Posted by Charles Marsala, a resident of the Atherton: West Atherton neighborhood, on Oct 4, 2008 at 10:27 am
As a council member since 2002, I have a fiduciary responsibility to the residents of Atherton and a moral responsibility to provide them with transparency. As Mayor in 2006, I was aware of the undermining Finance Director John Johns was doing to the Building Official, Police Chief, and City Manager. I also became aware of incorrect financial practices that were in place, some I had voted for, believing the presentations I was given earlier. Others were discovered either by a staff member advising me of a problem or later validating if council direction was being followed.
The first to come to light was the Off-Haul Fee, presented to the council by John Johns in March 2005. In June 2006, shortly before he retired Building Official Mike Hood informed me he thought it was illegal and council should address it. In September 2006, council refunded all funds collected with interest.
Last year I was informed by Interim City Manager Wende Protzman, that the 2003 re-engineered Business License Fee designed by John Johns and approved by council is double-charging residents in certain areas. In other areas it is charging more than justified. The new Business License Fee has increased revenues by more than $150,000 a year. Soon the council will take action on this. Refunds are due to residents and those who paid for the Business License Fee Permits.
For the last four years, I have been on the Town Facilities sub-committee. As I began working on the financials for the Town Center Project, I remembered back in May 2000 that Mike Hood proposed to council that permit fees be increased from $110 per square foot to $250 per square foot. This was shortly after the second defeat of the Parcel Tax in March 2000. Council approved.
Mr. Hood proposed that $146,000 annually of Building Department revenue go towards the Town’s Administrative budget, for services rendered to support the Building Department. The Building Department had been relocated to trailers in 1998, he proposed that $200,000 a year be set aside for a permanent building.
During the next six years of his tenure with the town the Building Department had substantial surpluses. A surplus is defined as revenues minus expenditures.
Finance director John Johns placed these surpluses in the General Reserves, where they have grown with interest. It appears he did not deduct the $146,000 per year for Administrative overhead. Which reduces the net to $2,622,027.
As I have researched this situation. I have been advised that State Law prohibits a city or town from making a “profit” on Building Department operations and restricts how those funds can be used. With proper cost accounting the overhead might be greater than the $146,000 per year. However when I see the surplus of $1,235,903 for 2001 alone, I realize that a large amount of funds placed in the General Reserves since 2001 may be at risk as they come from the Building Department surpluses.
Whether or not this qualifies as and Investigation or just doing my council and committee assignment, identifying and solving the problem needs to happen.
John Johns’ current Freedom of Information Request contains a binder I gave to the Interim Finance Manager in January of this year, more than five months after John Johns was placed on leave in August 2007. The binder contains John Johns credit card statements, three concerning purchase orders, and comments regarding requests by the City Manager for him to change days he was not in the Atherton Office to either vacation days or sick leave.
The compiling of this information resulted from a front page story in September 2007. Our auditors pointed to concerns with Atherton expense documentation. Although having been placed on Administrative leave prior to that meeting, John Johns contacted the press and pointed to three glasses of wine the Chief of Police had with meals while attending a conference. The wine turned out to be the dinner salads.
This distracted the press from what was on John Johns Atherton Credit Card: an Ipod, two cameras, multiple meals exceeding $50 with no documentation, flowers, internet dating services, subscriptions, and Commonwealth Club fees, to name a few. On at lease one occasion City Manager Jim Robinson had Mr. Johns reimburse the town.
I noticed an extra person in town hall and was told that John Johns had brought in his neighbor to do some work. This was done by issuing two purchase orders to his neighbor totaling over $20,000; any purchase order over $15,000 needs council approval. I received requests from residents to make the information public. I presented the binder to the Interim City Manager in January 2008. Some residents have asked for copies of the binder.
In April 2008, the GAO issued a report discussing Government credit card abuse with the same items as those found on John Johns’ credit card. The council has asked to discuss improving financial controls at a future meeting.
The history of this ordeal:
In November 2005 John Johns went to City Manager Jim Robinson, concerned that it had been inappropriate for the Building Department to tell residents of the off-haul fee increase prior to the May 17, 2005 effective date. In December Mr. Johns proceeded to get into a shouting match at the Building Department on this issue, and filed a complaint with Jim Robinson.
In January 2006, Jim Robinson brought in a personal investigator who interviewed more than twenty people. After the investigation Jim Robinson was satisfied that Building Official Mike Hood had acted appropriately and resolved the matter. On June 28, 2006 John Johns undermined Jim Robinson, bypassed the full council, and went directly to the press at a meeting 48 hours before Mike Hood was to retire, claiming Mike Hood showed favoritism with the implementation of the Off-Haul Fee.
This became known as the Phase One Audit. A few weeks later John Johns would issue a Phase Two Audit. In August the full council voted in favor of a Phase Three Audit. At that point I felt a no vote, would indicate a lack of interest in transparency.
Based on information supplied solely by Mr. Johns to the Grand Jury, they issued a report in February 2007 that only 63 out of 189 building permits had been inspected by Menlo Fire for fire in Atherton. In fact, Menlo Fire reported they inspected 226 out of 257 permits and 100% of the applications since the sprinkler ordinance passage had been inspected for fire. The other permits had been deemed minor and had been inspected by the Atherton Building Dept.
The Council’s response to the Grand Jury was termed “defiant”. The Grand Jury called and requested on May 2, 2007 from Jim Robinson building permits on council members. On May 3, 2007; John Johns without Jim Robinson’s approval sent an email to an outside attorney with information concerning those files. On May 8, 2007 John Johns forwarded to Jim Robinson a copy of the email, he had sent to the attorney. That day Jim Robinson retired. When I asked him why, he said “this is never going to end.”
Starting in September 2006, John Johns would claim “Whistleblower” protection and threaten to sue the town whenever challenged by managers for not coming into work. John Johns sent an email to Jim Robinson discussing a situation regarding a challenge to John Johns’ time card.
In mid August 2007, a female staff member came in crying about comments John Johns had made. Her son was in intensive care after being hit with a baseball. She reported that John Johns had remarked to her that he knew where there was a sale on baseball bats.
Interim City Manager Wende Protzman reviewed with the City Attorney what action should be taken. As this was not the first incident, she decided to place John Johns on leave and have an independent investigation done. Actions resulting from that investigation were deemed appropriate by The Almanac, in an editorial in November 2007.
John Johns currently has dismissed his case against the town with prejudice. Our town has faces many challenges: High Speed Rail, Environmental Awareness, Financial Stability, Recreation Resources, and Zoning and Quality of Life issues. The Council, Staff, and Committees are still addressing these while dealing with John Johns’ claim.