entities, provides a serious
predicament for the Council given the pressure to decrease the tax burden from the residents.
(6)We still face uncertain outcomes in remaining lawsuits and regulatory investigations. While the
majority of the legal wrangling in the post-scandal environment is behind us, the City is still responding
to requests for information in an ongoing investigation by the SEC. They are highly secretive about their
investigations, making estimation of any future liability difficult.
(7)We work in an era of reduced funding for all things governmental. But even before we got to this
point,we, like all governments,faced great challenge in bringing together adequate financial resources
to maintain and restore streets, roads, alleys,sidewalks,etc. The useful life of much of our
infrastructure—largely established during the mid-20th Century—is coming to an end. Keeping pace,
much less catching up is a formidable task.
(8) We are all aware that the Great Recession is over. Many cities, however, are not experiencing
marked improvement in their economic conditions. Bell is one of those. Recovery has been slow, and
many have been left behind. Others have abandoned the hope of meaningful re-employment
altogether. Last year at this time Bell's unemployment rate was 12.3%,the County of Los Angeles' rate
was 9.3%, and California's was 9%. Today, Bell's rate of unemployment is 11.7%, the County's rate is
8.8%, and California's is 6.7%.
Conclusion
Rebuilding the economy of the City of Bell to its former dimensions will be the biggest challenge yet and
will require significant new budgetary appropriations for, among other things: infrastructure; economic
development strategies and programs; modern business equipment;and new forms of engagement for
formerly disenfranchised citizens.
The great German poet Goethe once wrote: "Whatever you can do or dream you can, begin it. Boldness
has genius, power and magic in it."After navigating turbulent waters,the City of Bell finds itself at a
time in our history where it needs to be bold.We have unique opportunities—to rebuild,to rebrand,to
recreate—a City that was once the leader of the southeast LA County—to being the leader of Southeast
LA County again. For the first time in many years,the City of Bell can truly say that our future is what we
make it—our future is in our hands.
To lead this entire region once again, Bell has to face forward.And, it will take everyone—a visionary
Council; involved and responsible citizens; a risk-taking and growing business sector; and, dedicated and
committed employees—to create a bountiful future for the City of Bell. While the future is uncertain, I
am certain that if everyone remains committed and if we act boldly,that we can create a masterpiece.
Acknowledgements:
To Joe Perez,Josh Betta, and Pam Yugar-great professionals and amazing work. No one will ever truly
know what you've been through and what you've accomplished. Your strength,dedication,will,and
perseverance are unmatched.
Arne Croce and his interim team: Pam Easter, Anita Lawrence, Nancy Fong, and Debbie Kurita—stepping
into the chaos and bringing order to the City of Bell when it was so desperately needed.You started
writing a new future for the City.
Dave Aleshire, Sunny Soltani,Anthony Taylor,Anita Luck,June Ailen,Steve Onstot, Laura Walker, and all
the other attorneys at Aleshire&Wynder—I've never worked with finer attorneys and finer
professionals. Your commitment and dedication know no bounds.
The Bell City Council—every accomplishment over the last three years has at least three votes with it.
You had the courage to put your name on the ballot, and then the courage to make the tough decisions
needed to move the City forward.The future of Bell is yours.
Appendix
Accomplishments(6/1/12—12/31/14)
Economic Development
• Special Event Sales Permit: Ordinance adopted which replaced a $672 Temporary Use Permit fee
with a no-fee permit for businesses to hold Special Event Sales and Grand Openings.
• Bell Business Center: Four City-owned industrial properties totaling 40.2 acres were entitled for
warehousing and manufacturing uses. The sale of the entitled properties in early December to Pacific
Industrial allowed Bell to avoid foreclosure and a bankrupting deficiency judgment on three of the four
parcels. The new development was constructed to meet LEED Gold standards, raise property values,
generate tax revenue, and create more than 350 new permanent jobs.
• Plan Check and Building Permit Fees: Ordinance adopted which reduced City's Plan Check Fees
by a range of 23%to 58%and Building Permit Fees by 23%.
• Setback Requirements in Commercial Zones: Amended the municipal code on setback
requirements, which gives the City another important tool to improve the appearance of the City's
commercial corridors.
• Enacted new Economic Development Ordinance.
Housing
• Housing Element:To comply with State law,a Draft Housing Element was prepared and
submitted to the State for statutory review
Finance
• Publication of Monthly Investment Reports and Monthly Financial Reports:this is required by
the City Charter, but had never been done prior.
