Atascadero filched FEMA funds

April 2, 2012

Printery Building

By KAREN VELIE and DANIEL BLACKBURN

Prompted by a 2008 investigative report by CalCoastNews detailing how Atascadero city officials conspired to bilk taxpayers out of  millions of dollars in disaster aid, a FEMA investigation has determined the city received $8 million illicitly.

Nearly eight years after the San Simeon Earthquake damaged the Printery Building and Atascadero city hall, the Office of the Inspector General (OIG) is recommending that the Federal Emergency Management Agency (FEMA) ask the city to return $8 million in relief funds because of issues with conflict of interest, unsupported requests for monies, and expenditures for a building the city fraudulently called an active youth center.

Following the 2003 San Simeon Earthquake, Atascadero city officials conspired to bilk taxpayers out of millions in disaster aid to construct a replacement youth center under the guise the previous center had been rendered unsafe during the earthquake.

In an April 28, 2004 letter to the Governor’s Office of Emergency Services (OES), city staff requested an “improved project” to build a replacement youth center. The city went on to say, “The youth center is currently located in the … Printery Building that was severely damaged during the San Simeon Earthquake,” the state agency acknowledged the city’s claim in a May 12, 2005 letter to FEMA officials.

However, at the time of the quake, the Printery Building, located at 6351 Olmeda Avenue, was not functioning as a youth center, but as a meeting hall for the Freemasons. The city’s youth center then stood approximately a half-mile away, at 5493 Traffic Way.

Atascadero Mayor Tom O’Malley, Councilman Jerry Clay, and San Luis Obispo County Supervisor Jim Patterson repudiated CalCoastNews in 2008, claiming CCN reports about the illicit request for FEMA funds were untrue, or that the results justified the fraud.

Asked at the time if he was aware of the youth center deception by the city, Councilman Jerry Clay replied, “I didn’t know if both buildings were being used or just what. But it’s pretty neat; we have both facilities now, a community center and a skate park.”

So how did city officials pull this off? The OIG report says that city officials provided FEMA with inaccurate information by claiming that the Printery Building was the city’s youth center, and that the city had planned to continue using the building.

However, city records  show the city had moved the youth center to a building a few blocks away and was in the process of selling the Printery Building to former North County developer Kelly Gearhart.

Youth center number one began to materialize in 1994, when owners of the historic Printery Building, the Freemasons, donated it to the city – with the agreement that the city would maintain and renovate the building into a youth center.

Three years later, the still-structurally unsound facility opened its doors to the city’s youth. Immediate concerns surfaced regarding the structure’s condition and the cost of improvements. Following an accident in 1999 resulting in a claim against the city, the council opted to find new digs for the city’s after-school programs.

In 2001, the Freemasons asked the city to return the building due to the city’s inability to abide by its contract, according to the minutes of numerous city council meetings. In August 2003, the city council agreed, with the understanding that Gearhart would be the eventual owner. (Four months later, when the quake hit, the property was in the final days of escrow.)

Shortly after the city’s abandonment of youth center number one, city officials elected to purchase and transform a one-time animal feed storage building into youth center number two. To fund the conversion, officials used state grants and per capita funds awarded to the city in 2001. (Following the quake, the city morphed the non-insulated aluminum building into an indoor skate park.)

City officials agreed with the OIG’s findings that the Printery Building was not fully occupied at the time of the quake.

“City officials agreed that the building was not fully occupied at the time of the earthquake and that there was no intent to reoccupy,” the OIG report says.  “FEMA was unaware that a portion of the building was not in active use at the time of the earthquake.”

Investigators also found numerous unlawful acts in the city’s use of funds to transform a former bowling alley into a temporary city hall building while the former city hall was slated to be renovated. In addition, city officials blended their redevelopment staff and city staff, creating a conflict of interest.

