HomeMy WebLinkAboutHire Thomas W. Allen for Hearing Officer Services and Author �-
Council/Agency Meeting Held: DO
Deferred/Continued to:
'Approved ❑ Conditionally Approved ❑ Denied City Jerk' Signat
Council Meeting Date: 4/21/08 Department ID Number: CA 08-01
CITY OF HUNTINGTON BEACH
REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: MAYOR and CITY CIL MEMBERS
SUBMITTED BY: JENNIFER McG ity Attorney
PREPARED BY: JENNIFER McG Attorney
SUBJECT: Approve to Hire Thomas W. Allen for Hearing Officer Services and
Authorize the Appropriation of$50,000 in connection with the
Condominium Conversion Restitution Fund Matter
Statement of Issue,Funding Source,Recommended Action,Alternative Action(s),Analysis,Environmental Status,Attachment(s)
Statement of Issue: On October 15, 2007, the City Council approved the award of
restitution on a per-unit basis before a hearing officer. This procedure requires a hearing
officer to administer the Condo Conversion Restitution Fund. An appropriation of funds is
needed to cover the expenses related to the hearing officer contract.
Funding Source: Transfer $50,000 from Second Tier Reserve to City Attorney, Attorney
Fees Professional Services, 10015101.69505.
Recommended Action: Motion to:
1. Authorize the transfer of $50,000 from Second Tier Reserve to City Attorney, Attorney
Fees Professional Services, 10015101.69505 account for the hearing officer contract.
2. Approve hiring Thomas W. Allen for hearing officer services and authorize the City
Attorney to execute the agreement.
Alternative Action(s):
1. Do not hire a hearing officer and direct staff on how to proceed.
2. Do not appropriate $50,000 from Second Tier Reserve and direct staff on how to
proceed.
14. COPYRIGHTS/PATENTS
CITY shall own all rights to any patent or copyright on any work, item or
material produced as a result of this Agreement.
15. CITY EMPLOYEES AND OFFICIALS
CONSULTANT 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.
16. NOTICES
Any notices, certificates, or other communications hereunder shall be given
either by personal delivery to CONSULTANT's agent (as designated in Section 1
hereinabove) or to CITY as the situation shall warrant, or by enclosing the same in a sealed
envelope, postage prepaid, and depositing the same in the United States Postal Service, to
the addresses specified below. CITY and CONSULTANT may designate different
addresses to which subsequent notices, certificates or other communications will be sent by
notifying the other party via personal delivery, a reputable overnight carrier or U. S.
certified mail-return receipt requested:
TO CITY: TO CONSULTANT:
City of Huntington Beach Thomas W. Allen, Esq.
ATTN: City Attorney 3322 Via Lido
2000 Main Street Newport Beach, CA 92663
Huntington Beach, CA 92648
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17. CONSENT
When CITY's consent/approval is required under this Agreement, its
consent/approval for one transaction or event shall not be deemed to be a consent/approval
to any subsequent occurrence of the same or any other transaction or event.
18. MODIFICATION
No waiver or modification of any language in this Agreement shall be valid
unless in writing and duly executed by both parties.
19. SECTION HEADINGS
The titles, captions, section, paragraph and subject headings, and descriptive
phrases at the beginning of the various sections in this Agreement are merely descriptive
and are included solely for convenience of reference only and are not representative of
matters included or excluded from such provisions, and do not interpret, define, limit or
describe, or construe the intent of the parties or affect the construction or interpretation of
any provision of this Agreement.
20. INTERPRETATION OF THIS AGREEMENT
The language of all parts of this Agreement shall in all cases be construed
as a whole, according to its fair meaning, and not strictly for or against any of the parties.
If any provision of this Agreement is held by an arbitrator or court of competent
jurisdiction to be unenforceable, void, illegal or invalid, such holding shall not invalidate
or affect the remaining covenants and provisions of this Agreement. No covenant or
provision shall be deemed dependent upon any other unless so expressly provided here.
As used in this Agreement, the masculine or neuter gender and singular or plural number
shall be deemed to include the other whenever the context so indicates or requires.
Nothing contained herein shall be construed so as to require the commission of any act
17769 8
contrary to law, and wherever there is any conflict between any provision contained herein
and any present or future statute, law, ordinance or regulation contrary to which the parties
have no right to contract, then the latter shall prevail, and the provision of this Agreement
which is hereby affected shall be curtailed and limited only to the extent necessary to bring
it within the requirements of the law.
21. DUPLICATE ORIGINAL
The original of this Agreement and one or more copies hereto have been
prepared and signed in counterparts as duplicate originals, each of which so executed shall,
irrespective of the date of its execution and delivery, be deemed an original. Each
duplicate original shall be deemed an original instrument as against any party who has
signed it.
22. IMMIGRATION
CONSULTANT shall be responsible for full compliance with the
immigration and naturalization laws of the United States and shall, in particular, comply
with the provisions of the United States Code regarding employment verification.
23. LEGAL SERVICES SUBCONTRACTING PROHIBITED
CONSULTANT 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. CONSULTANT understands that
pursuant to Huntington Beach City Charter Section 309, the City Attorney is the exclusive
legal counsel for CITY; and CITY shall not be liable for payment of any legal services
expenses incurred by CONSULTANT.
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24. ATTORNEY'S FEES
In the event suit is brought by either party to construe, interpret and/or
enforce the terms and/or provisions of this Agreement or to secure the performance hereof,
each party shall bear its own attorney's fees, such that the prevailing party shall not be
entitled to recover its attorney's fees from the nonprevailing party.
25. SURVIVAL
Terms and conditions of this Agreement, which by their sense and context
survive the expiration or termination of this Agreement, shall so survive.
26. GOVERNING LAW
This Agreement shall be governed and construed in accordance with the
laws of the State of California.
27. SIGNATORIES
Each undersigned represents and warrants that its signature hereinbelow has
the power, authority and right to bind their respective parties to each of the terms of this
Agreement, and shall indemnify CITY fully for any injuries or damages to CITY in the
event that such authority or power is not, in fact, held by the signatory or is withdrawn.
