Atascadero leaders have something to hide

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Benjamin Franklin is credited with saying, “Three can keep a secret if two are dead.�
   
The implication, of course, is that the only way to keep information private is to keep it to yourself. Unfortunately for public officials—especially public officials who may have broken the law—secrets are hard to keep to just one person, let alone three. Or more.
 

# Throughout this past year, allegations that Atascadero city officials sanctioned and used the threat of eminent domain to force downtown property owners Pat and Sue Gaughan to sell their property across from the Carlton Hotel on El Camino Real—at a below-market price—have led to an onslaught of conflicting statements, finger pointing, smoke screens, and possible criminal acts that spring from trying to keep secrets. More than three people are involved, and more than two of them might wish that they were dead when everything comes to light.
 
According to Terry Francke—an attorney with the California First Amendment Coalition and author of The New Brown Act—the actions of the council, the city manager, and the city attorney may have opened the city and its officials up to legal repercussions. Allegations of potentially damaging actions include that the Atascadero City Council used closed-session meetings, typically reserved for a few exceptional circumstances and topics under the Brown Act, to discuss possibly embarrassing—though not permitted—subjects; that the city didn’t allow a property owner the option to redevelop his own property before the city decided to move ahead with the process of eminent domain; that the council attempted to call for the resignation of Redevelopment Agency Deputy Director Marty Tracey in an improperly noticed closed session; and that the city council unjustly reprimanded Tracey.
 

# The Atascadero City Council met in closed session on June 27 to discuss whether or not to release to New Times a revealing document concerning possible eminent domain threats. According to a city staff member, who wished to remain anonymous, that document outlines the results of an investigation into whether or not Tracey threatened the Gaughans.
 
The closed session resulted in a letter to New Times from the city, preventing access to the document.
 
“Your request is respectfully denied,� the letter states.
 
James Ewart, an attorney with the California Newspaper Publishers Association (CNPA), said that the city’s actions are downright criminal.
 
“The council’s egregious behavior and stance on records is a clear brazen resistance to the law,� he explained.

How the story began
In February 2005, the Gaughans came home to find a message on their answering machine. That message was from Tracey, warning the partially retired couple that the city council—during a closed-session meeting—had directed staff to move forward on the process of eminent domain on the Gaughans’ property.
 

# When questioned about the call in October of that year, City Attorney Patrick Enright, then-mayor Wendy Scalise, and two council members claimed that the city hadn’t started any such proceedings. They labeled Tracey as a rogue employee who didn’t attend closed-session meetings. That rogue, they said, would be dealt with.
 
In response to the subsequent fallout that shook the community, the council also held a special closed session to look into City Manager Wade McKinney’s job performance—due to undisclosed circumstances, according to the council’s agenda. During that session, the council exonerated McKinney, gave him a vote of confidence, and voted unanimously to call for Tracey’s resignation. The meeting appears to have been improperly noticed, which would potentially constitute a violation of the Brown Act.
 
According to government code section 54957, an employee shall be given 24 hours written notice of his or her right to have charges heard in an open session—rather than a closed one—which didn’t happen in this case. Also, the city failed to post Tracey’s name on the agenda, which is also a requirement of the Brown Act.
 
McKinney asked Tracey to resign and placed the beleaguered chief of redevelopment on paid administrative leave.
 
Tracey fought back, said he had been moving forward on the process of eminent domain under McKinney’s direction, and hired a lawyer.
 
Following accusations of breaking the Brown Act, the council announced its decision—during a regular council session on Nov. 7, 2005—to rescind its request for Tracey’s resignation. Then-mayor Scalise announced that Tracey would be back to work, possibly by the next day.
 
Tracey, however, remained on paid administrative leave while Ron Scholor—an attorney with the city’s Sacramento-based law firm—carried out an extensive investigation into charges that Tracey had threatened the Gaughans.
What they don’t know can’t hurt us
 
Three months later, Scholor sent the investigation results to McKinney, who, according to policy, decides on and implements staff disciplinary actions for the city. Tracey returned to work on Feb. 13 of this year with a change in title, a change in duties, and a pay cut. City officials claim that the results of the investigation can’t be released due to employee confidentiality matters and attorney-client privilege.
 
