For the past few months, the city of Oceanside has been riddled with controversy after an email written by a city employee in Oceanside’s treasury department started creating a buzz among residents.
The email, which had quickly began circulating around different Facebook groups, detailed explosive allegations against Oceanside City Treasurer Victor Roy accusing him of mishandling city investments, illegally asking city employees to donate to his election campaign, viewing “inappropriate material” on a public library computer and acting inappropriately toward employees.
It was written by Treasury Manager Steve Hodges, who sent it to multiple city officials, including Roy.
The city treasurer is responsible for overseeing the management of the city’s $500 million investment fund, while the treasury manager monitors the city’s investment portfolio day to day.
Roy was elected to the seat for a partial term in 2018 and was re-elected in 2020. His lack of a financial background was a point of contention among many Oceanside residents when he was first elected in 2018. Roy has a bachelor’s degree in geography from the University of California Los Angeles and had a 27-year aviation career at Continental Airlines and later United Airlines, retiring as a services director.
Residents called on city officials at the time to require professional financial experience for the position, but the city never did. That’s since changed.
Oceanside is now considering implementing stricter qualifications for those running for the city treasurer position moving forward.
Over the past couple years, residents noticed tension between Roy and Hodges during Citizens Investment Oversight Committee meetings. The two have argued publicly on a few occasions, even accusing each other of not performing their duties correctly.
We confirmed one of the accusations through a public records request, which demonstrated that Roy had been caught viewing nudity on a public computer at the Mission Branch Library in June 2021. The library’s staff gave Roy a warning after the incident and has not witnessed any other inappropriate behavior by him since.
As an elected official, the only way for Roy to leave office would be for the voters to organize a recall effort or for Roy to resign on his own. Roy has remained silent on the matter.
The city’s response opened an internal investigation into the allegations, which is now in its final stages.
The city is not investigating any of the allegations related to financial investments, despite Hodges’ claim that Oceanside’s investments under Roy’s oversight “cost the taxpayers millions of dollars,” because they determined that no individual official had control over those decisions.
My colleague, Ashly McGlone, and I investigated the city’s investments under Roy’s oversight. The city did lose out on millions of dollars, but it was because of legal callable investments.
When Hodges joined the treasury staff in 2019, the city had a significant amount of its money in callable investments, which are legal investments that could be abruptly terminated or “called” before the city sees all the interest earnings initially anticipated on the loans.
Hodges was concerned by the amount of money the city had in callable investments as opposed to non-callable or “bullet” investments.
With callable investments, the city loans money to a borrower that will pay the money back with a higher interest rate compared to bullet investments, meaning the city has the potential to make more money back on their investment.
But if interest rates drop, and a borrower can get a better deal somewhere else, the borrower can pay the city back its principal. The city then faces a reinvestment risk, meaning it may have to reinvest its money at a rate lower than its current rate.
This is what happened in Oceanside – it had a significant amount of money in callable investments, so when interest rates dropped during the pandemic, the city lost out on earnings, meaning the city didn’t earn as much as it could have if the money had been invested in different ways.
A twist we didn’t expect to find during our investigation was about the accuser himself – Hodges.
As it turns out, Hodges was convicted of burglary as a teenager for stealing an Oceanside city credit card and thousands of dollars from Home Depot, his former employer, as part of a gift card scam.
Hodges’ conviction was later expunged in 2004, but a new pattern soon formed and has followed him throughout his career.
Public records revealed that Hodges has had a tendency of complaining about colleagues and public agency employers in the past resulting in huge payouts including a $590,000 payout earlier this year from the Costa Mesa Sanitary District and a separate $49,000 payout from the city of Las Vegas in 2014.
In 2018, during his short stint at the Costa Mesa Sanitary District, he alleged that a former general manager was overbilling the agency and complained about alleged racial discrimination within the sanitary district. He also claimed he was retaliated against for his complaints. He received a $590,000 settlement.
Before Costa Mesa, Hodges worked for the San Diego County Water Authority. He didn’t receive any settlements there, but public records show that he did file complaints against the agency citing retaliation and discrimination.
Hodges’ first public agency job was working for the City of Las Vegas where he alleged the city violated the Equal Pay Act – a law requiring men and women in the same workplace be paid equal pay for equal work — and Title VII of the Civil Rights Act, which bars employment discrimination based on race, color, religion, sex and national origin.
He also alleged harassment by another employee and said he had taken on extra job responsibilities without being compensated for more than a year. He received a $49,000 settlement.
Hodges is still employed by the city of Oceanside, but plans to resign later this year. He declined multiple requests for comment.
The report from the city’s internal investigation is being finalized and is expected to be released on Sept. 14.
In Other News
- The Carlsbad City Council last week ratified a local emergency regarding bike safety due to a significant spike in crashes. The council also approved spending $2 million from the city’s general fund on road safety measures. (KPBS)
- Encinitas held its annual State of the City address last week, where Mayor Catherine Blakespear highlighted the city’s newly completed transportation projects, including the El Portal pedestrian tunnel under the railroad tracks, the Leucadia Streetscape project along Coast Highway and more. (Union-Tribune)
- Stone Brewing, headquartered in Escondido, has finalized its $165 million sale to Japanese beer maker Sapporo. With the acquisition, beer production at Stone’s breweries is expected to roughly double. (Union-Tribune)