CONSULTANT'S Initials
28. ENTIRETY
The parties acknowledge and agree that they are entering into this
Agreement freely and voluntarily following extensive arm's length negotiation, and that
each has had the opportunity to consult with legal counsel prior to executing this
Agreement. The parties also acknowledge and agree that no representations, inducements,
promises, agreements or warranties, oral or otherwise, have been made by that party or
anyone acting on that party's behalf, which are not embodied in this Agreement, and that
17769 10
that party has not executed this Agreement in reliance on any representation, inducement,
promise, agreement, warranty, fact or circumstance not expressly set forth in this
Agreement. This Agreement, and the attached exhibits, contain the entire agreement
between the parties respecting the subject matter of this Agreement, and supersede all prior
understandings and agreements whether oral or in writing between the parties respecting
the subject matter hereof.
29. EFFECTIVE DATE
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by and through their authorized officers. This Agreement shall be effective
on the date of its approval by the City Attorney. This Agreement shall expire when
terminated as provided herein.
THOMAS W. ALLEN, Esq. CITY OF HUNTINGTON BEACH,
a municipal corporation of the State of
California
By:
Thomas W. Allen, sole proprietor
City Attorney
INITIATED AND APPROVED AS TO FORM:
City Attorney
Date /
17769 1 1
EXHIBIT "A"
A. STATEMENT OF WORK: (Narrative of work to be performed)
Implement Justice Carter's Order for restitution to be paid to good faith purchasers of
fraudulently converted condominiums by means of determining how and to whom the monies
are to be distributed. Potential claimants will submit claims to the City which will then be
reviewed by Consultant as to how to proceed with administration. Consultant shall make the
final determination on how much and to whom to award the restitution monies. Consultant will
also be required to make a determination on how best to distribute the restitution money in
approximate proportion of each claimants' out-of-pocket expenses based on the total restitution
available for distribution. Consultant shall determine who qualifies as a bona fide purchaser and
what qualifies as out-of-pocket expenses under Judge Carter's Order. Consultant will determine
the credibility of the claim, weight of evidence and adequacy of evidence. Consultant shall
render a written decision for each claim processed.
Consultant shall also conduct hearings as he deems appropriate.
B. CONSULTANT'S DUTIES AND RESPONSIBILITIES:
1. Review, understand, and effectively implement Judge Carter's Restitution Order in the
most efficient manner.
2. Determine who qualifies as a "bona fide purchaser" and what qualifies as a legitimate
"out-of-pocket expense" for restitution under Judge Carter's Order.
3. Determine the criteria to distribute the restitution monies available to date pursuant to
Judge Carter's Order.
4. Review and process each claim using the criteria to distribute the restitution monies.
5. Determine how much and to whom to award the available restitution monies based on the
(a) credibility of each claim (b) weight of the evidence and(c) adequacy of the evidence.
6. Determine what hearings, if any, are necessary to assess each claim and conduct hearings
as deemed appropriate.
7. Make a final determination for each claim and provide a written decision on each claim
processed and/or matter heard.
C. CITY'S DUTIES AND RESPONSIBILITIES:
1. Notify all potential claimants and provide them with a claim form to submit to the City
indicating, among other things, the amount of actual out-of-pocket expenses incurred and
actual proof in the form of receipts and/or invoices of such expenses.
2. Package all claims received and submit to Consultant for review.
3. Provide Consultant with all reasonable assistance in a timely manner.
D WORK PROGRAM/PROJECT SCHEDULE:
Cannot be determined at this point
17961
REQUEST FOR CITY COUNCIL ACTION
MEETING DATE: 4/21/08 DEPARTMENT ID NUMBER: CA 08-01
Analysis: On October 15, 2007, the City Council of Huntington Beach made a motion to 1)
Award restitution on a per-unit basis before a hearing officer with established parameters and
2) Direct City Attorney to notify all potential claimants of the illegally converted condominiums
of a public hearing to finalize the methodology for distribution of the restitution. Per Council's
direction, the City Attorney's Office conducted chain of title searches dating back to
December 1999 of each of the approximately 122 illegally converted condominiums in an
effort to identity and notify all potential good faith purchasers of the subject properties of the
approximately $220,975.00 in restitution currently available for disbursement. To date, the
City has identified and mailed notices to approximately 420 potential claimants. As part of
the notice, the City will require each potential victim to submit to the City, within 90-days of
notice, a claim form indicating, among other things, the date of ownership of their illegally
converted condominium, the amount of out-of-pocket expenses that they are claiming, and
actual proof of such expenses in the form of receipts, invoices, etc. The City will then
package all claims received and submit them to the hearing officer for his/her preliminary
review.
The City Attorney has issued a Request For Qualifications (RFQ) for an attorney to serve as
a hearing officer to review all the claims, determine what hearings are necessary, and make
the hearings he/she deems appropriate. Since Judge Carter did not indicate how the
restitution fund will be administered, the hearing officer will have broad discretion to
determine how to appropriately distribute the monies currently available for disbursement.
The hearing officer will have to determine who qualifies as a "bona fide purchaser" and what
qualifies as a legitimate "out-of-pocket" expense for restitution under Judge Carter's Order.
The hearing officer will also be the ultimate authority on the credibility of the claims, the
weight of the evidence, and the adequacy of the evidence in determining how much
restitution to award to each claimant. Finally, the hearing officer must render a written
decision for each claimant.
Strategic Plan Goal: Provide quality public services with the highest professional
standards to meet community expectations and needs, assuring that the city is sufficiently
staffed and equipped overall.
Environmental Status: N/A
Attachment(s):
DescriptionCity Clerk's
Page Number No.
1. Professional Services Contract Between The City of Huntington Beach and
Thomas W. Allen for Hearing Officer Services In Connection with the
Condominium Conversion Restitution Fund Matter
2. Fiscal Impact Statement
3. Notice to All Potential Claimants of the Restitution Monies Available for
Disbursement
4. Claim Form sent with Notice to All Potential Claimants
-2- 4/10/2008 1:47 PM
ATTACHMENT NO . 1
L�
PROFESSIONAL SERVICES CONTRACT BETWEEN
THE CITY OF HUNTINGTON BEACH AND
THOMAS W. ALLEN FOR HEARING OFFICER SERVICES IN CONNECTION
WITH THE CONDOMINIUM CONVERSION RESTITUTION FUND MATTER
THIS AGREEMENT ("Agreement") is made and entered into by and between the
City of Huntington Beach, a municipal corporation of the State of California, hereinafter
referred to as "CITY, and THOMAS W. ALLEN, a sole proprietor hereinafter referred to
as "CONSULTANT."
