Mayor Pro Tem Elizabeth Pearson's job at the Laguna Playhouse and her voting on the Village Entrance project did not pose a conflict of interest, according to the California Fair Political Practices Commission.

The FPPC, which oversees elected officials and public employees, advised City Attorney Philip Kohn in April 2012 that Pearson was eligible to vote on proposals for the site — across Broadway Street from the Laguna Playhouse, where she serves as director of development — unless a decision financially affected her or the Laguna Playhouse.


FOR THE RECORD:
A previous headline that said "Panel clears Pearson to deliberate on Village Entrance" was changed to "FPPC letter says Pearson can vote on Village Entrance with restrictions"; The subhead "State commission decides there was no conflict interest regarding mayor pro tem's voting on project" was changed to "State commission decides mayor pro tem can vote on project as long as specific financial gains are not foreseeable."

Though settled last year at Pearson's request, the issue came to light recently when a resident inquired about whether she was allowed to vote.

An official cannot vote on a project that would benefit them if certain financial thresholds are crossed, which was not the case in Pearson's situation, Kohn said in a memo to the City Council addressing the resident's inquiry.

Kohn also advised the council in his memo, dated April 12, that his office was not aware of any change in the commission's 2012 position.

"Based on conversations with her from and after the time of the FPPC advice letter," Kohn stated in the memo, "we are confident that Council member Pearson is fully aware of the commission's guidance, and she is resolved to ascertain and assess the facts and circumstances associated with the nature of each proposed future decision concerning the Village Entrance project in order to determine whether the applicable materiality standard would be exceeded in the relevant time frame."

Longtime resident Jean Raun said she was aware of the correspondence with the FPCC last year, but the matter was brought to her attention again and asked the city attorney if anything had changed. She declined to name the person who brought the issue to her.

"I was concerned that Elizabeth would get a bad name, that she would be accused of using undue influence," she said.

Pearson was made aware of the inquiry on April 12 and issued a public statement the following day.

"Yesterday, I learned that Laguna residents Verna Rollinger and Jean Raun had made inquiries regarding my legal ability, as it relates to the California Fair Political Practices Commission, to deliberate — and/or vote on — a proposed Village Entrance project in Laguna Beach," Pearson stated in the statement.

Former Councilwoman Verna Rollinger said her only participation in the inquiry was to provide Raun with the city attorney's telephone number.

Pearson asked the city attorney to request FPPC clarification on a possible conflict of interest shortly after she went to work for the Playhouse, according to her statement.

"The FPPC reviewed the matter and determined that there were no 'direct' financial benefits either to the Playhouse or to me," she said. "Any financial benefits to the Playhouse were termed 'indirect' in nature. Therefore, it was determined that I could continue my work on behalf of the residents of Laguna Beach for a Village Entrance project."

Kohn and City Manager John Pietig assisted Pearson in her request for guidance from the commission.

Officials have a "financial interest" in decisions if it is reasonable to assume the decisions will have a "material" financial effect on the officials or any of their economic interests distinguishable from the effect on the general public.

If a public official's income exceeds an annual income of $500, then the financial "interest" also includes the 12 months prior to a decision.

The financial impact on the official's employer also is a factor. Pearson would have been disqualified from voting on any city decision related to the Playhouse if the decision increased or decreased the theater's income by $100,000 or more in a fiscal year; added or reduced existing expenses by $25,000 or more in a fiscal year; or resulted in an increase or decrease in the value of the Playhouse's assets or liabilities by $100,000 or more.

"Having the beautification of a park, and the convenience of centralized parking for all residents and visitors, including Playhouse patrons, would be very positive for the city," said Playhouse Executive Director Karen Wood. "We are in favor of it. However, the Village Entrance Project will have no direct financial impact on the Playhouse.

"We will not sell more tickets to plays or events because of the Village Entrance project," Wood added.

Kohn's request for guidance from the commission was made on the behalf of Pearson on Feb. 22, 2012, less than two months after she was employed by the Playhouse and about 18 years after she first supported the Village Entrance project as a planning commissioner.

Pearson was appointed at the March 27 City Council meeting to a subcommittee, along with Councilman Robert Whalen, to work with city staff to develop a plan for the Village Entrance, which will be presented to the public June 11.

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