Score: +1 (1/0/0)
Stanislaus County Grand Jury • 2005-2006

City of Patterson Grand Jury Case # 06-01, 06-03

Published: January 18, 2005 10 pages
View Original PDF

Note: Missing finding numbers detected: F8, F9, F10, F11, F12, F13, F14, F15, F16, F17, F18, F19, F20, F21, F22, F23, F24, F25, F26, F27, F28, F29, F30, F31, F32, F33, F34, F35, F36, F37, F38, F39, F40, F41, F42, F43, F44, F45, F46, F47, F48, F49, F50, F51, F52, F53, F54, F55, F56, F57, F58, F59, F60, F61, F62, F63, F64, F65, F66, F67, F68, F69, F70, F71, F72, F73, F74, F75, F76, F77, F78, F79, F80, F81, F82, F83, F84, F85, F86, F87, F88, F89, F90, F91, F92, F93, F94, F95, F96, F97, F98, F99, F100, F101, F102, F103, F104, F105, F106, F107, F108, F109, F110, F111, F112, F113, F114, F115, F116, F117, F118, F119, F120, F121, F122, F123, F124, F125, F126, F127, F128, F129, F130, F131, F132, F133, F134, F135, F136, F137, F138, F139, F140, F141, F142, F143, F144, F145, F146, F147, F148, F149, F150, F151, F152, F153, F154, F155, F156, F157, F158, F159, F160, F161, F162, F163, F164, F165, F166, F167, F168, F169, F170, F171, F172, F173, F174, F175, F176, F177, F178, F179, F180, F181, F182, F183, F184, F185, F186, F187, F188, F189, F190, F191, F192, F193, F194, F195, F196, F197, F198, F199, F200, F201, F202, F203, F204, F205, F206, F207, F208, F209, F210, F211, F212, F213, F214, F215, F216, F217, F218, F219, F220, F221, F222, F223, F224, F225, F226, F227, F228, F229, F230, F231, F232, F233, F234, F235, F236, F237, F238, F239, F240, F241, F242, F243, F244, F245, F246, F247, F248, F249, F250, F251, F252, F253, F254, F255, F256, F257, F258, F259, F260, F261, F262, F263, F264, F265, F266, F267, F268, F269, F270, F271, F272, F273, F274, F275, F276, F277, F278, F279, F280, F281, F282, F283, F284, F285, F286, F287, F288, F289, F290, F291, F292, F293, F294, F295, F296, F297, F298, F299, F300, F301, F302, F303, F304, F305, F306, F307, F308, F309, F310, F311, F312, F313, F314, F315, F316, F317, F318, F319, F320, F321, F322, F323, F324, F325, F326, F327, F328, F329, F330, F331, F332, F333, F334, F335, F336, F337, F338, F339, F340, F341, F342, F343, F344, F345, F346, F347, F348, F349, F350, F351, F352, F353, F354, F355, F356, F357, F358, F359, F360, F361, F362, F363, F364, F365, F366, F367, F368, F369, F370, F371, F372, F373, F374, F375, F376, F377, F378, F379, F380, F381, F382, F383, F384, F385, F386, F387, F388, F389, F390, F391, F392, F393, F394, F395, F396, F397, F398, F399, F400, F401, F402, F403, F404, F405, F406, F407, F408, F409, F410, F411, F412, F413, F414, F415, F416, F417, F418, F419, F420, F421, F422, F423, F424, F425, F426, F427, F428, F429, F430, F431, F432, F433, F434, F435, F436, F437, F438, F439, F440, F441, F442, F443, F444, F445, F446, F447, F448, F449, F450, F451, F452, F453, F454, F455, F456, F457, F458, F459, F460, F461, F462, F463, F464, F465, F466, F467, F468, F469, F470, F471, F472, F473, F474, F475, F476, F477, F478, F479, F480, F481, F482, F483, F484, F485, F486, F487, F488, F489, F490, F491, F492, F493, F494, F495, F496, F497, F498, F499, F500, F501, F502, F503, F504, F505, F506, F507, F508, F509, F510, F511, F512, F513, F514, F515, F516, F517, F518, F519, F520, F521, F522, F523, F524, F525, F526, F527, F528, F529, F530, F531, F532, F533, F534, F535, F536, F537, F538, F539, F540, F541, F542, F543, F544, F545, F546, F547, F548, F549, F550, F551, F552, F553, F554, F555, F556, F557, F558, F559, F560, F561, F562, F563, F564, F565, F566, F567, F568, F569, F570, F571, F572, F573, F574, F575, F576, F577, F578, F579, F580, F581, F582, F583, F584, F585, F586, F587, F588, F589, F590, F591, F592, F593, F594, F595, F596, F597, F598, F599, F600