WHEREAS, CITY desires to engage the services of a consultant to perform
hearing officer services on behalf of CITY in connection with the Condominium
Conversion Restitution Fund matter; and
Pursuant to documentation on file in the office of the City Clerk, the provisions of
the Huntington Beach Municipal Code, Chapter 3.03, relating to procurement of
professional service contracts have been complied with; and
CONSULTANT has been selected to perform these services,
NOW, THEREFORE, it is agreed by CITY and CONSULTANT as follows:
1. SCOPE OF SERVICES
CONSULTANT shall provide all services as described in Exhibit "A,"
which is attached hereto and incorporated into this Agreement by this reference. These
services shall sometimes hereinafter be referred to as the "PROJECT."
CONSULTANT hereby designates Thomas W. Allen who shall represent it
and be its sole contact and agent in all consultations with CITY during the performance of
this Agreement.
17769 1
2. CITY STAFF ASSISTANCE
CITY shall assign a staff coordinator to work directly with CONSULTANT
in the performance of this Agreement.
3. TERM: TIME OF PERFORMANCE
Time is of the essence of this Agreement. The services of CONSULTANT
are to commence on , 20 (the "Commencement Date"). This
Agreement shall automatically terminate three (3) years from the Commencement Date,
unless extended or sooner terminated as provided herein. All tasks specified in Exhibit
"A" shall be completed no later than two (2) years from the Commencement Date. The
time for performance of the tasks identified in Exhibit "A" are generally to be shown in
Exhibit "A." This schedule may be amended to benefit the PROJECT if mutually agreed
to in writing by CITY and CONSULTANT.
In the event the Commencement Date precedes the Effective Date,
CONSULTANT shall be bound by all terms and conditions as provided herein.
4. COMPENSATION
In consideration of the performance of the services described herein, CITY
agrees to pay CONSULTANT on a time and materials basis at the rates specified in
Exhibit "B," which is attached hereto and incorporated by reference into this Agreement,
a fee, including all costs and expenses, not to exceed Fifty Thousand Dollars ($50,000.00).
5. EXTRA WORK
In the event CITY requires additional services not included in Exhibit "A"
or changes in the scope of services described in Exhibit "A," CONSULTANT will
undertake such work only after receiving written authorization from CITY. Additional
17769 2
compensation for such extra work shall be allowed only if the prior written approval of
CITY is obtained.
6. METHOD OF PAYMENT
CONSULTANT shall be paid pursuant to the terms of Exhibit "B."
7. DISPOSITION OF PLANS, ESTIMATES AND OTHER DOCUMENTS
CONSULTANT agrees that title to all materials prepared hereunder,
including, without limitation, all original drawings, designs, reports, both field and office
notices, calculations, computer code, language, data or programs, maps, memoranda,
letters and other documents, shall belong to CITY, and CONSULTANT shall turn these
materials over to CITY upon expiration or termination of this Agreement or upon
PROJECT completion, whichever shall occur first. These materials may be used by CITY
as it sees fit.
8. HOLD HARMLESS
CONSULTANT hereby agrees to protect, defend, indemnify and hold
harmless CITY, its officers, elected or appointed officials, employees, agents and
volunteers from and against any and all claims, damages, losses, expenses, judgments,
demands and defense costs (including, without limitation, costs and fees of litigation of
every nature or liability of any kind or nature) arising out of or in connection with
CONSULTANT's (or CONSULTANT's subcontractors, if any) negligent (or alleged
negligent) performance of this Agreement or its failure to comply with any of its
obligations contained in this Agreement by CONSULTANT, its officers, agents or
employees except such loss or damage which was caused by the sole negligence or willful
misconduct of CITY. CONSULTANT will conduct all defense at its sole cost and expense
and CITY shall approve selection of CONSULTANT's counsel. This indemnity shall
17769 3
apply to all claims and liability regardless of whether any insurance policies are applicable.
The policy limits do not act as limitation upon the amount of indemnification to be
provided by CONSULTANT.
9. PROFESSIONAL LIABILITY INSURANCE
CONSULTANT shall obtain and furnish to CITY a professional liability
insurance policy covering the work performed by it hereunder. This policy shall provide
coverage for CONSULTANT's professional liability in an amount not less than One
Million Dollars ($1,000,000.00) per occurrence and in the aggregate. The above-
mentioned insurance shall not contain a self-insured retention, "deductible" or any other
similar form of limitation on the required coverage except with the express written consent
of CITY. A claims-made policy shall be acceptable if the policy further provides that:
A. The policy retroactive date coincides with or precedes the initiation
of the scope of work (including subsequent policies purchased as
renewals or replacements).
B. CONSULTANT shall notify CITY of circumstances or incidents
that might give rise to future claims.
CONSULTANT will make every effort to maintain similar insurance during
the required extended period of coverage following PROJECT completion. If insurance is
terminated for any reason, CONSULTANT 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.
If CONSULTANT fails or refuses to produce or maintain the insurance
required by this section or fails or refuses to furnish the CITY with required proof that
insurance has been procured and is in force and paid for, the CITY shall have the right, at
17769 4
the CITY's election, to forthwith terminate this Agreement. Such termination shall not
effect Consultant's right to be paid for its time and materials expended prior to notification
of termination. CONSULTANT waives the right to receive compensation and agrees to
indemnify the CITY for any work performed prior to approval of insurance by the CITY.
10. CERTIFICATE OF INSURANCE
Prior to commencing performance of the work hereunder, CONSULTANT
shall furnish to CITY a certificate of insurance subject to approval of the City Attorney
evidencing the foregoing insurance coverage as required by this Agreement; the certificate
shall:
A. provide the name and policy number of each carrier and policy;
B. state that the policy is currently in force; and
C. shall promise that such policy shall not be suspended, voided or
canceled by either party, reduced in coverage or in limits except
after thirty (30) days' prior written notice; however, ten (10) days'
prior written notice in the event of cancellation for nonpayment of
premium.
CONSULTANT shall maintain the foregoing insurance coverage in force
until the work under this Agreement is fully completed and accepted by CITY.
