Laguna Niguel Postpones Sending DA Allegations Staff Misspent $410,000

SPENCER CUSTODIO, Voice of OC

Laguna Niguel Mayor Jerry Slusiewicz.

The Laguna Niguel City Council will wait for results from an investigation into Mayor Jerry Slusiewicz’ allegations of city staff financial malfeasance involving a tree trimming contract and an separate investigation of bullying against Slusiewicz before it decides whether to turn finance data over to the District Attorney.

Slusiewicz placed an analysis of a tree trimming contract on Tuesday’s agenda to decide if they want to send the contract, along with a payment spreadsheet, to the DA’s office, but the item never came to a vote. The tree trimming contract is over the authorized amount by nearly $410,000.

Instead, Councilwoman Laurie Davies immediately moved to table the item until the financial audit is complete and until Mayor Pro Tem Fred Minagar is back from China.

“This has nothing to do with the audit … This is a prepared additional analysis of West Coast Arborists, that’s it. I’m not mentioning audit,” Slusiewicz said, adding that the council keeps “burying the audit.”

“Excuse me, Mayor Slusiewicz — that is totally uncalled for,” Councilwoman Elaine Gennawey said. “We do not have an audit yet, we have not received a final report.”

She said Minagar, at the special meeting last week that was centered around former City Manager Rod Foster’s claims of bullying by Slusiewicz, wants to wait until the audit is complete before they act on anything.

“This is a very serious decision here, and for us not to have five members — the entire council — vote on this, that’s irresponsible,” Davies said, adding “nobody’s trying to bury this item.”

The council voted 3-1 to push the decision back until their special meeting on Aug. 7, with Slusiewicz voting no.

The city council is waiting to receive an outside audit of purchasing and spending by city staff for fiscal year 2016-2017. Separately, Slusiewicz has alleged the city’s tree trimming contract was allowed to go far over its authorized amounts without city council approval. And some city council members have alleged Slusiewicz bullied staff.

The city has a three-year contract with the arborists that it entered in October 2015, which has gone over the $140,000 annual limit since then.

According to a staff report, the city spent $301,951 on tree maintenance from Oct. 7, 2015 to Sept. 30, 2016.  From Oct. 1, 2016 to July 28, 2017, the city has spent $387,743.

“I’m absolutely convinced that there was a problem with staff and something went wrong,” Councilman John Mark Jennings said.

Pat Mahoney, president of West Coast Arborists, said everything they did was approved by staff and people knew the spending went over the contract.

“Everybody knew,” Mahoney said. “It’s very common to go over the contract amount.”

The spike in tree maintenance spending is due to a beetle that infects and destroys trees, which can cause them to fall, according to a staff report. It costs $500 to $1000 to remove each diseased tree, according to the report. The Polyphagous Shot Borer is expected to cause over 360 trees to be removed.

The city never amended the contracted amount, but a contract amendment was up for a vote Tuesday night, until the council unanimously decided to push it back until the City Attorney figures out the legal liability if the city amends the contract — after the money has already been spent.

“Why that was never brought back to the city council? Great question, I would like to know the answer to that,” Jennings said during council deliberations. “The staff blew it.”

Furthermore, the municipal code requires that any spending of $25,000 or more must be approved by the city council.

However, Slusiewicz said the council has never approved increments over that threshold for West Coast Arborists (WCA). Instead, it was done by former Purchasing Manager Marvin Cruz, who resigned in May after discrepancies in tree maintenance spending were discovered.

“We created a purchasing manager position to help department heads track their contracts,” Interim City Manager and Finance Director Stephen Erlandson said, answering questions from the dais.

“Did anyone check spending limits of the purchasing manager?” Slusiewicz asked.

“I don’t know,” Erlandson said. “He did not work for me, he worked for the city manager.”

“You know the answer, Mr. Erlandson. No one was checking that,” Slusiewicz said.

“Nobody bats a thousand. I wish we did,” Erlandson replied.

Slusiewicz then repeatedly questioned Erlandson if he or Foster did any research into the matter after Slusiewicz brought the issue up May 10, the same day Cruz resigned.

“You don’t even do research to see what this guy’s been doing,” Slusiewicz said, cutting off Erlandson. “I’ve been accused of bullying … everything in this city started going downhill after the discovery of West Coast Arborists.”

The contract was originally up for an amendment May 16, but it was pulled by Foster. There’s two conflicting accounts of why it was pulled.

Slusiewicz, in an interview Tuesday afternoon, said he sent Foster a text message before the May 16 meeting and asked if Foster was sure he wanted it in the agenda. Because Foster was looking for a job in other cities at the time, Slusiewicz said he told Foster that he was going to bring all his concerns about the overspending and lack of oversight to the meeting.

It was then, Slusiewicz said, that Foster pulled the item, adding that he erred in notifying Foster.

However, Foster claims he pulled the item because of Slusiewicz’ bullying.

