Ex-Board Members’ Contract Questioned : Santa Ana: A couple resigned appointive city posts, and then their consulting firm soon won a $340,000 redevelopment deal.

Several city officials are questioning a $340,000 consulting contract that was awarded last month to a firm owned by two former city board members who resigned their posts so they could bid on the contract.

When Kathleen Rosenow resigned earlier this year from the Community Redevelopment Commission, she explained that her eight-year membership on the board had prevented her consulting firm from doing business with the city. By stepping down, she said, she would be free of any conflict-of-interest restrictions.

Several weeks later, on April 1, the City Council officially accepted the resignation of Frank Spevacek, Rosenow’s husband, from the Planning Commission.

The next day, the Redevelopment Commission awarded the Rosenow Spevacek Group Inc. a $340,000 contract to amend redevelopment plans in four ongoing project areas. The City Council, acting as the Community Redevelopment Agency, later ratified the agreement.

That contract has come under fire from some current and former city officials who say that while Rosenow and Spevacek may have avoided a conflict of interest by resigning their commission posts before being awarded the contract, they question whether the couple had access to information that could have given their firm an unfair advantage over competing bidders.

However, the city manager, community development director and city attorney all say proper procedures were followed in the contract award.

City Atty. Edward J. Cooper said the only concern that arose was whether Spevacek should resign from the Planning Commission, even though that panel would not be voting on the consulting contract.

“We determined it would be better if he not be on the commission,” Cooper said.

But Councilman John Acosta disagreed. After voting in favor of awarding the contract to Rosenow Spevacek Group, Acosta said he later began to question whether the events leading up to the contract approval were carefully reviewed.

“It just does not look good on the surface,” he said. “It’s almost like saying, ‘Resign. We are going to give you a contract.’ ”

Rosenow said neither she nor her husband did anything wrong and that neither of them ever voted on any items concerning the contract while they were members of the city commissions. She maintained that she and her husband resigned from the commissions specifically because they wanted to avoid any conflict of interest.

“I don’t think that this is a conflicting situation,” Rosenow said. “I don’t think they (critics) should penalize those who have the experience and abilities to perform on contracts.”

Rosenow Spevacek Group Inc., a consulting firm specializing in redevelopment planning of blighted areas, has an extensive list of clients throughout Southern California. As part of the new contract with the city, the firm will prepare an environmental study of the Inter-City, South Main, North Harbor and South Harbor redevelopment projects, and prepare amendments to extend the redevelopment agency’s power to acquire property through eminent domain.

The Redevelopment Commission normally approves the solicitation of bids from consulting firms, but it did not do so in the case involving the Rosenow Spevacek Group, according to the minutes of the commission’s meetings.

While the city staff is not legally required to ask the commission for authorization to seek bids for professional services, it usually does so “to make the commission aware of what we are doing,” city Redevelopment and Real Estate Manager Robert Hoffman said.

Cindy Nelson, Community Development Agency executive director, said the oversight in this case was caused by miscommunication among staffers. Rushed to meet the project deadline and get the requests for proposals out to prospective bidders, Nelson said, Hoffman did not get the item placed on a commission meeting agenda in time for advance approval.

Hoffman said, however, that the commission had been aware for some time that the work would be needed, and the staff may not have felt pressed to take it to the commission.

Rosenow said that as a commissioner, she was aware that the city’s redevelopment plans would need amending, but that knowledge did not give her an inside track into the development of the bid package for the consulting contract.

She added that the two other firms that also bid on the contract--Katz Hollis Coren & Associates Inc. and Fugro McClelland-- both in the Los Angeles area--probably knew as much or more about the city’s requirements for the job.

One of the firms, Katz Hollis Coren & Associates, “has worked for the city for years and helped create all of their existing redevelopment project areas,” Rosenow said. “If anyone had an insider position, based on their knowledge of the technical plans, they did.”

Officials for both firms declined to comment on the contract selection process.

Rosenow, who was reappointed to the Redevelopment Commission in December, announced at the Feb. 5 meeting that she would be stepping down.

A month later, the commission officially commended her and another departing commissioner, John Raya, for their service. The contract issue was not on the agenda, but at the conclusion of the meeting, the agency’s executive director advised the commission that the request for proposals for the consulting contract had been issued.

