Agenda Item 5.a.13 – 2013-2014 Appropriation Limit This gives the City the authority to spend $59 Million when Council is aware the City will only bring in $12 Million in tax revenue. The remaining agenda items explain how the City plans to pay for their expenses.
Two Additional Taxes: The following Resolutions are incompletely written and do not state the amount of the tax increases that will be attached to each property:
Item 5.a.6 – Resolution No. 2013-21 Levying the Special Tax in CFD 93-1 The City wants to impose a 'Special Tax' to pay for the Bond Debt. The map provided looks like it covers every parcel in the redevelopment areas. This Resolution does not state clearly how much the additional tax will be per home, but it is expected to pay the $15 Million bond debt. The 'good news' is that the City is finally acknowledging the bond debt.
Item 5.c - Resolution No. 2013-22 – Annual Sewer Standby Charges The Notice was printed in the 'Record Gazette' on June 7, 2013 - which is required by law when raising taxes. The City then submits paperwork dated August 8, 1995.
Three Resolutions to Impose Liens on Private Property for Delinquent Bills: These Resolutions are poorly written and does not provide a time-frame. This leaves it open for the City to put a lien on someone's property as soon as the bills are due:
Item 5.a.4 – Resolution No. 2013-19 Delinquent Sewer and Refuse
Item 5.a.5 – Resolution No. 2013-20 Weed Abatement Charges
Item 5.a.7 – Resolution No 2013-23 Nuisance and Building & Abatement Charges
The City has two more Items on the Agenda regarding the Sewer Fund:
Item 5.e – Establishing Incentives for Conversion of Septic Systems The City is offering a 'low introductory rate' to connect to the city sewer system.
Item 5.f – Sewer Service – Plantation of Lake Mobile Home Park This retirement community is being connected to the City Sewer System at a very bad time. Rates will start at $19/month, but will escalate $5/year until the Park residences are paying the same rates as City residences.
Item 5.d – Ordinance Adding Section 8.42 to the BMC (Smoking in Public) The Ordinance lists it is to: 'post permanent signs' for No Smoking in the parks, but the 1st offense is punishable by a fine of $1,000.00 or six (6) months in jail, or both.
In a Democracy; fines & penalties are weighted to fit the crime. They are not to be used as form of Government Control.
The City refers to California Health & Safety Code that allows this power. However 5473.2 clearly states: .. “If the legislative body finds that protest is made by the owners of a majority of separate parcels of property described in the report, then the report shall not be adopted and the charges shall be collected separately from the tax roll and shall NOT constitute a lien against any parcel or parcels of land.”
The overall problem with the Beaumont 2011 GAAP Audit is the incorrect accounting of 'pooled funds'. Agencies can give themselves different titles, but the debt still belongs to the City as a whole. The City has put their bond debt under 'Fiduciary Funds', separated it from the rest of government activities, and publicly refuses to acknowledge the debt exists.
Pg 6 – Statement of Activities: Lists Business-type Activities as Sewer and Transit, but should also include Fiduciary Funds. Fiduciary Funds are listed separately on Page 19 balancing out itself. This is incorrect. The $235,650,831 debit must be included with the other funds on the financial statements.
Page 8 – Balance Sheet of Governmental Funds: Again the City leaves out Fiduciary Funds and does not show the $235 million debt. Page 23, Note 1 b states: .. “(fiduciary funds) are excluded from the government-wide financial statements.” A notation does not make it acceptable, it only proves that the Auditors were aware the City was hiding the bond debt to balance their books.
Page 26 – Note 1 c reports the Fiduciary Fund's use as: “...purely custodial capacity..”. The City can keep a separate account of debt, but the fund still must be part of the total sum. The Fiduciary Fund account is being used as a 'black hole' to hide the debt.
Note 1 c also lists involvement in .. “the receipt, temporary investments, and remittance of fiduciary resources to individuals, private organizations, or other governments.”
This is a reference to the City's financing of private enterprise. The Finance Director and Auditors should know that government funds can not be used for personal loans. California Government Code 53602 – 'Legislative Body shall Invest only in notes, bonds, bills, certificates of indebitedness, warrants, or registered warrants which are legal investments for savings banks.'
Page 27 Note 1 d. Capital Assets: The Auditors clearly state: “The City does not maintain a complete record of accumulated depreciation and depreciation expense of capital assets for its governmental activities. Due to lack of records, no opinion has been given on the Capital Assets, Accumulated Depreciation, or Depreciation Expense related to the governmental activities in the government-wide statements.”
Capital Assets and Depreciation are accounts that contain multimillion dollar transactions. If the City is not properly maintaining their books to the extent that the Auditors can not or will not give an opinion then the Financial Statements are not GAAP compliant.
