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Gallant’s contracting practices questioned

Submitted by on 1, June 16, 2010 – 5:00 am22 Comments

Photo from The Valley Breeze

Item 6-E of the City Council’s agenda seemed like it should be a relatively mundane agenda item on refinancing bonds for street improvements, landscaping and storm drainage. But on Tuesday night it turned into a dramatic showdown over Interim City Manager Ann Marie Gallant’s contracting practices.

The confrontation between Councilwoman Lena Tam and Gallant ended with calls for more council oversight of city consulting contracts.

Tam questioned Gallant about her past relationship with one of the financial advisers brought in to handle the deal without the benefit of a competitive bidding process for the job.

Gallant said she did 10 to 12 months of consulting work in 1993 and 1994 with a separate financial services firm that included a named partner in Westhoff, Cone & Holmstedt, the adviser in question. The former firm, Westhoff-Martin and Associates, no longer exists, Gallant said.

“The innuendo that Mr. Westhoff or Westhoff, Cone & Holmstedt is getting this deal because there’s some kind of kickback to me is professionally insulting,” Gallant said. “It doesn’t exist, there’s no annuities paid, I’m not making any money off this.”

Gallant said she had worked with the same advisers who attended Tuesday’s meeting since the 1980s, at several different firms where they worked. And she said the firm was picked because they are the best outfit for the job.

Lonnie Odom, president of Stinson Securities LLC, complained to the council that he had been cut out of the deal. And he questioned whether the firm would hand itself underwriting duties for the bonds. They said they would not.

Councilwoman Marie Gilmore said the city needs to avoid even the appearance of impropriety. And she said she’s particularly sensitive to the appearance of women and minorities being denied contracting opportunities. Odom is African American.

“Maybe I’m sensitive to, times in the past, particularly for women and minorities, opportunities were given based on who you knew, not how good you are at what you did. For me, that strikes a chord and that strikes home,” Gilmore said. “For the city to even be accused of not following procedures or not going out for competitive bid, the appearance is particularly bothersome to me, and I think it’s something that we need to address.”

Gallant has come under fire for issuing contracts to out-of-town firms to improve the city’s website and conduct branding efforts. Gallant worked with the same firms, Rips Consulting and Graphtek, when she managed Desert Hot Springs.

The contracts fell below the $75,000 limit for which council approval is needed.

Members of the council said they’d like to put together new lists of financial advisers and other consultants to be used by the city. Councilman Frank Matarrese said he’d like the city to stop issuing professional service contracts without a bidding process.

Refinancing the bonds for Marina Village and the Harbor Bay Community Facilities district could result in $863,000 a year in savings for Marina Village property owners and an average savings of $618 a year for homeowners in the Harbor Bay district.

The bulk of the Marina Village savings would go to Legacy Partners, which owns a vast swath of office space there.

The target date for selling the $21 million in bonds is June 23, at a cost of $439,787.37. The sale will be handled by Westhoff, Sequoia Financial Group LLC and Quint & Thimmig, the city’s bond counsel.

22 Comments »

  • Jon Spangler says:

    The Interim City Manager’s handling of this refinancing is an issue because any City contracts for more than $75,000
    must be filed via an open and competitive bidding process–to avoid both corruption and the appearance of corruption in City government.

    By failing to disclose publicly and up front her previous business ties to individuals involved in the transaction, and by not putting these contracts or services out using an RFP and competitive bidding process, the ICM showed either an ignorance of or a willful disregard of ethical standards and concerns, which is why Lena Tam and Marie Gilmore were concerned.

    I do not know why she failed to disclose these obvious potential conflicts of interest, but the fact that she was not forthcoming about them ‘did not smell very good” to this observer, *regardless* of the presence of any actual conflicts or corruption.

    Former Council member Tony Daysog should also be commended for raising the ethical and contract limit issues during his public comments, which “outed” the above-the-$75,000-limit nature of the fees involved for the rest of us.

  • gillico says:

    Isn’t this the exact same thing that just happened with the city branding fiasco where Ms Gallant awarded the contracts to out-of-city firms without any sort of review?

    If this is her regular modus operadi, this city really needs to seriously consider hiring an *interim* Interim City Manager.

  • Jon Spangler says:

    Gillico,

    The branding contracts and the Civic Center Vision contract before that were both for less than $75,000 each and did not violate the letter of the law, even if there may have been a series of related and nominally below-the-limit contracts that added up to more than $75,000.

    The refinancing contracts clearly violated the letter of the $75,000 cap on non-competitive contracts.