“This transaction was less-than-arms-length because the same city officials with responsibility to manage FEMA’s disaster assistance funding were executive officers of the city’s redevelopment agency, thus creating a conflict of interest,” the report said. “As a result of this overlap, the transaction lacked independence because City officials were able to substantially influence or control the actions associated with the transaction. Costs incurred under less-than-arms-length transactions are eligible for federal disaster assistance funding only on a limited basis.”

City officials disagree with the investigators’ findings “on the basis that FEMA’s funding of the second temporary city hall implied concurrence with their action.”

FEMA has until June 20 to provide a written response to the OIG’s audit. If FEMA agrees with the OIG that $8 million in relief funds should be returned, the city will then be provided a chance to respond.

See the original 2008 article here.

 

FEMA Public assistance grants awarded to City of Atascadero, California.

Update: added document and link to original article.


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baskinrobins

Did you know:


When the earthquake happen, the City moved into the old centennial plaza and FEMA paid the rent.


When the city condemned the bowling alley because the City’s creek eroded the banks, Dr Harris sued and all of of sudden the building was not only ok, but it was so ok that the RDA agreed to buy it.


When the RDA agreed to buy the building, Colony Square got approved.


When Colony Square got approved, the city moved into the bowling alley.


When the city moved into the bowling alley, they had the pay the RDA (themselves) rent.


When the city needs rent, FEMA pays the rent.


When City Hall is fixed, the city has to move back in, or FEMA wants the rent back.


But that is ok ….


Because … the City bought an old bowling alley from Dr. Harrison, approved his development plans, guaranteed his loans and he built a pretty new building and parking lot in front of the RDA bowling alley, which greatly increased its value.


So ….


When the City moves back to city hall, the RDA has to sell the bowling alley and it is worth substantially more with a new development in front of it.


Brilliant. And. Conflict.


You want to know why they supported Colony Square with loan backing …. because the RDA is part of Colony Square. They signed the map and agreements as owners.


Who leads the RDA …. ?


Cindy

Do you really think they planned on moving back into that 10,000 sq’ building when they had spread themselves out into those lovely renovated (just for them) 31,000 sq’ of luxury space and decorated to their taste?


In 2003 the economy was booming and no doubt, Wade and staff figured that if they stalled on the City Hall repairs for the next 7 years, not only would they pay off the loan on the bowling alley (and then some) with FEMA lease payments but they would have grown considerably by 2010 and could claim that the 10,000 sq’ old city hall was no longer large enough to accommodate them. Little did they know what was really coming down the road. They never planned on moving back into the real City Hall, not in my opinion.


baskinrobins

They don’t have a choice. They have to move back in or they have to repay the FEMA rent from the begining. It is in the contracts, clear as can be.


danika

No, Baskin, THEY don’t have to repay a thing…the taxpayers do. THEY have a sweet thing going, a total “win win” for them.


Cindy

So they move back in for 4-6 months, store lots of their stuff in the RDA owned city hall (don’t want to move all that stuff twice). Then they claim that they can’t function in the confined quarters of the restored 10Ksq’ city hall, they can’t fit all their records, they are having to pay storage and run back and forth to access records and blah blah blah.


6 months later, they have honored the contract by initially moving out of the bowling alley and they have now negotiated a new contract with themselves to move right back in. You’ll See.


The Gimlet Eye

Cities are synonymous with corruption.


baskinrobins

Wade McKinney and Jim Lewis need to go along with Tom Omaley and Jerry Clay. Clean house. Redo. Start over.


There are so many back room deals these guys have stick their fingers in … and they all leave the tax payers holding the bag. Some of the things I can think of:


Purchase of the bowling alley and the back room deals made with the developer to enrich his project and ultimately provide the RDA with a fat building profit while FEMA pays the rent


Coercing the property owners at and near the Walmart site into selling or playing along and ultimate working behind the scenes with Walmarts attorneys to bankrupt the other develop to get them out of the way.


Coercing the property owners around the Carlton into selling or playing along


The Adventures of Wade and Jim in Vegas on the tax payers tab


Tom Omaleys meetings and dinners and drinks with developers to “help” them through the process.


