Gallant’s contracting practices questioned
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.