  • Barbara Thomas says:

    If it violated the letter of the law, feel free to seek the assistance of the courts. Gov. Code Sec. 1090 has no statute of limitations, and triple damages are authorized to be awarded by the code. Otherwise readers should feel free to assume this is just postering by candidates and their supporters. Or those left out of the process. The City of Alameda has long supported equal opportunity for all, regardless of race, national origin, sex or any other prohibited basis. I don’t think it has changed since we have had an African American, an Asian, and three women on the Council. If so shame on them! It is really great to have a City Manager who does not steal from us, [read Flynn] or is incompetent [read Kurita].
    I would rather Gallant spend her time dealing with the really serious problems facing the City, than items that candidates choose to bring to light for their own benefit. Please remember that we ordinary folks are not privy to all that goes on in the City. There are only 24 hours in a day. If you force someone like Gallant to spend 10 of them dealing with issues of lesser import, then she is limited to the time left for the items that really affect the City.

  • dlm says:

    Quoting Jon Spangler from “Measure E Prompts Court Case” (w/ a few revisions):

    “Having been a target of [Jon Spangler’s]thinly-veiled personal attacks and innuendo myself, I understand how others feel about [Spangler’s] public comments, in which he seems to attack people personally more than he addresses substantive issues in a constructive manner.

    If [Spangler’s] criticisms were true, based on the issues and not simply unfounded ad hominem attacks, or if they contributed to a more elevated discussion of the real issues in Alameda his behavior might not provoke such strong negative reactions.”

    Jon: Please stop this strange and offensive effort to smear the city manager. The purpose of this is entirely obvious: It’s payback for her criticism of SunCal, never mind that 85% of the voters came to the same conclusion. Lena Tam’s overwrought criticism of the city manager was especially offensive to me, because she is obviously playing on the whole smear campaign that all of her loyal supporters have launched against the city manager. I would hope that someone in her role wouldn’t stoop to that, but apparently I expect too much.

  • Carole says:

    It’s about time that the council show they are not asleep at the switch with this Interim City Manager. Awarding a $136,000 contract to her friend without going through a competitive process is abysmal and does not protect the coffers of the city.

  • Lauren Do says:

    DLM: Perhaps you should re-examine your post to see if you are engaging in the same behavior that you are accusing Jon Spangler of.

    Jon is commenting on an article in which a member of the public (Lonnie Odom) told the Council that he had been cut of of a fairly cushy deal to underwrite the refinancing of these bonds. As Tony Daysog noted that night, the amount received by the folks not cut out this is nearly $200K.

    Compounding the issue is that the Interim City Manager also has a past history as an employee of a corporation of one of the principals in the company that was blessed with her approval to move forward. Now if it were limited to just this example, maybe folks should calm down. But combined with her pattern of awarding sweet deals to companies/consultants that she was worked with previously — even though there are Alameda companies that can do the same — is problematic.

    For example, the website design element, on Michele’s page there is an ad for Superclean Web Design, but Superclean was never solicited to see if he would be interested or had the capacity to do the work that was requested. The commenter above, gillco, also does web design. I don’t believe gillco was ever contacted either.

    In isolation these would be no big deal. But a pattern is emerging and it’s one that — regardless of where you stood on the issue of Measure B, or should I say, despite the position you stood on Measure B — people should be concerned of.

  • ct says:

    Many thanks to Councilwoman Tam for shining a light on Interim City Manager Gallant’s covert giveaway of city contracts. Gallant says “the innuendo that ,,, there’s some kind of kickback to me is professionally insulting,” but Gallant should be made aware that she herself has insulted local business owners when she didn’t even consider them as eligible to participate in an open, transparent bidding process.

    Ms Thomas and dlm,

    The interim city manager’s aversion to openness and transparency in government is a worthwhile issue for members of the City Council to address. Addressing this issue benefits the citizens of Alameda.

  • dlm says:

    This is a smear campaign, pure and simple. The very fact that you all appear spouting the same lines in unison is a very obvious indication of that. This is what you did as SunCal supporters during the Measure B campaign, and see where that led.

    The irony here is that you’re after the city manager because she was critical of SunCal and gave the community an objective analysis of what their plans really meant. SunCal is likely to go under any day now, and you still have your minds fixated on this goal. In no way whatsover would we be better off if Measure B had won — in reality, we’d probably wind up w/ SunCal’s “Alameda Point Project” as yet another entry in a Bankruptcy Court file.

    Not only is this smear campaign clumsy and offensive, it’s not especially smart either.

  • Lauren Do says:

    DLM: I am not “after” the city manager because of her stance on one issue. There are lots of issues that I both agree and disagree with her position on. I have nothing against her as a person, but I have questions about her performance as a City Manager, interim or otherwise.

