December 15, 2005

San Jose City Council censures mayor
for backroom garbage deal

Gonzales apologizes; council doesn’t continue investigation

By Sheila Sanchez
Staff Writer

The San Jose City Council unanimously censured Mayor Ron Gonzales for not sharing “material facts” related to a secret promise of $11.25 million in payments to Norcal Waste Systems and its subcontractor California Waste Solutions which resulted in a $1.40-a-month garbage rate increase in 2003 for 155,000 households.

Special investigator Chris Scott Graham released a report on Dec. 6, which revealed San Jose Mayor Ron Gonzales and his top budget aide misled the public and the city council. Photo by Sheila Sanchez

It also reprimanded the mayor for not sharing with the council in the fall of 2000 assurances he made to Norcal that he would bring a recommendation to the council to amend its contract once the increased costs at the CWS materials recovery facility were determined and verified.

And it also condemned the mayor for not sharing with the council in the spring of 2003 information regarding the full rationale for the increase misleading the council and the public regarding the use of funds generated by the increase to reimburse Norcal for increased costs incurred by CWS.

The censure
Gonzales on Tuesday became the first mayor in the city’s history to be censured by the council. Censure is the most severe form of disciplinary action in the council’s conduct policy. It is a punitive action, which serves as a penalty imposed for wrongdoing, but it carries no fine or suspension of his rights as an elected official.

Councilman Ken Yeager, infuriated by the scandal, asked to additionally consider next month removing the mayor from serving on any council committees and asking him to submit his draft budget message to a council committee for review before being approved. His council colleagues voted 10-0, with the mayor abstaining, to support his additional sanctions against the mayor.

“I’m angry,” Yeager said. “My heart is swelling with sadness that this has become the focus of what we have done. I truly understand the pain and distrust citizens feel because of the mayor’s actions.”

The reprimand, contained in a memorandum from Vice Mayor Cindy Chavez and council members Linda LeZotte and Ken Yeager, came after the council voted 9-2 to accept the Dec. 6, 46-page report of independent investigator Chris Scott Graham which found that Gonzales and his top aide, Joe Guerra, had misled the council and the public as they sought to secure the contract amendment.

Councilmen Chuck Reed and David Cortese, who are running for mayor next year, voted against accepting the report as they had pursued continuing Graham’s three-month investigation. Cortese had asked the mayor to resign and Reed had recommended holding a hearing in January to remove him from office. Cortese, too, has been spearheading a voter-signature drive to institute a “vote of no confidence against Gonzales.

“Censure of the mayor is appropriate, but censure is no substitute for getting the truth,” Reed said, who feared ending the investigation would leave City Hall under a cloud of suspicion with possible violations of the Brown Act.
“The public has a right to know not only what happened, but also why it happened and why it was covered up. We have to find out if there is any truth to the allegations that the Norcal deal was part of a ‘bait and switch’ by Norcal from the beginning,” he said. “We have to find out if any favors were done or if money changed hands as part of the deal. The mayor has said that other council members knew what was going on. We need to find out who knew what and when did they know it.”

The 11 members of the San Jose City Council endured a painful and historic five-hour council meeting Tuesday that ultimately censured Mayor Ron Gonzales for misleading the public and the city council about the garbage deal. Photo by Sheila Sanchez

Cortese said he could not vote to terminate the investigation without having all the facts. “We have a systemic problem in terms of our governance … there is evidence this is not a one-time occurrence. Until we know the root cause of the problem we’re not going to know how to fix it,” he said.

Vice Mayor Cindy Chavez, who was taken by ambulance to O’Connor Hospital after the highly charged meeting after complaining of not feeling well, said the council’s task in the future would be to re-establish trust and confidence in City Hall. “I’m not sure the way to do that is through an ongoing investigation,” she said.

Councilman Forrest Williams said he believed the council could work on its ethical issues in other ways besides continuing an investigation. “We can focus our energy to correct the actions that have occurred,” he said. “I would rather put dollars into correcting the broken process.”

Williams went on to suggest that the only reason Reed and Cortese wanted to continue the investigation was because they were politically motivated as they’re running for mayor next year. Gonzales is termed out of office and will finish his second four-year-term as mayor at the end of 2006.

“What I’m seeing is two people running for mayor trying to keep this going to get publicity,” he said.

