LPP 13-01 May 8, 2013
EXHIBIT 10-Q DISCLOSURE OF LOBBYING ACTIVITIES
COMPLETE THIS FORM TO DISCLOSE LOBBYING ACTIVITIES PURSUANT TO 31 U.S.C. 1352
1. Type of Federal Action: 2. Status of Federal Action: 3. Report Type:
a. contract a. bid/offer/application a. initial
b. grant b. initial award b. material change
c. cooperative agreement c. post-award
d. loan For Material Change Only:
e. loan guarantee year ____ quarter _________
f. loan insurance date of last report ___________
4. Name and Address of Reporting Entity 5. If Reporting Entity in No. 4 is Subawardee, Enter Name and Address of Prime:
Prime Subawardee
Tier _______ , if known
Congressional District, if known Congressional District, if known
6. Federal Department/Agency: 7. Federal Program Name/Description:
CFDA Number, if applicable ____________________
8. Federal Action Number, if known: 9. Award Amount, if known:
10. Name and Address of Lobby Entity 11. Individuals Performing Services (including (If individual, last name, first name, MI) address if different from No. 10a) (last name, first name, MI)
(attach Continuation Sheet(s) if necessary)
12. Amount of Payment (check all that apply) 14. Type of Payment (check all that apply) $ _____________ actual planned a. retainer
b. one-time fee
13. Form of Payment (check all that apply): c. commission a. cash d. contingent fee
b. in-kind; specify: nature ______________ e deferred
Value _____________ f. other, specify __________________________
15. Brief Description of Services Performed or to be performed and Date(s) of Service, including officer(s), employee(s), or member(s) contacted, for Payment Indicated in Item 11:
(attach Continuation Sheet(s) if necessary)
16. Continuation Sheet(s) attached: Yes No
17. Information requested through this form is authorized by Title 31 U.S.C. Section 1352. This disclosure of lobbying reliance was placed by the tier above when his transaction was made or entered into. This disclosure is required pursuant to 31 U.S.C. 1352. This information will be reported to Congress
semiannually and will be available for public inspection. Any person who fails to file the required disclosure shall be subject to a civil penalty of not less than $10,000 and not more than $100,000 for each such failure.
Signature: _________________________________________
Print Name: _______________________________________
Title: ____________________________________________
Telephone No.: ____________________ Date: ___________
Authorized for Local Reproduction
Federal Use Only: Standard Form - LLL
Standard Form LLL Rev. 04-28-06
Distribution: Orig- Local Agency Project Files
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Bill Silva, PE
Principal
(707) 484-8236 10/30/2018 4/13/22
Local Assistance Procedures Manual EXHBIT 10-Q
Disclosure of Lobbying Activities
LPP 13-01 May 8, 2013
EXHIBIT 10-Q DISCLOSURE OF LOBBYING ACTIVITIES
COMPLETE THIS FORM TO DISCLOSE LOBBYING ACTIVITIES PURSUANT TO 31 U.S.C. 1352
1. Type of Federal Action: 2. Status of Federal Action: 3. Report Type:
a. contract a. bid/offer/application a. initial
b. grant b. initial award b. material change
c. cooperative agreement c. post-award
d. loan For Material Change Only:
e. loan guarantee year ____ quarter _________
f. loan insurance date of last report ___________
4. Name and Address of Reporting Entity 5. If Reporting Entity in No. 4 is Subawardee, Enter Name and Address of Prime:
Prime Subawardee
Tier _______ , if known
Congressional District, if known Congressional District, if known
6. Federal Department/Agency: 7. Federal Program Name/Description:
CFDA Number, if applicable ____________________
8. Federal Action Number, if known: 9. Award Amount, if known:
10. Name and Address of Lobby Entity 11. Individuals Performing Services (including (If individual, last name, first name, MI) address if different from No. 10a) (last name, first name, MI)
(attach Continuation Sheet(s) if necessary)
12. Amount of Payment (check all that apply) 14. Type of Payment (check all that apply) $ _____________ actual planned a. retainer
b. one-time fee
13. Form of Payment (check all that apply): c. commission a. cash d. contingent fee
b. in-kind; specify: nature ______________ e deferred
Value _____________ f. other, specify __________________________
15. Brief Description of Services Performed or to be performed and Date(s) of Service, including officer(s), employee(s), or member(s) contacted, for Payment Indicated in Item 11:
(attach Continuation Sheet(s) if necessary)
16. Continuation Sheet(s) attached: Yes No
17. Information requested through this form is authorized by Title 31 U.S.C. Section 1352. This disclosure of lobbying reliance was placed by the tier above when his transaction was made or entered into. This disclosure is required pursuant to 31 U.S.C. 1352. This information will be reported to Congress
semiannually and will be available for public inspection. Any person who fails to file the required disclosure shall be subject to a civil penalty of not less than $10,000 and not more than $100,000 for each such failure.
Signature: _________________________________________
Print Name: _______________________________________
Title: ____________________________________________
Telephone No.: ____________________ Date: ___________
Authorized for Local Reproduction
Federal Use Only: Standard Form - LLL
Standard Form LLL Rev. 04-28-06
Distribution: Orig- Local Agency Project Files
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N/A N/A
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X
Bill Silva, PE
Principal
(707) 484-8236 10/30/2018 4/13/22
Local Assistance Procedures Manual EXHBIT 10-Q
Disclosure of Lobbying Activities
LPP 13-01 May 8, 2013
EXHIBIT 10-Q DISCLOSURE OF LOBBYING ACTIVITIES
COMPLETE THIS FORM TO DISCLOSE LOBBYING ACTIVITIES PURSUANT TO 31 U.S.C. 1352
1. Type of Federal Action: 2. Status of Federal Action: 3. Report Type:
a. contract a. bid/offer/application a. initial
b. grant b. initial award b. material change
c. cooperative agreement c. post-award
d. loan For Material Change Only:
e. loan guarantee year ____ quarter _________
f. loan insurance date of last report ___________
4. Name and Address of Reporting Entity 5. If Reporting Entity in No. 4 is Subawardee, Enter Name and Address of Prime:
Prime Subawardee
Tier _______ , if known
Congressional District, if known Congressional District, if known
6. Federal Department/Agency: 7. Federal Program Name/Description:
CFDA Number, if applicable ____________________
8. Federal Action Number, if known: 9. Award Amount, if known:
10. Name and Address of Lobby Entity 11. Individuals Performing Services (including (If individual, last name, first name, MI) address if different from No. 10a) (last name, first name, MI)
(attach Continuation Sheet(s) if necessary)
12. Amount of Payment (check all that apply) 14. Type of Payment (check all that apply) $ _____________ actual planned a. retainer
b. one-time fee
13. Form of Payment (check all that apply): c. commission a. cash d. contingent fee
b. in-kind; specify: nature ______________ e deferred
Value _____________ f. other, specify __________________________
15. Brief Description of Services Performed or to be performed and Date(s) of Service, including officer(s), employee(s), or member(s) contacted, for Payment Indicated in Item 11:
(attach Continuation Sheet(s) if necessary)
16. Continuation Sheet(s) attached: Yes No
17. Information requested through this form is authorized by Title 31 U.S.C. Section 1352. This disclosure of lobbying reliance was placed by the tier above when his transaction was made or entered into. This disclosure is required pursuant to 31 U.S.C. 1352. This information will be reported to Congress
semiannually and will be available for public inspection. Any person who fails to file the required disclosure shall be subject to a civil penalty of not less than $10,000 and not more than $100,000 for each such failure.