    Everyone should be concerned about the actions of the person who essentially runs this town, that you are so willing to give her a pass on fairly questionable actions is puzzling.

  • DLM,

    not everyone sees all things through a SunCal lens. My personal criticisms of the ICM Ann Marie Gallant over the past year have been consistent, that some involved her handling of the SunCal issue, does not make them SunCal related. The same issues that people are raising, a closed, non-transparent decision making process that actively and purposefully keeps the public unaware of what business the City is conducting, and includes giving contracts to people she has an on-going personal relationship with, are the same that I have raised regarding her handling of the SunCal debacle.

    I would suggest that you re-read your many posts about the City Manager and see if in fact it is you who are giving a pass to some seriously bad behavior based on your own thanks-giving for the ICM’s role in defeating Measure B. By focusing all your comments, on nearly every issue, through a filter of Measure B, it’s clear that it is truly the only thing that matters to you. However, I would suggest that others in Alameda have a broader interest that manages to escape the comings and goings SunCal and the City Manager’s campaign to get rid of them.

    Watch the council meeting regarding the bonding issue, it was clear that every council member (with the possible exception of deHaan) thought that what took place was inappropriate and that the council must provide direction to avoid such situations in the future. That doesn’t seem like an anti-SunCal political vendetta, it seems like council-people from all sides of the Measure B debate coming together to stop poor public stewardship.

  • gillico says:

    My firm has never been contacted about anything to do with any opportunity to work for the city in any capacity or to bid on any contracts, despite my annual payment of fees to the city for my business licence under the category of “Design Service” since 2006.

    Also, I’m not one to agree with Lauren or John on most topics, so this is not your everyday coordinated smear campaign, sorry to burst your balloon, DLM.

  • Barbara Thomas says:

    Having had first hand knowledge of a handful of city managers, I can only say that Gallant is at the very top of the list. From Bruce Rupp onward. Kurita Flint, et al. were all just paycheck seeking self agrandizing dolops. Bill Norton was fabulous, as is Gallant. We don’t see all that they do. It is easy to criticize and whine, and sure there will be shortcomings. But her overall performance far exceeds any of her failings.

    The best defense is a good offense. So of course SUNCAL, TAM, KNOX et. al will throw whatever dirt they can her way. But all they will achieve in the end, is burying themselves in their own filth. The voters and those who pay attention to what is going on, will see it for what it is.

  • Jon Spangler says:

    Contrary to what you might assume, DLM, it gives me no pleasure whatsoever to find evidence of problematic behavior among city officials, whether they are elected or appointed, salaried or unpaid. And if I am critical of the Interim City Manager it is not because I am opposed to her politics or her personality. The first time I heard her speak as the Interim Finance Director in a Council meeting I was very impressed by her obvious intelligence, her superb facility with complex financials, and her clarity in explaining them to Council members and citizens alike.

    In addition to being intelligent and capable, however, she seems to be insensitive to what seem to be obvious and serious ethical and legal issues, not to mention the need to seek out and solicit local businesses whenever possible when the city needs vendors to meet its needs.

    This insensitivity–I often call it being “tone deaf”–is a serious problem when ethics and good government are involved. Even if Anne Marie Gallant is not seeking or accepting bribes (and I doubt that she is), even the faintest “smell” or appearance of impropriety os enough to cast doubt on the integrity of our city government. And integrity is crucial to a well-governed city.

    When good government is at stake, everyone should be in favor of “squeaky-clean” integrity, aggressive transparency on the part of city officials and citizens, and maintaining the highest possible standards of ethics. That is how you avoid even the smallest breaches of trust.

  • dlm says:

    JayAre located the petition below, from Desert Hot Springs, and posted it on Blogging Bayport — I’m reposting here.

    http://ronslog.typepad.com/ronslog/2007/08/the-petition-fo.html
    (dated 8/17/07)

    “RESTORE INTEGRITY!

    BRING BACK ANN MARIE GALLANT!
    By signing this petition, I agree to allow my name to be submitted to the City Council and to be used in any promotional material to further the cause of re-hiring Ann Marie Gallant as City Manager of Desert Hot Springs.

    Signature Print name email phone ”

    Ann Marie Gallant is very competent — maybe too competent, which is why some people are scheming to get rid of her. For some reason, they think the rest of us will read all their false accusations against her and gullibly believe it.

  • Jon Spangler says:

    dlm,

    What you perceive as “false accusations” against the interim City Manager are based on her words and actions that are on the record and public. While an actual “kickback” (the ICM’s term Tuesday night) may or may not be involved, the lack of transparency on her part in and of itself raises that possibility. And her antipathy towards transparency and full disclosure is not a one-time occurrence.

