Score: +10 (13/8/3)

Monterey County Grand Jury • 2017-2018

Project Bella

47 pages

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⚠️ Translation Notice: This content has been automatically translated. The original English text is the official version. Translation may contain errors.

⚠️ Este contenido ha sido traducido automáticamente. El texto original en inglés es la versión oficial. La traducción puede contener errores.

Findings and Recommendations 15 findings

Inspired by the prospect of significant revenue for the City, the project was pursued without due diligence.

No recommendations for this finding

Committing City funds without having done an investigation of the developer, without adequate deposits and without a firm contract for reimbursement, exposed the City to a potential liability of several hundred thousand dollars.

Related Recommendations (1)

The City of Pacific Grove should hold “lessons learned” sessions with a facilitator skilled in municipal operations, to critique the Project Bella experience in order to avoid making the same mistakes in future developments.

A lack of transparency contributed to the public criticisms and allegations of financial malfeasance. 16

Related Recommendations (2)

The City of Pacific Grove should develop a policy to improve the transparency of its communication with its citizens.

The lack of clearly defined systems and procedures that were consistently followed contributed to public criticism of the City administration.

Related Recommendations (2)

The City of Pacific Grove should develop a comprehensive policies and procedures manual that clearly describes the duties of all employees.

The allegation that $50,000 of City funds had been misappropriated resulted from the City’s failure to correctly record a check for that amount that was paid for Project Bella by David Armanasco. This allegation was shown to be incorrect.

No recommendations for this finding

The City lacked adequate procedures to account for employee time by project.

Related Recommendations (1)

The City of Pacific Grove should develop procedures that would track employee time by project.

The City lacked adequate procedures to track documents.

Related Recommendations (1)

The City of Pacific Grove should develop procedures that would enable document tracking.

A lack of appropriate controls on the part of the City administration contributed to unreimbursed costs of more than $101,402.47 to the City.

No recommendations for this finding

In the Jury’s opinion, it appears that Mr. Harvey had an advantage in competing for the position of City Manager.

No recommendations for this finding

F10

In the Jury’s opinion, the City Manager, Mr. Harvey, displayed a lack of sensitivity to the appearance of a conflict of interest created by joining Jared Ficker’s group membership in Surf Air.

Related Recommendations (2)

The City Council should review and revise Mr. Harvey’s employment contract to clearly spell out the limits of his travel allowance. 17

There should be a sunset date for the reimbursement for Mr. Harvey’s personal travel to Southern California.

F11

Mr. Harvey’s relationship with members of the Domaine organization resulted in an allegation that he was receiving gifts from Domaine.

No recommendations for this finding

F12

Mr. Harvey did not receive the membership in Surf Air from Domaine, as was alleged in a citizen complaint.

No recommendations for this finding

F13

Mr. Harvey did not pay for Surf Air for two separate three-month periods.

Related Recommendations (2)

The City Council should review and revise Mr. Harvey’s employment contract to clearly spell out the limits of his travel allowance. 17

There should be a sunset date for the reimbursement for Mr. Harvey’s personal travel to Southern California.

F14

The cost of Mr. Harvey’s flights to Southern California on Surf Air was substantially greater than the average cost would have been for commercial flights.

Related Recommendations (3)

The City Council should review and revise Mr. Harvey’s employment contract to clearly spell out the limits of his travel allowance. 17

There should be a sunset date for the reimbursement for Mr. Harvey’s personal travel to Southern California.

Travel of City of Pacific Grove employees should be reimbursed at the lowest practical cost.

F15

The April 19, 2016 re-zoning allows for hotel use at the American Tin Cannery site in the future.

