Visitors bureau told to terminate contract with mayor

Theresa Moreau

HUNTINGTON BEACH -- A week after handing over her investigation to the

district attorney’s office and the Fair Political Practices Commission,

City Atty. Gail Hutton ordered the Conference & Visitor’s Bureau to

terminate its publishing contract with Mayor Dave Garofalo.

In her Aug. 1 memo, Hutton ordered the bureau to immediately terminate

its contract with Garofalo, who has published the visitors guide since

1993 and continued to vote on the city’s funding contract with the agency

four out of the six years he has served on the council.

“We conclude that the publishing contract... is potentially invalid

and that the bureau must take action to terminate that contract and

immediately put it out to bid,” Hutton wrote in the memo.

If the contract isn’t terminated, the bureau could lose $270,000 in

funding from the city, Hutton warned.

Neither Hutton nor the bureau’s director, Diane Baker, could be

reached for comment. Garofalo and his attorney, Steven Churchwell, a

former FPPC general counsel, did not return phone calls.

Ed Laird, to whom Garofalo said he sold his publishing business, the

Local News, in 1998, said he is prepared to fight Hutton on the matter.

“If they [the City Council and visitors bureau] do, in fact, take her

advice, then my recommendation... would be to initiate a lawsuit against

them for breach of contract,” Laird said.

Laird said the contract is between the Local News -- an Air Quality

Consultants company that is owned by his son, Jeff -- and the visitors

bureau, not between David P. Garofalo & Associates and the bureau.

Garofalo has told the Independent that David P. Garofalo & Associates

publishes the visitors guide.

In January 1998, Garofalo sold the Local News for $220,000 to longtime

friend Laird, president of Huntington Beach-based Coatings Resource

Corp., Hutton noted in her memo. Laird agreed to pay Garofalo a $10,000

annual consulting fee to help his friend in the “mechanical and technical

aspects of publishing,” she said.

Garofalo has said in interviews and in statements of economic interest

that he is paid a $100,000 consulting fee.

In Hutton’s memo, she said Garofalo has in effect stayed publisher of

the Local News and its publications, despite the sale to Laird.

Garofalo profits from the guide’s advertising revenue, Hutton said,

acting as publisher “in all respects,” and his “activities included the

sale of advertising.”

Hutton said state conflict-of-interest laws prohibit “self-dealing

when making contracts” and that “a government officer may not make or

participate in the making of a government contract if he or she is

financially interested.”

However, Hutton stopped short of saying definitively that Garofalo

violated the code, citing the ongoing district attorney’s investigation

into the matter, among other things.

“It would be inappropriate to prejudge the results of that

investigation,” Hutton said in the memo.

But she warned of a “reasonable likelihood” that a court would find

the city’s funding contract with the bureau violated conflict-of-interest

laws.

“Our concerns are based on the following conclusions. First, the

funding contract with the bureau clearly enhanced the publishing

contract,” Hutton wrote. “But for the funding contract, the bureau would

never exist, and but for the bureau, there could not be a publishing

contract.”

David Treiman, a professor at Whittier Law School who specializes in

local government and state conflict-of-interest laws, said the the plain

language of the law prohibits the City Council from making a contract in

which any member has a financial interest.

“Therefore, I would agree with the city attorney that this case raises

serious concern about the legality of the contract,” Treiman said. “Under

the law, those contracts are void.... It does not exist.”

It’s unclear why Hutton decided to render an opinion after turning the

matter over to county and state authorities.

“I think the city attorney is confused,” Laird said. “On one hand, she

said she’s going to turn the investigation over to the FPPC and the

district attorney, and yet she’s making a determination like this that

could affect a lot of people, but not necessarily Dave Garofalo.”

Hutton began investigating the matter June 19 after Garofalo told the

Independent that his company -- David P. Garofalo & Associates -- had

always published the visitors guide.

On July 26, Hutton turned over her investigation to the district

attorney’s office and the FPPC, saying “any further investigation by this

office would be unnecessarily duplicative and redundant.”

The FPPC and the district attorney’s office are focusing their probes

on Garofalo’s City Council votes on projects involving advertisers in his

publications, as well as two real estate transactions he conducted. The

grand jury is also conducting its own investigation.

Councilman Dave Sullivan, who has publicly encouraged Garofalo to

explain his business dealings, said he agreed with Hutton’s findings.

“I’ve always felt the contract that Dave Garofalo received from the

city is flat-out wrong, and it should be terminated,” Sullivan said.

Sullivan said he hoped the Conference & Visitors Bureau board of

directors will call an emergency meeting and act on Hutton’s advice. The

board’s next regular meeting is scheduled for Sept. 5.

Debbie Cook, one of Garofalo’s harshest critics who is considering a

run for the council in November said Hutton’s findings are too little,

too late.

“I think that she’s almost got it right, after all these years,” Cook

said. “But it’s been over two months. It should have been when the FPPC

raised red flags [during an investigation] two years ago. That’s when it

should have come out. Not now. She’s always a day late and a dollar

short.”