8/4/2022
1 RiversideCA.gov
1 RiversideCA.gov
UPDATE - INVESTIGATE THE CITY OF RIVERSIDE
PARTICIPATION IN THE SOUTHERN
CALIFORNIA PUBLIC POWER AUTHORITY
City Council
August 16, 2022
City Manager’s Office
RiversideCA.gov
2 BACKGROUND
Finance
Committee
March 13, 2019
August 21, 2019
RFP No.
1963 issued
Professional
Consultant
Agreement
Awarded
June 30, 2020
August 24, 2020
Board of Public
Utilities
approval
First
Amendment
Approved
March 23, 2021
December 1, 2021
ICGC Draft
Report
Review
City Council
Request for an
SCPPA
Overview
December 7, 2021
June 21, 2022
Final Report
Review
1 2
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2 RiversideCA.gov
3 To effectively identify services and costs associated with investigating the 18 assertions, each assertion was
assigned to one of six categories:
DISCUSSION
• Forensic Accounting
• Criminal Allegation
• Previously
Investigated/Reviewed
• Outside Counsel
Recommended
• Insufficient Information
• SCPPA Request
RiversideCA.gov
4 Services that may be rendered by a forensic accounting firm such as Eide Bailly, LLC. Due to costs associated with bringing on a new vendor, it is recommended that any forensic accounting services be completed by Eide Bailly, LLC through contract amendment.
FORENSIC ACCOUNTING
Item Respondent's Assertions Estimated Fees
1 The City Council was not approving energy efficiency contracts prior to 2017. The signatures were actually being provided by SCPPA.
$ 10,000
6 Most of these other types of services ar e being inappropriately billed through the Palo Verde Contract. $ 15,000 11 Internships were provided to the children of two in dividuals associated with Riverside and SCPPA without the internships being posted to the public and interviews conducted. These interns hardly ever showed up to work.
$ 30,000
16 Lime Energy was charging $2,000 to change light bulbs at businesses. $ 15,000 17 Was SCPPA performing a bidding process every year of just at the beginning of the contract or not at all?
$ 15,000
18 You may want to consider adding to the scope. It would be good for the City to see overhead at SCPPA and how it's grown since 1980. My guess is we will see rapid expansion of SCPPA overhead and binning due to increased scope since the time of the charter. It would show why SCPPA would go along with it, since it's like building kingdoms, in that the more people the CEO can say is in the organization and he is overseeing, the more compensation he gets.
$ 20,000
3 4
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3 RiversideCA.gov
5 Any allegations of crimes have been referred to the District Attorney’s Office as it falls within the jurisdiction of the investigative agency – no further action is required for items assigned to this category.
CRIMINAL ALLEGATION
Item Respondent's Assertions Estimated
Fees
2 The former City Attorney was allowing fraud to occur by not speaking out against the spending limits. This process was shut down in 2016/2017, which is a de facto admittance. N/A 12 The prior audit was forged by a particular individual. N/A 13 The LADWP investigation has revealed that former General Manager was using family members' contact information as runners. Not sure if this was happening at RPU.
N/A
RiversideCA.gov
6 Assertions that have been previously investigated or reviewed are assigned to this category. No further action is required.
PREVIOUSLY INVESTIGATED/REVIEWED
Item Respondent's Assertions Estimated
Fees
3 City Finance was not doing a proper review of the payments before they were going out. This was verified by the current CFO, who also postulated that RPU Finance was rubber stamping approvals of invoices. It's not clear that RPU Finance was even reviewing the resolutions that were listed on the invoice and payment documents.
N/A
4 The SCPPA JPA allows for power and transmission projects only. The fact it doesn't specifically disallow other services does not mean it allows those services to be procured. A former City Attorney will confirm what I am saying is true. The current City Manager agrees that energy efficiency, internship, and lobbying programs are not allowed.
N/A
10 The author of a 2019 report questions why human resources investigations are being run through SCPPA.
N/A
5 6
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4 RiversideCA.gov
7 PREVIOUSLY INVESTIGATED/REVIEWED
Item Respondent's Assertions Estimated
Fees
3 City Finance was not doing a proper review of the payments before they were going out. This was verified by the current CFO, who also postulated that RPU Finance was rubber stamping approvals of invoices. It's not clear that RPU Finance was even reviewing the resolutions that were listed on the invoice and payment documents.
