By Matt Coker
By R. Scott Moxley
By Charles Lam
By Nick Schou
By Gustavo Arellano
By Gustavo Arellano
By Steve Lowery
By R. Scott Moxley
Photo by Amy TheiligIn January 2001, at the peak of California's energy-deregulation crisis, Larry Agran began drafting plans to create a public-private utility that would power his city's fast-growing new residential and commercial developments. Agran is Irvine's mayor and a man once heralded by liberals as a visionary where municipal government is concerned. But the Weekly has learned the mayor is attempting to steer the lucrative monopoly power contract to a company with unpublicized ties to his top political adviser: Edward Dornan.
The FBI is looking into the arrangement, but Agran has told supporters the deal is legal. Not everyone is appeased by that claim. Some of the mayor's closest allies are so disgusted--one of them says the deal "stinks"--that they've left the fold, driving Agran's once all-powerful political machine to the verge of collapse.
Dornan, who has worked as an English teacher at an Orange County community college, has no known business or utility expertise. He's Agran's longtime personal confidante, political consultant and campaign fund-raiser.
News of Dornan's connection to ENCO Utility Services, a 1997 Edison International spin-off now owned by Apollo Real Estate Investments IV LLC., worked its way in hushed tones around the top echelons of City Hall during recent months. A government contract would give Anaheim-based ENCO tens of millions of dollars in profit and highly lucrative paydays for the company's lobbyists.
Neither Agran, Dornan nor ENCO president Dennis A. Eastman returned phone or e-mail messages, but the behind-the-scenes deal troubled city Councilman Chris Mears so much that last week he announced "ethical" considerations were among the reasons he will not rejoin Agran's candidate slate for the upcoming November elections.
"Ed Dornan knows absolutely nothing about utilities or energy," said Mears. "Ed's only value to the deal is his personal access to Larry and the presumption that he could deliver three votes [on the five-member council] for the contract. If the deal gets done, the mayor's best friend [Dornan] has told me he stands to make more than a million dollars because he has an interest in ENCO. . . . I don't want to be part of a political machine looking for financial opportunities to sustain itself. What they're trying to do doesn't pass the smell test. Frankly, it stinks."
Neither Dornan nor Eastman would comment on the precise nature of their relationship. But the Weekly obtained internal city of Irvine records that show Dornan "accompanied" ENCO executives Eastman and Robert deKorne to a private City Hall meeting in June 2002. There, the three men lobbied Agran, City Manager Allison Hart and staff for the exclusive electrical pact for new residential and commercial developments. Dornan also appeared with ENCO representatives during several other occasions including March 14 and March 18, 2003, meetings.
State laws generally prohibit public officeholders from voting on projects in which they have a financial interest. Laws also require officials to declare any role they may have in companies, particularly businesses seeking government subsidies or contracts. But the law contains a glaring loophole: an elected official's close friend or top political operative, as Dornan is to Agran, can reap undisclosed monetary rewards from government contracts.
Mears said he confronted Dornan and Agran about the arrangement. "I told them to think of the headlines if reporters find out about this," said Mears, chairman of the city's Great Park board, acting chairman of the California State Athletic Commission and a 2003 finalist for a judicial appointment to the state Superior Court. "Ed wasn't shy about his part of the deal, at least in private talks with me, and Larry said, 'Hey, this is just the way business gets done.' I refused to go along with it. It's just wrong. That was the end of my role in the machine. From there on, Larry has treated me like a redheaded stepchild."
A source who knows Agran's version of events says the mayor feels betrayed that Mears would accuse him of sleaze and is emphatic that neither he nor any of his advisers has done anything unethical in the ENCO proposal.
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No matter who is right, the Agran-Mears rift has huge implications. The ENCO contract, which would call on the city to borrow and spend tens of millions of dollars to create a municipal utility in partnership with the private company, is certainly in jeopardy.
But there's also public policy and campaign fallout. In a county in which Republicans dominate, Irvine has been the lone city controlled by a liberal alliance. For most of the past four years, Agran relied on Mears and fellow Democrat Beth Krom to give him a consistent three-person council majority over conservatives Christina Shea and Mike Ward. Whether it was the Great Park--the largest quasi-public-works project in Orange County history--or a pet-zoning ordinance, Agran has usually gotten his way. Several veteran city staffers who requested anonymity say the triumvirate's power allowed the mayor to operate with arrogance.
That arrogance was in play at a key Feb. 24 City Council meeting. Agran had planned to advance the massive, complex ENCO deal with little public debate and no meaningful guidance from Shea and Ward. The two Republicans on the board hadn't even been fully briefed. But Agran's plan fell into chaos.