CNPA’s Ewart, however, said that the city couldn’t legitimately refuse a request for the investigation results because the investigation concerned Tracey’s performance as a public employee, not his private life. Also, Ewart explained, when the city provided Tracey—the potential litigant in the investigation—with a copy of the report, attorney-client privilege and the claim of privacy were waived.
 
According to California Code and case law, “The personnel exemption under the California Public Records Act was developed to protect intimate details of personal and family life, not business judgments and relationships.�
 
In response to a New Times request for the report, City Manager McKinney and City Attorney Enright scheduled a closed-session council meeting, which appeared on the June 27 agenda as “significant exposure to litigation.� Such sessions are typically held to discuss a suit that’s been filed against the city or a verbal claim of impending litigation made in an open public meeting, according to a city staff member, who wished to remain anonymous.
 
In this case, however, multiple city officials confirmed that the purpose of the session was to discuss the possibility of a lawsuit if the city decided to hold back on releasing the investigation. As a result, the city sent a letter of refusal to New Times, and City Attorney Enright refused to comment.
 
“The closed session permits members of the council and their legal council to discuss litigation exposure. It does not permit any discussion of intentionally violating the Brown Act,� CNPA’s Ewart said. “When they decided to thwart their obligation and duty under the public records act and the Constitution, they violated the Brown Act.�

Sacrificial lamb
In the meantime, a number of Atascadero city officials have leaked portions of the investigation and Tracey’s reprimand. Rather than painting Tracey as a rogue employee who was working on his own agenda, the investigation seems to exonerate him. 
 

# “I believe Tracey was the sacrificial lamb in an attempt to protect McKinney and the city council from scrutiny,� said Pat Gaughan, who received the eminent-domain phone message that set off this whole chain of events.
 
The leaked portions of the investigation seem to show that Tracey wasn’t lowered in rank for threatening the Gaughans. Instead, he was demoted for placing his hand in front of his face when a New Times photographer took his picture. McKinney also allegedly reprimanded Tracey in regard to his phone call to the Gaughans—though not for any threats or lies. Instead, it seems Tracey was punished for talking down to the Gaughans and for informing the unsuspecting property owners of the city’s plans.
 
“You can’t reprimand a city employee for putting his hand in front of his face,� the First Amendment Coalition’s Francke said. “The reprimand gives him an excellent suit against the city.�

Parcel of prime property
In July 2004, the city offered to purchase the Gaughans’ property for an amount not to exceed $1.1 million, depending on the outcome of an appraisal and environmental study. In January 2005, local developer Kelly Gearhart offered the Gaughans $1.1 million for the property, matching the city’s greatest possible offer. The Gaughans refused both.
 

# According to eminent-domain law, the owner of the property being taken is entitled to the highest price for the property—at optimal use—agreed to by a seller under no urgent need to sell.
 
In the fall of 2005, a private developer offered an amount more than 50 percent greater than the city’s most recent offer to purchase the property. The Gaughans accepted.
 
City Manager McKinney, developer Gearhart, Councilman Tom O’Malley, and ex-councilwoman Scalise have not responded to numerous requests for comment on the city’s and Gearhart’s interest in the property. City officials and the Gaughans have both confirmed that a rendering of Gearhart’s plans for the Gaughan property hung in a prominent position on the wall of the city’s redevelopment agency during most of 2005.
 
Though some members of the city council now admit that Tracey was in the closed-session meeting on Feb. 22, 2005—in which the Gaughan property acquisition was discussed—they continue to claim that the council didn’t plan to go ahead with eminent-domain proceedings. Even though the city was interested in purchasing the property, these council members say, there weren’t any approved plans for the land.
 
 â€œI am not a fan of eminent domain, and don’t think I would have voted for it,â€? said Councilman Jerry Clay. “I am in favor of letting the market take care of itself.â€?
 
That’s a sentiment echoed by Councilwoman Becky Pacas.
 