Page 32 Note 3 d – Excess Expenditures over Appropriations: This account lists CDBG Special Fund 7 with $113,000 Appropriations and $148,086 Expenditures. CDBG Fund 7 General Ledger shows transactions totaling $1.4 Million. The General Ledger lists transactions 207206 transferred $411,613.35 from another fund. The 'other' Deposits total $140,086.17 and there was an additional $148,086 credited to this account through interfund transfers paying for 'MAMCO' Contract Services. There is another $148,086.17 credited to 'CDBG Grants', but where this money comes from or what it was used for is unclear.
MAMCO is another company that has no existence outside the City of Beaumont.
Page 33 Note 4 – Investments Authorized by California Government Code and the City's Investment Policy lists 'Guaranteed Investment Contracts'. California Government Code 53601 state the limitations of agency investments. The City is making personal loans and gifts to private citizens and hiding the expense under the guise of 'guaranteed investment contracts'.
Page 34 Note 4 - Investments Authorized by Debt Agreements states “ Investments of debt proceeds held by bond trustees are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the City's investment policy.” This is incorrect – the City can not override State law and Federal laws.
Disclosures Relating to Interest Rate Risk states the City has $25 Million in a Money Market Fund, but the City can provide no proof that a money market fund ever existed. The City also lists $207,985,805 as an 'investment', but this amount represents the bond debt. In pooled funding all of the pieces must equal the whole. The agency can not claim 'investment' in one fund and ignore the debt that was created.
As of this writing; the only amount of actual investments from the $248.4 Million claimed by the City on the 2011 GAAP Audit is $1.8 Million remaining in the LAIF account. Page 36 lists 'Blackrock Institutional Funds' as the holder of the $25 Million investment, but the City has produced no documentation to show this investment ever existed.
Page 36 Note 5 – Note Receivable and Land Held for Resale or Exchange talks about a transfer of 91.56 acres of land from the Sewer Enterprise Fund to the RDA in 1995. The terms of the note are payment in 30 years without interest. California Government Code 53600.5 clearly states the three objectives of when investing – to safeguard the principle, to meet liquidity needs, & to “achieve a return on the funds under its control”. This transaction should have never been allowed and needs to be removed from the books. This transaction overstates 'promissory not payable' by $1.1 Million.
Page 36 Note 6 – Notes and Loans Receivable refers to the land deal made with now sitting Councilman David Castaldo in 2000. Although the Audit states an 11% interest rate and a 20-year time limit, the only interest recorded is was $592.00 on the 1st two payments made. No payments are recorded on the General Ledger until Saturday, November 3, 2011 – three (3) days before Castaldo was elected to City Council.
Page 37 Note 6 – Notes and Loans Receivable states the City makes advances on payroll checks that are: “..paid back immediately at the next payroll run.” This is not true. The General Ledger clearly shows that loans are being made that exceed the elected and appointed officials' bi-weekly pay. The City even gave Councilman Fox's son $200 and he doesn't even work for the City.
The City also refers to loaning $50,000 that was scheduled to be paid back with 5% interest by October, 2010. The Financial Statements still show a balance of $50,000. What happened to the money or who the money was loaned to is unknown. I could not find the transaction listed on the General Ledger.
Page 39 Note 8 – Capital Assets lists $2,486,915 in Machinery & Equipment purchased for the Sewer Enterprise Fund, but no record of any actual purchases are listed on the General Ledger, only plugged numbers.
The Transit Fund lists $107,789 in Machinery & Equipment and $682,892 in Vehicle purchases, but the General Ledger shows no purchases recorded, only plugged numbers. The GAAP Auditors did not read the General Ledger, perform and tests, or verify purchases through receipts.
Pages 43-55 Note 12 – Debt Without Government Commitment lists all the bond debt held by the City of Beaumont. Each bond is listed separately with the notation: “Neither the Authority Bonds nor the District Bonds are general obligations of the City.” This is incorrect. The City is responsible for all of the debt incurred by Council. The bond notes further state: “..since the City is not obligated to make payment beyond the available bond reserves, these bonds have not been reflected as long-term liabilities ...” The City is obligated to make the debt payments and is in fact making the bond debt payments from the General Fund because the property tax revenue generated does not cover the $15 Million/year bond debt payments. Page 63 states a total of only $2.8 Million was collected in property taxes for the entire city FYE 2011.
Page 61 Note 21 – Management's Review of Subsequent Events states that the Auditors entrusted city management to include any events recorded from June 30, 2011 until the audit was released on August 1, 2012. That is incorrect. It is the duty of the Auditor to review the data and notify the Board of Accountancy of any changes to the financial reports within 30 days. The Auditors' assumption that nothing had changed in 13 months or that the City would 'tell them' of changes is unrealistic. The GAAP Auditors would have seen the hundreds of 207206 transactions plugged into the General Ledger if they had only looked or actually performed an audit.
All Bonds should have a Reserve Fund holding 10% of the bond balance, but Beaumont has no Reserve Funds set aside for the bonds.
On May 16, 2013 Mayor Burg stated at the Beaumont Chamber of Commerce 'State of the City' meeting that there was $11 Million in Reserves and when questioned regarding rumors there is no money the Mayor stated: “ They're wrong. The City has money in the Bank”.
