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21 Dec 2017

Legally Speaking: Palm Springs City Attorney Edward Kotkin Answers Questions About the Budget, Transparency and Downtown Redevelopment

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Palm Springs City Attorney Edward Kotkin. Palm Springs City Attorney Edward Kotkin.

For the second time in six years, Palm Springs voters have agreed to open their pocketbooks a little wider.

Measure D, voted in last November, and Measure J, approved in 2011, will bring in a total of about $20 million in tax dollars annually to the city.

One problem: Millions from Measure J were given to John Wessman, the original developer of the downtown redevelopment project, and now the subject of numerous bribery indictments along with former Mayor Steve Pougnet.

One question: Will the city seek reimbursements from Wessman if he is found guilty?

Anticipating legal issues in the wake of the bribery scandal, which culminated in an FBI raid of City Hall, Palm Springs officials hired a new city attorney, Edward Kotkin, in April. While previous city attorneys were contractors, Kotkin was brought on as a city employee, at a salary of $206,088 a year plus benefits.

Kotkin is a former Riverside County deputy district attorney who is expected to develop strategies to protect the city from potential legal troubles regarding the outcome of the Wessman-Pougnet criminal case. He came to the city with a fantastic reputation as a skilled attorney.

Here’s an edited version of Kotkin’s answers to my questions, done via e-mail.

If or when Wessman is convicted of the criminal charges, will you seek retribution from Wessman’s companies—in other words, seek to get our taxpayer money back?

If there are convictions in the district attorney’s prosecution of Messrs. Pougnet, Wessman and (Richard) Meaney, those convictions will have civil legal ramifications that the City Council will consider and act upon in its discretion. The council will always act in the best interest of the city, its residents and businesses. The city has already initiated litigation aimed at protecting the city’s rights and remedies as to assets involved in transactions related to the criminal case, and will certainly continue to do so if and when the council determines that new litigation will advance the city’s interests.

It seems the city’s finances are always supported by yet another tax measure, but how long (will this go on)—until the next measure, or until the city’s bankrupt?

There is no potential whatsoever for future increases to the local sales tax. Only a certain amount of tax can be charged at the local level, and Measure D brings the percentage of tax passed through to local government to the maximum. The city has no current plans to consider or present the voters with any additional taxes in the foreseeable future. The city manages its finances effectively, and does not foresee any potential for municipal bankruptcy.

What are the city’s total annual expenditures, all funds included, and what are the annual revenues?

The city’s adopted budget with respect to all funds reflects revenues of nearly $222 million, and expenditures of nearly $230 million. It is misleading and inappropriate to view or portray this data as reflecting “deficit” spending by the city. For example, revenues from past years are being applied this year, based upon the timing of projects. That creates an artificially high figure regarding expenditures. Airport customer facility charge revenue accumulated through many years of rental car fees is being spent this year on Phase 1 of a significant new airport car-rental facility. Revenues of approximately $2 million are dwarfed by project-related expenditures of $6.5 million. Further, the general fund anticipates a small surplus this year, and leaves a reserve of approximately 20 percent.

I presume that you will not frame this revenue and expenditure data in a misleading or inappropriate manner. If you do so, it will compromise your relationship with my office irreparably.

Would it (have been) possible to keep the city of Palm Springs financially afloat, (and residents safe), without Measure D? For how long?

The city of Palm Springs handles its finances in a responsible manner at all times, and will always advance the interests of its residents, businesses and visitors to the greatest extent possible, within its means. Public safety will always be a top priority for the city. Your question presumes that there is an objectively quantifiable amount of funding that will make the city “safe,” and presumes that some level of public services translates to the city remaining “afloat.” The city rejects your question as based upon false presumptions. The city will always be safe, and always remain afloat. More resources at City Hall equate to better public safety and more city services.

What are the city’s legal tools and remedies to recoup the taxpayers’ money if there is or was a developer’s default, such as a prolonged timeline in finishing the additional structures (in the downtown redevelopment plans)?

The city declines to discuss legal strategies that may be employed to address any matter of city business. Doing so disadvantages the city in the event that those legal strategies must be employed. The city has made, and will continue to make, all decisions with respect to the evaluation and pursuit of the city’s legal rights and remedies, as they relate to the downtown project, in the best interest of the city’s residents and visitors. The city is proud of the West Elm building and store, and extremely excited about the … Kimpton Rowan hotel and related commercial locations. Your question contains a determination that the developer of the downtown project is in default. The city is the only party authorized to make that determination, and has not done so to date.

The city’s budget is a complex financial package. How do you help ordinary but curious Palm Springs residents, who are not accountants, grasp where and how taxpayers’ money is spent and used?

The city has implemented the OpenGov Portal ( to assist residents and other interested parties secure access to very user-friendly data regarding the city’s finances. … The city adheres to Governmental Accounting Standards Board requirements and segregates funds accordingly. The city’s comprehensive annual financial report is independently audited for compliance with all GASB (requirements), and all other applicable federal and state requirements.

The city claims transparency and that all of the information is out there on the site. Why, then, did the FBI raid City Hall in 2015 and seize certain records that resulted in indictments, if everything was in order?

The 2015 FBI search and seizure and the prosecution by the District Attorney’s Office did not reflect systemic problems at City Hall. The allegations in this matter pertain to a single elected official, his relationship with developers, and certain specific transactions where the elected official is alleged to have violated conflict-of-interest laws. The city has provided full cooperation with law enforcement’s efforts to investigate and prosecute this matter, and also initiated civil litigation to protect city rights and remedies related to the prosecution. The city has been, and remains, transparent with respect to its dealings with the developer of the downtown project. When money is spent under the PFA, an independent fund control agent and a city-retained consultant for “on-call” facility construction owner representative services help ensure the proper expenditure of all public funds through separate escrows for private and public improvements.

1 comment

  • Comment Link JC Friday, 22 December 2017 15:18 posted by JC

    Kotkin seems like a barrel of laughs. Remind me to invite him to my next party.

    Seriously, why is he writing responses like he's taking on an adversary in litigation? Doesn't he realize he's addressing the public through this reporter? His answers come across as defensive instead of explanatory. The questions certainly weren't presented in a particularly challenging manner.

    And is it necessary to threaten a reporter doing his job like a DA's office might when addressing defense counsel in a criminal case? "I presume that you will not frame this revenue and expenditure data in a misleading or inappropriate manner. If you do so, it will compromise your relationship with my office irreparably."

    In Kotkin's defense, some of these questions seem more appropriate for the City Manager rather than the City Attorney, but the man needs instruction on how to frame his answers for the intended audience (here, the public with a right to know) if he's also going to take on the job of general spokesman for the City.


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