HomeMy WebLinkAboutHUNTINGTON BEACH CONFERENCE AND VISITORS BUREAU, INC - Public Relations Services - FY 1999/2000 & FY 2000/2001 (Exp 9/30/2001) 9/20/99 - 1999-09-20I-,:). ve
(17) September 5, 2000 - Council/Agency Agenda - Page 17
4. Adopt Resolution* 2000-89 —A Resolution of the Redtwpment Agency of the
City of Huntington eac eclanng Intention to Reimburse Expenditures from the
Procceds of Tax Lxc.- pt ^' ,.:^.
[Adopted 7-01
3. (City Council) H. B. Conference and Visitor's Bureau (CVB) — Potential Issues
Relating to Legal Counsel for the CUB by the City Attorney (600.10)
ri3 Per direction at the August 28, 2000 Council meeting, the City Attorney's Office is
investigating and preparing material that may be presented at the meeting, and which
may require action by the City Council. The item is being brought forward for Council
consideration in response to the attached communication received from John Gilbert,
Chairman of the Huntington Beach Conference and Visitor's Bureau. The
communication dated August 28, 2000 is included in the agenda packet and addresses
issues relative to whether or not it is allowable for the City Attorney's Office to provide
P oYt11 ll-,L, attorney representation to the Huntington Beach Conference and Visitor's Bureau.
[Action of 08-21-00 Council meeting stands - Vote of approval of
following motion - 6-0-1 (Garofalo absent) stands: Strongly
recommend the Huntington Beach Conference & Visitors Bureau
Board of Directors to terminate its contract with Coatings
Resource to produce the Visitors Guide]
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CITY OF HUNTINGTON BEACH _
Inter -Department Communication p
TO: HONORABLE MAYOR DAVID GAROFALO AND
MEMBERS OF THE CITY COUNCIL;
HUNTINGTON BEACH CONFERENCE & s
VISITORS BUREAU;
RAY SILVER, CITY ADMINISTRATOR; AND
DAVID BIGGS, DIRECTOR OF ECONOMIC DEVELOPMENTa
FROM: GAIL HUTTON, City Attorney
DATE: September 1, 2000
SUBJECT: Funding Contract between the City of Huntington Beach and the
Huntington Beach Conference and Visitors Bureau; visitor's Guide
Contract between the Bureau and David Garofalo & Associates, Inc.
INDEX: Conflict of Interest; Government Code Section 1090
QUESTION NO. 1:
Is the Huntington Beach Conference and Visitors Bureau a City Council -created "board,"
"commission" or "committee"?
ANSWER TO QUESTION NO. 1
No.
QUESTION NO. 2:
Is it within the City Council's power to direct the City Attorney to defend the Bureau if it is sued
by Coatings Resources Company ("CRC") because the Bureau canceled the Publishing Contract?
ANSWER TO QUESTION NO.2:
No. Such would violate Charter § 309(c).
Lf�� (_P *AMLAQ'
rjw/00memoNisitor's Bureau Opinion
H.B. Conference & Visitors Bureau Opinion
September 1, 2000
OUESTION NO.3:
If the Bureau terminates the Publishing Contract and is then sued by CRC, can the City Attorney
represent the Bureau in that litigation?
ANSWERS TO QUESTION NO.3:
Under the City's Charter, the answer is no. Under the concept of express contractual
indemnification, the answer is also no. But under the concept of equitable, or implied,
indemnification, the answer is a possible yes.
BACKGROUND:
The City of Huntington Beach ("City") has an annual funding contract (the "Funding Contract")
with the Huntington Beach Conference & Visitors Bureau (the "Bureau"). The City has been the
sole funding source of the Bureau. The Bureau has had a separate contract (the "Publishing
Contract") with David P. Garofalo & Associates, Inc. ("DGA") to publish, since 1993, the
Huntington Beach Visitor's Guide (the "Guide "). While the Bureau does not pay DGA directly
for its services, DGA receives all advertising revenue from the Guide. DGA is wholly owned by
David Garofalo, a City Councilmember since December 1994 and the City's current Mayor. In
1998, the benefits of the Publishing Contract were sold to Coatings Resources Company
("CRC''), although Mr. Garofalo continued to serve as publisher of the Guide.
On August 1, 2000, this office wrote a comprehensive opinion on the issue of whether either the
Funding Contract or the Publishing Contract violated Government Code § 1090. In our August
I" opinion, we concluded by ruling that the Publishing Contract was potentially invalid and that
the Bureau should take steps to immediately terminate it. We further stated that, if the Bureau
failed to terminate the Publishing Contract, we recommended that the City terminate the Funding
Contract between it and the Bureau.
At its August 21, 2000, meeting, the City Council, with Mayor Garofalo absent, approved the
following motion: •
"The City Council strongly recommends that the Conference and Visitors Bureau
Board of Directors take action at its next board meeting to terminate its contract
with AQC regarding the Visitor's Guide."
By letter dated August 23, 2000, from Mayor Pro Tern Tom Harman to Ms. Diane Baker,
President of the Bureau, Mr. Harman advised Ms. Baker of the Council's August 21 sr motion.
By reply letter dated August 28, 2000, to the City from Mr. John J. Gilbert, Chairman of the
Bureau's Board of Directors, Mr. Gilbert asked the Council, at its September 5, 2000, meeting, to
provide the Bureau with more definitive direction and specifically to select one of the following
two alternatives:
rj%W00memoNisitor's Bureau Opinion 2
H.B. Conference & Visitors Bureau Opinion
September 1, 2000
A. "The Council directs the Bureau to terminate its publishing contract and the
Bureau does so. The City modifies the Bureau's existing contract allowing the
Bureau to retain legal counsel to defend itself against any breech (sic) of contract
action benefit by the publisher. Supplemental funding to be provided by the City
to cover the cost of the legal defense, and an indemnification be provided to the
Conference & Visitors Bureau in the event of any adverse judgment against the
Bureau";
C01Oki
B. "The publishing contract in question for the Visitor's Guide terminates as of
December 31, 2000. The Bureau will immediately solicit 'open bid" proposals
from publishers for the 2002 Visitor's Guide with a contract term commencing
January 1, 2001. This course of action would not require the Bureau to terminate
the publishing contract and would also eliminate any possibility of legal action
being initiated by the publisher."
Mr. Gilbert, in his August 28th letter, recommended that the Council select the second alternative.
At its August 21" meeting, the Council asked this office to respond, for the Council's
consideration on September 5, 2000, to the following questions: (1) Is the Bureau a City
Council -created "board," "commission," or "committee"? (2) Is it within the City Council's
power to direct or order the City Attorney to defend the Bureau if it is sued by CRC because the
Bureau canceled the Publishing Contract? (3) If the Bureau terminates the Publishing Contract
and is then sued by CRC, can the City Attorney defend the Bureau in that litigation?
THE CITY ATTORNEY'S OBSERVATIONS AND RECOMMENDATIONS:
Before answering these three questions, we wanted to provide the Council with our observations
and recommendations.
A. It is our opinion that the Bureau is not a City Council -created "board," "commission," or
"committee." We note that these three terms are defined in Huntington Beach Municipal
Code § 2.100.020. We recommend that the Council consider establishing the Bureau as
either a "board," "commission," or "committee," as this would give the Council greater
control over the Bureau's activities, including approval of future publishing contracts.
Such action would hopefully prevent the recurrence of the legal problems the City is
currently embroiled in with respect to the Bureau, its publishing contract and Mr.
Garofalo's involvement in the matter.
C. In answering the Council's three questions, we assume that only the Bureau might be
sued by CRC. If the City is also sued, that could change matters and this issue will be
discussed towards the end of this memorandum (see footnote 4 post).
rj"MmemoNisitor's Bureau Opinion 3
0
H.B. Conference & Visitors Bureau Opinion
September 1, 2000
D. In this memorandum, we are going to discuss City Charter § 309(c). Two of the three
Council questions require us to interpret Section 309(c). A charter provision is subject to
the same rules of interpretation as is a state statute. Laurent v. City and County of San
Francisco (1950) 99 Cal. App.' 2d 707, at p. 222 P.2d 274, at p. 275. A court's
overriding purpose in construing a statute is to ascertain legislative intent and to give the
statute a reasonable construction conforming to that intent. In interpreting a statute to
determine legislative intent, a court looks first to the words of the statute and gives them
their usual and ordinary meaning. Statutes must be given a fair and reasonable
interpretation, with due regard to the language used and the purpose sought to be
accomplished. Home Depot, U.S.A., Inc. 'v. Contractor's State License Board (1996) 41
Cal. App. 41h 1592, at pp. 1597-1598, 49 Cal. Rptr. 2d 302.
With this framework in mind, we will now answer the Council's three questions in more detail.
ANALYSIS OF QUESTION NO. 1:
City Charter § 405 states:
"The City Council shall establish such boards, commissions and committees as
are deemed necessary for the orderly functioning of the City. All such boards,
commissions and committees shall report directly to the City Council."
Implementation of Charter § 504 is found in Chapter 2.100 of the Huntington Beach Municipal
Code ("HBMC" ). A copy of Chapter 2.100, which consists of HBMC §§ 2.100.010 to 2.100.110,
is attached to this memorandum as Exhibit A.
HBMC § 2.100.010 provides that:
"Ali advisory boards and commissions shall be established by ordinance.
Committees may be established by resolution. The enabling document may
establish the duration, manner of appointment, term of office, and powers and
duties." (Emphasis added.)
In order to determine how the Bureau was originally created, we checked the records of the City
Clerk's Office. We found no evidence that the Bureau was created by either an ordinance or City
Council resolution. The City staff report presented to the City Council on September 20, 1999,
recommending approval of a grant agreement between the City and the Bureau for the 1999/2000
and 2000/2001 fiscal years, stated that the Bureau "...was formed in November 1989 to represent
the community in the solicitation of leisure travelers, tour groups, and conferences...." Actually,
it appears that the Bureau was created at an earlier time in 1989. According to page 90 of the
City Council's February 21, 1989, minutes, then Councilmember Don MacAllister" ... stated that
the Huntington Beach Visitors and Convention Bureau will present a letter to the City Council
prior to budget review, regarding suggestions, ideas and finances for this fiscal year 1989-90."
rj%v/00memoNisi1or's Bureau opinion 4
0
H.B. Conference & Visitors Bureau Opinion
September 1, 2000
We were able to speak with Mr. MacAllister and he was most helpful. He recalled that the
paperwork to create the Bureau as a nonprofit corporation was accomplished privately and not
with the assistance of City staff.
Other indicia contained in Chapter 2.100 clearly show that the Bureau is not a City Council -
created "board," "commission," or "committee." The City Council does not appoint the
members of the Bureau's governing board (See HBMC § 2.100.020; specify the members' terms
of office or fill vacancies (see HBMC § 2.100.080); require compliance with the state's open -
meeting law by the members of the Bureau's governing board (see HBMC § 2.100.090)1; or
require that members of the Bureau's governing board comply with the City's Conflicts of
Interest Code (see HBMC § 2.100.065).
Although the City is the sole source of the Bureau's funding and sets aside monies in the City's
fiscal year budget for this purpose (see HBMC § 2.100.030) and, although the City appoints a
staff liaison to the Bureau (see HBMC §§ 2.100.040 and 2.100.050), we do not feel that these two
factors alone would convert the Bureau into a City Council -created `'board," "commission," or
`'committee," in light of very strong evidence to the contrary.
