Gold Hill, Ore., Could Lose Insurance

The insurance company for Gold Hill, a southwest Oregon city, has threatened to pull its coverage because of continuing problems with the city council and the police department.

In a letter obtained by the (Medford) Mail Tribune newspaper, Noel Klein, the executive director of City County Insurance Services (CIS), said the company has been frustrated by its inability to get information from Gold Hill officials and “the manipulation of our recommendations by individual Council members to further their own political agenda.”

Gold Hill, an old Gold Rush town that is home to the Oregon Vortex roadside attraction, has a decades-long history of friction between the council and the police department. In 1997, for example, then-Police Chief Katie Holmboe was reprimanded by the City Council for selling Mary Kay while on duty and for using prayer to try to drive evil spirits from a man she thought was possessed.

The current police chief, Dean Muchow, has been on paid administrative leave since Oct. 24 while allegations of fraud, harassment and other claims are investigated.

Last spring, petitioners attempted to recall three council members, citing their lack of support for the police department. In the fall, a mayoral candidate said he had to drop out of the election because a police officer started harassing him.

Klein’s letter said the insurance company is unconvinced that the city needs a police department.

“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 in the letter dated Dec. 22.

The city will lose its coverage on Feb. 28 if it fails to successfully address the concerns of the insurance carrier, Klein wrote.

The letter, combined with decades of Gold Hill law-enforcement controversies, demonstrates the city’s failure to manage or maintain its own police department, councilman Gus Wolf said.

“It’s obvious we shouldn’t be in the police business,” Wolf said. “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.”

But council member Kathleen Price said the city must maintain its police department at all costs. The problem, Price said, is that the insurance company has not been given accurate information about the police department or the police chief.

“We’re going to have to prove the police department’s worth because of all the negativity,” Price said. “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.”

Klein’s letter arrived a few weeks after the city’s auditors resigned, citing a lack of openness from Gold Hill leaders.

Wolf said 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,” Wolf said. “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?”