FEMA may want Paso Robles earthquake monies returned

October 13, 2011


The city of Paso Robles is getting a double wave of bad financial news — not only is the city already facing a $2.1 million budget shortfall, but the feds may be looking for the return of more than $1 million in disaster relief money.

Nearly eight years after the San Simeon Earthquake caused a sulfur springs to erupt in the City Hall parking lot, the Office of the Inspector General (OIG) is recommending that the Federal Emergency Management Agency (FEMA) ask the city to return $1.1 million in relief funds.

The OIG recently completed an audit of four large projects and two small projects resulting from the earthquake, totaling $5.8 million. Federal inspectors concluded that the city did not get competitive bids, and as a result overpaid a local engineering firm for design and engineering work.

“City officials awarded these contracts non-competitively to the same contractor they employed before the disaster,” the OIG says in their Sept. 13 audit report. “Full and open competition increases the opportunity for obtaining reasonable pricing from the most qualified contractors and allows the opportunity for minority firms, women’s business enterprises, and labor surplus area firms to participate in federally funded work.

“In addition, full and open competition helps discourage and prevent favoritism, collusion, fraud, waste, and abuse.”

City officials signed a contract with Michael Nunley of Boyle Engineering to provide design and engineering services through Boyle Engineering, Wallace Engineering and Furgo West. City officials claim they selected Boyle Engineering in full compliance with federal and state laws.

“The City acted in full consistency with federal and state rules, the city’s purchasing procedures, and in close consultation and agreement with both CalEMA and FEMA officials,” said Meg Williamson, Paso Robles assistant city manager.

Nevertheless, FEMA requires that contracts must be of “reasonable cost and must comply with federal, state, and local procurement standards.” FEMA rules say engineering and design services should run no more than 12.4 percent of construction costs.

City officials shelled out as much as 63 percent of construction costs for engineering and design.

In addition to questioning approximately $1 million for non-bid engineering work, the OIG wants $100,000 back for ineligible work and unsupported costs.

The OIG is recommending FEMA ask for $43,125 in construction management costs for library improvements to be returned because it was not part of “the approved scope of work.”  City officials disagreed with the OIG investigators finding, but said they understood its position, the report says.

However, city officials agreed with the auditor that $51,882 in unsupported costs the OIG says occurred because of accounting errors and additional funds paid to an engineering firm without any details of the charges relating to disaster work should be returned, the report says.

FEMA has until Dec. 12 to provide a written response to the OIG’s audit. If FEMA agrees with the OIG that $1,110,952 in relief funds should be returned, the city will be provided a chance to respond.

“The city will have the opportunity to respond formally to FEMA before any determination is made by them,” Willamson said.  “The city will work through CalEMA to respond, if necessary, to the audit findings.”

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For all the engineering students Cal Poly cranks out that get hired to work for Motorola and Hewlitt Packard before they even graduate, you’d think they’d leave us a structural engineer or two to keep this place from being just a “one-horse” (=one engineer) town. Now that I’ve joined the bitch-fest a bit late in the game, I have to give credit where credit is due….After someone turned me onto the SSLOCSD Web site, I found more information about our local residential water and sewer projects than any other community government Web site. If I want to know what Oceano is doing with our money, I don’t go to the OCSD–the lights are on, but everybody’s out to lunch–I go to the SSLOCSD Web site. And, of course, if I need some direction about where to look for the trail, I go to the bloggers in the know at calcoastnews….Hey, Mary Malone! Is your real name Brenda Starr?…

No, that’s Karen’s real name =)