Finally, the Bureau is not included in the list of boards or commissions specified in Title 2 of the
HBMC. Boards and commissions mentioned in Title 2 include: (a) the Planning Commission
(Chapter 2.34); (b) the Community Services Commission (Chapter 2.64); (c) the Redevelopment
Agency (Chapter 2.80); (d) the Citizen Participation Advisory Board (Chapter 2.97); (e) the
Allied Arts Board (Chapter 2.101); (f) the Environmental Board (Chapter 2.102); (g) the
Advisory Board on the Handicapped (Chapter 2.104); (h) the Fourth of July Executive Board
(Chapter 2.107); (i) the Huntington Beach Youth Board (Chapter 2.108); 0) the Finance Board
(Chapter 2.109); (k) the Investment Advisory Board (Chapter 2.110); (1) the Public Works
Commission (Chapter 2.111); and (m) the Mobile Home Advisory Board (Chapter 2.112).
The Bureau appears to us to be a privately created nonprofit California corporation and privately
operated, with the City's only involvement being that of funding the organization and providing a
staff liaison to it.
ANALYSIS OF QUESTION NO. 2:
The City Council cannot direct this office to represent the Bureau in court if it is sued by CRC.
To do so, in our opinion, would violate Charter § 309(c). In this regard, Section 309 states, in
relevant part:
1 We note that in July of 1994, at a point in time when a member of the City Council sat on the Bureau's governing
board, this office ruled that the Bureau had to comply with the Ralph M. Brown Act. HoweVer, subsequent to July of
1994, the Bureau asked the City Council not to appoint, in the future, any councilmember to the Bureau's governing
board; and the Council has complied with that request in the years since 1994.
rjw/00mcmo!Visi1or's Bureau Opinion 5
H.B. Conference & Visitors Bureau Opinion
September 1, 2000
"...[T]he City Attorney shall have the power and may be required to:...
"(c) Represent and appear for the City in any or all actions or proceedings in
which the City is concerned or is a party..." (Emphasis added.)
If the Council were to compel this office to represent the Bureau in court, we would not be
representing the City in court, but rather the Bureau. This is disallowed by Section 309(c).2
In providing our opinion on this issue, we are aware of Charter § 304(b), which states, in
pertinent part:
"[T]he City Council shall have control of all legal business and proceedings and
all property of the legal department..."
Charter § 304(b) does not, in our opinion, `'trump" Charter § 309(c). Assuming, for the sake of
argument, that both Charter §§ 304(b) and 309(c) pertain to the same subject matter, and further
assuming that these two provisions cannot be reconciled, it is a settled principle of statutory
construction that a specific provision prevails over a general one. Department of Alcoholic
Beverage Control v. Alcoholic Beverage Control Appeals Board (1999) 71 Cal. App.4" 1518, at
p. 1521, 84 Cal. Rptr.2d 621 (Rev. den. August 11, 1999). Of the two Charter provisions in
question, Section 309(c) is the more specific one because it deals with the identity of the party
(the City) on whose behalf the City Attorney can appear in court. Charter § 304(b) is silent in
this respect.
Thus, insofar as the answer to this second question is concerned, Charter § 309(c) controls
Charter § 304(b).
ANALYSIS OF QUESTION NO.3:
The first question to be asked is whether, under the Charter, the City Attorney can represent the
Bureau in court as a defendant in any suit CRC may file as a result of cancellation of the
Publishing Contract. The answer is no. Charter § 309 states, in pertinent part:
"[T]he City Attorney shall have the power and may be required to:...
(c) Represent and appear for the City in any or all actions or proceedings in which
the City is concerned or is a party..." (Emphasis added.)
2 There is a non -Charter exception to Section 309(c). That would be a situation where a "law" required the City
Attorney to appear in court representing someone other than the City. This exception will be discussed at a later point
in this memorandum.
rjµ'/00memo/Visitor's Bureau Opinion
H.B. Conference & Visitors Bureau Opinion
September 1, 2000
Most importantly, Charter § 801(c) defines the word "City" to include, inter alia, any board or
commission. If the Bureau were a City Council -created "board," "commission," or "committee,"
and it.were sued by CRC or anyone else, this office could represent, and appear.in court on
behalf of, the Bureau. But, unfortunately, as we stated in our earlier answer to Question No. 1,
the Bureau is a privately run organization and is not a City Council -created "board,"
"commission," or `committee."
And the second question to be asked is whether the City is contractually obligated, under the
Funding Contract, to defend the Bureau in court. The answer to this question involves the
concept of "indemnity."
Indemnity means the obligation resting on one party to make good a loss or damage another party
has incurred. An indemnitor is the party who is obligated to pay another. An indemnitee is the
party who is entitled to receive the payment from the indemnitor. Maryland Casualty Co. v.
Bailey and Sons, Inc. (1995) 35 Cal. AppAth 856, at p. 864, 41 Cal. Rptr.2d 519. An indemnity
obligation arises from two general sources. First, it may arise from express contractual language
establishing a duty in one party to save another harmless upon the occurrence of specified
circumstances. This is express contractual indemnity. But indemnity may also arise based on
equitable considerations. Unlike contractual indemnity, which looks to the parties' intent,
equitable, or implied, indemnification focuses on principles of fairness and justice and is
designed to apportion loss among tortfeasors in proportion to their relative culpability. Id.
There is no express indemnity provision in the Funding Contract favoring the Bureau. In fact,
the Funding Contract contains an express indemnity provision (at paragraph 9) in the City's
favor.3
But the Bureau, utilizing the concept of equitable indemnity, might well ask the City to
indemnify it and assume its defense if the Bureau were sued by CRC for terminating the
Publishing Contract. We are not opining that such a demand has legal validity, but only that the
Bureau could make such a request since the City is its only funding source and the present legal
controversy is an outgrowth of the business activities of one of the City's elected
representativV es.4
If the City (through this office) were to undertake the Bureau's defense in court, under the
concept of implied indemnity, would not this office be appearing in court on behalf of the Bureau
and not the City; thus violating Charter § 309(c)?5 The answer is no. The written law of the
3 This indemnity provision, however, is limited to either the Bureau's performance of, or failure to comply with the
terms of, the Funding Contract; situations that do not appear to be currently present. The Funding Contract (at
paragraph 14) also contains a provision stating that the City is not liable for payment of any attorney's fees if the
Bureau, for any reason, hires a lawyer to assist it.
4 If CRC sued both the Bureau and the City and, assuming no conflicts of interest existed behveen the Bureau and the
City, the concept of implied indemnity makes more sense and the City might want to accept the Bureau's defense,
and indemnify the Bureau, because it thus could control the litigation.
5 Please see our earlier analysis of Question No. 2.
rjw/00memoNisitor's Bureau Opininn 7
H.B. Conference & Visitors Bureau Opinion
September 1, 2000
State of California is found in its Constitution and statutes, as well as the federal Constitution
and federal statutes. Code of Civil Procedure ("CCP") § 1987. This state's unwritten law is
found in the written decisions. of its courts; so-called "decisional law." CCP § 1899. The
concept of implied indemnity is a creature of decisional law (that is, court decisions) and is
imposed on the City, and this office as the City's attorney, in spite of any language contained in
Charter § 309(c).
It should also be noted that if the City accepts the Bureau's defense under the concept of implied
indemnity, a conflict of interest may exist between the City and the Bureau. If so, this office
would recommend to the City Council that outside counsel be retained at City expense under the
doctrine of equitable indemnity, to represent the Bureau in court. However, if both the Bureau
and the City signed waivers of any conflict, this office could represent the Bureau in court.
CONCLUSION:
If CRC sues only the Bureau, the City might consider "intervening" in that lawsuit on the side of
the Bureau. In this regard, CCP § 387, in relevant part, states:
"Upon timely application, any person, who has an interest in the matter in
litigation, or in the success of either of the parties, or an interest against both, may
intervene in the action on proceeding..."
Under the previously cited and discussed Charter § 309(c), the City would certainly be
"concerned" about this litigation. This would serve as a basis for this office to represent the City
in such an intervention action.
Another possibility exists for this office's involvement in any CRC -initiated lawsuit if the City,
under the concept of implied indemnity, accepts the Bureau's defense in any lawsuit filed by
CRC.
We hope and trust that this memorandum is responsive to the three questions posed to this office
by the City Council.
GAIL HUTTON
City Attorney
Attachment: Huntington Beach Municipal Code Chapter 2.100
rjw/00memoNisitor's Bureau Opinion
Fluntngton Beach Municipal Code •
2.100.010-2.100.065
Chapter 2.100
OPERATING POLICY FOR BOARDS AND CONEMSSIONS
(2896-6187, 3124-12191. 3250-10194, 3256-11/94, 3323.5M, 3327-5196, 3391-W8)
Sections'
2.100.010
Establishment
2.100.020
Definitions
2.100.030
Budget
2,100.040
Staff
2.100.050
Staff liaison and residency
2.100.060
Service limitation
2.100.065
Statements of Economic Interests
2,100.070
Employment limitation
2.100,080
Duration of terms
2.100.085
Attendance
2.100.090
Open meetings
2.100.100
Rules
2.100.110
Applicability
2.100.010 Establishment. All advisory boards and commissions shall be established by ordinance.
Committees may be established by resolution. The enabling document may establish the duration,
manner of appointment, term of office, and powers and duties. (2a9&&87, 3t24-12f91)
2.100.OZ0 Definitions.
(a) Board - a body of members appointed pursuant to Huntington Beach Charter § 405 to serve in a
continuing advisory capacity to the City Council, except for such Boards which have decision
making authority pursuant to the particular establishing ordinance creating such Board; (32-9)-1o1g4)
(b) Commission - a body of members appointed pursuant to Huntington Beach Charter § 405 which
may have decision making authority in those activities delegated -to them by the City Council;
(c) Committee - a body of members appointed pursuant to Huntington Beach Charter § 405 on an ad
hoc basis to advise the City Council on particular matters. (28566l87)
2.100.030 Budget. When deemed necessary, the City Council may cause to be set aside in the budget
for each fiscal year an amount necessary for the functioning of such boards and commissions. (289&&a7)
2.100.040 Staff. The city shall assign a staff liaison to each board and commission. (2ag&&87)
2.100.05Q Staff liaison and residency. Unless otherwise specified, each board or commission is to be
assigned one staff liaison specified by the City Council. All members of boards and commissions shall
be residents and electors of the City of Huntington Beach. (289&W7)
2100.060 Service limitation. No person shall serve on more than one board or commission at any one
time. No person shall serve more than two (2) consecutive terms on any one (1) board or commission,
and no person who has been a member for more than two (2) years of a term to which some other person
was appointed a member shall be appointed to the same board or commission for more that one (1)
farther consecutive tern. (2896-&87, 3255-11194, 3323-5M6, 3327-51%)
2.100.065 Statements of Economic Interests. Every person appointed to a board, commission, or
committee designated by the City Council resolution adopting the CiWs Conflict of interest code, shall
file a Statement of Economic Interests with the City Clerk on forms provided by the City Clerk.