The requirement for carrying the foregoing insurance coverage shall not
derogate from CONSULTANT's defense, hold harmless and indemnification obligations as
set forth in this Agreement. CITY or its representative shall at all times have the right to
demand the original or a copy of the policy of insurance. CONSULTANT shall pay, in a
prompt and timely manner, the premiums on the insurance hereinabove required.
17769 5
11. INDEPENDENT CONTRACTOR
CONSULTANT is, and shall be, acting at all times in the performance of
this Agreement as an independent contractor herein and not as an employee of CITY.
CONSULTANT shall secure at its own cost and expense, and be responsible for any and
all payment of all taxes, social security, state disability insurance compensation,
unemployment compensation and other payroll deductions for CONSULTANT and its
officers, agents and employees and all business licenses, if any, in connection with the
PROJECT and/or the services to be performed hereunder.
12. TERMINATION OF AGREEMENT
All work required hereunder shall be performed in a good and workmanlike
manner. CITY may terminate CONSULTANT's services hereunder at any time with or
without cause, and whether or not the PROJECT is fully complete. Any termination of this
Agreement by CITY shall be made in writing, notice of which shall be delivered to
CONSULTANT as provided herein. In the event of termination, all finished and
unfinished documents, exhibits, report, and evidence shall, at the option of CITY, become
its property and shall be promptly delivered to it by CONSULTANT.
13. ASSIGNMENT AND DELEGATION
This Agreement is a personal service contract and the work hereunder shall
not be assigned, delegated or subcontracted by CONSULTANT to any other person or
entity without the prior express written consent of CITY. If an assignment, delegation or
subcontract is approved, all approved assignees, delegates and subconsultants must satisfy
the insurance requirements as set forth in Sections 9 and 10 hereinabove.
17769 6
EXHIBIT "B"
Payment Schedule (Hourly Payment)
A. Hourly Rate
CONSULTANT'S fees for such services shall be based upon the following hourly rate and cost
schedule:
$175.00 /hr
B. Travel
1. Charges for time during travel are not reimbursable
2. Automobile expenses are limited to the IRS standard business mileage rate of$0.485.
C. Billin
1. All billing shall be done monthly in one-tenth-hour (0.10) increments and matched to
an appropriate breakdown of the time that was taken to perform that work and who
performed it.
Minimum billing charges are unacceptable. CONSULTANT shall only charge for
actual time spent. For example, minimum of 0.2 hours for phone calls or 0.4 hours for
letters is unreasonable unless that is an accurate measure of time spent.
2. Each month's bill should include a total to date. That total should provide, at a glance,
the total fees and costs incurred to date for the case or matter.
3. Telephone, cellular phone and postage charges are billable at actual cost. A copy of all
service bills/costs should accompany the billing for each single item that exceeds
Seventy-Five Dollars ($75.00). The fee for the sending or receiving of facsimiles shall
not exceed Twenty-five Cents ($0.25) per page. CITY will not pay a fee or charge for
telephone calls or facsimiles to CITY. Photocopier costs should be no more than the
actual cost of duplication, or Ten Cents ($0.10) per page, whichever is less.
4. CITY will not pay for secretarial time or secretarial overtime. CITY will not pay for
secretarial tasks or tasks that should be subsumed into CONSULTANT's overhead.
For example, time spent for faxing, mailing, arranging for messengers and calendaring
are not acceptable charges.
5. CITY will not pay for word processing charges. This includes per page or hourly
charges.
6. The CITY expects that all attorneys will have a library, be it in book or electronic
form. Consequently, the CITY will not pay for electronic legal research, such as
LexisNexis or Westlaw.
1
Exhibit B
7. CITY will not pay for billing or discussion of bills. If CITY has questions about
billing or needs additional information on bills, that is not a chargeable event;
CONSULTANT should respond without charging CITY for the time required.
8. CITY appreciates when CONSULTANT has researched an issue previously and uses
that research on the present case. CITY has retained CONSULTANT because of its
past experience. CONSULTANT shall not charge CITY for work it has done and
billed another client for in the past.
9. Delivery of work product: A copy of every memorandum, letter, report, calculation
and other documentation prepared by CONSULTANT shall be submitted to CITY to
demonstrate progress toward completion of tasks. In the event CITY rejects or has
comments on any such product, CITY shall identify specific requirements for
satisfactory completion.
10. CONSULTANT shall submit to CITY an invoice for each monthly payment due.
Such invoice shall:
A) Reference this Agreement;
B) Describe the services performed;
C) Show the total amount of the payment due;
D) Include a certification by a principal member of CONSULTANT's firm that
the work has been performed in accordance with the provisions of this
Agreement; and
E) For all payments include an estimate of the percentage of work completed.
Upon submission of any such invoice, if CITY is satisfied that CONSULTANT is
making satisfactory progress toward completion of tasks in accordance with this
Agreement, CITY shall approve the invoice, in which event payment shall be made
within thirty (30) days of receipt of the invoice by CITY. Such approval shall not be
unreasonably withheld. If CITY does not approve an invoice, CITY shall notify
CONSULTANT in writing of the reasons for non-approval and the schedule of
performance set forth in Exhibit "A" may at the option of CITY be suspended until
the parties agree that past performance by CONSULTANT is in, or has been brought
into compliance, or until this Agreement has expired or is terminated as provided
herein.
11. Any billings for extra work or additional services authorized in advance and in writing
by CITY shall be invoiced separately to CITY. Such invoice shall contain all of the
information required above, and in addition shall list the hours expended and hourly
rate charged for such time. Such invoices shall be approved by CITY if the work
performed is in accordance with the extra work or additional services requested, and if
CITY is satisfied that the statement of hours worked and costs incurred is accurate.
Such approval shall not be unreasonably withheld. Any dispute between the parties
concerning payment of such an invoice shall be treated as separate and apart from the
ongoing performance of the remainder of this Agreement.
