Mayor’s Votes Under Scrutiny

Huntington Beach Mayor Dave Garofalo voted repeatedly in favor of a developer who at the time placed him on a VIP list to buy the most coveted lot in the company’s upscale housing project.

Garofalo, then a councilman, cast eight of the votes while the home was in escrow, and jumped ahead of about 300 people on a waiting list to buy the first of 70 houses in the gated St. Augustine community, a development of PLC Land Co. Escrow closed in July 1998, and records show that he sold the 2,730-square-foot home with four bedrooms and 3 1/2 bathrooms to a friend the next day for an additional $60,000.

Five people on the waiting list said recently that it took up to a year to be chosen, after a rigorous process that included prequalifying for a loan and attending mandatory drawings. At the first drawing in 1998, the 7,132-square-foot corner lot with a sweeping view of the Pacific bought by Garofalo already had a red “sold” button on a model, they said.

“We found out right off the bat that [Garofalo] got it,” said Dave Hicks, an engineer and president of the neighborhood homeowners association. “Everybody rolled their eyes when we heard who got the best house. None of us had that opportunity.”

Garofalo has denied getting favorable treatment. He said last month that he wanted to buy a house in St. Augustine “as soon as the plans were made public.” He called the builder in early 1998 when the first homes were being built, he said.

“When it was my turn, I selected the lot that I most wanted,” he said. “It was available.”

Garofalo insisted in an interview with The Times last month that he attended the first drawing with other potential home buyers.

“I’ve never been told I was No. 1 on the list,” he said. “We all went to an open house Saturday morning. Everybody waited in line with their cars and we all went in and if the house you wanted was available, then that was the house that you got.”

However, four people on the waiting list who attended the first drawing said that they didn’t see Garofalo--who they said they would have recognized--and that they never heard his name called.

“It’s an absolute fact that he wasn’t on the list,” said Timothy Wetzel, who said he put his own name on the list in summer 1997, several months before Garofalo said he called. Wetzel started at No. 220 and improved to No. 110 before he finally bought a house in the development.

The home purchase is among several conflict-of-interest questions involving Garofalo and his relationships with people doing business with the city. Late last week, Dist. Atty. Tony Rackauckas’ office began an investigation into Garofalo’s voting record and his involvement with several local publications he has owned, as well as his purchase of the St. Augustine home.

Garofalo has denied benefiting from advertising revenue since December 1997 for his bimonthly newspaper and the city’s annual Visitors Guide, which he has published since 1994, the year he joined the council. He said he sold his publishing rights to Coatings Resource, a paint manufacturing company owned by a friend.

State law bars elected officials from voting for a year on matters involving those who have given them $250 or more. An official also cannot be involved in votes or deliberations if it is likely that the outcome would have an “important impact” on that official’s economic interests.

In June, City Atty. Gail Hutton advised Garofalo to abstain on council matters involving advertisers--including PLC, which advertised in the 1998 Visitors Guide--until the state Fair Political Practices Commission rules on the propriety of his votes. However, she said last week that she hasn’t yet sent her request to the FPPC while awaiting more information from Garofalo.

If Garofalo made money on the St. Augustine sale, which he denies, his six votes alone in the year following that transaction could pose a conflict-of-interest problem.

Sales documents recorded with the county show that Garofalo opened escrow in March 1998 on 19031 Poppy Hill Circle in St. Augustine. He said he got the money from a friend, George Pearson, to whom he had agreed to sell the house after finding another home on Main Street in a different part of town.

He also said he couldn’t afford the house and was “doing [Pearson] a favor” by selling it to him. He said he didn’t remember if he put down the $5,000 deposit required of potential home buyers.

On July 27, 1998, the Poppy Hill Circle house was recorded as sold to Garofalo for $565,000. One day later, he sold it to Pearson for $625,000. He said the difference was for upgrades chosen by Pearson and that his profit was $1. An executive with Christopher Homes said upgrades are completed before sale and included in the original purchase price.

William Holman, director of planning for PLC Land Co., referred questions about the sale to Christopher Gibbs, a partner in PLC and president of Christopher Homes, which built the St. Augustine tract. Gibbs could not be reached for comment after repeated attempts.

However, in a Jan. 24, 1998, sales memo, Gibbs wrote that the company reserved the right to “sell properties to individuals, including employees, prior to sales to the general public.”

Garofalo said last month that he and Pearson agreed to the house deal after meeting for lunch.

“I’m having lunch with my priest and George Pearson and I’m saying, ‘You know, it’s crazy. I get so lucky in getting this house and now I have to turn it in because I found this house on Main Street,’ ” Garofalo said in the interview. “And George said, ‘Hey, I’m on the waiting list for phase four. That’s the house I want.’ ”

Garofalo bought his current house at 630 Main St. with $82,600 down. Public documents show that Garofalo had sold his home of nearly five years on Fairway Lane on Sept. 4, 1997, at the selling price of $220,500--a $5,500 profit. He lived at a motel in the interim.

Garofalo’s first vote as a councilman involving the St. Augustine property was in March 1995, when the city approved a routine review of the development agreement for Holly Seacliff, which includes St. Augustine. PLC first appeared before the City Council in 1996, when the company requested the purchase of 448 acres of Holly Seacliff. The council approved the sale of homes in St. Augustine in January 1997.

Overall, Garofalo voted 56 times on approvals needed by PLC for Holly Seacliff between March 1995 and this past April. Of those, 26 votes were cast after Garofalo said he called the developer to say he wanted to buy a home. All but seven of the council votes were unanimous.

In December 1996, Garofalo was one of three council members placed on a committee to meet with staff, PLC officials and neighborhood property owners over reimbursement issues for Holly Seacliff.

At stake were millions: PLC wanted the city to reimburse or cut costs totaling at least $32 million for street, sewage, storm drain and water improvements, according to a report prepared for the city by Boyle Engineering. Boyle ultimately recommended less than $2 million in reimbursements, and PLC sued Huntington Beach over the amount.

Council members Tom Harman and Shirley Detloff, who also served on the committee, said it disbanded in late 1998 when PLC sued the city over an impasse on the reimbursement agreement. They didn’t remember Garofalo favoring PLC.

In April, Garofalo joined in a unanimous vote to settle the suit by agreeing to pay PLC $6.4 million. The bulk of the money was repayment of part of PLC’s cost in building a 9-million-gallon reservoir.

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Times staff writer Meg James contributed to this story.