HomeMy WebLinkAboutMinutes - City Council - 1959-11-12 481
City Council, 5pecial Meeting
Council Chambers, City Hall .
Redding, California .
� November 12, 1959 11:00 A.M.
The special meeting of the City Council of the City of Redding was called to
order by Mayor Fleharty with the following councilmen present: Fulkerth,
Kelly, Puryear, Simons and Fleharty, � .
City Manager Cowden, City Attorney Coshow and Director of Finance Courtney
were also in attendancee ` � '
�
, Mr, David Hinds, President of H & H Flying Services, Incp , Mr, :Laurence
Carr, Att�rney for H &-H Flying Services, Inco and Mr. George Lipp,
C. P. A� were also present.
Documents on File with the City Clerk � .
Notice of Special Meeting, signed by Mayor Fleharty, stating time o,f
the meeting and the business to be transacted.
Proof of service, signed by Williaxn W. Coshow, that Notice of Special
Meeting was personally delivered to all councilmen
Proof of service by mail, �signed by B`etty Jackson, that Notice of Special
Meeting was xnailed to newspap�rs and Radi�o and TV Stations.
Mayor Fleharty opened the special meeting with the s.tatement it had been
called to receive a preliminary report on the audit of the books of the H & .H
/C�f Flying Services, Inc. , Lessee, of the City property known as the Benton. Air-
�
port and determine the action, if any, to be taken at this time.
Mr. George Lipp, Certified Public Accountant authorized by the City to audit
the books of the H & H Flying Services, Inc. , advised he had completed a
preliminary study of the General Ledger and the Cash Receipts, and submitted
to all councilmen a "Recap of Income per Ledger and Credit Card Sales" for
, .
the years 1957 and 1958, and from January to September, 1959. He stated
an extensive amount of time would be involved before final report would be
completed,� as there was considerable detail on the analysis of the bookkeeping
entrie s.
Mr. Carr speaking before the group, advised he had been invited to attend this
meeting, however requested an extension of time for preparation of all the
facts, and stated he hoped the meeting would be delayed until after the return �
of Mrs. Hinds to Redding.
, � � . . . .
At the request of Mayor Fleharty, the letter of Mr, Carr was read in full:
November lZ, 1959 "
Honorable City Council �
City of Redding � �
Redding, Califa Re: H & H Air Service, Inc.
-- • Benton Fielci Lease °
Gentlemen: �
I am filing this.letter to confirm my oral request made at
your Council meeting today, November 12, 1959, for a meeting to
discuss matters arising out of an existing dispute between the City;
of Redding and H & H Air Service, Inc.
. It is regrettable that the parties did not seek such a conference
earlier to discuss disputed matters of mutual interest, that }iave arisen
over the above mentioned Lease, instead of pursuing the course of un-
warranted demands, threats of suit, and newspaper publicityo
482
My request must necessarily be prefaced with a reply t�
some of tr,e unfounded charges that my client and <myself have read
• in the public press,
First, it has been charged that repeated requests for state-
ments required by the Lease have been ignored. I have• examined v
the previous correspondence on this matter. My client received one
� letter dated M�.rch 2, 1959, from the then City Attorney, advising them
that reports had not been filed as required by the Lease. It was dis-
covered that this was a misunderstanding, because the reports had been
furnished monthly to the City Manager, the Mayor, and the members of
the City Council. The ,requirement of the Lease that a copy should also
be filed with the Gity Clerk was overlooked, and these copies were sub-
sequently filed. Also, the City Attorney requi�ed a certified statement
; saying that this was a requirement imposed by the City Auditors. The �"
Lease does not call for certified statements. Perhaps the city officials �
do 'n�ot appreciate that the requirem�nt so�t to be imposed by the city's
auditors, who are Certified Public Accountants, called for my client
to discharge its accountant, and hire a Certified Public Accountant, This
was an unwarranted demand.
A reply to this letter was made by H & H. advising that the state-
ments required by-the Lease would contiriue to be filed, T hus, this
letter was not ignored.
