Councilman Allevato Admits to Secret Contract Cancellation

Editor’s note: We invited Councilman Sam Allevato to explain to the taxpayers how and why the City Council secretly released ECO from its responsibility for the water plant, leaving San Juan water ratepayers to assume this massive financial obligation. This is one reason for our sky-high water bills. Allevato’s response is listed below. 

You have asked me to provide “my perspective” – you call it “an explanation” - on why the 5 members of the San Juan Capistrano Council voted in 2008 to settle a lawsuit with ECOS, the operator of the Groundwater Recovery Plan (GWRP). However, as I believe you are aware, the settlement was, pursuant to the Brown Act, approved in a City Council closed session meeting.

It may not be obvious to everyone, but the reason State law allows closed session action to settle litigation is because the State Legislature understands that some deliberations really have to be confidential. Think about how disadvantaged our City would be if every time the City Council wanted to discuss litigation, perhaps to decide strategy or perhaps to reach a settlement, all those discussions were required to be in a PUBLIC meeting.

With the advice of the City Attorney, and in the same way every city council meets to consider settlements, the ECOS settlement was considered in closed session in 2008; and while I am not sure of the exact number, probably over several meetings. As a Councilmember, I am required to keep confidential what occurs in closed session. Your request for “an explanation” of a decision I am supposed to keep confidential really puts me in an impossible situation. The only way to “explain it” is to violate my obligation as a Councilmember and violate State law, and I will not ignore the law.

In addition, as you are all aware, the [Capistrano Taxpayers Association] is currently suing the City on issues allegedly relating to the GWRP. Regardless of how anyone feels about the GWRP or the CTA, I am sure no one thinks it would be appropriate to comment on something that might hurt the City in defending the CTA litigation. Again, I see my duty to be clear as a City Councilmember, and it requires me to protect the City by obeying the law and keeping confidential matters confidential.

All that said, I do feel comfortable providing my general recollections of what motivated a settlement. Both sides were making significant claims, and the claims for unpaid amounts against the City would have done financial damage to the City. The Plant was up and running, and doing what we wanted most – providing locally available groundwater as part of our long-term plan. We all know it has not consistently met our goals, but it is a long-term project that provides us an essential back-up source of water.

Regarding the descriptions of rights and obligations under the bond documents and such, I personally have no recollection of those issues now almost 5 years later. However, I have to say I doubt a default by the City, even if covered by some kind of insurance, would have been as painless as you seem to imply because there are consequences to not paying your bills.

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