A. GARCIA/SFVS

Rick Olivarez

Less than a year after making a change in the city's legals representation, the City of San Fernando has replaced yet another legal firm and the city's attorney

Citing substantial savings for the same quality of work, the City Council unanimously approved the hiring of Rick Olivarez of the Los Angeles-based Olivarez Madruga, P.C. firm as the city's new legal counselor. Olivarez, son of U.S. Congresswoman Lucille Roybal- Allard, who represents southeast Los Angeles, replaces Maribel Medina of the Meyers Nave legal firm who had been providing legal counsel to the city since May of 2012.

Don Penman, the city's interim city administrator, noted that when Medina was hired, the contract required a six-month period review due to the fact that of the candidates considered at the time, she charged the highest fees for her services.

That review had not taken place until recently, when Mayor Antonio Lopez and Mayor pro tem Sylvia Ballin reviewed the fees, Penman said.

Ballin had already expressed reservations about Medina's hiring because she believed that similarly qualified companies who submitted proposals and charged considerably lower fees were bypassed. However, the council majority at the time (Maribel De La Torre, Brenda Esqueda and Mario Hernandez) pushed hard for Medina's hiring and Ballin's opposition was ignored. That council majority however, has since been recalled from office and replacing the city attorney was on the list of changes the newly configured council were anxious to make. Medina, was considered a strong ally of the previous council majority, so much so, that following the passage of a decorum ordinance that would impose penalties on residents who were viewed as speaking inappropriately during council meetings, local residents who packed the council chambers walked out in protest. Ballin and Lopez also walked off the council dais in support of residents, leaving Medina and remaining council members in an empty chamber.

But the news of the change in city attorney did not please everyone. Theale "Stormy" Haupt, a member of the Recall Committee, took issue with the council's action to remove Medina during a closed session meeting. He compared the action to the previous council's hiring of Medina.

"This was done in a very opaque manner. We in the recall committe expected transparency and all of a sudden our city attorney is gone. I don't want this to happen again," he said.

Council members took issue with the comparison.

"The way the other firm was brought in was questionable at best for us," said councilmember Jesse Avila, who was part of the Recall Committee and was elected in the recent recall election in November. "Maybe this process needs to be brought to the community sooner, but it will not change this decision." Ballin said she didn't think the comparison was fair.

"We have the responsibility to be good stewards of the city. If we don't look at every contract and get the best buy we can get, we're not doing that," she said.

Meanwhile, councilmember Joel Fajardo said Medina's hiring was for "highly charged, highly political reasons" that incorrectly served the previous administration, while this time he said the decision was based on the cost and the quality of service.

Penman noted that the city's review found that Meyers Nave charged $225 per hour for general services and between $225 and $325 per hour for special services and litigation.

Meanwhile, Olivarez Madruga P.C. charges between $185 and $200 per hour for general services and $225 per hour for special services and litigation. Penman said that difference could amount to a potential saving of between $5,000 and $6,000 a month for legal services.

A Larger Budget Deficit

Every dollar counts for the small city that's facing a deficit that has snowballed from a longtime practice to borrow money from one fund to another. The Fiscal Year 2012-13 Mid Year Review shows San Fernando will probably face a $1.2 million shortfall at the end of this year, which ends on June 30th. That's on top of the $1.2 million deficit the city entered this Fiscal Year with. Plus a $266,000 shortfall in insurance payments.

Among the information found during the review process was that previous City Administrator Al Hernandez did not provide a budget for all of the city's positions and services in the city, including the funding needed for the City's Personnel Manager Michael Okafor, nor the city's animal control services.

When the San Fernando Valley Sun/El Sol asked Penman to explain why this was done, he said he could not offer a reason. "I don't understand it," he said. "I don't know how you could not provide a budget item for a city's personnel manager. The city cannot operate without a personnel manager, I have no idea what the thinking was of the former administrator."

One city hall insider told the San Fernando Valley Sun/El Sol that Hernandez had targeted various positions for layoff and speculated that those on the chopping block were not represented in the budget prepared by Hernandez.

Also not reflected in the budget was money the city previously owed to city projects dating back to 2001. The city's budget penned by the previous city administration also didn't account for debts for services including money owed to the fire department or the cost of personnel currently placed on adminstrative leave. It also fails to consider the cost of lawsuits and deductibles paid to the city's insurance company.

"I think we're looking at about $4 million in deficit if you add all expenditures the city owes," said Penman, who noted the only positive side of this is the money is owed to the city itself. At the same time he notes that $4 million is significant and reflects nearly a quarter of the city's annual budget.

"If we had creditors, the situation would be worse," he said, before adding that adjustments have to be made because "we can't continue in that path."

Penman also confirmed that Hernandez had used redevelopment funds to help pay his own salary. "There were a number of positions that used redevelopment money. It is my sense that the city became over reliant on redevelopment money to cover general costs as general fund money depleted," said Penman. "That was a practice of many cities to use redevelopment money to plug the holes when they faced difficult financial times," said Penman. Hernandez, initially placed on administrative leave by the city council, was carried on the city's payroll until the first week of February.

"It's a whole set of circumstances, the city borrowed money for an affordable housing project in 2001 and the way things were financially managed in the city goes back several years and money the city owes to the state and to itself hasn't been paid back in a timely way."

The city often took money from sewer and other dedicated funds, including the city's retirement fund to pay for all kinds of projects, be it improvements to park or other expenditures. A good chunk of that deficit is the city's pool, where expenses surpass operating costs by about $397,000, plus another $80,000 from the general fund that goes to paying for money owed for the construction of that project.

Penman estimated the city has been in the red for the past five or six years, which past administrations covered by borrowing money from itself with various funds. This practice is believed to have gone on since 2001 and the city has failed to pay itself back with an agreement and payment arrangement. And while Penman said he expects revenue to grow in the near future (property and sales taxes have already exceeded budgeted amounts for this past half fiscal year) he admitted paying the debt the city carries is a much more difficult enterprise.

Trash Contract One-Year Extension Approved

Something that will come to alleviate the empty coffers in the city is the approval of a one-year extension with Crown Disposal. The new contract provides the city with $145,809 more in impact fees to cover for damages to streets caused by the company's trash trucks.

The extension also includes an annual shred day, a one-year freeze on trash fee increases for residents, two additional free bulky item pick up (for a total of four throughout the year; $35 for any extra pickups) and quarterly drop-off events for dangerous items and e-waste.

City Implements Housing Element Program

The Council also took time this week to hold the first of two public hearings about a housing element program that calls for an ordinance permitting emergency homeless shelters and community care facilities in the city.

A state law approved in 2007 requires all cities to draft this ordinance and San Fernando has until October to submit it to the state.

Fred Ramirez, Assistant Planner for the City, said the ordinance covers facilities with seven or more units that could be housed in residential areas.

A homeless count conducted in the City on January 31, 2012 revealed that there were 12 homeless individuals living in the municipality.

The City had initially proposed the ordinance would include homeless shelters with 50 beds, but after that count they reduced it to 30 beds. However, Ramirez said that in the 10 years since he's been with the city, there's never been any request for a homeless shelter.

Next week: the San Fernando Valley Sun/El Sol continues to cover the city's financial crisis.