It’s as predictable as death and taxes: politicians say that everyone should obey the law, especially their interpretation of it, but when the law inconveniently conflicts with their own interests they just ignore it in violation of the public trust and their oath of office.
That’s what happened on Dec. 20 when, as reported exclusively in the Voice, the Huntington Beach City Council voted 6-0 to approve changes to the city’s municipal code that would strip the elected city treasurer of the powers and duties vested in that office by the City Charter (the city’s constitution) and hand them over to the Director of Finance, an appointed position under the direct control of the city manager and council, not the voters.
Simply put, the council majority conducted a coup d’état of the City Treasurer’s office, the charter be damned, even though voters said five times at the ballot box that they want an elected treasurer to provide checks and balances in order to better watch over their money.
That’s a good idea, judging from Councilmember Don Hansen’s opinion that it’s just fine to trust investment bankers to properly look after public funds in light of the drastic budget and staffing cuts that accompanied the coup, leaving a treasurer’s office that will be even less able to conduct its oversight duties.
The coup was depicted as an effort to save money—over $100,000 a year by making the treasurer a part-time position and consolidating staff.
Limiting the treasurer to conducting “core” charter duties would create more efficient management, City Manager Fred Wilson told the council, while preserving the independence of the treasurer’s office as required by the City Charter.
Wilson’s conclusions were based on a report by an outside consulting firm, but the changes he recommended and the council approved went beyond what the report called for and clearly conflict with the charter.
That report was not attached to the council agenda for council members and the public to read. Even worse than that act of negligence, when asked if they had even read the report or cross-checked the wording of the code changes with the City Charter, not a single voting council member responded.
Obviously, the City Council didn’t bother to do its homework or think of the possible long range consequences of its actions. When outgoing City Treasurer Shari Freidenrich gave her last address to the council that same night (she was elected Orange County Treasurer), she warned that its illegal actions would endanger the ability of the city to protect the taxpayers’ assets, but her concerns were casually brushed aside by Wilson and City Attorney Jennifer McGrath, as well as the council.
McGrath later conceded that her office is following up on the concerns raised by the Voice and that, “if an amendment is necessary to clarify any ambiguity, then it can be made at the second reading on January 17, 2011.”
Last year, after McGrath issued a legal opinion that said Section 617 of the City Charter—which had been approved by voters—allowed a mandated 15 percent budget set aside for infrastructure to include debt service payments for infrastructure designated bonds, she put her political career on the line.
Councilmember Devin Dwyer, who had hoped to create a city financial crisis that would force renegotiation of city labor contracts, lashed out at McGrath by calling her “another lawyer” using “legalese” to “twist things” in order to thwart the will of the people.
McGrath was attacked by local Republican Party bloggers and threats were made to remove her from office. If you believed the angry rhetoric, it was a war between Good and Evil and McGrath was Satan.
On Dec. 20 it was Dwyer who ignored the will of the voters, but he had plenty of help, even from an unlikely source sitting on the opposite side of his place on the right wing of the political spectrum.
Councilmember Joe Shaw was just as adept at practicing his own form of selective democracy. Despite campaign speeches denouncing the past city council for approving an arguably unlawful senior center in Central Park, Shaw, who was elected to the council for the first time last November, also had no qualms about voting for another arguably unlawful action just as soon as he took office.
Some on the council, no doubt, see our ailing economy as a long awaited opportunity to diminish the functionality of local government and transfer control of the public’s money to the private sector. And some council members are simply happy to claim that they have saved money for the people.
But the real bottom line is that the voters have been betrayed and may end up actually losing money along with their right to vote for a city treasurer who has real power and is accountable to them.
The City Council will have another opportunity at its Jan. 18 meeting (no meeting on Monday because of Martin Luther King Day) to undo its mistakes when the changes to the municipal code come before it for a required second reading and final vote.
If you have read the Huntington Beach City Charter and think that you have the right to elect your city treasurer, don’t be so sure.
Section 311 of the City Charter—the city’s equivalent to the U.S. Constitution—calls for the treasurer to be elected by the voters at large. But budget cuts and other changes approved Dec. 20 by a 6-0 majority of the Huntington Beach City Council (Connie Boardman was absent) leave little more than a figurehead for a treasurer instead of the vigilant watchdog intended by the charter.
