Memo Indicates Illegal Acts in Placentia Rail-Consulting Deal

A former Placentia public-works director probably broke state law by arranging for himself a lucrative consulting contract to oversee the city’s $400-million OnTrac rail project, confidential city records show.

The legal opinion by Placentia City Atty. Thomas Nixon concluded that OnTrac Executive Director Christopher Becker -- who won the contract without competition shortly after seeking it in 2000 -- violated state conflict-of-interest laws that forbid public officials from influencing government contracts in which they have a financial interest.

Should a court conclude that the consulting contract, worth $4.5 million over 10 years, was indeed improper, Becker would be subject to potential civil or criminal penalties, Nixon concluded. He also might be required to return almost $830,000 in consulting fees to the city.

After the opinion was issued in January 2003, the city modified his contract in an attempt to correct the situation. But critics maintain this did not resolve the central legal problem: the conflict of interest that occurred three years earlier when the contract was granted.

A City Council member, the city’s longtime elected treasurer and a group of community activists have requested an investigation by the Orange County district attorney’s office. They contacted prosecutors June 21.

“I believe there is a conflict of interest,” said City Treasurer Carolyn H. Davis, who has been in office since 1985. “I am saddened by the city’s situation and the lack of city funds because of all the money spent for OnTrac.”

Ontrac -- an ambitious project to lower five miles of railroad tracks into a concrete trench so the city’s aging downtown can be revitalized -- has been a source of controversy and frustration over the months as it has drained city reserves.

Town leaders have cut programs, auctioned off parkland, sold bonds and once considered eliminating Placentia’s police force in an effort to keep the project going.

Becker and retired City Manager Robert D’Amato -- to whom the legal opinion was directed -- could not be reached for comment, and OnTrac attorney George McFarlin did not return calls. D’Amato left office in December as controversy swirled around the crumbling finances of the city and OnTrac.

Nixon and acting City Manager Ray Griest said they could not discuss the memo because of the attorney-client relationship and city prohibitions against commenting on confidential information.

The legal memorandum obtained by The Times is the first official indication of wrongdoing related to OnTrac, a faltering public-works project that has plunged Placentia at least $22 million in debt.

Today, the project, which is run by a board of city officials, owes at least $10 million to Burlington Northern Santa Fe Railway Co. for track work and to Office Depot for property purchased for right of way.

OnTrac officials hope the federal government will grant $200 million to the project and the state will restore almost $12 million in funding delayed by the state budget crisis. They also have requested a $5.6-million loan from the Orange County Transportation Authority.

More than 18 months ago, when activists began to complain about OnTrac’s expenses and Becker’s lucrative contract, Nixon reviewed the executive director’s contract. He concluded in a legal opinion dated Jan. 15, 2003, that Becker had violated state conflict-of-interest laws.

“If a court reviews this matter,” Nixon wrote, “it will likely conclude that Chris Becker’s actions” as OnTrac executive director in which he recommended his own hiring as a private consultant “constituted a violation of Government Code section 1090.”

The provision states that “members of the Legislature, state, county, district, judicial district, and city officers or employees shall not be financially interested in any contract made by them in their official capacity, or by any body or board of which they are members.”

State conflict-of-interest laws were written specifically to stop financial self-dealing by government employees, said Robert Stern, president of the Center for Governmental Studies in Los Angeles and a co-author of the state’s Political Reform Act.

“The whole idea of conflict-of-interest laws and rules is that you can’t serve two masters,” he said. “Decisions have to be made free of economic bias and in the public’s interest.”

On April 25, 2000, the city awarded Becker -- its public works director -- a 10-year, $4.5-million consulting contract to run OnTrac. In addition, it stated that Becker could collect 15% of any fees paid to other consultants for overseeing their work.

Becker also was allowed to keep his job as public works director, but had to reimburse the city for his annual salary out of his consulting fees -- a deal that permitted him to keep his health and retirement benefits. His pay as public works director ranged from $118,000 to $125,000.

The legal opinion states that before the consulting contract was awarded, Becker suggested salary terms and recommended to the OnTrac board that he be hired.

A week before the contract was granted, Becker, acting as OnTrac’s executive director, signed a report to board members in which he discussed his leadership abilities and project accomplishments. He characterized his $4.5-million fee -- about $450,000 a year -- as “very reasonable.” Becker concluded the report with the recommendation that he be hired.

On the day his contract was approved, Becker discussed the report with board members, again stating that his salary would be reasonable. Nixon noted that no independent reports, analysis or recommendations were presented to the OnTrac board. The city did not seek applications for the job from anyone else.

More than two months after Nixon’s memo was sent to D’Amato, the city overhauled Becker’s consulting contract and Becker stepped down as public works director. His hourly compensation was reduced from $200 to $150. Guarantees of $4.5 million in fees over 10 years were removed.

“A decision was made to revise his contract and remove him from City Hall,” said Placentia Mayor Judy A. Dickinson. “We have taken care of the issue.”

But others contend that serious concerns over whether Becker violated state conflict-of-interest laws remain and need to be resolved.

“There are so many questions that have not been answered,” said Councilwoman Constance Underhill, who wrote a complaint letter to the district attorney.

“It makes me wonder if there is something that needs to be looked at more closely.”

Assemblyman Todd Spitzer (R-Orange), who once called for a state investigation into OnTrac, said the Placentia City Council should revisit Becker’s original consulting contract and determine whether to recover consulting fees.

“The memo corroborates what the community has been saying all along,” Spitzer said, “that OnTrac was built on a house of cards from the beginning.”

Like state law, the Placentia city charter contains provisions that prohibit municipal officials from participating in or influencing any contract or transaction in which they have a direct or indirect financial interest.

The charter gives the City Council the power to void contracts when conflicts occur, and the document requires any city official convicted of such an offense to leave office.

“Mr. Becker and Mr. D’Amato ought to be held accountable,” said Greg Sowards, a member of Citizens for a Better Placentia, a group opposed to the way OnTrac has been managed. “They were the two officials who cooked up this whole scheme.”

Times staff writer Jean O. Pasco contributed to this report.