Cooked books, sealed lips, secret decisions, a covert trip to
Seattle
– city officials left out of the loop are wondering why
San Juan Bautista has been paying a water grant consultant with
non-existent funds from a federal grant the city may have lost in
September, even as concerns about the city’s handling of finances
surface.
It’s a new revelation on top of several others that have come to
light recently when Council Member Chuck Geiger was told by another
council member that several city officials — including possibly
one or two council members — traveled to Seattle last month,
apparently to check on the status of the city’s suspended federal
water infrastructure grant. No one outside of the suspected Seattle
delegation knows what the upshot of that meeting was or if anyone
even went. City officials presumed to be involved will neither
confirm nor deny going on the trip.
Cooked books, sealed lips, secret decisions, a covert trip to Seattle – city officials left out of the loop are wondering why
San Juan Bautista has been paying a water grant consultant with non-existent funds from a federal grant the city may have lost in September, even as concerns about the city’s handling of finances surface.
It’s a new revelation on top of several others that have come to light recently when Council Member Chuck Geiger was told by another council member that several city officials — including possibly one or two council members — traveled to Seattle last month, apparently to check on the status of the city’s suspended federal water infrastructure grant. No one outside of the suspected Seattle delegation knows what the upshot of that meeting was or if anyone even went. City officials presumed to be involved will neither confirm nor deny going on the trip.
“Going to Seattle, that can be done,” Geiger said. “But the information is not being shared with the entire council.”
At last week’s San Juan City Council meeting, Geiger tried to get answers about the trip but his fellow council members – as well as paid grant writer Mark Davis, who serves as an employee of the council – refused to answer questions about the junket.
Now San Benito District Attorney John Sarsfield is taking a closer look at city policies for possible Brown Act violations.
“Why not just answer the question?” asked Sarsfield, who confirmed he has seen a video of the meeting and that he is investigating complaints about the town’s lack of transparency. “It was a reasonable question. By not answering it they raise all these red flags.”
It was during that same council meeting that City Manager Jennifer Coile announced her resignation due to a family illness.
It all started when the Economic Development Administration, which has a regional office in Seattle, Wash., co-awarded a $3.8 million water infrastructure grant to both the city and the San Benito Water District in February. The badly needed project would have provided new water lines for the city (the current pipes are degraded and haven’t been replaced since the 1960s), a new water treatment facility, new storm drains, a new water reservoir, upgraded wells and the promise of more jobs at nearby produce packing plants, which would have been enlarged because of the upgraded sewage and water capacities.
The water district was to match the grant with $3.1 million more, but after the district insisted on having a third party handle the money because of the Mission town’s less-than-stellar financial past, the city refused to negotiate any further with their co-grantee.
In September, the EDA suspended the grant. Within days, City Manager Coile told the council that they were free not to speak to the press and if they wished, all inquiries could be directed to her. Geiger says that stance is urged on by council member Priscilla Hill. In the following months, Coile and Davis announced they were pursuing a $500,000 loan from San Benito Bank for minor expenses before they go to bid in April 2006 on the water infrastructure project, which they claimed was never anything more than a new line beneath Fourth Street.
“It’s totally on schedule,” Coile said of the project last week. “We are going out to bid in April and starting construction in August.”
No one –except possibly Coile, Davis and the council member believed to have gone on the Seattle trip — knows if there is a deadline date for San Juan and the water district to settle their differences. EDA officials in Seattle and Washington, D.C., refuse to answer that crucial question for The Pinnacle.
It appears that the water district’s fears about the way San Juan handles money could be justified, and not just because the town nearly went bankrupt in the early 1990s.
The Pinnacle has obtained part of an October statement from San Benito Bank for the city of San Juan Bautista, which shows that Fund 825, also known as the “EDA fund,” was in the negative in September by $253,585.03. The sheet indicates that in October $6,250 was taken from the fund – the exact amount of Davis’ monthly salary – resulting in a negative balance of $259,835.03.
It means city officials have been plunging into a money pot that was never filled in order to pay for a contracted job that, ostensibly, was fulfilled in March when the city announced being co-awarded with the federal grant. Council member Geiger said he has repeatedly tried to find out what Davis’ job description is and what he is doing to earn such a paycheck, especially since the EDA has already awarded the grant. Davis was contracted with the city in 1999 to land the grant, which he did along with former City Manager Larry Cain in early spring last year. But since then, Geiger says, City Manager Jennifer Coile has stonewalled him on providing an answer as to why the city continues to pay Davis $6,250 a month. Coile could not be reached to answer questions about Davis’ job description this week. In the past, Davis has been described as project manager.
“I want to see an itemized list of what he’s doing, and we never get it,” Geiger said.