Statements of Economic Interests shall be Bled upon taking office, annually no later than thirty (30) days
after the date specified by law, and upon leaving office. Any such person who fails to file a Statement of
Economic Interests as provided in this Section shall automatically vacate the office. (33914M)
8418
2.100.070-2.100.110 . . Huntington Beach Municipal Code
2.100.070 Employment limitation. No person serving on any board or commission shall hold any full_
or part-time paid office or employment in the Huntington Beach personnel system while so serving,
unless otherwise specified. (2896 &87)
2.100.080 Duration of terms. Members shall serve until their respective successors are appointed and
qualified. The City Council shall have the power to fill any vacancies. Unless otherwise specified, terms
of members of boards and commissions shall be four (4) years, staggered so that the majority of terms
shall end in odd -numbered years following the election of four (4) council members and remainder of the
terms shall end in odd -numbered years following the election of three (3) council members. (289&W7)
2.100.085 Attendance. Any person appointed to any city board, commission, or committee shall
automatically vacate the office upon a fifth (5th) unexcused absence during a calendar year or upon more
than three (3) consecutive absences at any time during the term of office. The appointing authority shall
appoint a successor to fill the vacancy. {3124-12)91)
2.100.090 Oven meetings, All meetings of boards and commissions shall be open to the public unless
subject to the closed session exceptions contained in the Ralph M. Brown Act Govemment Code
§ 54950). (2896-&87)
2.100.100 Rules. Each board and commission may adopt such bylaws and rules as may be necessary or
convenient for the conduct of its business, subject to approval of the City Council. (28 87)
2.10.0_._110 Annlicability. This chapter shall apply to all boards and commissions, unless an ordinance
enacted after the date of this section establishes different requirements. (3124-12191, 3323.5res)
yh �
1
Nk
s
. 0 o t- - _
(17) September 5, 2000 - Council/Agency Agenda - Page 17
4. Adopt Resolution No. 2000-89 — "A Resolution of the Redevelopment Agency of the
City of Huntington eac eclaring Intention to Reimburse Expenditures from the
Proceeds of Tax -Exempt Obligations and Directing Certain Actions."
[Adopted 7-0]
F-3. CitM Council H. B. Conference and Visitor's Bureau CVB — Potential Issues
Relating to Legal Counsel for the CVB by the City Attorney (600.10)
Per direction at the August 28, 2000 Council meeting, the City Attorney's Office is
investigating and preparing material that may be presented at the meeting, and which
may require action by the City Council. The item is being brought forward for Council
consideration in response to the attached communication received from John Gilbert,
Chairman of the Huntington Beach Conference and Visitor's Bureau. The
communication dated August 28, 2000 is included in the agenda packet and addresses
issues relative to whether or not it is allowable for the City Attorney's Office to provide
attorney representation to the Huntington Beach Conference and Visitor's Bureau.
[Action of 08-21-00 Council meeting stands - Vote of approval of
following motion - 6-0-1 (Garofalo absent) stands: Strongly
recommend the Huntington Beach Conference & Visitors Bureau
Board of Directors to terminate its contract with Coatings
Resource to produce the Visitors Guide]
[No new o e Ta nek ]
rrr�r
Huhqln Hod
Sc urbern colybril a's
Corr,i ta! Pki.l km u n d
28'hAugust, 2000
City Council Members
City Administrator
City Attorney
City of Huntington Beach
2000 Main Street
Huntington Beach, CA 92648
Dear ladies and Gentlemen:
RECEIVED FROM
AND MADE A PART OF THE�ECOD AT THE
� �
COUNCIL MEETING OF X=- -.
OFFICE OF THE CITY CLERK
CONNIE BROCKWAY, CITY CLERK
The Huntington Beach Conference and Visitors Bureau is in receipt of the August 23,
2000 letter from Mayor Pro Tem Tom Harmon. This letter outlines the Council's action
of August 21, 2000, and while not concluding that there is a legal violation strongly
recommending the Bureau take action to terminate its contract with AQC for publication
of the Visitors Guide.
I have postponed the next Board meeting to September 6, 2000, and would ask that the
City Council consider providing the C� J board with a more specific level of direction
based on one of the two alternatives. It is my hope that the Council can consider these
alternatives at its September 5, 2000, regular meeting. I will be recommending that the
C&VB Board take action based on one of the following two altematives depending on
the alternative which the Council selects:
1. The Council directs the Bureau to terminate its publishing contract and the Bureau
does so. The City modifies the Bureau's existing contract allowing the Bureau to
retain legal counsel to defend itself against any breech of contract action brought by
the publisher. Supplemental funding to be provided by the City to cover the cost of
this legal defense, and an indemnification be provided to the C&VB in the event of
any adverse judgment against the Bureau...
101 Main Street, Suite 2A, Huntington Beach, California 92648. 714 - 969 - 3492 • FAX 714 - 969 - 5592. 1 - 800 - SAY -OCEAN
.7
•
2. The publishing contract in question for the Visitors Guide terminates as of December
31, 2000. The Bureau will immediately solicit "open bid" proposals from publishers
for the 2002 Visitors Guide with a contract term commencing January 1, 2001. This
course of action would not require the Bureau to terminate the publishing contract
and would also eliminate any possibility of legal action being initiated by the
publisher.
I believe that the Council selecting the second option outlined above would best serve
both the Bureau and the City. The Bureau remains committed to its mission and its
partnership with the City of Huntington Beach and looks forward to this partnership
moving forward in a positive manner once we can address the unfortunate
circumstances in which we find ourselves.
Sigcerely yours,
John Gilbert
Chair an
Cc: HBC&VB Board of Directors
H-2.
•
_ and Visitor's Bureau (600.10)
Communication received from Councilmembers Ralph Bauer and Dave Sullivan submitting
the following Statement of Issue: In an opinion dated August 1, 2000, the City Attorney
indicated that the publishing contract between the Conference and Visitor's Bureau and
David P. Garofalo might be invalid. Since the city of Huntington Beach provides major
financial support to the Conference and Visitor's Bureau, the city may be party to an invalid
contract.
Communication from the City Attorney's Office - opinion dated August 1, 2000 titled
Funding Contract between City of Huntington Beach and Visitor's Bureau; Visitor's Guide
Contract between Bureau and David Garofalo & Associates, inc.
Communication titled Agreement to Purchase the Local News, et at. and Amendment to
Agreement to Purchase the Local News, et al.
Recommended Action: Motion to:
it is suggested that the City Council, after further discussion and consultation with the City
Attorney during a regular City Council meeting, give the City Attorney and the city staff
direction with regards to continued financial support of the Conference and Visitor's
Bureau.
[Strongly recommend the Huntington Beach Conference & Visitors
Bureau Board of Directors to terminate its contract with Coatings
Resource to produce the Visitors Guide — Mayor Pro Tem Harman
to issue letter to Board of Directors — Approved 6-0-1 (Garofalo
absent)]
[City Administrator to report back on cost of producing and
printing the Huntington Beach Conference & Visitors Guide;
request to know if it has ever been audited; whether a joint
checking account established; bank statements — paper trail of
revenues; and whether Mayors have been designated to serve on
the Huntington Beach Conference & Visitors Bureau; also request
whether Huntington Beach Conference & Visitors Bureau must
conform to FPPC requirements such as filing Form 700 — Conflict
Statements. Councilmember requested study session to
investigate history of past relationship between the city and the
Huntington Beach Conference & Visitors Bureau and to consider
present relationship and future relationship with Huntington
Beach Conference & Visitors Bureau as it is an important part of
the city.]
Council Comments - (Not Agendized)
At this time Councilmembers may report on items not specifically described on the agenda which
are of interest to the community. No action or discussion may be taken except to provide staff
direction to report back or to place the item on a future agenda.
0 0 0
•
CONNIE BROCKWAY, CITY CLERK
City of Huntington Beach
2000 Main Street - Second Floor
Huntington Beach, California 92648
Internet: http://www.ei.huntington-beach.ca.us
•
11 � Ire I
HuRliqluo �eacn
Solerl7enz Cali/���atia's
CGCISra! Plea g rou nd
28th August, 2000
City Council Members
City Administrator
City Attorney
City of Huntington Beach
2000 Main Street
Huntington Beach, CA 92648
Dear Ladies and Gentlemen:
f46 C J-U1
/a o
The Huntington Beach Conference and Visitors Bureau is in receipt of the August 23,
2000 letter from Mayor Pro Tem Tom Harmon. This letter outlines the Council's action
of August 21, 2000, and while not concluding that there is a legal violation strongly
recommending the Bureau take action to terminate its contract with AQC for publication
of the Visitors Guide.
I have postponed the next Board meeting to September 6, 2000, and would ask that the
City Council consider providing the C \fI Board with a more specific level of direction
based on one of the two alternatives. It is my hope that the Council can consider these
alternatives at its September 5, 2000, regular meeting. 1 will be recommending that the
C&VB Board take action based on one of the following two alternatives depending on
the alternative which the Council selects:
The Council directs the Bureau to terminate its publishing contract and the Bureau
does so. The City modifies the Bureau's existing contract allowing the Bureau to
retain legal counsel to defend itself against any breech of contract action brought by
the publisher. Supplemental funding to be. provided by the City to cover the cost of
this legal defense, and an indemnification be provided to the C&VB in the event of
any adverse judgment against the Bureau.
101 Main Street, Suite 2A, Huntington Beach, California 92648. 714 - 969 - 3492 • FAX 714 - 969 - 5592. 1- 800 - SAY - OCEAN
0
•
2. The publishing contract in question for the Visitors Guide terminates as of December
31, 2000. The Bureau will immediately solicit "open bid" proposals from publishers
for the 2002 Visitors Guide with a contract term commencing January 1, 2001. This
course of action would not require the Bureau to terminate the publishing contract
and would also eliminate any possibility of legal action being initiated by the
publisher.
I believe that the Council selecting the second option outlined above would best serve
both the Bureau and the City. The Bureau remains committed to its mission and its
partnership with the City of Huntington Beach and looks forward to this partnership
moving forward in a positive manner once we can address the unfortunate
circumstances in which we find ourselves.
Cc: HBC&VB Board of Directors
M
r'.
• i qM
TO:
CITY OF HUNTINGTON BEACH
CITY COUNCIL COMMUNICATION
r�Nl=;F-NVO NV-f r4)J -5-Eff WAq�F---b WT\p� N*O'QN �4E 4;y� G Of�)A�
Honorable Mayor and City Council Members
FROM: Ralph Bauer, City Council Member
Dave Sullivan, City Council Member
DATE: August 15, 2000
SUBSECT: ' H' Item for the August 21, 2000, City Council Meeting
Publishing Contract
In an opinion dated August 1, 2000, the City Attorney indicated that the publishing
contract between the Conference and Visitor's Bureau and David P. Garofalo, might be
invalid. Since the city of Huntington Beach provides major financial support to the
Conference and Visitor's Bureau, the city may be party to an invalid contract.
It is suggested that the City Council, after further discussion and consultation with the
City Attorney during a regular City Council meeting, give the City Attorney and the City
Administration direction with regards to continued financial support of the Conference
and Visitor's Bureau.
RB:DS:lp
c: Connie Brockway
Ray Silver
a
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n
F� 2-
kOZ4 T4'�[ V-14) (3 -1Q
F
(16) August 21, 2000 - CouncillAgency Agenda - Page 16
H-2. Submitted By Councilmember Ralph Bauer and Counciimember Dave Sullivan
(City Council) Financial Support of Publishing Contract with the H. B. Conference
and Visitor's Bureau (600.10)
Communication received from Councilmembers Ralph Bauer and Dave Sullivan submitting
the following Statement of Issue: In an opinion dated August 1, 2000, the City Attorney
indicated that the publishing contract between the Conference and Visitor's Bureau and
David P. Garofalo might be invalid. Since the city of Huntington Beach provides major
financial support to the Conference and Visitors Bureau, the city may be party to an invalid
contract.
Communication from the City Attorney's Office -opinion dated August 1, 2000 titled
Funding Contract between City of Huntington Beach and Visitors Bureau, Visitor's Guide
Contract between Bureau and David Garofalo & Associates, inc.
Communication titled Agreement to Purchase the Local News, et al. and Amendment to
Agreement to Purchase the local News, et al.
Recommended Action: Motion to:
It is suggested that the City Council, after further discussion and consultation with the City
Attomey during a regular City Council meeting, give the City Attorney and the city staff
direction with regards to continued financial support of the Conference and Visitor's
Bureau.
