City agrees with grand jury: Accounting lacked oversight | TahoeDailyTribune.com

City agrees with grand jury: Accounting lacked oversight

Susan Wood

It’s been two months since the El Dorado County grand jury took aim at the financial management of the city Park Avenue Redevelopment Project in its 2003-04 report, finding “poor oversight” during 1999-2002 because overruns were allowed in spending.

But the issue still simmers – with at least one grand jury member criticizing the city’s response issued last week as finger-pointing and excuse-making.

Almost a year ago, the South Lake Tahoe City Council – working under the auspices of the Redevelopment Agency – discovered $7 million had been borrowed from the general fund to complete the Marriott-anchored complex near Stateline. Prompting a gasp from citizens, council members reported they thought the overruns were less than a third of that amount.

The oversight inspired city management and the council to rectify the wrongs of the past.

The city summarized in its response that “accounting of public costs by component parts of a project was not well done. There were no financial policies in place requiring staff to report increases in project costs and drawdown of general fund reserves to pay for cost overruns in RDA projects.”

Council members are now advised by auditors and staff of cost increases, city officials say.

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“The problems with financial management were not caused at the policy level. …,” the city report reads. “The city had a weak internal financial accounting and reporting system in place…”

That’s a contradiction of terms, according to grand jury member Ken Weitzman. Either policies are installed or they’re not.

As for the spending updates, the city said: “While there was always enough revenue to meet bond payments, the agency ran short of funding for other costs (primarily administrative costs).”

Weitzman takes issue with money from the bond service fund used for other costs.

“They’re trying to cover that up by saying they were complicated transactions,” he said.

For the most part, the city agreed with most of the grand jury’s recommendations, with one major exception.

In its recommendations, the grand jury called for future agency boards to serve independently of the City Council – a point Weitzman said he’s not as adamant about.

City management and council disagreed with having an independent board to conduct agency business.

“Elected leadership of the city is directly accountable to the people. An independent board of non-elected persons has less accountability to the people,” the report states.

Council members such as Davis, Hal Cole and Judy Brown have repeatedly taken responsibility for the management of the project, saying the outcome defines the future of the city.

But they agree with city management that there’s more of a danger in asking an independent board to be accountable to the city where there may be no checks and balances.

“We can’t change what’s happened in the past. There’s no doubt mistakes were made. The end result is the success of the project,” Councilwoman Kathay Lovell said during last Tuesday’s meeting regarding the grand jury response.

– Susan Wood can be reached at (530) 542-8009 or via e-mail at swood@tahoedailytribune.com