June 21, 2011
Reporting by Sara Rubin and Rebecca Robinson
A new report on alleged double-dipping by former Monterey County Water Resources Agency board member Steve Collins has implicated Marina Coast Water District General Manager Jim Heitzman. The finding, made public this afternoon, threatens to quickly unravel the strings tying together the $400 million Regional Desalination Project.
View the Board of Supervisors review documents here.
Collins—who resigned from the MCWRA board when facts emerged about his side contract with RMC Engineering, which he helped land the $28 million project management gig—was hired by RMC on the recommendation of Marina Coast Water District General Manager Jim Heitzman, according to the June 21 report by San Leandro law firm Remcho, Johansen & Purcell LLP.
Heitzman asked RMC to hire Collins in January 2010, according to an investigation commissioned by the Monterey County Board of Supervisors. The report was released to the media by Monterey County Counsel Charles McKee on Tuesday afternoon.
The entire situation may have remained secret but for the fact that Marina Coast hired a new accounting clerk in August 2010, and that unidentified clerk raised questions about the invoices Collins was submitting—and that Marina Coast was paying.
Heitzman then went to RMC and told the Walnut Creek-based firm he would not pay for Collins’ time. RMC continued to pay Collins’ invoices after Marina Coast refused, “and after becoming fully aware that Collins had been billing for time spent performing his duties as an MCWRA director,” the report states.
Heitzman and RMC Principal Lyndel Melton "became aware that Collins was charging RMC, and RMC in turn was charging MCWD, for time spent performing his official duties as MCWRA [board member]," according to the report. MCWRA is one of three partners in the $400-million Regional Project.
“We have uncovered evidence that…while Collins was serving on the Monterey County Water Resources Agency board, he was also being paid by RMC Engineering, the firm awarded the project management contract,” according to the report. “This conduct raises concerns about the validity of certain contracts that the MCWRA approved as part of the Regional Desalination Project, including the Settlement Agreement, Water Purchase Agreement and Reimbursement Agreement.”
Collins’ contract terminated on Dec. 2—the same day the CPUC granted final approval on the project. “Indeed, Collins’ contract with RMC appears to have coincided with the 2010 CPUC proceedings,” according to the report.
RMC paid Collins for at least five appearances made in his capacity as an MCWRA director. For example, he was compensated for the following activity on Feb. 23: “Attend [Board of Supervisors] meeting with Curtis Weeks and Irv Grant to obtain County approval of all agreements for the PUC.”
Under Collins’ original contract with RMC, he was authorized to bill up to $25,000, but his total billings from January to November. 2010 totaled $160,598. His maximum compensation was first boosted the day after Collins met with the Board of Supervisors for more than two hours in closed session, after which the board voted to conditionally approve the Regional Project.
Marina Coast paid the invoices in full, but under the reimbursement agreement—now potentially rendered invalid—California American Water reimbursed the full amount of the invoice requests, at Marina Coast’s request. The report, at the request of MCWRA, has also been sent to the District Attorney and the California Fair Political Practices Commission, which initiated an investigation into Collins’ conduct May 18.
Meanwhile, Monterey County Chief Assistant District Attorney Terry Spitz says his office began investigating the Collins contract and the potential conflict of interest violation two weeks ago at McKee’s request. The prosecutors are conducting their investigation in conjunction with the FPPC—the first time local prosecutors have launched a joint investigation with the state agency. Spitz says he was a bit chagrined the Supervisors released the Remcho investigation before his own investigation was complete. But that, he says, is not going to be quick..
“As prosecutors, we would like to see no report until our investigation is done…but we will live with that decision,” Spitz says. “The FPPC seems eager to get involved and talk about strategy, and we will speak next week about what we have done so far.”
Jim Heitzman could not be reached for immediate comment. Marina Coast General Counsel Lloyd Lowry says it’s too early to comment until Remcho’s final report is released. “I don’t think it’s appropriate to speculate on anything at this point,” he says.
Collins' attorney, Juliet Peck, insists that the report doesn't demonstrate any wrongdoing on the part of her client.
"The report clearly shows there was no conflict of interest between Stephen Collins and the MCRWA," Peck says. "Further investigation will reveal that his consulting work was performed at the request and at the approval of the highest levels of County government and with the endorsement of the County's legal advisors."
McKee says the report doesn’t implicate any supervisors.
“There is no evidence that any county personnel were aware of Collins’ billings other than to recognize that Marina Coast Water District, through RMC, had retained Collins for the Ag Land Trust case,” McKee says. He also notes the supes’ desire to move forward with the project and not get mired in emerging scandal.
“The supervisors are committed to making sure that ethics are held to a high level at the county, while making sure that the project doesn’t get derailed,” McKee says. “It’s easy to play up the firestorm and get everyone’s ire moving, but the focus now is moving on to the next step and getting constituents’ needs met.”
McKee says a lawsuit to nullify all of the desal contracts “could occur, but I haven’t heard any murmurs yet.”
Also on Tuesday, the Board of Supervisors appointed Collins' replacement for the Grower-Shipper Association's seat on the MCWRA board. Mike Scattini of Luis Scattini and Sons, a Castroville artichoke operation, who also sits on the Monterey Farm Bureau board of directors, will fill Collins' remaining term which ends Dec. 31. Jim Bogart, president of the Grower-Shipper Association, had no comment on the Remcho report.
Check back for more as this story develops.