• Completion of three years of back audits within one year.
• Implementation of new Purchasing Ordinance and publication of training manual.
• RFP and Acquisition of new accounting/finance software.
• Establishing a viable transaction environment,that is:the daily posting of all revenue and
disbursements.Some had been more than two years behind.
• There was less than $200K in General Fund reserves on 6/1/12—as of 4/15/14,there were more
than $25M in General Fund reserves.
• Closed Dexia transaction,which eliminated $15M in potential deficiency and reduced debt by
$38M.
$•69M. Citywide debt was more than $140M on 6/1/12—as of 12/31/14,debt had been reduced to
• Publication of an industry-standard and highly-transparent budget document that won CSMFO
Merit in Budgeting Award.
• Implementation of daily cash management spreadsheet.
• Publication of new Financial Policies and Procedures Manual.
• Extensive use of new five-year General Fund financial forecast models so as to allow decision
makers to create the City's first structurally balanced budget in twenty years. In the process, presented
and passed 2013/14 budget that closed a $1.2m budget gap.
• Successfully resolved Supplemental Retirement Plan issues which brought a net of$4M to the
City and eliminated a liability of more than$3M.
Good government/Transparency
• Great improvement of customer service at front counter through restructuring and training.
• New MOU's with BCEA and BPOA—first MOU's in more than six years.
• At the direction of Council, issued an RFP and a resulting contract for new Livestream services
for City Council meetings.
• Executed a new IT contract with resulting upgrades in hardware and service—first ever IT
strategic plan.
• A draft of new complete HR policies being edited.
• City municipal code was updated, digitized, and is now on the website.
• Creation of shared IT networks for all City departments,with daily system backup.
• City's new website went online in the Spring of 2013. Website is meeting the City's goal of
transparency by providing full financial, contracting and other information to the public. Website
earned an "A-"rating from the Sunshine Review,an organization that monitors governmental websites.
All compensation data, City checkbook, and all city contracts are on the website
Public Works
• Applied for and won $2M grant for transportation from METRO.
• The City completed three street improvement projects in 2013,the first year of our 5-year
Pavement Management Program. In 2013, 16`yo of City streets were reconstructed (19 streets)or slurry
sealed (13 streets). These projects cost$2.1 million and were funded out of gas tax revenues, which are
restricted to street infrastructure construction and repairs.The project continued in 2014 at similar
expenditure levels.
• An ordinance was introduced which updates the approval process and requirements for existing
as well as proposed recycling collection facilities.
• Previously, landscape maintenance, public works maintenance(streets,sidewalks,curb and
gutter,sewer system,storm drains)and graffiti removal services were mismanaged which resulted in
inadequate, slow, and poor services. The substandard services of the previous contractors also led to
findings by the State for non-compliance with State laws and the loss of gas tax dollars. In 2013,we
aggressively fixed these problems by acquiring new contractors through competitive bidding using
industry-standard practices.
• Graffiti Removal:Acquired new contractor GPC through competitive bidding; added weekends
and holidays to contract hours;the new contractor is removing THREE TIMES the amount of graffiti
compared to the previous contractor; introduced new smartphone app to the public for graffiti
reporting.
• Landscape Maintenance: Acquired new contractor through competitive bidding;the new
contract produces an annual savings of$64,200 compared to previous cost and higher quality
professional services (Le. contractor developed comprehensive irrigation repair and improvement plan).
• Public Works Maintenance(streets,sidewalks,curb &gutter,storm drains, sewers): Acquired
new contractor through competitive bidding;the new contract produces an annual savings of$41,000
compared to previous cost;the new contract eliminates potential of negative State audit finding—the
previous contractor, Medina Construction, had no proper contracts and non-existent work
documentation,which led to negative State audit findings and the loss of gas tax dollars ($341,100)
between FY 2010 to 2013.The new contractor has much higher quality professional service and
professional standards of documentation and work order tracking.
• Sewer Maintenance: Developed Sanitary Sewer Maintenance Plan (SSMP)and internal policy to
handle and report sewer spills; acquired new contractor MICE,who could handle sewer spills properly;
mishandling of sewer maintenance by previous contractor resulted in non-compliance findings by the
State Water Quality Board and the threat of a fine;the new contractor has resolved non-compliance
issue and the State has accepted the City's new measures.
• Tree Maintenance:Trimmed 1,015 trees; planted 31 new trees; removed 29 trees that were
dead,diseased, or causing significant damage to sidewalks, and curb and gutter; 133 new trees to be
planted in first quarter of 2014.
