Costa Mesa: Brown Act, Lawsuit, and Lobdell’s Contract Secrets Exposed.

Sometimes I get the feeling that all I write about is Costa Mesa. Unfortunately, that has become a reality. It isn’t so much out of obsession as it is due to the abundance of material to write about. With that said, here’s the latest from the Fascist Republic of Costa Mesa.

Brown Act Violations

Costa Mesa City Attorney Tom Duarte takes oath of office. Photo: Chris Prevatt

As predicted, City Attorney Tom Duarte, a.k.a. Costa Mesa’s John Yoo, has issued his opinion that the City Council work groups are not committees of the Council subject to the Brown Act. This sets things up for a possible legal challenge to the actions, such as the outsourcing plan formulated in a vacuum by Jim Righeimer, Gary Monahan, and likely through email Stephen Mensinger. The open government advocacy group CalAware warned the City last week that they were in potential violation of the Brown Act, and Orange County Employees Association General Counsel Don Drozd demanded that the city correct and cure its unlawful actions and rescind the layoffs. Such a demand is the first step in any action to enforce the Brown Act through the legal process.

No one expected Duarte to issue any different opinion. He was brought in after the former City Attorney Kimberly Hall Barlow suddenly resigned after telling Righeimer and crew that their outsourcing and layoff scheme was not legal. Immediately upon her departure Duarte issued an opinion that reversed Barlow’s determination.

Costa Mesa City Employees’ Association Files Suit

Attorneys for the Costa Mesa City Employees’ Associationon Tuesday filed a complaint in Superior Court against the City of Costa Mesa asking a judge to stop the lay off of more than 100 city employees. The complaint which includes a request for an immediate restraining order to stop the layoffs as well as long term injunctive relief to stop the city from taking further steps towards the layoffs.

According to the complaint, the City’s action to lay off city employees and outsource their jobs is prohibited under both California law and the agreement between the City and the Costa Mesa City Employees’ Association.

California law prohibits general law cities such as Costa Mesa from outsourcing services except for under very narrow circumstances. The City’s decision to outsource all city services (except police) exceeds the powers granted to municipalities and clearly violates California Law.

OCEA General Manager Nick Berardino

Additionally, the City’s contract with the Employees’ Association prohibits this type of outsourcing during the term of the agreement, which doesn’t expire until March 31, 2013.

“As we have said since the beginning, the City did not have the legal authority to take this action.” said Nick Berardino, General Manager of the Orange County Employees Association. “The council majority has had a series of opportunities to avoid litigation, but they ignored repeated public and private warnings and instead irresponsibly chose to send layoff notices unlawfully to more than half the City’s workers.”

Mr. Sunshine’s Contract Raises Questions of Transparency

William "Bill" Lobdell (Facebook Photo)

About a week ago I asked Bill Lobdell, Costa Mesa’s Interim Communications Director, for a copy of his contract with the city. Initially I was just trying to see whether or not he had a specific confidentiality agreement that would keep him quiet about the goings on at City Hall once his contract expired. What I found, was a contract that was a bit different from what has been represented publicly.

Since he came on board a consistent theme has come out of Lobdell, CEO Tom Hatch, and the Council majority has been that Lobdell was under a 3 month, $36,000 contract. Under this contract he could charge $75 per hour for up to 40 hours per week for his PR services. At the Budget Study Session last Tuesday, Lobdell was touted as doing a great job and not charging the city for the full amount of time he was working.

Well, my review of his contract found that Lobdell had been hired to do PR work for a 6 month period ending October 1, 2011, renewable in 6 month increments for up to 2 additional years. The maximum amount of the contract obligation was for $36,000 as has been reported, but the allocation of funding was all in the current fiscal year ending June 30, 2011. All that is needed to add more hours to the contract, is an additional funding allocation in next year’s budget. Based upon the current  delivery model, that means Lobdell’s contract is really closer to $72,000 not the $36,000 claimed.

Now here is where it gets a bit weird. Rather than just fly off the handle I asked Lobdell to explain the discrepancy. Lobdell initially stated; “The contract is for a max of $36,000. CEO Hatch wants me to work full-time. That means the contract will run out in three months.”I was getting ready to send Lobdell a note explaining that the way Hatch wanted to spend the money had nothing to do with the term of the contract that had been executed when I got another email from him saying; “I just read over the contract, and you’re right, it’s wrong. It should be only for three months. In practical terms, it wouldn’t make a difference because of the $36,000 cap but I’m having the City Attorney amend it to reflect three months.”

