Atascadero challenges federal audit of quake funds

Federal report says city misused or failed to account for $8 million

tstrickland@thetribunenews.comApril 2, 2012 

Atascadero could owe the federal government roughly $8 million for allegedly not complying with rules attached to millions of dollars in recovery funds awarded to the city after the 2003 San Simeon Earthquake, federal auditors say.

A report issued by the Department of Homeland Security’s Office of Inspector General dated March 22, but released Monday, concluded that Atascadero didn’t properly use or account for expenses totaling $8,014,375.

The city was awarded a total of $26.3 million for debris removal, recovery efforts and construction after the quake damaged several buildings, including Atascadero’s historic City Hall, which is undergoing construction for repairs. The audit reviewed approximately nearly $12.9 million in expenses.

During an afternoon news conference Monday, city officials adamantly denied most of the allegations outlined in the report: “The city is surprised by the audit findings, strongly disagrees with many of the findings and questions the tone, characterizations and conclusions of the report.”

City officials say they have kept detailed documentation of the many earthquake-related repairs and expenses and have worked closely with FEMA each step of the way.

The audit — which investigators told city officials was routine, according to Atascadero finance director Rachelle Rickard — started in August 2010 and concluded last month.

The audit says the city:

• Spent about $3 million in unsupported costs related to architecture and engineering services for repairing the historic City Administration Building.

• Spent nearly $2.7 million while not following federal rules by temporarily relocating city offices to a former bowling alley, where they still operate today.

• Misused about $2.4 million in constructing a new community center on Traffic Way by falsely indicating that the nearby damaged historic Printery Building was actively housing city recreation programs.

• Misrepresented about $1,300 on an invoice for work on the Printery Building.

The city agrees with the last allegation, saying that a typo on an invoice mistakenly allocated money to the Printery Building that was supposed to be used for the City Administration Building. The error has been fixed, Rickard said.

The report also states that the city agrees that FEMA dollars should not be used to cover nearly $1.5 million for the City Administration Building repairs. But Rickard said Monday that’s not true.

FEMA officials have 90 days to decide whether they plan to file an appeal or approve the audit. Officials with the city of Atascadero say they are working with FEMA to provide the necessary support documents.

The audit’s allegations concerning the relationship between the earthquake-damaged Printery Building and the Colony Park Community Center built at another site interested a few members of the public at Monday’s news conference.

Some critics in 2008 believed that Atascadero misrepresented the amount of city-sponsored activities at the Printery Building before it was damaged in the 2003 earthquake, in order to obtain FEMA money to fund construction of the community center.

But an FBI investigation that same year, which reportedly stemmed from the same issue, never released such findings. In fact, no FBI determination was ever publicly made, nor have authorities confirmed that the Printery Building/community center issue was being investigated.

Read the audit

OIG audit on FEMA funds awarded to city of Atascadero

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