“I pulled the item because the Mayor continued to bully me and my staff when I tried to resolve the matter by adding the item to the May 16th (sic) agenda. It is obvious that the Mayor felt I had taken his ‘A-ha’ moment away from him,” Foster wrote in a July 28 letter that was attached to Tuesday’s agenda.

Slusiewicz told the council they shouldn’t pay for anything past the contract amount and the city should fight to get the money back.

Contrary to the Mayor’s stance, City Attorney Terry Dixon said since the city has been paying WCA since they went over their contract, the city has effectively entered an “implied” contract with them.

During public comment, former Orange County Treasurer Chriss Street said, “You people here on the board better get this right or lawyer up” and that spending past the contract amount without an amendment and violating spending caps is considered illegal, especially by the county Grand Jury.

But, former Mayor Robert Ming said while staff was doing what they were supposed to, he would like to see protocols to keep spending from going over authorized amounts.

“You passed a mid-year budget review that authorized the money to be spent …They had trees cut,” Ming told the council. “They told you what they were going to do and they did it. That’s how government works.”

Spencer Custodio is a Voice of OC reporter who covers south Orange County and Fullerton. You can reach him at scustodio@voiceofoc.org.

  • Randy O

    Not to exceed contract for $140K; exceeded by $162K for the 2015/2016 contract. Do you think this put the guardians of its taxpayers on notice that something was not quite right. Not at all !! Next year it was $247K over West Coast Arborist’s (WCA) contract amount. It’s like “Let’s try the dumb citizens on again.” Paid again without authorization per Laguna Niguel’s code. Where’s the outrage? Where’s the OC DA, the State Controller, the CA Bar Association’s scrutiny of the city attorney? The lone voice (Slusiewicz) on the City Council crying out for justice is squelched and maligned by the other council members. Is this how the corruption at the City of Bell got started? And now word that the former City Manager was having personal work done by WCA and the city’s procedural process might be in violation of the Brown Act. Are the puzzle pieces starting to fall together? Stay tuned…..this is fodder for an episode on TV’s American Greed.
    LA Times Reporter, Jeff Gottlieb of the Bell cesspool, PLEASE HELP.

  • Bill421

    Now that this story is out why would the DA not investigate. Why wait ?

  • jim.swanek

    Someone needs to call the shots on instant spending to remove heavily infested trees. If they stay up for one day after the next generation of the beetle begins to leave to find a new host, all trees within 300 feet can be infested themselves

    • LFOldTimer

      Nonsense.

      Over the course of 2 consecutive fiscal years the $140,000 limit was exceeded by about $160,000 and $250,000, respectively. No one could claim with a straight face that this was an appropriate action without bringing it back before the council to amend the contract. Looks like a cover-up to me. The taxpayers are lucky Slusiewicz caught it since it seemed to fly under the radar of the other 4 council members. Slusiewicz should be commended, not criticized.

      • jim.swanek

        I take it you’ve been to the same training sessions I have?

        • LFOldTimer

          Did they teach you at your “sessions” that it’s perfectly appropriate for a city to overspend a “not to exceed” contract by $160,000 and $250,000 for 2 consecutive years without bringing the matter back before the taxpayers in a public meeting to amend the contract?

          Did you read what Councilman Mark Jennings said?

          “Why that was never brought back to the city council? Great question, I would like to know the answer to that,” Jennings said during council deliberations. “The staff blew it.”

          Please expound on what “sessions” you attended. Did they address these concerns? Please explain. I’m all eyes.

  • astar2b

    With all the hand slapping going on, maybe Mayor Slusiewicz is just checking things out… LoL…

  • Cynthia Ward

    I agree that staff needs to be held accountable for the mission creep that is often used to approve change orders that in themselves are below the permitted amount, which then pushes the total contract past the permitted allowance for staff approval. it is a grey area but still wrong. BUT…if there is a call to get the money back from West Coast, that doesn’t seem right. Mahoney has been around for a long time, and does a good job from what I can see. Demanding money BACK from them for work they legitimately did isn’t kosher. The City needs to get their house in order, but going after the House of Mahoney is not proper.

  • LFOldTimer

    “Not to exceed” means exactly that. The City Manager of Goobersville (pop. 47) could figure that one out. If it’s true that the “not to exceed” value was violated by $410,000 without a public amendment to the contract Slusiewicz has a valid point. It appears that city government is attempting to divert the public’s attention away from the violation to protect the former city manager by accusing Slusiewicz of being a “bully”. What is this? 3rd grade?

    All of which makes me wonder who the real “bully” is? Slusiewicz or the other 4 council members and an unknown number of staffers who are ganging up on Slusiewicz and slapping him around for publicly exposing a gross policy violation?

    $410,000 is nothing to sneeze at. The taxpayers should support Slusiewicz and come to his defense.

  • David Zenger

    “Nobody bats a thousand. I wish we did,” Erlandson replied.

    What a lame response. When we pay a city manager more than $300,000 in salary and benefits we should expect competency, at least.