Anchorage ombudsman confirms some allegations made by fired city manager against Bronson administration

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Mar. 20—An investigation released Wednesday by the Anchorage ombudsman found several allegations made by former Anchorage city manager Amy Demboski against members of Mayor Dave Bronson's administration were justified.

Ombudsman Darrel Hess published the report more than a year after Bronson's December 2022 firing of Demboski, who filed a complaint with the ombudsman before she left the mayor's office. In an explosive 11-page letter last year, she accused Bronson of illegal and unethical behavior and of firing her in retaliation for attempting to convince the mayor to stop such activities.

In an interview Wednesday, a spokeswoman for Bronson noted the mayoral election is underway and called into question the timing of the report's release.

The ombudsman said in an interview that the timing of its release was not politically motivated.

Under city code, the ombudsman is directed to be an "independent, impartial office," and is appointed by the Assembly. Hess has been in the position since the administration of former Mayor Dan Sullivan. The office takes complaints and investigates city agencies, as well as actions taken by directors and employees, and can make recommendations for changes to city code, policies and processes.

The ombudsman's investigation says he substantiated three of Demboski's claims and found that two other allegations were not valid.

After investigating a sixth allegation — that Bronson's senior policy adviser, Larry Baker, tried to use his position to influence the former municipal attorney to drop or reduce domestic violence charges against his business partner — the ombudsman had "a reasonable belief that breach of duty or misconduct may have occurred." Hess said he is referring the matter to the state's Office of Special Prosecutions.

[Read the ombudsman's report]

The ombudsman said the following complaints or allegations were justified:

—Anchorage Purchasing Department director Rachelle Alger gave out penis-shaped cookies to employees in city hall.

—The Purchasing Department violated city code requirements and did not follow longstanding policies and practices when contracting with the mayor's senior policy adviser, Larry Baker.

—In 2022, municipal employees knowingly violated city code by allowing homeless residents to take shelter in a warming area inside the city's former Sullivan Arena emergency winter shelter, beyond the allowed capacity.

The ombudsman did not find the following complaints or allegations to be true or he did not substantiate them:

—That the city purposefully hired Baker as a contractor instead of a municipal employee in order to circumvent or defraud the state's Public Employees Retirement System.

—That a city employee used the Alaska Homeless Information Management System, which contains protected information about homeless residents, for inappropriate purposes.

The ombudsman's report does not name Demboski or Alger and instead uses their staff titles.

Alger, in a written response to Hess' report, objected to his findings about the impact of her actions, denied contracting violations and called his report "inaccurate, misleading, and harmful to the Municipality and to the reputations of those of us who have been caught in the crossfire."

Demboski filed a lawsuit last year against Bronson and the municipality.

In a statement Wednesday, Demboski's attorney, Scott Kendall, said she was "pleased with the outcome" of the investigation and that "it is evident that the most serious allegations she made were fully substantiated."

During the investigation, Hess reviewed more than 1,500 documents, emails, memorandums, text messages, photographs, Assembly meeting recordings, Human Resources Department files, city policies and its ethics code, and interviewed "multiple current and former employees," according to the report.

Veronica Hoxie, spokeswoman for the mayor's office, called the timing of the report's publication "very interesting." Anchorage's city election is underway and Bronson is running for a second term.

"You've got a municipal election in two weeks, so let people believe what they want right now," Hoxie said of the report.

To hold off publishing a completed report because an election is near or underway would itself be a "politicized process," Hess said in an interview Wednesday.

"I've been doing this for 12 years, and whether or not there was an election has never been a consideration on when we released a report," Hess said.

More details on Baker allegations

The report includes new details surrounding Demboski's allegation involving Baker, then-municipal attorney Patrick Bergt, and criminal domestic violence charges against his business partner, Brandon Spoerhase. Bergt was not named in the ombudsman's report, instead referred to by his staff title. He was named by Demboski in her letter.

Demboski had alleged that Bergt came to her twice to report that Baker tried to get him to drop the criminal charges against Spoerhase, and that Bergt expressed "shock and discomfort" at Baker's request.

Demboski was not the only person Bergt spoke to about the incident, according to the report.

Two other city executives contacted the ombudsman about the situation. They had been part of a conference call discussing how to handle the allegation, during which another city attorney said Bergt had also told them about it.

