EXECUTING A CONTRACT
WITH THE WRONG ENTITY
AND AWARDING FUNDING
WITHOUT WRITTEN
AGREEMENTS
COMPROMISED THE CITY’S
ABILITY TO AUDIT WIDE
OPEN WALLS AND DAVID
SOBON EVENTS
Jorge Oseguera, City Auditor
Farishta Ahrary, Principal Fiscal Policy Analyst
Chevelle Jackson, Fiscal Policy Analyst
July 2022
BACKGROUND
Source: CapRadio, 2018
https://www.capradio.org/articles/2018/08/20/listen-artist- shepard-faireys-in-depth-discussion-of-his-new-johnny-cash- mural-in-sacramento/
May 2020: Received allegation that third
-
party
vendors Wide Open Walls and David
Sobon
Events, Inc. had mismanaged, and mishandled
funds provided by the City.
Representatives of WOW and DSE disputed the
allegations.
OBJECTIVE, SCOPE AND METHODOLOGY
Assess the City’s contracts
with Wide Open Walls and
David Sobon Events and
determine whether City
funds provided to them
were appropriately spent.
CITY PAYMENTS TO DAVID
SOBON EVENTS, INC. (DSE)
David Sobon Events, Inc.
Type of Payment Contract Number Year Amount Description Grant C2018-0165 2018 $50,000 City funds were to be used for expenses related to advertising, public relations,
and equipment rental for Wide Open
Walls Mural Festival.
Grant PRC000516 2019 $50,000* City funds were to be used for expenses related to advertising, public relations,
and equipment rental for Wide Open
Walls Mural Festival.
CARES Small Business
Recovery Loan
C2020-2130 2020 $5,000 Forgivable loan to small businesses to mitigate the effects of the COVID-19
public health emergency.
Total $105,000
*Although this check was made out to DSE, the payment was deposited into WOW’s bank account and spent by WOW.
CITY PAYMENTS TO WIDE
OPEN WALLS (WOW)
Wide Open Walls
Type of Payment Contract Number Year Amount Description Special Event Grant C2018-1254 2018 $5,094* Grant used to defray the cost of fees assessed to WOW for services provided by the City's Police,
Parking, and Fire Departments and Private Security
related to the Wide Open Walls Block Party event.
Sponsorship No Contract Issued 2018 $25,000 One-time event sponsorship under the North Sacramento Economic Development Investment
Initiative.
Sponsorship No Contract Issued 2019 $25,000 Sponsorship for the Del Paso mural project under the North Sacramento Economic Development
Investment Initiative.
CARES Small Business
Recovery Loan
C2020-2131 2020 $5,000 Forgivable loan to small businesses to mitigate the effects of the COVID-19 public health emergency.
Total $60,094
SCOPE LIMITATION
The City did not have a written agreement with
WOW, the actual service provider for funds provided
to DSE or written agreements for the WOW
sponsorships.
As a result, we could not audit WOW or DSE’s
financial records and do not express an
opinion on the appropriate use of City funds
by either WOW or DSE.
FINDING 1: EXECUTING
A CONTRACT WITH THE
WRONG ENTITY AND
AWARDING FUNDING
WITHOUT WRITTEN
AGREEMENTS
COMPROMISED THE
CITY’S ABILITY TO
AUDIT WIDE OPEN
WALLS AND DAVID
SOBON EVENTS
• The City executed a
contract with DSE, when
WOW was the actual
service provider
• The City provided
WOW with two $25,000
awards to fund the Del
Paso mural project
without written
agreements
THE CITY
EXECUTED A
CONTRACT WITH
DSE, WHEN WOW
WAS THE ACTUAL
SERVICE PROVIDER
DSE receives 2019
City funds for Wide
Open Walls Festival
WOW non-profit was
created in 2018
Funds issued to DSE
Deposited in WOW’s
account and spent by
WOW.
THE CITY PROVIDED
WOW WITH TWO
$25,000 SPONSORSHIPS
TO FUND THE DEL PASO
MURAL PROJECT
WITHOUT WRITTEN
AGREEMENTS
The City’s procurement policy
requires written agreement for
purchase of services or supplies
over $5,000.
the City had written sponsorship agreements with organizations • Sponsorship agreements with the Sacramento Kings.
Department of Parks and Recreation Community Sponsorship Initiative • “All sponsorship agreements, and all donations and sponsorships with a value of more than $500, must be memorialized in a written agreement between the City and the donor or sponsor.”
Grant Distribution Policy
• “The City shall enter into a formal grant agreement with all recipients in accordance with the City’s signing authority in place at the time of granting.”
DEL PASO MURAL PROJECT
Source: Del Paso Blvd. Partnership https://dpbpartnership.com/wide-open-walls
RECOMMENDATION
We recommend the City Manager’s Office:
Update the Grant Distribution Policy to
clarify that sponsorships should also have
written agreements documenting the
intended use of City funds, the requirement
for recipients to document the appropriate
use of funds, and expectations that such
records will be made available to assess
compliance in a timely manner.
QUESTIONS OR
COMMENTS?