[Strongly recommend the Huntington Beach Conference & Visitors
Bureau Board of Directors to terminate its contract with Coatings
Resource to produce the Visitors Guide — Mayor Pro Tem Harman
to issue letter to Board of Directors — Approved 6-0-9 (Garofalo
absent)]
[City Administrator to report back on cost of producing and
printing the Huntington Beach Conference & Visitors Guide;
request to know if it has ever been audited; whether a joint
checking account established; bank statements — paper trail of
revenues; and whether Mayors have been designated to serve on
the Huntington Beach Conference & Visitors Bureau; also request
whether Huntington Beach Conference & Visitors Bureau must
conform to FPPC requirements such as filing Form 700 _ Conflict
Statements. Councilmember requested study session to
investigate history of past relationship between the city and the
Huntington Beach Conference & Visitors Bureau and to consider
present relationship and future relationship with Huntington
Beach Conference & Visitors Bureau as it is an important part of
the city.]
CJ
•
F, iff CITY OF HUNTINGTON BEACH
Inter -Department Communication
TO: MAYOR AND CITY COUNCIL MEMBERS;
HUNTINGTON BEACH VISITOR'S BUREAU;
CITY ADMINISTRATOR; AND
DIRECTOR OF ECONOMIC DEVELOPMENT
FROM:
DATE:
SUBJECT
INDEX:
GAIL HUTTON, City Attorney
AUGUST 1, 2000
Funding Contract between City of Huntington Beach and Visitor's Bureau; -Visitor's
Guide Contract between Bureau and David Garofalo & Associates, Inc:;
Conflicts of Interest; Government Code Section 1090
BACKGROUND
The City of Huntington Beach (City) has an annual funding contract (the "Funding Contract")
with the Huntington Beach Conference and Visitor's Bureau, Inc. (the "Bureau"). The City is
and has always been the sole funding source of the Bureau. The Bureau has had a separate
contract (the "Publishing Contract") with David P. Garofalo and Associates, Inc. ("DGA") to
publish the Huntington Beach Visitor's Guide since 1993. While the Bureau does not pay DGA
directly for its services, DGA receives all advertising revenue from the Guide. DGA is wholly
owned by David Garofalo, a City Councilmember since December 1994. In 1998, the benefits of
the Publishing Contract were sold to Coatings Resources Company ("CRC"), although Garofalo
continued to serve as publisher of the Guide.
2. QUESTION
Does either the Funding Contract or the Publishing Contract violate Government Code Section
1090?
3. ANSWER
No definitive answer can be provided because the facts concerning the sale of the Publishing
Contract are not fully known, and because how a court would apply Section 1090 to these
transactions is uncertain. :Moreover the City Attorney is mindful of the fact that these
transactions are now the subject of a District Attorney investigation and it would be'
inappropriate to prejudge the results of that investigation.✓
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Mayor/CC
Contract between City and Bureau
Nonetheless, regardless of any pending investigation, the City should place its relationship with
the Bureau on an unassailable foundation. Any transactions that have any potential of being
invalid should be avoided. Using this admittedly high criteria as our standard, it is our
conclusion that the Publishing Contract is potentially invalid, and that the Bureau should take
steps to immediately terminate it. If the Bureau fails to do so, we recommend terminating the
Funding Contract between the City and the Bureau.
4. FACTS'
A. VISITOR'S BUREAU
The Bureau was established as a nonprofit corporation in the spring of 1989. In November 1989,
Huntington Beach City Council approved a S 150,000 Funding Contract with the Bureau for the
Bureau to promote tourism and economic expansion within Huntington Beach. This Contract
has been renewed annually by City Council through 2001, as indicated below:
Fiscal Year
Amount
Source
Vote
1989-90
S150,000
City of HB
N/A
1990-91
S 150,000
City of HB
N/A
1991-92
5175,000'
City of HB
N/A
1992-93
$172,500
City of HB
NIA
1993-94'
$172,500
City of HB
N/A
1994-95
$6,0634
City of HB
NIA
1995-96
$190,000
City of HB
7-0 (Garofalo voted)
1996-97
5190,000
City of HB
5-0-2 (Garofalo and Green abstained and
stated conflict of interest)
1997-98
$190,000
City of HB
6-0 (Garofalo voted)
1998-99
$190,000
City of HB
6-0-1 (Garofalo absent)
1999-2000
5200,000
City of HB
7-0 (Garofalo voted)
2000-01
5270,0005
City of HB
7-0 (Garofalo voted)
1 The description of the facts contained in this memo is based primarily on our review of the following documents:
1) Request for Council Action for funding to the Visitor's Bureau; 2) Funding Contracts between Ciry and the
Bureau; 3) Minutes of the meeting of the Board of Directors of the Bureau, as well as other correspondence from the
Bureau; 4) Contract between DGA and CRC to purchase the Local News; 5) Amendment to Agreement between
DGA and CRC to purchase the Local News; 6) memorandum from Mayor Garofalo dated 7/12100 regarding the sale
of the Local :News to CRC.
2 This amount reflects an additional $25,000 approved by City Council and Redevelopment Agency for phase I of a
marketing program.
s First year of Visitor's Guide.
' The amounts from 1994 to 1998 are consistent on both the City Council minutes and the Bureau's federal income
tax records. According to the 1994 Form 990 tax return, the Bureau's total income from 1994 was S6,063. ,
str'00mcmo garofalo-cc
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Mayor/CC
Contract between City and Bureau
B. PUBLISHING CONTRACT BETWEEN BUREAU AND DGA
The Bureau first entered into the Publishing Contract with DGA on May 15, 1993, under which
DGA would prepare and publish a Visitor's Guide (the "Publishing Contract"). David Garofalo
is the sole shareholder of DGA. The key terms of the contract are:
1. Compensation6
• 100,000 copies of 1994 Visitor's Guide to be produced by DGA and delivered to
Bureau
• All advertising revenue to be paid into joint checking account between DGA and
Bureau
• Upon payment of all bills pertinent to Visitors Guide, DGA receives remaining funds
in the account
2. Terms
• Agreement to terminate upon delivery of 100,000 copies by 12/31/93
3. Len th of Contract?
DGA to present a proposal each April for 1995 and 1996. "Board approval each year
for the publication constitutes a no -bid process for a total of three years."
s $70,000 for ad campaign.
6 A frequently encountered difficulty in preparing this legal analysis was interpreting various contracts. Although
the starting point for interpreting a contract is the written document itself, the understanding of the parties is also
very relevant, and frequently can overrule even an express contractual term. For example, Diane Baker of the
Visitor's Bureau understands the Publishing Contract to provide that the Bureau does not pay DGA any
compensation for preparing the Visitor's Guide. This is a reasonable interpretation of the Contract and reflects
reality; no monies from the Bureau have ever been paid DGA, according to Ms. Baker. On the other hand, the
Contract itself provides that the advertising revenue is to be paid into a joint checking account held by DGA and the
Bureau. Only after all bills in connection with publishing the Visitor's Guide are paid does DGA receive the
advertising funds.
7 Once again, the contract language is not entirely helpful in determining a key contract term. Was the Publishing
Contract intended to be a 3-year contract, or a series of one-year contracts? The term provision of the Publishing
Contract suggests an "evergreen" clause meaning that after the budget is approved in one year, the Contract still is
extended for an additional year so that it always has three years to run. However, the fact that the minutes never
reflect the Board of Directors extending the Contract since its original execution only clouds the issue. Further
confusing the issue is that in July 1999, the Bureau extended the Publishing Contract for two additional Visitor's
Guides. A reasonable interpretation of the contract at this point in time was that it had essentially become a year-to-
year Contract to be terminated by either party at their option. ,
stiA00memo garofaio-cc
sri,ao
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Mayor/CC
Contract between City and Bureau
The Publishing Contract has been renewed annually without formal action by either
party
In July 1999, the Bureau notified Edward Laird that it had extended the Publishing
Contract to the 2000 and 2001 Visitor's Guides, due December 31, 1999 and
December 31, 2000 respectively.
C. GAROFALO ELECTED TO CITY COUNCIL
In November 1994, David Garofalo was elected to City Council. He took office in December
1994. As a Councilmember, he is on the City Council, which annually approves the funding
contract between the City and the Bureau. Garofalo was reelected to City Council in November
1998. The Council elected him mayor in December 1999.
D. SALE OF DGA TO COATINGS RESOURCE COMPANY
In January 1998, DGA entered into a contact with CRC in which DGA would sell The Local
News (TLN) to CRC. TLN is a fictitious business name for DGA. TLN publishes The Local
News, a newspaper distributed in Huntington Beach and surrounding communities, the
Huntington Beach Visitor's Guide, on behalf of the Bureau, and the Huntington Beach Chamber
of Commerce Directory, on behalf of the Huntington Beach Chamber of Commerce.
The January 1998 Purchase Agreement (the "TLN Agreement") provides that:
1. DGA will act as `'publisher" of all TLN properties for 36 months.
2. DGA will consult on the mechanical and technical aspects of publishing, pursuant
to an independent contractor contract to be established under separate cover.
3. Sales price is $220,000, with S20,000 down, and the remainder as a promissory
note due in 36 months, carrying an annual interest rate of 7%.
In February 1998, the parties entered into an Amendment to the Agreement to Purchase TLN
(the `'TLN Amendment"), providing that:
4. "Given that [CRC] is required to pay the purchase price of $220,000 under the
Agreement regardless whether TLN makes a profit," DGA will "attend to the
publication of TLN for the exclusive benefit of Coatings. All of the profits
generated by TLN shall belong exclusively to Coatings." Profits are to be applied
to paying down the note (first to interest, then principal).
s David Garofalo was on the Bureau's Board of Directors in 1994-95 as Vice President. He was part of the
Executive Board until at least 1996. The minutes do not show that Mr. Garofalo, nor any other member of the
Board of Directors ever formally voted to extend the Publishing Contract. According to the minutes of the Bureau's
Board of Directors Meetings, beginning at least by January 1997, fir. Garofalo served as an ex-officio member of
the Board of Directors, which meant, like other Council members serving as ex-officio members, he could sit in on
directors meetings, discuss the issues, but not vote on them. ,
s f fl` O o me m o! ga ro fa l o-c c
8i POO
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Mayor/CC
Contract between City and Bureau
5. DGA to create a new bank account for TLN, which is to be owned by CRC.
DGA to have full check writing authority over this account, and Garofalo is to use
it to pay himself compensation for publishing TLN and for paying down the note.
6. There appears to be no formal, separate written consulting agreement. However,
Garofalo reports that he was paid a consulting/publishing fee of 510,000 for 1998
and that "the same arrangement applied for 1999 and has applied thus far in
2000." He also reports that the note has been paid down by $25,000. (It is
unclear whether this is the total pay -down to date, or if 525,000 was paid each
year since 1998.) Garofalo reports the source of these payments was the TLN
account. The chief (and perhaps the only) source of revenue to this account is
advertising revenues from the three TLN publications, including the Visitor's
Guide.
7. It appears that Garofalo acted as publisher in all respects for The Local News, as
well as the Visitor's Guide and Chamber of Commerce Directory from 1998 —
2000. His activities included the sale of advertising.
Garofalo contends that he effectively divested himself of any interest in the Publishing Contract
between the Bureau and DGA when he sold TLN to CRC. On its face, the TLN Agreement
supports a sale of the business. However, the surrounding record suggests that the TLN
Agreement may not have fully divested Garofalo of a financial interest in the Publishing
Contract.
The TLN Amendment states that Garofalo will receive his payment for TLN regardless of the
success of publications, but also provides that the profits from the advertising revenue are to be
used to pay down the promissory note. Naturally, Garofalo has an interest in a quick pay -down
period, particularly because the note is unsecured. Further, Garofalo is being paid S 10,000
annually as a "consulting" fee. Both these facts suggest that Garofalo may -have a material
interest in the success of the Publishing Contract.