The Director of Finance, who is appointed by the council and answers directly to the City Manager rather than the electorate, will assume the treasurer’s core duties if the legal wording behind the new policy is taken at face value.
The apparent coup d’état was performed by eliminating Section 2.16 of the Municipal Code, which explained the duties and powers of the City Treasurer in detail based on the City Charter, and then attaching several of its provisions to the end of Section 2.15 of the Municipal Code that explains the duties and powers of the Director of Finance.
Outgoing City Treasurer Shari Freidenrich warned that transferring the treasurer’s duties as proposed would be in “direct conflict with the charter and state law.” Eliminating staff would cause the treasurer’s investment decisions to suffer, she said, and went against the will of the voters, who had voted to keep their elected officials elected many times.
Freidenrich was elected to the office of Orange County Treasurer in November. She received kudos earlier at the council meeting (her last) from City Manager Fred Wilson for15 years of service in which she “restored the honor and integrity to the City Treasurer’s position” after the notorious 1994 Orange County bankruptcy.
But Wilson had presented an entirely different analysis than Freidenrich’s in his presentation to the council, saying that the city would save over $100,000 a year by making the treasurer a part-time position and consolidating the City Treasurer’s duties with the Finance Department while preserving the authority and independence of the office. “[Only] the duties and responsibilities not required by the City Charter to be performed by the City Treasurer shall be migrated to the finance director,” Wilson said.
Councilmember Keith Bohr asked City Attorney Jennifer McGrath if the city was in compliance with the law. “Yes, we are,” McGrath answered, “The charter does not speak to whether this position is part time or full time. And by deleting the ordinance you are actually taking it back to the core responsibilities as dictated in the charter.”
Councilmember Joe Shaw asked if the City Treasurer’s office would retain its ability to act as an independent oversight in order to provide the checks and balances that it is intended to provide as an elected office. In the future, will the City Treasurer be able to do that?
“Absolutely,” Wilson answered.
Based on McGrath’s two sentences of legal analysis and Wilson’s word, and without cross checking Freidenrich’s assertions with the City Charter, all six council members present were satisfied with the plan. But if they had bothered to read the outside analysis which Wilson cited in his written report as the basis for the final recommendations or to double-checked the charter for themselves before voting, they might have had second thoughts.
But the Anderson report notes only one non-core function spelled out in chapter 2.16 of the Municipal Code: the collection of money. The report correctly notes that although the charter requires that the treasurer ultimately “receive” all city funds it does not prohibit the initial collection of the money by other agencies. The report recommends that function—and only that function—be transferred to the finance department.
The Anderson report goes further. In order to create a part-time treasurer and still provide the support necessary for that position to fulfill its charter mandate, it recommends that the City Treasurer have “primary support from the Finance Department to accomplish the Offices’ (sic) responsibilities.”
The report, which the six present council members apparently did not read because—although cited—it inexplicably was not attached to Wilson’s written report and probably also because they didn’t ask to read it, did not recommend cutting sections of chapter 2.16 that enumerate the charter mandated duties and powers of the City Treasurer and pasting them into chapter 2.15, which explains the duties and powers of the Department of Finance, but that’s exactly what Wilson did.
The result is a conflict between the city’s municipal code and the city’s charter, and a virtual coup d’état, either by design or by sloppy staff work, and by sloppy council oversight. Nobody on the city council bothered to check, but comparing the wording in the charter to the wording of the amended city law proves the point.
“The City Treasurer shall have the power and shall be required to,” according to the charter, “Receive on behalf of the City all taxes, assessments, license fees and other revenues of the City…”
But now, under the amended city code 2.15(k), the Director of Finance “Receives all City monies including taxes, fees, water, sewer and trash fees…”
Again, the City Charter states that the City Treasurer shall “Have and keep custody of all public funds belonging to or under the control of the City or any such office, department of agency of the City government and deposit or cause to be deposited all funds coming into his hands in such depository as may be designated by resolution of the City Council…”
But now, according to the amended city code 2.15(h), the Director of Finance “Establishes and controls all bank accounts, negotiates services and contracts with bank, makes daily deposits,…” and, regarding investments, in 2.15(l) also “maintains all trusts, bonds, security agreements, and funds for the City including depositing…”
Nowhere in the amended city code does it state that the City Treasurer has any authority over her transferred duties or powers, another indication that the supposed “consolidation” is at best an accidental transfer of power with the potential for future legal headaches or, at worst, a deliberate takeover.
