Keith Metzler

Three members of the Victorville City Council last month doubled down on their ongoing bet against the U.S Securities and Exchange Commission, elevating Keith Metzler from interim status as city manager to officially being the city’s full-fledged top administrator.
The move came more than four months after former Victorville City Manager Doug Robertson accepted what was tantamount to a lateral transfer from the city manager’s post in Victorville to the town manager’s position in Apple Valley at the end of November. Robinson’s tenure with Victorville officially ended on December 31, but in fact Metzler, who had served in the capacity of assistant city manager since 2011, at once took the helm in Victorville, having been designated as the city’s interim manager by the city council at its December 5, 2017 meeting.
The council turned to Metzler despite his central role with regard to the circumstances that led to the U.S. Securities and Exchange Commission’s filing of a civil action against the city in 2013, a matter which has yet to resolve itself. In that suit, Metzler is the only Victorville city employee named specifically as a defendant. The Securities and Exchange Commission (SEC) alleges the city overvalued hangars at Southern California Logistics Airport in marketing airport bonds in 2008. Metzler at that time was the city’s director of economic development and an agent for Southern California Logistics Airport Authority which was involved in converting shuttered George Air Force Base to civilian use. According to the SEC, in working with two investment bankers – Jeffrey Kinsell and Janees Williams, Metzler conspired to provide “materially misleading disclosures and a substantially oversized bond offering” to the purchasers of City of Victorville’s airport bonds. This entailed Metzler knowingly inflating the value of the hangars used as collateral for the bond issuance, the SEC charged, when he recognized them to be worth far less than the $65 million investors were told.
Metzler was the “point person” most fully focused on the situation at the airport, including the value of its various assets, the SEC’s lawyers, consisting of Robert Conrad, Theresa Melson, Todd Brilliant. Sam S. Puathasanon, John W. Berry, Kristin S. Escalante, Amy Jane Longo and David J. Vanhavermaat, have asserted. Metzler played “a significant role” in the bond offerings, according to the SEC, communicating with bond rating agencies and giving presentations to potential investors. Evidence shows he knew the county assessor valued the hangars at roughly half the amount he represented, the SEC contends. Metzler and the city were motivated to make the misrepresentations, according to the SEC, because the city and its attendant agencies and adjunct entities including the airport authority had incurred more than $269 million in debt in the effort to develop the airport, and had exhausted all options in leveraging available tax revenues, including obtaining a bridge loan while hoping that operations at the airport would pick up and begin to generate revenue to service the accumulating and mounting debt. When such an increase in operations did not materialize, the city went forward with the bond issuance which the SEC claims was collateralized with the overvalued hangars.
Nearly from the outset of the SEC’s April 2013 filing, city officials have asserted their innocence and maintained they want proceedings to get under way so it can be demonstrated that the Southern California Logistics Airport Authority did not, as the federal government contends, engage in a Ponzi-like scheme. Despite those claims, there have been numerous delays, the lion’s share of which have come about as a result of requests by the city. While early on the city and the airport authority, which are represented by Terree A. Bowers, Adam Bentley, Collin Seals and Karen Van Essen of Arent Fox LLP; and Metzler, represented at taxpayer expense by Michael D. Torpey, James N. Kramer, James A. Meyers, Kevin M. Askew, Judy Kwan and Blake L. Osborn of Herrington & Sutcliffe LLP; and the bond underwriting firm of Kinsell, Newcomb & DeDios. represented by Shaun Murphy and the law firms of Slovak Baron Empey, Murphy & Pinkney, LLC and Watt Tieder Hoffar & Fitzgerald LLP; hung together in contesting the SEC’s allegations, the city and Metzler in particular have over the last three years broken ranks with Kinsell, Newcomb & DeDios, propounding that much of what was at the basis of the SEC’s case was action by Kinsell, Newcomb & DeDios.
In court papers filed in July 2015, however, the SEC asserted Metzler could not logically or credibly lay responsibility for what had occurred at the feet of Kinsell, Newcomb & DeDios or other agents of the city, including city staff assigned to the airport. “Metzler, in his motion, attempts to characterize this case as one about simple ‘mistakes’ that he made while surrounded by a team of professionals who should have fixed the errors instead of him,” according to the SEC. “What he ignores, however, is the compelling evidence of his intentional conduct to hide serious problems regarding the millions of dollars of tax increment that was needed to repay the authority’s ever-increasing debt load.”