2
Exhibit B
ATTACHMENT NO . 2
... CITY OF HUNTINGTON BEACH
INTERDEPARTMENTAL COMMUNICATION
FINANCE DEPARTMENT
TO: PAUL EMERY, INTERIM CITY ADMINISTRATOR
FROM: DAN T.VILLELLA, CPA,FINANCE DIRECTOR
SUBJECT: FIS 2007-08-13 Approve to Hire Thomas W. Allen for Hearing Officer Services
and Authorize the Appropriation of$50,000 in connection with the
Condominium Restitution Fund Matter
DATE: APRIL 10,2008
As required by Resolution 4832, this Fiscal Impact Statement has been prepared for"Approve to
Hire Thomas W.Allen for Hearing Officer Services and Authorize the Appropriation of$50,000
in connection with the Condominium Restitution Fund Matter."
If the City Council approves this action (total appropriation for the General Fund of$50,000) the
Second Tier Reserve will be reduced to $8,524,300
an T. Villella
Finance Director
DTV/rs
ATTACHMENT NO. 3
o��NNa�NGTp,,B� OFFICE OF
qy CITY ATTORNEY
Q P.O. BOX 190 Paul D'Alessandro,Assistant City Attorney
ycF ppUNTV GP��4o 2000 Main Street Scott Field,Assistant City Attorney
Neal Moore,Sr.Deputy City Attorney
Huntington Beach,California 92648 Leonie Mulvihill,Sr.Deputy City Attorney
Jennifer McGrath Telephone: (714)536-5555 John Fujii,Sr.Deputy City Attorney
City Attorney Facsimile: (714)374-1590 Teresa Judd,Deputy City Attorney
Daniel Ohl,Deputy City Attorney
Sarah Sutton,Deputy City Attorney
Mike Vigliotta,Deputy City Attorney
DATE
To All Good Faith Purchasers Of An Illegally Converted Condominium In The City
Of Huntington Beach
Re: Court-Ordered Restitution Fund For The Benefit Of Victims Of Fraudulent
Condominium Conversions
Notice of Restitution Funds Available for Disbursement
You are being sent this notice because you may be entitled to restitution as a good faith
purchaser of an illegally converted condominium in the City of Huntington Beach. You
have 90 days from the date of this letter,postmarked no later than
[DATE when 90-day period ends] to complete and return the attached claim form and
all accompanying evidence (receipts, invoices, etc...) representing actual out-of-pocket
expenses that you can prove you suffered as a good faith purchaser of an illegally
converted condominium in the City of Huntington Beach. You must provide actual proof
of the amount of out-of-pocket expenses that you are claiming in the form of receipts,
invoices, and any other evidence that proves you were in fact a victim of this fraud and
are entitled to restitution.
Background
In 2004, an investigation by the City of Huntington Beach found that approximately 122
condominiums in the City were built without City permits and in violation of the City
code. The schemers used phony documents to sell the illegally converted condominiums.
Some buyers participated in the fraud by purchasing the condominiums with notice that
they were illegal conversions. However, many original and subsequent buyers were good
faith purchasers who purchased without notice and as a result, suffered out-of-pocket
expenses.
Helga/condos/Notice of Restitution Funds Available for Disbursement
DATE
Page 2 of 3
In October 2006, seven individual defendants were convicted in federal court and ordered
to pay approximately $679,000.00 in restitution to the victims of the illegally converted
condominiums. Each defendant is separately responsible for his/her share of the
restitution award. To date, the total restitution available for disbursement is
approximately $220,975.00, with only one defendant having paid his share in full.
Justice David Carter further ordered the restitution to be paid to the "City of Huntington
Beach in a segregated fund for the benefit of the good faith purchasers of the fraudulently
converted condominiums." Specifically, Justice Carter ordered that a restitution fund be
set up for the benefit of victims who actually incurred out-of-pocket expenses and notice
be sent to all potential good faith purchasers of the illegally converted condominiums.
However, Justice Carter did not indicate how the fund would be set up or how it would be
administered.
In an effort to identify and notify all potential victims, including all original and
subsequent good faith purchasers of the approximately $220,975.00 in restitution
currently available for disbursement, the City Attorney's Office conducted a chain of title
search dating back to December 1999 of each of the approximately 122 illegally
converted condominiums. Some condominiums have remained with the original buyer(s)
while others have had multiple subsequent buyers since December 1999. To date, the
City has identified and mailed notices to approximately 420 potential claimants. As
noted earlier however, not all buyers were good faith purchasers as some took with
knowledge that the condominiums were illegally converted. The City's objective,
however, is to notify all buyers so that all potential good faith purchasers are made aware
of the restitution monies available to the victims of the fraud.
Review Of Timely Returned Claims Before A Hearing Officer
All potential claims timely returned will be forwarded to an impartial hearing officer who
will have broad discretion to determine how and to whom the restitution monies available
to date should be distributed. The hearing officer will determine what hearings are
necessary and conduct the hearings he/she deems appropriate. The hearing officer may
also act as a claims administrator in making the final determination on how much and to
whom to award the available restitution monies based on the hearing officer's
comprehensive review of each individual claimant. The hearing officer may determine
that some claims are meritless and therefore,the claimant gets nothing. Alternatively,the
hearing officer may determine that all submitted claims are valid but the total amount
requested from each claimant exceeds the restitution monies available for distribution. In
that case,the hearing officer will make a determination on how best to distribute the
restitution money in approximate proportion of each claimants' actual out-of-pocket
expenses based on the total restitution available for distribution.
Furthermore,the hearing officer will determine who qualifies as a"bona fide purchaser"
and what qualifies as a legitimate "out-of-pocket" expense for restitution under Judge
Carter's Order. The hearing officer will be the ultimate authority on the (1) credibility of
the claims, (2) weight of the evidence and(3) adequacy of the evidence in determining
Helga/condos/Notice of Restitution Funds Available for Disbursement
DATE
Page 3 of 3
how much restitution to award to each claimant. Finally, the hearing officer will render a
written decision for each claimant.
What To Do If You Believe You Qualify For Restitution As A Good Faith Purchaser
If you believe that you are a good faith purchaser and victim of a fraudulently converted
condominium,you must complete the attached Claim Form and return it to the City of
Huntington Beach within 90-days from the date of this letter, postmarked no later than
[DATE] You must provide actual proof of the amount you are claiming,
in the form of receipts, invoices, and any other evidence that represents the amount of
actual out-of-pocket expenses you suffered as a good faith purchaser and victim of the
fraud. If you fail to respond to this letter with the stated 90-day period or if you timely
return your claim form without any actual proof of the amount of out-of-pocket expenses
you are claiming, your claim will be denied.
