ABSTRACT: The 2014-2015 Monterey County Civil Grand Jury Report “CARMEL-BY-THE-SEA A GOVERNANCE REVIEW” document copy is embedded. Importantly, “CONCLUSION The 2014/2015 Monterey County Civil Grand Jury was asked by the Mayor of Carmel to review the City’s policies and internal controls and to make recommendations. In addition, a formal Citizens’ Complaint was filed requesting that the MCCGJ examine City governance and failed oversight. This Report is as comprehensive as possible, given the constraints of time and resources, and the systematic lack of cooperation by the City. However it could not purport to address all the complaints, issues and problems of Carmel-by-the-Sea’s management and governance.”
"...the City engaged in a “request and deny” strategy, which served only to cause many weeks of delay. The investigation was further hampered by instructions from the City Attorney and private legal counsel advising some interviewees not to answer MCCGJ questions relating to personnel matters of which they had direct, personal knowledge."
Waiver of Attorney-Client Privilege
"...the City engaged in a “request and deny” strategy, which served only to cause many weeks of delay. The investigation was further hampered by instructions from the City Attorney and private legal counsel advising some interviewees not to answer MCCGJ questions relating to personnel matters of which they had direct, personal knowledge."
Waiver of Attorney-Client Privilege
Because of the considerable use by the City of outside legal counsel between 2012 and 2014 for employee terminations, Public Records Act (PRA) request reviews, HR matters, contract matters, and general legal services at a cost to the City of more than $475,000, the MCCGJ wanted to know more about the involvement of the City Attorney in such services and whether he has a regular procedural role in a defined list of City matters or is “on call” when needed. The MCCGJ also wished to speak with the outside attorneys who acted for the City in the areas noted above, to gain clarity about the appropriate use of separately retained counsel and to help determine if charges of cronyism were founded. For these, and only these, purposes the MCCGJ requested a waiver of attorney-client privilege.
In response to this request, the City staff used outside counsel to inform the MCCGJ that it would not waive attorney-client privilege, preventing the Grand Jury from examining this critically important area.
Waiver of City Council Closed Session Privilege
To further its investigation and gain insight into City Council processes regarding establishment of key initiatives and priorities, approval of contracts, supervision of the City Administrator, (and City Attorney, Treasurer and Engineer), public records request positions, and knowledge of major personnel actions taken, the MCCGJ requested waiver of the City Council’s closed session privilege for these, and only these, purposes for the period 2012-2014.
In response to this request, the Mayor and Council voted on Feb. 10, 2015 to table the request until outside counsel could be consulted. The waiver was subsequently not granted.
In response to this request, the City staff used outside counsel to inform the MCCGJ that it would not waive attorney-client privilege, preventing the Grand Jury from examining this critically important area.
Waiver of City Council Closed Session Privilege
To further its investigation and gain insight into City Council processes regarding establishment of key initiatives and priorities, approval of contracts, supervision of the City Administrator, (and City Attorney, Treasurer and Engineer), public records request positions, and knowledge of major personnel actions taken, the MCCGJ requested waiver of the City Council’s closed session privilege for these, and only these, purposes for the period 2012-2014.
In response to this request, the Mayor and Council voted on Feb. 10, 2015 to table the request until outside counsel could be consulted. The waiver was subsequently not granted.
And the "Investigative Report on City of Carmel-by-the-Sea Contracts,"dated May 5, 2015, was footnoted, as follows: 1 The MCCGJ is not able to accept this report because of its limited and selective scope, its failure to recognize the City’s historic and systemic contract process problems, the conspicuous lack of an interview with the City Administrator who was in office, and the absence of an audit prepared according to Generally Accepted Accounting Principles, as would have been provided by the use of a Certified Public Accountant.
FINDINGS, RECOMMENDATIONS and RESPONSES REQUIRED sections are reproduced.
FINDINGS, RECOMMENDATIONS and RESPONSES REQUIRED sections are reproduced.
Findings F1 through F6 apply to the time period prior to the hiring of Mr. Jason Stilwell in late 2011.
F1. In the time period note above, City operations were undisciplined, as City policies were outdated, nonexistent or ignored. With several empty Department director positions, employees worked hard to keep up and paid little attention to standard municipal procedures.
F2. In the time period noted above, there were serious flaws and vulnerabilities in network system security, placing the City at risk financially and legally.
F3. In the time period noted above, contracts were mismanaged with regard to public bidding, purchase order processing, and services provided with expired contracts.
F4.In the time period noted above, the City Council was not provided with contract payment schedules or accumulated payment tracking reports.
