Toll Road Agency Chair Stripped of Authority to Approve Contracts

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An Orange County toll road agency’s board of directors Thursday stripped its chair of a unique contracting authority — allowing contracts to be approved in secret and without the full board’s knowledge – after county Supervisor Todd Spitzer harshly criticized the power and detailed examples of abuse in public session.

Typically, contracts with the Foothill/Eastern Transportation Corridor Agency exceeding $25,000 must be approved at a public meeting of the agency’s board. A board resolution in 2008, however, gave the board chair authority to sign contracts higher than that amount, as long as they have a legislative purpose.

That power had been renewed annually as part of the budget adoption, with the most recent time being June 2013. Spitzer said he was absent from that meeting.

According to Spitzer, the real intent of that resolution was to shield contracts from the full board and public at large. He said he and others were “taken aback” by the volume and scope of contracts approved under the chair and CEO’s signing authority.

In one case, a $27,000 three-month consulting contract with former Governor Gray Davis’ firm, Loeb & Loeb, was secretly approved even though it had nothing to do with legislation, Spitzer said. The contract states that it is to deal with regulatory issues, he said.

In another example, a contract with San Diego-based Gable PR started at $20,000 in 2008 but was repeatedly increased with approvals by the chair until it reached $517,793 by 2014. None of the contract approvals went to the board, Spitzer said.

“This was an incredibly abused resolution,” Spitzer said. “It is clear to me that resolution was passed for one reason and one reason only. … It was to increase contacts and hire people so no one would know.”

The agency’s chairwoman, Dana Point Mayor Lisa Bartlett, who is also a candidate for the supervisorial seat being vacated by Pat Bates in 2015, defended the contracting power, saying that it was required to quickly react to legislative moves in Sacramento and Washington, D.C., that could hurt the agency.

Bartlett repeatedly attempted to move the discussion to an ad hoc committee, a type of body that is allowed to meet behind closed doors and out of public view. She said that ad hoc committees had also signed off on many of the contracts, a power they aren’t supposed to have.

“We’re not letting out a numerous amount of these contracts,” Bartlett said. “They’re one here, one there.”

Bartlett’s defense wasn’t enough to persuade her colleagues not to rescind the power. The 10 members of the Foothill/Eastern agency board present voted unanimously to do so.

The agency is one of two that form a joint powers authority known as the Transportation Corridor Agencies  or TCA, which manages the county’s toll roads. The other in the partnership is the San Joaquin Hills Transportation Corridor Agency.

The boards of both agencies meet together regularly once a month.

TCA faced other criticism in December over its refinancing of the near junk-status bonds that paid for construction of the 241 toll road, which provides a shortcut between the 5 and 91 freeways and snakes into Rancho Santa Margarita.

Agency officials said the refinancing was necessary to lower annual payments. But the refinancing added $1.8 billion to the debt and postponed the retirement date from 2040 to 2053. That is important, because drivers will be able to use the roads for free when the debt is paid off.

A deep level of frustration and mistrust of the agency from Spitzer and Supervisor Shawn Nelson — a member of the Foothill/Eastern agency board — was apparent at the meeting.

At one point, Spitzer commented that the fine print on agency documents had to be scrutinized closely. And Nelson described an agency that operates in secrecy and withholds information from some board members.

“I don’t know what happened in this little bubble called the TCA,” Nelson said. “There’s a lot of behind-the-scenes stuff. I regularly feel like I’m not apprised of what’s going on.

“It’s offensive. It’s probably illegal. We need to knock it off. … I’ve reached my limit. I’m tired of the secrecy.”

Agency spokeswoman Lisa Telles refused to provide Voice of OC with a spreadsheet of contracts that is the source of Spitzer’s criticism, calling it a “working document.”

Instead, she wrote in an email that only five contracts have been approved under the special authority since Jan. 1, 2013, and they represent a tiny portion of the total dollar amount in approved contracts.

“They total $183,278.88 and represent 1.5 percent of the total volume and 0.2 percent of the total value of all contracts awarded during this time period per the agencies’ policies. Total value of contracts awarded during this time period is $76,054,900.39,” Telles wrote.

It’s not just contracts entered into under the chair’s authority that have drawn Spitzer’s criticism.

Agency CEO Neil Peterson last year approved a $25,000 contract with the firm California Strategies while it was under investigation by the California Fair Political Practices Commission for failing to register as a lobbying firm.

Within weeks of signing the contract, the FPPC found the company to be guilty of the violation.

Spitzer was especially angry about that, because, he said, Peterson told him about the lobbying contract in a meeting with the supervisor but never told the supervisor about the FPPC issues. Spitzer interrogated Peterson from the dais about the omission.

Bartlett downplayed the FPPC determination, saying that a lobbyist was in a room he shouldn’t have been in but wasn’t actually lobbying.

Peterson said that the firm was more than reputable and has performed very well for the agency over the years and that he only regretted not telling the board about the FPPC investigation.

“If I had to do it all over again, I would have communicated more with the board. I apologize for that,” Peterson said.

The mistrust is so high that there weren’t enough directors willing to pass a $15.9-million budget amendment because it contained a provision that allows the CEO to transfer money between different line items in the administrative budget.

Instead the amendment will return to the board in 30 days.

Please contact Adam Elmahrek directly at aelmahrek@voiceofoc.org and follow him on Twitter: twitter.com/adamelmahrek

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