The City claims $11 Million in 'Reserves' on the Budget and Financial Statements. At the June 4th, 2013 City Council Meeting the City Manager states: “Reserves are not cash, that is assets over liabilities.” The statement can be heard on the Podcast at the 124 minute mark. The Budget was presented by the City Manager. The Finance Director was present at the Council Meeting, but he never said a word.
At the 135 minute mark on the 06/04/13 podcast a Citizen asked about the $300 Million Bond Debt. The City publicly states: “There is no debt.” This is a material misstatement intended to mislead and defraud the Public.
May 16, 2013 Beaumont City Council meeting podcast - http://podcast.ci.beaumont.ca.us/CC_2013-06-04_agenda.htm
The Financial Statements in no way accurately express the fiscal condition of the City of Beaumont. The Finance Director made fraudulent entries and material misstatements intended to skew the Financial Statements. The Auditing Firm of Moss, Levy, Hartzheim are either ridiculously incompetent or they knowingly conspired with the City to defraud the Public and the State of California.
The bonds issued by the City of Beaumont name Alan Kapanicas as the Finance Director. William Aylward is no longer holding the title of Finance Director on official documents. Mr. Aylward is still listed on the City website as the Finance Director, but he has lost all control of his position.
The 2012 Bond Series B (Improvement Area No. 20) lists Alan Kapanicas as 'Authority Executive Director, City Manager, Finance Director, and Deputy City Clerk. Alan Kapanicas has removed all checks and balances and created a Totalitarian form of government. Totalitarian rule in a Democracy is unacceptable.
The June 4, 2013 City of Beaumont Council Meeting Agenda lists Item 5.a.8 – Investment Policy This agenda item contains the following Material Misstatements and is illegal in content..
The Investment Policy document creates a 'Finance Committee' consisting of the City Manager, Treasurer, Finance Director, Mayor, and two Councilmen. The City Manager designates himself as 'Investment Officer' of the Finance Committee. This paper allows the City Manager access to LAIF funds without prior notification to Committee.
The City states the funds will be invested according to California Government Codes 53601 and 53635. Govt. Code 53601 clearly states .. “The legislative body of a local agency having moneys in a sinking fund or moneys in its treasury not required for the immediate needs of the local agency may invest any portion of the moneys that it deems wise or expedient in those investments set forth below.”
The City of Beaumont is $300 Million in debt and has no additional funds to invest.
California Govt. Code 53635 states “A local agency that is a county, a city and county, or other local agency that pools money in deposits or investments with other agencies may invest in commercial paper pursuant to subdivision (h) of Section 53601, except that the local agency shall be subject to the following concentration limits:
(1) No more than 40 percent of the local agency's money may be invested in eligible commercial paper.
(2) No more than 10 percent of the total assets of the investments held by a local agency may be invested in any one issuer's commercial paper.
The Diversification by Instrument Chart lists all of the various types of funds the Finance committee plan to invest. The chart should be showing the percentage of funds each investment will contain. This amount should total 100% - not 400%.
The chart includes the following misstatements:
General Fund Checking and Savings – General Fund is for immediate needs of the City and is not included in investments.
Guaranteed Investment Contracts – This is not a legitimate or secure investment source. California Government Code 53651 does not allow for this type of investment with taxpayer dollars.
Local Agency Bonds, Notes, Warrants, or other evidence of Indebtness – This is not investment, this is debt. The City can not continue to keep $300 Million in debt on the books as a financial investment. The debt is a $15 Million/year expense that is suppose to be derived from incremental property taxes. The revenue generated from the bonds is only a fraction needed as the City's total property tax revenue is only $3 Million.
The City of Beaumont is attempting to create the appearance of investments, but the term investment implies the original funds will be returned with interest earned.
Govt. Code 53600.3 states: '.....When investing, reinvesting, purchasing, acquiring, exchanging, selling, or managing public funds, a trustee shall act with care, skill, prudence, and diligence ...'
The term 'trustee' applies to the City Manager, Finance Director, and every memeber of Council.
The term 'Reserves' means that a company/agency has a sum of money separated from the money that is used to fund the activities of the business/agency. Reserves do not included monies in the General Fund or 'investments' where the money has no liquidity. Although not a requirement; prudent company/agency would have a large enough amount in reserves to cover daily operations for a few months.
The City of Beaumont should also have a manditory amount of reserves exclusively for bond debt. Older bonds list the reserve amount at 10% of bond amount, but recent bond purchases by the City list slightly less.
Page 27 of Bond 2009 SERIES B (IMPROVEMENT 8D & 17B) list the reserve fund requirement at $264,000 or 10% of the $2,640,000 bond. However, the last few bond reserves amounts are slightly less than 10%.