F5. In the time period noted above, the Human Resources process was mismanaged with regard to pay grades, progressive discipline, and proper staff training, and was lacking in leadership.
F6. In the time period noted above, the Public Records Act request process was unstructured, noncompliant, and ad hoc.
F7. The Mayor and City Council did not fully execute their responsibilities of inquiry and oversight.
F8. Neither the Mayor nor the City Council members received any formal training or substantive orientation on the responsibilities of their positions.
F9. The Mayor and the City Council members were more responsive to political pressure than to the need for effective governance.
F10. Mr. Stilwell was a well-qualified City Administrator who recognized and diligently addressed widespread City management problems and tried to implement shifting City Council priorities, maintaining a professional attitude in spite of external pressure and criticism. He may have avoided much of the upheaval surrounding his administration by having a clearer perception of the nature of small-town government and exercising a more thoughtful and measured approach to change.
F11. Ms. Paul was an experienced Administrative Services Director who quickly recognized areas of mismanagement and risk for the City and implemented solutions within what she understood to be her areas of authority with due diligence and proper municipal procedure. Her decisive by-the-book actions and abrupt manner caused resentment among longtime employees and City residents, which may have been avoided with more sensitivity on her part to the City’s culture.
F12. There was no credible evidence to support allegations of contract splitting, cronyism or any other wrongdoing under Mr. Stilwell or Ms. Paul.
F13. The General Law/Weak Mayor structure was often misunderstood by Carmel citizens and the City Council.
F14. The local media provided easy access for City employees to vent their side of a story when the City’s hands were tied by employee privacy restraints.
F15. The governance and administration of the City is unduly influenced by the reportorial and editorial practices of The Carmel Pine Cone.
F16.
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F17. The City Treasurer was isolated from any meaningful role in the contract/invoice disbursements and tracking system.
F18. There was no evidence of any systematic review of contracts in excess of $25,000 by legal counsel as to form or content.
F19. A significant amount of money is spent on outside counsel as it supplements the City Attorney position in numerous matters including but not limited to labor and employment concerns, public records requests, general business and facilities, joint powers agreements, municipal law, and miscellaneous lawsuits.
F20. Historical averages of amounts spent on outside legal services over the past five years would support a full-time City Attorney and staff where such attorney would have experience in contracts, employment matters, and Public Records Act requests, as well as municipal law.
F21. The City Council seriously failed to exercise its power of inquiry in its decision-making process regarding rehires, by excluding the City’s outside defense counsel from the process and by negotiating hasty settlements of claims in the early or pre-litigation stages, which precluded any meaningful scrutiny of these employment issues.
RECOMMENDATIONS
R1. The City require all elected officials to undergo The League of California Cities “New Mayors & Council Members Academy” formal training, for each new term of office.
R2.
The Mayor and City Council conduct a structured review of the City’s departments each month, to ensure proper oversight of City operations and more aggressive use of their power of inquiry.
R3. The City immediately procure or upgrade to an appropriate IT System and secure the data network.
R4. The City immediately hire an experienced Human Resources Director and fill all open positions as quickly as possible.
R5. The City define and utilize a formal, mandatory progressive discipline system to be consistently applied for all employee disciplinary matters.
R6. The City require that all employees undergo formal training, with specific focus on job responsibilities, City policy, and Municipal Code guidance for their specific positions.
R7. The City immediately procure and implement appropriate, full-function financial management software.
R8. The City review the contract awarding process to ensure that the Carmel Municipal Code provisions are being followed at departmental levels, and that where called for, public bidding is used.
R9. The City review (or rewrite if necessary) the purchasing process, to ensure that the Carmel Municipal Code provisions are current, complete, and are being followed.
R10. The City adopt a procedure whereby all major contracts are reviewed and signed off by the City Attorney and City Treasurer.
R11. The City report periodic payments under contracts to the City Council, in a manner which reflects the total contract amount and total payments to date, as well as the current monthly payment.
R12. The City establish a content list for City contract files and assure that such files contain (as applicable): bidding process compliance (RFP); vendor proposal and all attachments; legal review; staff summary report to the City Council; City Council resolution; and where there are contract amendments, all of the foregoing as appropriate.
R13. The City enhance the role of the City Treasurer such that the position has responsibility in the day-to-day financial management, including tracking the status of all contracts, identifying payment overages, and reporting to the City Council.
R14. The City make the City Attorney position a full-time City employee requiring meaningful experience in the areas of contracts, employment law, and Public Records Act requests, as well as municipal law.
R15. The City Attorney manage the selection, and oversee the engagement of outside legal counsel, including the review and approval of their billings.
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June 19, 2015
(26 pages)
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