Jerry Clay meeting with the Walmart team immediately before important City Council meetings


… There are filtered campaign contributions, direction from CC to Wade and Wade to Jim and Jim to developers …. Sickening.


Cindy

“… There are filtered campaign contributions, direction from CC to Wade and Wade to Jim and Jim to developers …. ”


HUH?? Tell us more…


baskinrobins

Omaley and Wade work the strings on the puppets. The puppets go to large developers (like lets say Stuffmart) (some times in large cities like lets say Vegas) to visit and then those developers coincidentally write checks to PR firms who write checks (add have their buddies write checks) to campaigns, or the zoo, or the vets memorial, or the central coast tax payers association, or the boy scouts ……. which all help campaigns either directly or from a PR standpoint. Then guys like Jim Lewis take all the credit and advance up the social ladder and become vice-presidents of this and that (like boy scouts or their homeowners association) for all the dollars they bring in and how important they are.


Omaley and Jerry are just the successful campaigns. Don’t forget the one who weren’t elected, they get dollars too. And then there are the ones who get in the way, like the Bobs of the world.


It is all very connected. One could have an interesting night being a fly on the wall of the Omaley ice cream parlor, or the old hoovers night club in the off hours ….


Cindy

That all sounds rather odd, an extensive analysis was done on their campaign contributions by the AHA several years back. Every contributor was identified and their was nothing of the sort that you’re talking about except some funds from WM (disguised as their PR firm) Rottman and Dr Harris although the contributions were disclosed and legitimate. O’Malley did try to hide some WM/Rottman contributions by filing a late disclosure statement and the city assisted him by withholding it during two separate public records request but an insider blew the whistle and the AHA got the report. O’Malley also failed to disclose the contributions during an ex parte which was illegal but we aren’t talking about more than $2,500 if I recall and a party that WM/Rottman (can’t recall which) paid for. It wasn’t much to make a big deal about or anything like you’re suggesting.


I don’t doubt that there are some back room deals and payoffs but I think you’re confused about how it all comes to fruition. Its not in the campaign contributions.


baskinrobins

It’s not just about payoff and campaign contributions. It’s about project approvals in exchange for many things … including campaign contributions. And I am not confused. I was there for many deals.


Mike Brenler and David Broadwater think they are so smart with all their conspiracy theories, but the irony is they have not idea how right they are, just about the wrong things. Campaign contributions is such a minor part of what means anything to them. Seriously, this is Atascadero. There are much more important rewards, many of which died with bankrupted projects.


Cindy

AGREED, The big rewards are in the contracts, the deals made behind closed doors and the envelope that gets passed or the gratis home improvement upgrade you get or the ………….they do it a 1000 different ways and sometimes they slip up a little and we catch a glimpse.


“I was there for many deals.”

If you were there for many deals, why not contact CCN and fill them in on the details, or Mike Brennler or even the FBI?


godislanguage

Sounds like criminal fraud to me….how come the city attorney didn’t sign off the documents?


Property owners get screwed by all the boiler plate academic bureaucrats so we don’t build, now FEMA gravy train comes around and we get screwed again with all the overpriced, prevailing wage contractors feeding at the government trough….can’t really blame them since making a living without a pipeline into the government cash machines seems futile.


Well $8M isn’t so bad….only $750/household….at least we’ll have something to show for it.


The road to hell is paved with good intentions.


godislanguage

…its really sick that the Architectural & Engineering and Relocation expenses exceed the actual building expenses by 2 to 1.


BTW, why previous comment about it only costing $750/household is sarcasm.


SLOBIRD

Maybe that is because they did not do the bidding process and cronyism played out here to (same as Paso School). Just bring in friends, relatives, etc and charge what you want, we got the Federal bucks coming in…


Cindy

They did cheat on the bidding process but that isn’t the problem, its far worse than that. I guess you haven’t read the report yet.