Councilwoman Judy Chirco characterized the last six months at City Hall as a troubling time. “San Jose is my family. You’re my brothers and sisters. I want San Jose whole and healthy,” she said.

Councilwoman Nancy Pyle, who did not speak at the city council meeting Tuesday, said Wednesday morning through an e-mail that residents in District 10 want the issue closed and that she had voted to censure the mayor because she believed he failed to property notify the council about the garbage deal.

“I did not support further investigation because it would take a minimum of six months and cost a minimum of $200,000. This money could be spent in a much better manner, such as adding two additional police officers to our streets,” she said. “We have many important issues coming before us in the next few months, and this council and this city should not be bogged down while additional investigations take place.”

Mayor’s apology
The censure came after the mayor read a prepared statement containing a lengthy apology. Graham, accompanied by retired Judge Peter Stone of the YAMS dispute resolution company and San Jose City Auditor
Gerald Silva, was questioned for more than an hour about the goals, scope and standards of the investigation, which included the review of more than 14,000 documents at a cost to taxpayers of more than $100,000. Graham said his law firm had incurred another $100,000 to spare taxpayers’ dollars.

“Today I express my sincere apology to my city council colleagues and to the people of San Jose. I’m sorry that I have disappointed you. Although I’ve always tried to do the right thing for the people of San Jose, it’s clear now that on this matter I went about it the wrong way,” Gonzales said.

The mayor said from the beginning of the Norcal issue, his goal had been to achieve the council’s objectives such as getting low rates for garbage services and decent pay for the people who do the hard work of processing the city’s garbage.

“Although we were successful at achieving these goals—and they remain high priorities for the council and our community—I failed to do it the right way. For this I apologize. I take full responsibility for my decisions, the actions of my staff, and my own process for dealing with this issue. I should have handled these matters differently,” he said.

Gonzales then said he should have disclosed more information sooner and more often to the council and to the public regarding all issues related to the Norcal contract, labor costs, and garbage rates.

Gonzales said he didn’t share the information because “I’ve always carried myself as a ‘get-it-done’ mayor, and I clearly fell victim to that part of my personality in this issue. I tried to solve this problem on my own. I tried to show that my leadership and action could bring back a solution to you that would satisfy everyone. It didn’t work that way.”

The mayor stressed that the only people who benefited from his involvement in the Norcal contract amendment were the residents, who now pay one of the lowest rates for garbage service in the entire Bay Area, even with rate increases and the amended contract; and the workers.

“I ask you to please accept my apology so that we can move forward together,” he said.

Probing the investigator
In the end, Graham said he had found enough evidence during his investigation to support a grand jury investigation last June that accused Gonzales and his top budget aide, Joe Guerra, of “duping” the council into agreeing to the rate increase and the contract amendment.

Special investigator Chris Scott Graham and San Jose City Auditor Jerry Silva listen to the council’s proceedings Tuesday. Graham conducted an investigation, which revealed the mayor failed to share information and misled the council in pursuit of contact amendment for Norcal Waste Systems. Photo by Sheila Sanchez

San Jose City Attorney Rick Doyle said the documents he had produced for Graham were those requested by the grand jury and members of the news media. At times during the questioning from the council members, Graham appeared frustrated by the inquiries. “What are the elements of a complete investigation?” Chavez asked eliciting a puzzled look from Graham who responded the council would have to look at goals set for the investigation.

Chavez also asked Graham whether he thought continuing the investigation would correct what she called an “organizational development” problem within the city.

In March of 2001 the council approved the Norcal contract. In May of 2003 the council agreed to a 9 percent garbage rate increase without being told the money was needed to pay for Gonzales’ private deal with Norcal and in September of 2004 Gonzales gets the council to approve the $11.25 million payment to Norcal.

Chavez said she had read the report twice with the assistance of a legal dictionary.

Cortese asked Graham whether he was familiar with Proposition 218. “No,” replied Graham, looking even more puzzled by the questioning. The intent of Proposition 218 is to ensure the appropriate handling of some government funds.

Councilman Forrest Williams asked Graham why he didn’t ask for more time to proceed with the investigation instead of ending his probe in the 90 days originally stipulated. Graham said he was only doing what was requested of him within the time frame he had received.

Councilwoman Linda LeZotte asked Graham whether he thought from his investigation that the lying and deceit was a systemic problem or just the Norcal issue.