Signature: _________________________________________
Print Name: _______________________________________
Title: ____________________________________________
Telephone No.: ____________________ Date: ___________
Authorized for Local Reproduction
Federal Use Only: Standard Form - LLL
Standard Form LLL Rev. 04-28-06
Distribution: Orig- Local Agency Project Files
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N/A N/A
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X
Bill Silva, PE
Principal
(707) 484-8236 10/30/2018 4/13/22
Local Assistance Procedures Manual EXHBIT 10-Q
Disclosure of Lobbying Activities
LPP 13-01 May 8, 2013
EXHIBIT 10-Q DISCLOSURE OF LOBBYING ACTIVITIES
COMPLETE THIS FORM TO DISCLOSE LOBBYING ACTIVITIES PURSUANT TO 31 U.S.C. 1352
1. Type of Federal Action: 2. Status of Federal Action: 3. Report Type:
a. contract a. bid/offer/application a. initial
b. grant b. initial award b. material change
c. cooperative agreement c. post-award
d. loan For Material Change Only:
e. loan guarantee year ____ quarter _________
f. loan insurance date of last report ___________
4. Name and Address of Reporting Entity 5. If Reporting Entity in No. 4 is Subawardee, Enter Name and Address of Prime:
Prime Subawardee
Tier _______ , if known
Congressional District, if known Congressional District, if known
6. Federal Department/Agency: 7. Federal Program Name/Description:
CFDA Number, if applicable ____________________
8. Federal Action Number, if known: 9. Award Amount, if known:
10. Name and Address of Lobby Entity 11. Individuals Performing Services (including (If individual, last name, first name, MI) address if different from No. 10a) (last name, first name, MI)
(attach Continuation Sheet(s) if necessary)
12. Amount of Payment (check all that apply) 14. Type of Payment (check all that apply) $ _____________ actual planned a. retainer
b. one-time fee
13. Form of Payment (check all that apply): c. commission a. cash d. contingent fee
b. in-kind; specify: nature ______________ e deferred
Value _____________ f. other, specify __________________________
15. Brief Description of Services Performed or to be performed and Date(s) of Service, including officer(s), employee(s), or member(s) contacted, for Payment Indicated in Item 11:
(attach Continuation Sheet(s) if necessary)
16. Continuation Sheet(s) attached: Yes No
17. Information requested through this form is authorized by Title 31 U.S.C. Section 1352. This disclosure of lobbying reliance was placed by the tier above when his transaction was made or entered into. This disclosure is required pursuant to 31 U.S.C. 1352. This information will be reported to Congress
semiannually and will be available for public inspection. Any person who fails to file the required disclosure shall be subject to a civil penalty of not less than $10,000 and not more than $100,000 for each such failure.
Signature: _________________________________________
Print Name: _______________________________________
Title: ____________________________________________
Telephone No.: ____________________ Date: ___________
Authorized for Local Reproduction
Federal Use Only: Standard Form - LLL
Standard Form LLL Rev. 04-28-06
Distribution: Orig- Local Agency Project Files
N/A
N/A N/A
N/A N/A
N/A N/A
N/A N/A
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X
Bill Silva, PE
Principal
(707) 484-8236 10/30/2018 4/13/22
GHD City of Fortuna 12th Street Interchange Modernization Project – Environmental Documentation and Preliminary Engineering Services 64 Local Assistance Procedures Manual EXHBIT 10-Q
Disclosure of Lobbying Activities
LPP 13-01 May 8, 2013
INSTRUCTIONS FOR COMPLETING EXHIBIT 10-Q DISCLOSURE OF LOBBYING ACTIVITIES This disclosure form shall be completed by the reporting entity, whether subawardee or prime federal recipient at the initiation or receipt of covered federal action or a material change to previous filing pursuant to title 31 U.S.C. Section 1352.
The filing of a form is required for such payment or agreement to make payment to lobbying entity for influencing or attempting to influence an officer or employee of any agency, a Member of Congress an officer or employee of Congress or an employee of a Member of Congress in connection with a covered federal action. Attach a continuation sheet for additional information if the space on the form is inadequate. Complete all items that apply for both the initial filing and material change report. Refer to the implementing guidance published by the Office of Management and Budget for additional information.
1. Identify the type of covered federal action for which lobbying activity is or has been secured to influence, the outcome of a covered federal action.
2. Identify the status of the covered federal action.
3. Identify the appropriate classification of this report. If this is a follow-up report caused by a material change to the information previously reported, enter the year and quarter in which the change occurred. Enter the date of the last, previously submitted report by this reporting entity for this covered federal action.
4. Enter the full name, address, city, state, and zip code of the reporting entity. Include Congressional District if known. Check the appropriate classification of the reporting entity that designates if it is or expects to be a prime or subaward recipient. Identify the tier of the subawardee, e.g., the first subawardee of the prime is the first tier. Subawards include but are not limited to:
subcontracts, subgrants, and contract awards under grants.
5. If the organization filing the report in Item 4 checks "Subawardee" then enter the full name, address, city, state, and zip code of the prime federal recipient. Include Congressional District, if known.
6. Enter the name of the federal agency making the award or loan commitment. Include at least one organization level below agency name, if known. For example, Department of Transportation, United States Coast Guard.
7. Enter the federal program name or description for the covered federal action (item 1). If known, enter the full Catalog of Federal Domestic Assistance (CFDA) number for grants, cooperative agreements, loans and loan commitments.
8. Enter the most appropriate federal identifying number available for the federal action identification in item 1 (e.g., Request for Proposal (RFP) number, Invitation for Bid (IFB) number, grant announcement number, the contract grant. or loan award number, the application/proposal control number assigned by the federal agency). Include prefixes, e.g., "RFP-DE-90-001."
9. For a covered federal action where there has been an award or loan commitment by the Federal agency, enter the federal amount of the award/loan commitments for the prime entity identified in item 4 or 5.
10. Enter the full name, address, city, state, and zip code of the lobbying entity engaged by the reporting entity identified in Item 4 to influence the covered federal action.
11. Enter the full names of the individual(s) performing services and include full address if different from 10 (a). Enter Last Name, First Name and Middle Initial (Ml).
12. Enter the amount of compensation paid or reasonably expected to be paid by the reporting entity (Item 4) to the lobbying entity (Item 10). Indicate whether the payment has been made (actual) or will be made (planned). Check all boxes that apply. If this is a material change report, enter the cumulative amount of payment made or planned to be made.
13. Check all boxes that apply. If payment is made through an in-kind contribution, specify the nature and value of the in-kind payment.
14. Check all boxes that apply. If other, specify nature.
15. Provide a specific and detailed description of the services that the lobbyist has performed or will be expected to perform and the date(s) of any services rendered. Include all preparatory and related activity not just time spent in actual contact with federal officials. Identify the federal officer(s) or employee(s) contacted or the officer(s) employee(s) or Member(s) of Congress that were contacted.
