City of Pacific Grove*

Conclusions 18

• CL1
  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. City disagrees wholly with the finding. City does not agree it has an obligation to independently investigate any project proponent or applicant, or to investigate any firm or individual who deposits money with the City. City does not agree it is required to obtain a deposit from a proponent or applicant before it undertakes any City action. The Grand Jury fails to cite any policy, procedure or code in support of its findings. City disagrees its actions related to Project Bella exposed the City to potential liability in any amount.
• CL2
  A lack of transparency contributed to the public criticisms and allegations of financial malfeasance. City disagrees wholly with the finding. The City does not agree its actions related to Project Bella lacked transparency. The City acted in full compliance with the Brown Act and the Public Records Act. The Grand Jury fails to cite any facts, or any policy, procedure or code in support of its findings.
• CL3
  The lack of clearly defined systems and procedures that were consistently followed contributed to public criticism of the City administration. City agrees partially with the finding. City agrees its systems and procedures may be improved; nonetheless, City does not agree its systems or procedures lack clarity, or that they were inconsistently followed. The Grand Jury fails to cite any policy, procedure or code in support of its findings. City has no information from this report as to the basis for assertion.
• CL4
  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. City agrees wholly with this finding. The allegation was incorrect.
• CL5
  The City lacked adequate procedures to account for employee time by project. City disagrees partially with the finding. Large projects that require time tracking have historically been rare in Pacific Grove.
• CL6
  The City lacked adequate procedures to track documents. City disagrees partially with the finding. The City recognizes the need to follow protocols for the creation and editing of documents. Most Council agenda documents are well tracked and archived. In this instance, there was an error in the application of the protocol.
• CL7
  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. The City disagrees partially with the finding. Please see the comment on Fact (26). The City believes that unreimbursed expenses are under $40,000.
• CL8
  In the Jury's opinion, it appears that Mr. Harvey had an advantage in competing for the position of City Manager. City disagrees wholly with the finding. City has no basis to respond to the Jury's opinion and is not aware of any evidence or facts to support its conclusions related to Mr. Harvey's application for City employment. See Comment on Fact 6.
• CL9
  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. The City disagrees partially with the finding. The City acknowledges the Grand Jury opinion. The City has no basis to respond to the Jury's opinion and does not share any conclusion expressed by the Jury related to Mr. Harvey's sensitivity to the appearance of any conflict of interest. The Grand Jury fails to cite any factual basis to determine Mr. Harvey's sensitivity to the appearance of a conflict of interest.
• CL10
  Mr. Harvey's relationship with members of the Domaine organization resulted in an allegation that he was receiving gifts from Domaine. City disagrees wholly with the finding. City has no information as to the basis for any allegations that Mr. Harvey may have received gifts. The City investigated the allegations, and they were determined to be unfounded.
• CL11
  Mr. Harvey did not receive the membership in Surf Air from Domaine, as was alleged in a citizen complaint. City agrees with the finding. City agrees the allegation referenced in Finding 12 has been shown to be incorrect.
• CL12
  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.
• CL13
  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 not agree with an implication that this Finding, if true, has any relevance. Mr. Harvey was provided a monthly allowance from the City for transportation and housing, in a not-to- exceed amount. This amount was part of his compensation, and available for him to use at in his discretion – for travel and housing. Any spending more than the allowance would be a personal expense and not a cost to the City.
• CL14
  The April 19, 2016 re-zoning allows for hotel use at the American Tin Cannery site in the future. City agrees with the finding. City affirms present zoning for the American Tin Cannery site will allow future hotel use. Response to Grand Jury Project Bella Recommendations With respect to each recommendation, the Grand Jury requests the City report one of the following actions: 1) The recommendation has been implemented, with a summary of the implemented action; 2) The recommendation has not yet been implemented, but will be implemented in the future, with a timeframe for implementation, 3) 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 (this timeframe not to exceed six months from the date of publication), or 4) The recommendation will not be implemented because it is not warranted or is not reasonable, with an explanation therefor.
• CL15
  The recommendation has been implemented, with a summary of the implemented action;
• CL16
  The recommendation has not yet been implemented, but will be implemented in the future, with a timeframe for implementation,
• CL17
  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 (this timeframe not to exceed six months from the date of publication), or
• CL18
  The recommendation will not be implemented because it is not warranted or is not reasonable, with an explanation therefor. R1. 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 investigator and the report of the Jury. R2. The City Council should review and revise Mr. Harvey's employment contract to clearly spell out the limits of his travel allowance. The recommendation has been implemented, in part: City reviewed Mr. Harvey's employment contract and will continue to review it on an annual basis as is the City's standard practice. The remaining recommendation will not be implemented because it is not warranted or is not reasonable. Further limits on his travel allowance are not needed. The City notes that Mr. Harvey's total compensation includes both a salary component and a clearly specified limit on his personal travel and housing allowance. The Council has set the total compensation at a level, that in the opinion of the Council, is appropriate in comparison to peers. R3. There should be a sunset date for the reimbursement for Mr. Harvey's personal travel to Southern California. The recommendation will not be implemented because it is not warranted or is not reasonable. Mr. Harvey's employment contract provides for a personal travel allowance as part of his total compensation. See also the response to R2. 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 documents that are included as Council agenda items. The City will investigate the use of systems that would further improve this process. The assessment will begin within the next six months. R6. 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 duties of all employees. The recommendation will not be implemented because it is not warranted or is not reasonable. The duties of all employees are set forth in detailed job descriptions, the City's Municipal Code and Charter, the Administrative Policies and Procedures Manual and the Employee Handbook. The Jury has not suggested any specific additional policies or procedures, except time tracking and document tracking, addressed elsewhere. R8. The City of Pacific Grove should develop a policy to improve the transparency of its communication with its citizens. The recommendation will not be implemented because it is not warranted or is not reasonable The City strives to conduct its business in public and abide by the Brown Act and Public Records Acts. The City has responded promptly and in good faith to requests for information from the public. The Grand Jury has not provided any evidence to the contrary.