Report blasts housing agency

Area cities and counties should have guarded themselves against liabilities created by the financial collapse of a local affordable-housing agency last year, the Tuolumne County Civil Grand Jury reported last week.

In the Grand Jury’s annual report, the investigative body made up of local citizens, detailed the rise and fall of the Central Sierra Planning Council and recommended ways to avoid similar incidents in the future.

The council folded last year due to spiraling costs, leaving its current board of directors and affiliated cities and counties possibly holding the bag for as much as $1.6 million in unpaid, outstanding liabilities

In the report, the Grand Jury points the finger at the council’s previous leadership and former Executive Director Larry Busby for financial mismanagement. And the panel recommended a series of steps including audit requirements and pension reforms for all agencies to avoid a similar situation in the future.

The council — a joint-powers authority made up of Alpine, Amador, Calaveras and Tuolumne counties and the cities of Jackson, Ione, Sutter Creek, Amador City, Plymouth, Angels Camp and Sonora — laid off four employees and stopped functioning last year due “in part to lack of financial planning, responsibility and oversight,” the report states.

“It is not known how the financial obligations of the CSPC will be resolved and which members will have to finally pay,” the Grand Jury states in the report.

The report found a number of issues when investigating the council that contributed to the collapse. The JPA agreement between all parties did not include language that could have relieved the members of the liabilities under state law. The council also maintained an annual financial audit schedule until 1999, and stopped conducting audits in 2000.

In the report, the Grand Jury suggests that training on financial record-keeping should be required of all public boards, including JPAs, and all public entities should be required to have an audit committee. The report also recommends that the county adopt procedures to ensure all required audits are performed at least annually by public entities.

Deputy County Counsel Carlyn Drivdahl and County Auditor/Controller Deborah Russell both said Tuolumne County is looking to start a training program for members of public boards.

Drivdahl and Russell have been working with the council since the financial issues surfaced, and they said the issues have highlighted a need for such a program.

In this situation, the organization was being run by board members whose concerns were focused on the housing programs serving the consumers, Russell said. Those were operating well, but the leadership was not scrutinizing the numbers.

“Board members also need to worry about … how the operations of the JPA are going,” Russell said.

Along with the training, Russell said her office will review annual audits which JPAs are required by the state to complete. Her office already reviews audits for other agencies in the county, she said.

Drivdahl also said the county will review all JPA agreements to make sure language exists to remove liability from member agencies, something that is allowed by state law.

“We’re going to put together a training just so we can give board members the tools to protect the public trust and the public money,” she said.

The Central Sierra Planning Council administered housing programs like federal Section 8 rental vouchers and some Community Development Block Grant programs. The agency appeared to operate successfully until suddenly closing its doors June 2011.

The agency did not have the incoming revenue to cover personnel costs, let alone pension costs, debts, unemployment and other obligations.

Though the council board of directors is still working on finding a way to pay down the liabilities, the council does not conduct any day-to-day activities and has no revenue.

The Grand Jury also found that while the council board relied on Busby to keep it apprised of financial issues, the financial documents he presented to the board “did not accurately reflect the current or future financial condition.”

The report states that the Grand Jury went as far as inquiring with the Tuolumne County District Attorney’s Office about whether there was any possible criminal or civil wrongdoing.

“No laws were violated,” the report states.

Busby, who is suing the council for about $22,000 in severance, did not return a phone message from The Union Democrat.

But even with training programs, the county or any other agency is limited in what it can require since a JPA is an independent organization. As a member of a JPA, the county can impose requirements of the members it appoints or can push for requirements before joining, Drivdahl said.

“If it’s not part of the JPA agreement, it’s not necessarily a requirement,” she said. “To implement some of these ideas, it would be beyond the county’s involvement.”