Huh? Last time I checked transparency does not mean changing the facts retroactively to reflect what you have been saying once it is revealed that what you have been saying isn’t entirely true.

Contract Seems To Violate Purchasing Rules

At the same time I asked Lobdell for an explanation about his contract I also asked what the policy was regarding dollar amount approval thresholds for contracts and what the requirements were for putting contracts (like Lobdell’s) up for bid. He punted that question over to City Attorney Tom Duarte. Now I rarely ask a question that I don’t have some idea what the answer might be; this happened to be one of those cases.

What I knew up front was that a contract for 6 months had been executed between Lobdell and the City, which if billed out as it is currently, would amount to about $72,000. I also knew that the City Municipal Code requires that contracts for services under $50,000 require a minimum of 3 bids, unless the contractor is the only one that can do the job (a circumstance that in no way exists with Lobdell). Contracts over $50,000 require approval by the City Council.

Costa Mesa Municipal Code establishes the rules for purchasing by the City. It sets up a bidding process for purchases that pretty much mirrors every other municipality in the state. Costa Mesa Municipal Code Sec. 2-165. establishes exceptions to its bidding requirements.

(a) Purchase of supplies, services, equipment and the sale of personal property shall be by bid procedures as set forth in sections 2-166, 2-167 and 2-168
(b) Notwithstanding subsection (a), bidding procedures for the purchases of supplies, services and equipment shall not apply to the following situations:

(1) An emergency requires that an order be placed with the nearest available source of supply;
(2) The amount involved is less than five thousand dollars ($5,000.00);
(3) The commodity or service can be obtained from only one (1) vendor; or
(4) Professional services contracts for accountants, attorneys, architects, engineers, surveyors, and construction managers subject to sections 4526 through 4529.5 and 37103 of the Government Code.

Costa Mesa Municipal Code Sec. 2-167 states; “Except as provided in this article, purchases of supplies, equipment, contractual services and sales of personal property of an estimated value in the amount of fifty thousand dollars ($50,000.00) or less, that… purchases shall, whenever possible, be based on at least three (3) bids and shall be awarded to the lowest responsible bidder.”

Duarte told me that the City “Council needs to approve contracts over fifty-thousand dollars.  There is no minimum number of bids required if the contract is for special services pursuant to Government code section 37103.” Just so we’re clear, Government Code § 37103 only gives municipalities authority to hire experts for whatever amount they deem appropriate (rather than accepting the lowest bid), it does not say anything about exempting the city from it’s own municipal code requirements regarding bids. Specifically GC § 37103 states;  The legislative body may contract with any specially trained and experienced person, firm, or corporation for special services and advice in financial, economic, accounting, engineering, legal, or administrative matters. It may pay such compensation to these experts as it deems proper.

The services offered by Mr. Lobdell are neither special or unique in their nature. Numerous public relations firms exist that can do the same job.  In order to go beyond their existing rules the Council must take specific action to do so. Since the Council never voted on the contract it isn’t like they could have “deemed anything proper.”

What we are left with is a contract that extends into the next fiscal year, with it maximum amount of funding all allocated for the current year budget. Because of this the contract is likely to exceed the $50,000 during it’s period. It is apparent that the dollar amount of the contract was based solely on the costs planned for the current fiscal year in order to avoid the threshold requiring Council approval. No proposals for professional services other than Lobdells were requested or reviewed. The only unique qualification I can find for Lobdell is his glowing appraisal of Righeimer in his December 10, 2010 Daily Pilot column.

 Lobdell has no unique public relations or crisis management experience. He is nothing more than a person who shares the political perspective of Righeimer and Mensinger, and happens to know how to spin out press releases based upon his years of receiving and reading them.

Another interesting note is that Lobdell’s proposed scope of work is dated March 16, 2011, the day before layoff notices were issued. Lobdell hire was announced three business days later.

To say the least, I’ve asked Duarte to explain the exception to the rule here, but he had not responded as of the time I wrote this story. I’ll be sure to let you know what he says when he gets back to me.

  13 comments for “Costa Mesa: Brown Act, Lawsuit, and Lobdell’s Contract Secrets Exposed.