September 15, 2009
At a town hall meeting held by the city’s Charter Review Commission, residents of Huntington Beach were asked to comment on possible changes to the City Charter, including the idea of changing the elected offices of city attorney, city clerk and city treasurer to appointed positions.
It was one of several meetings where the topic would be discussed along with many other charter reform ideas. At the end of the commission’s term various charter reforms were proposed to the council for placement on the ballot, but converting elected positions to appointed positions was not one of them.
Although strong arguments were made on both sides of the debate of elected versus appointed city officials, the question had already been put to the voters many times and their response was always crystal clear: ballot measures to have an appointed city attorney failed seven times; an appointed city clerk failed four times; and, an appointed city treasurer failed five times, most recently in 1996.
Due to the likelihood of yet another rejection by voters, the commission went with a proposal for stricter eligibility requirements for city treasurer instead of creating an appointed position, and that was passed by the voters.
In the past, the voters seemed to have said that they wanted accountability directly to the public in order to provide better checks and balances in local government. Freidenrich, speaking at the town hall meeting, noted the pressures that could be placed on an appointed treasurer to produce interest income, pressures that might lead to risky investments for the taxpayers. “An elected treasurer can be independent and unbiased an select the most important investments for the city,” she said.
In contrast, speaking at the Dec. 20 council meeting, member Don Hansen suggested a way for assisting the new part-time city treasurer to provide the “safety, security and liquidity” for the city that had been Freidenrich’s trademark by all accounts: investment bankers. They will be at the new city treasurer’s disposal, he said, and “we can’t dismiss their responsibility and commitment to the city in providing their services and experience…”
Whether the residents of Huntington Beach retain their right to elect their city treasurer in reality or in name only, and the extent to which they will have to rely on the recently proven commitment of investment bankers to to protect the public’s best interests, may depend on what happens at the second reading of the amended ordinance at the next city council meeting.
In response to a Voice inquiry, McGrath defended the quick legal opinion she gave to the council, and said the council’s actions were “wholly consistent with the City Charter, the Municipal Code and state law.” As for not answering Freidenrich’s assertions, it was not her responsibility to respond “unless asked by my client.” Only Bohr asked her a question. To that extent, she says, “I responded accordingly and there were no further questions.”
McGrath assured that she would be working closely with the city manager, finance director and treasurer to make sure that law is properly followed. But she also acknowledged that—in response to the concerns raised by the Voice—her office will “follow-up” by taking another look at the language of the ordinance, and “if an amendment is necessary to clarify any ambiguity, then it can be made at second reading on January 17 (sic), 2011.”
Note: The city council meeting will actually take place on the 18th due to Martin Luther King Day on Monday.
Confidential State Department memos released through Wikileaks and the New York Times show that Surf City’s congressman, Dana Rohrabacher, tried to obtain special favors for his friends while undermining Obama’s foreign policy during a visit with Honduran coup d’état leaders in the later part of January and start of February last year.
A military coup had recently overthrown the democratically elected president, Manuel Zalaya, who remains exiled to this day. Representatives of the new government, under the titular leadership of President Porfirio Lobo, pressed Rohrabacher to help them restore U.S. aid that had been withdrawn because of the coup.
Based on the documents, the Times reported that “Using his status as a senior Republican on the House Foreign Affairs Committee, Mr. Rohrabacher cheered his hosts in Honduras by openly challenging the Obama administration’s foreign policy agenda there..”
The Times also reported that “…Mr. Rohrabacher’s trip last February was different because he pushed for small, specific companies with which he had personal and political ties. The coin dealer, John R. Saunders, is a big contributor to Mr. Rohrabacher’s campaigns, dating back at least a decade. The president of SG Biofuels, Kirk Haney, is a friend of Mr. Rohrabacher’s wife and a former intern in the congressman’s office, Mr. Rohrabacher said, as well as a contributor.”
Rohrabacher met with the president of the Honduran Supreme Court and congratulated the court for its ruling justifying the removal of president Zalaya from office, one memo indicates.
“He urged the Government of Honduras to eschew establishing a ‘truth commission,’ asserting that the ‘Supreme Court is the truth commission’ and that any further investigation into the events of the summer would result in continued political division and animosity in the country,” the once-secret memo says.