"Both executives stated that during the call, an attorney with the MOA Attorney's Office had stated that they would not lie under oath regarding the matter; they would have to testify that (Bergt) had informed them that Baker had pressured him to drop the misdemeanor DV prosecution of Spoerhase," the report says.

[From August 2023: Larry Baker, at center of multiple allegations against Mayor Dave Bronson's office, is back as adviser]

The ombudsman contacted the other city attorney, who no longer works for the city, and they confirmed the executives' account of the phone call. The former city attorney told Hess they did not have firsthand information about Baker allegedly pressuring Bergt, but that their secondhand information came directly from Bergt.

The ombudsman reviewed more than 1,000 documents and did not find evidence directly supporting the allegation.

Bergt declined to answer the ombudsman's question about whether he had been pressured by Baker.

He "stated that he had consulted an attorney and that if he is subpoenaed as part of an investigation or trial, he would answer truthfully," the report said. Bergt also said he did not take any actions to influence prosecution on behalf of Baker.

Demboski also claimed that Baker attempted to prevent the victim in the domestic violence case from being hired to work at city hall.

Baker denied both allegations when the ombudsman spoke with him.

Baker did speak with Bergt about the case "when he advised him that he had a conflict regarding one of the Spoerhase cases because he had been called to testify in the case," according to the report.

Baker also told the ombudsman that he'd advised Bergt and Bronson that he needed to recuse himself from any hiring discussions about the victim, according to the report. The victim was ultimately hired.

Baker did not respond to multiple messages Wednesday requesting comment on the report. Bronson's office also did not comment on the findings.

Hess said by phone that he is referring the matter to the state's Office of Special Prosecutions.

"I'm not an attorney. It's not a legal process. But when two former executives, one who is a member of the bar, tells me that (Bergt) directly told them that Larry Baker pressured him, and then of course, Larry Baker denies this — there's no physical evidence — but I think it raises enough questions that somebody needs to look at it," Hess said.

Genitalia-shaped cookies and 'inappropriate behavior'

After Demboski filed her complaint about Alger, "several current and former City Hall employees" also contacted the ombudsman with complaints and "stated that they considered the distribution of the genitalia-shaped cookies in City Hall to be unprofessional, inappropriate and workplace harassment," according to the report.

They also alleged that Alger had "screamed, yelled, and cursed at them," the report said. One executive employee expressed concerns about alleged "aggressive, intimidating and disruptive behavior."

"During the investigation by the Ombudsman's Office, it became apparent that the alleged distribution of genitalia shaped cookies at City Hall was only the tip of the alleged inappropriate behavior by the Director," Hess said in the report.

Hess on Wednesday said that more than 10 current and former city staff have come to the ombudsman's office with concerns about Alger and the workplace environment in the Purchasing Department — including two in the last few weeks — and that he referred them all to Human Resources.

Multiple staff filed complaints with the Human Resources department, and HR staff followed the proper process, according to the report. They investigated the complaints, substantiated all of the complaints about "alleged inappropriate behavior of the director" and made recommendations for each complaint, and "action was taken."

However, it is up to the employee's supervisor or director — in Alger's case, Bronson — to implement disciplinary actions that HR recommends.

Directors, supervisors or agency heads may choose to not take action or may reduce the severity of the discipline, and in Alger's case, the municipality failed to "take appropriate action," Hess said in the report.

"... when it comes to the actions of the Director, the MOA has not provided a work environment free of harassment and bullying over the past two+ years," Hess said in the report.

The city has a policy regarding unlawful discrimination and harassment, which applies only when it's based on the victim's protected class, such as race, religion, sex, age and disability.

Bronson, in a July 2023 policy statement, said, "inappropriate bullying behavior that may not rise to the level of illegality is equally unacceptable and will not be tolerated."

Hess said in the report that the city failed to meet that standard "when it comes to the behavior of the director."

Hess concluded that after speaking with several employees familiar with the incident, several said that Alger's status as a superior and perceived close ally of Bronson left them feeling "helplessness because they believed that they were powerless to confront the Director or to report her."

The administration said Wednesday that it had taken appropriate steps in response to the incident.

"(The Mayor's) stance is specifically, with the cookies for example: It's over two years old, and it was handled the way it was supposed to be handled," Hoxie said.