No recommendations for this finding

Conclusions 2

CL1

Inspired by the prospect of significant revenue for the City, the project was pursued without due diligence.
CL2

The Jury does not doubt that the City entered into Project Bella with the best of motivations. However, inspired by the prospect of significant revenue for the City, the project was pursued without due diligence. Ultimately, the only positive result of this project was a zoning change at the ATC site which significantly increased the value of the location. This was at a cost to the city of a minimum of $101,402.47. A new project for a luxury hotel at the ATC site in the future is still a possibility. If the City is able to identify and incorporate the lessons learned from Project Bella, such a project has every possibility of succeeding. Proposed Site of Project Bella 35 “ ICMA Code of Ethics with Guidelines “The ICMA Code of Ethics was adopted by the ICMA membership in 1924, and most recently amended by the membership in June 2017. 14 FACTS (1) November 9, 2015: Notice of an incomplete application to develop the American Tin Cannery site at 125 Ocean View Blvd, Pacific Grove was provided by the Community Economic Development Department to Domaine Pacific Grove LLC. (2) Domaine had 180 days from November 9, 2015 to submit revised plans or the project would be considered withdrawn. (3) Domaine never submitted a complete application which was required for construction of Project Bella. (4) The application fee of $11,044.20 due from Domaine was never received by the City of Pacific Grove. (5) At the commencement of the project, the City failed to follow standard procedure by not requiring a substantial deposit from the developer to cover the City’s project expenses. (6) After the City Manager announced his resignation, Mr. Ficker recommended Mr. Harvey to fill the position of City Manager. (7) January 4, 2016: Ben Harvey began work as an independent contractor. (8) January 20, 2016: Ben Harvey began work as Interim City Manager. (9) January 20, 2016: The City Council approved an agreement for Domaine to reimburse the City for the cost of the special election for a zoning change necessary for Project Bella. (10) January 27, 2016: Mr. Harvey joined a membership group in Surf Air’s private air travel organization. (11) The group membership was owned by Jared Ficker, a friend of Mr. Harvey. (12) Mr. Ficker was also an associate of Ronald Meer who was the president and CEO of Domaine and a member of the Surf Air group. (13) February 17, 2016: The City Council authorized the interim City Manager to enter into a master reimbursement agreement with Domaine which included reimbursing for City staff time. (14) February 17, 2016: In the same City Council meeting the Economic Development Director reported that an estimated $35,000 of City staff time had been devoted to Project Bella. (15) The Jury found no evidence in the City’s documents of a tracking system for staff time. 15 (16) The jury found no evidence that the City had billed Domaine for staff time devoted to Project Bella. (17) April 19, 2016: City of Pacific Grove Special Election approved rezoning the ATC parcel for hotel use. (18) April 20, 2016: Ben Harvey hired as permanent City Manager. (19) June 4, 2016: The City and Domaine signed a second reimbursement agreement that was not presented to the City Council for approval. (20) August 11, 2016: A letter from Jason Letterer, attorney for Domaine, contained Domaine’s offer to reimburse the City for a portion of its Local Coastal Plan costs. (21) Early August, 2016: A $50,000 check from David Armanasco was not properly recorded as a payment for Domaine for more than a month. (22) February 1, 2017: meeting the City Council voted unanimously to no longer seek additional Reimbursement from Domaine for Local Coastal Plan costs. (23) The Jackson Lewis law firm was hired by the City in response to public allegations and criticisms of its decisions and performance. (24) In a City Council meeting, the Jackson Lewis investigator gave a PowerPoint presentation with the conclusion that no evidence of malfeasance had been found. (25) The City of Pacific Grove now has the zoning change that will be necessary for the development of a hotel at the ATC site. (26) The unreimbursed cost of Project Bella to the City has been $101,402.47.

Agency Responses 2

Government agencies' official responses to this report's findings and recommendations. Click on a response to see the structured breakdown.

City of Pacific Grove Response to report: Who's In Charge? Stepping up on Homelessness: The need for

August 20, 2018 • 5 pages • 19 responses • Score: +11 (+11, 8, 0) View Details ▾

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19 responses to findings and recommendations

Response: Requires Analysis

Score: 0

As to the recommendation, the City of Pacific Grove reiterates that the County of San Luis Obispo, Homeless Services Oversight Council (HSOC), would serve as a good model for the County of Monterey. For example, HSOC membership is comprised of one member of the County Board of Supervisors, one City Council Member from each city, County Government Service Providers, Behavioral Health as an example, Nonprofit service providers, local business/business organizations, law enforcement, typically a representative from the County Chiefs Association, local academic institution, local health provider, ...