16. Check whether or not a continuation sheet(s) is attached.
17. The certifying official shall sign and date the form, and print his/her name title and telephone number.
Public reporting burden for this collection of information is estimated to average 30-minutes per response, including time for reviewing instruction, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding the burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to the Office of Management and Budget, Paperwork Reduction Project (0348-0046), Washington, D.C. 20503. SFLLL-Instructions Rev. 06-04 Local Assistance Procedures Manual EXHBIT 10-Q
Disclosure of Lobbying Activities
LPP 13-01 May 8, 2013
INSTRUCTIONS FOR COMPLETING EXHIBIT 10-Q DISCLOSURE OF LOBBYING ACTIVITIES This disclosure form shall be completed by the reporting entity, whether subawardee or prime federal recipient at the initiation or receipt of covered federal action or a material change to previous filing pursuant to title 31 U.S.C. Section 1352.
The filing of a form is required for such payment or agreement to make payment to lobbying entity for influencing or attempting to influence an officer or employee of any agency, a Member of Congress an officer or employee of Congress or an employee of a Member of Congress in connection with a covered federal action. Attach a continuation sheet for additional information if the space on the form is inadequate. Complete all items that apply for both the initial filing and material change report. Refer to the implementing guidance published by the Office of Management and Budget for additional information.
1. Identify the type of covered federal action for which lobbying activity is or has been secured to influence, the outcome of a covered federal action.
2. Identify the status of the covered federal action.
3. Identify the appropriate classification of this report. If this is a follow-up report caused by a material change to the information previously reported, enter the year and quarter in which the change occurred. Enter the date of the last, previously submitted report by this reporting entity for this covered federal action.
4. Enter the full name, address, city, state, and zip code of the reporting entity. Include Congressional District if known. Check the appropriate classification of the reporting entity that designates if it is or expects to be a prime or subaward recipient. Identify the tier of the subawardee, e.g., the first subawardee of the prime is the first tier. Subawards include but are not limited to:
subcontracts, subgrants, and contract awards under grants.
5. If the organization filing the report in Item 4 checks "Subawardee" then enter the full name, address, city, state, and zip code of the prime federal recipient. Include Congressional District, if known.
6. Enter the name of the federal agency making the award or loan commitment. Include at least one organization level below agency name, if known. For example, Department of Transportation, United States Coast Guard.
7. Enter the federal program name or description for the covered federal action (item 1). If known, enter the full Catalog of Federal Domestic Assistance (CFDA) number for grants, cooperative agreements, loans and loan commitments.
8. Enter the most appropriate federal identifying number available for the federal action identification in item 1 (e.g., Request for Proposal (RFP) number, Invitation for Bid (IFB) number, grant announcement number, the contract grant. or loan award number, the application/proposal control number assigned by the federal agency). Include prefixes, e.g., "RFP-DE-90-001."
9. For a covered federal action where there has been an award or loan commitment by the Federal agency, enter the federal amount of the award/loan commitments for the prime entity identified in item 4 or 5.
10. Enter the full name, address, city, state, and zip code of the lobbying entity engaged by the reporting entity identified in Item 4 to influence the covered federal action.
11. Enter the full names of the individual(s) performing services and include full address if different from 10 (a). Enter Last Name, First Name and Middle Initial (Ml).
12. Enter the amount of compensation paid or reasonably expected to be paid by the reporting entity (Item 4) to the lobbying entity (Item 10). Indicate whether the payment has been made (actual) or will be made (planned). Check all boxes that apply. If this is a material change report, enter the cumulative amount of payment made or planned to be made.
13. Check all boxes that apply. If payment is made through an in-kind contribution, specify the nature and value of the in-kind payment.
14. Check all boxes that apply. If other, specify nature.
15. Provide a specific and detailed description of the services that the lobbyist has performed or will be expected to perform and the date(s) of any services rendered. Include all preparatory and related activity not just time spent in actual contact with federal officials. Identify the federal officer(s) or employee(s) contacted or the officer(s) employee(s) or Member(s) of Congress that were contacted.
16. Check whether or not a continuation sheet(s) is attached.
17. The certifying official shall sign and date the form, and print his/her name title and telephone number.
Public reporting burden for this collection of information is estimated to average 30-minutes per response, including time for reviewing instruction, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding the burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to the Office of Management and Budget, Paperwork Reduction Project (0348-0046), Washington, D.C. 20503. SFLLL-Instructions Rev. 06-04 Local Assistance Procedures Manual EXHBIT 10-Q
Disclosure of Lobbying Activities
LPP 13-01 May 8, 2013
INSTRUCTIONS FOR COMPLETING EXHIBIT 10-Q DISCLOSURE OF LOBBYING ACTIVITIES This disclosure form shall be completed by the reporting entity, whether subawardee or prime federal recipient at the initiation or receipt of covered federal action or a material change to previous filing pursuant to title 31 U.S.C. Section 1352.
The filing of a form is required for such payment or agreement to make payment to lobbying entity for influencing or attempting to influence an officer or employee of any agency, a Member of Congress an officer or employee of Congress or an employee of a Member of Congress in connection with a covered federal action. Attach a continuation sheet for additional information if the space on the form is inadequate. Complete all items that apply for both the initial filing and material change report. Refer to the implementing guidance published by the Office of Management and Budget for additional information.
1. Identify the type of covered federal action for which lobbying activity is or has been secured to influence, the outcome of a covered federal action.
2. Identify the status of the covered federal action.
3. Identify the appropriate classification of this report. If this is a follow-up report caused by a material change to the information previously reported, enter the year and quarter in which the change occurred. Enter the date of the last, previously submitted report by this reporting entity for this covered federal action.
4. Enter the full name, address, city, state, and zip code of the reporting entity. Include Congressional District if known. Check the appropriate classification of the reporting entity that designates if it is or expects to be a prime or subaward recipient. Identify the tier of the subawardee, e.g., the first subawardee of the prime is the first tier. Subawards include but are not limited to:
subcontracts, subgrants, and contract awards under grants.
5. If the organization filing the report in Item 4 checks "Subawardee" then enter the full name, address, city, state, and zip code of the prime federal recipient. Include Congressional District, if known.
6. Enter the name of the federal agency making the award or loan commitment. Include at least one organization level below agency name, if known. For example, Department of Transportation, United States Coast Guard.
7. Enter the federal program name or description for the covered federal action (item 1). If known, enter the full Catalog of Federal Domestic Assistance (CFDA) number for grants, cooperative agreements, loans and loan commitments.
8. Enter the most appropriate federal identifying number available for the federal action identification in item 1 (e.g., Request for Proposal (RFP) number, Invitation for Bid (IFB) number, grant announcement number, the contract grant. or loan award number, the application/proposal control number assigned by the federal agency). Include prefixes, e.g., "RFP-DE-90-001."
9. For a covered federal action where there has been an award or loan commitment by the Federal agency, enter the federal amount of the award/loan commitments for the prime entity identified in item 4 or 5.
10. Enter the full name, address, city, state, and zip code of the lobbying entity engaged by the reporting entity identified in Item 4 to influence the covered federal action.
11. Enter the full names of the individual(s) performing services and include full address if different from 10 (a). Enter Last Name, First Name and Middle Initial (Ml).
12. Enter the amount of compensation paid or reasonably expected to be paid by the reporting entity (Item 4) to the lobbying entity (Item 10). Indicate whether the payment has been made (actual) or will be made (planned). Check all boxes that apply. If this is a material change report, enter the cumulative amount of payment made or planned to be made.
13. Check all boxes that apply. If payment is made through an in-kind contribution, specify the nature and value of the in-kind payment.
14. Check all boxes that apply. If other, specify nature.
15. Provide a specific and detailed description of the services that the lobbyist has performed or will be expected to perform and the date(s) of any services rendered. Include all preparatory and related activity not just time spent in actual contact with federal officials. Identify the federal officer(s) or employee(s) contacted or the officer(s) employee(s) or Member(s) of Congress that were contacted.
