Professional Documents
Culture Documents
CONFIDENTIAL
BY FEDEX AND ELECTIONIC MAIL
to ann. diem acgov. org
July 2 , 2010
Negotiations between the City and Westhoff, Cone & Holmstedt financial,a
advisorylinvestment banking firm, with respect to potential refinancing of City
assessment bonds , and subsequent attempts by Lonnie Odom of Stinson Securities , an
investment banking firm, to participate in the refinancing of the bonds.
An Exclusive Negotiating Agreement (" ENA" ) between SunCal , the City, and other
public entities regarding Alameda Point , a former naval base and arguably one of the
most lucrative development opportunities in California at present.
A lawsuit against the City by the International Association of Firefighters (IAFF), the
union which represents the City' s firefighters , regarding retiree medical benefits for
public safety personnel hired after Januar 2 , 2010.
98578.
Ann Diem, Assistant District Attorney
July 2, 2010
CONFIDENTIAL
Page 2
criminal intent. People v. Harby (1942) 51 Cal.App.2d 759, 767. Willful misconduct in office
includes, for example, the conduct of an officer who exercises the power of his or her office so as
to violate a statute or who engages in any willful malfeasance, misfeasance, or nonfeasance. Id.
A Brown Act violation justifies removal from office pursuant to section 3060. Bradley v.
Lacy, 53 Cal.App.4th 883, 887 n.1 (1997). The Brown Act provides, inter alia, that a majority
of City Councilmembers may not, outside a meeting authorized by the Act, use a series of
communications of any kind, directly or through intermediaries, to “discuss, deliberate, or take
action” on any item of business within the subject matter jurisdiction of the City Council.
Government Code section 54952.2. The enclosed documents show that Councilmember Tam
used such series of communications, with Mr. Odom as an intermediary, to discuss with a
majority of Councilmembers outside an open session of the Council Mr. Odom’s desire to profit
from a City bond refinancing.
Such serial meetings in violation of the Brown Act are evidenced by emails among Mr.
Odom, and Councilmembers Tam and Gilmore, with copies to Councilmember Matarrese (who
did not respond to this unlawful communication but was merely a passive recipient of it). On
May 21, 2010, Mr. Odom emailed Councilmember Tam (Exhibit DD) about a proposal to
refinance City bonds. The email stated Mr. Odom had “just met with [Councilmember] Gilmore,
who suggested that [he] contact [Councilmember Tam].” He further stated that he would be
meeting with Councilmember Matarrese and that he would also like to meet with
Councilmember Tam. Councilmember Tam replied (Exhibit DD) that she was very interested in
meeting with him and the two negotiated a meeting time. From Councilmember Tam’s email, it
appears that she already discussed the substance of Mr. Odom’s email with Councilmember
Gilmore and she copied her email to Councilmember Gilmore. Further, on May 26, 2010, Mr.
Odom sent another email to Councilmembers Tam, Gilmore, and Matarrese, with a carbon copy
to Councilmember deHaan (Exhibit EE), thanking the Councilmembers for meeting with him.
Councilmember Tam responded to this email (Exhibit FF), stating she appreciated the
opportunity to meet with Mr. Odom and that she was working to schedule his proposal to
provide bond underwriting services for a closed session of the City Council. (although we can
think of no legal justification for discussion of that topic in closed session). Finally, on June 14,
2010, Mr. Odom emailed Councilmember Tam (Exhibit GG) stating that it was troubling that
“the issuance of bonds [had] been placed on the Consent Calendar” for the June 15, 2010
Council meeting, which he claimed was highly unusual. Councilmember Tam replied to this
email (Exhibit GG), copying her reply to Councilmembers Gilmore and Matarrese, and invited
Mr. Odom to attend the Council meeting and “pull” the item from the consent calendar for public
debate to “share [his] experience.” As such, Councilmember Tam communicated with a majority
of Councilmembers about the refinancing of City bonds, using Mr. Odom as intermediary and
98578.11
Ann Diem, Assistant District Attorney
July 2, 2010
CONFIDENTIAL
Page 3
relying upon his unsupported e-mail statements as fact. This communication related to an issue
within the City’s subject matter jurisdiction and therefore should have occurred only in a
properly agendized open session of the entire Council.
2. Official Misconduct Based on Violation of Sections 7-2(H) and 7-3 of the City
Charter.
Councilmember Tam has also engaged in official misconduct by interfering with the City
Manager’s performance of her duties. Section 7-3 of the City Charter1 provides:
Neither the Council nor any of the members thereof shall interfere with the
execution by the City Manager of his or her powers and duties. Except for
purposes of inquiry, the Council and its members shall deal with that portion of the
administrative service for which the City Manager is responsible solely through
him or her. An attempt by a Councilmember to influence the City Manager in
the making of any appointment or the purchase of any materials or supplies
shall subject such Councilmember to removal from office for malfeasance.
(Emphasis added.)
The City Manager shall have the power and it shall be his or her duty . . . [t]o see
that all contracts and franchises made under his or her jurisdiction or that of the
Council are faithfully performed, and to report all violations thereof to the
Council.
Councilmember Tam interfered with the City Manager’s duty to provide her best
professional recommendation as to the financial advisors best suited to refinance the City’s
bonds and directly contacted individuals involved in the transaction in an attempt to influence it
for the apparent benefit of Mr. Odom.