Response: Agree Score: +1

F3. The County's strategy for addressing homelessness needs a clearer focus, accountable leadership, and enhanced capacity. As to the finding regarding the City of Pacific Grove, the respondent agrees and Response: recommends the County of San Luis Obispo Homeless Services Oversight Council, subject to the Brown Act (1953), serve as a model program. F4. Structuring the Continuum of Care administrator as a 501(c) 3 nonprofit organization is conducive to securing funding and coordinating homeless services. However, a non-profit organization cannot establish public policy and planning needed t...

The City Council should review and revise Mr. Harvey’s employment contract to clearly spell out the limits of his travel allowance. 17

Response: Requires Analysis

Score: 0

As to the recommendation, the City of Pacific Grove reiterates that the County of San Luis Obispo HSOC model could be used in Monterey County. For example the HSOC mission statement, the purpose of San Luis Obispo County Homeless Services Oversight Council (HSOC) is to ensure that everyone has access to appropriate and affordable housing and to services they need to sustain it. The recommendation requires further analysis. The County and its Cities should enter into a binding, enforceable agreement, such as a R3. Memorandum of Agreement, to secure commitment to the plan and ensure responsibi...

A lack of transparency contributed to the public criticisms and allegations of financial malfeasance. 16

Response: Agree Score: +1

recommends the County of San Luis Obispo Homeless Services Oversight Council, subject to the Brown Act (1953), serve as a model program. F4. Structuring the Continuum of Care administrator as a 501(c) 3 nonprofit organization is conducive to securing funding and coordinating homeless services. However, a non-profit organization cannot establish public policy and planning needed to end homelessness. As to the finding regarding the City of Pacific Grove, the respondent agrees. Response: F5. The County has unofficially established the Coalition of Homeless Service Providers as a central organ...

There should be a sunset date for the reimbursement for Mr. Harvey’s personal travel to Southern California.

Response: Requires Analysis

Score: 0

The recommendation requires further analysis, with an explanation and the scope and parameters of an analysis or study, and a timeframe for the matter to be prepared for discussion by the City within six months from the date of publication. The Lead Me Home Leadership council should clearly define its purpose and goals. R4. Response: As to the recommendation, the City of Pacific Grove agrees that clearly defined purpose, goals and responsibilities are necessary. The recommendation requires further analysis. There should be a clear distinction between governance of the Continuum of Care - as ...

The lack of clearly defined systems and procedures that were consistently followed contributed to public criticism of the City administration.

Response: Agree Score: +1

F5. The County has unofficially established the Coalition of Homeless Service Providers as a central organization for addressing homelessness. Making any nonprofit the center of homeless solutions effectively creates the perception there is governmental leadership when there is, in fact, no formal political leadership. This arrangement provides elected officials with a way to avoid accepting political responsibility for addressing homelessness. As to the finding regarding the City of Pacific Grove, the respondent agrees in Response: part, however, the Lead Me Home Leadership Council does incl...

Travel of City of Pacific Grove employees should be reimbursed at the lowest practical cost.

Response: Requires Analysis

Score: 0

As to the recommendation, the City of Pacific Grove agrees. The recommendation requires further analysis. If the County effectively exerts control of Coalition for Homeless Service Providers R6. through the Leadership Council, then the County should clearly define the purpose and role of the Coalition for Homeless Service Providers. It also follows that the Coalition for Homeless Service Providers should be adequately funded and staffed in proportion to its level of responsibilities with respect to securing resources and performing services for the county. Response: As to the recommendation,...

Response: Agree Score: +1

part, however, the Lead Me Home Leadership Council does include governmental leadership. F6. The Coalition of Homeless Service Providers is a small nonprofit that does not have sufficient capacity to administer the County's strategic plan to end homelessness and its continuum of care for both Monterey and San Benito counties. It does not provide political leadership to coalesce public support and government commitments around a concrete action-plan to end homelessness. As to the finding regarding the City of Pacific Grove, the respondent agrees. Response: Page | 3 F7. The composition of t...

The City of Pacific Grove should develop procedures that would enable document tracking.

Response: Requires Analysis

Score: 0

The City lacked adequate procedures to account for employee time by project.

