Council members, ex-city manager are criticized.
A blistering report issued by the Fresno County grand jury Wednesday says that Sanger's former city manager and some current council members have benefited from cozy relationships with developers and have grossly mismanaged the city's finances over the years.
The 10-page report, which details a series of incidents, says city officials acted inappropriately and, in some cases, illegally.
"These conflicts of interest erode the public trust and create the impression that council members are working in the best interests of themselves and developers rather than the city of Sanger and its citizens," the report says.
* Grand jury report on city of Sanger
The grand jury also made it clear that the city would not be facing the possibility of such drastic budget cuts in the next fiscal year that begins July 1 if it had managed its finances better.
District Attorney Elizabeth Egan said her office is reviewing the report and could not comment on it.
One of the report's most striking accusations is that former City Manager Jim Drinkhouse bought a house from a developer for tens of thousands of dollars below the market value. In an interview Wednesday, Drinkhouse said his wife bought the house from Phillip "Randy" Castiglione's company, Bethel Estate, in 2004 or 2005.
The grand jury said Drinkhouse gave Castiglione special treatment by allowing him to build homes before they were approved and by letting him "cut corners" on building permits. The report also said that Drinkhouse's wife worked for Castiglione, though Drinkhouse said she was hired only after they bought the house.
Drinkhouse denies giving Castiglione any preferential treatment. He said his wife was able to get a good deal on the house because she bought it before it was built. By the time other homes in the development went up for sale, real estate values had risen, he said.
The report also criticized the City Council for not fully vetting Drinkhouse before hiring him seven years ago. It said that after he was hired, Drinkhouse told the City Council in closed session that he had been convicted of forgery. Nevertheless, the council decided to let him keep his job.
In late February this year, Drinkhouse abruptly resigned without explanation. The City Council agreed to let Drinkhouse collect his salary and benefits for the remainder of his contract through January 2010 -- totaling $233,000.
The report also said that "it has been common practice" for council members and city staffers to meet with developers for lunch prior to City Council votes on new developments. The council members didn't mention the lunch meetings before voting on the projects, the grand jury report said.
An unidentified developer also gave gift baskets and leather jackets to Drinkhouse and some council members, the report said. It said that most council members did not report the gifts on state financial disclosure forms.
Interim City Manager John White declined to comment Wednesday. Most council members did not return calls or e-mails.
Mayor Jose Villarreal, who was elected to the council in November, wouldn't comment on any of the specific accusations in the report but said the city is closely reviewing it.
"There are serious concerns that must be addressed," he said. "We will have to respond to those findings and recommendations. The citizens of Sanger deserve no less."
The city is struggling financially because it has depleted its reserves and is anticipating reduced revenues for the next fiscal year, as are most cities in California. But the grand jury made it clear that the city would not be in such dire financial straits if it had been more fiscally prudent.
In the 2006-07 fiscal year, for example, the City Council approved a budget that resulted in a $2.1 million deficit. Drinkhouse blamed the shortfall on declining city revenues.
The report said the city also has made loans of or spent almost all of the $15 million it received from a legal settlement with chemical and oil companies in the early 1990s. The money was supposed to be used for water-related projects, but much of it has been lent for unrelated projects, the report said.
The grand jury also reported that at a September 2008 festival at Sanger Park, Drinkhouse directed the city to "borrow" the Sanger Chamber of Commerce's liquor license so the city could sell beer. An unidentified council member who helped organize the event was warned by Sanger police that it was illegal for the city to sell alcohol, the report said.
Drinkhouse acknowledged that the city should not have been selling beer.
"That was an innocent mistake," he said. "No one knew we weren't supposed to do that."
http://www.fresnobee.com/local/story/1431500.html
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