16. Check whether or not a continuation sheet(s) is attached.
17. The certifying official shall sign and date the form, and print his/her name title and telephone number.
Public reporting burden for this collection of information is estimated to average 30-minutes per response, including time for reviewing instruction, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding the burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to the Office of Management and Budget, Paperwork Reduction Project (0348-0046), Washington, D.C. 20503. SFLLL-Instructions Rev. 06-04 GHD City of Fortuna 12th Street Interchange Modernization Project – Environmental Documentation and Preliminary Engineering Services 65 Katie Everett, Caltrans Project Manager 8/2/2022
Discussion Item 6a
STAFF REPORT
City Council Discussion Item
DATE: September 6, 2022
TO: Honorable Mayor and Council Members
FROM: Ryan Plotz, City Attorney
THROUGH: Merritt Perry, City Manager
SUBJECT: Fortuna Business Improvement District (FBID) Audit Update STAFF RECOMMENDATION:
Staff recommends that the Council receive an oral report from the City Attorney on the status of the audit of the records of the Fortuna Business Improvement Corporation, which was the nonprofit entity that administered Fortuna Business Improvement District pursuant to a contract with the City.
Following the report, it is recommended that the Council receive public comment, discuss the report and ask questions of staff, and provide any desired direction.
DISCUSSION:
Over the past nine (9) months, the City Council has held numerous discussions about the future of the Fortuna Business Improvement District, which was established as a business assessment district in 1990 to fund certain activities within the District, including: (i) promotion of public events; (ii) decoration of public places; (iii) furnishing of music in public places; (iv) promotion of business activities; and (iv) marketing to fill available space, recruiting and expansion of commercial enterprise. Among other decisions and structural changes to FBID, the Council elected to terminate the contract with the non-profit Fortuna Business Improvement Corporation, which had administered FBID since at least 2005.
Among other reasons, the Council elected to terminate the contract with the Corporation based upon the City’s review of the results of an audit of the Corporation’s finances for the six fiscal years ending June 30, 2016, 2017, 2018, 2019, 2020, and 2021. The audit, which was performed at the City’s insistence and funded through a City-funded loan, included six fiscal years because the Corporation failed to conduct annual audits for the subject years, despite a contractual obligation to do so.
The audit was conducted by Anderson, Lucas, Somerville & Borges, LLP, which was retained directly by the Corporation to perform the six-year audit. In February 2022, the City received Discussion Item 6a
from the Corporation a draft audit report containing the Corporation’s audited financial statements for the six years under audit (Attachment A), which report the Council previously reviewed.
As the Council will recall, the audit report that was initially provided to the City in February 2022 did not include any findings and recommendations that would customarily be found in such a report. Accordingly, the City Manager inquired with the Corporation on February 24, 2022, as to whether the auditor had, in fact, supplied the Corporation with written findings and recommendations. The Corporation’s then-president informed the City Manager that the auditor provided the Corporation with internal control letters, and that, on advice of the Corporation’s counsel, the Corporation would not release to the City a copy of the internal control letters on the ground they were confidential.
Despite this claim of confidentiality, the City continued to insist that the internal control letters be publicly released because Corporation administered public funds. Ultimately, on or about March 30, 2022, the Corporation’s board of directors elected to release all audit related documents, including draft copies of internal control letters, which letter were made publicly available and were the subject of prior Council discussions. A copy of the above-referenced internal control letter is attached as Attachment B.
As previously reviewed with the Council, by way of the internal control letter, the auditor found certain deficiencies in the Corporation’s internal controls, and classified the deficiencies as either a “material weakness” or “significant deficienc[y]”. Among other things noted in the internal control letter, the auditor made the following findings:
• That the Corporation had a “total lack of internal controls in place” to ensure an appropriate segregation of duties. The Auditor noted:
“Because of the limited number of employees, one person, the executive director and coordinator, was primarily responsible for data entry and maintaining the Corporation’s general ledger accounting records. [The Executive director] had use of a debit card for the banks, signed checks, and processed her own payroll checks. [The auditor] found this employee had access to over-the-counter withdrawals from the bank and transferred funds between the operating account and the gift certificate accounts for cash flow purposes. These represented loans to cover expenses while waiting for the next assessment check.
Generally, when there are limited personnel, the Board of Directors can mitigate this lack of segregation of duties by performing the bank reconciliations and approving and signing accounts payable checks. The Board of [the Corporation] did not fully understand what their position and duties were. The Board was responsible for setting policy and direction for the executive director’s performance. From the minutes, it was clear that the executive director, set the agendas, and prepared the minutes. Her payroll checks were signed by a Board member, but there was no questioning or review of the checks being signed.
Placing the management functions and accounting functions on one person increases the risk that omissions and errors will go undetected. The Board was Discussion Item 6a
not presented with the financials per the minutes, because the director said they needed to be cleaned up first. Many errors were found during the six-year audit which indicates a complete lack of controls in place to prevent and detect errors.
The executive director lacked certain bookkeeping and accounting skills, and, in our judgment, her time would have been better utilized in the overall management of the daily activities and pursuit of organizational goals.” • That the Corporation had multiple payroll issues, including the following list supplied by the auditor:
“During our audit we encountered multiple concerns with payroll policies and issues.
1. It is advisable that the executive director does not issue their own payroll checks; it is also advisable that the director provide a timecard or explanation of duties performed and time expended as payroll documentation.
2. We suggest either having a written agreement or employment contract which outlines the duties, responsibilities and obligations of each party.
3. Employee cash advances should be discontinued or limited with concrete terms for repayment of such, preferably through subsequent payroll deductions.
4. Benefits such as health stipends should be paid through periodic payroll not in lump sum payments.
5. The executive director often paid herself in advance of working. For example, in March 2020, six payroll checks cleared the bank, meaning she was prepaid for two months. Because of quarterly payroll taxes, the Corporation had to pay taxes three months in advance for the April and May prepaid payroll.
When interviewed, the former director said because of Covid she was not able to obtain a Board signature. However, this does not explain why the checks were not dated as of the period for which they were intended.
6. Lacking concrete policies and procedures has caused inconsistencies in benefits provided by the corporation to its employees. The former director, when asked how the interns were receiving vacation and holiday pay, when this was not part of their stated benefits, replied that she was authorized to do whatever steps necessary to retain her employees, even though this was not included in the budget.
7. Employment pay and benefits for each year should be clearly documented going forward so that the parties do not have to reconstruct past practices with respect to bonuses, sick leave, and vacation pay.
Discussion Item 6a
8. During the audit, several EDD envelops were found unopened. Several payroll tax notices were received. This alone is a major red flag as it represents late tax filing and penalties and interest. Some payroll tax reports were not found in the files.”
Concerned by the findings in the internal control letter, the City Manager and the Mayor met with the assigned auditor on or about May 2, 2022, to discuss the findings. During this meeting, the auditor represented that, during the audit process, she found that the former executive director may have received overpayments of compensation in the amount of $9,656.02 over the course of the audit period. It was further explained that, in December 2021, the auditor questioned the former executive director about these payments and encouraged the former executive director repay the funds to the Corporation. The City Manager and the Mayor requested from the auditor any documentation that would support the auditor’s finding that overpayments were made.