• Street Light Maintenance: Started monthly inspections of street lights in April 2013; in April over
140 outages were found; currently,30 to 40 outages are found each month;outages are reported to
Edison as soon as monthly inspection is completed.
• Developed Geographic Information System (GIS): New GIS operation started in April 2013;
digitized City's infrastructure maps (streets, sewer lines,storm drains,etc.); new GIS greatly improved
internal operations (engineering, public works,and code enforcement).
• Developed New Work Order System:track public works service requests such as tree trimming,
sidewalk repairs,etc.; previously, no computerized system existed; new system improves customer
service by reducing"lost" work orders ensuring prompt completion of service requests.
• Compliance with State Recycling Requirements:Working with the City's franchise hauler,the
City is meeting State law requiring waste recycling and diversion.
Recreation/Community Services
• The City's CDBG funding had been suspended—took aggressive action to meet the County's
requirements to save annual CDBG funding of more than $700k to be used for community services.
• Creation of two highly successful Special Events (85th Birthday Event and La Campana Street
Festival).
• Development and Creation of Summer Concert Series.
• Creation of the Haunted House at Veterans Park Clubhouse for Halloween celebration: more
than 2000 visitors.
• Development and creation of Senior Services Division: Have established and maintained a
working relationship with Oaks and Murray Place; developed the Senior Newsletter; brought in Exercise
classes, arts and crafts,dances and a mini health fairfor seniors; created community travel excursion
program. Increase from 1 annual excursion to 18 excursions planned and executed FY12-13.
• Issued RFP and new contract for transportation services. Included development and creation of
a NEW fixed Route transit systems that serves over 5,000 riders per month.
• Creation of a 16-page Community Services activity guide that is mailed to all residents.
• Camp Little Bear Park: Created Movie Nights at the Park(Summer& Halloween Session);created
Arts and Crafts Drop-in program; developed and created Jr. Chef Program;created Homework Helpers
program to aid kids with school assignments; implemented Drop-in Board Game program; created and
implemented "Play 60"which encourages youth to be active for 60 minutes a day.
• First ever Part Time Employee handbook created;full time evaluations done-first time in more
than 10 years.
• Renovated Veteran's Memorial softball field and established new procedures to properly
maintain synthetic soccer fields. Previously,fields had gone unmaintained for more than eight years.
Also, purchased new goal posts for Nueva Vista soccer fields.
• Adult Sports: Developed four new adult sports: Men's 7 on 7 Soccer; COED 7 on 7 Soccer;
Women's Slow Pitch Softball; and,COED Chicago Softball.
• Youth Sports:770 more kids in soccer program now; new Wood Bat Division for 14& 15 year old
players;developed and created Pee Wee Soccer Program; developed and created Pee Wee T-Ball
Program; developed and created Pee Wee Basketball Program; created a comprehensive youth soccer
manual for parents, participants and coaches; created a comprehensive database for Youth Sports
Volunteer Coaches from 2012 till present.
Judy Deertrack
1333 South Belardo Road, Apt 510
Palm Springs, CA 92264
Wednesday, April 13 2016
City Council Closed Session
City of Palm Springs, CA
Re: Personnel Review of Employment Contracts for City Manager David Ready
and City Attorney, Doug Holland
To The Honorable Members of the City Council:
I have forwarded a comment letter that is on file where I explain my reason for
requesting you to replace the present City Manager, Mr. David Ready, and the
present City Attorney, Doug Holland. This is not a commentary on their service
to the community, or the excellence of that service in any regard. It is simply a
warning and request to the present City Council that there is extraordinary
hard work ahead in identifying and correcting the wrongs that resulted in a
massive FBI Raid on September 1, 2016, and to discontinue with the denial
that business can proceed "as usual' without heeding the need for major
change in policies, actions, and personnel.
I have given you material published from the City of Bell. One of the major
reports is from the ex-City Attorney, David Aleshire, whom I believe has the
complete respect of this community. I would ask for you to confer with him on
options, and how the City of Bell confronted the difficult interim period
between the raid and the indictments.
