Oxnard City Manager Years Late Paying Off Loan

Oxnard’s city manager — one of the highest-paid government leaders in Ventura County — is years late paying back a small personal loan from the city, documents show.

Oversight of a $10,000 loan made to Ed Sotelo in 1998, when he was hired as Oxnard’s top executive, had fallen through the cracks until recent inquiries by the District Attorney’s Office brought the paperwork to light, city officials say.

“When the document appeared, I thought: ‘Wow, I better pay that off,'” Sotelo said.

The money should have been paid in full in 2003 when Sotelo sold his house, according to terms spelled out in a one-page loan agreement. The 10-year loan also was due in full at the end of 2008, according to papers obtained by The Star through a public records request.

But none of the principal was paid down until this summer. Sotelo has since paid back $7,500 and says the final check is coming soon.

Sotelo’s annual base salary is $266,013.70, the highest among equivalent city and county chiefs in Ventura County. His total compensation package is worth more than $381,000.

When asked why he didn’t pay back the loan in 2003 or 2008, Sotelo said it had always been his intention to pay it off when he left or retired.

“I think the salient point is that the contract required a $400 (interest) payment every year,” he said. “I never missed a year.”

City records account for many of those $400 annual interest payments, although the city couldn’t provide receipts for 2002, 2003, 2004 and 2007. The annual 4 percent interest payment due in December 2010 wasn’t made until late May, netting a $6.67 late fee, records show. When all is done, Sotelo’s payout is expected to total $14,806.67.

No oversight

The loan amount is miniscule by government finance standards, but the situation appears to show there was lax oversight on public funds lent to Sotelo.

No mention of the loan, for example, is made in any of the city manager’s employment contracts or amendments. By contrast, a housing loan to Ventura City Manager Rick Cole is detailed in his contract.

Sotelo said, and receipts seem to confirm, that he delivered checks for the annual interest payment to the office of the then City Attorney Gary Gillig.

Gillig, who drew up the loan agreement, said he vaguely remembers signing it but has no recollection of handling ongoing payments. If his office had such a role, he wasn’t personally involved, Gillig said, adding he would have assumed Sotelo repaid the loan when his house sold in 2003.

“I turned management of that agreement over to the Finance Department,” Gillig said.

The former finance director, Stan Kleinman, died in 2006.

Gillig said he had no explanation why no one at the city noticed when the loan went unpaid.

“Possibly, it just slipped through the cracks,” he said.

City Attorney Alan Holmberg said he doesn’t know who was in charge of the loan.

“I do not really know the circumstances under which the loan was originally made,” Holmberg said.

In December 2008, he forwarded Sotelo’s interest payment to the current finance chief with a handwritten note indicating some mystification. “I think for some reason, Gary (Gillig) insisted over the years that the payment be delivered to him,” Holmberg wrote, “so it was delivered to me on 1 1.” The note was included in documents provided to The Star.

Holmberg said after the DA’s office made inquiries in recent months, “we searched high and low for the file.” Some receipts were found in a personnel file, he said, and a separate file for the note was found in the finance department.

The DA’s office has been investigating the city of Oxnard for more than a year for possible malfeasance involving public works and other contracts. Most records are sealed, no charges have been filed and the DA has been tight-lipped. Some paperwork regarding Sotelo’s loan was turned over after a public records request was filed in May, but publicly available documents provide no indication as to whether the loan is part of the DA’s probe.

Only a condo

Sotelo said he could only afford a condo, not a house, when he was hired.

“When I started work for the city of Oxnard, I was one of the lowest paid city managers in the entire county,” he said.

His base salary was $120,000.

Sotelo’s contract was signed in January 1998. Six months later, the City Council directed Gillig to negotiate an unspecified fringe benefit for him, meeting minutes show. The loan agreement was signed in October, just after Sotelo bought a home on Rhonda Street for $190,500, according to property records. In 2003, the house sold for $435,000. But the $10,000 loan remained unpaid.

David Grau, a board member of the Ventura County Taxpayers Association, said the issue comes down to transparency. It’s not right that citizens or reporters are forced to dig such information out of public agencies, he said.

“It’s certainly the principle of it, not the amount” of money involved, Grau said.

The loan, a tiny item in the constant torrent of municipal business, has apparently faded from the memories of some involved.

Former Mayor Manuel Lopez said he had no recollection of a loan to Sotelo.

Former Councilman Dean Maulhardt pieced together a few memories after recent discussions. He said other city managers at the time had received as much as $200,000 or more in housing assistance, but Oxnard’s council didn’t want to get mixed up in that kind of a contract.

Oxnard Mayor Tom Holden, who was a councilman in 1998, doesn’t recall any loan discussions and said he never saw the final agreement. But the matter hasn’t been handled appropriately, he said.

“It should have been part of the employment agreement,” Holden said, so the council could have kept tabs during future negotiating sessions.

He can’t foresee the city making a similar loan in the future.

But if were to happen, “I know it would be written up differently,” Holden said.