The auditor provided the documentation supporting her finding that overpayments were made to the Corporation’s then-president, who transmitted the documentation to the City Manager on May 2, 2022. In her transmittal email, the Corporation’s then-president explained, among other things, that the Corporation’s counsel concluded that the alleged overpayments “were justified under CA employment law” and that “if there was any overpayment, it was not nearly what the auditor claimed, and it was not worth exposing FBID to liability for an attempt to reclaim.” The Corporation’s then-president further noted that, on advice of the Corporation’s counsel, the Corporation sent a letter (Attachment C) to the former-executive director on February 27, 2022, stating, in pertinent part, as follows: “As you know, FBID had an audit conducted this year for the years 2016 through 2021. After consideration and review by the auditor and an attorney, we do not believe there was any deliberate misuse of FBID funds. We did find, however, that it was difficult to reconstruct years of past practices by former Boards and employees, which likely would have prevented many of the questions put to you by the auditor.” The documentation provided by the auditor in support of her finding showed the following:
• On June 30, 2015, the former executive director received an overpayment of $1,251.02
• On July 1, 2020, the former executive director received an over payment of $4,000 • On November 1, 2020, the former executive director received an over payment of $3,000
• On November 23, 2020, the former executive director received an over payment of $1,000
• On July 31, 2021, the former executive director received an over payment of $405 The documentation from the auditor further showed that, of the $8,000 in claimed overpayments during 2020, the Corporation’s payroll records show $6,000 was paid in “vacation” pay and $2,000 was paid in “sick” pay. The auditor found that these amounts were paid in addition to the formerexecutive director’s salary and that she was not able to locate any Board approvals or other authorizations for the above-listed payments, resulting in her conclusion that these payments constitute overpayments of compensation to the former executive director.
Discussion Item 6a
By way of her May 2, 2022, email providing the auditor’s documentation of the overpayments, the Corporation’s then-president represented that the Corporation’s board considered the issue of the overpayments resolved and that the Corporation would take no further action, stating, “After going through all of this and sending [the former executive director the February 27, 2022, letter], I believe our board is done. The audit is done.” The Corporation’s then-president further conveyed that this situation has been difficult on the volunteers that served on board.
In May 2022, the City received notice that the remaining member of the Corporation’s board of directors intended to resign their seats, leaving the Corporation without a governing board. The notice was received at a time when, based on several considerations, the Council was considering making a change in the manner in which FBID is administered, including bringing the administration in-house or issuing a request for proposals for a new entity to assume the Corporation’s role.
At the request of the City, the Corporation’s then-president and other members of the Corporation’s board of directors agreed to remain on the board to facilitate an orderly dissolution of the Corporation and winding up of the contract, which was completed in short order including the transfer of the Corporation’s assets to the City.
At the request and direction of the Council, on May 20, 2022, the City Attorney sent a letter (Attachment D) to the former-executive director. This letter, among other things, provided notification to the former-executive director of the auditor’s findings and provided her the opportunity to repay any amount she concurred represents an overpayment of compensation during her employment.
The former executive director responded by letter on May 27, 2022 (Attachment E), stating that she disagreed with the auditor’s findings in regard to her compensation and requesting evidence demonstrating any overpayments.
The City Attorney responded by letter on June 6, 2022 (Attachment F) to provide her a complete copy of the documentation provided to the City by the auditor as the underlying support for the auditor’s conclusion.
The former executive director responded by letter on June 16, 2022 (Attachment G), stating that upon review of the auditor’s documentation she “still [does] not believe the [Corporation] overpaid [her]” and pointing out that the audit reports did not include any express finding of overpayments.
The City Attorney responded by letter on July 5, 2022 (Attachment H), stating, in pertinent part, the following:
While I know you disagree with the Auditor’s conclusions, you have yet to provide an explanation as to why the above-listed payments, which were in addition to your annual salary, were proper. So that I have your position and can provide your explanation to the Council, would you please explain the basis for the abovepayments and why, during calendar year 2020, you received $2,000 in sick pay and $6,000 in vacation pay, which amounts appear to be in addition to your salary? Discussion Item 6a
As mentioned previously, the City is relying upon the findings of the Auditor and the documents provided. As you were the sole person in charge of handling payroll for the Corporation and given the lack of any FBID Board minutes approving the above-referenced payments, your explanation is critical for the Council’s consideration. At this point, all the Council has is the Auditor’s conclusions.
The former executive director responded by letter on July 14, 2022 (Attachment I), stating that she processed her checks with the guidance of and approval of the Board. She did not, however, provide any specific explanation for why the particular payments were made.
Following receipt of the above-described letter, the City Manager contacted the former executive director directly to discuss the matter. During the call, the former executive director continued to deny receiving any overpayment of compensation, accused the City of harassing her, and asked that the City not contact her further.
The City Attorney will provide an oral report on the above-content and discuss further handling.
FINANCIAL IMPACT:
No fiscal impact.
RECOMMENDED COUNCIL ACTION:
1. Receive staff presentation and review Council questions with staff
2. Open Public Comment
3. Close Public Comment
4. Provide direction to staff as appropriate
ATTACHMENTS:
• Attachment A – Draft Audit Report
• Attachment B – Draft Internal Control Letter
• Attachment C – Letter to D. Rios
• Attachment D – Letter to D. Rios from City Attorney dated May 20, 2022 • Attachment E – Letter from D. Rios dated May 27, 2022 • Attachment F – Letter to D. Rios from City Attorney dated June 6, 2022 • Attachment G – Letter from D. Rios dated June 16, 2022 • Attachment H – Letter to D. Rios from City Attorney dated July 5, 2022 • Attachment I – Letter from D. Rios dated July 14, 2022
Board of Directors
Fortuna Business Improvement Corporation
Fortuna, California
In planning and performing our audits of the financial statements of the Fortuna Business Improvement Corporation for the years ended June 30, 2021, 2020, 2019, 2018, 2017, and 2016, in accordance with auditing standards generally accepted in the United States of America, we considered Fortuna Business Improvement Corporation's internal control over financial reporting (internal control) as a basis for designing auditing procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness .. of the corporation's internal control.
Accordingly, we do not express an opinion on the effe6~iveness of the corporation's internal control. · ·
; '
Our consideration of internal control was for the .Jiµiited purpose described in the preceding paragraph and was not designed to identify ,all defidencies in internal control that might be material wealmesses or significant deficiencies' anq, therefore, material weaknesses or significant deficiencies may exist that were not ide~tifi~d:'. However, as discussed below, we identified certain deficiencies in internal control th~t we \consider to be material wealmesses and other deficiencies that we consider to bi:l sig~ifi6arit deficiencies. ;-- , '\ . '.',
A deficiency in internal controre:l(ists }h;n the design or operation of a control does not allow management or employees, in the'·pormal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A material wealmess is a deficiency or a combination of deficiencies in internal control, such that there is a reasonable possibility that a material misstatement of the corporation's financial statements will not be prevented, or detected and corrected, on a timely basis. We consider the following deficiencies in the Corporation's internal control to be a material wealmess.
Material Weaknesses:
A. Core Area Accounting
The three Core areas, Downtown Merchants, Strongs Creek and Redwood Village are supposed to receive 62% of the assessments paid by those areas. In the past, there was an overpayment to the Core Areas caused by over reimbursement as the corporation had not allocated 3 8% to Citywide. This was shown as a restricted deficit in net assets by core area. The previous auditor recommended the Corporation prepare a schedule showing the additions and subtractions to each zone. Our findings during this audit of six years shows that even if this schedule continues, there is no system or agreement in place to return these overpayments. The finite amount of assessments are spent annually, whether on the core areas, citywide or operating expenses.
