In Loaning Money, San Juan May Have Made Costly Mistake

The Jan. 6 article “City Loans Its Manager $398,235 Over 10 Years” made some things very clear.

First, that the San Juan Capistrano City Council members who participated in this fiasco are remarkably arrogant.

Second, that their attitude toward their duty to the citizens of San Juan, particularly but not limited to the disposition of the citizens’ money, is uncommonly casual.

Third, that the council does not have the kind of employer-employee relationship it ought to have with Stephen B. Julian, the city manager.

Fourth, that Mr. Julian is apparently unable to live within his means and is perhaps not financially healthy enough to obtain bank loans. Is it wise for San Juan to continue to employ such a person as its top official?

And last, that no one in the city Administration seems to have successfully completed their fourth-grade arithmetic lessons. Let’s see if I’m up to it. The city loaned Mr. Julian $250,000 to buy a house. He bought a house for just $207,500. What happened to the remaining $42,500? And did he have no down payment of his own?

Later Mr. Julian sold the house back to the city for $280,000--a profit of $72,500. He still owed his lender (the city) $86,095, but his lender didn’t ask to have the loan paid down with these profits.

Maybe the council members were in elementary school during the time of the “new math,” or maybe these “word problems” were too tricky for them. It all seems to have Mr. Julian quite befuddled, since he is quoted as saying that the “city is at no risk” because it is “my money.”

Kenneth E. Friess, the current mayor, explains away the whole dilemma succinctly when he says that he personally would have granted all the loans to Mr. Julian “as salary . . . the man has done an excellent job.” It seems to me that Mr. Julian’s annual salary of $125,644 to $152,345 (heaven forbid that the citizens of San Juan should know the exact figure) is quite handsome. But if he’s so fab, why not just raise his wages? Is it taboo in San Juan to do something aboveboard?

Alas for the council, San Juan is no longer the backwater ranching community it once was. Back-room deals are being brought to light, and dirty laundry is showing up in the best of neighborhoods. Brace yourselves, fellow Titanic passengers, this is almost certainly the merest tip of the iceberg.

GILA JONES, San Juan Capistrano