Graham said he believed that “there’s an indication that this is not a one-time occurrence.”

“… The process of the investigation clearly calls for some form of soul searching or expertise to attack the problem,” LeZotte said.

In response Graham said, “Each council member will have to look at their own heart to answer that question.”

The council also voted unanimously, with Gonzales abstaining, to admonish Guerra and recommend the mayor’s office take appropriate disciplinary actions against him, request public apologies from Del Borgsdorf, the city manager and Rick Doyle, the city attorney, for their actions relating to the Norcal, direct Doyle to prepare a cover letter or other appropriate documentation and to forward the report as the council formal response to the grand jury investigation and to direct staff to incorporate training on the city charter and other appropriate city policies in an effort to prevent future violations, such as those outlined in Graham’s report.

Attorney’s response
In a somewhat poetic tone, Doyle explained his involvement in the deal by citing Polonis’ advise to his son, Hamlet. “This above all: to thine own self be true,” he said.

A memo he issued Tuesday outlined the legal issues that his office encountered with the mayor’s staff, manager’s staff and council.

Through the process, Doyle said, he identified the three legal issues based on information provided. The first one was that any amendment to the Norcal contract needed council approval. “This was not a mere formality. I am the attorney for the entire council and am mindful of this role,” Doyle said.

Other legal issues he considered, he said, were that the proposal, as originally made, could not go forward without additional consideration and that the city had no legal obligation to approve the amendment.

“Like you I did not have all the facts,” he told the council. “My job as a city attorney is to provide the best legal advice possible; not make policy. We have done that consistently. However, I often remind people that an attorney’s advice is only as good as the information he or she receives. Incomplete information results in incomplete advice.”

He continued: “Regrettably, city government has been labeled unethical by some. This saddens me. Like most of you, I entered public service to serve the public. I have a reputation as a straight shooter and I value that reputation.”

Doyle, lastly, said he welcomed the opportunity to train city staff on the city charter.

Public comment
When it came time for the public to speak, most of the comments were pointed and heartfelt. “Mr. Mayor you have brought shame on the Hispanic community,” one citizen said.

Others, including a former city councilman, said the city was doing well and enjoying a nice reputation around the world. One woman called the investigation “stupid.”

But the majority said they were disappointed by the mayor’s actions and asked for the investigation to continue.
“Will you shut the door and leave the public in the dark?” one man asked.

One speaker said Gonzales should be treated like former councilman Terry Gregory, who resigned from office in January after pleading no contest to 11 misdemeanor counts including failing to report gifts.

J. Manuel Herrera, the latest mayoral contender to declare his candidacy and president of the East Side Union High School District, said, “the drums are beating now to hound this mayor from office,” but he said, “The vote of the people is sacrosanct and should not be trampled by others.

“The distrust in the community is not just about this matter and this mayor at this point in time. It’s about the politics working today,” Herrera said.

“My desire is for mayor Gonzales to preserve his dignity and his legacy in recognition of his years of service to the people of San Jose,” Herrera said. “At this point his greatest sin appears to be one of arrogance and not one of malfeasance.”

Terry Cotcher urged the council to strive for transparency.

Ruben Solorio claimed he had been wrongly terminated by Norcal and asked the council to deny future contracts to the garbage hauler.

Jack Ybarra told the mayor there was no need to apologize for the Norcal deal as the ones who benefited were the garbage workers. “They are entitled to a prevailing wage. They wake up at 3 a.m. to take our trash.”

John Renish urged the council to continue the investigation. “So far this has cost taxpayers $11 million, if it costs $2 million I don’t care.”

Laurel Renish said she was tired and upset with the scandal. “To think that we don’t care that there’s a pervasive culture of corruption in this house is wrong. Those of you who think this kind of attitude won’t be punished at the polls are wrong. We need transparency,” she said.

Edna Elkins, while professing her love for the mayor, told him, “You’ve lost your light.”

More ahead
Next week the council will learn whether Santa Clara County District Attorney George Kennedy will investigate the matter further, which could bring criminal charges against Gonzales.

And, Williams will ask Doyle to look into rescinding the $11.25 million garbage contract to Norcal.

To read the independent investigator’s report log onto www.sanjoseca.gov/clerk/agenda/12_13_05docs/121305_03.08.pdf.