Board of Directors
Fortuna Business Improvement Corporation
Recommendation:
It appears each core area has different ways they are reimbursed. We suggest Downtown Merchants submit invoices from the current year for the current year assessments. We noticed that the invoices being submitted for payments are two years old. Redwood Village has no contact person and no bank account. The method of paying out the assessments to them are by directly paying invoices for the Al Gray Parade in December. Strongs Creek generally provided a list of checks and amounts without invoices with requests for payment.
We were surprised that FBID personnel were on the bank accounts for these core areas. It appears that these areas are separate associations which have one Board member appointed to represent them. We suggest the Corporation maintain a schedule of assessments due to each area and disbursements provided to each area. At the end of the fiscal year, the Corporation should reconcile and submit the remainder of assessments due to the Core areas. The method used now varies between the areas and is overly complex, when the Corporation should just provide the 62% of assessments to these areas unless there is any re(l,s6n this is not acceptable, perhaps the Board can work with each Core area and find a simpleqnethod of reimbursement.
We ' have updated the schedule for the past six <_Year~ and can provide a schedule of actual assessments ( 62%) less expenditures for each of thos6 years under audit. During our audit we found some of the assessments were not a!li;,cated i:qrrectly, many of the invoices were not available for review, and certain expens~s were,not coded correctly. The actual balances in the Core areas may not be accurate. ) \
B. Segregation of Duties ;-
When designing a system of liiternal) controls, it is prudent to separate the recordkeeping function, custody of assets, and authdrization function whenever feasible. We found that Fortuna Business Improvement Corporation had a total lack of internal controls in place. Because of the limited number of employees, one person, the executive director and coordinator, was primarily responsible for data entry and maintaining the Corporation's general ledger accounting records.
She had use of a debit card for the banks, signed checks, and processed her own payroll checks.
We found this employee had access to over-the-counter withdrawals from the bank and transferred funds between the operating account and the gift certificate accounts for cash flow purposes. These represented loans to cover expenses while waiting for the next assessment check.
Generally, when there are limited personnel, the Board of Directors can mitigate this lack of segregation of duties by performing the bank reconciliations and approving and signing accounts payable checks. The Board of Fortuna Business Improvement Corporation did not fully understand what their position and duties were. The Board was responsible for setting policy and direction for the executive director as well as providing oversight and monitoring of the executive director's performance. From the minutes, it was cleai· that the executive director, set the agendas, and prepai·ed the minutes. Her payroll checks were signed by a Board member, but there was no questioning or review of the checks being signed.
Board of Directors
Fortuna Business Improvement Corporation
Page3
Placing the management functions and accounting functions on one person increases the risk that omissions and errors will go undetected. The Board was not presented with the financials per the minutes, because the director said they needed to be cleaned up first. Many errors were found during the six-year audit which indicates a complete lack of controls in place to prevent and detect errors. The executive director lacked certain bookkeeping and accounting skills, and, in our judgment, her time would have been better utiliz.ed in the overall management of the daily activities and pursuit of organizational goals.
We understand that beginning in July 2021, a third-party bookkeeping company has been engaged to do the accounting for the Corporation.
C. Gift Certificate Bank
Over the years, the Fortuna Bucks account was never reconciled by certificate making it impossible to know exactly how many certificates are outstanding. We found during these years; the bank account was reconciled by netting the sale of certificates to the certificates that were used. This netted figure was posted to the Certificate Jl;bility account causing the liability account to be overstated. · \,.
The previous auditor recognized income and expe_pse .. :-We adjusted the liability account by the amount that was recognized as income during thf 2015 audit. As of January 2021, the corporation no longer sells Fortuna Buck certificat(es.''Jhe bank will remain open to offset any submitted certificates and the liability accounf;\\1111 be closed to income at a future date. We believe the liability account is more reason!!bly stated with our adjustment. ,.· ,,, ) ·, _,,.-
All transfers have been returned to the Gift Certificate bank account. . \ --~- D. Accounts Payable
There are no closing procedures performed to capture unbilled expenses or to accrue payables at year end. This includes the reconciling of the Core area zones to enable the Corporation to report all reimbursements on a fiscal year basis.
E. Certain Fundraising Activities
During 2016, 2017 and 2018, the corporation took on a major fundraising Ice Rink rental activity. For the first year, there were more people involved and the budget was reasonably close to the actual expenses. The following two years, poor recordkeeping and a corrupt QuickBooks file hampered the ability of the auditor to compile sufficient evidence that all cash transactions were accounted for or to determine if any cash controls were in place. Using the separate bank account as a control document, the auditor was able to obtain a reasonable basis for the audited amounts presented. In the final year, the files were apparently turned over to another organization to manage the rink activity. Those records were not available.
Board of Directors
Fortuna Business Improvement Corporation
During 2017 and 2018, the Corporation took on further fundraising events with the Redwood Comedy Fest. These events were not budgeted, and the auditor did not have sufficient evidence to confirm that the recorded revenues or expenses were reflected properly or in whole. Much of these activities were operated on a cash basis. The records did not indicate how many tickets were sold, or how many people attended, or what controls were in place to ensure all cash was accounted for. Many of the direct bank expenses did not include receipts. Fortuna Business Improvement Corporation paid for the comedians' flights, hotels and paid the comedians in cash for their performance.
The comparison between these events showed that both 2017 and 2018 fundraising resulted in losses.
A significant deficiency is a deficiency, or combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider the following deficiencies in. the corporation's internal control to be significant deficiencies:
Significant Deficiencies:
F. Assessments and City Matching Revenues '
The City assessments were not reconcited to t)le corporation's general ledger. As mentioned earlier, the allocation between revenu~ acco;unts·1md Core Areas was not recorded correctly. In addition to these corrections, the norwitl accrual of the final payment made in July for the previous fiscal year was not recorded a~ ·b~e from City. While these adjustments are minor, the receivable balances each year were incol)"ect.
We recommend reconciling the payments received from the City to the City ledger and correcting for the 62% calculated for the Core areas and the 3 8% to Citywide revenue account.
G. Bank Accounts Not on General Ledger
The Ice Rink account held at Redwood Capital Bank was the separate account which needed to be reflected in the Corporation's books. However, there was apparently a credit card bank account at U. S. Bank in FBID's name which was opened in April 2018 and closed in 2020.
Although the balances were under one thousand at June 2018, 2019, and 2020, this account was also used by other organizations such as Rotary.
Follow up shows the account is closed and remaining funds of $550 were transferred to the Corporation's operating account.
Board of Directors
Fortuna Business Improvement Corporation
H. Functional Expense Allocations
In the previous audits performed, the administrative costs were compiled, and management designated the hours related to all activities to calculate the allocation of these costs to each activity and specific functions. This was an estimate which was time consuming. During this six year audit the executive director was no longer employed, and given the late nature of the audit, management agreed that the allocation presented was reasonable and less convoluted.
We recommend that the Corporation develop a reasonable and consistent method of allocating administrative costs for the annual reporting and disclosures of functional expenses between program services and supporting services.
I. Reporting Revenues Separate from Expenses
Certain activities have sponsorship donations or tickets sales which should not be netted with the expenses incurred for these activities. Not only are the financials more relevant and understandable; the revenues are not understated and sllould,_be reported at gross.
