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Hobbs mayor's $60,000 loan to city manager deserves Fourth Estate's scrutiny

By Nick Maxwell
Published on November 29, 2016

Hobbs, N.M. -- When Hobbs City Manager John J. “J.J.” Murphy applied for the city manager position of the City of Las Cruces this year, the public could see on his resume that his salary at the time was “$178K PLUS $50K BONUS”. The $50,000 “BONUS” had actually been a housing-assistance recruitment incentive for certified police officers that his own resume says he crafted himself and pushed the Hobbs City Commission to pass in April 2013. He then effortlessly convinced the commission that he, too, should get the incentive added to his contract less than two months later.

You heard right: the city manager helped himself to the same housing relief intended to help newly recruited police officers afford a home during Hobbs’ oil boom. The commission discontinued the housing incentive one year later, upon Murphy’s recommendation that the incentive had done its job.

According to the incentive agreement, an officer who selected the $50,000 option also agreed to serve at the Hobbs Police Department for 10 years, or else pay back a prorated percentage of the incentive upon an early separation.

Recently, Hobbs Mayor Sam Cobb wrote that the “City Commission directed Mr. Murphy to look for work outside the organization in early August.” The commission and Murphy claimed to be negotiating a “reduced severance compared to what [Murphy] would be entitled to if he waited until August 2018 [sic] to depart.” The resulting proposal, however, presented during the Oct. 3, 2016, regular commission meeting, was a far better deal than if the commission just terminated his contract now and paid him the rich severance that’s in his current contract. As one can see (at 50:15), no discussion took place concerning the fancy new legal benefits in the failed proposal, which had the potential of costing city taxpayers a small fortune and any option of future recourse.

While many are in an uproar about what the city commission may agree to pay Murphy as part of his new exit terms, I am thinking about that housing incentive, wondering: since the city commission is looking to part ways with Murphy “on or before June 1, 2017,” well before completing 10 years of service, how much of that $50,000 “BONUS” will Murphy have to pay back to the City of Hobbs?

I thought I would find an answer in public records, since the incentive agreement states, “A lien would be placed on the home by the City of Hobbs until the obligation is met.” As I searched for a City of Hobbs lien for Murphy’s home, I stumbled upon a mortgage showing that a limited partnership tied to Mayor Sam Cobb has had a lien on the city manager’s home for a $60,000 loan since August 2013, one year into Murphy’s five-year contract.

Ask your banker. If the repayment of the $60,000 loan is not to exceed $120,000, and if the term of the loan, conceivably, coincides with the remainder of the city manager’s contract – four years – then that is a very high interest rate for a loan. What prevented Murphy from going to a local bank to secure the $60,000 at a much lower interest rate? Why would he get the loan from the mayor of Hobbs? With minimal imagination, this loan hints at being the foundation of an elaborate kickback scheme.

Thinking such a discovery needed to be urgently passed on to our local newspaper, I sent a tip to the Hobbs News-Sun. I emailed the mortgage and other supporting documents to the editor and other staff on Monday, Oct. 31. Weeks have passed by with no mention of the mortgage in newsprint.

What's wrong here?

The city commission has one employee: the city manager. They are responsible for his hiring, ongoing evaluations and – if it comes to it – termination. For any member of the commission to have a vested financial interest in the city manager's continued employment – or termination – is a huge deal. How can you evaluate an employee's performance fairly if he owes you a significant sum of money?

Murphy signed the $60,000 mortgage on Aug. 6, 2013. What else worthy of note happened in August of 2013?

On Aug. 19, 2013, the Hobbs City Commission, led by Mayor (and Murphy financier) Sam Cobb, voted on an amendment to Murphy’s contract that included:

• Salary increase of more than 15.5 percent, from $142,700 to $165,000;

• Accrual of paid time off increase from 15 hours per month to 18 hours per month;

• Bereavement allowance of up to $7,000 per year for family travel in the event of an illness or death involving an immediate family member; and

• Severance doubled to one year, to be paid in a lump sum unless otherwise agreed to, and itemizing other benefits to be included in severance as:

     o Health insurance for city manager and all dependents;

     o Life insurance;

     o Short-term and long-term disability;

     o Car allowance; and

     o Any other available benefits.

The meeting minutes show that Mayor Cobb and six commissioners voted to approve the contract amendment, but nowhere do the minutes show that Mayor Cobb disclosed that he had entered into a substantial financial relationship with Murphy just two weeks prior.

