Paso Robles may have to return $1.1 million to the federal government after an auditor said the city didn’t follow the rules with money it received after the 2003 San Simeon Earthquake.
Four findings of alleged wrongdoing are detailed in a Sept. 13 audit by the U.S. Homeland Security’s Office of the Inspector General.
City officials disagreed with all but part of one of the claims, saying that the auditor is confusing certain policies and that further documentation would give the context needed to show the city followed the law.
“They’re asking questions and those are the checks and balances. And we’ll provide the answers,” Assistant City Manager Meg Williamson said of the process.
Auditors reviewed the city’s use of $6.6 million in Federal Emergency Management Agency funds in the period from Dec. 22, 2003, to July 14, 2011. They also reviewed the city’s processes, invoices and expense statements, according to the city.
City officials are gathering supporting documentation for the Office of Homeland Security. If it still supports the allegations, then the city can appeal. Paying back the $1.1 million is the worst-case scenario, Williamson said.
Paso Robles used the federal money to assess and fix various city facilities damaged by the quake. That included work on two, 4 million-gallon water tanks off Golden Hill Road, the historic Carnegie Library, a sulfur spring that erupted through the City Hall parking lot, and providing a service trailer for homeowners and merchants to explain how to return to buildings.
The auditor says that the city didn’t comply with federal guidelines to seek competitive bids on the water tank designs; charged for work not approved by FEMA on the Carnegie Library; accepted excessive costs for design on closing up the sulfur pit; and charged unspecified costs on the trailer service.
The audit also found an unsupported cost of $15,000 from the city accidentally inverting a number on a claim, and the city agrees with that finding.
The city disagrees with the other allegations.
On the water tanks, the city said that it hired an engineering firm familiar with the storage reservoirs to assess them in the first 12 hours after the quake because millions of gallons of fresh water were at stake, officials said. The auditor claimed that by not seeking competitive bids, there was “no assurance that the city paid reasonable prices.”
But the city says the auditor is confusing the guidelines required for seeking design services — which require using the most qualified firm — with the guidelines required for seeking construction work, which require using the lowest responsible bidder.
On the allegations regarding the Carnegie Library, the city said that contractor didn’t charge the city for construction management costs not related to FEMA repairs, so it wasn’t broken out on the financial statements.
On the allegation of accepting skewed design costs that far exceeded construction costs on the sulfur pit, the city said that the actual work to fix the pit was “relatively inexpensive” compared to the seven years of extensive environmental studies needed to reroute the hot sulfur water underground.
“So the percentage became disproportionate from the design to the repair because of the strangeness of this project,” Williamson said.
On the unspecified costs with the trailer service, Williamson said the city would provide further documentation to account for the hours spent helping the public on items previously marked miscellaneous.