Alger, in a written response to Hess' report, said she gave "a few ribald, humorous cookies to close colleagues whom I considered friends."

However, Alger called his conclusions about the cookies "careless and inaccurate."

"The ombudsman's role is to protect the public by being an impartial investigator into questions of public administration. Instead, the Ombudsman seems eager to take sides in a dispute brought by disgruntled former employees with a self-serving axe to grind," she said in her response.

Contracting violations

A large chunk of the report focuses on whether Baker and the administration violated municipal rules on contracting. Baker received multiple sole-source contracts, one after the other, and all of them just slightly beneath the $30,000 threshold that would make them subject to Assembly approval.

The ombudsman noted that between July 2021, when Bronson took office, and January 2023, three distinct but consecutive six-month contracts worth $29,500 each were issued to Baker's consulting business, adding up to $88,500.

"The way the contracts were structured and processed could be construed by a reasonable person to have been part of an effort to circumvent the requirement for Assembly approval of the contracts," Hess wrote.

All three contracts issued for Baker's services lacked a standard indemnity clause, which put legal liability for a municipal contractor onto the city.

Alger also responded to this portion of the report:

"Mr. Baker was experiencing personal circumstances that prohibited him from making a long term commitment to his role," Alger wrote. "The attempt to attach sinister motives to these extensions is unfair and unwarranted and the Ombudsman is engaging in pure speculation when he makes those allegations."

Hoxie, with the administration, dismissed that there was anything untoward about Baker's contracts.

"At the end of the day, the process was legal," she said.

The report said the justification for making Baker's contract sole-source was not merited under municipal code requirements, but noted that such exclusive contracts' "questionable" justifications are a "systemic problem" affecting both the mayor's office as well as the Assembly. He encouraged revisions to city rules to handle the issue.

Hess found no evidence supporting the allegation that Baker was hired as a contractor rather than an employee in order for Baker to continue collecting PERS retirement distributions. State rules specifically allow for retirees to have personal services contracts with public employers.

Still, the back-to-back contracting and the parameters of his position "appear to have blurred the line between independent contractor and (city) employee," the report said.

Hess recommended that the city attorney's office and Human Resources work together to address any problems in the city's code of ethics relating to the hiring of contractors for positions normally filled by city staff, especially executive and supervisory roles.

Cold-weather shelter

The report concluded that the administration violated city rules when it unilaterally moved to increase capacity at an emergency warming center located within the Sullivan Arena shelter during the winter of 2022. Space inside the facility was capped at 150 people, with a surge capacity of up to 200.

During a cold snap, administration officials relocated an outdoor warming center indoors to a concrete hallway in the building's mezzanine.

"Based on the comments by multiple members of the Administration, it was obvious that they were aware that moving the warming area into the Sullivan had increased the capacity of the emergency shelter beyond the 200 that was authorized by the Assembly at that time," the report says.

At the time, Bronson and officials in his administration framed the move as a humane step to make sure people didn't die outdoors in the cold. Hoxie said Wednesday that given the circumstances, Bronson had made the right decision to keep vulnerable residents safe, and would do it again if he had to.

"That was an issue of morality, a life-and-death situation," Hoxie said.

She added that "sometimes you have to put aside bureaucracy" in order to save lives, and that the issue had ultimately been resolved.

In the report, Hess wrote that while he sympathized with the dilemma facing the administration, they could have taken steps to protect people that did not violate city rules, such as the mayor issuing an emergency declaration.

Indemnifying the ombudsman

The investigation took longer than anticipated due to the number of interviews, records requests and review of documents it entailed, Hess said. Hess initially planned to issue the report on Feb. 8, but the administration and municipal attorney raised concerns about its legality.

In a 12-page letter, the law department asserted that, if Hess released the report, the city might not indemnify the ombudsman if a lawsuit is filed, Hess said in the report.

Earlier this month, the Assembly took steps to indemnify the ombudsman, approving an ordinance that Bronson then vetoed.

Expanding the ombudsman's powers of investigation "erodes executive authority and aggrandizes legislative power in the Municipality," Bronson said in the veto.

On Tuesday, members overrode that veto and altered city code, allowing the ombudsman to publish the report and be protected in the event of a lawsuit.