220202 1950 FW_ FPPC Complaint No. COM-01192022-00138_REDACTEDFrom:Fred Galante
To:Paulo Morales; Anne Hertz-Mallari; Jon Peat; Frances Marquez; Scott Minikus
Cc:Peter Grant
Subject:FW: FPPC Complaint No. COM-01192022-00138
Date:Wednesday, February 2, 2022 7:49:56 PM
Attachments:COM-01192022-00138; Cypress - R Redacted.pdf
Letter to FPPC re Peat, Hertz-Mallari.PDF
Dear Mayor and Council Members,
Fred Galante | Equity Partner
Aleshire & Wynder, LLP | 18881 Von Karman Ave., Suite 1700, Irvine, CA 92612
Tel: (949) 223-1170 | Dir: (949) 250-5410 | Fax: (949) 223-1180 | fgalante@awattorneys.com |
awattorneys.com
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From: Ginny Lambing <glambing@fppc.ca.gov>
Sent: Wednesday, February 2, 2022 4:46 PM
To: Fred Galante <fgalante@awattorneys.com>
Cc: jpeat@cypressca.org; ahertz-mallari@cypressca.org
Subject: FPPC Complaint No. COM-01192022-00138
*** EXTERNAL SENDER ***
Mr. Galante,
Please see the attached CC. We have closed this complaint and will not pursue it further.
Thank you,
Ginny Lambing
Political Reform Consultant, Enforcement Division
FAIR POLITICAL PRACTICES COMMISSION
1102 Q Street, Suite 3000 | Sacramento, CA 95811
STATE OF CALIFORNIA
FAIR POLITICAL PRACTICES COMMISSION
1102 Q Street • Suite 3000 • Sacramento, CA 95811
February 2, 2022
George Pardon
Re: Complaint No. COM-01192022-00138; City of Cypress, Peat, Hertz-Mallari
Dear Mr. Pardon,
This letter is in response to the sworn complaint you submitted to the Enforcement Division of the
Fair Political Practices Commission regarding the above-named individuals. Your complaint
alleged that Cypress City Councilmembers Ann Hertz-Mallari and Jon Peat had a conflict of
interest when they made decisions regarding the City’s contract (and contract amendments) with
Valley Vista Services (VVS).
Under the Political Reform Act, a public official has a disqualifying conflict of interest in a
governmental decision if it is reasonably foreseeable that the decision will have a financial impact
on their personal finances or other financial interests.1 The facts and information in your complaint
failed to establish that either Hertz-Mallari or Peat had financial interests that would have been
effected when they made or participated in making decisions regarding VVS.
Therefore, after review of the complaint, evidence provided, applicable law, and communication
with the Respondent’s legal counsel, the Enforcement Division will not pursue an enforcement
action in this matter. If you have any questions, please contact Ginny Lambing at
glambing@fppc.ca.gov.
Sincerely,
Angela J. Brereton
Angela J. Brereton, Chief
Enforcement Division
AJB:gal
cc: Fred Galante o/b/o City of Cypress, Peat, Hertz-Mallari
1 Section 87100
Fred Galante
fgalante@awattorneys.com
(949) 250-5410
18881 Von Karman Avenue,
Suite 1700
Irvine, CA 92612
P (949) 223-1170
F (949) 223-1180
01004.0001/764039 1
February 1, 2022
VIA E-MAIL AND U.S. MAIL
Ginny Lambing
Enforcement Division
Fair Political Practices Commission
1002 Q Street, Suite 3000
Sacramento, CA 95811
E-Mail: glambing@fppc.ca.gov
Re: Complaint No. COM-01192022-00138; City of Cypress, Peat, Hertz-Mallari
Dear Ms. Lambing:
This letter is sent on behalf of the City of Cypress, Mayor Pro Tem Anne Hertz-Mallari and
Council Member Jon Peat, and the undersigned. It is sent in response to your letter to the City of
Cypress, c/o the undersigned, Mayor Pro Tem Hertz-Mallari and Council Member Peat, dated
January 20, 2022. Thank you for both communications and your continued efforts to ensure the
public trust is maintained by local decision makers. We have the same commitment, as will be
evident from the below description of the facts involving the subject complaint.