2012 SERIES C (IMPROVEMENT NO. 7B & 7C) Bond is $3,655,000 with a reserve requirement of $333,279.09 or 9.1 %.
2013 SERIES A (IMPROVEMENT NO. 19C) Bond is $8,810,000 with reserve requirement of $708,883.76 or 8%.
2013 SERIES B (IMPROVEMENT 17A) Bond is $10,875,000 with a reserve requirement of $854,500 or 7.8%.
The City of Beaumont should have a Mandatory Reserve Fund Balance of at least $25 Million, so where is it?
I have repeatedly requested statements from all financial institutions and we have had a very public discussion on the meaning of 'all financial institutions'. The City has only produced one (1) reserve fund – the California LAIF Account which has a total of $1.8 Million.
Page 36, Cash and Investments Note 4 in the 2011 GAAP Audit lists the City of Beaumont investments of $25,492,158 with 'Blackrock Institutional Funds'. I have not received any documentation for this company. This notation also has $207,985,805 in Bond Debt listed as an investment.
On May 16, 2013 Mayor Berg publicly announced the City had $11 Million in Reserves. $11 Million does not fulfill the Reserve Fund requirement nor does it explain why the $25 Million invested in Blackrock has disappeared.
May 22, 2013
Governor of the State of California
California Attorney General's Office
I am requesting the Attorney General and Governor intervene in the City of Beaumont as I have exhausted all means on the local level. The County of Riverside is corrupt and refuses to do their jobs.
The Riverside County Grand Jury has closed their ninth (9th) investigation of Beaumont. Beaumont City Officials bragged to me that the Grand Jury closed the case a month before I received a letter in the mail and the information was made public.
The Riverside District Attorney's Office has a new District Attorney, but he can not break the 'old guard'. His own office attorneys have turned against him.
The City Manager, Alan Kapanicas has taken over the local government in Beaumont. Below are the main issues with the City of Beaumont.
Office of the City Clerk: The Office of the City Clerk is staged in Beaumont. Kapanicas personally controls all Records Requests. Attached is a copy of a reply sent from Kapanicas mocking the citizens request and delaying the process. To receive the March 2013 Bank Statement Mrs. Bingham had to wait 19 days, go into City Hall three (3) times, and request both the State Assemblyman & State Senators Office to intervene before he would release of the records. 2013-2014 Budget shows there is only $6,000 allocated to the Office of the City Clerk.
Debt: The City of Beaumont is $300 Million in debt. The Interest and Premiums are $15 Million/year and the City revenue is only $14 Million For the last two years the City has taken out additional Bond Debt every few months just to make the payments on the old debt. It's a twisted form of a Ponzi Scheme that can not sustain itself any longer.
Forging the Financial Reports: The Budget and Financial Statements do not match the General Ledger. Ten month after the close of books FYE 2011 the City plugged over 300 transactions into the 2011. Some entries were duplicates of earlier transactions and some were completely fabricated numbers.
The 2013-2014 Budget lists $11,275,000 in 'budget reserves', but there is no reserves. The City has drained their LAIF account to $1.8 Million and has overdrawn their General Fund checking account several times. The budget also lists $23,309,000 in Revenues, but the Consolidated Financial Transactions Report printed in the Record Gazette on 02/22/13 listed revenues at $13.8 Million.
Page 63 from the 2011 GAAP Audit states: “ The City's General Fund had a deficit unassigned fund balance of $10,871,054 at June 30,2011. It is uncertain whether the $22,380,000 advances to the Beaumont Redevelopment Agency will be collectible due to the dissolution of the Redevelopment Agency. The City's general fund continue to rely on overhead reimbursement and services payments from various CFDs within the City to balance its budget. The City, in its 2012-2013 budget, also used a one-time transfer of $2 million from its Equipment Replacement Fund to help balance the budget. It is uncertain if the City will be able to; 1) balance its general fund budget if such revenues are no longer available, and 2) reduce the deficit without additional revenue sources or expenditure cuts.”
I have made repeated request for the 2012 GAAP Audit. On May 2nd, 2013 Craig Hartzheim from the Auditing firm Moss, Levy, Hartzheim told me that they have not started the GAAP Audit for 2012 because the City has not completed the General Ledger for that year.
On February 5, 2013 the Check Warrant Report is forged to the extent that the Finance Director refused to sign it, so the City Manager signed it himself. When other Officials in Beaumont refuse his request Kapanicas takes over the position.
Private Companies: The City of Beaumont has private companies set up within the government to funnel money out and to provide government health care to the private sector.
Urban Logic – This company has been paid $14 Million in the last two year for 'consulting services'. This company does not exist. The address in Temecula is an empty building and when I called the telephone number provided on the website the man answered: “Public Works”. The company is operating out of the City and the 'owners' are given government health care benefits. Deepak Moorjani's wife has her own health care account on the City General Ledger.
General Government Management Services – This company is in the name of the City Manager's wife. In the last two years there have been over $600,000 in checks issued, but there is no evidence of any work being performed.