Rohrabacher and his “delegation,” including representatives of SG Biofuels—one of whom interned for Rohrabacher and is a friend of his wife—met with Ramon Espinoza, President Lobo’s science advisor and agricultural expert, and a government economist to discuss introducing the seed of a strain of Jatropha, a biofuel being developed for the company the University of California at San Diego, to Honduran small farmers.
Current City Councilmember James Righeimer also accompanied the congressman. Righeimer was Rohrabacher’s campaign chairman in his last two reelection campaigns.
The leaked State Department cables are reprinted below.
Date 2010-02-24 20:28:00
Source Embassy Tegucigalpa
C O N F I D E N T I A L SECTION 01 OF 03 TEGUCIGALPA 000169
1. (SBU) Congressman Dana Rohrabacher (R-CA) visited
Honduras January 31-February 2 and called on Hondurans to
“turn the page” on the political events of the summer.
Congressman Rohrabacher commended the Honduran
people for their commitment to democracy and said he would
urge the U.S. government to re-instate revoked U.S. visas.
Congressman Rohrabacher expressed concern that
establishment of a “truth commission,” as called for by the
Tegucigalpa-San Jose Accord, would have the effect of
continuing to divide Hondurans. Congressman Rohrabacher,
who was accompanied by several American businessmen and
investors, endorsed US investment and particularly lauded
the benefits of the development of biofuel industry in
Honduras. He enthusiastically promoted a start-up biofuel
company, SG Biofuels. End Summary.
2. (SBU) Congressman Dana Rohrabacher visited Honduras
January 31-February 2, accompanied by President and
Vice-President of SG Biofuels, Kirk Haney and Greg
John Saunders and James Righeimer; and political consultant
Mark Klugman. The delegation met on February 1 with
Porfirio Lobo, who was accompanied by Secretary of State for
Foreign Affairs Mario Canahuati; with President of Congress
Juan Orlando Hernandez; and with Science Advisor to the
President Ramon Espinoza. The delegation met on February 2
with President of the Supreme Court Jorge Alberto Rivera
Aviles. The Ambassador and the Embassy country team
provided Congressman Rohrabacher with a briefing. In
addition to these official meetings, the delegation met
independently and informally with several important actors
in the Honduran political scene including: former President
Ricardo Maduro; current Mayor of Tegucigalpa Ricardo
Alvarez; businessmen Camilo Atala, Robert Vinelli and
Richard Vinelli; and President of the Honduran Association
of Small Renewal Energy Producers Elsia Paz.
TURNING THE PAGE ON THE COUP D’ETAT
3. (SBU) Throughout his visit, Congressman Rohrabacher
stressed his great admiration for the commitment of the
Honduran people to democracy. He warned of the danger of
allowing “caudillos” or strongmen, like Cuban President
Fidel Castro and Venezuelan President Hugo Chavez, to
assume control and praised the recently replaced Honduran
de facto regime. (Note: Rohrabacher did not request a
meeting with Roberto Micheletti. End Note).
4. (SBU) In his conversation with President of Congress
Juan Orlando Hernandez on February 1, Congressman
Rohrabacher told Hernandez that he was an emissary of
Honduras’ friends in Congress, in particular member of
Congress Ileana Ros-Lehtinen. Congressman Rohrabacher told
Hernandez he believes it is important to bring closure to
the Honduran political crisis. Hernandez agreed that
Honduras needs to put the crisis behind it, adding that the
political amnesty decree passed by the congress on January
26 will contribute to that.
5. (SBU) Hernandez told Congressman Rohrabacher that it is
difficult to understand why some foreign nations have not
recognized the government of President Porfirio Lobo.
Hernandez noted that the electoral process that led to the
November 29 general election began long before the June 28
coup d’etat and was organized by an autonomous body, the
Supreme Electoral Tribunal. Hernandez asked Congressman
Rohrabacher for assistance with resumption of U.S.
assistance. Hernandez stated that some steps on
re-engagement had already taken place, noting his meeting
with the Ambassador earlier that day. Hernandez told
Congressman Rohrabacher that all political parties
represented in congress are ready to take measures to
attract foreign investment. Hernandez said that he is
committed to modernizing the congress and requested
information about the workings of U.S. congressional
6. (C) Hernandez noted that he was scheduled to meet with
an Israeli delegation on February 5 to discuss their
concerns about Iranian contacts with Venezuelan President
Chavez; Hernandez added that he knew the U.S. was also
concerned about such contact.