In 2007, the City’s financial advisor William Reynolds provided the City with a report of
its assessment bonds, advising that certain bonds be refinanced (Exhibit HH). Around that time,
Mr. Odom offered then-City Finance Director Juelle Ann Boyer a proposal to refinance these
bonds, but she did not accept the offer (Exhibit II). In 2009, City Manager Ann Marie Gallant
began reviewing the potential refinancing of the bonds (the “transaction”) and contacted the
municipal securities underwriting firm Westhoff Cone & Holmstedt as a potential underwriter
candidate for the transaction, because of their statewide expertise in land-based securities
transactions (Exhibit JJ). At one point, Mark Holmstedt, a principal in that firm, discussed
1
The text of the City’s Charter appears on-line at www.ci.alameda.ca.us/gov/city_charter.html.
98578.11
Ann Diem, Assistant District Attorney
July 2, 2010
CONFIDENTIAL
Page 4
The City Manager’s duty with respect to the transaction was to find a competent and
reliable candidate to underwrite the City’s bonds and to provide professional, unbiased
recommendations to the City Council. It was her job to negotiate with potential underwriters –
and it was not the role of individual Councilmembers to do so,2 although the ultimate contracting
2
This separation of Councilmembers from the administrative details of City business is required
by Section 7-3 of the Alameda Charter and other charter and ordinance provisions adopting the
Council-Manager form of government, which is intended to prevent patronage and corruption in
city government: “The concept of the council-manager form of government was a product of a
confluence of the prevailing modes of thought during the late 1800s and early 1900s. Probably
the foremost influence was the Progressive Movement; following along the thought lines of the
movement, the municipal reformers of that time wanted to rid municipalities of the pervasive
“Machine” form of government and the abuses of the Spoils system. The thought was to have a
politically impartial administrator or manager to carry out the administrative function.”
http://en.wikipedia.org/wiki/Council%E2%80%93manager_government (footnotes and
hyperlinks deleted).
98578.11
Ann Diem, Assistant District Attorney
July 2, 2010
CONFIDENTIAL
Page 5
decision was for the Council to make in discussions compliant with the Brown Act. The City
Manager and the City’s underwriting team excluded Mr. Odom from their recommendations to
the Council for this transaction due to his unprofessional dealings (Exhibit JJ). Instead, the
bonds were ultimately sold through a competitive process in which Mr. Odom’s firm did not bid.
By secretly communicating directly with Mr. Odom, the City’s financial advisor, and other
interested parties and without disclosing that fact to the City Manager, Councilmember Tam
interfered with the City Manager’s ability to carry out her duty and violated Section 7-3 of the
City Charter. As noted above, that charter provision states that the consequence of such
misconduct is removal from office for malfeasance. Indeed, this was the basis for the recent
removal from office of the former Mayor of Mountain View by the Santa Clara County Superior
Court in an action filed under Government Code §§ 3060 et seq..
98578.11
Ann Diem, Assistant District Attorney
July 2, 2010
CONFIDENTIAL
Page 6
Councilmember Tam further used her position to advance SunCal’s interests in the
Alameda Point project at the expense of the City and its residents and taxpayers. A public
official acts as trustee for the public, and thus cannot use his or her official position to benefit a
private party. Terry v. Bender, 143 Cal. App. 2d 198 (1956); People v. Harby, 51 Cal.App.2d
759, 770 (1942). Councilmember Tam violated this trust by making statements on behalf of
SunCal in response to a public records request from David Howard, a City resident and blogger.
In directly responding to a public records act request, purportedly on behalf of the City,
Councilmember Tam also interfered with the City Manager’s administration of City affairs in
violation of section 7-3 of the City Charter.
On May 25, 2010, Mr. Howard emailed a public records request to the City Manager and
the City Council (Exhibit MM), asking whether SunCal had made any financial commitment to
the Alameda Point project and stating that SunCal might be committing fraud on the residents
by falsely representing that it had financing for the project. The City Manager replied to Mr.
Howard’s email (Exhibit MM), with carbon copies to relevant City staff, stating that public
records requests are handled by the City Clerk’s office. Although Councilmembers may not
respond to public records requests under the Council-Manager form of government,
Councilmember Tam replied to Mr. Howard’s email on May 26, 2010 (Exhibit NN), stating that
“[f]rom the records and filings, DE Shaw and SunCal (Cal Land) spent $183 million in non-
borrowed equity in New Mexico” and that “[i]n the discussions with the Navy and the public
proforma that we have reviewed, SunCal/D.E. Shaw is ready, willing and able to spend the
$108.5M in conveyance costs requested by the Navy.” This information was not available from
any City records and it appears that Councilmember Tam obtained this information from SunCal
and provided it on behalf of SunCal, especially because she blind-carbon-copied her reply to the
public records request to SunCal representative Frank Faye (Exhibit NN). Because
Councilmember Tam used her official position to present on behalf of the City what was
ultimately SunCal’s position without revealing her discussions with SunCal officials, she
breached her fiduciary duty to the public and violated section 7-3 of the City Charter.
Although additional investigation is required to establish this, recent emails suggest that
Councilmember Tam may be continuing to leak closed session information in violation of the
Brown Act. Our May 26, 2010 letter included emails which evidence that Councilmember Tam
leaked closed session information to various third parties and that she has covertly acted on
behalf of the IAFF. On June 12, 2010, Councilmember Tam forwarded to her personal g-mail
account (Exhibit OO) closed session information relating to a lawsuit IAFF has filed against the
98578.11