Re “Nachbar on Agency and Audit: ‘Unlikely’ There Is a Problem”
In the four months that John Nachbar has been in Culver City, the principles of the new City Manager’s Middle Western upbringing — relaxed, deliberate, straight-ahead — repeatedly have emerged as his strongest weapon.
But he was sideswiped almost as soon as he sat down.
Six weeks after he took office, the state Senate Office of Oversight and Outcomes, surveying numerous California cities, cited the Redevelopment Agency of Culver City for spending specifically marked housing funds for sidebar-type programs.
The waters already were souring, however, before the Sept. 30 finding came out of Sacramento. Last summer, the Los Angeles Times broke the City Hall scandal in Bell that has gone viral, and may send a team of former Bell leaders to prison.
It turned out to be an oops moment for Culver City.
The national auditing firm that evidently failed to discover any wrongdoing in Bell’s spectacular pratfall is the same bookkeeping firm Culver City has used the past three years.
Moving with deliberation, nearly a half-year after the Bell scandal erupted, City Hall announced just before Christmas that it was actively searching for an “independent” auditing company to re-examine its books during January and February to insure an error-free audit and to preserve its reputation.
Past Culver City CEOs have politely, firmly, declined comment when a potential embarrassment has arisen. But not Mr. Nachbar. He looked it in the eye.
“I want to be transparent,” he said.
Instead of shrugging and moving along, he wanted to share his reflections.
A Time to Dig in
“Do you have a few minutes?” he asked.
“This is not an easy story to explain. Two different things have happened, and they overlap.
“We have had the report prepared for the state Senate committee by a staffer, Nancy Vogel (former Los Angeles Times reporter) who works for the state Senate Oversight office.
“My supposition is that the motivation for that report was to analyze redevelopment agencies around the state. It was intended to be critical. This was in advance of the November ballot measure, Prop. 22, which would have prevented the state from taking local government revenue and redevelopment agency revenue.
“The Senate committee for whom the report was prepared was attempting to make an argument that redevelopment agencies should not be protected. “It was important, I think, that the report happen before the November election. From what I can tell, this report has been completed. Some people have talked about an ongoing investigation.
Constantly Watched
“There is no investigation. Depends on how you define ‘investigation.’
“Our Redevelopment Agency is under continuous observation by the state.
“Every year.
“We have to submit documentation. I don’t know what the frequency is, just that it is monitored on an ongoing basis.”
Turning to Ms. Vogel, the author of the report, Mr. Nachbar said:
“In analyzing the expenditures of the Redevelopment Agency, she made a statement in the report that said ‘some expenditures may not be legal.’ She did not say they are legal or that she had found a violation. She said they ‘might’ be.
“She was referring to a category called ‘Other Expenditures.’
“The main point she was making about Culver City’s Redevelopment Agency is that it has spent a significant amount of money over the years and has not produced a lot of (affordable) housing. That is a valid criticism, but it is not illegal.
Making a Comeback
“The other part of this is that she is criticizing the Redevelopment Agency for its past history when it appears that in the last year or two, there has been an effort to set it on a different course with regard to the creation of housing. Tilden Terrace, for example, is in the works, and so is Globe Avenue.
“We are in the middle of producing housing.
“Nonetheless, you still have the statement made by the Senate staffer that some of the expenditures may not be legal.
“Then last week, the state Controller completed his report of (the auditing firm) Mayer Hoffman McCann. What caught our eye was that in his conclusion, the Controller said when his office renewed Mayer Hoffman’s auditing in Bell, Mayer Hoffman did not follow redevelopment agency guidelines.
“In his conclusion, the Controller says Mayer Hoffman ‘did not comply with the (redevelopment agency) audit guide for allowable expenditures.’
“The very thing that the Senate staffer (Ms. Vogel) questions, Mayer Hoffman is pointed out for in the state Controller’s report for not examining properly.
“When you put that together, we sat down and thought, it would be best if we brought in a third party to re-audit us.
“When you put these two parts together — it’s not that I am concerned. I am rather confident. I don’t know for certain, but I think it is unlikely there are any problems.
“It is important we demonstrate transparency,” Mr. Nachbar said.
“The public trust is critical.
“Credibility is critical.
“I do not want to do anything to damage the public trust.
“Out of an abundance of caution, I directed (Chief Financial Officer Jeff Muir) to find a new CPA firm not associated with Mayer Hoffman McCann to take a second look at least at those Redevelopment Agency ‘expenditures.’”
