Loveland council picks Boulder attorney as special prosecutor

LOVELAND — With the four members accused of violating open-meetings rules choosing not to attend the special meeting, and after hearing a threat of federal court action by their defense attorney, the Loveland City Council late Friday afternoon voted to appoint Kathy Haddock, former lead counsel for the city of Boulder, as special prosecutor to weigh possible misdemeanor criminal charges against the four current council members and an additional three former members.

In a separate 5-0 vote, the abbreviated council also voted to retain attorney Christopher Gregory, former chairman of the Colorado Council on Judicial Conduct, as an adviser for the duration of the prosecution, if there is one. Gregory had been engaged by the council majority March 19 as a special counsel to investigate whether criminal charges were warranted. He summarized his report at Tuesday night’s meeting, and Friday’s special session was called to give council members and interim City Attorney Vince Junglas time to read it.

The allegations stem from letters council members Dana Foley, Patrick McFall, Steve Olson and Andrea Samson and former council members Richard Ball, John Fogle and Don Overcash signed on Loveland City Council letterhead and sent to Gov. Jared Polis and state lawmakers. The letter to Polis was sent April 19 and signed by all but Samson. All seven signed the letter to members of the General Assembly that was sent April 27.

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The letters expressed their opposition to Senate Bill 23-273, which would have prohibited the designation of undeveloped land as blighted so it could be eligible for urban-renewal consideration — the strategy McWhinney Real Estate Services Inc. was pursuing to gain approval for its proposed $1 billion Centerra South development on farmland on Loveland’s eastern edge.

The urban-renewal plan and master-finance agreement would use 25 years of tax revenues that the development would generate to pay for Centerra South’s infrastructure, including streets and utility lines. The letters to Polis and lawmakers contended that the legislation would derail McWhinney’s project. 

SB 23-273 passed the Senate and House last spring but Polis vetoed it. 

The previous City Council approved the Centerra South plans in votes April 18 and May 2, just before Polis vetoed the bill. Gregory noted that in Polis’ veto statement, the governor explained “that part of his logic and thinking is what happened in that May 2 meeting.”

The reason for the council majority’s haste to start the wheels of prosecution is that any charges would have to be filed by April 19 and April 27 of this year, or else the one-year statute of limitations for misdemeanors would expire.

Summarizing his report for council members, Gregory said the coordinated letters, passed around for signatures in a “daisy chain,” constituted a clear set of violations of open-meetings provisions in state law as well as the Loveland city charter. The Loveland municipal code states that “willfully or knowingly” violating the charter provisions about open public meetings could result in a fine between $25 and $300, up to 90 days in jail or both.

Gregory’s report contended that the series of one-on-one meetings to sign the letters written by Olson constituted a non-public meeting.

Friday’s votes came more than three hours after First Amendment attorney John Zakhem, who was hired to defend council members Steve Olson, Andrea Samson and Patrick McFall as well as former member John Fogle, threatened that “any further action by the council majority against them “will be met with a federal lawsuit for civil-rights violations.”

In a dramatic voice similar to that used in a closing argument before a jury, Zakhem called the council’s action a “hatchet job” and a “vendetta for my clients’ exercise of their First Amendment rights,” adding that “you’re going out on thin ice even holding this hearing.”

Zakhem, of the Denver firm Campbell Killin Brittan & Ray LLC, has been involved in open government cases representing elected officials, candidates and public figures.

He said a prosecutor must believe commission of a crime must be proved to a jury “beyond a reasonable doubt,” and that “if you don’t have reasonable doubt now, you’re in the wrong business.”

After a 40-minute public comment period in which half of the 14 speakers urged the council to let a court settle the issue, Gregory responded to Zakhem’s presentation by noting that, “in my experience, the loudest voices are typically not the most accurate.”

Gregory said the city had contracted him to determine not whether crimes had been committed “beyond a reasonable doubt” but whether there was “probable cause” for the city to move forward with independent law enforcement, prosecutor and magistrate to pursue the case.

“There’s nothing that would prohibit someone charged from challenging the validity of the statute under which they were charged,” Gregory said. “There’s nothing wrong with having the courts decide; that’s the entire purpose of the judicial system. To wash away that procedure we have doesn’t make sense.”

Junglas, careful not to involve the city attorney’s office in the prosecution because he represents and advises all members of the council, repeatedly emphasized that “it’s very important that my office stay conflict free. My goal is to hand this off to an independent agency that can handle this matter going forward.”

