GOLD HILL — The city is on the brink of losing its insurance coverage because an uncooperative council and unprofessional police department make it too great a liability risk, according to a letter from the city's insurance company obtained by the Mail Tribune.
"We have been frustrated by an inability to get straight information from the city and the manipulation of our recommendations by individual Council members to further their own political agenda rather than for the good of the city," said Noel Klein, executive director for City County Insurance Services (CIS), in a letter to the city dated Dec. 22.
The city has six weeks to successfully address its risk concerns or lose its insurance on Feb. 28, Klein wrote.
The root of the insurance company's concerns is whether the city should have its own police department, Klein stated.
"A basic CIS recommendation urged the Council NOT to have their own police department given the past history of turmoil between the Council and the police department and the unwillingness of the Council to adequately fund and staff a professional police department," Klein wrote.
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Klein's four-page letter, combined with decades of Gold Hill law-enforcement controversies, demonstrates the city's failure to manage or maintain its own police department, said council member Gus Wolf.
"The issue is the police department," said Wolf. "It's obvious we shouldn't be in the police business. We don't have the funds or the expertise to provide oversight for that particular service. When one service in the city jeopardizes everything, it's time to look at the liability of providing that service."
Council member Kathleen Price, a staunch Muchow supporter, said the city must maintain its police department at all costs. The problem, Price said, is that CIS has not been given accurate information about the police department or its current chief.
"(The old council) put a man (Muchow) on administrative paid leave who was doing his job," Price said. "They abused their political powers."
Incoming Mayor Daniel Morris II and council members Judith Holdeman, Scott Baker and Robert Ashton will join her in supporting Muchow and the police department, Price said.
"We're going to have to prove the police department's worth because of all the negativity," said Price. "But we are stepping up to the plate. We will put an action plan into effect to prove to (CIS) that we are worthy for them to continue insuring our city."
The city currently carries a $10,000 per occurrence deductible for liability claims and a $1 million limit on coverage — not enough coverage for a small municipality, Wolf said.
"I'm worried about the liability of the town," said Wolf. "We have two potential lawsuits coming down now. All we need is one cop doing something stupid, and come on, folks."
This is not the first time the city has been on the brink of losing its insurance over controversy involving its police department, Wolf said. In April 2000, CIS agreed to join the city in a financial settlement with former Police Chief Katie Holmboe on the condition that the city not fund the police department for the next two years, he said.
"This has happened before," Wolf said. "What part doesn't Kathleen (Price) get? This is an old fight for (CIS). They shut us down before."
Klein said "failure to address internal conflict on the council, compounded by the independent actions of some council members, has made it virtually impossible to provide risk management services to the city."
Klein's letter comes just two weeks after the resignation of the city's auditors. In a strongly worded letter to the city, Christopher Dye of Medford accounting firm Purkeypile and Johannsen said, "We have concluded that the openness of the city's leadership is questionable."
Wolf said he worried that without an audit or insurance, the city may go bankrupt or become unincorporated.
"I really don't think the average citizen of Gold Hill understands the depths of the problems," said Wolf. "The way I look at it is, if we don't have insurance, we don't have employees. Without an audit, we don't get any funding. If we can't prove where we're spending the money, how can we expect the state to allow us to collect taxes?"
Reach reporter Sanne Specht at 776-4497 or e-mail sspecht@mailtribune.com.
