The city of American Canyon and its fire district lack transparency and should hire a full-time attorney to control legal expenses, according to the Napa County civil grand jury.

In a report issued last week, the grand jury said that as of March the American Canyon Fire Protection District spent some $130,000 in public funds on legal fees related to a controversy over firefighters earning bonuses for gaining degrees from an online diploma mill that often did not require course work from students.

That’s more than twice the amount — an estimated $60,000 — the district paid out to current and former firefighters who claimed the bonuses.

The fire district no longer allows the bonuses. Firefighters who are still active with the department have agreed to return the money they received, a total of $36,000. The other firefighters who received the bonuses have retired and it is no longer in the authority of the fire district or the union to seek the money they received.

The $130,000, according to the grand jury report, was spent primarily on two investigations of the educational bonus payments, probes completed by private law firms hired by the fire district. The figure also includes money spent defending a lawsuit filed by the Napa Valley Register, which sought release of one of the reports after the fire district voted to conceal it, as well as what the grand jury characterized as legal efforts “resisting the grand jury’s review of this matter.”

According to the report, the district paid $78,102 to American Canyon City Attorney Bill Ross for his time on the firefighter bonus matter; about $4,000 to McDonough Holland and Allen, the Sacramento law firm that issued the first probe into the bonus payments; $43,623 to Dawson, Passafuime, Bowden and Martinez, the Scotts Valley firm that carried out the second investigation; and about $8,000 for the legal expenses related to the California Public Records Act lawsuit filed by the Register.

The fire district released the second report in February, three months after the Register’s lawsuit was filed and nearly six months after the city received the report from Dawson, Passafuime. After releasing the report, the district continued to contend in court that state law did not compel the release of the report, and prevailed in a Napa County Superior Court decision rendered in March.

The grand jury stated that many of the facts of the controversy had been publicly revealed before the expenses were incurred.

 “Early on, the then fire chief stepped up and acknowledged his mistake. The firefighters stepped up and agreed to the termination of the payments to protect their well-deserved reputation. Under these circumstances, (the district) nevertheless spent in excess of $130,000 to prove what is ‘common sense,’” the grand jury report stated. “The district needs to tell its taxpayers why.”

The second legal report, the grand jury said, added “little, if any new facts not already known.”

“Never have so many waited so long for so little,” the grand jury report stated.

AmCan response

Ross, who has represented the city and the district on legal matters for more than two decades, said the district will respond to the grand jury report within 60 days.

“The city council sitting as the fire district board, the district and the city attorney who also is the fire district counsel will reply to the report consistent with all procedures of the penal code detailing specific inaccuracies of the report and how its conclusions are not supported by evidence,” Ross said.

“Much of the report is contradicted by documents, including court decisions that were publicly available to the grand jury yet ignored,” said Ross.

American Canyon Mayor Leon Garcia echoed Ross’ sentiments. “We will prepare a response in due course,” said Garcia.

The grand jury, which unsuccessfully sought a copy of a settlement agreement between the fire district and the International Association of Firefighters Local 1186 — which represents the firefighters who took advantage of the program — asked for more transparency from the district. Virtually all the district board meetings regarding the issue took place behind closed doors, the grand jury said.

City Councilman Ed West said the district had to make sure that the rights of the firefighters were protected.

“That’s why it took so long,” West said. “We are as transparent as we can be.

“The grand jury may have not appreciated the quandaries that the city was in,” he added.

The grand jury recommended that that the city, which contracts for the services of Ross and his Palo Alto-based law firm, “consider employing a full-time city attorney/district general counsel at less cost to the city than it now spends on a contract attorney and also develop a more effective and economical process to control legal expenses.”

‘Happy it’s over’

As to the details of the bonus controversy, the grand jury concurred with the findings of the two probes funded by the district. It wrote that the firefighters’ degrees from Almeda University did not entitle the firefighters to receive educational incentive payments, and that Keith Caldwell, then the American Canyon Fire Chief and now a member of the Napa County Board of Supervisors, should not have approved the bonuses.

The grand jury also found that Caldwell had not encouraged firefighters to obtain the degrees, an allegation made last year by Local 1186 leader Kurt Henke.

On Saturday, Caldwell said he takes “full responsibility” for approving the educational incentives, and added that he agrees with the grand jury that the money spent on legal matters could have been better spent.

“I’m just happy it’s over,” he said.