J. Payroll Issues
/
During our audit we encountered multiple com;ems wit:4 payroll policies and issues. ' ~ ' ' \ _.i
1. It is advisable that the exe~µtive)director does not issue their own payroll checks; it is also advisable that the directotJirovide a timecard or explanation of duties performed and time expended '.';!,payrqQ ·dpcumentation. •.\ • ' V .,, . I
2. We suggest either having a :written agreement or employment contract which outlines the duties, responsibilitie11/and obligations of each party.
3. Employee cash advances should be discontinued or limited with concrete terms for repayment of such, preferably through subsequent payroll deductions.
4. Benefits such as health stipends should be paid through periodic payroll not in lump sum payments.
5. The executive director often paid herself in advance of working. For example, in March 2020, six payroll checks cleared the bank, meaning she was prepaid for two months. Because of quarterly payroll taxes, the Corporation had to pay taxes three months in advance for the April and May prepaid payroll. When interviewed, the former director said because of Covid she was not able to obtain a Board signature.
However, this does not explain why the checks were not dated as of the period for which they were intended.
Board of Directors
Fortuna Business Improvement Corporation
6. Lacking concrete policies and procedures has caused inconsistencies in benefits provided by the corporation to its employees. The former director, when asked how the interns were receiving vacation and holiday pay, when this was not part of their stated benefits, replied that she was authorized to do whatever steps necessary to retain her employees, even though this was not included in the budget.
7. Employment pay and benefits for each year should be clearly documented going forward so that the parties do not have to reconstruct past practices with respect to bonuses, sick leave, and vacation pay.
8. During the audit, several EDD envelops were found unopened. Several payroll tax notices were received. This alone is a major red flag as it represents late tax filing and penalties and interest. Some payroll tax reports were not found in the files.
K. Other Concerns and Findings
I. Bank check numbering sequences were out of order.
2. One ' instance of a check date being changeq, orf'!l check that cleared the bank in Sept 2018, the audit trail showed the date changed to 7/I/19. Unknown reason provided.
3. There were multiple voids and deletes ,Clfi th~,QuickBooks file.
4. Found an unopened envelop in the Ice Rink 2016 file containing $85.00 from Trinity _,-. ,0 School students. \1 - •-- -_ <·,_,
5. Costco card membership shoqld beln_,i'otporation's name rather than director's name as the corporation would bpriefit\froni;the cash back provision annually.
6. Due to/from Rotary was not ctear why the exchange students' dinners and telephones were paid by FBID a9d char~bQ back to Rotary.
7. In three out of six yeiµ:s, Workers Comp insurance was cancelled and reinstated.
8. Vendors should not be paid,.'fo cash. Ex. Pony rides at AI Gray Lighted parade and Comedians at Comedy Fest events.
9. Possible Sales tax should have been filed for miscellaneous sales at Ice rink events.
10. Possible 1099 NECs should have been issued to visiting Comedians at Comedy Fest events.
11. Each year late invoices for advertising should be accrued to capture all expenses for that fiscal year.
12. Horizon invoices were paid from statements and invoices causing duplicate payments for the same invoices.
13. On the QuickBooks file, Downtown Merchants and Fortuna Downtown Merchants both listed as vendors. Strongs Creek listed as vendor and Job. It is advised that only one name be entered for Vendors.
14. For three years, the Corporation was loaned money from a Board member to cover cash flow problems the first quarter of each year. This is indicative of poor budgeting and related party issues.
15. Upon receipt of the FBID QuickBooks accounting file, it was clear that the 2015 audit journal entries had not been recorded. As the audit was not completed until October 31, 2020, it is understandable that the tax preparer did not notice. By accepting the audit, the corporation should have recorded the auditor's journal entries.
Board of Directors
Fortuna Business Improvement Corporation
16. Even though the City requires an annual audit, the corporation has not adhered to this requirement. We suggest that the Board consider an annual audit with no gaps of assurance on the financial statements. This would substantially increase the overall review and assessment of internal controls and other such matters of operating efficiencies, as well as provide the Board with timely financial statements. ****************************************************************************** In addition, we noted other matters involving the internal control and its operation that we have reported to management of Fortuna Business Improvement Corporation in a separate letter dated December 21, 2021.
This communication is intended solely for the information and use of management, the Board of Directors, and others within the organization, and is not intended to be and should not be used by anyone other than these specified parties. . ,
December 21, 2021
Fortuna, California
..
'
Anderson, LricJts, Somerville & Borges
THE MITCHELL LAW FIRM, LLP
CLIFFORD B. MITCHELL (1927 - 2010)
PAUL A. BRISSO*
NANCY K. DELANEY*
RUSSELL S. GANS
NICHOLAS R. KLOEPPEL
RYAN T. PLOTZ
AMY A. HUNT
KAREN J. ROEBUCK, Senior Associate
ATTORNEYS AT LAW
426 FIRST STREET
EUREKA, CALIFORNIA 95501
www.mitchelllawfirm.com
Established 1915
TELEPHONE (707) 443-5643
FACSIMILE (707) 444-9586
P.O. DRAWER 1008
EUREKA, CA 95502
WILLIAM F. MITCHELL (Retired)
JOHN M. VRIEZE (Retired)
EMERY F. MITCHELL (1896 - 1991)
WALTER J. CARTER (1949 – 1993)
R.C. DEDEKAM (1929 – 2011)
* Of Counsel
May 20, 2022
Via Certified Mail
Dianna Rios
RE: Fortuna Business Improvement District
Dear Ms. Rios:
I serve as City Attorney for the City of Fortuna. As you know, the City formed the Fortuna Business Improvement District (“District”) pursuant to the California Streets and Highways Code and contracted with the Fortuna Business Improvement Corporation (“Corporation”) to administer the District and promote its purposes. Through the contract, the City provides public funds to the Corporation to administer on behalf of the City for the benefit of Fortuna’s businesses. I understand that you served as the Corporation’s executive director for a period of time, including from 2015 through a portion of 2021, until you resigned.
As you may be aware, the Corporation failed to conduct annual audits pursuant to the contract with the City for the six-year period beginning with fiscal year 2015-2016 through 2020-2021. The Corporation, at the City’s insistence, retained Anderson, Lucas, Somerville & Borges, LLP to conduct an audit of the Corporation’s finances during the afore mentioned six (6) year period. This audit is now complete, and the findings of the audit have been shared with the City.
The auditor found, generally, that the Corporation lacked adequate financial controls and managerial oversight during the six (6) years under audit. One area of particular concern—and the reason for this letter—is the auditor’s finding that you received a significant overpayment of compensation in the aggregate gross amount of $9,656.02 from the Corporation, itemized as follows:
May 20, 2022
Date of Payment Amount
June 30, 2015 $ 1,215.02
July 1, 2020 $ 4,000.00
November 1, 2020 $ 3,000.00
November 23, 2020 $ 1,000.00
July 31, 2021 $ 405.00
From our own review of the financial records of the Corporation, we see that during calendar year 2015, you received hourly compensation in the amount of $1,251.02, in addition to your annual salary of $42,953.43. We see that during calendar year 2020, you received vacation pay of $6,000 and sick pay of $2,000, in addition to your salary of $49,251.95. We also see that during calendar year 2021, you received vacation pay of $310 and sick pay of $95, in addition to your partial year salary of $29,000. These figures match the auditor’s listing of “overpayments” to you during the same period.
