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San Gabriel Valley Tribune (California)
Jan 06, 2005

by Cindy Chang

Alhambra councilman to keep city vending contracts, not profit

ALHAMBRA, Calif. -- Newly elected Councilman Gary Yamauchi plans to keep his vending machine contracts with the city, but donate the proceeds to charity.

City Attorney Joseph Montes has advised Yamauchi that because of the way the contracts are structured, there is no conflict of interest with his duties as a councilman even if he continues to collect the profits.

Yamauchi initially considered staying with the current arrangement but decided the charitable donations would both benefit those in need and help deflect any accusations of impropriety.

"It's not much money, number one, and also I don't like something hanging over my head like that," he said.

Corruption is common in the vending machine business, according to Yamauchi, and he says he does not want a company from outside Alhambra to wring extra profits from the city.

So rather than abandoning the contracts altogether, he will continue selling soda, chips and other snacks on city property without keeping the profits for himself.

A former president of the Alhambra Rotary Club and the San Gabriel Valley YMCA, Yamauchi plans for most of the money to go to local charities to which he does not have a personal connection.

Tri-Star provides vending machines for Alhambra parks and two of the city's three high schools as well as for City Hall, the library and the city maintenance yard. The contracts are not very profitable, netting only about $3,000 a year, or less than 1 percent of the company's annual earnings, Yamauchi said.

The contracts for the library and the city yard are informal, while a written contract entered into in December 1995 gives Yamauchi the right to operate vending machines in the parks and City Hall. The written contract has no expiration date, but either Yamauchi or the city can terminate it at any time.

Under the contracts, the city does not make monetary payments to Yamauchi. Instead, Yamauchi shares up to 15 percent of his gross sales with the city in return for the right an exclusive right, in the case of City Hall to put his vending machines on city and school district property.

"Because there's no check going from the city to Yamauchi's company, the City Council has no opportunity under the existing contract to make any decision that affects that contract. If he's not called upon to make any decisions, then he doesn't have a conflict," said City Attorney Montes.

If the contracts are legal, then Yamauchi can decide what he wants to do with the profits, whether he keeps the money for himself or donates it to charity, Montes added.

Even if a technicality legally absolves him, it might be best for Yamauchi to terminate the contracts and avoid any appearance of a conflict, said consumer advocate Carmen Balber of the Foundation for Taxpayer & Consumer Rights.

The Santa Monica-based organization pushed for conflict-of-interest legislation that five California cities passed by referendum in 2001 and that Pasadena and Santa Monica are still contesting in the courts.

"In a situation where there may be a possible conflict of interest a situation where the council member can influence a decision that can make his own company money, the public has the right to expect the public official to step aside rather than create an actual conflict of interest or even the appearance of one," Balber said.

In a hard-fought election battle last fall, Yamauchi's opponents raised the issue of his vending contracts with the city, referring to them in one attack mailer as a "sweetheart deal in perpetuity."

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