OnTrac Warnings Ignored, Testimony Alleges

City officials in Placentia ignored the advice and pleas of legal and financial experts as they spent millions on the ambitious OnTrac rail project that drove the city to the edge of bankruptcy, Orange County Grand Jury testimony shows.

The city attorney had also warned the city administrator that the city might be on perilous legal ground by tapping the town’s public works director to head the rail project -- a deal that was expected to net him about $450,000 a year. None of those concerns was shared with the City Council, which seemed largely ignorant of the potential conflict for years.

The former public works director, Christopher Becker, and retired City Administrator Bob D’Amato were indicted last month on charges that they influenced government contracts in which they had a financial stake.

The recently unsealed testimony of nearly three dozen city employees, elected officials and government investigators paints an alarming picture of Placentia’s government:

In its zeal to solve the city’s railroad woes and lower five miles of track into a concrete trench, the council seemingly placed blind trust in D’Amato and Becker, rarely asking probing questions or attending OnTrac meetings. In turn, D’Amato and Becker frequently kept council members in the dark and did not relay significant financial and legal concerns.

Council members testified that they were not provided with OnTrac agendas or minutes and, according to at least one elected official, were encouraged to stay away from meetings.

“Too much information was being held in one person, and in my opinion, it was Bob D’Amato,” Councilman Norman Z. Eckenrode testified.

“You were kind of the mushroom theory of management,” he told the grand jury. “You get information on a need-to-know basis. And if you wanted more, you had to dig. That’s not a healthy situation.”

None of the council members said they knew, for example, of a memo written by then City Atty. Carol Tanenbaum in June 2000 that raised concerns about Becker holding jobs as both public works director and executive director of the railway project. They said they did not learn of the memo until an investigator for the district attorney’s office showed it to them.

In her testimony, Tanenbaum said that even though she was the city attorney, she was not asked to review Becker’s contract and was not told about the meeting to approve it. She discovered it only because she happened to be at City Hall, she said. As a contract attorney, she typically worked out of her law firm’s offices.

“Looking back, I think that the parties concerned could predict what my reaction would have been had I [been] presented with those documents,” she said.

Tanenbaum said she expressed “serious concern” that Becker’s contract might violate portions of the California Political Reform Act. She drafted a memo to OnTrac attorneys hired by the city asking them to review the law; she also notified D’Amato.

“It was clear to me that he didn’t want to hear what I had to say and his mind was made up,” Tanenbaum said. “He wasn’t very happy when I left his office.... He just said, ‘You know, I don’t know why you’re doing this. There isn’t any problem.’ ”

D’Amato apparently ignored Tanenbaum’s warnings and allowed Becker to continue in both jobs drawing nearly $900,000 in 2 1/2 years. Meanwhile, both Becker and D’Amato touted the deal, saying it was saving the city money because Becker would pay back his salary as the city’s public works director.

The City Council apparently agreed. Some members, including Councilman Chris Lowe, questioned the $4.5-million, 10-year agreement, but they approved it after Becker told them it was below the norm, according to testimony to the grand jury, which met in secret in February and March. Some council members testified that they did not even know how Becker’s salary was being paid.

Money was a serious problem for the city. Its reserves of $5 million were drained, and finance services manager Carolyn Chu testified the city was diverting $500,000 to $700,000 a month to the OnTrac project.

“I kept looking at the balances; they kept going down,” Chu said. “I didn’t see how we could keep going like that.”

At least three times, Chu said, she cautioned her boss, Finance Director Steven Brisco. He said he voiced similar concerns to D’Amato. Again, council members said they were not warned.

Interim City Manager Raymond Griest testified that by the time he took over in December 2003, the city was faced with “an inordinately high number of negative balances.... OnTrac turned out to be, I guess you could say, the reason for the deficits in the account.”

OnTrac would have been one of the largest public works projects in Orange County, a mammoth undertaking for a town of 50,000 with a $25-million annual budget. Instead, it plunged the city $36 million in debt, forcing it to cut public services, lay off staff, sell parkland and borrow millions in an effort to keep the project going.

D’Amato and Becker, who both quit under pressure, are scheduled for arraignment May 31. If convicted, each could get up to three years, eight months in state prison.