Helga/condos/Notice of Restitution Funds Available for Disbursement
ATTACHMENT NO , 4
Page I of 2
DATE
City of Huntington Beach
2000 Main Street
Huntington Beach, CA 92648
Attention: City Clerk
Subject: Claim for Restitution as a Victim of Illegally Converted Condominiums
CLAIM FORM
Claimant's-Name:
Assessor's Parcel No.
Parcel Address:
Claimant's Address [if different than parcel address]:
Phone Number and E-Mail Address [optional]:
Amount of out-of-pocket expenses you are claiming:
Please Note: You must provide actual proof(receipts,invoices,etc.)of the amount you are claiming
as a good faith purchaser of an illegally converted condominium. You must attach copies of all
your receipts and any other evidence proving the amount of actual out-of-pocket expenses you are
claiming with this claim form.Failure to provide proof of the amount you are claiming is a ground
for denial of your claim.
Are you the current record owner of this property? YES NO
Date that you acquired this property:
From whom did you acquire this property(name of grantor) and address(if known)
CLAIM FOR RESTITUTION
Pursuant to a court-ordered Restitution Fund ordered by U.S. District Court Judge David Carter, Central
District of California, in the matter of U.S. v. Harvey Dubose, Pamela Houchen,Michael McDonnell, and
Jeffrey Crandall,No. SACR 04-309 DOC(September 25,2006), Claimant is a victim in the above-
mentioned matter and seeks restitution for actual out-of-pocket expenses suffered as a good faith
purchaser of an illegally converted condominium in the City of Huntington Beach.
Page 2 of 2
GROUNDS
In 2004, an investigation by the City of Huntington Beach found that approximately 122 condominiums
in the City were built without City permits and in violation of the City code. The schemers used phony
documents to sell the illegally converted condominiums. Some buyers participated in the fraud by
purchasing the condominiums with notice that they were illegal conversions_ However, many original
and subsequent buyers were good faith purchasers who purchased without notice and as a result, suffered
out-of-pocket expenses.
In October 2006,seven individual defendants were convicted in federal court and ordered to pay
approximately$679,000.00 in restitution to the victims of the illegally converted condominiums. Each
defendant is separately responsible for his/her share of the restitution award. To date,the total restitution
available for disbursement is approximately$220,975.00,with only one defendant having paid his share
in full.
Justice David Carter further ordered the restitution to be paid to the"City of Huntington Beach in a
segregated fund for the benefit of the good faith purchasers of the fraudulently converted condominiums."
Specifically, Justice Carter ordered that a restitution fund be set up for the benefit of victims who actually
incurred out-of-pocket expenses and notice be sent to all potential good faith purchasers of the illegally
converted condominiums. However, Justice Carter did not indicate how the fund would be set up or how
it would be administered.
GOOD FAITH PURCHASER STATUS
I certify that I a—M a good faith purchaser of the above-meri'tioned Assessor`'s Parcel because I did not take
with notice that the condominium had been fraudulently converted when I purchased it,I had no way of
knowing or finding out about the fraud,and I did not participate in the fraud in any way and as a result, I
am a victim of the fraud.
TIMELY RETURN AND ACTUAL PROOF REQUIRED
I understand that if my claim form is not postmarked on or before [DATE],which is 90-
days from the date of this letter or if my claim is timely returned but without any actual proof or evidence
in the form of receipts,invoices,etc. representing the amount I am claiming,that my claim will be denied
and I will not be entitled to any restitution as a result.
PRAYER
For the foregoing reasons,Claimant requests restitution in the above-mentioned amount of actual out-of-
pocket expenses that Claimant suffered as a good faith purchaser and victim of an illegally converted
condominium in the City of Huntington Beach.
VERIFICATION
I certify upon penalty of perjury under the laws of the State of California that the foregoing is true and
correct and that this verification was executed on the date shown below.
DATED: SIGNED
RCA ROUTING SHEET
INITIATING DEPARTMENT: City Attorney's Office
SUBJECT: Appropriate Funds to Administer the Condo Conversion
Restitution Fund
COUNCIL MEETING DATE: , April 21, 2008
"'STAW,
-4114 ..............
RCA AITAGHMENTS
Ordinance (w/exhibits & legislative draft if applicable) Attached F]
Not Applicable N —
Resolution (w/exhibits & legislative draft if applicable) Attached El
Not Applicable
Tract Map, Location Map and/or other Exhibits Attached ❑
Not Appi cable
Contract/Agreement (w/exhibits if applicable) Attached z
(Signed in full by the City Attorney) Not Applicable El
Subleases, Third Party Agreements, etc. Attached El
(Approved as to form by City Attomey) Not Applicable
Certificates of Insurance (Approved by the City Attorney) Attached z
Not Appi cable El
Fiscal Impact Statement (Unbudgeted, over $5,000) Attached z
Not Applicable El
Bonds (If applicable) Attt Ap ached El
Noplicable z
Staff Report (If applicable) Attt Ap educable
cable
Commission, Board or Committee Report (if applicable) Attached ❑
Not Applicable
Findings/Conditions for Approval and/or Denial Attached F-1
Not Applicable z
T.,TAC-"HMENT---&1
EXP.,LANXT,110W FOR
"REVIEWED
y = z RETURNED ` FOR MMDE D
Administrative Staff
Deputy City Administrator (initial)
City Administrator (Initial)
City Clerk
EXPLANATION.F0RRE-%URN-,,-,0F'lTElVl-
(Below Space For City Clerk's Use Only)
RCA Author: JMM/HH
NOTICE OF PUBLIC HEARING
BEFORE THE CITY COUNCIL OF THE
CITY OF HUNTINGTON BEACH
NOTICE IS HEREBY GIVEN that a public hearing will be held by the City Council of the City of
Huntington Beach, in the Council Chambers of the Civic Center, Huntington Beach located at
2000 Main Street, at the hour of 6:00 PM, or as soon as possible thereafter on Monday, the 21st
of April, 2008 on the following:
❑ 1. The distribution of the restitution monies that are available for
disbursement pursuant to the court-ordered Restitution Fund established
for the benefit of the victims of fraudulent condominium conversions
ATTACHED TO THIS NOTICE AND ON FILE: A copy of the Request for Council Action
(RCA) and its attachments pertaining to the matter will be on file in the City Clerk's Office, 2000
Main Street, Huntington Beach, California 92648, for inspection by the public on Thursday, April
17, 2008.
