HomeMy WebLinkAbout3/2/2016 - STAFF REPORTS - 00 (2) a..
.. W:.
11111w5aWaalweak
:60
Judy Deertrack
1333 South Belardo Road, Apt 510
Palm Springs, CA 92264
Wednesday, March 2 2016
NOTICE AND DEMAND LETTER (LITIGATION OR PROSECUTION EXPOSURE)
Inter-Governmental Conference with Investigators/Prosecutors
California State Attorney General's Office (California Government Code 1090)
To Honorable Members of the City Council
Palm Springs, California
RE: 1.C. CONSIDERATION OF AN AMENDMENT TO THE MUSEUM MARKET PLAZA SPECIFIC PLAN AND
ADDENDUM NO. 2 TO THE FINAL ENVIRONMENTAL IMPACT REPORT (CASE NO. 5.1204 SP A-1):
RECOMMENDATION: 1) The Public Testimony portion was closed on February 3, 2016, 2) Review the final
revisions to the Museum Market Plaza Specific Plan as directed to staff by the City Council at its February 3,
2016, meeting; 3) Adopt Resolution No. . "A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM
SPRINGS, CALIFORNIA, APPROVING ADDENDUM NO. 2 TO THE PREVIOUSLY- CERTIFIED ENVIRONMENTAL
IMPACT REPORT FOR, AND AMENDING THE MUSEUM MARKET PLAZA SPECIFIC PLAN, REDESIGNATED AS THE
DOWNTOWN PALM SPRINGS SPECIFIC PLAN;" 4) Waive the reading of the ordinance text in its entirety and
introduce for first reading Ordinance No. "AN ORDINANCE OF THE CITY OF PALM SPRINGS, CALIFORNIA,
AMENDING THE MUSEUM MARKET PLAZA SPECIFIC PLAN,AND REDESIGNATING IT AS THE DOWNTOWN PALM
SPRINGS SPECIFIC PLAN;" and 5) Direct the City Council Subcommittee to coordinate with staff and Palm
Springs Promenade, LLC, to discuss the terms and conditions of a draft Development Agreement related to the
timely construction of public and private improvements, and vesting of certain entitlements pursuant to the
scope of final changes to the Museum Market Plaza Specific Plan.
To the Honorable City Council:
I request that action on this Notice and Demand Letter be considered an Urgency Item for potential litigation
and prosecution exposure, so that the City Council can stay any pending action on the Palm Springs Downtown
Specific Plan until such time this item can be calendared for consideration on the Closed Session Docket for
the City of Palm Springs.
I urgently request the City Council, and its operating officers, to immediately STAY all action on the pending
legislative approvals of the Palm Springs Downtown Specific Plan; on all pending development entitlements
and subsidies to Mr. Wessman; and on the pending Development Agreement to permanently and irretrievably
vest development rights for a period of years to the benefit of Mr. Wessman.
�JB.c.J C CycuFOE.✓T'
2
This Notice and Demand Letter gives constructive notice to the City Council, City of Palm Springs, that
continuing action on the Palm Springs Downtown Specific Plan, and its underlying entitlements, construction,
subsidies, and vesting of development rights may potentially pose an ongoing violation of California
Government Code 1090, Conflict of Interest;
(1) that California GC 1090 violations are a potential felony, particularly where members of an approving or
adopting board have knowledge of the business relationship between the contracting party and a member of
their board (past or present);
(2) that California GC 1090 demands strict compliance with conflict of interest provisions to prohibit the City
Council and/or Planning Commission from granting contractual approvals, subsidies, or entitlements to a
Developer if that person(s) or entity is a source of income (through decision or direct employment) to any
member of the Council at the time of the approval or adoption of government contracts and entitlements;
(3) that the operation of Government Code 1090, and its restrictions and responsibilities, may apply to the
currentfive (5) members of the City Council, as well as the City Council in office at the time of employment;
(4) that past applications of Government Code 1090 (by court decision) has, under certain conditions, been
extended to prohibit further contracts issuing to the benefit of a party AFTER the termination of employment
with a member of the approving board, particularly where those later contractual actions were supplemental
to, and an extension of, the original approvals;
(5) that under circumstances where the sitting City Council is aware the applicant was or is a potential source
of income to a member of that body, and is aware of a business relationship of the Developer to one of its
members (present or past); and where that body fails to pursue available information and chooses to remain
uninformed when circumstances dictate to the contrary, such behavior may pose a risk of implicating the
current City Council, and may raise the issue of public necessity for the City Council to seek further information
in order to protect the public interest; and that the failure to pursue information or communication with the
State and Federal corruption probe in a reasonable manner may be its own form of misconduct.
