City Council reiterates order on contract

Theresa Moreau

HUNTINGTON BEACH -- The City Council didn’t waver Tuesday: The city’s

Conference & Visitors Bureau must terminate its publishing contract for

its annual guide or lose its city funding.

Though a vote wasn’t taken on the matter, the message was clear.

“The ball is in the Conference & Visitors Bureau court,” Councilman

Dave Sullivan said Wednesday. “They got direction, and then they wanted

more direction, and we gave them the same direction. The question is: Is

the bureau going to follow the strong recommendation?”

The council’s position echoes a stern warning from City Atty. Gail

Hutton, who suggested the contract be terminated because it may violate a

state law that prohibits city officials from self-dealing when making

contracts. If the bureau doesn’t follow the advice, Hutton recommended

the city yank its funding -- which is 100% of the bureau’s budget.

At the center of the controversy is Mayor Dave Garofalo, who held the

publishing contract for the guide for five years before selling it to

local businessman Ed Laird of Coatings Resource Corp. in January 1998.

Garofalo continued on as a consultant after the sale and, according to

Hutton’s findings, acted as publisher while continuing to vote on the

bureau’s budget.

“The advertisers paid directly to David P. Garofalo & Associates for

advertising,” Hutton said.

The mayor stepped away from the dais Tuesday as the council prepared

to discuss the matter, citing a potential conflict of interest.

Last week, the bureau’s chairman, John Gilbert, sought further

guidance on the issue from the council, asking members to choose one of

two options -- either again order the bureau to terminate the contract

and agree to cover legal fees if Laird sues, or allow the bureau to honor

the contract through Dec. 31, when it expires.

The bureau planned to discuss the issue Wednesday. (For details on the

meeting, see story on the Independent’s Web page: https://www.hbindy.com.)

Whether the city will provide legal services if Laird sues is still a

matter of debate.

In a Sept. 1 memo to the council, Hutton said it was not within the

City Council’s power to defend the bureau if it is sued by Laird.

However, in a wavering response, Hutton also noted that, under the city

charter, the city attorney may or may not represent the bureau in that

litigation.

“Under the concept of express contractual indemnification, the answer

is also no,” Hutton said in the memo. “But under the concept of

equitable, or implied, indemnification, the answer is a possible yes.”

Sullivan on Wednesday expressed frustration over the issue.

“At the appropriate time, she’ll make that decision and ask the

council if they concur with that,” Sullivan said. “But I do find it a

little strange because the grant agreement that the city has with the

Conference & Visitors board said that they will undertake their own legal

defense and hold the city harmless for any legal problems they’ll

encounter.”

In her latest memo, Hutton described the bureau as neither a

city-created board, commission nor a committee and recommended the

council consider establishing the agency as one of the above.

“This would give the council greater control over the bureau’s

activities,” she said, “including the approval of future publishing

contracts.”