According to the bank statement, the phantom EDA fund has been paying for Davis’ salary for four years. At last week’s meeting the city council wiped out debts placed on the town’s water and sewage funds without discussion. In less than one minute, the council “forgave,” as they put it, the water fund (which was in the negative in October by $219,424) and the sewer fund (in the red $285,073). The vote was 4-1, with Mayor Dan Reed and council members Priscilla Hill, Art Medina and George Dias voting for the debt erasing. Geiger was the lone dissenter.
As they voted, elected City Treasurer Paul Petersen looked on in apparent horror.
“I don’t know when they decided they were going to write off the city’s debt like that,” Petersen said in a post-meeting comment. “No one’s going to loan the city money with debt like that in the sewer and water funds.
“They’re subsidizing Mark Davis,” added Petersen.
Petersen also said that he believes that forgiving the debts in the sewer and water funds is legal, but he sees it as highly irregular.
“But they just wrote it off,” said Petersen. “The cash is consolidated into one account, essentially. I don’t understand that.”
Petersen has sent a letter to Coile, with copies sent to many other city officials, asking for detailed information on all the city’s funds and accounts, including any comptroller’s reports.
Geiger says it’s worse than what it seems on the surface. Money juggling may be a necessary evil at times when budgets are tight, as they are throughout towns and counties in debt-ridden California. However, Geiger said, in the case of the yet-to-be-awarded EDA grant money which has been heavily dipped into to pay Davis, there is a finite amount of money that legally can go to the payment of a consultant such as Davis.
“The grant says there’s only a certain amount that can go for administration,” Geiger said. It is not known what percentage can be set aside for administrative salaries.
Petersen says he has been shut out of the city’s accounting practices ever since he was elected to the post of City Treasurer in 2004. Petersen, who obtained his accounting degree from the University of San Francisco, was a certified public accountant for 38 years, now retired. He was chief financial officer at Hartnell College for 10 years. In addition, he performed audits for large state agencies, including the governor’s office.
On one occasion when Petersen was in City Hall requesting information on the budget, interim city manager and fire chief Rick Cokley forcibly pushed the treasurer out of the office as city employees looked on. Petersen was shocked by the rough treatment, but apparently, it piqued his curiosity as to what the city was hiding.
Petersen, like Geiger, discovered that the city was running on an old accounting system that hampers disclosure to the public and even the council. A monthly check register report shown to the council indicates a single section for VISA charges – but fails to list each expense on the city credit card.
“It’s a great way to hide possible expenses,” Geiger said. “Unless we personally go into the city office to look at the receipts of this VISA bill, we never know what’s been charged. Why can’t they be listed on a sheet and included in the city council packet?”
Another problem, according to Petersen, is the way city checks are written. Each check requires two signatures, and there are five possible city officials who can sign the checks. The authorized signers are the city manager, two of five council members, treasurer Petersen and city accountant Janet Locey. Petersen said he believes it is highly improper that the city accountant – the very person responsible for maintaining the books – should be a check signer.
“A bookkeeper should never ever be an authorized check signer,” Petersen said.
Petersen added that he rarely has signed a check because he is rarely asked to do so.
“I haven’t signed a check in four months,” he said. “And I’m complaining.”
Petersen also said he requested to be present during the negotiations with San Benito Bank to get the $500,000 loan for the shrinking water infrastructure project. But Coile told him “no,” he said, with no further explanation. City officials won’t let him see even the payroll record.
Petersen and Geiger believe the council erased the water and sewer fund debts in order to make the city’s financial situation more palatable to San Benito Bank, and thereby hook the half-million dollar loan they long for.
“By wiping away that debt, they’re cooking the books,” Geiger said.
Like Petersen, Geiger says he has been shut out of the business he was elected to do. Since he decided to talk to the press again, no one on the city council speaks with him except, on occasion, Council Member Dias. Council Member Art Medina also shuns Geiger, which is ironic considering that Medina, like Geiger, ran on a platform that ensured constituents more transparency in city government.
“I’ve gotten no e-mails, no information on the water infrastructure project,” Geiger said. “Every month at the council meetings they window dress the water project problem and say they’re still in negotiations with the water district. But I know for a fact there are e-mails from (water district director) John Gregg they have never answered.”
D.A. Sarsfield said it will take his office about a month before they make any decision on the whether or not San Juan officials have violated any public disclosure laws.
“What looks bad is when you start to conceal simple stuff like this; it looks strange,” Sarsfield offered.
The Pinnacle is in the process of preparing a California Public Records Act request to Coile to obtain expenditure statements regarding any out-of-state trips taken by city officials. Another Freedom of Information Act request will be sent to the EDA to find out when the drop-dead date for the water infrastructure grant is. The parties have 10 days to respond, if they don’t, we need to notify the DA that they are in violation of Cal-PRA.
Pinnacle Staff Writer Melissa Flores contributed to this report.
