Mayor Garcia wasn't the Auditee; city management's Public Works Department's JOC program was the Auditee. However since at least January 2016, Mayor Garcia has led a high visibility effort urging the public to support a sales tax increase to 10% in large part on grounds LB needs more revenue to deal with infrastructure issues.

City Auditor Doud tells LBREPORT.com that "any relationship between this audit and ballot measure is coincidental as the report was released when it was completed."

[Scroll down for further.]

In late February and early March, the City Council voted to put a measure on the June ballot that would raise LB's sales tax to 10% (currently 9% in Signal Hill/Lakewood, 8% in most OC cities) and written in a way that allows the current and future Councils to spend the tax revenue on any general fund items they wish.

On April 5, Mayor Garcia agendized a City Council item that sought changes in the JOC program, portraying his agendized action as the result of his having "been working with the City Auditor's office to improve the City's Job Order Contracting Program (JOC)." He told the Council and the public: "We are interested in making changes to improve efficiency and strengthen transparency in our JOC programs." He made no public mention of the not-yet-public audit of the JOC program although he appears to have been made aware of some findings by the City Auditor. Garcia's agenda item asked the City Attorney to prepare an ordinance "for an updated City of Long Beach Job Order Contracting Program and return to City Council for review in 45 days."

During that 45 day period, Garcia led a campaign for the sales tax increase ballot measure, frequently citing infrastructure, consistent with the results of a voter survey (funded by LB's police and firefighter unions) that indicated voters would support a sales tax increase if they were told it would be used for police, fire and infrastructure purposes. In various formulations, Mayor Garcia and others argued that the City had a backlog of needed infrastructure repairs because the City lacked sufficient revenue.

Advertisement

Advertisement

On or about April 20, a series of mailers began arriving, funded by the campaign committee initially from sums contributed by LB's police union ($100,000+) and firefighter union ($50,000+) that are about to negotiate new contracts with the City after the June election. (The committee has since collected over $350,000 as of mid-May.)

On or about May 9, vote by mail ballots began circulating and people began voting. On May 17, within the normal period applicable to all audits, city management provided the City Auditor's office with management's responses to the Audit's findings. On May 24, an item appeared on the Council agenda making changes in the JOC program and made no public reference to any Audit and passed unanimously. The next day, on May 25, the City Auditor released her audit.

When the Audit was released on May 25, its revelations included the following:

[City Auditor May 25, 2016 press release text] In December 2014, the City received a letter warning that contractors' bids were too low. However, the City disregarded the warning and continued to accept the low bids. The audit found vague scopes of work (SOW) which lacked sufficient detail to determine if contractor pricing was appropriate. The poorly designed SOWs resulted in change orders and cost overruns occurring in 91% of the projects reviewed during the audit period.

Another way project costs were inflated was through contractors use of items outside of the preestablished catalog, which were charged at 110%. Most JOC programs cap the amount of noncatalog items that can be used in a project, however the City did not have a cap. Had non-catalog items been capped, the City could have potentially saved $1.9 million on project costs identified during the 17-month audit period. As typical JOC projects currently average $100,000, this is equivalent to an additional 19 projects that could have been completed.

In our May 25 coverage, LBREPORT.com provided a link to the Audit in full at this link.

Neither the Audit text, nor the Auditor's press release accompanying it, mentioned the Auditor's office communications with the Mayor's office.

In response to an inquiry from LBREPORT.com about the general timeline, City Auditor Doud responded by email (May 26): "Any relationship between this audit and the tax initiative is coincidental as the report was released when it was completed."

LBREPORT.com learned about the Auditor's communications with Mayor Garcia via an email from City Auditor Doud, which told us:

[City Auditor May 25 email to LBREPORT.com]: The audit was lengthy and took well over a year to complete. During that time, we continually communicated the seriousness of the findings to City Management and the Mayor. We have an internal process that ensures an open line of communication throughout the audit and sets expectations to ensure all findings are thoroughly vetted.

The internal process, as described on the City Auditor's website, refers to Auditees...and the Mayor wasn't the Auditee. The JOC program within the City's Dept. of Public Works was the Auditee.

The City Auditor's website indicates it's the City Auditor's office policy to communicate its findings to the Mayor and Council after the matter is closed out. But it appears that the City Auditor was communicating at least some findings on matters related to the Audit to the Mayor before the Audit was closed out.

We asked Auditor Doud (whose office website states declares "independence you can rely on") to explain what took place. In a May 26 email, she replied in pertinent part:

[May 26 email from City Auditor Doud to LBREPORT.com] Inferring that something occurred outside of our normal audit process is incorrect. We do not and have never released findings to the public until they have been fully vetted and reviewed both internally and with Departments. This audit was no exception. To release that information prematurely would be a violation of Government Auditing Standards.

The communication process during an audit is designed to vet all issues and address concerns as potential findings come to light. This communication has never been limited to only the Department. Implying that the public was purposely left out of these communications is factually inaccurate. This Office followed our normal communication process. Releasing information early would be both irresponsible and detrimental to both the City and the public. It is unfortunate that the timing of this report release is the focal point of discussion versus the seriousness of the findings in the report and the City's attempts to rectify the situation.

Our main objective has always been to create positive change within the City. The fact that the City immediately took actions to address the findings through implementation of new legislation and suspended the program so it could be redesigned are evidence the process is effective. Any relationship between this audit and the tax initiative is coincidental as the report was released when it was completed. The public should feel confident that any potential tax dollars processed through the JOC program will now be more secure due to findings of this audit.

Advertisement

Advertisement

In our email exchange, City Auditor Doud also indicated that it's her understanding "that audits are not required in the measure language. However, should the City request our review, we will work with the City to meet this objective."

Auditor Doud is technically correct in saying audits aren't required in the tax measure itself...but the verbiage below was part of materials approved in publicly voted actions by the City Council on February 23, 2016. It's what LB voters will see immediately before marking their ballot [emphasis added by us]

[All caps in original] "CITY OF LONG BEACH PUBLIC SAFETY, INFRASTRUCTURE REPAIR AND NEIGHBORHOOD SERVICES MEASURE. To maintain 911 emergency response services; increase police, firefighter/paramedic staffing; repair potholes/streets; improve water supplies; and maintain general services; shall the City of Long Beach establish a one cent (1%) transactions and use (sales) tax for six years, generating approximately $48 million annually, declining to one half cent for four years and then ending, requiring a citizens' advisory committee and independent audits, with all funds remaining in Long Beach?" [emphasis added]

That verbiage appears on the ballot because on Feb. 16, Mayor Garcia made the following statement the Council meeting when the Council voted to direct the City Attorney to prepare materials for Council approval that would place the measure on the ballot:

"We will also as part of this, and as of any measure that would come before us, the City Auditor will also as part of this measure will also be conducting regular and routine annual looks and audits of what is happening with the funds, and so, that audit piece will also be part of it," Mayor Garcia said.

Advertisement

Advertisement

A few weeks later, Mayor Garcia signed (as lead co-author) the official Rebuttal to the Argument Against Measure A, which told voters: "Measure A includes annual audits by our independent City Auditor."

Opinions expressed by LBREPORT.com, our contributors and/or our readers are not necessary those of our advertisers. We welcome our readers' comments/opinions 24/7 via Disqus, Facebook and moderate length letters and longer-form op-ed pieces submitted to us at mail@LBReport.com.