WENATCHEE — The federal Securities and Exchange Commission is expected to take enforcement action against a top city official for her role in the Town Toyota Center debacle.
The action — the first by the agency in its investigation of the arena’s finances and ultimate bond default — is expected next month, Mayor Frank Kuntz said. It is expected to target Executive Services Director Allison Williams, according to a document included in the City Council agenda packet.
The mayor announced the expected SEC action and what he said was a pending settlement agreement with the agency that would close the case.
The City Council on Thursday moved to secure Williams’ role in the settlement agreement, voting 4-2 to approve paying Williams six months’ salary and benefits if she is fired before the end of 2014 and three months’ salary and benefits if she if fired before the end of 2016.
In exchange, Williams has agreed to sign a SEC settlement agreement, which has not yet been made public.
The SEC opened an investigation in 2011 after the arena defaulted on nearly $42 million in short-term bonds that were sold to pay for construction of the arena. On June 10, the agency sent a letter to the city advising that it intended to file an enforcement action against Williams.
All of the information about the pending SEC action came from the city because the federal agency does not comment on its activities until after an enforcement action is taken. A spokesperson for the agency on Thursday would not confirm that an investigation was underway.
Williams would not comment on the severance agreement and referred all questions to Kuntz.
Kuntz said that Williams, who is an at-will employee of the mayor along with all department heads, will continue to work for the city in her current position.
“I anticipate she’ll be employed here for a long time,” he said. “She’s doing a fantastic job.”
As executive services director, Williams oversees the city clerk and human resources departments, serves as liaison between the city and many community groups, and handles other assignments from the mayor.
Williams was then-Mayor Dennis Johnson’s right-hand employee in planning and arranging financing for the nearly $42 million arena, and also served as contracts manager for the public entity that was created to oversee the arena.
Johnson and Williams were the primary promoters of building the arena after the idea was presented to the city by arena developer Global Entertainment of Arizona. They were instrumental in getting state approval for the creation of Greater Wenatchee Regional Events Center Public Facilities District, which secured the financing, and in convincing the City Council to agree to financial back the bonds if the PFD was unable to repay them.
Williams was also the chief communicator of arena-related business to the City Council and the main spokesperson for the project to the community.
The SEC opened an investigation in 2011 after the arena defaulted on short-term bonds that were sold to pay for construction. Investors were eventually paid back about 10 months after the default when two new sales tax were approved and long-term bonds were sold to refinance the debt.
About 100 investment firms and individual investors bought the original bonds. Wells Fargo Bank was the largest bondholder with nearly $4 million invested. Douglas County and Central Washington University were among the agencies who bought the bonds.
Several of them banded together and threatened to sue if they were not repaid.
The SEC enforcement action Kuntz said is pending against Williams stems from her role as contracts manager for the PFD, which was created to own and finance the arena.
The severance-pay agreement with Williams states that all her actions for which she may be punished came on the advice of the PFD’s bond counsel.
Councilman Tony Veeder and Mark Kulaas both voted against the severance package for Williams.
Veeder said he opposed it because it could set a precedent for the labor unions representing city employees. He also said it was a preferential contract for one employee that was not negotiated.
Kulaas provided a prepared, typed statement that said City Council members have been advised by attorneys representing the city not to publicly comment on matters relating to the active SEC investigation.