It is true about the bidding though. They put the new youth center project out for bid and a local came through with the lowest bid but the guy with the highest bid got the project. The way that happened is Jim Lewis claimed that he hadn’t properly noticed the project so he had to do it again and take new bids. Miraculously, the guy with the original highest bid suddenly came in below the guy with the original lowest bid! I wonder how that happened ?


Regardless, it isn’t part of the OIG concerns.


Cindy

P.S. I should add that the same three guy’s who bid the project the first time around were the exact same three guy’s that bid the project the second time around.


JordanJ

Did you know that he eventually did get to charge according to his original highest bid? After he won as the lowest bidder in the second round, he increased the project cost by a few hundred thousand. The OIG should look into it, the Atascadero Soprano’s cheated everybody on that project, all the way around.


baskinrobins

My favorite is how the same person (an ex city employee) bids engineering projects for two separate companies at the same time. There are only a few firms the city will use and they always give those firms all the information they need to win the bid.


And if it doesn’t look legit, they alter the records to cover their rears. Oh … yeah … that guy … yeah … he bid the job originally. …. sure here it is …


The Lake park frontage job bid out to several engineers, they sent out letters to the engineers saying they were not moving forward, then went ahead with a design contract with a former city employee anyway.


The new bus stop (Transit Center) … not designed by the lowest bidder. Not even close. Like double.


The bridge to nowhere (at City Hall) … same engineer as several other slide projects around town.


If you want to do work in the city of Atascadero, find Wade, Jim and Russ and pucker up.


Nancimeek

Who was the City Attorney? I know at one time it was Robert Grigger jones, and I heard he still has influence


Cindy

Nanci, You’re so funny, NO it wasn’t Grigger Jones, he hasn’t been our city attorney for at least 20 years. He can’t be behind every dirty deal but its good that you check on him…………..often. ;)


baskinrobins

The City attorney is out of LA, Brian something or other. Call Walmart, they will give you his name, direct number, cell phone and check his schedule for you to let you know when he can meet with you.


racket

$275 per Atasacderan is what the $8 million is going to cost each man, woman and child in Atascadero. ($8 mill ÷ 29K people). That assumes 100% of the FEMA monies must be returned, and it assumes no penalties or interest.


doggin

You need to change your North County comment to San Luis Obispo, hell for that matter America.


danika

The document is an interesting read. Page 6 especially. Wade McKinney was in charge of the FEMA funds as were other city officials. It stated an obvious conflict of interest. Makes you stop and think. If those in charge of the FEMA funds can blatantly lie and spend those funds however they chose to, what do you think they are saying (lies) to the people of Atascadero when spending their tax dollar? It is beginning to look like a true “trust no one” in government in the North County.


baskinrobins

Jim Lewis – Assistant (to the) City Manger, President of the Office of Economic Development …… hmmmmmm


standup

It’s fraud, plain and simple. Punishable by jail or prison. I am so sick of these city managers screwing us over. McKinney is a piece of excrement just like his butt buddy App.


SLOBIRD

I am sick and tired of all these rigtheous idiots sitting on their thrones telling us seifs what to drive, what to eat, how to build my house, what I can buy/bag with, my heathcare, etc. etc. We the citizens need to take charge and when we find these idiots doing this type of corruption strip them of their job, benefits, sue for all their possessions and send them to SLO in a van to live in. Solomon should give back the $250,000 she got and the bi=weekly disability checks she getting, Apps should get fired without his contract awards of $1,000,00 plus and McKinney should just get in the van and leave and take O’Malley and Clay with him. Do these guys know what idiots they are??? Tom O’Malley has been questionnable for years, from personal behaviors, to good ole boy favors, etc. Clay, well, it depends on whether he has taken his medication or not to know how he is functioning. CLEAN HOUSE NEXT ELECTION.


ApathyWillKillYou

Very well said SLOBIRD!


Crusader

This sorta crap has been going on for decades. The ONLY difference today is the existence of CCN and crew…


They should all be given medals…