, F601, F602, F603, F604, F605, F606, F607, F608, F609, F610, F611, F612, F613, F614, F615, F616, F617, F618, F619, F620, F621, F622, F623, F624, F625, F626, F627, F628, F629, F630, F631, F632, F633, F634, F635, F636, F637, F638, F639, F640, F641, F642, F643, F644, F645, F646, F647, F648, F649, F650, F651, F652, F653, F654, F655, F656, F657, F658, F659, F660, F661, F662, F663, F664, F665, F666, F667, F668, F669, F670, F671, F672, F673, F674, F675, F676, F677, F678, F679, F680, F681, F682, F683, F684, F685, F686, F687, F688, F689, F690, F691, F692, F693, F694, F695, F696, F697, F698, F699, F700, F701, F702, F703, F704, F705, F706, F707, F708, F709, F710, F711, F712, F713, F714, F715, F716, F717, F718, F719, F720, F721, F722, F723, F724, F725, F726, F727, F728, F729, F730, F731, F732, F733, F734, F735, F736, F737, F738, F739, F740, F741, F742, F743, F744, F745, F746, F747, F748, F749, F750, F751, F752, F753, F754, F755, F756, F757, F758, F759, F760, F761, F762, F763, F764, F765, F766, F767, F768, F769, F770, F771, F772, F773, F774, F775, F776, F777, F778, F779, F780, F781, F782, F783, F784, F785, F786, F787, F788, F789, F790, F791, F792, F793, F794, F795, F796, F797, F798, F799, F800, F801, F802, F803, F804, F805, F806, F807, F808, F809, F810, F811, F812, F813, F814, F815, F816, F817, F818, F819, F820, F821, F822, F823, F824, F825, F826, F827, F828, F829, F830, F831, F832, F833, F834, F835, F836, F837, F838, F839, F840, F841, F842, F843, F844, F845, F846, F847, F848, F849, F850, F851, F852, F853, F854, F855, F856, F857, F858, F859, F860, F861, F862, F863, F864, F865, F866, F867, F868, F869, F870, F871, F872, F873, F874, F875, F876, F877, F878, F879, F880, F881, F882, F883, F884, F885, F886, F887, F888, F889, F890, F891, F892, F893, F894, F895, F896, F897, F898, F899, F900, F901, F902, F903, F904, F905, F906, F907, F908, F909, F910, F911, F912, F913, F914, F915, F916, F917, F918, F919, F920, F921, F922, F923, F924, F925, F926, F927, F928, F929, F930, F931, F932, F933, F934, F935, F936, F937, F938, F939, F940, F941, F942, F943, F944, F945, F946, F947, F948, F949, F950, F951, F952, F953, F954, F955, F956, F957, F958, F959, F960, F961, F962, F963, F964, F965, F966, F967, F968, F969, F970, F971, F972, F973, F974, F975, F976, F977, F978, F979, F980, F981, F982, F983, F984, F985, F986, F987, F988, F989, F990, F991, F992, F993, F994, F995, F996, F997, F998, F999, F1000, F1001, F1002, F1003, F1004, F1005, F1006, F1007, F1008, F1009, F1010, F1011, F1012, F1013, F1014, F1015, F1016, F1017, F1018, F1019, F1020, F1021, F1022, F1023, F1024, F1025, F1026, F1027, F1028, F1029, F1030, F1031, F1032, F1033, F1034, F1035, F1036, F1037, F1038, F1039, F1040, F1041, F1042, F1043, F1044, F1045, F1046, F1047, F1048, F1049, F1050, F1051, F1052, F1053, F1054, F1055, F1056, F1057, F1058, F1059, F1060, F1061, F1062, F1063, F1064, F1065, F1066, F1067, F1068, F1069, F1070, F1071, F1072, F1073, F1074, F1075, F1076, F1077, F1078, F1079, F1080, F1081, F1082, F1083, F1084, F1085, F1086, F1087, F1088, F1089, F1090, F1091, F1092, F1093, F1094, F1095, F1096, F1097, F1098, F1099, F1100, F1101, F1102, F1103, F1104, F1105, F1106, F1107, F1108, F1109, F1110, F1111, F1112, F1113, F1114, F1115, F1116, F1117, F1118, F1119, F1120, F1121, F1122, F1123, F1124, F1125, F1126, F1127, F1128, F1129, F1130, F1131, F1132, F1133, F1134, F1135, F1136, F1137, F1138, F1139, F1140, F1141, F1142, F1143, F1144, F1145, F1146, F1147, F1148, F1149, F1150, F1151, F1152, F1153, F1154, F1155, F1156, F1157, F1158, F1159, F1160, F1161, F1162, F1163, F1164, F1165, F1166, F1167, F1168, F1169, F1170, F1171, F1172, F1173, F1174, F1175, F1176, F1177, F1178, F1179, F1180, F1181, F1182, F1183, F1184, F1185, F1186, F1187, F1188, F1189, F1190, F1191, F1192, F1193, F1194, F1195, F1196, F1197, F1198, F1199, F1200, F1201, F1202, F1203, F1204, F1205, F1206, F1207, F1208, F1209, F1210, F1211, F1212, F1213, F1214, F1215, F1216, F1217, F1218, F1219, F1220, F1221, F1222, F1223, F1224, F1225, F1226, F1227, F1228, F1229, F1230, F1231, F1232, F1233, F1234, F1235, F1236, F1237, F1238, F1239, F1240, F1241, F1242, F1243, F1244, F1245, F1246, F1247, F1248, F1249, F1250, F1251, F1252, F1253, F1254, F1255, F1256, F1257, F1258, F1259, F1260, F1261, F1262, F1263, F1264, F1265, F1266, F1267, F1268, F1269, F1270, F1271, F1272, F1273, F1274, F1275, F1276, F1277, F1278, F1279, F1280, F1281, F1282, F1283, F1284, F1285, F1286, F1287, F1288, F1289, F1290, F1291, F1292, F1293, F1294, F1295, F1296, F1297, F1298, F1299, F1300, F1301, F1302, F1303, F1304, F1305, F1306, F1307, F1308, F1309, F1310, F1311, F1312, F1313, F1314, F1315, F1316, F1317, F1318, F1319, F1320, F1321, F1322, F1323, F1324, F1325, F1326, F1327, F1328, F1329, F1330, F1331, F1332, F1333, F1334, F1335, F1336, F1337, F1338, F1339, F1340, F1341, F1342, F1343, F1344, F1345, F1346, F1347, F1348, F1349, F1350, F1351, F1352, F1353, F1354, F1355, F1356, F1357, F1358, F1359, F1360, F1361, F1362, F1363, F1364, F1365, F1366, F1367, F1368, F1369, F1370, F1371, F1372, F1373, F1374, F1375, F1376, F1377, F1378, F1379, F1380, F1381, F1382, F1383, F1384, F1385, F1386, F1387, F1388, F1389, F1390, F1391, F1392, F1393, F1394, F1395, F1396, F1397, F1398, F1399, F1400, F1401, F1402, F1403, F1404, F1405, F1406, F1407, F1408, F1409, F1410, F1411, F1412, F1413, F1414, F1415, F1416, F1417, F1418, F1419, F1420, F1421, F1422, F1423, F1424, F1425, F1426, F1427, F1428, F1429, F1430, F1431, F1432, F1433, F1434, F1435, F1436, F1437, F1438, F1439, F1440, F1441, F1442, F1443, F1444, F1445, F1446, F1447, F1448, F1449, F1450, F1451, F1452, F1453, F1454, F1455, F1456, F1457, F1458, F1459, F1460, F1461, F1462, F1463, F1464, F1465, F1466, F1467, F1468, F1469, F1470, F1471, F1472, F1473, F1474, F1475, F1476, F1477, F1478, F1479, F1480, F1481, F1482, F1483, F1484, F1485, F1486, F1487, F1488, F1489, F1490, F1491, F1492, F1493, F1494, F1495, F1496, F1497, F1498, F1499, F1500, F1501, F1502, F1503, F1504, F1505, F1506, F1507, F1508, F1509, F1510, F1511, F1512, F1513, F1514, F1515, F1516, F1517, F1518, F1519, F1520, F1521, F1522, F1523, F1524, F1525, F1526, F1527, F1528, F1529, F1530, F1531, F1532, F1533, F1534, F1535, F1536, F1537, F1538, F1539, F1540, F1541, F1542, F1543, F1544, F1545, F1546, F1547, F1548, F1549, F1550, F1551, F1552, F1553, F1554, F1555, F1556, F1557, F1558, F1559, F1560, F1561, F1562, F1563, F1564, F1565, F1566, F1567, F1568, F1569, F1570, F1571, F1572, F1573, F1574, F1575, F1576, F1577, F1578, F1579, F1580, F1581, F1582, F1583, F1584, F1585, F1586, F1587, F1588, F1589, F1590, F1591, F1592, F1593, F1594, F1595, F1596, F1597, F1598, F1599, F1600, F1601, F1602, F1603, F1604, F1605, F1606, F1607, F1608, F1609, F1610, F1611, F1612, F1613, F1614, F1615, F1616, F1617, F1618, F1619, F1620, F1621, F1622, F1623, F1624, F1625, F1626, F1627, F1628, F1629, F1630, F1631, F1632, F1633, F1634, F1635, F1636, F1637, F1638, F1639, F1640, F1641, F1642, F1643, F1644, F1645, F1646, F1647, F1648, F1649, F1650, F1651, F1652, F1653, F1654, F1655, F1656, F1657, F1658, F1659, F1660, F1661, F1662, F1663, F1664, F1665, F1666, F1667, F1668, F1669, F1670, F1671, F1672, F1673, F1674, F1675, F1676, F1677, F1678, F1679, F1680, F1681, F1682, F1683, F1684, F1685, F1686, F1687, F1688, F1689, F1690, F1691, F1692, F1693, F1694, F1695, F1696, F1697, F1698, F1699, F1700, F1701, F1702, F1703, F1704