Is it possible that the city's complicated pension crisis could be solved by simply nullifying the votes that created it?
That question was reportedly asked when City Attorney Mike Aguirre met on Dec. 16 with April Boling, a CPA and treasurer for various local political interests, and her attorney, Michael Conger, who successfully sued the city in 2003 to end the practice of under-funding the pension system.
The sit-down was scheduled after Boling and Conger sent Aguirre a letter and draft of a lawsuit threatening to sue the San Diego City Employees Retirement System if a 2002 City Council vote granting controversial retirement benefits to city workers is not overturned.
During the meeting, Conger says, he laid his cards on the table, explaining how and why he'll attempt to force the City Council to nullify its vote. He also reiterated a Jan. 12 deadline-one day after the council's next scheduled meeting-when the city must take action to invalidate the vote if it wants to avoid a legal challenge.
But why sue SDCERS if it's the City Council's vote they're seeking to overturn? Conger and Boling, who also chaired Mayor Dick Murphy's Pension Reform Committee, allege SDCERS trustees directly benefited from their 2002 decision to allow the city to under-fund the pension system in return for an increase in benefits. The duo claims that pension trustees had a conflict of interest and subsequently violated Section 1090 of California law, governing conflict of interest by public officials and appointees. Their suit would ask a judge to determine if the vote was illegal and declare it invalid.
In Conger's view, the votes were part of a behind-the-scenes quid pro quo deal and, if a judge invalidates half of the deal, the remainder cannot stand.
"We have already gotten rid of the under-funding part of the deal, and this lawsuit seeks to get rid of the rest.... You can't have a half-legal deal"
Boling says Aguirre expressed interest in their case, which makes sense because it's a target of his own investigation, not to mention a probe by U.S. Attorney Carol Lam.
"Aguirre asked for additional information-we are in the process of providing it.... I would assume that he is going to make a decision as to whether or not he agrees that there was an apparent 1090 violation," she says, adding that she isn't eager to sue. "You have to understand, if Mike Aguirre can fix this without a lawsuit, I am more than happy to assist him in doing that."
But Boling says the two sides aren't exactly cooperating.
"I don't know if "cooperation' is exactly the right term," she says. "We are providing him with the information that we will be using if we end up suing and giving him the opportunity to... take actions that would arrive at the same objective.... If he doesn't get it done, we are bringing suit."
But questions remain whether or not Aguirre, as the legal representative of the city, who has also recently asserted himself as the legal representative of SDCERS, can effectively take action against his own clients if they fail to heed his legal advice.
"I don't know whether he can or can't, and that's his call to make," says Conger.
During his campaign for City Attorney, Aguirre repeatedly mentioned that he would bring 1090 action, if necessary, but he told CityBeat this week that he doesn't think his own legal action will be required. "There is no intent to sue SDCERS or the city under 1090," he says. "We have no intent to sue anyone.... We are issuing a legal opinion that will address the 1090 issue."
Aguirre says that opinion-at least a partial result of his internal investigation-which will "go way beyond 1090," will be issued within the next two weeks.
If Aguirre does take action, Conger says he won't interfere. "I'm not trying to preempt him," he says. "I just want to make sure it's done."
Pushing for action together, Boling and Conger make a bit of an odd pairing. Formerly an outspoken critic of the Mayor's Pension Reform Committee, Conger says he was skeptical about the motivations of Boling, the committee's chair and also Murphy's campaign treasurer, until he observed her actions firsthand.
"I thought she was just a part of the problem, and I think I called her the broomstick of Murphy's efforts to sweep this problem under the rug," he says. "But frankly, she earned my respect because she asked the right questions and her analysis and recommendations... I thought were right on target.
For her part, Boling, who is also the outgoing president of the San Diego Taxpayers Association, which Conger says will be the lead plaintiff if a suit is filed, recognizes that the threat of a suit is a "fairly gutsy move with political downsides. There are politicians and there are special interests that are less than pleased about this move, and I am sure that there is going to be plenty of backlash."
Lawyers representing two unions, the San Diego City Firefighters and the San Diego Municipal Employees Association, upset by the prospect of losing benefits, have already filed protests with the mayor and City Council. In a Dec. 20 letter, attorneys for the Municipal Employees Association blasted Conger's ultimatum to Aguirre as a prearranged "conspiracy" and urged the elected officials to seek outside legal council.
In a similar letter, dated Dec. 16, lawyers for the firefighters disputed Conger's claims that a quid pro quo deal or any impropriety ever took place.
Finally, a Dec.17, letter from Coughlan Semmer & Lipman, which didn't identify the clients the firm represents but indicates they were named in a draft complaint sent by Conger to Aguirre, states that "Mr. Conger's letter and draft complaint are factually false and legally erroneous. On behalf of our clients we demand the city defend this litigation to the fullest extent."
Jerry Coughlin Jr., who signed the letter, didn't respond to CityBeat's requests to identify those clients but, according to widely published reports, the firm represents Firefighters Union president and SDCERS board trustee Ron Saathoff as well as Councilmember Michael Zucchet, who's been indicted on federal charges in a different matter.
Those union letters prompted the Performance Institute, a government-reform think tank led by Carl DeMaio, to fire back on Tuesday, urging the mayor and City Council to publicly reject the unions' requests to have Aguirre barred from council deliberations related to the pension crisis.
"Perhaps the unions are doing the dirty work of the mayor and council, who may want the city attorney banned from important meetings looking into city financial problems," DeMaio wrote in a statement issued Tuesday. He also threatened legal action if the City Council attempts to exclude Aguirre.
Despite the contentious back-and-forth, Conger insists it's the process by which the deals were made, not the benefits they created, that he wants to change. "The city can readopt the [benefits] the next day," he says. "I'm not against the benefits.... What we are trying to do here is say that if the city government is going to make a policy decision and grant workers a raise, we just want to make sure it is done openly.... It's about open government."
But Conger concedes that some things would change. Most notably, if the City Council wanted to reinstate the benefits after voiding its previous vote, it would have to do so under guidelines recently established by Prop. G, which forces the city to pay the cost of new benefits-in this case, approximately $42 million-over five years rather than spreading it out over decades.
Where the City Council would get the estimated $8 million a year required to pay that debt is another problem without a simple solution.
"It's a cruel hoax that's being perpetrated on [pensioners] by those who are in charge of the pension plan and their hired guns to tell them that they realistically can expect to receive benefits that there is no money to pay for," says Aguirre, "and they knew there was no money to pay for when they were created."