The San Gabriel City Council Chambers (Photo – San Gabriel City)
Conflict of Interest and $185,000 Chamber Loan Brought to the Fore.
By Cheri Cabot
The San Gabriel Chamber came to the San Gabriel City Council again on September 5, requesting $23,000 with no contract and no accountability. Several pertinent questions were asked about the efficacy of giving out money without a contract.
Is it legal? Maybe. Is it ethical?
Councilmember Denise Menchaca opened the council comments by asking Mayor Harrington if his daughters were getting paid by the Chamber and if that would be considered a conflict of interest in these considerations.
Harrington replied, “Yes, they are getting paid by the Chamber, but it is not a conflict of interest.”
“But they live in the same household?”
“Correct,” Harrington said.
“I look at it as a conflict, but at least you confirmed that your daughters got paid by the Chamber,” Menchaca said.
Harrington did not recuse himself from the discussion or voting.
Is it legal? Maybe. Is it ethical? Probably not.
Conflict of interest
This statement regarding conflict of interest is from the website of California Attorney General Rob Bonta. Conflicts-of-interest-PDF: “Laws are grounded on the notion that government officials owe paramount loyalty to the public. Thus, personal and private financial considerations on the part of governmental officials should not be allowed to enter the decision-making process.”
Mass exodus, Business Loan, Lack of accountability?
Menchaca went on to state, “I think it is very important that we highlight the fact that there has been a mass exodus of Chamber board members. In less than three months, you have long-time leaders in the community resigning. They were all concerned with integrity, sustainability issues, and not being business friendly. We can’t ignore that. I think we should take that as a sign that our taxpayer money should not be associated with an organization that is clearly not functioning.”
The City Council asked for a financial statement from the Chamber. What they received were tax returns for the years 2019, 2020, and 2021. It was within these tax returns that Menchaca noticed that the Chamber had received a Small Business Loan for $185,000.
“For any size organization, that is severe debt,” Menchaca stated. “If you think about public works contracts we enter into, we always say, ‘look at the lowest bidder and then we look at the most responsible. In this case, it is the highest bidder and the least responsible, with no accountability.’”
In March, the Chamber sold $13,500 worth of advertising and sponsorships for a journal. It was never published and the money was not returned. An event was planned for September to raise money but was canceled without explanation. A vendor for this event told Councilmember Menchaca, “She is owed money and now realizes she will not get paid.”
“The word is out. There is no trust or integrity so why would we as a City, want to be associated with them? Why should we use taxpayer’s money to fund the Chamber? I vote to not have any financial support for the Chamber,” Menchaca stated.
Councilmember Ding then asked, “One of the things I want to see, since they created this new membership fee, is there any listing for the benefits for the City? If we are going to give them City money, we need accountability. We need to have a contract.”
Taxpayer’s money needs to be spent in the right place
At this point, Councilmember Wu had specific questions for the Chamber and Chamber Board Member, Gilda Mosher, came up to the podium.
“I think it is our responsibility to see that taxpayer’s money is spent in the right place. Will you give us an update on the current financial status?” Wu asked.
Mosher: “It’s tight.”
“Are you still carrying the $185,000 SBL debt?” Wu asked.
“Yes,” Mosher said.
Wu then asked, “Can you tell me the benefits of the Presidential Circle Membership?”
“You received a letter outlining all your benefits,” Mosher said. “I want to make clear this is not a contract; this is a membership. It is not meant to be contractual.”
“So, the membership is more like spiritual?” Wu asked.
“If we are going to [be] granting anything, including funds, then we should have a service agreement listing the scope of work and our expectations.” Wu said. “We need to review the old agreements we had; if not, create a new one with the contingency that the agreement be signed.”
Mosher then asked how the City Council and public entities received the minutes of their meetings and if it was legal. Menchaca replied that they were sent to the City and to the Council and therefore became public records.
To that end, the minutes of the Chamber were sent to the City and therefore became public record, subject to public records requests.
Councilmember Ding then asked Chamber Treasurer Shelly Chia, “So, if the Chamber has financial problems, does the City have the responsibility to support it?”
Chia responded with, “I think the members and the City as well.”
“Personally, I support the Chamber of Commerce if they continue to help the community, businesses, and residents, but accountability, and transparency are very important,” Ding continued. “How many board members do you have now?”
“Nine,” Chia said.
“And how many are residents of San Gabriel or have businesses here?” Ding asked.
“Four,” Chia said.
Finally, Councilmember Mechaca made a motion to purchase the $23,000 membership that includes a scope of work, a list of deliverables, and accountability.
Mayor Harrington objected and wanted it to not state any dollar amount.
Menchaca agreed, and City Manager Mark Lazaretto said the motion meant that “the City will sit down with the Chamber to discuss deliverables and scope of work and bring that back to the Council. I would suggest a membership level. Have it all in one agreement and one staff report.”
Councilmember Wu, seconded the amended motion.
So, at this point, the issue of funds to be granted to the San Gabriel Chamber of Commerce has again been delayed until a further City Council meeting, at which time City staff will present a new contract. No monies will be distributed to the Chamber until there is a further vote.
> The City Council meeting of September 5, 2023 can be viewed below:
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The fact that Mayor Harrington is trying to downplay the facts, calling them smears, is shocking. He should not be trying to discredit you, Councilmember Menchaca and the Chamber members who resigned, who are sounding the alarm. The city should try and help the Chamber but not before doing their due diligence.