  1. May 17, 2011 at 1:09 pm

    Chris:

    I would argue that Bill does provide unique expertise. True, there are any number of PR firms or individuals who could have been hired. However, since Bill’s has been covering Costa Mesa for so decades, he knows the community extremely well — a unique and valuable quality other firms would not be able to provide. Bill could hit the ground running with the knowledge, rather than spend time learning the community, the players, the background, etc.

    • May 17, 2011 at 6:57 pm

      He apparently did hit the ground running. In reviewing his invoices I have found that he started flaking for the Council on Friday March 18th, two days after the date of his proposal. If I didn’t know better (snark) I’d think he knew he had the job before he submitted the proposal.

      If you call having your nose firmly planted in the rear end of Righeimer and Mensinger knowing the community and players well, then I agree with you.

      • Matthew Cunningham
        May 17, 2011 at 7:52 pm

        You’re right Chris. We certainly don’t want government to hire a consultant who can quickly, efficiently and effectively begin doing the work he was hired to do.

        Slow down, Bill! What’s the rush? You’re making everyone else look bad!

        • May 18, 2011 at 8:18 am

          Matt, I have no problem with the government hiring consultants so long as they follow the fair and open market principals set up by law. To have a process, where the City Manager hires a consultant through a no bid process using an unrealistic dollar amount, so that he can then raise that amount later and explain to the council that the increase and selected vendor is necessary to continue existing work invites favoritism, and abuse.

          While I recognise that Bill Lobdell has some skills that are unique and could benefit the city, the decision to hire him should have been made using the competitive process.

          As we saw with the Management Partners contract last night, we have a $25,000 no-bid contract that suddenly exploded to $145,000. The contractor may be good, but they are not the only ones out there that do the type of work contracted. But since the person is already in the position of working on the project, changing contractors is not feasible.

  2. May 17, 2011 at 4:43 pm

    Your shovel must be white-hot! Good job of digging out the facts! I suspect Lobdell must be feeling like he’s swimming upstream in a Cat 5 rapid these days. By the way, the business he and Tom Johnson – former publisher of the Daily Pilot and the Newport Beach Independent – started was called “Cat 5 Commmunications”… how ironic! Great job, Chris.

  3. Matthew Cunningham
    May 17, 2011 at 7:57 pm

    Furthermore, I think the fact that OCEA is fixing Lobdell in its is a strong indication he is effective in his job.

  4. junior
    May 18, 2011 at 7:03 am

    From the Brown Act:
    “.. advisory committees, composed solely of the members of the legislative body that are less than a quorum of the legislative body are not legislative bodies, except that standing committees of a legislative body, irrespective of their composition, which have a continuing subject matter jurisdiction, or a meeting schedule fixed by charter, ordinance, resolution, or formal action of a legislative body are legislative bodies for purposes of this chapter.”

    Please explain to me exactly how the CM council is violating the Brown Act.

  5. May 18, 2011 at 7:50 am

    Committies which have a continuing subject matter jurisdiction are subject to the Brown Act. A budget Commmittee, by its very nature is not an ad hoc group.

    • May 18, 2011 at 8:08 am

      Terry Francke of CalAware said it best: “The key to legally setting up a working group is that it have limited, immediate purpose, a short duration and a date of expiration. None of that is here.”

    • junior
      May 18, 2011 at 10:02 am

      What exactly is “a continuing subject matter”? You know as well as I do Chris that cities are (sometimes regretably) given considerable latitude in defining such terms. I would say that “a continuing subject matter” would be something over a couple of years. In what sense is this a budget committee – perhaps it is an advisory committee to a continuing Budget Committee.

  6. junior
    May 18, 2011 at 9:56 am

    I respect Terry’s work in regard to the Brown Act – but that is only his opinion – it is not written that way in the law.

  7. Jouras
    May 29, 2011 at 4:12 pm

    Bill is an atheist, best known for his “losing religion” book.

    What do you expect?

    AS far as he is concerned, he is smarter than everyone else and the fit survive while the weak perish.

    tough cookies.

  8. Donna
    May 30, 2011 at 4:57 pm

    costa mesa city council and planning commission are corrupt . . . call it like it is! they line their pockets (and their developer cronies pockets) at the expense of the citizens of costa mesa. shame on them! we need a responsible, intelligent and ethical city council.

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