“I would not have supported taking any property by eminent domain unless it was necessary for public safety,� she said.
 
Tracey, however, claimed that the council agreed to begin the process of eminent domain in closed session.
 
The closed session meeting—listed on the agenda as “conference with negotiator over real property�—seems to have violated the Brown Act, as the only item permitted for discussion in such a meeting is the purchase price, said the First Amendment Coalition’s Francke.

Moving on
Despite Atascadero City Council members’ denial of plans to move forward with eminent domain, it appears that the process had already begun, with or without council approval. On April 27, 2005, City Attorney Enright’s firm filed a court action to allow the city access to the Gaughans’ property for an environmental study, using eminent-domain law as justification. In an offer from the city to purchase the property for $950,000—dated Oct. 12, 2005—the Gaughans were threatened with the possibility of eminent domain if they refused to sell.
 
“We had planned to live off the income from renting the property,� Pat Gaughan said. “When we first heard there was a good possibility we would lose the property through eminent domain, we asked the city to allow us to participate in the redevelopment, but city staff refused to allow us to develop our own property.�
 
According to Atascadero’s redevelopment plan and eminent domain law, property owners are to be allowed to participate in the development or improvement of their property.

Happily ever after
On Nov. 9, 2005, the city agreed to rescind all eminent-domain proceedings against the Gaughans in a meeting in which the Gaughans’ attorney, Roy Ogden, asked the city to “back out and allow the Gaughans to sell their property.�
 
On May 1 of this year, Tracey demanded a public hearing—scheduled for this upcoming August—to not only fight the disciplinary actions implemented against him by City Manager McKinney, but to exonerate himself while informing the public of the inner workings of the city.
 
“I want the issues to be made public. That’s why I’ve requested a public hearing,� Tracey said in May. “They wanted me—figuratively speaking—dead. Dead. This has been the worst thing that has ever happened to me.�
 
The public, however, won’t become privy to the case as a result of the Tracey hearing. Tracey was fully reinstated last month, the city took back all prior actions against the employee and produced the questionable reprimand, and councilwoman Scalise resigned, citing health reasons.
 
Because of the secrecy involved in Tracey’s demotion and reinstatement, the public is still unaware that he may not be the perceived monster responsible for trying to snatch the Gaughans’ property out from under them.
 
“My reputation has been damaged,� Tracey said in May. “Just type my name into a Google search. I couldn’t get another job if I wanted to.�
 
Meanwhile, the Gaughans plan to file a claim against the city to recoup the financial losses they’ve incurred.
 
“The city forced the Gaughans to sell their property to a developer,� said Ogden, the Gaughans’ attorney.
 
Though some council members agree that their actions might have violated the Brown Act, they claim to have based their exploits on the advice of City Attorney Enright and City Manager McKinney.
 
McKinney has yet to return numerous phone calls. Enright, however, has defended himself against the allegations of Brown Act violations.
 
“As far as I know, we haven’t violated the Brown Act,� Enright said. “We have had valid reasons for meeting in closed session.�
 
“If they’re claiming the violations are not their fault—not an excuse, anyway—it is time to find a new city attorney and a city manager that know the Brown Act,� attorney Ewart said. “The city’s brazen behavior is clearly in conflict with the law.� ∆

The public’s right to know
In 1953, then-assemblyman Ralph M. Brown enacted the Brown Act to safeguard the public’s right to access and to participate in government meetings. Brown sponsored the act to prohibit secret meetings—except under exceptional circumstances—in response to mounting public concern over public officials holding informal, undisclosed meetings that didn’t abide by advance public notice requirements and were, instead, secret workshops and study sessions. Officials who violate the Brown Act can face up to six months in jail. The district attorney’s office is responsible for dealing with Brown Act violations.
 
The California Public Records Act was established in 1968 to provide citizens access to public records and to improve the accountability of state and local government. According to the act, “Access to information concerning the conduct of the people’s business is a fundamental and necessary right of every person in this state.�

Staff Writer Karen Velie can be reached at kvelie@newtimesslo.com.

This article appears in Jul 13-20, 2006.