, F1705, F1706, F1707, F1708, F1709, F1710, F1711, F1712, F1713, F1714, F1715, F1716, F1717, F1718, F1719, F1720, F1721, F1722, F1723, F1724, F1725, F1726, F1727, F1728, F1729, F1730, F1731, F1732, F1733, F1734, F1735, F1736, F1737, F1738, F1739, F1740, F1741, F1742, F1743, F1744, F1745, F1746, F1747, F1748, F1749, F1750, F1751, F1752, F1753, F1754, F1755, F1756, F1757, F1758, F1759, F1760, F1761, F1762, F1763, F1764, F1765, F1766, F1767, F1768, F1769, F1770, F1771, F1772, F1773, F1774, F1775, F1776, F1777, F1778, F1779, F1780, F1781, F1782, F1783, F1784, F1785, F1786, F1787, F1788, F1789, F1790, F1791, F1792, F1793, F1794, F1795, F1796, F1797, F1798, F1799, F1800, F1801, F1802, F1803, F1804, F1805, F1806, F1807, F1808, F1809, F1810, F1811, F1812, F1813, F1814, F1815, F1816, F1817, F1818, F1819, F1820, F1821, F1822, F1823, F1824, F1825, F1826, F1827, F1828, F1829, F1830, F1831, F1832, F1833, F1834, F1835, F1836, F1837, F1838, F1839, F1840, F1841, F1842, F1843, F1844, F1845, F1846, F1847, F1848, F1849, F1850, F1851, F1852, F1853, F1854, F1855, F1856, F1857, F1858, F1859, F1860, F1861, F1862, F1863, F1864, F1865, F1866, F1867, F1868, F1869, F1870, F1871, F1872, F1873, F1874, F1875, F1876, F1877, F1878, F1879, F1880, F1881, F1882, F1883, F1884, F1885, F1886, F1887, F1888, F1889, F1890, F1891, F1892, F1893, F1894, F1895, F1896, F1897, F1898, F1899, F1900, F1901, F1902, F1903, F1904, F1905, F1906, F1907, F1908, F1909, F1910, F1911, F1912, F1913, F1914, F1915, F1916, F1917, F1918, F1919, F1920, F1921, F1922, F1923, F1924, F1925, F1926, F1927, F1928, F1929, F1930, F1931, F1932, F1933, F1934, F1935, F1936, F1937, F1938, F1939, F1940, F1941, F1942, F1943, F1944, F1945, F1946, F1947, F1948, F1949, F1950, F1951, F1952, F1953, F1954, F1955, F1956, F1957, F1958, F1959, F1960, F1961, F1962, F1963, F1964, F1965, F1966, F1967, F1968, F1969, F1970, F1971, F1972, F1973, F1974, F1975, F1976, F1977, F1978, F1979, F1980, F1981, F1982, F1983, F1984, F1985, F1986, F1987, F1988, F1989, F1990, F1991, F1992, F1993, F1994, F1995, F1996, F1997, F1998, F1999, F2000, F2001, F2002, F2003, F2004

Findings and Recommendations 8 findings

F1
To not have a closed session
No recommendations for this finding
F2
To refer the check handling matter to the CGJ
No recommendations for this finding
F3
To not take any personnel action until the matter is completed
No recommendations for this finding
F4
To refer items on tonight’s (April 22, 2005) agenda to future Council meetings • On April 25, 2005, the City Attorney advised the Council, in writing, that the FOC exceeded its authority and recommended that they disassociate themselves from the report. 5 • At the May 3, 2005 Council meeting, the Mayor moved to approve the following statement… “The lack of the Council’s direct response to the Accounting Oversight Committee report is not to be construed as an endorsement of the report. It represents the view of the two committee members. The release of the report to the newspapers was not authorized by the City Council.” • The records indicate that the Council did not either endorse or reject the FOC’s Report. 