BACKGROUND I FBI PUBLIC CORRUPTION TASK FORCE):
On September 1, 2015, an FBI Public Corruption Task Force, comprised of multiple law enforcement agencies
that include the California State Attorney General's Office, served a warrant upon the City of Palm Springs, in
order to seize a large range of data and information on the business activities of the City, including its
development activity.
The Task Force left a Receipt with the City (ATTACHMENT 1) that indicates the possible scope and range of its
investigation. Such raids are often (and not always) followed with criminal indictments and prosecution. The
Desert Sun Newspaper made the FBI Receipt and its itemization publicly available. Item 24 of the FBI Receipt
demanded the City release all agreements with Wessman Holding. Other portions of the probe reference Mr.
Wessman, his business partner, Mr. Meaney, and their joint developments before the City. Mr. Wessman is a
focus of the FBI investigation from a reading of the Search Warrant Receipt.
This communication is to give constructive (and further) notice to the City Council of facts that warrant
protection of the public interest. I urgently request the City to STAY all development activity pertaining to Mr.
Wessman and the Downtown Plan in order to confer, in an inter-governmental conference, with the California
Office of Attorney General on the implications of Government Code 1090 and its possible application to
current decisions being made by the City Council, most importantly to determine whether there is an ongoing
3
threat to the public interest,financially, or by entitlement. I also highly recommend that Independent Council
be appointed to represent the City, since it is unknown whether any staff members or advisors to the City
have the requisite impartiality. I say this only because these parties (City Manager City Attorney) are
signatories to the documents under inspection and investigation.
MAYOR POUGNET'S EMPLOYMENT WITH PSIFF (JOHN WESSMAN EXECUTIVE VICE-PRESIDENT)
The City Council has been given previous notice (and should be independently aware) that its original 1992
contract with the Palm Springs International Film Festival (PSIFF) (ATTACHMENT 2) prohibited any city official
or employee from receiving income or benefit from PSIFF under its Conflict of Interest provisions. To date,
there have been at least ten amendments to the original agreement, but the Conflict of Interest provisions
have been incorporated in by reference, and have continued in effect. This is a potential contractual
prohibition from Mayor Pougnet working for PSIFF as a fundraiser.
In 2012, the Desert Sun Newspaper widely reported the public controversy that Mayor Pougnet was working
for PSIFF as a fundraiser. Mayor Pougnet was required by law to disclose his income sources to the State of
California, and his Form 700 for 2012 through 2014, discloses that he received amounts ranging from $10,000
to $100,000 from PSIFF as a fundraiser for those years.
It is widely known, and is verifiable through records kept by the City of Palm Springs in its Record Keeping
provisions for PSIFF, that Mr. Wessman was acting as an Executive Vice-President for PSIFF during the years
2012 — 2014, and possibly into the present year. Mr. Wessman's position as Executive Vice-President may
have given him the requisite standing as an "employer" or "source of income" to Mayor Pougnet, during the
time period entitlements, contracts, finance agreements, and extraordinary subsidies were granted to Mr.
Wessman on the Palm Springs Downtown Specific Plan. It is unknown whether these facts will taint the
contracts and entitlements previously granted, and presently under consideration on today's agenda. This
information can be obtained only through a government-to-government collaboration with the California
State Attorney General's Office, or FBI Task Force.
The City Council must face the possibility that the FBI pending indictments may result in a Government Code
1090 violation, particularly since effective enforcement and prosecution voids all underlying entitlements by
operation of law. At the least, it is egregious for the City to speculate on the pending investigation. There are
clearly ongoing complications from granting further subsidies and entitlements, given the uncertainty of
whether the original agreements were tainted by conflict of interest. Given that today's agenda proposes to
vest all entitlements under a Development Agreement, which is a divestiture of city police powers; that the
agenda proposes a Specific Plan Amendment to allow further approval of entitlements; that this Specific Plan
"clean up" appears to be an attempt to "legalize" earlier actions that may not have been consistent with the
plan currently in effect; and that the City is still meeting on the Event Center, with subsidies and entitlements
that may well reach $20 Million Dollars of additional expenditures (public funds), it is imperative the City
Council act immediately in the public interest. If nothing else, blindness to these implications may
inadvertently be an obstruction of justice, if it further complicates the federal/state corruption probe.
