Law firm threatened to sue newly elected City Councilmember Steve Harrell for holding two incompatible offices simultaneously
TULARE – Newly elected Tulare City Councilmember Steve Harrell resigned from his seat on the Tulare hospital district board last month over the potential for a conflict of interest.
Harrell made the decision to resign on Sunday, Jan. 31 after receiving a late-night letter from Marguerite Melo, of the Law Offices of Melo and Sarsfield in Visalia, stating Harrell was in violation of state law by simultaneously holding elected offices for the city of Tulare and Tulare Local Healthcare District (TLHCD). Melo’s letter cited California Code of Civil Procedure section 803 which prohibits elected officials from serving in multiple positions when there is a “conflict of loyalties.”
Melo referenced a 2018 ruling by Attorney General Xavier Becerra specifically citing a conflict of loyalties between the hospital districts and city councils. The ruling stated a member of the Southern Mono Healthcare District board of directors could not simultaneously hold office on the city council of Mammoth Lakes or the city’s Planning and Economic Development Commission. Becerra wrote a 2005 legislative action codified the rule of incompatible offices prohibiting anyone from holding two offices if “there is a possibility of a significant clash of duties or loyalties between the offices” based on jurisdiction. The hospital district envelopes all of the city limits, according to maps at the Local Agency Formation Commission, which oversees and settles jurisdictional changes and conflicts. For example, both entities have the power to take property through eminent domain.
Harrell, a retired Tulare Police lieutenant, was appointed to the hospital board in 2017 in the aftermath of the failed former management of Healthcare Conglomerate Associates (HCCA) whose executives are now facing 40 felony charges for embezzlement, money laundering, conflict of interest and trying to influence a political campaign. He ran unopposed to retain the seat in 2018 and was appointed in lieu of election for a four-year term through 2022.
Harrell was elected to the city council in November after edging out incumbent Carlton Jones by seven votes. His city council term will end in 2024, meaning he would have held both offices for at least two years.
Melo also cited an August 2020 news article where Harrell publicly stated his intent to hold both offices if elected to the city council and that the two offices are incompatible and the law firm was prepared to initiate litigation against Harrell if he did not resign.
“By operation of law, you forfeited your seat on the Board of TLCHD when you took the oath of office for the City Council,” Melo wrote. “Before initiating that formal court process, we wanted to advise you of our intent, so that you could immediately resign from the TLHCD Board.”
In an interview this week, Harrell told The Sun-Gazette the district’s general counsel, Jason Howard of McCormick Barstow LLP, and the Fair Political Practices Commission (FPPC) both noted the only issue of overlapping responsibilities was the $9 million dollar line of credit extended to the hospital district by the city council in February 2019. The line of credit was paid off by the hospital district on June 18, 2020 just 16 months into the five-year term. The loan helped float the hospital while it worked through bankruptcy and paid the city $63,980.65 in fees and $562,065.92 in interest in addition to the principle.
Harrell said with the loan paid off, there was no current conflict of interest and nothing in the district by-laws or city charter precluding him from holding both offices and, in the event of an issue like eminent domain, Harrell always had the option to recuse himself from the discussion and vote.
“It was always my intention to hold both offices in order to live up to the promises I made to the voters of the hospital district,” Harrell said. “What’s important is the hospital district is in good hands and doing well. I would have liked to stay on to see the completion of the tower, but I’ll still be around to see it, just not as a member of the board.”