4) Mishandling of building permit checks from 1999 to 2004 in the amount of $8.3 million. In the 1990s, the City contracted with Precision to handle their construction permit and inspection process due to its rapidly expanding developments. Precision was responsible for the day-to-day building permit activities. The CGJ investigated the building permit system at Patterson and found the following major flaws leading up to the 2004 breakdown in the processing of building permits and fees: • The Community Development Director, who presented Precision’s annual contract to the Council for renewal, was involved in the daily contract activities, and had the Precision contract employee handling permits in his department. The Director did not accept financial responsibility for administering and overseeing Section 2.3 of the Precision contract. • There was no particular city employee assigned the responsibility for the implementation of the Precision contract. • There was no department level training or communication to discuss the requirements of the Precision contract to ensure a citywide staff understanding of the contract. • Precision’s contract, section 2.3, requires that its employees not handle any permit fees and that payments go directly to finance to be deposited. The CGJ found that, inconsistent with the contract, a Precision employee was handling and holding permit fees for extended periods of times. • The contract had been in operation for nearly 8 years, and over the course of time city employees were familiar with the fact that Precision’s employees were handling permit fees. The lack of administration of the contract lead to complacency among city and contract employees resulting in improper processing of permits and handling of funds. Checks and cash were frequently left either on or in the building department’s desk overnight. 6 • The job of the Precision employee was to input the permit information into a building department computer system and give it a number. This information stayed within the building department and was not transferred either manually or electronically to the finance department. It was only when the Precision contract employee directly provided the permit and fees to the finance department that the information was transferred and funds deposited. • The CGJ determined through sworn testimony that the city’s accounting and building permit systems were not integrated, and thus made it impossible to cross check building permit activity between the finance and building departments. • One of Precision’s employees was asked by city staff to perform tasks outside the scope of its contract. This diverted the attention of the Precision employee away from its contract responsibilities and duties. 5) The City of Patterson’s response and action to address unresolved deposited checks breakdown. The CGJ determined through sworn testimony that the issue of undeposited building permit fee checks first came to the city’s attention formally in August of 2004 when triggered by a developer inquiry. Checks were found in drawers, on desks, and were taken home by a contract employee. Upon further research the City Manager ultimately advised the Council of the problem in October 2004. The Council took the following actions to resolve the problem: On November 1, 2004 the Council contracted with Maze & Associates to analyze the City’s $8.3 million undeposited building permits funds and the City’s processes for building permits. The March 18, 2005 report to the Council, Maze was able to reconcile all but $32,779.14. Since that day all checks, including the $32,779.14, have been reconciled. In addition, Maze calculated the lost interest on undeposited checks to determine the financial impact on the City. Total interest lost was reported to be $126,866.13. Precision Systems has agreed to reimburse the City for its expenses of the audit plus any lost interest. • Maze concluded its report with the following recommendations:
No recommendations for this finding
F5
The accounting for permits issued each month discussed in
No recommendations for this finding
F6
Precision Systems should be requested to obtain a SAS 70 audit of its system.