The trial was set to commence on January 23, but was postponed one week until January 30. A further delay at the request of the city was granted until February 27. The judge hearing the case, U.S. District Judge John A. Kronstadt, in January said he would brook no further delays beyond February 27. February 27, however, has come and gone, with the trial yet to commence. Word now is that the trial might begin at the end of this month.
There is a prospect that once the trial begins in earnest, the repeated expressions of confidence in Metzler made by members of the city council will at last be put to the test and that the throw of the bones the city has made by resolving to keep Metzler in the driver’s seat will come up snake eyes. Yet, on April 17, a solid majority of the council seemed to entertain no doubts about staying the course with Metzler in command.
Citing Metzler’s 22-year tenure with the city and the institutional knowledge that accompanies that, councilmen Eric Negrete, Jim Kennedy and Jim Cox enthusiastically consented to dispensing with the interim qualifier in his title and declaring him the city’s top administrator. In doing so they conferred upon him a $240,000 annual salary augmented with $76,802 in benefits for a total compensation package of $316,802.
It was nevertheless pointed out that Metzler was still being remunerated less than his predecessor Robertson, who was provided with a $264,560 salary and further pay and benefits of $77, 841. According to Victorville City Attorney Andre Bortnowski, Metzler will be making roughly $15,000 more per year as city manager than he was making as interim city manager.
Pointing out that Metzler’s “leadership led to the SEC litigation and the ComAv litigation,” councilwoman Blanca Gomez said before elevating Metzler to the official city manager’s post “I would be in favor of hiring a consultant to do the due diligence, so we hire the right candidate.”
Councilman Kennedy said, “I think over 22 years Mr. Metzler has proven his commitment to the city of Victorville. He has been through thick and thin with the city and I think in the last four months he has demonstrated the ability to make smart decisions that needed to be made, smart ideas and the leadership that we need in this city.”
Negrete said, “The city is fortunate to have someone like Keith. Maybe the public a lot of times doesn’t know all of the inner workings and the ups and downs, the struggles we go through just to run a city effectively, but I’ve seen Keith jump right in and have no questions about his leadership style. I appreciate working with him. I am proud to move this item for approval.”
Cox, who was formerly Victorville’s city manager from 1969 until 1999 and then again from 2009 to 2011, said that a consultant would weed out any candidates for city manager who were not qualified but would not make the final selection of who would actually hold the job. “In my 35 years experience as a city manager, I never heard of a consultant choosing a city manager,” said Cox, who as mayor pro tem was chairing the meeting in Mayor Gloria Garcia’s absence. “While we did not go on a nationwide hunt, it is still a decision by the council. Any manager that works for the council is going to have a stipulation that if they don’t do the work required by the council, that that contract is in jeopardy unless they carry out the mandates of the council, because there is always severance for cause. Always.”
While Negrete, Kennedy, Cox and Garcia have heaped upon Metzler accolades for the advances at Southern California Logistics Airport, where, according to the city a number of aeronautics-related companies have set up shop and are employing upwards of 2,400 skilled workers, those who are both the city’s and Metzler’s detractors maintain that the effort to jumpstart the local economy at the airport has been far more costly than successful. A large portion of the $269 million in debt the city accrued by 2008 in the airport development effort has yet to be retired, and the SEC case still hangs ominously over the city. As of February, the attorneys working to defend the city, the airport authority and Metzler in the SEC case alone had been paid $11.47 million. That legal bill, even if the defense of the civil case brought against the city and Metzler proves successful, will likely rise to over $15 million before a trial concludes.
Moreover, the city has been embroiled in a legal dispute with one of the aeronautical companies that had located at the airport and was engaged in what the city has long touted as the justification for undertaking its expensive airport conversion effort. For reasons that are somewhat opaque, the city embarked on an effort two years ago to evict ComAv, an aviation logistics support company that employs 310, from a hangar at Southern California Logistics Airport. Initially, the city had leased the hangar to Pratt & Whitney Line Maintenance Services, Inc. When Pratt & Whitney left, it assigned its lease on the building over to ComAv, which remained in place. When Pratt & Whitney’s original lease expired, ComAv moved to exercise a provision in its contract allowing it to extend its lease at the facility by paying a monthly hangar lease fee to the airport authority that was one-and-one-half times what it had been paying to Pratt & Whitney. The city rejected this, insisting that ComAv leave, in seeming contravention of the city’s stated desire to run the airport to create local employment opportunities. When the city and the airport authority undertook legal action to evict ComAv, the company stood its ground, and Judge Wilfred Schneider ruled in the company’s favor. As a consequence Victorville now owes ComAv $1.9 million in legal fees. The city is appealing Schneider’s ruling.
–Mark Gutglueck