Beaumont Electric – In the last two years Beaumont Electric has been paid $962,000 for parts and services, but the City has purchased $2.5 Million worth of wholesale materials for Beaumont Electric. Before the audits started Beaumont Electric owed up to $1/2 Million to the City for wholesale parts and still have over $300,000 debt on the books.
I am requesting immediate intervention from the Office of California Attorney General and Governor to stop the City of Beaumont from further deterioration. The City is 115% underwater and their home values are ½ that of the rest of the State. Please feel free to contact me if you have any questions or would like additional documentation.
Riverside FBI Supervisory Special Agent Colin Schmitt is still working on the case. You can contact him at 951-248-6515.
P.O. Box 1905
Imperial Beach, CA 91932
Part of the State requirements for gas tax revenue is that the cities must have separate funds established to track the money. Beaumont uses 'Fund 3', but the account is in such disarray it is of little value use as a reference. From July, 2010 to January, 2013 the Bank Statements show that the City of Beaumont has received $2,912,551.98 in gas tax funds, but the City only lists receiving $1,492,964.02 on the General Ledger.
In the last three years there is not one entry for any road-related work in Fund 3. The only expenses the City of Beaumont shows in Fund 3 is $86,333.00 for 'Administrative Overhead' and $363,018.56 paid to 'Urban Logic Consultants'.
Page 8 of the State Controller's 'Guidelines to Gas Tax Expenditures' states: “Overhead will only be allowed via an approved cost allocation plan or an equitable and auditable distribution of overhead to all departments.” The City can not claim $1/2 Million in overhead when there was no work performed.
Unfortunately the City of Beaumont is no different than ever other California city. Every City seems to be wasting the Gas Tax Funds instead of using the money for its intended purposes.
The City of Imperial Beach receives $2 Million/year from Gas Tax, but only $300,000 can be traced to items such as 'street signs' and 'asphalt patch'. The other $1.7 Million disappears. Although Citizens have made repeated request, the City of Imperial Beach refuses to do any road repairs. Last year an alley was so deteriorated that the neighbors took it upon themselves to pay for gravel. The City fined them $1,000.00 for the citizens' attempt to repair the alley themselves.
The current fuel tax rate is $.36/gal. In 2010 the decision to raise fuel taxes were taken from the Taxpayer and given to the California Board of Equalization. The Board has voted to raise gas taxes to $.395/gal on July 1, 2013. The excuse for the increase is “..a $157 Million shortfall in gas-tax revenue in fiscal 2012 and a 'projection' that California drivers will consume less.”
The Board of Equalization did not look to see if the current tax revenue money was spent wisely nor consider how the additional increase would impact the citizenry. Their only focus was want of money.
Taxes are collected for specific purposes, but when those purposes are not addressed by the tax increase the correct action would be to stop the taxes, not increase them.
Please contact your State Representatives to stop the additional Gas Tax taking effect on July 1, 2013 and the elimination of additional taxes given to local governments. If local funding is needed it can be voted on by the local voter.
On Tuesday, May 7, 2013 Council for the City of Beaumont voted 5-0 to adopt a Resolution to: 'Approve the Freeway Agreement with Caltrans and Authorize the City Manager to execute the Agreement'. The Resolution presented to Beaumont City Council includes the following information that show the Agreement is detrimental to the City and Taxpayers of Beaumont.
Obligations of State: Page 2 of the Construction Cooperative Agreement lists the responsibilities of the City and Caltrans. No. 13 & 14 states the only obligations of Caltrans is to act as 'lead agency' for the California Environmental Quality Act and the National Environmental Policy Act. There is no funding or other any obligations from the State to complete the Project.
Cities do not build state roads because state roads are the property and responsibility of the State. Page 4 No. 34 states: “Upon Obligation Completion, ownership or title to all materials and equipment constructed or installed for the operations and/or maintenance of the State Highway System within SHS right of way as part of the work becomes the property of Caltrans”.
The City is obligating the Taxpayers of Beaumont to fully pay for a state construction project instead of sharing the costs throughout the state or even other cities within the Riverside County.
Obligations of the City: This Contract has several clauses that will obligate and burden the City.
Page 10 Item No. 80 states: “...if there are insufficient funds available in this agreement to place the right of way in a safe and operable condition, the Implementing Agency (City) accepts responsibility to fund these activities until such time as Partners amend this agreement”. This clause forces the City of Beaumont to 'find the money' to continue the project.
Page 13 Item No. 97 – 99: These clauses allow the State to force the City to complete the Project and states: “...if any Partner stops fulfilling Obligations, any other Partner may seek Equitable relief to ensure that Obligations continue”. This allows the State to sue the City of Beaumont and force completion of the Project.
Funding: The Agreement is very clear that all funding responsibilities will be the burden of the City of Beaumont. Page 2 Item No. 9 of the Agreement lists the City as: 'Sponsor for 100% of the Project' and Item No. 12 states: 'City is the only Funding Partner'. Page 21 shows a Funding Summary listing the costs and funding of various aspects of the project.
