By Mark Gutglueck
The political and legal time bomb that has been ticking in Fontana since July 2019 grew closer to exploding this week when California State Auditor Elaine M. Howle turned her full attention to the situation surrounding the abrupt departure of Ken Hunt as Fontana city manager two years ago, and the financial and administrative arrangements that were made to buy his silence with regard to the events that led up to his leavetaking.
The more sophisticated, exacting and intense focus now being applied from entities outside the clubby governmental establishment that pervades San Bernardino County is now threatening to detonate that bomb, revealing layers of corruption in Fontana’s governmental structure implicating Fontana Mayor Acquanetta Warren.
In the spring of 2019, Hunt had experienced a remarkable 19-and-a-half year run as Fontana’s city manager and was at that time the highest paid city manager in San Bernardino County and among the highest paid city managers in the state. He had nearly two-and-a-half years left on what was then his current five-year contract with Fontana that was paying him $352,136.35 in salary and other pay and $93,516.67 in benefits for a total annual compensation of $445,653.02. For the previous eight years, just as it had been with the administrations of the city’s three previous mayors, Hunt had a very good relationship with the administration of Mayor Warren, who had been a city councilwoman since 2002 and mayor since 2010.
In May 2019, however, Hunt came face-to-face with convincing evidence of something he had over the previous few years suspected but could not prove, which was that Mayor Warren was hip deep in graft, and was taking kickbacks from entities that were doing business with the city.
There ensued what was for Warren and Hunt a very uncomfortable June, during which both sized up the political, legal and situational reality they were confronted with. Warren at that point had a lock on the city council. She counted Councilman John Roberts, Councilman Jesse Armendarez and Councilman Phil Cothran, Jr. as firm and fast allies who would back her down the line on anything, including shedding Hunt as city manager if it came to that. Hunt understood the political situation and the authority Warren wielded in that regard.
Nevertheless, Warren recognized Hunt possessed information that might prove highly problematic for her if he unleashed it. Hunt was in a difficult position. It is never easy for a government employee to work at cross purposes to his political masters. There was no telling how politicians elsewhere, where Hunt might eventually seek employment, would look upon his having betrayed the last mayor he had worked for. Simultaneously, Hunt was acutely conscious that even if he kept what he knew under his hat, there was no guarantee the information would not surface eventually anyway, and that though he was not himself involved in getting paid off, questions would emerge about what he knew and when he knew it. If he was put in the position of insisting he did not know what was going on, he would look incompetent. If he tried to explain that he knew but had allowed himself to be overridden by Warren and her political authority, his reputation would be damaged in a whole other way he would not want to live with.
Warren was not willing to undo what had been done, nor untangle herself from the quid pro quos she had engaged in which had endowed her and her political war chest with a commanding amount of money that virtually ensured her reelection as mayor for as long as she chose to remain politically active. Hunt was no longer willing to go along. The only way out was for Hunt to leave.
What ensued was a deal, one that instantaneously conferred more money on Hunt than he would make if he remained in place even beyond what would have been the full duration of his contract as city manager. An arrangement was made so that Hunt moved off into a comfortable retirement while he remained officially on the city payroll long enough for him to achieve his 30-year milestone as a public employee. In return, Hunt’s lips were sealed.
In July 2019, Hunt and the city announced that Hunt was leaving. Hunt departed Fontana City Hall, never to return. To even casual observers, the development seemed odd and took residents by surprise, as over the previous two years there had seemed to be a mutual lovefest between Hunt and the city council, the members of which went out of their way to justify Hunt’s salary by speaking of what an outstanding job he was doing in running the city and how he was responsible for Fontana’s enviable financial position. Mayor Warren maintained an air of nonchalance when discussing Hunt’s departure, at first hinting without actually saying that it was Hunt’s wish to retire and that the city had merely accommodated him. When she was pressed on the matter and it was pointed out that Hunt’s contract called for him remaining in place until the end of 2021, the mayor adjusted her statement to say that Hunt had resigned. That begat further questions, since Hunt’s voluntary resignation, under the terms of his contract, would have absolved the city of having to provide him the severance specified in his contract. The resignation, Warren insisted, was voluntarily made so Hunt “could retire.”
Warren was unwilling at that point to explain why the city had assented to a severance payout it did not need to make. In 2018, for 12 months of service as city manager, Hunt had made $445,653.02 in total compensation, that is full pay and benefits. In 2019, when Hunt had worked six months and fifteen days as city manager, he was paid $464,584.53 in total compensation, an indication he was receiving a severance despite his voluntary resignation. Peppered with further questions, Warren became testy, insisting that it was a personnel matter and that the questions needed to stop. Shortly thereafter, she conceded that a deal with Hunt had been reached to allow him to leave as city manager in July 2019 but remain on the payroll until January 2020, at which point Hunt would achieve 30 years as a city employee, thereby enhancing his pension. “He’s happy, We’re happy. Everyone’s happy,” Warren said.
As it turned out, however, that wasn’t the half of it.
The city had buried the fact that while Hunt was to remain on the payroll through January 31, 2020, the separation agreement he had finalized with the city on July 12, 2019 also called for him continuing to receive his full salary and health benefits for another year beyond that, until January 31, 2021. That was to be topped with another $312,864.95 in what was described as a “leave settlement.”
