SAN JUAN CAPISTRANO : Outside Review of Julian Loans OKd

In the wake of a district attorney’s office decision not to investigate the municipal loan transactions of City Manager Stephen B. Julian, the city has decided to go ahead with plans for an independent review to be conducted by outside lawyers and accountants.

The City Council voted last month to hire the outside specialists if the district attorney’s office turned down the council’s request to investigate. Prosecutors on Friday declined to investigate, citing no evidence of any crime.

Mayor Kenneth E. Friess had indicated Friday he was reluctant to hire the lawyers and accountants but would follow the will of his colleagues. Friess has said that the loan transactions with Julian have been entirely straightforward.

“From a personal standpoint, I didn’t want to do it,” said Friess, referring to the decision to go ahead with the outside review. “But that was not the direction I got from my fellow members of the council. I wanted to delay this and talk about it.”

City Councilmen Gil Jones and Lawrence F. Buchheim were among those who disagreed, however, and insisted the outside firms be hired.

“We said we would do this and let’s do it. I want to get this thing past us,” Jones said.

The law firm of Whitmore, Kay & Stevens of Palo Alto was sent a contract for an amount not to exceed $10,000 to analyze the city’s dealings with Julian.

The accounting firm of Coopers & Lybrand in San Diego was sent a contract for 80 hours of work at $75 an hour for the audit, Assistant City Manager George Scarborough said.

The council’s request for a legal review and audit followed news reports in January that Julian had obtained five city loans since 1981, incurring debts totaling $398,235. As of February, Julian still owed the city about $80,000 at no interest.

Julian has said that the municipal loan transactions were proper and that he has nothing to fear from an outside review.