5. ANALYSIS
A. SECTION 1090
Government Code Section 1090 prohibits "self -dealing" when malting contracts. Section 1090
provides that a governmental officer may not make or participate in the making of a government
contract if he or she is "financially interested" in the private party entering into the contract.
This prohibition applies to virtually all state and local officers, including councilmembers. (City
Council v. WcKinley (1978) 80 Cal.App.3d 204.)
Any contract made in violation of Section 1090 is void and cannot be enforced. Any employee
or official who violates Section 1090 may be subject to criminal, civil and administrative
sanctions. An important aspect of Section 1090 is that its application cannot be avoided even if
the official with the financial interest abstains from voting on the contract. The mere presence of
s ffA00mem01profa10-cc
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Mayor/CC
Contract between City and Bureau
the official on the board approving the contract prohibits the board from entering into the
contract. (This is based upon the concept of avoiding the possibility that "I'll scratch your back if
you scratch mine;" in other words, that the remainder of the board will still approve the contract
even if one member abstains, in expectation that that board member will approve another
contract where another member has a financial interest but also abstains.)
It should be noted that there are certain exceptions to Section 1090. Section 1091 and 1091.5
specify exceptions known as "remote interests" and "non -interests." An official with a remote
interest may not participate in making contracts, but the contract will not be void as long as the
official's interest is disclosed and noted in the corporation's official records. An official with a
non -interest may vote on a contract provided that his/her interest is disclosed and noted in a
similar manner. Both remote and non -interests are carefully defined under sections 1091 and
1091.5.
While section 1090 does not define when an official is financially interested in a contract, courts
have applied the prohibition to include a broad range of interests, both direct and indirect.
(Thompson v. Call (1985) 38 Cal.3d 633, 645, 214 Cal.Rptr. 139.)
A "direct" interest in the contract would be the situation where the public official actually owns
the company that is to enter into a contract with the governmental entity. An "indirect" interest
would involve a situation where the public official has some financial interest in the company
that is to enter into the contract with the governmental entity. In defining what is an indirect
interest, courts have looked past the technical relationship of the parties in order to discern the
vital facts. (People v. Matson (1971) 15 Ca1.App.3d 28, 37, 92 Cal.Rptr. 860.) "However
devious and winding the trail may be which connects the officer with the forbidden contract, if it
can be followed and the connection made, a conflict of interest is established." (Id.)
A useful example of this appears in People v. TVatson. At issue was a contract between the
Harbor Commission of the City of Los Angeles to enter into a lease for a berth to locate a
floating restaurant. Watson was one of the members of the Harbor Commission. Charles Sutton
formed the restaurant corporation, known as the Princess Louise Corporation. A loan was made
for S 10,400 from Engineering Associates (an engineering corporation originally owned by
Watson but transferred to his wife after his appointment to the Board of Commissioners) to the
Princess Louise Corporation to purchase a liquor license. Subsequently, the Board of Harbor
Commissioners, including Watson, twice voted in favor of granting the berth lease in the
Princess Louise Corporation. Subsequently, after the restaurant was opened, Sutton used the
proceeds from the operation of the bar and restaurant to repay S10,400 to Engineering
Associates. He delivered the check directly to Watson. The court concluded that the existence
of a debt to Watson from the corporation entering into the contract with the Harbor Commission
amounted to an indirect interest in the contract in violation of Section 1090.9
9 The Watson court offered the following definition of "indirect financial relationship":
"The interest is indirect when the board member enters into a contract in his official capacity with
a business firm, which business firm, by reason of the board member's relationship to it at the time
s ff...":OO me mo'g a ro Pa t o-c c
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Contract between City and Bureau
The case of Fraser-Yamor Agency, Inc. v. County o{Del Norte (1977) 68 Cal.App.3d 201, is
also helpful in defining an indirect interest. In this case, Del Norte County obtained insurance
contracts through an insurance agency in which one county supervisor was a shareholder. The
supervisor abstained from voting on the insurance contracts, and the insurance agency arranged
the contracts in such a way that none of the commissions derived from the County's insurance
business went to the supervisor or were used to defray the operating expenses of the agency.
Nonetheless, the court concluded that the supervisor's shareholder interest in the insurance
agency constituted a financial interest. The court held that the general financial success of the
agency and the fact that the overall volume of business procured was an important consideration
in the agency's relationship with insurance companies meant that the supervisor still benefited
from the contract even though he received none of the commissions, and the commissions were
not used to defray the operating expenses of the agency. The court explained that applying this
very strict construction of an indirect interest insured that governmental officers had absolute
loyalty and undivided allegiance to the best interest of the governmental agency they served.10
B. APPLICATION OF SECTION; 1090 TO THE FACTS
Any analysis of this situation must begin by noting that the contract approved by the City
Council subject to Section 1090 is the Funding Contract between the City and- the Bureau;
consequently, at issue is whether Garofalo had an indirect interest in the Funding Contract
through the -Publishing Contract. It would appear there is a reasonable likelihood a court will
find that a violation of Gov't Code Section 1090 occurred when the City entered into the
Funding Contract with the Bureau. Our concerns are based on the following conclusions. First,
the Funding Contract with the Bureau clearly enhanced the Publishing Contract. But for the
Funding Contract, the Bureau would never exist, and but for the Bureau, there could not be a
Publishing Contract.
Second, although there are unresolved factual issues whether Mayor Garofalo has truly divested
himself from the Publishing Contract, it is reasonable to conclude that he still has a financial
interest in that Contract. Consequently, any vote to approve the Funding Contract effectively
enhances the value of the Publishing Contract in which Garofalo has at least a potential financial
interest.
the contract is awarded, is in a position to render actual or potential pecuniary benefit to the board
member based on the contract the business firm has received."
10 Another court explained that the relative size of the interest is given less weight than the fact that there is a
financial interest at all: "The fact that [an official's] interest might be small or indirect is immaterial so long as it is
such as deprives the city of his overriding fidelity to it and places him in the compromising situation where, in the
exercise of his official judgment or discretion, he may be influenced by personal considerations rather than the
public good." (Terry v. Bender (1956) 143 Cal.App.2d 198, 207-208.) Thus, any private interest which may
influence an official's public treatment of a contract may be interpreted by the courts as an indirect. financial interest.
s fff-00memo/garo falo-cc
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Contract between City and Bureau
Third, it should be noted that one of the exceptions to Section 1090 expressly addresses the
situation of public officials having a financial interest in a company that supplies goods and
services to another company that enters into a contract with the public agency. Section
1091(b)(a) provides that if a public official is a supplier of goods and services to the contracting
party for at least five years prior to taking office, then the contract as a supply of goods and
services is treated as a remote interest. As a remote interest, the public agency may still enter
into the contract, provided the public official abstains from voting. In this case, DGA provides
goods and services to the Visitor's Bureau in the form of the Visitor's Guide. However,
Garofalo was a supplier of goods and services to the Visitor's Guide for only one year prior to
taking office. Consequently, this exception does not apply.
Fourth, the courts also recognize that in circumstances such as these, where officials have
financial interest in contracts in violation of Section 1090 when thev take office, the courts have
held that such preexisting contracts remain valid. (Beaudry v. Valdez (1867) 32 Cal.269.)
However, such contracts may not be renewed. (City of Imperial Beach v. Bailey (1980) 103
Cal.App.3d 191.) Consequently, when Garofalo took office the Publishinp Contract remained
valid at least through its existing term. However, once the Contract expired it could not be
validly renewed by the Bureau in July 1999, without triggering Section 1090.
Finally, the facts in this case at least suggest that a court may view the entire matter as one
contract. The RCA, which recommends allocating funds to the Bureau, mentions the annual
production of the Visitor's Guide as one of the purposes of funding the Bureau. Whether
publishing the Visitors Guide was an expectation of the City Funding Contract with the Bureau
is uncertain, but the fact that the Guide is mentioned in the City Staff report recommending
funding to the Bureau suggests that the City is funding the Bureau to perform a number of
duties, including issuing the Visitor's Guide.
In conclusion, this is an extremely difficult area of law, which ultimately can only be
adjudicated by the court. The issue is complex and the answer is not black and white. Our
analysis herein could carry little weight, but in light of California Courts' strict treatment of this
issue, it is important to apply an abundance of caution. Consequently, we conclude that the
Publishing Contract between the Bureau and CRC is potentially invalid and that the Bureau
must take action to terminate that contract and immediately put it out to bid.
zx--A6��
GAIL HUTTON,
City Attorney
A
SW-00memorgarofalo.cc
Bi 100
AGREEMENT TO PURCHASE
THE LOCAL NEWS, ET. AL.
This Agreement is by and between David P. Garofalo & Associates,
Inc., and the rights to THE LOCAL NEWS AND OTHER PUBLISHING
PROPIIRTIES (TLN) and Coatings Resource Corporation, (CRC), their
President and CEO, Edwin Laird (Laird), this day of 1998 in
Orange County, California.
CRC has made an offer to acquire TLN and publishing rights to
other magazine products currently produced by TLN. The purchase price
is S220,000 (two hundred and twenty thousand dollars.) It is to be paid at the
rate of $20,000 (Twenty thousand dollars) down, the balance in 36 months
from the date of this transaction. Interest on the balance shall accrue at the
annual rate of 7% (seven per cent).
This is a Promissory Note. The Purchase Price has been deferred for
an agreed period of time as a convenience to the buyer. All funds are due
and payable under the conditions of this agreement unless otherwise
mutually agreed to. Both parties agree to pay any legal cost necessary to
enforce the Agreement to the aggrieved party.
David P. Garofalo & Associates, Inc. (Garofalo) will act as Publisher
during the thin �y-six month final payment period. As a consultant,
Independent Contractor, Garofalo shall advise on printing,
newspaper/magazine layout, typesetting. graphic design, demographic
research, staff development, news generation and assist in creating new
editorial, real estate, classified type special pages for the various products.
Compensation shall be agreed to under separate cover.
CRC President Laird intends to take an active role in the develop of TLN,
author columns and manage the sales and marketing activities of the
products listed above as President and CEO of Coatings Resource
Corporation, the parent company.
The statement: "A Coatings Resource Company" shall appear on all
products produced under this Agreement regardless of any dba's currently
in use or developed in the future.
This is the entire Agreement. All issues pertaining to the execution
of any issues deriving from this Agreement shall be adjudicated in Orange
County (Huntington Beach), California as a matter of record.
This Agreement can be changed by mutual consent during the course
the terms set -fort
David P. Gaz_ afa
_: David-P G alo -
ive.
�c., Inc Coatings Resource Corporation _ -
t nt- __- -- -: - Edwin Laird -.President..
AMENDMENT TO AGREENfENT TO
PURCHASE THE LOCAL NEWS, ET. AL. -
This Amendment is made February 25, 1998 by and between Coatings
Resource Corporation (Coatings) and David P. Garofalo & Associates, Inc.
(Garofalo) regarding the Agreement to Purchase The Local Flews and other
publishing properties (TLNas set forth in the Agreement'to Purchase dated
January 14, t998, Due to certain personal matters concemind Edwin Laird and his
wife, Coatings and Garofalo agree to the additional terms set forth in this
Amendment.
Garofalo agrees to undertake the actual printing, of TLN for Coatm- gs, along
with performing the obligations of Garofalo undo: the Agreemment. Given that
Coatings is required to pay the purchase price of S220,000 under the Agreement
regardless whether TLN makes a profit, Garofalo will- attend to the publication of
TLN for the exclusive benefit of.Coatings. All of the profits'generated by TLN
shall belong exclusively to Coatings. Coatings plarfs on applying the profits from
TLNI-to pay down the promissory note (fzrst.to interest, then to the principal) set
forth in the Agreement during the thirty six month period .following the purchase
by Coatings. Coatings will pay Garofalo the balance owing on the note, if any, at
the end of the thirty six month period.