ALL INTERESTED PERSONS (especially senior citizens and persons with disabilities) are
invited to attend to express their opinions for, or against, the distribution of the restitution
monies with written or oral comments. Written communications to the City Council also may be
mailed to the City Clerk. If there are any further questions please call the City Attorney's Office
at (714) 536-5555 and refer to the above items. Direct your written communications to the City
Clerk.
The City of Huntington Beach endeavors to accommodate persons of handicapped status in the
admission or access to, or treatment or employment in, city programs or activities. The City of
Huntington Beach is an equal opportunity employer.
City of Huntington Beach
Jennifer McGrath, City Attorney
2000 Main Street, 4th Floor
Huntington Beach, California 92648
(714) 536-5555
Huntington Beach Independent has been adjudged a newspaper of general
circulation in Huntington Beach and Orange County by Decree of the Superior
Court of Orange County.State of California,under date of Aug. 24, 1994,case
A50479.
PROOF OF
PUBLICATION
STATE OF CALIFORNIA )
) SS.
COUNTY OF ORANGE )
I am a Citizen of the United States and a
resident of the Count aforesaid; I am over �— ----
Y NOTICE OF PUBII(HEARING ALL INTERESTED
SONS (especially senior
the age of eighteen years, and not a party I BEFORE THE CITY COUNCIL Icitizens and persons.
OF THE CITY OF with disabilities) are in-
to or interested in the below entitled matter. 1 vited to attend to ex
_ HUNTINGTON BEACH press their opinions for,
I am a principal clerk of the HUNTINGTON - NOTICE IS HEREBY or against, the distribu-
GIVEN• that a public tion of the restitution'
BEACH INDEPENDENT, a newspaper of hearing Will be held by monies, with written or+
the City Council of the oral comments.�Written;
general circulation, printed and published in City of Huntington communications to the
Beach,' in the Council City Council .also may;
the City of Huntington Beach, County of Chambers of the Civic Ibe mailed to the City
,Center, Huntington (Clerk. If there are any
Orange, State of California, and the Beach cated t.2090 Ifurth'er questions please'
Main Strloeet;at tahe hour 1call the City Attorneys.
attached Notice is a true and complete copy of 6:00,PM, br as soon lOffice at (714)_ 536-'
as possible thereafter 15555 and refer•to the
as was printed and published on the on Monday, the 21st of above items. Direct
April, 2008 on the fol-j (your written communi-
following date(s): lowing: . (cations to the City
❑ 1. The distribution Clerk.
of The 'astituiion,mon- I The City of Huntington
Iles that are available, Beach endeavors to ac-
,for disbursement pur-, commodate persons of
,suant to the court- handicapped status in
iordered Restitution the admission or access'
Fund established for to, or,treatment or em-
April 3, 2008 the benefit of the vic-, ployment in, city 'pro-
tims of fraudulent con grams or activities. The
dominium conversions ' City_ of Huntington
ATTACHED TO' THIS Beach is an equal op-
NOTICE' AND ON FILE:; portunityerriployer.
A copy of the Request City of '
for Council Aition Huntington Beach .,
(RCA) and its attach-! Jennifer McGrath,
ments pertaining to the City Attorney '
mattbr will be on file in 2000 Main Street,
the City Clerk's Office, 4th Floor
2000-Main Street, Hun- Huntington I Beach,tington Beach, Califor- Califorgia 92648
nia 92648, for,inspec- (714)536-5555
tion by the public on Published Huntington'(
Thursday,
I declare, under penalty of perjury, that the
a_April 17,' Bedtelpe V' *2� y
foregoing is true and correct.
Executed on April 4, 2008
at Costa Mesa, California
Signature
Huntington Beach Independent has been adjudged a newspaper of general
circulation in Huntington Beach and Orange County by Decree of the Superior
Court of Orange County.State of California,under date of Aug. 24, 1994,case
A50479.
PROOF OF
PUBLICATION
STATE OF CALIFORNIA )
) SS.
COUNTY OF ORANGE )
I am a Citizen of the United States and a
resident of the County aforesaid; I am over rNOTICE OF PUBLIC HEARNIF, -ALL-INTERESTED PER-
the age of eighteen years and not a party BEFORE THE CITY COUNCIL SONS.(especially senior
, � citizens and persons
OF THE CITY OF with disabilities) are in-
to or interested in the below entitled matter. + HUNTINGTONBEA(HCH, I vited to attend to ex-
press their opinions for,
NOTICE IS HE
I am a principal clerk of the HUNTINGTON GIVEN that a public; or against, the distribu-
hearing will be held by tion of the restitution
BEACH INDEPENDENT, a newspaper of monies with written or
the City Council of thei oral comments. Written
general circulation, printed and published in IQity of Huntington communications to the
Beach, in the Council City Council also•may
the City of Huntington Beach, County of 'Chambers of the Civic be.mailed to the City
,Center, Huntington Clerk.' If there are any
Orange, State of California and the ;Beach located at 2000
g ' ' ,Main Street,at-the hour further'questions please
of 6:00 PM, or as soon call the City Attorney's
attached Notice is a true and complete copy as possible thereafter Office -at. (714) 536-
5555 and refer to the
as was printed and published on the on Monday, the 21st•of above items. Direct
April, 2008 on the fol-, your written communi-
following dates). lowing' cations to the City
❑ 1. The distribution Clerk-
' 'of,the restitution Mon-
ies that are availableI The
endeavors to ac-
for disbursement pur-1 commodate persons- of
suant to the court-,
I handicapped status in
,ordered Restitution the admission or access
Fund established for to, or treatment.or em-
the benefit of the vic-I
April 3, 2008 aims of fraudulent con- ;ployment in, city pro-
s conversions grams'or activities. The
'- ATTACHED TO THIS City of Huntington
Beach is an equal op-
NOTICE AND ON FILE: pdrtunity employer. .
�A copy of the Request; of
for Council' Action �- Hun
ti CingtonBeach
(RCA) and its attach- Jennifer McGrath,
ments pertaining to the City Attorney.
matter will be on file in j 2000 Main Street,
the City Clerk's Office, '4th Floor.