�
�
, Nothing was heard again until October 14, 1959, when the City
Attorney wrote again to H & H Flying Service, Inc. , stating "You have
not filed an audited or ver�fied financial statement with the City pursuant
to your Lease Agreement. Would you please make arrangements to file
an audited statement as soon as it is conveniently possible. "�LTnder date
Qf November 1, 1959,� Mr. William Allpress, the accountant for H & H
Flying Service, Inc. , replied to this letter and pointed out that no such
statement was required by the Lease, and he again advised the City
Attorney that the Lease was .being complied with and the reports called
for by the Lease _were on file. No effort or request to discuss the matter
was had there,after. On November 2, 1959 H & H again received a demand
from the City Attorney that they permit an audit of the books of the Flying
, Service by an independent Certified Public Accountant, This demand
included a forznal demand that they make available among other things,
'.'corporate tax returns, incozne tax returns, etc. " Coupled with this third
unwarranted demand was a threat that "if cooperation is not forthc�ming",
that the City would take steps to enforce the terms of the Lease by legal
proceedings. �
The implication of the lett�ers that the failure to meet these un-
warranted demands would be a violation of the Lease, which is absolutely
untrue. This formed the basis of the unfav�rable publicity against my
client, which had .been i,ssued to the press without even giving them an
opportunity to discuss the bona fide differences which existed over the form
of report required by the Lease.
Statements also were issued implying that they were falsely re-
porting and that there w�re "discrepancies", indicating some skull�uggery
on the part of H & H, This was also given wide publicity to the further
damage of their reputation before the public,
On November 3, 1959, I contacted the City, Attorney on behalf of. my
clie�tafor' the first time, to request that the matter be held in abeyance
until Mrs. Hinds� return from a scheduled trip, and in the meantime I advised
the City Attorney that I would recommend that the books be made available
to them, but not the tax returns, which are certainly confidential and which
had been the basis of Mrs. Hindst objection to the most recent demand by the
City Attorney. . ,
483
My request for the courtesy of a little time was formally
denied with suggestion..rnade th�at Mrs. Hinds should not take a,trip
under these conditions, although the matter had been apparently in
dispute for many months, arid that unless the whole rr�atter was worked
out the same day, the City would sue, W.ithin a matter of two or three
hours.I was able to contact Mr. David Hinds, the President of H & H
Air Service, Inc. and M�. Hinds as such officer, directed that-the books
be made available as.recom�ended. There was never any other intention
as far as, I know on the part of anyone connected with H & H.
The threats and publicity pr.essure applied to this matter to
attempt to achieve imxnediate results desired �by the City, were both
an imposition on me;;personally and.in my opinion, a ver.y definite dis- .
courtesy. The City has no right under the Lease to examine the books
of H & H Air Service, Inc� It was my opinion that I was l�,eing more than
r.cooperative in making an effort to arrange this accommodation to the City,
and I was personally chagrined and surprised at the pressure and the
ths�eats which were made, , I can assure you, they had nothing to do with
my decision previous.ly made; Unfortunately this matter also was well
publicized by the City officials involved, with the result that an erroneous
impression was reflected, in the pres's, that the intimidation by the City
had brought about the examination of the books. This also is untrue.
There is a, bona fide dispute over the amount of rental due the
City and what should be reported to the City as a b.asis for determining
� this rental. We would very much like to discuss this matter at length
and under circumstances .where we are attempting to conciliate matters.
,
In view of the attitude of the parties toward each other growing
out of this unfortunate background, it does not seem �ikely or reasonable
that we can �speak frankly and discuss the matters involved. in_.this bona
fide dispute in an open council meeting in front. of inember�s of the press.
. � ,
I am sure that no members of.the Council would expect to discuss
a business transaction involving their own business and involving some
degree .of sus.picion, and with previously ex}�ressed feelings of distrust,
frankly and. with a.view to solution, under those condi.tions.
It is therefqre our request that a tixne be set to discuss this matte,r,
in �a private conference,. with.the objective of obtaining all the necessary •
_ facts on both sides.and s,ettling between the parties the matter in dispute.