On March 2nd Closed Session hearing, I brought up the point -
If the FBI is investigating developer corruption (which it is);
if the violations of law are centered around contracts reviewed and approved
between the Developer and the City (which they are);
if the FBI Search Warrant supports that those contracts are now part of the FBI
Probe (which they are);
Z
if those contracts were reviewed, recommended and approved by Dr. Ready
and Mr. Holland (which they were);
if it is now necessary to do impartial review of the City's exposure (which it
is!!);
if Dr. Ready and Mr. Holland are literally acting as the City's SOLE ADVISORS
(which they are!),
if we have had a series of approvals of Specific Plans and entitlements of
development permits for Mr. Wessman with evidence of his implication in GC
1090 violations;
if the City illegally issued building permits to Mr. Wessman for footings on a
new building downtown without a prior approval of that building;
if the City wrongfully transferred hotel incentive tax credits from a defunct
ordinance from one hotel to another without adequate public hearings or
review, or without adequate findings;
THEN we have a major problem, we have a past administration of staff and city
councilmembers who are inappropriately influencing the new city council and
its decisions, and wrongfully implicating them in past acts which may now be
imputed to them as misconduct or criminal acts;
AND it is time to change advisors, because this is the essence of Conflict of
Interest!
Please take this under serious advisement and make a decision that allows the
City to move forward with complete transparency, and without improper
conflicts of interest.
With regard,
Judy Deertrack
Jay Thompson
From: Ginny Foat <ginnyf@mizell.org>
Sent: Wednesday, April 13, 2016 4:56 PM
To: Jay Thompson S'
Subject: FW: City Manager David Ready 4
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From: Potts, Michael (CENTRAL) [mailto:mpot"srcmail.net]
Sent: Wednesday, April 13, 2016 1:31 PM
To: Ginny Foat
Subject: City Manager David Ready
My name is Michael Potts, I am both a resident of Palm Springs as well as employed in Palm Springs. In my nearly 15
years living and over 40 years visiting Palm Springs, I have seen the city grow and become a world class destination. I am
in the Hospitality industry, and have live in 10 states and Europe working in this business for over 44 years. In all of this
time, I have never seen a city more welcoming to the Hospitality Industry,or one that partners more with the
industry. David Ready for the past 12 years or so, has been the one constant leading this charge. He always has the best
interest of the City at heart, and goes out of his way to meet with the professionals in one of the leading industries foe
the entire Valley on a regular basis.
I am not speaking on behalf of my employer,as I am not authorized to do so, but rather as a Hospitality Professional
with over 44 years of experience. David Ready is the finest, most professional City Manager that I have worked
with. We should be honored to have him in our City, and I would hope you support him in every way possible.
I am available for any comments or questions that you might have. I have a meeting this evening or I would come to the
Council meeting this evening and express these same comments.
Cordially,
Michael Potts
Michael Potts
Director of Sales&casino Marketing
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The information contained in this message may be privileged and confidential and protected from disclosure. If
the reader of this message is not the intended recipient, or an employee or agent responsible for delivering this
message to the intended recipient, you are hereby notified that any dissemination, distribution, or copying of
this communication is strictly prohibited. If you have received this communication in error, please notify us
immediately by replying to the message and deleting it from your computer
2
Jay Thompson
From: Ginny Foat <ginnyf@mizell.org>
Sent: Wednesday, April 13, 2016 4:53 PM
To: Jay Thompson
Subject: FW: PS Citizen input
I will start forwarding these to you. Please include in next weeks Council folder.
From: Ginny Foat [mailto:Ginny.FoatCobpalmsprincis-ca.gov]
Sent: Wednesday, April 13, 2016 2:50 PM
To: 'ginnyf@mizell.org'
Subject: FW: PS Citizen input
From: Kevin Becker [ma i Ito:pskev@icloud.com]
Sent: Wednesday, April 13, 2016 12:22 PM
To: Ginny Foat
Subject: PS Citizen input
I am emailing to add my support to David Ready and Douglas Holland. I feel the mayor is out of line.
Respectfully,
Kevin
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Palm Spnngs
HOSPITALITY
A S S O C I A T 1 O N
April 13, 2016
The Honorable Mayor Rob Moon
Members of the Palm Springs City Council
3200 E. Tahquitz Canyon Way
Palm Springs, CA 92262
Dear Mayor and City Council —
At today's Palm Springs Hospitality Association/Palm Springs Restaurant Association
(PSHA/PSRA) April Board Meeting, the 19 Board Members made a unanimous decision
to support our City Manager David Ready. PSHA/PSRA represents the tourism industry
in Palm Springs and is comprised of the largest association of tourism professionals in
Palm Springs. The organization is currently 183 members strong.
