San Juan Bautista – A $3.8 million grant intended to fund San Juan Bautista’s $10 million water infrastructure project has been terminated by the U.S. Economic Development Administration.
In a letter sent earlier this month and signed by Seattle Regional Director A. Leonard Smith, the EDA announced that “the grant to the City of San Juan Bautista will be terminated for cause with no allowance for EDA participation in any project costs with the City.”
Smith’s letter cites an audit conducted by the U.S. Department of Commerce’s Office of the Inspector General earlier this year. In her report, the auditor stated that the city didn’t provide the necessary information to evaluate San Juan Bautista’s ability to manage the grant, and she recommended “terminating the award … and putting the funds to better use.”
San Juan Bautista City Manager Jan McClintock said the city will appeal the decision and that she will also be applying for alternative sources of government funding. Many of those sources weren’t available earlier, when San Juan Bautista was an EDA grant recipient. Now that the grant has been terminated, the city is eligible for those funds, she said.
McClintock said she hopes to start construction by spring 2008 and finish by November 2009.
“We have to move forward,” she said. “If we slow down, we get fined.”
The Central Coast Regional Water Quality Control Board – the same state agency that imposed Hollister’s building moratorium – has issued a cease-and-desist order to force the city to improve the quality of its water, McClintock said. That deadline has already passed, and if the city stops making progress on the infrastructure project, it will face substantial fines, she said.
The EDA first awarded the grant in February 2005 to the city and to the San Benito County Water District. The negotiations between the city and water district broke down and the grant was suspended that August.
Since then, the water district has written to the EDA to withdraw from the grant and to pledge $2 million of district funds to the infrastructure project. In November 2006, McClintock said the city had everything it needed for the grant except for the “cover sheet” and that she had received verbal confirmation from Smith, the EDA director, that everything was fine.
Jim Pereyra, who was then in the middle of an unsuccessful City Council bid, criticized McClintock’s statements at the time. He said Friday that he will ask the San Benito County Grand Jury to investigate whether McClintock lied about the grant’s status at public meetings.
Former Councilman Chuck Geiger, who allied himself with Pereyra in the 2006 election and also lost, is now on the grand jury. He said he has always urged the water district and the city to work together.
“I hope the people of San Juan Bautista hold City Council officials responsible for this failure,” he said.
But McClintock said her statements had not been intentionally misleading and had reflected her knowledge at the time. She also said the city has followed the EDA’s instructions whenever it could.
“We’ve got enough Fed Ex receipts shipping stuff to the EDA to sink a boat,” she said.
The EDA letter states that the grant to the water district has not been terminated and that the water district could “continue the project without the City, either as the sole grantee or with another governmental entity as co-grantee.”
Water District Manager Lance Johnson said he’s discussing the district’s options with other agencies, including San Benito County.
“The district is in review of the proposed project, and potential involvement in it is still under consideration,” he said.
Asked about the EDA’s statement regarding the water district, McClintock said, “Yeah, we don’t know what it means.”
City Councilman George Dias emphasized that the infrastructure project is still moving forward.
“Right now, we’re in panic mode,” he said. “But once we file this appeal, we can take a deep breath and then we will fight it out with the EDA. There’s no other way to put it.”
Anthony Ha covers local government for the Free Lance. Reach him at 831-637-5566 ext. 330 or [email protected].