GOVERNMENT CODE 1090(CONFLICT OF INTEREST IN CONTRACTS BEFORE A GOVERNMENT BOARD)
"The Political Reform Act(Gov. Code Sections 81000-91014)requires most state and local government officials
and employees to publicly disclose their personal assets and income. They also must disqualify themselves from
participating in decisions that may affect their personal economic interests." (Manual, Conflicts of Interest,
Office of the Attorney General (2010), Introduction)
4
"The common law prohibition against "self-dealing" has long been established in California law. (City of
Oakland v. California Const. Co. (1940) 15 Cal.2d 573, 576.) . . . . . Section §1090 essentially prohibits a public
official from being financially interested in a contract — in this case the entitlements, subsidies, and finance
agreements -- in both the official's public and private capacities. (Lexin v. Superior Court (2010) 47 Cal.4th
1050, 1073.) [emphasis added]. Courts have construed that the probability of the official receiving income
increases if the supplier of income is receiving significant contractual benefits from the official's board of
which he is a member.The impropriety of the relationship is the thrust of Government Code 1090.
As the California Supreme Court has stated, the purpose of section §1090 is to make certain that"every public
officer be guided solely by the public interest, rather than by personal interest, when dealing with contracts in
an official capacity. Resulting in a substantial forfeiture, this remedy provides public officials with a strong
incentive to avoid conflict-of-interest situations scrupulously." (Thomson v. Call (1985) 38 Cal.3d 633, 650.)
Eliminating temptation for public officials, avoiding the perception of impropriety, and obtaining their
undivided loyalty have been deemed as extremely important public policy goals in California. (id. at p. 648.)
Because these goals are of the utmost importance, it is of no import whether actual fraud or dishonesty is
involved in the contract process; whether the contract is fair to the public agency; or whether the public
agency loses money from the contract.
Similarly, the full disclosure of an interest by an officer is also immaterial, fn. 24, as disclosure does not
guarantee an absence [38 Cal.3d 650] of influence. To the contrary, it has been suggested that knowledge of a
fellow officer's interest may lead other officers to favor an award which would benefit him. [emphasis added]
(Manual, Conflicts of Interest, Office of the Attorney General, at 24 and 25)
The disgorgement of all contract benefits Is automatic (Carson Redevelopment Agency v. Padilla (2006) 140
Cal.App.4th 1323, 1336). [emphasis added] "A person who violates section 1090, regardless of whether the
violation is intentional, forfeits any rights or interests flowing from the illegal contract." (Campagno v. City of
Sanger(1996) 42 Cal.App.4th 533, 538) [emphasis added]
"in 86 Ops.Cal.Atty.Gen. 187 (2003), this office concluded that there was no "reach-back period" (such as the
12-month period for income under the Political Reform Act) within the context of section 1090. The opinion
concluded that only during the pendency of the business relationship was there a financial interest from which
the official might benefit directly or indirectly. However, if the business relationship is not terminated in a
manner that removes "the possibility of any personal influence, either directly or indirectly"the prohibition
of section 1090 would remain in effect. [emphasis added] (See, e.g., 89 Ops.Cal.Atty.Gen. 69 (2006).)"
(Manual for Conflicts of Interest, Office of the Attorney General (2010), supra,at page 67)
"A public official has an economic interest in any source of income that is either received by or promised to
the official and totals $500 or more in the 12 months prior to the decision in question. A conflict of interest
results whenever either the amount or the source of an official's income is affected by a decision. [emphasis
added] (Regulation, §§ 18703.3, subd. (a), 18705.3, 18704.5 & 18705.5, subd. (a)); see also Witt v. Morrow
(1977) 70 Cal.App.3d 817.) For example, a decision that foreseeably will materially affect an official's
employer would necessitate disqualification even if the amount of income to be received by the official were
not affected. [emphasis added] (In re Sankey(1976) 2 FPPC Ops. 157.)" (Manual, Conflicts of Interest, Office of
the Attorney General, at page 13.)
With regard,
Judy Deertrack
rn$97(R"s 11-94 Puge 1 of 2
UNITED STATES DEPARTMENT OF JUSTICE FEDERAL
BUREAU OF MVESTIGATION
Receipt for Property Received/Retumed/Released+Seized
File p 194B-LA-6446210
On (date) 9/1/2015 item(s)listed below acre:
Received From
0 Returned To
❑ Released To
ICI Seized
eF;ame) Palm Springs City Hall
(Street Address) 3200 E Tahquitz Canyon Way, —_-
Pt)) Palm Springs, CA
Description of Item(s):
1 - Purple file folder labeled 9116115 containing Nexus Development does.