N/A
• Internal Audit completed June 2018 - reviewed financial transactions for FY 2014, 2015, and 2016. Audit resulted in no findings.
• External RPU Financial and Performance Review completed on May 20, 2016 by Baker Tilly.
Audit resulted in no findings.
• External Financial and Performance Review completed on June 27, 2016 by Matrix Consulting Group. Audit resulted in no findings.
RiversideCA.gov
8 PREVIOUSLY INVESTIGATED/REVIEWED
Item Respondent's Assertions Estimated
Fees
4 The SCPPA JPA allows for power and transmission projects only. The fact it doesn't specifically disallow other services does not mean it allows those services to be procured. A former City Attorney will confirm what I am saying is true. The current City Manager agrees that energy efficiency, internship, and lobbying programs are not allowed.
N/A• A legal written opinion related to the SCPPA Joint Powers Agreement was completed by Norton Rose Fulbright on April 17, 2019 and included in the January 11, 2022 City Council SCPPA Report.
7 8
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5 RiversideCA.gov
9 PREVIOUSLY INVESTIGATED/REVIEWED
Item Respondent's Assertions Estimated Fees
10 The author of a 2019 report questions why human resources investigations are being run through SCPPA.
N/A
• Page 15 of the final Eide Bailly report present to City Council on June 21, 2022 addresses this assertion.
RiversideCA.gov
10 In an effort to maintain transparency, any legal opinions sought related to Respondent assertions are recommended to be outsourced to outside Counsel for review. Due to the timeline of the investigation, findings may be subject to the statute of limitations.
OUTSIDE COUNSEL
Item Respondent's Assertions Estimated
Fees
5 Outside counsel, or legal opinions prior to 2015, when I brought up this issue, should have been obtained. After that time any staff reports and legal opinions would be worthless since it was after my accusation and these subsequent opinions would be covering up for past actions. $20,000
9 10
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6 RiversideCA.gov
11 Assertions assigned to this category contain insufficient information to identify next steps. Without complete information a recommendation cannot be made. Respondent was invited to provided further insight. No insight was provided at the time of this report – no further action is required for items assigned to this category.
INSUFFICIENT INFORMATION
Item Respondent's Assertions Estimated Fees
7 Just because something is in the City's budget doesn't mean it's okay if it's still not allowed under the SCPPA JPA. For instance, in that case, the former General Manager could have done anything as long as it was in the budget. Also, the budgets may have carve-outs for SCPPA-specific projects.
N/A
8 Staff reports were manipulated by the former General Manager and former City Attorney. Just because the staff reports were received and filed, does not mean that what they were doing was okay or that the City or Council agreed with what was in them. In addition, there should be a RPU Board Memo stating that it approved it before it went to City Council. There is no sign of proof from the RPU Board.
N/A
9 The notion that energy efficiency is a generation resource is "garbage". Energy efficiency is not a generation resource, it's not a power plant, it's not a transmission line. N/A 14 I was told MBMC was called in to write policy on procurement systems related to resource adequacy, which is not true. N/A
RiversideCA.gov
12 It is recommended that a formal request to audit SCPPA related assertions assigned to this category be requested by the RPU Manager at a future SCPPA board meeting.
SCPPA REQUEST
Item Respondent's Assertions Estimated
Fees
15 Any SCPPA rate that is more than $0.19 per kilowatt is overpriced. N/A • RPU General Manager may make a formal request to SCPPA to conduct a rates study. 11 12
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7 RiversideCA.gov
13 Strategic Priority No. 5 – High Performing Government Goal No. 5.3 – Enhance communication and collaboration with community members to improve transparency, build public trust and encourage shared decision-making.
Cross-Cutting Threads
STRATEGIC PLAN ALIGNMENT
RiversideCA.gov
14 That the City Council:
1. Receive and discuss expenditures and services proposed to investigate Respondent’s assertions related to the City of Riverside’s participation in the Southern California Public Power Authority;
2. Determine whether to retain forensic accounting services, reporting directly to City Council, to investigate Respondent’s assertions within a date range as determined by City Council for an estimated cost of $105,000;
3. Determine whether to retain outside counsel, reporting directly to City Council, to investigate Respondent’s assertions within a date range as determined by City Council for an estimated cost of $20,000; and
4. Provide direction to the City Attorney and City Manager on discussion items identified in this report.
RECOMMENDATIONS
13 14