Related Recommendations (1)
R1
above should be used to reconcile the issued Permit file (currently held by Finance) with the amount of Precision’s bill. 6. Precision Systems should be requested to obtain a SAS 70 audit of its system. 7. The Community Development Department should analyze the effect of unrecorded construction on service levels and infrastructure already in place. (cid:121) In March of 2006, the CGJ conducted a site visit to the City of Patterson to observe their records and systems. During this visit the CGJ made the following observations: 1. The Building Permit log is available online and contains each permit’s status. There are no skipped sequences on the log. 2. The City has continued to research the remaining imbalance, which has now been reconciled. 3. All checks are only given to the finance department by the applicant and immediately deposited. 4. The City uses the “Springbrook Accounting” system. It is an integrated, modular system that allows the City to monitor the status of permits from any authorized computer terminal in any department. 5. The City has hired an “in-house” building official and changed contractors to perform the plan review and inspections. 6. There is a daily reconciliation of permit fees and monies collected. There is also a monthly reconciliation of permit fees and general ledger entries. 8 6) The ability of the CGJ to be a fair and unbiased body in resolving the allegations set forth, based on the fact that an FOC member was a past CGJ member. The FOC member in question was on the 2003/2004 CGJ. Each year a new 19- member jury panel is randomly selected by the Superior Court to investigate and write final reports. The CGJ requires a super majority vote of 12 members to take any action. A previous CGJ member has no knowledge or input into any current CGJ investigations. The FOC member in question is not a member of the 2005/2006 CGJ. RECOMMENDATIONS 1) The process in which the FOC was selected and the definition of its assignment. The CGJ recommends that the Patterson City Council develop a written policy regarding the establishment of Special Assignment/Ad Hoc Committees. This policy shall direct that committees authorized by the Council, include representation from the City Council, City employees and the public at large, as required to perform the committee’s assignment in an objective and professional manner. The Council shall clearly define the duties, responsibilities, scope, authority, timeline, and interim and final reports. 2) A possible conflict of interest or bias in regard to the members of the FOC and/or the Council. The CGJ recommends that the above written policy include the following: (cid:121) Candidates for appointment by the Patterson City Council to Special Assignment/Ad Hoc Committees should be questioned regarding any potential or ongoing economic or personal conflicts of interest or bias. (cid:121) Any real or perceived conflicts of interest shall disqualify the candidate from appointment to the committee. (cid:121) The policy shall also disqualify any Council member with any real or perceived conflicts of interest from participating in the selection, assignment, work, or reports of Special Assignment/Ad Hoc Committees. 9 3) The acceptance/approval of the FOC’s report and recommendations to the Council. The records indicate that the City Council did not either endorse or reject the FOC’s Report. The CGJ, through sworn testimony and the review of documents, has found that the scope of the report was beyond what was authorized by the Council. For this reason, the CGJ recommends that the FOC report be expunged from the City’s records. 4) Mishandling of building permit checks from 1999 to 2004 in the amount of $8.3 million. • The City of Patterson continues to implement the recommendations of the Maze & Associates’ report and that they are integrated into the City Policy and Procedures Manual. • When the City implements a new contract or related process, a responsible staff member shall be assigned as the contract manager and they shall be held responsible for the implementation, training, coordinating, and monitoring of the terms of the contract. • The City conduct periodic meetings involving contract implementation by staff and management and should be conducted to answer questions, address problems, and identify process improvements and other issues. 10
F7
The Community Development Department should analyze the effect of unrecorded construction on service levels and infrastructure already in place. (cid:121) In March of 2006, the CGJ conducted a site visit to the City of Patterson to observe their records and systems. During this visit the CGJ made the following observations:
Related Recommendations (1)
R1
above should be used to reconcile the issued Permit file (currently held by Finance) with the amount of Precision’s bill. 6. Precision Systems should be requested to obtain a SAS 70 audit of its system. 7. The Community Development Department should analyze the effect of unrecorded construction on service levels and infrastructure already in place. (cid:121) In March of 2006, the CGJ conducted a site visit to the City of Patterson to observe their records and systems. During this visit the CGJ made the following observations: 1. The Building Permit log is available online and contains each permit’s status. There are no skipped sequences on the log. 2. The City has continued to research the remaining imbalance, which has now been reconciled. 3. All checks are only given to the finance department by the applicant and immediately deposited. 4. The City uses the “Springbrook Accounting” system. It is an integrated, modular system that allows the City to monitor the status of permits from any authorized computer terminal in any department. 