Oceano has yet to cough ups its own records related to FEMA funding it received to “repair and maintain infrastructure” damaged by the 2003 Paso earthquake. The District has been unable to provide invoices for purchases of replacement sewer, water, or gas piping; and other materials and equipment needed to fix any damage that may have occured to those utilities. Problem is, there is no record of work done by project, the days, hours and personnel who worked on the project; when a project started or was completed; no time cards identifying by employee and contractor or agency, the days and hours worked; or the location where the work occured. I asked for this several months ago. Months later, a general description of hours worked by employee was said to be available, however, these records were never produced. When I started to go back into the older Oceano public records of agenda documents, Thomas Geaslen, our “new” general manager, ordered Carol Ann Pardo (according to Pardo,) to remove all the public records in the bookcase to the right of the front counter, and old agenda documents in the little room off to the left of the District’s office. I came into the office while Carol Ann was on the phone to “Steve” and heard her ask him if he “wanted any of the records” because they “were going to throw them out.” When I asked to make a list of titles of the documents they were going to discard before the boxes left the office, Carol Ann refused to provide access to these records. When Thomas Geaslen came out of his office, Carol Ann stated that “I was making trouble.” Geaslen flatly refused to provide access. This occurred during the grand jury’s investigation of the SSLOCSD. When Geaslen threatened to have me thrown out of the office by the sheriffs, I went to the Oceano substation and asked for an officer to keep the peace. Just as an officer came out to speak with me, he got a call on his radio to come back into the station. The call to refuse assistance was from Sheriff’s admin., I assume Kenneth Conway. Before he returned to the office, he accompanied me to the office. I pointed out the boxes and stated that I wanted to do research relevant to the grand jury investigation. Geaslen immediately stated that he was not removing the boxes or intending to discard the documents. He stated he was “only putting them in storage.” That was in August. I have been denied access to those records, which were removed and probably destroyed, since then. Today, October 20, 2011, these records have still been refused despite my written request to view the documents BEFORE they were “put in storage.” Documents included the alleged “special procedure” created by Mitch Cooney in 2001 which permitted the OCSD Directors to appoint a director with only two votes instead of the statutorily required three votes.

From the SSLOCSD agenda package, Jan 05 2005.

San Simeon Earthquake _FEMA Project Update.

Administrator Wallace presented a report with regards to the San Simeon Earthquake FEMA project. He stated that the District has 9 separate projects under the FEMA 1505 fund. Project completion since the SS quake included the Final Clarifier baffle repair,asphalt repairs and maint building block repairs. In addition, repairs to damaged electrical conduits and concrete throughout the plant including the FFR ribs are now completed. The video inspection of the sewer trunk collection lines is also complete and because it revealed no significant damage caused by the quake, no funding was available for this project,except for minor admin costs.

The paragraph below is directly off Wallace’s website as they toot their horn for more work they claimed to have performed.

“As a result of the 2003 San Simeon Earthquake, the aging wastewater treatment plant operated by the South San Luis Obispo County Sanitation District was severely damaged. Wallace Group provided a wide range of mechanical engineering, civil engineering, planning and construction inspection services to repair and upgrade the entire facility. As a result of the earthquake, the center well baffles in the final clarifier were destroyed. We coordinated the inspection of the clarifier while on line with a diver and developed methods to repair and replace the baffles and other components that were damaged by the earthquake. All work was performed under time-critical emergency conditions”.

Think competitive bidding took place for the necessary engineering,management etc Wallace admits to doing? hell no, Wallace & gang knows whats best for SLO county so they so graciously did it for us without wasting precious dollars putting it out for competitive bid.

RR, do you know if all downstream contracts (i.e., subcontractors who contracted from the initial company who won the bid…if there was a bid, which there wasn’t in this case) require bidding out, too?

Perhaps this is an issue that, because the original PR contract with FEMA went to Boyle engineering without bidding out, that the Boyle contract, and all contracts originating from the Boyle contract, are considered illegally awarded by not sending them out to bid?

If I am not mistaken any public project over a certain amount (and I think I remember the number being $25,000) must be put out to bid with at least three bids…

There has been a long history of these shenanigans going on county wide. Atown and the city of SLO do not have a monopoly on this type of behavior…

Karen Velie last Friday, on Bill Benica’s “Talk is Cheap” radio show (1340 KYNS) said she thinks the feds, in the future, will be coming after FEMA’s less-than-ethical funding recipients on a larger scale.

In case y’all don’t know, Velie is on Benica’s show Fridays, Noon to 2 PM. I hardly ever listened to the show before, but now I try to make it a point to listen in on Fridays.


Im not sure on the exact details, however the officials at FEMA have been contacted and documentation provided to them for review.

Mary, if you cut and paste the below headliner a PFD document from FEMA relatede to Paso’s errors should come up. Its the FEMA audit of Paso where It states Paso did not use “full and open competition” for construction management,engineering,design services. This may mean Wallace is also at fault for his work at the San Dist as they DID NOT use a “full and open competition” process.

FEMA Public Assistance Grant Funds Awarded to City of Paso Robles …

Yowzer! Thanks so much for the link, and for your drawing the lines from FEMA auditing PR for not getting competitive bids, and John Wallace/SSLOCSD (also did not get competitive bidding for FEMA work) being at risk for FEMA auditing.