There was $5 Million in Federal Funding for this Project, but the Funding Chart on page 21 shows this money has already been received and spent. There is no other funding sources listed – only 'City'. The City has not stated how it will pay for the Project and the City can not received funding because Highways are State Property.
The Resolution obligates the City to complete the Project once it's started, but does not mention how the City will fund the Project. It obligates the City to pay $70 Million in the next three (3) years with any revenue source.
Item 4.b.1 on the Council Agenda is the Financial Update as of February 28, 2012. Total Revenues listed for the 8-month period are $11 Million. Expenses on the Financial Update are listed at $15,828,304, but these are only the expenses to operate the City. The City neglected to declare $8.3 Million Bond Debt paid in September, $3 Million spent through Fund 35, and $1 Million spent through Fund 35 to pay Penalties to the Riverside Auditor/Controller. Actual Expenses for the first 8-months of this fiscal year were $28 Million.
Projected forward; the City will receive a total of $49.5 Million in Revenues in the next three Fiscal Years and incur $71 Million in Expenses for the Basic Operations of the City. Another $45 Million is obligated to pay past Bond Debt. The City of Beaumont currently spends money 2 ½ times faster than it receives money.
This Agreement would obligate the Taxpayers of Beaumont to pay another $70 Million by 2016 and Page 6 No. 45 states: “...If implementing Agency (City) anticipates that funding for work will be insufficient to complete work, Implementing Agency (City) will promptly notify Sponsor (City). This leaves the City open to request more funds 'if needed' instead of staying within the Budget.
The City of Beaumont has already spent $10,689,836.92 directly related to the Potrero Bridge Project with the following Vendors:
Department of Fish & Game - $2,101.50
Harmsworth Associates - $49,835.00
Union Pacific - $85,646.86
Natures Image Inc - $148,170.03
Community Bank - $497,218.81
Los Angeles Engineering - $3,157,068.51
Urban Logic Consultants - $6,749,796.21
As of March 1st the City of Beaumont had $7,958,155 in General Fund Checking, $43,199.03 in Savings, and $1.8 Million in the LAIF Account. There have been rumors of $10 Million in Reserves, but there are no additional Reserves. As of this writing the City of Beaumont has not produced a 2012 GAAP Audit.
State highways are for state-wide use and all funding for state highway projects should be paid for with State funding, not the Taxpayers in one small City. It is not practical or financially feasible for the City of Beaumont to continue with this project.
This audit captures the Diners' Club Card charges for the fiscal year 2011-2012. The Authorized users for the card are City Manager Alan Kapanicas, Chief of Police Francis Coe, Human Resource Director Elizabeth Urtiaga, and Assistant to City Manager Shelby Hanvey.
The account is under the name of Finance Director William Aylward. It is the duty of the Finance Director to verify the expense and allocate the cost to each department. The General Ledger does not reflect the information on the Invoice. Most of City Manager Kapanicas's charges are hidden in the Administration Department instead of listed in the City Manager's Department.
Credit cards are issued to cover additional expenses when staff is traveling, but there are also several monthly charges listed on this card: ww.izigg.com
– This $249.95/month charge started in December, 2011. I see no use for this service to the City and it could be a charge that attached itself to the card and was never noticed or removed.
OnStar Tracking - $28.90/month charged to Chief of Police Coe. If there is one vehicle in the City fleet using OnStar the bill should be paid monthly by check.
Direct TV – 78.99/month charged to Chief of Police Coe. Neither the Onstar or Direct TV billings are listed in the Police Department.
Gotomypc.com - $29.95 charged to Human Resources.
CD-data - $79.95 charged to Human Resources. Both of these are monthly bills that should be paid with invoice.
Sirius Music - $175.01 charged on 04/17/12 and $120.66 charged on 05/17/12. Both of these yearly subscriptions were charged to Chief of Police Coe.
Fastrack – There were also two $100 charges for Fastrack charged to Chief of Police Coe on 11/30/11 and 06/18/12.
Travel and Food: This is where city officials show total disregard for the taxpayers' money. Travel and food comprised over $42,000 of the $88,000 total Diners' Club charges. $18,000 was for a Washington D.C. Trip for Brian & Kelsey Deforge, Jeff Fox, Elizabeth Urtiaga, & Gregory Fagan. Their Marriott Hotel rooms for five days were $2,697 - $2,857.04 because they checked in on Saturday, which is the most expensive night of the week.
Hilton Hotel: The Hilton Hotel appears five times in three different cities. City Manager Kapanicas spent six nights and $4,000 at the Hilton Hotel San Francisco in September, 2011. Chief of Police Coe also stayed at the Hilton Hotel San Francisco for one night. Hotel bill was $668.06 and Hilton Urban Tavern bill was $171.56.
Chief of Police Coe stayed at the Hilton Las Vegas on April 23, 2011. The hotel bill was $557.76 and the Olive Garden Las Vegas bill was $953.64.