5. The City has hired an “in-house” building official and changed contractors to perform the plan review and inspections. 6. There is a daily reconciliation of permit fees and monies collected. There is also a monthly reconciliation of permit fees and general ledger entries. 8 6) The ability of the CGJ to be a fair and unbiased body in resolving the allegations set forth, based on the fact that an FOC member was a past CGJ member. The FOC member in question was on the 2003/2004 CGJ. Each year a new 19- member jury panel is randomly selected by the Superior Court to investigate and write final reports. The CGJ requires a super majority vote of 12 members to take any action. A previous CGJ member has no knowledge or input into any current CGJ investigations. The FOC member in question is not a member of the 2005/2006 CGJ. RECOMMENDATIONS 1) The process in which the FOC was selected and the definition of its assignment. The CGJ recommends that the Patterson City Council develop a written policy regarding the establishment of Special Assignment/Ad Hoc Committees. This policy shall direct that committees authorized by the Council, include representation from the City Council, City employees and the public at large, as required to perform the committee’s assignment in an objective and professional manner. The Council shall clearly define the duties, responsibilities, scope, authority, timeline, and interim and final reports. 2) A possible conflict of interest or bias in regard to the members of the FOC and/or the Council. The CGJ recommends that the above written policy include the following: (cid:121) Candidates for appointment by the Patterson City Council to Special Assignment/Ad Hoc Committees should be questioned regarding any potential or ongoing economic or personal conflicts of interest or bias. (cid:121) Any real or perceived conflicts of interest shall disqualify the candidate from appointment to the committee. (cid:121) The policy shall also disqualify any Council member with any real or perceived conflicts of interest from participating in the selection, assignment, work, or reports of Special Assignment/Ad Hoc Committees. 9 3) The acceptance/approval of the FOC’s report and recommendations to the Council. The records indicate that the City Council did not either endorse or reject the FOC’s Report. The CGJ, through sworn testimony and the review of documents, has found that the scope of the report was beyond what was authorized by the Council. For this reason, the CGJ recommends that the FOC report be expunged from the City’s records. 4) Mishandling of building permit checks from 1999 to 2004 in the amount of $8.3 million. • The City of Patterson continues to implement the recommendations of the Maze & Associates’ report and that they are integrated into the City Policy and Procedures Manual. • When the City implements a new contract or related process, a responsible staff member shall be assigned as the contract manager and they shall be held responsible for the implementation, training, coordinating, and monitoring of the terms of the contract. • The City conduct periodic meetings involving contract implementation by staff and management and should be conducted to answer questions, address problems, and identify process improvements and other issues. 10
F2005 Page 4
From testimony, the intent of the Council was to have the FOC oversee the building permit audit by Maze & Associates. On February 1, 2005, the Council approved a new scope of work for Maze & Associates to audit the services of the building department. The two-member FOC did not include representatives from the community, Maze & Associates or Precision Systems personnel. In addition, written direction by the Council in regard to the committee’s assignment was not established, including procedures to report their progress. 2) A possible conflict of interest in regard to the members of the FOC. (cid:121) The FOC was composed of only two members: a Council member who was also a past Finance Department employee, and a private citizen that was also a past City Treasurer. The CGJ’s investigation, including a review of the documents pertaining to the FOC’s assignment to work with and act as liaison to Maze & Associates, found no conflict of interest within the Committee. (cid:121) The CGJ interviewed the members of the FOC and the Mayor under sworn testimony, and concluded that the committee members did have a bias against City staff. Additionally, at the April 9, 2005 meeting, the Mayor exercised his influence with the FOC to expand the Committee’s report to include personnel issues. 4 (cid:121) The CGJ also discovered that the Mayor had an outstanding check (valued at approximately $30,000) on file in the Building Permit office (for over a year) and that his check was one of the undeposited checks. This appears to represent a type of economic interest that would disqualify him from this issue under Government Code section 87100. Government Code section 87100 - No public official at any level of state or local government shall make, participate in making or in any way attempt to use his official position to influence a governmental decision in which he knows or has reason to know he has a financial interest. 