Summary of Allegations
The referenced complaint (Complaint) correctly states (i) Mayor Pro Tem Hertz-Mallari is a
long-time Executive Director of the Boys and Girls Club of Cypress (B&G Club) and is now the
CEO of the Boys and Girls Club of Greater Anaheim and Cypress and (ii) Council Member Peat
is a non-compensated member of the Board of Directors of the B&G Club. Mayor Pro Tem
Hertz-Mallari’s salary for serving in the above position is sufficient to make the Boys and Girls
Club of Greater Anaheim and Cypress (B&GCGAC) a source of income to her. In addition, the
complaint correctly states, George Briggeman, General Manager of Orange County Operations
of Valley Vista Services, the City’s solid waste hauler (VVS), is a strong supporter of the B&G
Club and he has donated to B&G Club events and VVS has given the B&G Club free trash
services for 15 years.1
1 Also, please note, although not mentioned in the Complaint, Mr. Briggeman’s wife recently
donated 80 bottles of wine to the B&G Club. As in the situation discussed in Gallagher Advice
Letter No. A-19-045, the donation of the wine to B&G Club did not create a financial interest in
VVS, or Mrs. or Mr. Biggeman for Mayor Pro Tem Hertz-Mallari or Council Member Peat,
because neither official received any personal benefit and the donation was made to a non-profit
organization.
Ginny Lambing
February 1, 2022
Page 2
01004.0001/764039 1
The Complaint alludes to concerns regarding several Council actions relating to VVS. Two
concerns are regarding 2017 decisions, in which Council Member Peat participated, relating to
“an extraordinary adjustment to [Valley Vista Services’ solid waste hauling] contract which
included service reductions and rate increases”2 and an extension of “the contract with [VVS] for
2 years making it a 12-year contract.” Another concern relates to the October 26, 2020, Council
decision to appoint then Council Member Paulo Morales and Council Member Peat to serve on
the two-person subcommittee to review VVS’s request “to build a trash transfer station and a
Compressed Natural Gas facility on the City Yard in order to reduce [VVS’s] costs further. The
final concerns relate to the Council’s consideration on January 24, 2022, to amend VVS’s
contract to include an adjustment “increasing the recycling cost because [VVS] says they are
losing money on it,” as well as “a substantial increase to the cap on annual CPI increases and
probably the most egregious change is an extension to the contract to 2037. The original contract
was a 10-year contract with an allowance for a 2-year extension and 2 one-year extensions. This
would have allowed a total of 14 years. With these new changes, this will end up being a 22-year
contract without going out to bid.”
Analysis
Under Section 871003, a public official may not make, participate in making, or use his or her
official position to influence a governmental decision in which the official has a financial
interest. A public official has a “financial interest” in a governmental decision, within the
meaning of the Act, if it is reasonably foreseeable that decision will have a material financial
effect on one or more of the public official’s interests. (Section 87103; Regulation 18700(a).)
Section 87103 identifies interests from which a conflict of interest may arise and includes:
• A business entity interest, where the public official has a direct or indirect investment
worth$ 2,000 or more (Subdivision 87103(a).); or in which the official is a director,
officer, partner, trustee, employee, or holds any position of management (Subdivision
87103(d).)
• An interest in a source of income, aggregating five hundred dollars ($500) or more in
value provided or promised to, received by, the public official within 12 months prior to
the time when the decision is made. (Subdivision 87103(c).)
2 Quotations are from the Complaint.
3 The Political Reform Act (PRA) is contained in Government Code Sections 81000 through
91014. All statutory references are to the Government Code, unless otherwise indicated. The
regulations of the Fair Political Practices Commission (Regulations) are contained in Sections
18110 through 18997 of Title 2 of the California Code of Regulations. All regulatory references
are to Title 2, Division 6 of the California Code of Regulations, unless otherwise indicated.