Chief of Police Coe also has two charges for the Hilton Grand Vacations in Florida. One charge was on 03/30/11 for $934.08 and another on 01/26/12 for $278.88.
There are some day trips taken by city staff and City Manager Kapanicas has two other trips to Sacramento charged to the Diners' Club card; four night at the Hyatt in March, 2011 totaling $471.91 and five nights at the Sheraton in April, 2012 at $325.82/night. Hotel and food totaled $1,651.29 for the total stay.
The rest of the travel is charged to Chief of Police Coe. He travels to flies without any other city staff to various destinations in Northern California almost every month. There are also numerous charges to gas stations in Beaumont and surrounding cities. It makes no sense for a city employee to charge $60.00 at the Beaumont Chevron.
Another odd charge to Chief of Police Coe is $1,835.60 on 06/24/11 from 'Classic Restaurant Supply' in Hartford CT. Of the $88,000 in charges, $38,000 are charged to Chief of Police Coe. Either Coe is using the Diners' Club Card for personal use or someone is using him as a patsy.
Mitigate means 'to lessen the impact'. Beaumont Budget describes Fund 35 as: “used to account for the revenues levied on new development projects within the City. The revenues are levied based on development impact fees studies adopted by the City Council and include street, bridge, fire station, emergency facilities, parks, etc.”
2010 – 2011 Budget list Mitigation Fees Fund had a $12 Million Fund Balance on 06/30/10, Revenues are listed at $2.2 Million and Expenses at $13 Million leaving a Ending Fund Balance of $1.2 Million on 06/30/11.
2011-2012 budget lists Mitigation Fees Fund Beginning Balance at $600,000, total Revenue at $501,000; and total expenses at $1 Million leaving a 06/30/12 Ending Fund Balance of $101,000.
20012-2013 Budget lists Mitigation Fees Beginning Fund Balance at Zero ($0). Revenue and Expenses are both estimated at $501,000 to leave a zero Ending Fund Balance. Over $3 Million has already been funneled through this account.
Beaumont's Budget lists total expense at $14.5 Million, but from July, 2010 to February, 2013 the General Ledger shows over $24 Million passed through this department. The Budgets lists Department 3500 on the Special Fund Detail, but doesn't list an individual budget to show expenses. The GAAP Audit makes no reference to Mitigation Fees.
Fund 35 has spent $20 Million that was transferred from the General Fund. In the past 2 ½ years the following expenses are listed:
TUMF Projects $1,335,827.67
Potrero Bridge $11,338,395.54
Oak Valley Pkwy $3,581.14
650 Magnolia Bldg $23,534.55
General Plan $4,145.00
Mitigation Fees $91,516.32
Basic Services & Facilities $638,809.05
Traffic Signal Revenue $616.00
Railroad Crossing $633.50
Emergency Preparedness $78,444.32
Recycling Water Facilities Fee $3,843.65
Regional Park Fee $4,076.72
TUMF (non CFD) $41,575.36
Basic Services & Facilities: This was paid to Urban Logic Consultants from July, 2010 to June, 2012. The account has not been used in the current fiscal year.
Recycling Water & Regional Park Fee: The Recycling Facilities Fee was collected from October, 2011 to December, 2012. The Park Fee ran from July, 2010 to November, 2012. The collection of both fees stopped when the audit started.
Vendors: Over $15 Million went to 30 Vendors. Of course the big winner was Urban Logic Consultants that made $8.875 Million; Los Angeles Engineering made $3.5 Million. Some oddities are Altura Roofing - $1,850 and 'Hillcrest Contracting' had a one-time payment of $100,000.
Contract Services: According to the General Ledger the City spent $2.5 Million on Contract Services and 'made' $2.6 Million. Most of the magic happened in December, 2011 when $1.15 Million was credited to the contract services account with the memo “ACH CFD 2009a”.
Over $3 Million has already been funneled through Fund 35 this year. In the past 2 ½ years this account has literally had 1,000 transaction totaling millions of dollars, but there is no mention of this fund in the GAAP Audit.
This audit will cover the other three (3) RDA Fund Accounts found in the General Ledger from July, 2010 through February, 2013 .
Fund 37 – RDA Debt Service
The Budget states this fund is used: “ to account for the tax increment received for the redevelopment project area and the related expenditure on the debt incurred.” This fund is used to account for revenue collected through RDA and payments made to other government agencies.
2010-2011 Budget projects revenue at $2,260,000. The 2011 RDA GAAP Audit lists revenue at $2,759,063. The General Ledger lists actual revenue at $3,283. The GAAP Auditors 'missed' a $2 million discrepancy.
2011-2012 Budget project revenue at $752,000. The 2012 GAAP Audit has yet to be released. The General Ledger lists revenue at $1,682,672.49, but $1,679,359.49 is transferred in and out on 01/13/12 leaving actual revenue at $3,313 FYE 2012.
