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.