Same goes for the contract amendment approved on Oct. 6, 2014, the proposed and rejected contract amendment put before the commission on Oct. 3, 2016, as well as other action items in between those dates that related to Murphy’s employment and benefits. No disclosure. None.

Regardless of Mayor Cobb’s intentions at the time the loan was made, “Full disclosure of real or potential conflicts of interest shall be a guiding principle for determining appropriate conduct,” New Mexico’s Governmental Conduct Act says in Section 10-16-3(C) NMSA 1978, which is titled “Ethical principles of public service; certain official acts prohibited; penalty.” Under those terms, even noble intentions stink to high heaven.

The News-Sun let Mayor Cobb be the explainer-in-chief about the terms of the contract amendment in the Oct. 2 column published the day before the severance vote. Mayor Cobb said there were really only two “key elements of the agreement,” but the News-Sun failed to do any independent, substantive reporting on the many other elements of the amendment, which include immunity for Murphy “for any events that have arisen or occurred prior to the Effective Date of this Agreement,” which you will not find in severance agreements or consulting contracts between the city and his predecessors.

Hobbs residents should ask why the mayor is championing such lucrative exit terms for the city manager while at the same time not disclosing this existing mortgage to the public, and why he is attempting to cut out the rest of the commission from approving Murphy’s travel and other expenses.

I hope the city commission will reserve the right to negotiate Murphy’s severance at the time he retires or resigns and not before then, and furthermore, the commission must reserve the right to refuse to pay Murphy a dime of his severance should he transition to a new job. If the city commission is waiting for him to land a new city or county management position, then they may be in for the long haul.

Among the most recent of communities Murphy has applied to in the last few years, one vigilant local newspaper did its homework on the city manager candidates. The Killeen Daily Herald reported on finalists’ backgrounds, which revealed “concerns … heading into the interviews, but none of the caliber of Murphy’s red flags.”

The Killeen Daily Herald reported in another article, “A federal grand jury looked into his (Murphy’s) business dealings after he resigned as the Wilkes-Barre, Pa., city manager, and a 2012 agreement between Murphy’s consulting group, Goals Consulting, and the Wilkes-Barre Parking Authority to aid in a leasing contract was subpoenaed as part of a widespread corruption probe into the city.”

Why should this matter to people in New Mexico?

The Killeen newspaper chastised the executive-search firm for doing shoddy work in creating its slate of finalists for the Killeen City Council to consider, writing in one editorial, “Anyone with internet access and a phone could have uncovered many of the issues that surrounded some of the candidates. Yet, such basic screening was not done in this case — and that is unacceptable.”

You see, Strategic Government Resources, or SGR, the search firm that presented Murphy as a finalist, is the same headhunter conducting the City of Roswell’s executive search, which has already been scrapped and rebooted once.

Again, why should this matter to New Mexicans? Because Murphy was named the New Mexico Municipal League’s 2016 City Manager of the Year by his peers throughout the state. The irony is palpable.

The Hobbs News-Sun did not report on Murphy’s federal grand jury probe. Is that a surprise, since there’s been no reporting on this $60,000 loan, and no reporting on the terms of the severance contract the commission rejected? What gives? Is the newspaper under threat of a lawsuit? It’s been known to happen.

In 2011, Murphy sued a Pennsylvania town, Radnor Township, for not hiring him in 2009, citing discrimination of his ongoing military reserve duties. The News-Sun was good to give him a forum to make a pre-trial public relations appearance, as was Fox News. The trial was very telling, and testimony was relevant to Hobbs taxpayers, but the News-Sun offered no coverage as it unfolded. Reportedly, Radnor Township felt Murphy had overstated his qualifications. His brother, then-Congressman Patrick Murphy, had also called during Radnor's interview process and tried to influence the selection. Murphy lost the case and the appeal in 2014.

I want to believe the News-Sun has the community’s best interests at heart, but the evidence stacks up to suggest the contrary. Is it unreasonable for the public to expect the local newspaper to inform public discussion, rather than the newspaper to expect members of the public to inform newspaper content? Those citizens are rare who will independently dig through meeting agendas and public records to inform themselves and others about the people’s business being conducted by elected officials.

We still need the Fourth Estate to do the heavy lifting to compel government transparency and effect government accountability, but in the meantime, I am doing what I can with my website, wethefourth.org, to open up Hobbs city government and to be the watchdog Hobbs has been without the last half decade or more.

Nick Maxwell Courtesy Photo

Nick Maxwell

Nick Maxwell is a technology consultant, writer, and analyst. Maxwell advocates for government transparency and operates the watchdog website wethefourth.org.

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