2 - Mtggy's Cantina Cancelled checks
3 - Contract profit and loss statements. Board member information
4 - David Ready emails regarding Wessman's fee
5-Citizen's complaint to city mayor; letter from CA FPPC
6 -Voicemail toe
7 - Documents for La Hacienda• Miggy's Cantina
8 - Doc*with related names: Nexus David Ready
9- Handwritten notes management plans power points documents
10 - Letter from Attomey(possible taint material)
11 - Form 803s contact lists Form 602 handwritten notes,talking points
12 - Developer agreement, emails, related to subjects
13 - Email from J. Raymond to D. Ready�-D HollanSl
14 - Folder containing PO Change orders _
15-Claim voucher(2)
16- Five folders containing mist documents(Abbey and Wessman)
17 -Spiral notebook
18- State of city dots stand along notes blue file folder"2014'
19 - Dakota Files(Possible taint material)
20- CFD Annex Doc(possible taint material)
21 - Correspondence from file for downtown project
m-597(Rn 5-I1.94)
NU}c 2 Of 2
UNITED STATES DEPARTMENT OF JUSTICE FEDERAL
BUREAU OF INVESTIGATION
Receipt for Property Received/Re[umed/Released/Seized
File 0 194B-LA-6446210
22 -Aberdeen Prairie Schooner memorandum and correspondence
23 -Plaza del sol Redwell
24 -Agreement vdth Wessman Holding
25 -ABC lawsuit (Possible taint material)
26 - Dakota Files
27'-sWD'Extemal,hard drive (s.n:WMC3O0154776)
28 -8uifacelaptop(Marcus Fuller)
29 -Surface laptop
30-!Phone(Amy Blaisdell)
31 -HP"CATS MIND"sn:WWA61X4977 --- -- — ---_—-- --
322Black My Passport ultra extemal hard drive sn:WXA1A2413985
RecekedBy JaHeS Irror-IP50rJ .K
Received From
'd
I "
ATTACHMENT 2 (A)
SENT BY;Xerox Telecopier 7021 ; 4— 1-02 ;10:45AM ; 01- 6193237701ti1 9
1 *
litigation. All such fees shall be deemed to have accrued on
commencement of such, action and shall be enforceable whether or not
such action is prosecuted to judgment.
8.0 CITY OPPICERB AND EMPLOYERS: NON-DISCRIMINATION
8.1 Non-liability af9ity Officers and Employees. No
officer or employee of the City shall be personally liable to the
Festival, or any successor in interest, in the event of any default
or breach by the City or for any amount which may become due to the
Festival or to its successor, or for breach of any obligation of
the terms of this Agreement.
8. Conflict of Interest. No officer or employee of the
City shall have any financial interest, direct or indirect, in this
Agreement nor shall any such officer or employee participate in any
decision relating to the Agreement which effects his financial
interest or the financial interest of any corporation, partnership
or association in which he is, directly or indirectly, interested,
in violation of any State statute or regulation. The Festival
warrants that it has not paid or given and will not pay or give any
third party any money or other oonaideration for obtaining this
Agreement.
S.3 venan igainst Discrimination. Festival covenants
that, by and for itself, its heirs, executors, assigns, and all
persons claiming under or through them, that there shall be no
discrimination against or segregation of, any person or group of
persons on account of race, color, creed, religion, sex, marital
status, national origin, or ancestry in the performance of this
Agreement. Festival shall take affirmative action to insure that
applicants are employed and that employees are treated during
employment without regard to their race, color, creed, religion,
sex, marital status, national origin, or ancestry.
9.0 MISCELIANEOUS PROVISIONS
9. 1 Notice, Any notice, demand, request, document,
consent, approval, or communication either party desires or is
required to give to the other party or any other person shall be in
writing and either served personally or sent by prepaid,
first-class mail, in the case of the City, to the City Manager and
to the attention of the Contract Officer, CITY OF PALM SPRINGS,
P.O. Box 2743, Palm Springs, California 92263, and in the case of
thQ Festival, to the person at the address designated on the
execution page of this Agreement. Either party may change its
address by notifying the other party of the change of address in
writing. Notice shall be deemed communicated at the time
pdm:\wpfiles\psp-gen\filagrl
4/1/92 8
i
SENT BY: Olivetti FX 2000 - 1-92 ; 2139PM 71454 5y 61932377013# 4
ATTACHMENT 2 (B) �A 0
IN WITNESS WHEREOF, the parties have executed and entered into
this Agreement as of the date first written above.
ATTEST: CITY OF GS,
a mu cipal corpo ion
By: ` Bp;
C3.�i CIErk CIE y M agar
APPROVED AS To FORMS
RT.ITAN & TUCKER
9Y Pc'�'.
DaVid JX41eshlrs, Esq.
City Attornay
Festival:
PALM SPRINGS INTERNATIONAL FILM
FESTIV California nonprofit
publi of i corporation
By:
NamO S � /a
Titles a w
By:
MAIJ
Name:
Title: G
Address:
Palm Springs International Film
Festival
c/o Denis Pregnolato
415 Arbramar Avenue
Pacific Palisades, CA 90272
pdm: \wpfiles\psp-qan\tilagrl
4/2/92 10