Ginny Lambing
February 1, 2022
Page 3
01004.0001/764039 1
• An interest in any donor, or any intermediary or agent for a donor, of a gift or gifts
aggregating $500 or more in value provided to, received by, or promised to the public
official within 12 months prior to the time when the decision is made. (Subdivision
87103(e).
Council Member Peat:
The B&G Club is not a business entity, as defined by Section 82005, because it is a 501(c)(3)
non-profit organization. In addition, because Council Member Peat is not receiving any income,
as defined by Section 82030, the B&G club is not a source of income to him4. Also, the donation
of 80 bottles of wine by Mr. Briggeman’s wife and free trash services provided to the B&G Club
by VVS for the last 15 years were not provided to, received by, or promised to Council Member
Peat nor were they given contingent on Council Member Peat participating in or influencing,
favorably or unfavorably, any of the above-referenced decisions of the City Council related to
VVS.
Reference is also made to Maleck Advice Letter A-80-06-031 and Peak Advice Letter I-14-028,
both of which dealt with a public official holding a non-compensated position with a Boys and
Girls Club and found no conflict of interest in holding those concurrent positions.
Based on all the foregoing, Council Member Peat has no financial interest in any of the above-
described decisions. Therefore, his actions regarding those decisions do not violate the PRA or
Regulations.
Mayor Pro Tem Hertz-Mallari
Similar to the above discussion regarding Council Member Peat, the B&GCGAC, is not a
business entity, as defined by Section 82005, because it is a 501(c)(3) non-profit organization.
Similar to the situation with Council Member Peat, the donation of 80 bottles of wine by Mr.
Briggeman’s wife to the B&G Club and free trash services provided to the B&G Club by VVS
for the last 15 years were not provided to, received by, or promised to Mayor Pro Tem Hertz-
Mallari nor were they given contingent on Mayor Pro Tem Hertz-Mallari participating in or
influencing, favorably or unfavorably, any of the above-referenced decisions of the City Council
related to VVS. Due to Mayor Pro Tem Hertz-Mallari’s employment position with the
B&GCGAC, that organization is a source of income to her.
Since, as stated above, the B&GCGAC is a source of income to Mayor Pro Tem Hertz-Mallari,
further analysis was done to determine whether that would result in a conflict of interest for
4 Although he does not, even if Council Member Peat were to receive reimbursement for travel
expenses and per diem from the B&G Club for activities as a Board Member, that is still not
income (Subdivision 82030 (b)(2) ).
Ginny Lambing
February 1, 2022
Page 4
01004.0001/764039 1
Mayor Pro Tem Hertz-Mallari regarding VVS. As stated in Section 87103, the PRA prohibits
Mayor Pro Tem Hertz-Mallari from participating in or influencing any decision by the City
Council if it is reasonably foreseeable that decision will have a material financial effect on her
source of income. Since Mayor Pro Tem Hertz-Mallari’s source of income is a non-profit
organization, Regulation 18702.3 (a)(3) applies to determine if a financial effect would be
material. The above-referenced decision does not affect any real property owned by the
B&GCGAC, so only Regulations 18702.3 (a)(3)(A) and (B) are further discussed. Those
decisions regarding VVS would not result in any increase or decrease of the B&GCGAC’s
annual gross receipts, or the value of its assets or liabilities (Regulation 18702.3 (a)(3)(A)). Also,
the decisions would not cause the B&GCGAC to incur or avoid any additional expenses or to
reduce or eliminate expenses in any amount (Regulation 18702.3 (a)(3)(B)).
Based on all the foregoing, Mayor Pro Tem Hertz-Mallari has no financial interest in any of the
above-described decisions. Therefore, her actions regarding those decisions do not violate the
PRA or Regulations.
Please let us know if you have any other questions to which we could provide additional
information.
Very truly yours,
ALESHIRE & WYNDER, LLP
Fred Galante
Cypress City Attorney
FG:krb
c: Honorable Mayor Pro Tem Hertz-Mallari
Honorable Council Member Peat