If the .,Lease_must be modified to enable the City .to obtain the reports that
it desires on the one hand, and to set up a formula for rentals that is both
fair and mutually understood on the other, it would seem to l�e the best
way to serve the "public interest". Charges and countercharges in the
press will hardly achieve. this objective.
� Very truly yours,
CARR AND KENNEDY .
- / Laurence W. Carr �
LWC/sa
Mr. Carr summarized the contents of this communication, and expressed his
hope for a closed meeting that terms of the lease and�method of reporting be
irone_d. ou�t. . "My clients would like to stay" he stated.
He further asked permission to examine the existing contracts with Standard Oil
C ompany. '
Mayor Fleharty directed the City Attorney to submit a formal reply to Mr. ~
Carr's letter, and under date of November 13, 1959, the following formal
�
statement was submitted:
Mr. I�aurence W. Carr
Carr & Kennedy, Attorneys-at-Law � •
1555 East St. Redding, Calif. •
484
Dear Mr. Carr:
�
. . I:n reply to your letter of November 12, 1959, I would like to
make the following observations:
� •
1. It is agreed that the City of Redding does not h,ave under the
Lease Agreement, a right to an audited or verified statement to be filed
by H & H Flying Service periodically.
2, The City of Redding, however, is entitled to an accurate
financial �ep�rt to be filed eachand every month as well as accurate
quarterly statements. There appeared to the City Finance Departmznt
apparent discrepancies in reports being filed by H & H Flying Service.
It was the desire of the City. of Redding to determine the exact facts with
a minimum of notoriety until the superficial evidence of erroneous financial
statements could be confirmed. •
,
3. When H & H Flying Service, Inc. , declined to furnish an
audited statement and when the Standard Oil Company furnished certain
figures which confirmed the apparent discrepancies, the City was left
with no recourse but to demand that an audit be made,
4. 5ince the City eannot au.dit the books under the� lease itself �
without the cooperation of the H & H Flying Service, Inc. , except by filing
a suit for an accounting and inasmuch as the evidence before the Ci.ty
warranted such a suit, the City gave the H & H.Flying Service the alternative
of either opening the books voluntarily for an audit or face a suit so that an-
audit of the books would take place under that suit.
no
There was/intention to be discourteous. As a matter of fact, the
City of Redding has bent over backwards to be as courteous as possible
under the circumstances to the H & H Flying Service, Inc. The cold facts are .
these, Mrs.. Hinds upon being requested to open the books for an audit by
the City stated that the books were always open to the City and that she had
absolutely no objection to the Ci ty _examining her books. She thereupon
left for a two week business trip in ara apparently inaccessible area and
rescinded her previous agreement to permit the City to examine her books,
Under the circumstances of the evidence before the Gity of the
inaccurate financial statements filed, the City had absolutely no recourse
but to prepare a com;�laint to be filed in the Superior Court to attain an
immediate audit of the recards. This was not a threat of a suit, this was
the mere statement of the existing facts, This is, H & H was presented with
the alternative of,opening the books for an audit voluntarily or be faced with
a suit so that the City could examine the books.
Sincerely,
/ William "vV. Coshow
City Attorney � � � -
WWC/blj _ . - _. �
It was the .opinion of all Councilmen that a preliminary me-eting of tlie two attorneys,
Mr, Coshow, representing the City of Redding, and Mr. Carr, representing H & H
Flying Service, Inc. , be held to resolve certain matters before presentation to
Council.
. It was requested this matter be deferred until November 23rd, -1959, 4:00 P. M.
and that the meeting of the City Council on November 16th be adjourned until this
time.
There being no further discussion, on motion of Councilman 'mons, second, d.b�
Councilman Puryear the meeting was adjourned. �
1
APPR D:
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l __ � I � ' � � � �
� � �
Attest: TtI-y.y��-' ,��---� �M�yo �of th�,`_ i�.t_y,.of Redd�ing
,��-c � E�:. /�.e� � ��
City lerk ��