2012-13 Budget has no revenue or expenses listed. The General Ledger lists no revenue in Fund 37 for the first six months of the 2012-2013 budget and only one expense - $988,826.35 to the Riverside County Auditor/Controller.
In the last two fiscal years this account was used to pay eight ( 8 ) different government agencies. Payments were made on 10/22/10, 05/24/12, and 06/01/12 totaling $1,339,763.26. The payments were made through this account, but the money was transferred in from the General Fund instead of using the tax revenue that is specifically allocated for the debt.
Beaumont Library District - $55,494.06
Beaumont Cemetary District - $374,176.75
Beaumont Unified - $443,021.18
Mt. San Jacinto Jr. College - $124,822.24
Riv Co Super of Schools - $142,873.99
Riv Co Flood Control - $99,422.97
San Gorgonio - $51,602.17
San Gorgonio Pass - $48,349.90
Fund 37 also has various random entries listed:
Account Number 7010 - CUR SECURED PERS PROP - This account is located in the General Fund Administration accounts, but in 2010-2011 a total of $2,795,950.12 was transferred through Fund 37 in eleven (11) transactions. In 2011-2012 there were two (2) transactions totaling $1,307,334.43 coded to the PERS fund. As of February there is only one entry listed FYE 2013 in Fund 37 - payment to the Riverside Auditor/Controller for $988,826.35. This close to million dollar payment was not disclosed to the Public or listed on the Check Warrant.
Transaction 207206 - Fund 37 has the following 207206 transactions added to the account:
Cash added - $15,136,625.42
Cash removed - $15,796,555.81
Account Payable added - $645,569.25
Unreserved Fund Balance added - $56,242.64
Unreserved Fund Balance added - $56,242.64 – this entry is repeated twice
Debt Service – The City also laundered $1,700,000 through this account on 06/30/11 by adding to Cash and removing it through code 6900 – Debt Service. There is also $270,727 in Contract Services that is unexplained.
Fund 38 – RDA Low/Moderate Housing
Budget describes this fund's use: “to account for the 20% tax increment received for low/moderate income housing in the redevelopment project area”.
2010-2011 Budget lists revenue & expenses at $760,000 each; 2011-2012 Budget lists revenue & expenses at $2,251,000 each, and the 2012-13 Budget list no revenue or expenses in this department.
2011 GAAP Audit lists Fund 38 revenue at $699,131 and expenses at $659,987.
General Ledger lists 2011 revenue at $10,186.10 and accounted for the money as 'Interest'. There is also $691,000 transferred through this fund using account 7010 - Cur Secured PERS Prop.
This Account had only one Contract Services Expense in 2011: $39,144.60 to Beaumont Electric on 05/05/11.
Fund 38 also has four 207206 transactions:
Cash in - $139,161.51
Cash-Interfund out - $1,908,229.02
Unreserved Balance - $1,387,404.04
Unreserved Balance - $1,387,404.04 – this transaction is entered twice.
2012 Budget lists revenue & expense at $2,251,000. The last transactions in Fund 38 are made in January, 2012. The General Ledger FYE 2012 lists $10,186 cash into the account and $2,292,031.52 transferred out. The General Ledger also shows FYE 2012 there was $71,910.63 paid to Urban Logic Consultants, $306,508.85 transferred through Cur Secured PERS Prop, and $2,281,845.52 for Contract Services, but Payee is not listed.
Fund 39 – Not Listed On Budget.
Fund 39 is not listed on the budget or financial statements, but there are transactions coded to fund 39 in the General Ledger. FYE 2011 on 09/10/10 $62,764.18 was transferred into this account and paid to 'Beau-Cherry Valley' as 'Deposit'. On 06/30/11 $263,092.48 Cash was taken from this account and credited to 'Deposits', but this account has no cash or funding.
This account also has three (3) 207206 transactions:
Cash out - $874,774.22
Cash interfund in - $156,411.81
Deposits in - $718,359.41
A total of $959,202.78 was spent through Fund 38 in the year 2011-2012 - $120,421.73 Cash taken from the fund and $838,781.05 transferred through the fund to pay $583,916.27 to Christian Brothers Engineering; another $185,272.84 to Beau-Cherry Valley Water Authority; and $69,591.94 to an Unknown Recipient. These transactions are listed on the Check Warrants. Beaumont-Cherry Valley Water Authority Checks #077248 notes 'Improvement Plan' and #077662 notes 'Capital Improvements' instead of 'Utilities'.
From 06/30/11 to 05/24/12 total of $2,159,830.66 was moved through this fund account:
Christian Brothers Engineering $561,581.60
Beaumont-Cherry Valley Water $339,963.63
Unknown Recipient $1,258,285.43
Funds to Pay Christian Brothers & Beaumont-Cherry Valley were transferred in from the General ledger. Of the Unknown Recipient $874,771.22 is a 207206 Transaction and $383,514.21 Cash came from an unknown source.