Responses Give New Twist to
$1 million Transfer

Tulare - In individual responses to the Tulare County Grand Jury, City Manager Darrel Pyle and two council members said Tulare Motor Sports Complex developer Bud Long in 2009 did not need the city's permission to remove the $1 million he had in a Tulare bank and move it to a Fresno bank.

The money was placed in a Citizens Bank account to demonstrate the developer's intention to repay the city for cost of an environmental impact report.

The grand jury, in one of its findings pertaining to an allegation of a Brown Act violation, said an agreement was amended on Dec. 29, 2008 – the night the City Council approved the EIR – to prevent the developer from withdrawing funds from a Tulare bank without city permission.

Pyle, Vice Mayor Phil Vandegrift and Councilman Richard Ortega said that was not the case, thus disputing publicly for the first time what generally has been thought to be true.

The handwritten modification drafted by TMSC attorney Myron Smith at the direction of then-City Attorney Steve Kabot was neither dated nor approved by the council, thus making it invalid, Pyle said.

“This action was taken without the knowledge and consent of the City Council, demonstrating that it was not signed by 'all parties'” as required, Pyle said.

He also said he heard Kabot tell Smith he would “kill the deal” if he didn't agree to the modification, which hardly amounts to “mutual consent.”

Because the council never acted, the original agreement, which allowed Long to remove the money after the EIR was approved, remained in effect, he and the council members said.

Mayor Craig Vejvoda agreed with the grand jury that an amendment was made, but noted the change happened without the knowledge or action of the City Council, leaving “some question” as to its validity.

Pyle said he reached his conclusions after the grand jury raised its concerns in July, prompting him to review relevant documents to see how matters got to this point.
This is just the city manager talking,” he said. “I'm not an attorney.”

News to Kabot

Kabot said he was surprised by Pyle's comments because the city manager knew about the amendment before the Dec. 29 meeting and agreed it was necessary to protect the city.

Before that meeting, he, TMSC attorney Smith, Bud Long, Pyle and others met at City Hall, where he raised the issue about the original agreement, Kabot said.

The prohibition against the developer taking money out of the account was going to dissipate with approval of the EIR and that was something the city did not want, he said.

“The simplest solution was to draft that amendment,” he said. “Darrel Pyle was fully aware of it and agreed that it was necessary.”

He believes at least one council member was present at the meeting but he could not recall which one.

“The fact it [the amendment] was undated does not mean anything as far as whether it's enforceable or valid or not,” Kabot said. “It was very clear the developer – Bud Long was there – understood that was changing the agreement and it was very necessary to do so.”

As for threatening to “kill the deal,” Kabot said he didn't recall using those words.
“I said I would recommend the EIR not be approved and the development agreement not be approved that night unless there was a modification,” he said. “But

I can't kill the deal and I know that.”

Kabot called Pyle's responses “absurd” and said the city manager is in effect saying he knew full well when the council approved the EIR, the city would have no control over the $1 million and he didn't care, he said.

“That's the only way to interpret that,” he said.

Pyle said whether he knew is not the point. The point is the rules to change the amendment were not followed and that was the city attorney's responsibility to see that they were.

He maintained it was the city attorney's responsibility to see that the amendment got on that night's agenda – perhaps as an urgency item – and he didn't.

Asked why he didn't raise the matter that night, Pyle said: “I don't write contracts. I don't amend contracts and we pay attorneys a whole bunch of money to do that very specific task.”

Pyle also said that while TMSC attorney Myron Smith signed the agreement and believed it was binding, Long apparently after reviewing the documents, determined it was not and attempted to remove the money from Citizens Bank a few days later.
But the bank balked and called city Finance Director Darlene Thompson, who said permission from the city was needed.

When the money was transferred to a Fresno Bank, Smith prepared a document that would give the city continued control over the funds. Vejvoda – with Kabot's blessing – signed the document at the Fresno airport that would have done that – but Long refused after Smith brought him the paper.

Pyle later approved transfer of the money, again with an OK from Kabot.

The above story is the property of The Valley Voice Newspaper and may not be reprinted without explicit permission in writing from the publisher.