I just discovered something very interesting. Prior to accepting the position in Nipomo, Mike Lebrun was employed by none other than the Wallace Group. If he (Lebrun) had any input whatsoever into giving work to the Wallace Group there is something seriously wrong here and a full investigation needs to take place.

Don’t get me wrong, but posting comments on this website will most likely accomplish very little. What needs to happen is the citizens of Nipomo need to show up at the Board Meetings and demand an investigation.

Same goes for Grover, Arroyo and Oceano in regards to Wallaces dealings with the Oceano San Dist.

The public needs to show up en masse at the Grover and Arroyo council meetings and demand that Nicolls and Ferraro be removed from the San Dist board of directors. It’s obvious they don’t have the publics best interest in mind and are only trying to cover up the misdealings of the Wallace.

Show up people! Make your voice heard to the politicians that you elected and let them know they work for us!

Interesting about Lebrun. What is your source for that information?

Prior to Cambria CSD’s Tammy Rudock being run out of town, she was the highest paid CSD general manager, and Lebrun (as an interim GM for Nipomo CSD) was the second highest paid CSD GM in county CSDs.. With Rudock being gone from the picture, it appears Lebrun is now the highest paid county GM. He makes $134,000 a year plus benefits and perks.

It’s clear that Nipomo CSD has not done as well as before he became GM. The $600,000 budget deficit they have carried over from the last fiscal year), based on the records I could find, is the first time in years that the district has shown a deficit.

From Lebrun’s own comments to the press, it appears clear that the shockingly large water rate increase on the district’s residential customers will go, in part, to pay off that deficit.

The district has large projects in progress now, and they need proven, qualified leadership.

If he worked for Wallace in the past, it just adds another layer of questions about why in the world the Nipomo CSD’ board of directors made him their general manager.

Rallyraid, Thank-you for the cite to the Jan. 5, 2005, SSLOCSD agenda package. It would have taken me a few weeks of full-time searching to narrow down the specific agenda containing this information. Even though my Oceano research involves an audit of money given to Oceano for damage in that community during the 2003 Paso Robles earthquake, the documents found in the Jan. 5, SSLOCSD agenda documents will help me understand what types of information to look for, where to look for it, and cites to more specific details related to cost, labor and materials. And yes, whether the project bidding process conformed to the OMB’s bidding regulations, is one of the most important factors to consider when trying to account for where the money went and how it was spent.

As for Oceano, our “new general manager,” has “done away with the OCSD agenda packages,” so we no longer have access to the documents referenced by the agenda items. Nor are there paper copies available for inspection and copying at the time of the OCSD meetings, a direct violation of the Public Records Act.

WTF. Has he been reported?

Just about the time you think Oceano can’t get a bigger bonehead to be its GM, they up and surprise us yet again.

If City Manager Jim App were in charge of a company, he would’ve been fired loooong ago. This FEMA debacle is just the latest case of gross mismanagement in App’s not-so-illustrious career in Paso.

Hmmm? So the city of Paso Robles did NOT get “competitive bids” for their “project”…How is this different from the County of San Luis Obispo NOT getting ” COMPETITIVE BIDS” for the Los Osos sewer “project”…Why is it ok for the 5,000 homeowners in the “prohabition zone” to pay for the ENTIRE COST OF this overpriced project? We need the AG, NOW. Something stinks here & it’s NOT coming from the septic systems….

I may be out of my depth, Los Osos wise, but I think we are talking about two different projects which probably have two different sets of requirements and accounting procedures.

The PR contract for funding was through FEMA, which has its own set of requirements and procedures. Paavo’s Los Osos Sewer Vision contracts are being run by the county, and I don’t know what kind of oversight is provided for the county level.

ITA about the state AG, controller and auditor being contacted to see who wants first dibs. The state auditor has a new batch of powers, recently signed into law by Governor Brown, but that doesn’t start until 1/1/2012.

However, one of the powers the auditor now has is to contact the offices of the AG and controller for information and leads on government entities that may be involved in illegal accounting and investment scams.

I don’t live in Los Osos, but I, in general, have a fierce aversion to fraud, graft and cronyism at any level. So I would encourage you and other Los Osos peeps to contact each of the three above-named state officials, and remember it’s the person that goes back five times who gets what they want. So you may have to be diligent and relentless in trying to get them interested in it.

If you come across anything that people outside of Los Osos can do, post it here at least.