TEGUCIGALP 00000169 002 OF 003
7. (SBU) During Congressman Rohrabacher’s meeting with the
President of the Supreme Court and the Supreme Court
Justices on February 2, he congratulated the Supreme Court
for its actions in removing President Jose Manuel “Mel”
Zelaya from office. He urged the Government of Honduras to
eschew establishing a “truth commission,” asserting that
the “Supreme Court is the truth commission” and that any
further investigation into the events of the summer would
result in continued political division and animosity in the
country. He also explained that he would return to the US
and urge the administration to reissue visas for those
people whose visas were revoked or suspended in response to
8. (SBU) The Supreme Court Justices each took the
opportunity to thank Congressman Rohrabacher for his
comments and defended the integrity of the legal process
used to remove President Zelaya. Justice Victor Manual
Martinez Silva said that the Organization of American
States (OAS) had expelled Honduras and the European Union
(EU) had censured Honduras without even hearing their legal
justifications and he urged that international financial
sanctions be removed. Justice Rosalinda Cruz Sequiera
observed that various human rights reports, including the
Committee on Inter-American Dialogue report, contained
statements that were “completely false” in referring to the
removal of former President Zelaya as a “coup d’etat”. She
expressed the belief that history would bear out the
correctness of their actions. Vice-President of the
Supreme Court-Jose Tomas Arita Valle emphasized that the
actions taken by the court were not driven by political
interests and were practically unanimous.
SUPPORTING US INVESTMENT IN HONDURAN BIOFUEL
9. (U) Congressman Rohrabacher and members of his
delegation met on February 1 with Ramon Espinoza, an
agricultural expert who serves as science advisor to
President Lobo. Mr. Espinoza was accompanied by Manlio
Martinez, a development economist who works in Mr.
Espinoza’s office. The economic counselor also attended
10. (SBU) Congressman Rohrabacher introduced Kirk Haney
and Greg Simon-Miro, representatives of the company SG
Biofuels, which has been developing a highly productive
strain of jatropha, a biofuel, in Guatemala. Congressman
Rohrabacher told Mr. Espinoza that experts from the
University of California at San Diego had been working with
the company to develop the strain. Haney said that the
company had planted 600 hectares of the seed, which is the
top-producing jatropha strain to date, in Guatemala. The
challenge now is to bring the technology to the market.
Haney told Espinoza that, when he first met with
Congressman Rohrabacher about this topic two years ago,
Congressman Rohrabacher had told him that the best way to
do this would be to make the seed available to small
farmers. The company would give the farmers a contract to
buy the seed at a pre-set price.
11. (SBU) Espinoza said that he had worked on a biofuel
project while in academia. He stated that he has talked
about biofuels to President Lobo and believes that the
President wants to make this area a priority. Espinoza
noted that Brazil had benefited from its foresight in
making this a priority starting in the 1980s. Honduras,
Espinoza said, is behind in this area and the challenge
will be to select two or three key priorities. He told
Congressman Rohrabacher that he had opposed Honduras’
emphasis on palm oil, since he does not think it is
advisable to turn a food material into an energy source,
given the distortions this causes to food prices. He said
that the jatropha project was an excellent opportunity.
Haney said that his company was not looking for special
favors from the Honduran government but wanted to make the
government aware that the project was available.
12. (SBU) Espinoza said that Honduras’s development is
hampered by the country’s lack of technical skills. He
noted that Intel had just announced that its highest-end
chip will be produced in Costa Rica, but that this type of
manufacturing would not be possible in Honduras. Congressman
TEGUCIGALP 00000169 003 OF 003
Rohrabacher recommended that Honduras develop its patent and
copyright framework so that there will be an incentive to
The Congressman said one way that Honduras could attract
innovators would be to make income derived from patents and
13. (SBU) In a productive meeting with Ambassador Llorens,
the representatives from SG Biofuel presented their
proposal for initiating jatropha planting operations in
Honduras. The Ambassador and Congressman Rohrabacher
discussed the many ways that this serious initiative
coincides with the Mission’s Strategic Goals on renewable
energy. The Ambassador arranged break-out meetings for the
SG representatives with the economic section, Millenium
Challenge Corporation (MCC) and USAID to discuss further
opportunities for collaboration.
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