Response: Agree Score: +1

Page | 3 F7. The composition of the Leadership Council and its location within the Coalition of Homeless Service Providers has affected the focus of the leadership council. The Leadership Council's critical opportunity of generating and executing a strategic plan to end homelessness has narrowed to providing oversight of the Continuum of Care. As to the finding regarding the City of Pacific Grove, the respondent agrees. Response: F8. The structure of the Leadership Council does not provide authority to design and execute a regional plan to end homelessness, and it does not support full pub...

The City of Pacific Grove should develop procedures that would track employee time by project.

Response: Requires Analysis

Score: 0

As to the recommendation, the City of Pacific Grove agrees. The recommendation requires further analysis. The newly created regional leadership body (see R2) should update and implement a R7. regional strategic plan to end homelessness by defining its purpose, goals and assessments to measure and track progress. Response: As to the recommendation, the City of Pacific Grove agrees. The recommendation requires further analysis. The strategic plan should be revisited annually using outcome measurements to evaluate R8. and adjust strategies for meeting goals. Response: As to the recommendation...

The City lacked adequate procedures to track documents.

Response: Agree Score: +1

F8. The structure of the Leadership Council does not provide authority to design and execute a regional plan to end homelessness, and it does not support full public accountability for meeting stated targets. As to the finding regarding the City of Pacific Grove, the respondent agrees. Response: F9. Political leadership is necessary to secure public support, enact policy and planning decisions that capitalize on state legislation, and execute a regional homeless plan. As to the finding regarding the City of Pacific Grove, the respondent agrees. Response: F10. Government decision-making is...

The City of Pacific Grove should develop a comprehensive policies and procedures manual that clearly describes the duties of all employees.

Response: Requires Analysis

Score: 0

As to the recommendation, the City of Pacific Grove agrees. The recommendation requires further analysis. The strategic plan should be revisited annually using outcome measurements to evaluate R8. and adjust strategies for meeting goals. Response: As to the recommendation, the City of Pacific Grove agrees. The recommendation requires further analysis. Page | 5 Reports that assess which goals are, or are not, being met should be generated and made R9. publicly available. Response: As to the recommendation, the City of Pacific Grove agrees. The recommendation requires further analysis. R10....

A lack of appropriate controls on the part of the City administration contributed to unreimbursed costs of more than $101,402.47 to the City.

Response: Agree Score: +1

F9. Political leadership is necessary to secure public support, enact policy and planning decisions that capitalize on state legislation, and execute a regional homeless plan. As to the finding regarding the City of Pacific Grove, the respondent agrees. Response: F10. Government decision-making is essential for making choices about resource commitments. As to the finding regarding the City of Pacific Grove, the respondent agrees. Response: F11. To meaningfully change the course of homelessness and housing insecurity, there must be a regional approach to homelessness and the creation of a ...

The City of Pacific Grove should develop a policy to improve the transparency of its communication with its citizens.

Response: Requires Analysis

Score: 0

As to the recommendation, the City of Pacific Grove agrees. The recommendation requires further analysis. Page | 5 Reports that assess which goals are, or are not, being met should be generated and made R9. publicly available. Response: As to the recommendation, the City of Pacific Grove agrees. The recommendation requires further analysis. R10. The new regional leadership body should produce a transparent consolidated budget to maximize resources and identify expenditures. All municipalities should demonstrate their commitment to the regional plan to end homelessness in an equitable, or pr...

In the Jury’s opinion, it appears that Mr. Harvey had an advantage in competing for the position of City Manager.

Response: Agree Score: +1

F10. Government decision-making is essential for making choices about resource commitments. As to the finding regarding the City of Pacific Grove, the respondent agrees. Response: F11. To meaningfully change the course of homelessness and housing insecurity, there must be a regional approach to homelessness and the creation of a new governing body with the power to oversee implementation of the plan. As to the finding regarding the City of Pacific Grove, the respondent agrees. Response: F12. The strategic plan to end homelessness serves as an informal guide rather than a definitive region...

F10

In the Jury’s opinion, the City Manager, Mr. Harvey, displayed a lack of sensitivity to the appearance of a conflict of interest created by joining Jared Ficker’s group membership in Surf Air.