3) The acceptance/approval of the FOC report and recommendations to the Council. • The FOC met on April 9, 2005, to discuss the final draft of their report. In addition to the two committee members, the Mayor also attended this meeting. Under sworn testimony it was determined that the FOC decided to expand its initial draft report to include City personnel matters. • On April 14, 2005, prior to the Council receiving the FOC report a Committee member prematurely released its report to the press. Prior to the next Council meeting on April 15, 2005, coverage of the report was in the Patterson Irrigator. • The reports by Maze & Associates and the FOC were put on the agenda for the Council meeting of April 19, 2005. • At the April 19, 2005 Council meeting, there was substantial public comment concerning the FOC’s report. There was no action taken by the Council other than to reschedule a closed session meeting for April 22, 2005, to consider the FOC’s report. • According to the April 22, 2005 meeting minutes, the Council did not go into closed session but approved the following: 1. To not have a closed session 2. To refer the check handling matter to the CGJ 3. To not take any personnel action until the matter is completed 4. To refer items on tonight’s (April 22, 2005) agenda to future Council meetings • On April 25, 2005, the City Attorney advised the Council, in writing, that the FOC exceeded its authority and recommended that they disassociate themselves from the report. 5 • At the May 3, 2005 Council meeting, the Mayor moved to approve the following statement… “The lack of the Council’s direct response to the Accounting Oversight Committee report is not to be construed as an endorsement of the report. It represents the view of the two committee members. The release of the report to the newspapers was not authorized by the City Council.” • The records indicate that the Council did not either endorse or reject the FOC’s Report. 4) Mishandling of building permit checks from 1999 to 2004 in the amount of $8.3 million. In the 1990s, the City contracted with Precision to handle their construction permit and inspection process due to its rapidly expanding developments. Precision was responsible for the day-to-day building permit activities. The CGJ investigated the building permit system at Patterson and found the following major flaws leading up to the 2004 breakdown in the processing of building permits and fees: • The Community Development Director, who presented Precision’s annual contract to the Council for renewal, was involved in the daily contract activities, and had the Precision contract employee handling permits in his department. The Director did not accept financial responsibility for administering and overseeing Section 2.3 of the Precision contract. • There was no particular city employee assigned the responsibility for the implementation of the Precision contract. • There was no department level training or communication to discuss the requirements of the Precision contract to ensure a citywide staff understanding of the contract. • Precision’s contract, section 2.3, requires that its employees not handle any permit fees and that payments go directly to finance to be deposited. The CGJ found that, inconsistent with the contract, a Precision employee was handling and holding permit fees for extended periods of times. • The contract had been in operation for nearly 8 years, and over the course of time city employees were familiar with the fact that Precision’s employees were handling permit fees. The lack of administration of the contract lead to complacency among city and contract employees resulting in improper processing of permits and handling of funds. Checks and cash were frequently left either on or in the building department’s desk overnight. 6 • The job of the Precision employee was to input the permit information into a building department computer system and give it a number. This information stayed within the building department and was not transferred either manually or electronically to the finance department. It was only when the Precision contract employee directly provided the permit and fees to the finance department that the information was transferred and funds deposited. • The CGJ determined through sworn testimony that the city’s accounting and building permit systems were not integrated, and thus made it impossible to cross check building permit activity between the finance and building departments. • One of Precision’s employees was asked by city staff to perform tasks outside the scope of its contract. This diverted the attention of the Precision employee away from its contract responsibilities and duties. 5) The City of Patterson’s response and action to address unresolved deposited checks breakdown. The CGJ determined through sworn testimony that the issue of undeposited building permit fee checks first came to the city’s attention formally in August of 2004 when triggered by a developer inquiry. Checks were found in drawers, on desks, and were taken home by a contract employee. Upon further research the City Manager ultimately advised the Council of the problem in October 2004. The Council took the following actions to resolve the problem: On November 1, 2004 the Council contracted with Maze & Associates to analyze the City’s $8.3 million undeposited building permits funds and the City’s processes for building permits. The March 18, 2005 report to the Council, Maze was able to reconcile all but $32,779.14. Since that day all checks, including the $32,779.14, have been reconciled. In addition, Maze calculated the lost interest on undeposited checks to determine the financial impact on the City. Total interest lost was reported to be $126,866.13. Precision Systems has agreed to reimburse the City for its expenses of the audit plus any lost interest. • Maze concluded its report with the following recommendations: 1. The numerical sequence of building permits issued must be accounted for at least monthly.
No recommendations for this finding

Additional Recommendations 3

These recommendations are not explicitly linked to specific findings.

Observations 6

Agency Responses 1

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Patterson City