The tourism industry directly and indirectly employs over 5,000 employees and
generates over $40 million in Transient Occupancy Tax, Sales Tax, Property Tax, Real
Estate Tax and Utility Taxes every year.
Many of the PSHA/PSRA board members have known David Ready since he arrived as
City Manager 16 years ago. The entire board respects and admires David and
considers him a champion for our industry. He is an exceptional City Manager and has
always been available to all of us on very short notice.
David led the City of Palm Springs during the difficult time of 911 along with the
economic fallout of 2008. Additionally, under his leadership and direction, along with
the Palm Springs City Council at that time, the implementation of the Renaissance for
the City of Palm Springs has continued to move forward in a positive direction.
In your closed session today, we strongly urge you to provide unanimous support for
David Ready to continue as our City Manager as we progress towards completion of the
downtown development plan.
Sincerely,
Palm Springs Hospitality Association
Palm Springs Restaurant Association
P.O. Box 4507
Palm Springs, CA 92263 01 0
Pv�.�.ae CO.G/HE�
r Climate
;&Action PS
Our goal.•To stop climate change
Press Release
4/4/16
Climate Advocacy Group Launched in Palm Springs
The science is in. We know for a fact that excess greenhouse gases (GHG) cause climate change.
In Palm Springs and other valley cities, climate change represents a threat to our health,
economy and quality of life.
It's time for Palm Springs to assert bold leadership on climate. It's the right thing to do and it's
good for our brand.
Climate Action PS ivwu chmateactiorrps,com is a Palm Springs citizen advocacy group whose
goal is to stop climate change and accelerate the transition to a green energy economy. We
include a cross section of Palm Springs residents who recognize the threat presented by climate
change and want our leaders to take aggressive action to cut GHG emissions.
Climate Action PS will work with the City and regional bodies to create a systematic and
methodical program for cutting greenhouse gases over the next 10-15 years. That includes:
• Identify bold GHG reduction targets that meet or exceed best practices nationally
• Yearly audit of GHG emissions
• Prevent the addition of new sources of GHG
• Systematically reducing exiting sources of GHG emission
• Ensure adequate funding to execute plan
Our first priority is to prevent added sources of GHG emissions to our environment. According
to our last GHG audit in 2010, the largest portion of our emissions (70%) come from the
electricity and natural gas used to light, heat and cool our buildings. Most new construction adds
to our GHG emissions. We must mandate best practice energy efficiency for all new
construction. Net zero would be ideal.
Citizen climate advocacy is central to making the transition to a thriving green energy economy.
The vast majority of Americans recognize the threat of climate change. National polls reveal
strong support for the government limiting greenhouse gases.
httg�//cliiiiatepublicopinion.stanfoi-d.edu
It's time to get moving. Making this transition will take all of us and we have no time to waste.
CONTACT:
Ellen Lockert
el lcn cc cl imateacti ones...c-om
206.650.6476
www.climateactionps.com
P.O. Box 5086, Palm Springs, CA 92263
Me
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SCIENCE
Scientists Warn of Perilous Climate Shift
Within Decades, Not Centuries
By JUSTIN GILLIS MARCH 22, 2016
The nations of the world agreed years ago to try to limit global warming to a level
they hoped would prove somewhat tolerable. But leading climate scientists warned
on Tuesday that permitting a warming of that magnitude would actually be quite
dangerous.
The likely consequences would include killer storms stronger than any in
modern times, the disintegration of large parts of the polar ice sheets and a rise of
the sea sufficient to begin drowning the world's coastal cities before the end of this
century, the scientists declared.
"We're in danger of handing young people a situation that's out of their
control," said James E. Hansen, the retired NASA climate scientist who led the new
research. The findings were released Tuesday morning by a European science
journal, Atmospheric Chemistry and Physics.
A draft version of the paper was released last year, and it provoked a roiling
debate among climate scientists. The main conclusions have not changed, and that
debate seems likely to be replayed in the coming weeks.
The basic claim of the paper is that by burning fossil fuels at a prodigious pace
and pouring heat-trapping gases into the atmosphere, humanity is about to
provoke an abrupt climate shift.
Specifically, the authors believe that fresh water pouring into the oceans from
melting land ice will set off a feedback loop that will cause parts of the great ice
sheets in Greenland and Antarctica to disintegrate rapidly.
That claim has intrigued some experts who say the paper may help explain
puzzling episodes in Earth's past when geological evidence suggests the climate
underwent drastic shifts. Yet many other scientists are unconvinced by some of the
specific assertions the authors are making.