0
Given that Garofalo was not going to act as the publisher of TLN under the
Agreement, Coatings will agree to compensate Garofalo for agreeing to remain as
the acting publisher for Coatings. Garofalo and Coatings agree that they will
discuss the exact amount of compensation to be paid to Garofalo during the term
of the Agreement. Garofalo agrees to allow Coatings to take over the publishing
function of TLN immediately upon Coatings written request.
Garofalo agrees to transfer all of the books and records of TLN to Coatings
and Garofalo will establish a new bank account for TLN. Coatings will own the
account and have 'all rights to the monies in the account with Garofalo havina.
check.siping authority to run and publish TLN and to pay down the Promissory
Note and to pay -his compensation for publishing TLN.
All other matters contained in the Agreement remain unchanged.
9vid Garofalo Assoc.,. Inc.
David P. Garofalo - President
.Coatings Resource Corpo ation
Edwin C. Laird - President
Council/Agency Meeting Held:_7����_g�___�
Low.
Deferred/Conrinued to: --- —___________—__--
AProved ❑ Conditionally Approved ❑ Denied
'D=P—-City Clerk's Signature
—o
Council Meeting Dare: September 20, 1999
Departmenr 1D Number: ED 99-47
CITY OF HUNTINGTON BEACH
REQUEST FOR COUNCIL ACTION
SUBMITTED TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS
M. T. r-
SUBh'IITTED BY: RAY SILVER, City Administrator Xf
PREPARED BY: DAVID C. BIGGS, Director of Economic Development CZ)
0/00 n
SUBJECT: Approve Grant Agreement Between the City of Huntington Beach and the
Huntington Beach Conference & Visitors Bureau, Inc., (HBCVB) for Fiscal
Years 1999/2000 and 2000/01
Statement of ln5ue, Funding Source, Recommended Action, Alternative Actions), Analysis, Environmental Status, Atrachment(s)
Statement of Issue: The Huntington Beach Conference & Visitors Bureau submitted its request
for funds for the 1999/2000 and 2000/01 fiscal years in the amounts of $200,000 and $270,000
respectively. The grant request for 1999/2000 is S 10,000 over prior fiscal years, and is earmarked to
support regional efforts for tourism and the film commission. The grant request for 2000/01 includes
$80,000 for a one-time special "Media 2000-2001 Huntington Beach" campaign to market the City
nationally in time for the opening of the new Hilton Pacific Grand Resort and other new visitor serving
commercial developments. Staff is recommending approval of the attached two-year agreement for
$200,000 for fiscal year 1999/2000 and 5270,000 for fiscal year 7-000/01.
Funding Source: Funding for Agreement is included in the approved budget for fiscal years
1999/2000 and 2000/01.
Recommended Action: Motion to:
1) Approve and authorize execution by the Mayor and City Clerk of the Grant Agreement between
the City of Huntington Beach and the Huntington Beach Conference and Visitors Bureau, Inc.
(HBCVB) for a two-year Agreement for a total of $470,000.
Alternative Actions : Do not approve the Agreement.
Anal Isis: The Huntington Beach Conference and Visitors Bureau was formed in November 1989
to represent the community in the solicitation of leisure travelers, tour groups, and conferences. The
Bureau has developed an annual Huntington Beach Visitor's Guide, a Meeting Planners' Kit, and a
four-color rack brochure in five languages.
The Bureau is also the place where visitors obtain information about what to see and do in
Huntington Beach and the surrounding area. The Bureau reports that the City's Transient
Occupancy Tax revenues have surpassed $2 million per year, and they project a 1.7%
increase for this fiscal year; proof that rourism and hospitality are thriving in Huntington
Beach. The focus for the 1999/2000 fiscal year is to be regionally active in Orange County,
and in 2000/01 to market heavily in the U.S. with emphasis on the Western States.
Environmental Status: Not applicable.
Attachment(s):
Grant Agreement bem-een the City of Huntington Beach and the HBCVB for
Public Relarions Services.
2 I HBCVB Two-year Budget for Fiscal Years 1999/2-000 and 2000-01.
3 1 Letter from HBCVB dated July 26, 1999.
RCA Author: EAN, x5088
CITY OF _HUNTINGTON BEACH
2000 MAIN STREET
OFFICE OF THE CITY CLERK
CONNIE BROCKWAY
CITY CLERK
CALIFORNIA 92648
LETTER OF TRANS MIITTAL OF ITENI APPRMTQ BY THE CITY COUNCIL/
REDEVELOPMENT AGENCY OF THE CITY OF HUNTLIGTON BEACH
DATE: _,7'� U elm
TO:
M.r ' J6
shame' —JAW F2"I7ac) 4,U
4/ 7�9i.V
St
r7YUnfina;�n 3eacAra• g?2649
City, state
ATTENTION: VJI4-)Ie \&� ee
DEPARTMENT:
1 rI I r• • r 0
See Attached Action Agenda Item, Date of Approval 9 d'YJ
Enclosed For Your Records Is An Executed Copy Of The Above Referenced Agenda Item.
Remarks:
Connie Brockway
City Clerk
Attachments: Action Agenda Page
Agreement
--Z Bonds
Insurance
RCA
Deed
Other
CC: A-m,6 _.
rune
GS
eLl be✓.
De artment
Dom/
--,z
RCA Agreement
Insurance/ Other
✓
Name
Department
RCA Agreement
Insurance Other
Name Department RCA
Name Qepartmrnt RCA
Risk Management Dept.
Agee. -teal Insurance Other
Age:-ntnt lnsutancc/ Other
Insurance
Received by Name - Company Name - Date
G:Followup;coverltr
(Telephone: 71 A-536-52271
Contract with Conference & Visitors Bureau
ATTACHMENT #1.
GRANT AGREEMENT BETWEEN THE CITY OF
HUNTINGTON BEACH AND THE HUNTINGTON BEACH
CONFERENCE AND VISITORS BUREAU FOR PUBLIC
RELATIONS SERVICES
Table of Contents
I Grant of Funds
2 Public Purposes Limitation/Duration of Agreement
3 Records
4 Workers Compensation :
5 Professional Liability Insurance
6 Certificates of Insurance
7 Independent Contractor
8 City Employees and Officials
9 Indemnification and Hold Harmless
10 Non -Discrimination
11 Assignment and Subcontracting
12 Copyright/Patents
13 _ Immigration
14 Legal Services Subcontracting Prohibited
15 Attorney's Fees
16 Entirety
1
2
2
3
4
4
5
5
5
5
6
6
6
6
7
0. 0
GRANT AGREEMENT BETWEEN THE CITY OF
HUNTINGTON BEACH AND THE HUNTINGTON BEACH
CONFERENCE AND VISITORS BUREAU FOR PUBLIC
RELATIONS SERVICES
THIS AGREEMENT is made and entered into this _,(! _ , day of
S Q 1999, by and between the CITY OF HUNTINGTON BEACH, a
municipal corporation of the State of California, hereinafter referred to as "CITY," and the
HUNTINGTON BEACH CONFERENCE AND VISITORS BUREAU, a California non-profit
corporation, hereinafter referred to as "GRANTEE."
WHEREAS, CITY desires to grant funds to GRANTEE to perform promotional services,
and provide a conference and visitors bureau in the City of Huntington Beach; and
GRANTEE has agreed to accept such funds and to perform such services;
NOW, THEREFORE, it is agreed by CITY and GRANTEE as follows:
1. GRANT OF FUNDS
CITY hereby grants to GRANTEE the sum of Two Hundred Thousand Dollars ($200,000)
for the 1999-2000 fiscal year; and Two Hundred Seventy Thousand Dollars (5270,000) for the
2000-2001 fiscal year..
2. PUBLIC PURPOSES LIMITATION/DURATION OF AGREEMENT
All funds granted herein shall be used only for the promotion of the City of Huntington
Beach, to attract visitors and convention business, to provide information to persons interested in
doing business in the community, to represent the City on related regional activities such as the
Film Commission, and to operate a conference and visitors bureau to benefit the CITY. These
services of the GRANTEE are to commence as soon as practicable after the execution of this
Agreement and all tasks shall be completed no later that September 30, 2001. This Agreement shall
last for two years, the l 999-2000 fiscal year and the 2000-2001 fiscal year..
4rsA-99Agree:v isi199
RI 1 9`M05
3. RECORDS
GRANTEE shall maintain separate accounting records for all funds received from CITY
under this Agreement. GRANTEE further agrees that all of its records, including those pertaining
to funds received from CITY and all other funds received by GRANTEE, must be maintained in
accordance with standard accounting procedures and principles. GRANTEE further agrees that
within sixty (60) days after termination of this Agreement, GRANTEE shall submit to CITY, a final
financial statement detailing all expenditures made and all income received during the effective
period of this Agreement.
All accounting records and evidence pertaining to all costs of GRANTEE shall be kept
available at GRANTEE's office, or place of business for a period of not less than three (3) years
after funds are granted to GRANTEE. GRANTEE shall make all of its records available to CITY
during regular business hours for the purpose of auditing and shall furnish clerical assistance for this
purpose to CITY's auditor as required. GRANTEE shall furnish copies of all records to CITY on
request. GRANTEE agrees to implement all recommendations made by CITY's auditor, if any.
In the event GRANTEE does not make its books and financial records available within the
City of Huntington Beach, GRANTEE agrees to pay all necessary and reasonable expenses incurred
by CITY in conducting any audit at the location where said records and books of account are
maintained.
4. WORKERS COMPENSATION INSURANCE
Pursuant to California Labor Code section 1861, GRANTEE acknowledges awareness of
section 3700 et sect. of said Code, which requires every employer to be insured against liability for
workers compensation; GRANTEE covenants that it will comply with such provisions prior to
commencing performance of the work hereunder.
41::4-19A_ Tce: V1 i 109
RLS 99-50S
GRANTEE shall maintain workers compensation insurance in an amount of not less than
One Hundred Thousand Dollars (S100,000) bodily injury by accident, each occurrence, One
Hundred Thousand Dollars (S100,000) bodily injury by disease, each employee, Two Hundred Fifty
Thousand Dollars (S250,000) bodily injury by disease, policy limit.
GRANTEE shall require all subcontractors to provide such workers compensation insurance
for all of the subcontractors' employees. GRANTEE shall furnish to CITY a certificate of waiver of
subrogation under the terms of the workers compensation insurance and GRANTEE shall similarly
require all subcontractors to waive subrogation.
5. PROFESSIONAL LIABILITY INSURANCE
GRANTEE shall furnish a professional liability insurance policy covering the work
performed by it hereunder. Said policy shall provide coverage for GRANTEE's professional
liability in an amount not less than S1,000,000 per occurrence and in the aggregate. A claims made
policy shall be acceptable if the policy further provides that:
The policy retroactive date coincides with or precedes the professional services
contractor's start of work (including subsequent policies purchased as renewals or
replacements).
2. GRANTEE will make every effort to maintain similar insurance during the required
extended period of coverage following project completion, including the requirement
of adding all additional insureds.
If insurance is terminated for any reason, GRANTEE agrees to purchase an extended
reporting provision of at least two (2) years to report claims arising from work
performed in connection with this Agreement.
4. The reporting of circumstances or incidents that might give rise to future claims.
4's4-9')A,-�tc ViSi(99
iris 1)1)--505
G. CERTIFICATES OF INSURANCE
Prior to commencing performance of the work hereunder, GRANTEE shall furnish to CITY
certificates of insurance subject to approval of the City Attorney evidencing the foregoing insurance
coverages as required by this Agreement; said certificates shall:
a. provide the name and policy number of each carrier and policy;
b. shall state that the policy is currently in force; and
C. shall promise that such policies shall not be suspended, voided or canceled by
either party, reduced in coverage or in limits except after thirty days prior written
notice; however, ten days prior written notice in the event of cancellation for
nonpayment of premium.
