Council Member Heffernan announced that the Airport Working Group (AWG) presented an expenditure summary to the City.  He reported that, at the July 9, 2002, Council meeting, a request was made to AWG and Citizens for Jobs and the Economy (CJ&E) to submit an expenditure summary to report how those groups spent the money previously allocated by Council.  He stated that AWG received $3.6 million and CJ&E received $300,000.  He indicated that AWG’s report was submitted on July 31, 2002, to the City Manager.  Mayor Ridgeway noted that the City will be conducting an audit on the reports, but it will not be prepared or ready for about a month.  Council Member Heffernan stated that the two steps include the statement that is submitted by the group and the independent audit by the City to verify that the statement is accurate.  He indicated that he is now commenting on AWG’s numbers and reported that AWG spent about $3,572,000.  He noted that this was approved May 2001 by Council on a 6-1 vote, with himself casting the dissenting vote, and that there was a subcommittee of this Council which consisted of Council Members Glover, Proctor, and himself.  He stated that Bruce Nestande and Dave Ellis made the presentation to substantiate this grant.  He reported that there was no budget, no line item, no work plan, or no competing bid, but the bid was approved.  He pointed out that Bruce Nestande was paid $332,415, the law firm in which Barbara Lichman is a member (Cheveliar, Allen & Lichman) was paid $330,134, and Dave Ellis & Associates LLC was paid $458,062.  He noted that over $1,120,000, which represents over 31% of the grant, was spent on these three groups.  He believed there was lack of due diligence when this grant was approved and feels it is peculiar that the three groups got such a large proportion of the grant.

Council Member Adams reported that the agreement with AWG and CJ&E required an audit.  Council Member Heffernan stated that he is reporting on who got large portions of the money.

Council Member Glover reported that, on February 12, 2002, the City Council decided not to sue over any matters relative to Measure W, noting that the election was March 5, 2002. She stated that the City also decided to inform AWG and CJ&E not to spend any more money from their grants received from the City and that City Attorney Burnham was told to tell AWG and CJ&E not to spend any more of their grant money.  She explained that the reason Council did this was to garner and keep support from many factions for the Board of Supervisors vote on February 26 to sign the John Wayne Airport (JWA) Settlement Agreement.  She stated that she went out and told the El Toro Re-use Planning Authority (ETRPA), the corridor cities, Congressman Cox, the Board of Supervisors (including Supervisors Wilson and Spitzer), and the Orange County Congressional Delegation of the path Council had taken to not spend any money on litigation on El Toro matters and/or Measure W issues, and that the City was not spending any more money on any El Toro issues.  She indicated that she did this because of the direction of Council at the February 12 meeting.  Council Member Glover emphasized that she put her name and reputation on the line, as well as the reputation of the City on the line.  She stated that she could never have gotten the Settlement Agreement signed without getting the support of the above parties. She indicated that much of the support was based on the fact that the City was not spending funds on El Toro or Measure W.  She pointed out that Newport Beach has to be a City where people can trust the City, staff, and Council since it is Council and staff who represent the City.  Council Member Glover stated that, if any bills were incurred by CJ&E and AWG after February 12, Council is not responsible for them because the City Attorney informed them not to spend any more money.  She believed that the respective organizations should pay those funds back because the City Attorney was instructed to tell those respective groups that no more of the public’s money was to be spent.  She stated that, if any checks were cut by the City for AWG and CJ&E after February 12, 2002, the appropriate staff who authorized them should provide statements as to why such checks were cut.  She noted that the JWA Settlement Agreement is signed and they went out in good faith to get support.  She stated that, if staff, AWG, or CJ&E spent monies after February 12, 2002, that needs to be addressed by Council since it was without authorization by Council.  She indicated that they are out telling people what Newport Beach represents and what it is doing, and if the City has staff handing out checks while Council is telling everyone we are not spending anything, then they are tearing down the reputation of the City and those who are going out.  She noted that they testified in front of the Board of Supervisors and visited the groups and told them certain things.  Council Member Glover emphasized that the Settlement Agreement is signed and believed that anyone who has participated in this endeavor and has not followed those rules has tarnished the City of Newport Beach and the system.

Mayor Ridgeway emphasized that, until there is an audit, accusations are premature.  He reminded everyone on Council that, when the original grant was made in 2001, it was at the behest of the Board of Supervisors and noted that part of it was to support the JWA Settlement Agreement.