}2000 Main Street, Hun- Huntington Beach,
{tington Beach, Califor- California 92648 ,
III nia 92648, for inspec- (714)536-5555
tion by the public on Published Huntington
Thursday, April 17, Beach"Independent April
declare, under penalty of perjury, that the 2°°$- = 3,2008 041-518
foregoing is true and correct. i
Executed on April 4, 2008
at Costa Mesa, California
Signature
RECEIVED FROM ' ` ` /
AS PUBLIC RECORD FO CQ N I MEETING
16751 Green Street#A OF I
HB, CA 92649 CITY CLERK FFIC
BAN L.FLYNN,CITY CLERK
Michelle Howard- Current Owner
Even though when I purchased my condo it was disclosed that it was part of the condo
fraud scheme, the realtor lead me to believe the condo conversion was already completed,
which was not true. Therefore, I was also duped into buying a condo that needs the
following repairs to make it marketable and up to code:
1. acoustic walls
2. exterior water main pipes are plastic, not copper and there has been a slow leak
since before I owned the property
3. The driveway is cracked and sinking
Objectives: Things that do not include repairs needed to be done to bring the condo up to
code.
1. The use of the $50,000 to distribute our owner designated fund. The city of HB
should assume responsibility also.
2. The funs paid by Howard Richie should cover primarily the 12 units he illegally
converted. Since the other defendants were tricky enough to hide their assets,
why should we cover for their victims?
3. The proposal has not considered the current owners and the unconverted items
that are needed to be done to bring the condos up to code.
4. I understand that the people that were previous owners are also affected by this
illegal conversion. However, I do not feel the current owners are being
represented. If the previous owners made improvements that brought the condo
to code, then yes they should be given money,but if the upgrades they made were
for their own personal preference, then they should not be considered to receive
any of the money.
I'iiiiLfe«� t�rIiTFYC C?R( C CPC�I MEETING
CLEIF bO;3,Pv Le F_'Oflv,CITY CLERK
Good evening, I am Norma Rodriguez, one of the condo owners
involved in the condo conversion fraud at 16751 Green St. Thank
you for the opportunity to address this council.
After a careful review of the resolution fund proposal, I have the
following objections:
1) I find it totally unfair to use $50,000 out of the general
resolution fund to hire someone to make the distribution.
The city was designated by US District Judge David Carter to
handle this disembursment. Let's don't forget a city major
was a key player on this scheme fraud, consequently the city
must also assume responsibility.
2) The proposal fails to include the correctior�needed to bring
our condos to code. In our building the exterior water main
has plastic instead of copper pipes, no acoustic walls, termite
clearance did not take place, and the driveway has been
sinking and cracking in select places. Because a proper
inspection by the city did not take place, these abnormalities
were not corrected. If the distribution is to be fair, our needs
should also be considered. Equally important is a financial
compensation for our four years and nine months of pain,
anguish, and suffering.
3) Last, but not least, is the fact that only Mr. Howard Riche
paid his dues and he only converted 12 units, not 112. The
owners he did wrong should take priority in this process
1.
hv
"" .:.r=� COt71�IL
'A.t KkFaFICE _
FLYNN.CITY CLERK
Illegal%20Condo%20Restitution[1]
I am Michael stephano, one of the new condo owners at 16751 Green St.
I only discovered the fact that this property was illegally converted to a
condominium after I had committed to buying. At that time I was ensured that this
was only a matter of paperwork and that the condominium would soon be considered
legal due to an agreement with the City of Huntington Beach. However I have since
learned that my property is not yet up to code and some improvements need to be made
to make it so.
After reviewing the proposal by the city, I have the following three objections:
1. The use of $50,000 from the disbursement fund to engage the services of a hearing
officer seems rather exhorbitant to me. $50,000 is a significant percentage of the
funds available for disbursement and is therefore unreasonable to expect that
victims lose that portion for rightful compensation. It is the responsibility of the
City of Huntington Beach to properly allocate the funds instead of handing it off to
a third party, especially when the cost to do is unreasonably high.
2. The proposal includes reimbursement of only costs already incurred by victims. I
am a victim and have not yet incurred any out-of-pocket costs, but I am definitely
at a net loss due to the improvements required to bring our condominium complex up
to code. This includes acoustic walls, external copper piping, and driveway repairs.
3. It is unfair to use the fines paid by one particular defendant, Howard Richie, to
compensate everybody. It is clear that only victims of Howard Richie should be
compensated from the fines paid by him and that other victims should be paid by
their respective perpetrators.
Page 1
As PUBLIC REC�CL;EOFME
NCIL MEET►NG U
CF
JOAN L,RYNN,CITY CLERK
To Whom it may concern,
I am one of the original owners at 16751 Green St. I purchased unit# C in
October of 2002 with the understanding that it was a legal condominium. It was not
until approximately 6 months later that I was informed it was never approved by
the City of Huntington Beach. After the investigation led to the arrests and
convictions of several individuals including a city politician it still took several years
for this condo complex to finally be approved by the city in 2007. I have the
following issues with the restitution fund and how it should be disbursed:
1. The City's plan to use an outside source to disperse the funds for the fee of 50K is
excessive. This fund should be dispersed to the victims at the lowest possible
operating cost.
2. As for having to show proof of the expenses we have incurred, I find that rather
insulting as the stress put on all of the owners far exceeds the actual monies we had
to spend on this matter. The fact of not knowing whether your investment was
actually legally recognized as what it was advertised as should be reciept enough
that this fund should be dispersed to the victims equally. All of the owners are the
vcitims and we should all share in the restitution equally. I have spent
approximately 2K in regards to this matter. That total fails in comparison to the
time invested and the stress that this matter brought on for over 5 years.We were
defrauded and should not have to prove ourselves.
3. I firmly believe that Howard Ritchey's restitution fines should only be shared
with his victims as it was initially intended. I would not expect compensation from
the other parties involved in this scam as it was Howard Ritchey who defrauded the
owners of 16751 and 16741 Green St. by willingly mis-representing his properties
for sale for his financial gain.
Respectfully,
Joseph M. Limauro
PO Box 1449
Sunset Beach,CA 90742
Resident and owner of 16751 Green St. Unit# C