GRANTEE shall maintain the foregoing insurance coverages in force until the
work under this Agreement is fully completed and accepted by CITY.
The requirement for carrying the foregoing insurance coverages shall not derogate
from the provisions for indemnification of CITY by GRANTEE under the Agreement. City or its
representative shall at ail times have the right to demand the original or a copy of all said policies of
insurance. GRANTEE shall pay, in a prompt and timely manner, the premiums on all insurance
hereinabove required.
7. INDEPENDENT CONTRACTOR
GRANTEE is, and shall be, acting at all times in the performance of the services of
this Agreement as an independent contractor. GRANTEE shall secure at its expense, and
be responsible for any and all payment of taxes, social security, state disability insurance
compensation, unemployment compensation and other payroll deductions for its officers,
agents and employees and all business licenses, if any, in connection with the services to
be performed hereunder.
41 s:»A9Agree:Visit99
RL5 99-5q5
S. CITY EMPLOYEES AND OFFICIALS
GRANTEE shall employ no CITY official nor any regular CITY employee in the work
performed pursuant to this Agreement. No officer or employee of CITY shall have any financial
interest in this Agreement in violation of the applicable provisions of the California Government
Code.
9. INDEMNIFICATION AND HOLD HARMLESS
CRANTEE shall protect, defend, indemnify and hold harmless City, its officers, officials,
employees and agents from and against any and all liability, loss, damage, expenses, costs
(including without limitation costs and fees of litigation of every nature) arising out of or in
connection performance of this Agreement or its failure to comply with any of its obligations
contained in this Agreement, except such loss or damage which was caused by the sole negligence
or willful misconduct of the City.
10. NON-DISCRIMINATION
In the performance of this Agreement GRANTEE shall not discriminate against anv
employee or applicant for employment on the basis of race, sex, color, religion, ancestry, national
al
origin, age or as an otherwise qualified handicapped individual. This prohibition shall pertain to
employment, upgrading, demotion or transfer, recruitment advertising; layoff or termination; rates
of pay and other forms of compensation; selection for training, irmluding apprenticeship; and any
other action or inaction pertaining to employment matters, and shall also apply to proscribe
discrimination in any program or activity funded in whole or in part with funds made available
under this Agreement.
11. ASSIGNMENT AND SUBCONTRACTING
This Agreement is a personal service contract and the supervisory work hereunder shall not
be delegated by GRANTEE to any other person or entity without the consent of CITY,
4%S:4-99A-ref: t`lil 91)
IZLS 99-505
I2. COPYRIGHTIPATENTS
CITY shall own all rights to any patent or copyright on any work, time or material produced
as a result of this Agreement.
13. IMMIGRATION
GRANTEE shall be responsible for full compliance with the immigration and naturalization
laws of the United States and shall, in particular, comply with the provision of the United States
Code regarding employment verification.
14. LEGAL SERVICES SUBCONTRACTING PROHIBITED
GRANTEE and CITY agree that CITY is not liable for payment of any subcontractor work
involving legal services, and that such legal services are expressly outside the scope of services
contemplated hereunder. GRANTEE understands that pursuant to Huntington Beach City Charter
§309, the City Attorney is the exclusive legal counsel for CITY; and CITY shall not be liable for
payment of any legal service expenses incurred by GRANTEE.
15. ATTORNEY'S FEES
In the event suit is brought by either party to enforce the terms and provisions of this
agreement or to secure the performance hereof, each party shall bear its own attorney's fees.
Balance of page intentionally left blank.
6
/5_4-99agree:visf t99
KLS 99-505
16. ENTIRETY
The foregoing sets forth the entire Agreement between the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by
and through their authorized offices the day, month and year first above written.
HUNT NGTON BEACH CONFERENCE
AND VISITORS BUREAU, a California
corporation:
By:
t
print name
ITS: (circle one) Chairma -`Presider 'ice President
D
By:
print name
ITS: (circle one2 Secretary/ChiefFinancial Officer/Asst.
Secretary - Treasurer
REVIEWED AND APPROVED:
City dministrator
4 sA-99Agree:visit99
Rl S 99-05
CITY OF HUNTTI`tGTON BEACH, A
municipal corporation of the State of
California
1� �LAO-�—
Mayor
ATTEST:
C/
City Clerk /0/ Q9
APPROVED kS TO FO 'VI:
�Atvffit Attorney
TED AND APPROVED: INIT
/,-? , /M
Director of Econo is Development
• • /�99 �i'K.
AC—Q—RD. CERTIFICATE OF LIABILITY INSURANCE, DATH" mm"
07290
PRCcv Is I!Rll-FICATEISISaUEDASAMATTULROFINFORMATiON
ONLY AND CONFERS NO RIQHT9 UPON THE CERTIFICATE
1 ISO North American ins Aef. #2 Z e. Wo - HOLDER. TRIG CERTIFICATE 00F8 NOT AMZND, EXTEND OR
P.O. Box 7248 `_ ALTER THE COVERAGE AFFORDED BY THE POLICIES SELO .
O=ange CA 92863-7240 �f 48W'j .lD INSURERS AFFORDING COVERAGE
Phone: 714-772--7i0D Tax:714-SJ�808S R�Lr� �,0
Nav-Re" [ IY9URERA'.
�,H=
mon Beach visitorsc:
anCen£■rence Bureau41 yain St�et D;
Huatangton Beach CA 9264E
m5iftS E:
THE POLICIES OF INSURANCE LISnO BELOW HAVE KM i$$UED TO TM INSVRIM rOMED ABOVE FOR THE POLICY PERIOD INDICATHD. NOTyy "TAWiNG
AN,420L11Re6ThT. TERM OR CCNC,TION OF AYY CONTRACT OR 011FiER DOCUMENT NRTH RE9PECTTO WF,ICN THIS CERTrCATE MAY BE ISSLWD OR
MAY PeFRTA'N, THE 110L)KANCE AFFORDED SY rHE POLICIES DESCRIBED HEREIN IT SUBJECT TO ALL THE TERMS, EXCLUSIONS ASD CONUM" OF 8 UCI+
POLICIES- A3GRzcATE LM'T9 SH,7WN MAY HAVE BEEN REDUCED BY PAII? CL. JdI8_
4' F : TYP' CF �N9Lh1AJICc COL!CY F uUSER OA'. E 'M W i I aAi'G
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�EBGA: vMCl ; pF CDwAT'OF. CA'I"Jn6llw-hi CLUMoNeA EC By iNNO0ROL'41Q4-T A- PRO VI NB
•10 day notice of eancollation for note -payment of premium. The
City of
Huntlftgton Beach, it's Officers, and Zmployea■ are hereby named
Iam Addirional Insured with respects to general 11ability.
j
I
CLRT,CI1:ATE -IOLDER Y ' ADOMONALiNsLpm INCVR0iL4rrm. CANCELLATION
ANY OF THR ABOVE CEBGIt;BED PGLIGES N : ANG&-.Z 1r 590CMc 7r.0
piFIRAT ON DA*2 T-1g(IE07, R THE MOU49 11460 WLL V9K%KkjGtL1.L i
30 * ,Ave NwrrTeN NOTr -O TML CSRrP4CATr Hti.DGR ►:AmE n'rO7FiE
C_ty of Huntington Beach P7
Risk Management Division
2000 D1ai.n stroet
Hunting -ton Beach CA 3264E
Ta • as
LL,)L-\�—
A25 S MS7' ` ACORD CORPORATIOK 109
0 0
Amerloan Sues AMERICAN ECONOMY INSURANCE COMPANY PAGE 1
IIVOIA#APOLIS, INOIAMA
ULTRA OFFICE
NAMED HUNTINGTON BEACH VISITORS AND RENEW L DECLARATIONS
INSURED CONFERENCE BUREAU
AND 417 MAIN ST POLICY NUMBER 02-BO-354273-0
ADDR
ESS AS 9 HUNTINGTON BEACH, CA 92648 RENEWAL OF 02—HO-354273-9 11-86
OaR�S
POLICY PER:O1) FROM 11-01-98 TO ? 1-01-99 12:01 AM
STANDARD TIME AT YOUR MA".!4'3 ADDRESS SHOVA ABOVE.
FORM of CORPORATIO>r
Bus-fiF55.
TOTAL ANNUAL PREMIUM.
DUE ON EFFECTIVE DATE.
AGENT TAURUS INSURANCE AGENCY, INC
NAME 1111 E KATMLLA AVE, 0215
AND P 0 BOX 7248
Aauaess ORANGE, CA 92863
04-79395 (714) 771— 400
$258.00
IN RETURN FCR THE PAYMENT OF THE PREMIUM, AND SUBJECT TO ALL THE TERMS OF TH!S POLICY. WE AGAFE WITH You
TO PROVIDE THE INSURANCE AS STATED IN THIS POLICY.
ADDITIONAL INSURED
WILLIAM AND ESTELLE ROBERTS
PREMISE3 001 220 F.ARTFORD AVENIIE
FrJNTINGTOti REACH, CA 92648
LANDLORD
THE FOLLOWING FORMS CURRENTLY APPLY TO THIS POLICY:
BF0402 0097) ADDL INS--VANAGE-LESSOR OF PREM
BP0009(0197) BUSINESSOWNERS COMMON POLICY C
IL7201 (0392) COMPANY COMMON POL CONDITIONS
BP0417(0196) EMPLOYHENT-RELATED PRACTICES E
BP8068 (0598) EXCLUSION - ASBESTOS
BP0002(0197) BUSINESSOWNIMS SPECIAL PAOPERT
BP7635(0598) BUSINESSOWNERS ULTRA PLUS LIA'B
COJN'TEMIOVATURE
ADDITIONAL INSURED
THE CITY OF EVNTINGTON BEACH
PREMISES001 IT'S OFFICERS AND EMPLOYEES
2000 MAIN STREET
HUNTINGTON BEACH, CA 92648
BPOOO6(0197)
IL0003(0689)
IL0270(0897)
BP0435(0197)
BP8029(1296)
BP7087(0598)
B?7092(0196)
BUSINESSOWNERS LIABILITY COVER
CALCULATION OF PREMIUM
CALIFORNIA CHANGES - CANCELLxT
BUSINESS LIABILITY COVERAGE -
AGGP.EGATE LIMITS OF INSURANCE
OFFICE ULTRA PROPERTY PLUS
KNI COMPUTER COVERAGE FORM
(Op. 7; IBY i ,
5-aG(,�-sir
COMPANY JSE ONLY
Cf)(JriJ r: CAA 7 f02$Da') AGENT COPY PREPARED,_,i Win:i n:- ��cn., �.'Fc—aN- 4v'
FROM : HUNTIN5T3N BEACH C U F FAX NO. 714 969 5592 Aug. 30 1999 10:50JAhl P1
JAN 0 7..,8% SG
STAT F. P.O. BOX 807. SAN FRANCISCO,CA 941 d 1-�d807-
COMPENSAt10N
tHSVRAN C:G
V N LJ CERTIFICATE OF
WORKERS''; COMPENSATION
INSURANCS.�
41o2.66 - 98
ISSUE DATE: 01-01-99 :
i.
�.'
6ER'f°,FICATtRE5
TI`-00
CITY OF HUNT I NGTDN_: BEACH
=
,•
wOB": ALL OPERATIONS
RISK MANAGEMENT 'ATTN: JUL
I E ' F'1TTERY
2000 MAIN STREET
HUNTINGTON BEACH, CA 92648
This is to ce'tifY That we have issued a valid WO'Kers' Coneoensation ins.uance policy ,n a form approved by the
California 'nsurance Comrnissloner to the employer named below for the policy period indicated.