In what the staff concedes was a quick “turn-around” for professional service contract bids, the request for proposals was sent out Feb. 22, with a submission deadline of March 18.

A week after the deadline for bids, Spevacek resigned from the Planning Commission. He did so after seeking the advice of Cooper, the city attorney, who said that even though the Planning Commission would not be voting on the Rosenow-Spevacek contract, the commissioners eventually would review the plan amendments developed by the firm.

On April 1, the City Council officially accepted Spevacek’s resignation, and the next day, the Redevelopment Commission approved the contract.

According to minutes of the commission meeting, the staff said it was recommending that the contract go to Rosenow Spevacek Group because of the firm’s knowledge of city operations, its involvement in the community, and because it was the only local firm that submitted a bid. The bids from the three firms were close in terms of cost, with Rosenow Spevacek Group’s falling in the middle.

A staff memo to the council stated that the Rosenow Spevacek Group would be expected to “expedite preparation of the amendments, due to the firm’s familiarity with city procedures, organizational structure and staff.”

Hoffman later explained that the controversy surrounding the Bristol Street redevelopment plan--handled by Katz Hollis Coren & Associates--had demonstrated the need for a local firm. That plan ended up in court over condemnation of property.

When the City Council approved the Rosenow Spevacek contract in mid-April, Councilman Daniel E. Griset abstained from the vote, citing a conflict of interest. Griset, an insurance agent, has sold insurance to Rosenow and Spevacek and also leases office space from them.

Raya, who left the commission at the same time as Rosenow, has suggested that a law be passed prohibiting officials from doing business with the city for one year after leaving their public posts.

“I am not going to question her honesty in dealing with the city,” Raya said, commending Rosenow’s service on the Redevelopment Commission. “But it’s a question of that perception of propriety. That’s a fair issue that comes up.”

Appointed to the commission by Councilman Richards L. Norton, Raya lost his seat in February in a power play orchestrated by Mayor Daniel H. Young to remove Norton’s appointees from key city commissions. Because of that, Raya said, he was reluctant at first to raise questions about the contract publicly.

Former Planning Commissioner George Hanna, who was removed under the same circumstances, echoed Raya’s sentiments.

“Maybe they (Rosenow and Spevacek) have covered all the legal bases, but it’s very strange,” Hanna said. “They have the inside dope, they have the inside track on what’s taking place over there.”

Redevelopment Commissioner Harold H. Gosse Jr. said his vote for the Rosenow-Spevacek contract was based on the staff’s recommendation. But since then, he said, a “diverse group” of individuals has questioned the timing of the resignations and the contract approval.

But Redevelopment Commission Chairman Victor Alleman said criticism of the contract is coming from the mayor’s political opponents who are trying to stir up controversy.

“All of these things are brought up as harassment,” Alleman said. “What they are saying is that anyone who is active and volunteers for things can never participate in their professional (capacity), and that is wrong. I am sure Kathleen made sure it was done right.”

Contract’s History

The following is a chronology of events leading up to the awarding of a $340,000 redevelopment contract to Rosenow Spevacek Group Inc. The Santa Ana consulting firm is owned by Kathleen Rosenow, a former city redevelopment commissioner, and her husband, Frank Spevacek, a former city planning commissioner.

* Feb. 5, 1991--Kathleen Rosenow announces her resignation from the Community Redevelopment Commission.

* Feb. 22--The city staff sends requests for proposals to prospective consulting firms to develop plan amendments for four ongoing redevelopment projects.

* March 5--Rosenow receives from commissioners a commendation for her service. At the conclusion of the meeting, the Community Redevelopment Agency’s executive director advises commissioners that a consultant is being sought to develop the plan amendments.

* March 18--Bids for the project are submitted by three companies, including Rosenow Spevacek Group.

* March 26--The city clerk’s office receives a letter from Rosenow’s husband, Frank Spevacek, offering his resignation from the city Planning Commission.

* April 1--The City Council officially accepts Spevacek’s resignation.

* April 2--The Community Redevelopment Commission votes to give the $340,000 contract to Rosenow Spevacek Group. The vote is ratified two weeks later by the City Council, acting as the Community Redevelopment Agency.