In that quest, Junglas asked government legal teams from Fort Collins, Greeley,  Longmont, Windsor, Estes Park, Frederick, Firestone, Johnstown, Westminster and Trinidad as well as district attorneys from Larimer, Weld and Eagle counties, but none would commit to handling the potential prosecution. “The reasons generally were lack of bandwidth or lack of availability of resources,” he said, but added that some also were reluctant because they had working relations with the city of Loveland.

Junglas then turned to Geoff Wilson of the Louisville-based Wilson Williams Fellman Dittman law firm in hopes he’d “be able to find a handful of attorneys that have the chops to act as a special prosecutor” in open-meetings cases. Wilson came up with four names. Two proved to be unavailable, leaving Haddock and Andy Ausmus, who runs a law firm in Greenwood Village. The council’s consensus pick was Haddock, who has been the city of Boulder’s senior counsel for more than 14 years and specializes in collaboration on complex public-private partnerships.

Mayor Jacki Marsh, noting that Loveland has had a history of backroom agreements, declared that “this belongs in a court to decide. It shouldn’t be the five of us. It shouldn’t be the nine of us. This needs to be in a court.”

Councilmember Laura Light-Kovacs agreed that “meetings shouldn’t be just a rubber stamp” and said she had a problem with the daisy-chain of “letters put together as a group, six on one, seven on the other.” Citing “the fact these letters weren’t disclosed” to the entire council before their Centerra South votes, she asked, “Would that discourse have been different if they were?”

Councilmember Jon Mallo mused, “Can you imagine the nine of us trying to figure this out? We’d be here until 2028.”

Councilmember Troy Krenning, an attorney who made the March 19 motion to hire Gregory, acknowledged that the daisy-chain arrangement “is unsettled law in Colorado” as far as open-meetings rules are concerned, agreed with Junglas that consequences such as sanctions or censure might be a possibility, but added that “I don’t like playing Beat the Clock” and asked Junglas whether members could “file the case to preserve the statute of limitations and let it sit in municipal court” until Haddock reaches a conclusion.

He dismissed Zakhem’s warning of taking the city to federal court over First Amendment issues, noting that threats are “not something we’re unaccustomed to.

“It’s not what people said,” Krenning declared. “It’s what people did.”

Looking forward, Krenning sent an email Wednesday to Junglas asking whether the City Council had authority to create a permanent special counsel to hear allegations against the council from its members, from staff or from the public. 

The city charter provides the council with three direct reports: the city manager, city attorney and municipal judge. This would be a fourth, although, as Krenning noted, the special counsel would not necessarily be a full-time position.

Responding to the concerns Junglas expressed at Tuesday night’s council meeting that the city attorney’s office would find itself conflicted if one or several council members sued or filed charges against one or more other members, Krenning wrote that his proposal “would create an avenue for all of these allegations of charter violations to be addressed, including those of Mr. Foley, while protecting the integrity of the office of the city attorney.”

He was referring to a motion made by councilmember Dana Foley at the March 19 meeting that the council appoint a special counsel to investigate whether the council majority itself had violated the charter as alleged in lawsuits filed by a group of former council members as well as a suit filed by resident Peter Gazlay that alleged another charter violation related to the lack of background investigation of councilman Krenning before he was sworn in in November. 

Gazlay is not seeking monetary damages against the city, but wants a legal declaration that Krenning was an invalid candidate on Nov. 7 and that candidate Dan Anderson should be declared the winner of the election. 

Anderson finished second to Krenning in the Ward 1 council race, while lawyer Russell Sinnett, the attorney representing both Gazlay and the group of former council members, came in third.

Represented by Sinnett, five former Loveland City Council members – Fogle, Richard Ball, Dave Clark, Don Overcash and Chauncey Taylor – and three other residents of the city filed a complaint against the city in January stemming from the current council’s Nov. 21 vote to reverse the previous council’s approval of the urban-renewal plan and master finance agreement for McWhinney’s proposed Centerra South development. The complaint filed in Loveland Municipal Court includes allegations that the procedure used by Marsh and four other council members to rescind resolutions related to Centerra South violated the 14th Amendment rights of the plaintiffs as well as the amendment to the City Charter passed by voters Nov. 7 with ballot question 301 that gives Loveland voters final approval over any council decisions related to urban-renewal plans. Thus, according to the complaint, Marsh and the four other members who voted to rescind the agreements are ineligible to serve on the council.

According to Kimberly Staab, municipal clerk of court in Greeley, the parties in the Ball and Gazlay cases met Friday for a status conference, which was “set over” to 10 a.m. April 26. Parties in the complaints have 14 days to file briefs, then seven days after that to respond to the briefs.

A formal response from the city of Loveland was due on Friday.