This policy is not subject to cancellation by the Fund except. upon 30 days' advance `written notice to the emPloy'e•
We will also giv6 you 34 davS' advance notice should this policy be cancelled prior to its normal expiration.
This certificate of insurance iS not an insurance policy and does not-antend, _extend .or. -alter, tl•e Coverage afforded
by ti�s pof:cies figted herein_ Notwithstanding any requirement, term, o% deriditiori' of any 'contract or other eocumen:
w te'e respect to which this certificate of insurance may be issued or 'may pertain. the insurance afforded by the
policies descrlbeq here.n is subject to. all the term�,,exclusions and conditions of.-SuchrP0660S.
r` :z#FIESIDENT
EMPLOYER'S LIABILITY t_If+lIT•IWCLUDING•DEFEN'SE?.0OF: STS:$1;"OA0,008.t?OryPrEi;t:.000WENCE.
ENDORSEMENT 02065 ENTITLED CERTIFICATE KOLDEO§"' NOTICE: EFFECTIVE'01/61%S9'IS ATTACHED To AND
FORKS A PART OF THIS POLICY.
HUNTINGTON BEACH CONFERENCE S
VISITORS BUREAU
4'.7 MAIN 5T
HUNTINGTON BEACH -CA 92648
TO FORM:'
GATT TEUTTON
T i.-.Y -'r.'_ TN
a;r
D_u-: City Attorney
fs 1"r 0
HUNTINGTON $EACH CONFERENCE AND
VISITORS BUREAU
(A NON-PROFIT CORP.)
PRINTED: 12-111-98 PC409
1':512 714 969 5592 a.C,-
FROM HUNT'NGTCN BEACH C u B FAX NO. : 714 969 5592 1999 13:51FM P2
i 1 /9q
Executive Risk Indemnity Inc. AdmfnistratUw Offices/Mailing Adaress:
mcme meadow Street
37 W lil;ttui
O°'�
s7 nockcn 9quorc. 9wIC LIDO 82 Hop
meadow
acla�a I4X01 Simsbury. Connecticut
%06070-7683
NOT -FOR -PROFIT ORGANIZATION
DIRECTORS, OFFICERS AND TRUSTEES LIABILITY INSURANCE POLICY le Al o
INCLUDING EMPLOYMENT PRACTICES LIABILITY COVERAGE filop,-oaze d?1dV1Cj '
DECLARATIONS
POLICY NUMBER
751-145951-99
NOTICE: THIS IS A CLAIMS MADE POLICY WHICH APPLIES ONLY TO "CLAIMS" FIRST MADE DURING THE
"POLICY PERIOD,` OR, IF PURCHASED, THE DISCOVERY PERIOD. THE COVERAGE AFFORDED UNDER THIS
POLICY DIFFERS IN SOME RESPECTS FROM THAT AFFORDED UNDER OTHER POLICIES. PLEASE READ THE
ENTIRE POLICY CAREFULLY.
1'EM 1. PARENT ORGANIZATION — NAME AND PRINCIPAL ADDRESS: ITEM 2. POLICY PERIOD:
iuntington Beach Conference & Visitors Bureau (a)'Inception Date: January 11, 1999
.17 Main Street (b) Expiration Date: January 11, 2000
luritington Beach, CA 92648 at 12:01 a-m. both dates at thO Principal
Mate of Incorporation or Oroanization: CA Address in ITEM 1.
rEM 3. LIMIT OF LIABILITY:
1,000,000.00 maximum aggregate limit of ;lability for all Claims made or deemed made during any Policy Year
TEM 4. PREMIUM:
$ 900.00 total premium.
TEM 5. RETENTIONS:
a) $0.00 each Insured Person each Claim. but only for Loss as to which indemnification by the Insured Entity is not
legally permissible or is not made solely by reason of the Insured Entity's financial insolvency.
b) $0.00 each Claim, for Loss as to which indemnification by the Insured Entity is legally permissible
c) $0.00 each Claim under Insuring Agreement C _
TEM 6. ADDITIONAL PREMIUM FOR EXTENDED REPORTING PERIOD:
40% of annual expiring premium, for one (1) year Extended Reporting Period
75% of annual expiring premium, for two (2) year Extended Reporting Period
TEM 7. NOTICE UNDER CONDITIONS (G)(1) AND (G)(2) MUST 8E ADDRESSED TO:
Vice President of Claims
Executive Risk Management Associates
P. 0. Box 2002 1
Simsbu_ yj CT 06070 __ J
TEM 8. ENDORSEMENTS ATTACHED AT ISSUANCE:
)21190
)23832 :m:�• (ty tul,-orney
Cx'Lla Y+Y� 1, i
By:. D�F .1--,i City Attorney
e% !*Y
These Declarations, the signed and completed Application and the Policy, with endorsements,. will constitute
the entire agreement between the Underwriter, the Insured Entity and the Insured Persons.
_XECUTIV I KIND N INC. by (Authorized Company Representative):
1
Form C22208 (9f9e ec.'
Ca'alcg No. NPPc•I
FROM HJNTINGTCN BEACH C U B
FP.x N0. : 714 969 5592 Aug. 30 1999 10:5?Am F3
ier
ENDORSEMENT NO. i
CALIFORNIA STATE AMENDATORY ENDORSEMENT
This Endorsement, effective at 12:01 a.m. on January 11, 1999, forms part of
Policy No. 751-145951-99
Issued to Huntington Beach Conference & Visitors Bureau
Issued by Executive Risk Indemnity Inc.
In consideration of the premium charged:
(1) The Underwriter may non -renew this Policy by mailing or dellvering notice of non -renewal to
the Parent Corporation and to the agent at the mailing address shown on the Policy at least
sixty (60), but not more than one hundred twenty (120), days before the Expiration Date set
forth in Item 2(b) of the Declarations.
(2) The Underwriter may condition renewal of this Policy upon a reduction in limits, elimination of
coverages, Increase in deductibles or increase by 25% or more of the rate upon which the
premium is based, by mailing or delivering notice of such renewal change(s) to the Parent
Corporation and to the agent at :he 'nailing address shown on the Policy at least sixty (60),
but not more than one hundred twenty (120), days before the Expiration Date set forth In Item
2(b) of the Declarations.
(3) If, In connection with any non -renewal or renewal conditioned upon renewal change(s) as
described in paragraphs (1) and (2) above, the Underwriter does not mall or deliver notice
thereof at least sixty (60) days before the Expiration Date set forth in Item 2(b) of the
Declarations, the coverage afforaed under this Policy shall continue in force with no change
in its terms, conditions and limitations for sixty (60) days after the Underwriter mails or
delivers such notice.
(4) Nothing in this endorsement is intended, nor shall it be construed, to vary, after or amend any
of the terms, conditions or limitations of this Policy except as stated above.
All other terms, conditions and limitations of this Policy shall remain unchanged.
Authorized Representative
021190 (i V94) Page 1
Fo"s used on; C2' 102, C21108, C21644, C21120, C21114, C21138
AEG-3�-1959 i?:53 714 969 5592
- - F.03
0
CVB Two -Year Budget
• .
HUNTINGTON BEACH CONFERENCE AND VISITORS BUREAU
OPERATING BUDGET
FISCAL YEAR
1999-2000
Accounting / Payroll Service / Audit
$ 2,000.00
Auto
2,400.00
Exhibit / Seminar / Registration Fees
3,000.00
Familiarization I Orange County
11,000.00
Fixtures / Furniture / Computer
1,900.00
Health Insurance
1,850.00
Liability Insurance
2,650.00
Maintenance / Lease Equipment
1,500.00
Manager's Expense
3,000.00
Office Supplies
1,700.00
Payroll Taxes
9,000.00
Pension
4,000.00
Postage
5,000.00
Printing / Photo / Promo
4,500.00
Rent / Electricity / Janitorial
24,000.00
Salaries
111,000.00
Subscriptions / Dues
3,500.00
Telephone
5,000.00
Travel Expenses
3,000.00
TOTAL $200,000.00
• 0
HUNTINGTON BEACH CONFERENCE AND VISITORS BUREAU
OPERATING BUDGET
FISCAL YEAR
2000-2001
Accounting / Payroll Service / Audit
$ 2,000.00
Auto
2,400.00
Exhibit / Seminar / Registration Fees
3,000.00
Familiarization / Orange County
1,000.00
Fixtures / Furniture / Computer
1,900.00
Health Insurance
1,850.00
Liability Insurance
2,650.00
Maintenance / Lease Equipment
1,500.00
Manager's Expense
3,000.00
Office Supplies
1,700.00
Payroll Taxes
9,000.00
Pension
4,000.00
Postage
5,000.00
Printing / Photo / Promo
4,500.00
Rent / Electricity / Janitorial
24,000.00
Salaries
111,000.00
Subscriptions I Dues
3,500.00
Telephone
5,000.00
Travel Expenses
3,000.00
TOTAL $190,000.00
Add Media 2000 2001 SB Campaign (see attachment) 80,000-00
GRAND TOTAL $270,000-00
•
•
MEDIA 2000 2001 HUNTINGTON BEACH CVB
Develop Two Print Ads: One for Leisure travel, other for Conference Business. $ 6-
8,000 for both.
Partner these ads when possible, also piggyback on umbrella promotions. '
Leisure Market to include: Phoenix, San lose, San Francisco, Western States.
Place in:
1. Destination California Visitors Guide $10,000
2. Umbrella -San Francisco / Travel section with Anaheim twice a year,
$ 8,000 total.
3. Umbrella -Phoenix 1 Travel section, same as above, $ 7,000.
4. Sunset Magazine (Travel Ads) 2" x 4", 6 x buy $ 9,000.
5. Partner -Anaheim Destination Guide $ 4,000.
6. AAA monthly publication, 3 x buy $ 9,000 (Northern California edition
or gateway from Nevada and Phoenix?) Will study the best buy for us.
Maybe both.
Conference Business:
Meetings in the West
Orange County Section
Western Association News
Orange County Section +
Partner with I dton Ocean Grand when possible.
3 x $ 7,500
$ 4,000
ASAE Association Management $5,000
Orange County Section +
Meeting Planners International
San Francisco, LA, Chicago, Dallas, New York 3 x buy $7,500
We need a new video, but I think this year we will rely on the "Waterfronts" and use it - or
perhaps add some footage to their existing piece.
The Above totals about $80,000.
0
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Request Letter from CVB
jil
HUH000100 Reach
southcpw Cctlifolwict's
Coastal P1ri.)ground
July 26, 1999
David Biggs, Director
Economic Development
City of Huntington Beach
2000 Main Street
Huntington Beach, CA 92648
Dear David:
I have spoken to City Manager Ray Silver about additional dollars for marketing and
promoting Huntington Beach. My understanding is that this year the City will adopt a
two-year budget. My first year request for fiscal year 1999-2000 will be for, $200,000.
For fiscal year 2000 2001 1 would like to add $80,000 for marketing and imaging
Huntington Beach. The total would be for $270,000.
Personally, David, I want to thank you for taking the time you do each month to attend
our Board Meetings and giving the updates you do on the City's progress. It is
significant to the group to have factual information and to understand where they can be
helpful in moving towards what looks like a very bright future in Huntington Beach.
Thank you for all you do. We are proud to be your partner in Economic Development.
Sincerely,
Diane Baker
President/CEO
417 Main Street - Huntington Rca:h. C.)]1[Ornia92649-5131 - 714-969-349' - FAX 714-969-5592 - 1-800-SAY-OCEAN
w,k%v.hl)vicit.com - Email hhvisil@ix.netconixoni