We are aware that the Corporation, which was your employer during all times relevant, sent you a letter dated February 27, 2022, in which the Corporation’s president wrote, “After consideration and review by the auditor and an attorney, we do not believe there was any deliberate misuse of FBID funds.” We understand that the Corporation was aware, at the time it sent this letter, of the auditor’s findings with regard to the abovereferenced payments.
The City is not yet able to opine as to whether the overpayments resulted from a deliberate misuse of FBID funds or whether the payments were a result of some other cause or circumstance. Regardless, as these are public funds, the City has an obligation to see that the public is made whole, if, in fact, the auditor is correct in finding you received $9,656.02 in overpayments.
Accordingly, the purpose of this letter is to notify you of the auditor’s findings regarding the above-described payments and provide you the opportunity to repay any amount you concur represents an overpayment of compensation during your employment. If you are so inclined, I ask that you contact me prior to June 2, 20222, to let me know your intentions. If you disagree with the auditor’s findings, you are encouraged to provide an explanation.
On June 6, 2022, City staff will be providing a report to the City Council on the audit, the significant findings, and the reasons why the contract between the City and the Corporation is being terminated. We hope to report that you have voluntarily agreed to repay the overpayments after being notified of the same.
May 20, 2022
Thank you for your attention to this correspondence. We look forward to your response.
Respectfully,
Ryan T. Plotz
CC: City Manager
THE MITCHELL LAW FIRM, LLP
CLIFFORD B. MITCHELL (1927 - 2010)
PAUL A BRISSO*
NANCY K DELANEY*
RUSSELL S GANS
NICHOLAS R KLOEPPEL
RYAN T PLOTZ
AMY A HUNT
KAREN J ROEBUCK, Senior Associate
ATTORNEYS AT LAW
426 FIRST STREET
EUREKA, CALIFORNIA 95501
www.mitchelllawfirm.com
Established 1915
TELEPHONE (707) 443-5643
FACSIMILE (707) 444-9586
P.O. DRAWER 1008
EUREKA, CA 95502
WILLIAM F. MITCHELL (Retired)
JOHN M. VRIEZE (Retired)
EMERY F. MITCHELL (1896 - 1991)
WALTER J. CARTER (1949 – 1993)
R.C. DEDEKAM (1929 – 2011)
* Of Counsel
June 6, 2022
Dianna Rios
RE: Fortuna Business Improvement District
Dear Ms. Rios:
Thank you for your letter dated May 27, 2022. By way of your letter, you requested evidence of any alleged overpayments made by the Fortuna Business Improvement Corporation to you during the period of your employment as the Executive Director.
Attached is the summary and supporting documents provided by the Auditor to support the Auditor’s finding that overpayments were made.
Thank you for your further consideration and review.
Respectfully,
Ryan T. Plotz
CC: City Manager
THE MITCHELL LAW FIRM, LLP
CLIFFORD B. MITCHELL (1927 - 2010)
PAUL A BRISSO*
NANCY K DELANEY*
RUSSELL S GANS
NICHOLAS R KLOEPPEL
RYAN T PLOTZ
AMY A HUNT
KAREN J ROEBUCK, Senior Associate
ATTORNEYS AT LAW
426 FIRST STREET
EUREKA, CALIFORNIA 95501
www.mitchelllawfirm.com
Established 1915
TELEPHONE (707) 443-5643
FACSIMILE (707) 444-9586
P.O. DRAWER 1008
EUREKA, CA 95502
WILLIAM F. MITCHELL (Retired)
JOHN M. VRIEZE (Retired)
EMERY F. MITCHELL (1896 - 1991)
WALTER J. CARTER (1949 – 1993)
R.C. DEDEKAM (1929 – 2011)
* Of Counsel
July 5, 2022
Via USPS Certified Mail
Dianna Rios
RE: Fortuna Business Improvement District
Dear Ms. Rios:
Thank you for your letter dated June 16, 2022, in which you state that you “still do not believe the Fortuna Business Improvement Corporation overpaid [you]” during your tenure as the Executive Director. Your letter follows my prior letter in which I enclosed the Auditor’s documentation upon which she based her conclusion that you received overpayments in the amount of $9,656.02, itemized as follows:
Date of Payment Amount
June 30, 2015 $ 1,215.02
July 1, 2020 $ 4,000.00
November 1, 2020 $ 3,000.00
November 23, 2020 $ 1,000.00
July 31, 2021 $ 405.00
You conclude your letter with an apparent acknowledgement that you received the abovelisted payments, but reason that “proof of payment is not evidence of an overpayment.” You further quote from Emily Hobelmann’s letter to you in which she states that “we do not believe there was any deliberate misuse of FBID funds.” The City is due to provide a report to the Council on any lose ends arising from its termination of the FBID contract, one of which remains the issue of the overpayments found by the Auditor. While I know you disagree with the Auditor’s conclusions, you July 5, 2022
have yet to provide an explanation as to why the above-listed payments, which were in addition to your annual salary, were proper. So that I have your position and can provide your explanation to the Council, would you please explain the basis for the abovepayments and why, during calendar year 2020, you received $2,000 in sick pay and $6,000 in vacation pay, which amounts appear to be in addition to your salary? As mentioned previously, the City is relying upon the findings of the Auditor and the documents provided. As you were the sole person in charge of handling payroll for the Corporation and given the lack of any FBID Board minutes approving the abovereferenced payments, your explanation is critical for the Council’s consideration. At this point, all the Council has is the Auditor’s conclusions.
Thank you for your attention to this correspondence. We look forward to your response.
Respectfully,
Ryan T. Plotz
CC: City Manager
City Manager’s Report
STAFF REPORT
City Manager's Report
DATE: September 6, 2022
TO: Honorable Mayor and City Councilmembers
FROM: Merritt Perry, City Manager
1. Upcoming Council Meeting Dates
*Special Meeting/Workshop
Monday, September 19, 2022
6:00 p.m.
Regular City Council Meeting
Council Chambers at City Hall
Monday, October 3, 2022
6:00 p.m.
Regular City Council Meeting
Council Chambers at City Hall
2. Upcoming Planning Commission Meeting Dates
Tuesday, September 27, 2022
6:00 p.m.
Regular Planning Commission Meeting
Council Chambers at City Hall
3. Upcoming Measure E Meeting Dates
Tuesday, September 20, 2022
5:30 p.m.
Regular Measure E Meeting
Council Chambers at City Hall
4. Upcoming Rohner Community Recreation and Park District (RCRPD) Meeting Dates
CANCELLED
Wednesday, September 7, 2022
2:30 p.m.
Regular RCRPD Meeting
Council Chambers at City Hall
5. Brief Written Report
City Manager will be at the CalCities Annual Conference from 9/7- 9/9 and Aaron Felmlee will be Acting City Manager during that time.
Staff had advertised for the part-time FBID staff position and advisory committee members.
Staff have transmitted written comments on Police Facility to Whitchurch Engineering and they are working on responding to comments on the building permit submittal. Staff are close to completing an overview of the specific plan for the former Palco Mill Site and will be scheduling meetings in the near future to solicit input from key stakeholders that own property on or near the mill site. Staff are still working on a draft solid waste franchise agreement to bring to a future Council workshop for consideration. The draft franchise agreement will replace the current franchise agreement executed in 1998 and incorporate needed provisions to comply with SB 1383.