The separation agreement is illuminating, betraying that there was some degree of bad blood between Hunt and Warren and perhaps others at Fontana City Hall. In return for staying on the payroll until the end of January 2020 and getting paid for yet another year while he was not working, Hunt acquiesced to a demand that he leave City Hall at once. Also hidden in the agreement was that Hunt was being placed on “administrative leave,” a status inconsistent with him heading into a willful retirement.
The agreement had a clause in it that prohibited Hunt from saying anything at all about or explaining why he was leaving, such that if he were to be asked about the matter, he could answer such an inquiry “only by indicating that the separation was amicable.”
Ultimately, in February 2020, Fontana hired Mark Denny as city manager. Hunt’s situation faded from public focus.
More recently, however, State Controller Betty Yee published payroll data for cities and counties for the year 2020. That data showed that the Fontana city manager was paid $932,623 from January 1 until December 31, 2020.
Fontana’s city manager for 2020, or most of it, was Mark Denny. Denny did not make $932,623. Rather, Denny was paid $210,672.91 for the 11 months he did work in 2020. Before Denny arrived, Mike Milhiser had been serving as Fontana’s city manager. Milhiser was brought in as Hunt’s interim replacement at the end of July 2019, and he remained in place through to the end of January 2020. Milhiser was paid $19,152.08 for his work in January 2020.
Yee highlighted the $932,623 paid to the “Fontana city manager” in 2020. That aroused the interest of California State Auditor Elaine M. Howle, who noted that $932,623 being paid to a city manager was some $380,000 more than was paid to any other city manager in the state. At that point, it was revealed that the city manager in question was not Denny or Milhiser, but rather Hunt. When it was learned that Hunt had left the Fontana payroll at the end of January 2020 and had not actually worked since July 2019, alarms rang.
This prompted Fontana to issue a statement seeking to clarify things. The clarification spelled out that the full $932,623 had not gone to Hunt but rather to Hunt, Denny and Milhiser. Thus, Denny and Milhiser had been paid a combined total of $229,825 in 2020 and Hunt had been paid $702,798, that is $476,771.58 in pay and benefits and and a final $226,026.42 installment of his $312,864.95 leave settlement.
Whether Fontana’s statement will dissuade Howle from tracing everything out remains to be seen.
All told, from the point of his resignation in July 2019 going forward, Hunt was provided with a severance package that totaled $1,127,378.45, despite the consideration that the terms of his contract specified that if he resigned or in some other fashion voluntarily terminated his employment with the city, he was due no severance.
Sources close to Fontana City Hall say that the $702,798 paid to Hunt in 2020 will be very hard to justify if Howle chooses to put the City of Fontana through its paces. In actuality, that payment was hush money to keep Hunt quiet about what he learned over the last three or four years of his tenure as city manager, capped off by the details he learned in the Spring of 2019, the Sentinel was told. That includes money paid to Warren in various forms in exchange for votes she made and votes of others on the council she delivered, it is alleged.
One of those tainted votes pertained to the City of Fontana’s approval of a no-bid multi-million dollar contract with Alliance Building Solutions to equip city facilities with energy conservation systems and products and to install alternative energy supply sources such as solar energy panels on rooftops and carports.
As city manager, Hunt was pushing the city council to seek competitive bids on any energy efficiency projects the city was going to pursue. Warren, however, bypassed the bid process on the Alliance Building Solutions contract. While in most cases governments and public agencies at all levels are required by law to utilize a competitive bid process, that requirement is suspended in certain circumstances such as emergencies or where the urgency for the service or goods is so great that soliciting, receiving and evaluating bids would result in a delay that would harm public safety, health or well being.
One specific exception to the competitive bid requirement for public agencies and governments in California relates to energy efficiency projects. As long as a public agency or government can demonstrate that the work or service to be provided will result in improved energy efficiency or a reduction in fuel or energy use as well as show that some savings in cost will accrue to the entity contracting for the service, it need not conduct a bidding process but can simply award a contract to a provider of that service. While not conducting a competitive bidding process on energy conservation or energy efficiency projects is an option for governments and public agencies, they can, if they so choose, seek competitive bids.
Warren’s efforts in helping Alliance Building Solutions get the no-bid contract in Fontana was one of the patterns in her conduct that brought Hunt to the conclusion that Warren was on the take, an individual knowledgeable about the circumstance told the Sentinel.
More recently, Alliance Building Solutions’ founder and principal, Brad Chapman, has hired former San Bernardino County Supervisor Bill Postmus to serve as his company’s representative. Postmus is now seeking to convince Warren to again use Alliance Building Solutions in improving energy efficiency at other Fontana city facilities, and in so doing not engage in an open bidding process, rather allowing Chapman’s company to obtain the contract for the energy efficiency conversion work without subjecting it to having to compete against any other purveyors of the service. Simultaneously, Postmus’s strategy includes conveying money from Chapman to Warren and other Fontana officials, money which is to be provided to them either as campaign contributions or payments in some other form.
Warren was unwilling to discuss why the severance package was conferred upon Hunt or what her position is on having Alliance Building Solutions involved in any future energy efficiency projects the city is to engage in.
By Mark Gutglueck