Response: Agree Score: +1

F11. To meaningfully change the course of homelessness and housing insecurity, there must be a regional approach to homelessness and the creation of a new governing body with the power to oversee implementation of the plan. As to the finding regarding the City of Pacific Grove, the respondent agrees. Response: F12. The strategic plan to end homelessness serves as an informal guide rather than a definitive regional plan. It needs to be updated and fully implemented. As to the finding regarding the City of Pacific Grove, the respondent agrees. Response: RECOMMENDATIONS R1. Elected County an...

F11

Mr. Harvey’s relationship with members of the Domaine organization resulted in an allegation that he was receiving gifts from Domaine.

Response: Agree Score: +1

F12. The strategic plan to end homelessness serves as an informal guide rather than a definitive regional plan. It needs to be updated and fully implemented. As to the finding regarding the City of Pacific Grove, the respondent agrees. Response: RECOMMENDATIONS R1. Elected County and City officials should provide government leadership to address homelessness. Response: As to the recommendation, the City of Pacific Grove reiterates that the County of San Luis Obispo, Homeless Services Oversight Council (HSOC), would serve as a good model for the County of Monterey. For example, HSOC membersh...

F12

Mr. Harvey did not receive the membership in Surf Air from Domaine, as was alleged in a citizen complaint.

Response: Agree Score: +1

RECOMMENDATIONS R1. Elected County and City officials should provide government leadership to address homelessness. Response: As to the recommendation, the City of Pacific Grove reiterates that the County of San Luis Obispo, Homeless Services Oversight Council (HSOC), would serve as a good model for the County of Monterey. For example, HSOC membership is comprised of one member of the County Board of Supervisors, one City Council Member from each city, County Government Service Providers, Behavioral Health as an example, Nonprofit service providers, local business/business organizations, law...

Response to report: Project Bella from City of Pacific Grove

July 18, 2018 • 9 pages • 5 responses • Score: -1 (+2, 0, -3) View Details ▾

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5 responses to findings and recommendations

Response: Will Not Implement

Score: -1

. The City of Pacific Grove should hold "lessons learned" sessions with a facilitator skilled in municipal operations, to critique the Project Bella experience to avoid making the same mistakes in future developments. The recommendation will not be implemented because it is not warranted. The City has already conducted a "lessons learned" session at an open council meeting. It is time to put energy into future application. As to all feedback from its citizens, the City takes the feedback seriously and works to improve service. The City has diligently reviewed the report of its retained investi...

The City Council should review and revise Mr. Harvey’s employment contract to clearly spell out the limits of his travel allowance. 17

Response: Will Not Implement

Score: -1

R4. Travel of City of Pacific Grove employees should be reimbursed at the lowest practical cost. The recommendation will not be implemented because it is not warranted or is not reasonable. This recommendation implies a broader requirement for all employees of the city. The City believes that travel is judiciously used by employees who apply for travel reimbursement as a business expense. R5. The City of Pacific Grove should develop procedures that would enable document tracking. The recommendation requires further analysis. The City already has instituted a disciplined process for all documen...

The City of Pacific Grove should develop procedures that would track employee time by project.

Response: Will Not Implement

Score: -1

. The City of Pacific Grove should develop procedures that would track employee time by project. The City notes that by far the largest number of Community Development projects in our City do not require the overhead of time tracking, as the time cost of employees is already included in standard fees for project applications. The City has obtained software for employee time tracking and will deploy that capability for appropriate projects and departments by January 1, 2019. R7. The City of Pacific Grove should develop a comprehensive policies and procedures manual that clearly describes the du...

F12

Mr. Harvey did not receive the membership in Surf Air from Domaine, as was alleged in a citizen complaint.

Response: Agree Score: +1

the finding. City agrees the allegation referenced in Finding 12 has been shown to be incorrect.

F13

Mr. Harvey did not pay for Surf Air for two separate three-month periods.

Response: Agree Score: +1

. Mr. Harvey did not pay for Surf Air for two separate three-month periods. City agrees with the finding. City agrees Mr. Harvey did not pay for Surf Air for two separate three-month periods; however, the City does not agree this fact was improper or should support any allegation of impropriety. F14. The cost of Mr. Harvey's flights to Southern California on Surf Air was substantially greater than the average cost would have been for commercial flights. City disagrees wholly with the finding. City has no basis to compare the cost of Surf Air transportation to commercial transportation and does...