"Some of the claims in this paper are indeed extraordinary," said Michael E. Mann,
a climate scientist at Pennsylvania State University. "They conflict with the
mainstream understanding of climate change to the point where the standard of
proof is quite high."
Despite any reservations they might have about the new paper, virtually all
climate scientists agree with Dr. Hansen's group that society is not moving fast
enough to reduce emissions of greenhouse gases, posing grave risks. An agreement
reached late last year in Paris seeks to cut emissions, but it is not remotely
ambitious enough to limit global warming to the degree Dr. Hansen regards as
necessary.
Among Dr. Hansen's colleagues, some of the discomfiture about the new paper
stems from his dual roles as a publishing climate scientist and, in recent years, as a
political activist. He has been arrested at rallies, and he has joined with a group of
young people who sued the federal government over what they said was its failure
to limit global warming.
Dr. Hansen argues that society is in such grave peril that he feels morally
compelled to go beyond the normal role played by a scientist and to sound a clear
warning.
That stance has made him a hero to college students fighting climate change,
but some fellow scientists fear he has opened himself to the charge that he is
skewing his scientific research for political purposes.
In 2009, nations agreed to try to limit the planetary warming to 3.6 degrees
Fahrenheit, or 2 degrees Celsius, above the preindustrial level. The Earth has
already warmed by about half that amount. The climate appears to be destabilizing,
virtually all land ice on the planet has started to melt, and the oceans are rising at
an accelerating pace.
The paper, written by Dr. Hansen and 18 other authors, dwells on the last time
Earth warmed naturally, about 120,000 years ago, when the temperature reached a
level estimated to have been only slightly higher than today. Large chunks of the
polar ice disintegrated then, and scientists have established that the sea level rose
20 to 30 feet.
Climate scientists agree that humanity is about to cause an equal or greater
rise in sea level, but they have tended to assume that such a large increase would
takQ centuries, at least. The new paper argues that it could happen far more
rapidly, with the worst case being several feet of sea-level rise over the next 50
years, followed by increases so precipitous that they would force humanity to beat
a hasty retreat from the coasts.
"That would mean loss of all coastal cities, most of the world's large cities and
all their history," Dr. Hansen said in a video statement that accompanied the new
paper.
The paper identifies a specific mechanism that the scientists say they believe
could help cause such an abrupt climate shift.
Their idea is that the initial melting of the great ice sheets will put a cap of
relatively fresh water on the ocean surfaces near Antarctica and Greenland. That,
they think, will slow or even shut down the system of ocean currents that
redistributes heat around the planet and allows some of it to escape into space.
Warmth will then accumulate in the deeper parts of the ocean, the scientists think,
speeding the melting of parts of the ice sheets that sit below sea level.
In addition, a wider temperature difference between the tropics and the poles
will encourage powerful storms, the researchers contend. The paper cites evidence,
much of it contested, that immense storms happened during the warm period
120,000 years ago.
For instance, the paper says such storms might have thrown giant boulders
onto coastal ridges in the Bahamas, though other experts think a tsunami might
have been responsible.
The idea of a shutdown in the ocean circulation because of global warming was
considered more than a decade ago, and awhile scientists concluded that a
weakening of the currents was possible, they said a complete shutdown was
unlikely to happen in this century.
That did not stop a distorted version of the idea from becoming the premise of
the disaster movie "The Day After Tomorrow," released in 2004.
The new paper may reopen that debate, requiring scientists to re-examine the
idea with the more sophisticated computer models of the climate that are available
today. It could take several years for the experts to come to a consensus, though.
Dr. Hansen spent decades heading NASA's climate research unit in
Manhattan, before retiring in 2013. He now heads a center created for him at
Columbia University.
He gained fame in 1988 when he warned Congress that global swarming had
already begun. He was ahead of the scientific consensus at the time, but it became
clear in retrospect that Earth had been in the midst of a period of rapid global
warming at the time he testified.
Even scientists wary of the specific claims in the new paper point to Dr.
Hansen's history to argue that his ideas need to be taken seriously.
"I think we ignore James Hansen at our peril," Dr. Mann said.
Like the Science Times page on Facebook.
A version of this article appears in print on March 23, 2016, on page At 1 of the New York edition with the
headline: Study Warns of a Perilous Climate Shift Within Decades,
Related Coverage
1. Rising Sea Levels May Disrupt Lives of Millions, Study Says MARCH 14, 2016
2. Inside the Paris Climate Deal DEC. 12, 2015