    This is truly unfortunate, because she may not have anything to actually hide. But it is beginning to look as if she does have something to hide when she does not disclose potential conflicts of interest. Even the appearance of conflict on the part of city officials is problematic since that alone decreases trust in the integrity of government.

    In fact, some of the ICM’s actions during the Measure B campaign showed the same lack of appreciation for transparency and accountability when the city’s supposedly unbiased and accurate figures were not as accurate as Suncal’s. Also, the city staff was forbidden from discussing the underlying assumptions and details of their analyses, even when Suncal did not object to making that analysis public. (I asked.)

    The Interim City Manager is obviously a gifted and talented administrator and financial analyst, but those characteristics do not excuse her (or anyone else involved in city government) from meeting the high standards of full disclosure and openness that modern government requires.

    For the record, my lifelong concern about ethical behavior by public officials certainly predates any views I might have had on Measure B or anything else in Alameda, no matter what you might prefer to believe.

  • Desert Hot Springs Insider says:

    Please do not send Ann Marie back to Desert Hot Springs (or Carson City). I’m still having to clean up the mess she created here. There are contracts that have never been approved by the City Council that she committed funds from our city. She was a freaking disaster here, filing lawsuits that cost our fine desert city money it can’t afford. She started giving contracts to her friends on re-development projects. She was often sick and missed work a lot, prolonging negotiations so issues never could get concluded. There is public documentation for all of this, although there is a “gag order” on the wrongful termination lawsuit settlement that Ann Marie filed against us that isn’t public. The law firm that represented us was from your area.

  • Concerned says:

    DHSI:

    Would love to hear more. This ICM seems to be ridden out of town everywhere she goes in pretty short order and with a legacy of mess left behind. We need to stop the waste and the corruption given the economic problems and broken financial model we have to deal with in this city.

    Michele, as a reporter/watchdog, I would urge you to do more research on the past issues of this ICM and why the Council seems so reluctant to dig into these issues. Thankfully, Daysog, Gilmore and Tam are now pressing the issues.

  • Karen Bey says:

    Here are my concerns about this issue:

    SunCal clearly tried to take control the City and take many of the development powers away from the City through their Measure B initiative. Luckily we caught on and voted NO on Measure B. Why would they try and take control of the City? SunCal’s model is to cut up the base in small pieces, entitle it and sell each piece to the highest bidder – then they are done, and they make millions of dollars without a huge investment of capital. To accomplish this, they are willing to take control of the City by any means necessary including taking down the ICM. Since they couldn’t take control over the City through the initiative process, they are now pitting us against each other – and as we near the SunCal July 20th deadline, expect it to get worse — it’s called divide and conquer!

    Granted there are issues that need to be raised and discussed about the some of the decisions the ICM has made, but this smear campaign takes the focus away from the project and the very important decisions that need to be made by July 20th. We as a community should be talking about the project, and asking ourselves do we want SunCal to be the master developer of Alameda Point? Yet what are we talking about as the July 20th deadline approaches? These war room tactics are counter productive to a successful development. How can you build partnerships and work together in this hostile environment? What kind of development will our community end up with if the developer and the City can’t get along and we haven’t even started? But I guessed this about SunCal when they tried to ram Measure B down our throats and then convince us that we didn’t vote for it “because we didn’t understand it”. SunCal has proven they have no intentions of building the kind of relationships that are required for a successful 25 – 30 year development. Because SunCal doesn’t build anything, they have no reason to stay around for 25- 30 years to develop Alameda Point; and therefore they have no reason to build the kind of partnership and relationships with City staff and City leaders required for a 25 -30 year development. Who loses? With many of SunCal’s projects in bankruptcy, and the July 20th deadline fast approaching, SunCal has nothing to lose. As with the initiative, they are putting it all the line.

    But we have everything to lose! When SunCal is gone, we’ll still be neighbors, friends, and community. This is not the kind of developer we want developing Alameda Point or any project in Alameda!

    In closing, I am very concerned for my City that this developer is using war room tactics, including pitting us against each other, while diverting our attention away from the project at a very crucial time, when all eyes should be on July 20th and the question: Do we want SunCal to be the master developer of Alameda Point?

  • Desert Hot Springs Insider says:

    Here’s one of many examples to support our desert city’s experience with Ms. Gallant.

    http://www.mydesert.com/assets/pdf/J183302822.PDF

  • Concerned says:

    well, it seems obvious Council didn’t do its homework before this ICM hire. Time to cut losses and clean house with many of these department directors.

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