A Superior Court judge has ruled against a former director of the San Lorenzo Valley Water District, saying that he violated a state conflict of interest law that prohibits elected officials from participating in decisions that result in personal gain.
At issue was a 2010 vote by Terry Vierra while he was a member of the water district board that resulted in $9,004.50 commission being paid to his real estate agency, and a $3,001.50 commission paid to his wife.
The Dec. 13 ruling, to be finalized in early January, upheld claims from retired engineer Bruce Holloway of Boulder Creek that Vierra, at the time a longtime water district director, participated in and influenced a decision by the water district in 2010 to buy property on Rebecca Drive in Boulder Creek that was listed by the Century 21 agency owned by Vierra and his wife, Mary Bischoff.
The order to be signed by Judge John Gallagher of Superior Court in Santa Cruz would require that Vierra pay the amount of the agency commission, plus 11.4 percent of his wife’s $3,001.50 commission: half of the total to Holloway and half to the state.
The law stipulates that Vierra also has to pay Holloway’s lawyer fees, estimated at about $60,000. Vierra’s lawyer fees already exceed $59,000 said district manager Brian Lee.
Even though the water district, which now has all new board members since 2012, was separated from Holloway’s lawsuit, Lee said the current board is paying all of Vierra’s legal bills, and is likely to pay the court fines and legal bills to be imposed against Vierra.
Lee said the water district board will consider these payments at its January meeting, where it also is likely to discuss whether to appeal Gallagher’s decision.
The district’s rate payers are paying all of the legal bills of Vierra, now a private citizen, “because he was acting as a board member of the district” at the time of the real estate deal, said Lee.
Vierra did not seek re-election in 2014.
Lee said, and the district argued in court, that the entire board was aware of Vierra’s potential conflict when it voted on the real estate transaction.
“It was a small mistake,” he said.
“All directors testified that they knew about the contract (that resulted in Vierra’s agency commission) and approved the contract,” said Redenbacher.
“This was a violation of the public trust, and the judge ruled according to the law,” he said.
“We have to have confidence in our public officials.”
Vierra had excused himself from public discussion of the deal, but had provided information, participated in the decision and voted to buy the land.
Holloway said he filed the lawsuit only because the district had rejected his request following the 2010 real estate deal to admit its mistake and force Vierra to resign.
Even though the board voted in 2014 to pay Vierra’s continuing legal bills, Lee blamed Holloway for forcing ratepayers to pay Vierra’s legal bills, which when combined could total nearly $130,000, because he filed the lawsuit.
Further, Lee said the district doesn’t agree with the judge’s view of the conflict of interest law, which specifically prohibits any public official from participating in a decision that results in financial gain.
Vierra’s attorney in the case, Marc Hynes of Los Gatos, also is the water district’s attorney.
Holloway’s attorney, Gary Redenbacher of Scotts Valley, said “It’s very clear in the law that government officials are not to enter into a contract that enriches them.”
He said the judge made this very clear in his ruling from the bench last week.
Gallagher could have imposed fines up to the equivalent of triple the commission, but told the lawyers in court that he did not impose the maximum because the defendant had no malicious intent.
