Beaumont residents awoke a year ago with news that the officials they entrusted to run their city government through two decades of rapid growth might have betrayed them.
Anti-corruption investigators with the Riverside County District Attorney’s Office and FBI agents arrived April 22, 2015, in flak jackets and windbreakers with search warrants for City Hall, the Palm Desert home of then-City Manager Alan Kapanicas, and the Beaumont offices of Urban Logic, the consulting firm that for years provided the city with its public works, planning and economic development directors.
Authorities carted away as many as 500 boxes of documents from Urban Logic offices alone.
A year later, no criminal charges have been filed, but a spokesman for the District Attorney’s Office said the investigation is continuing.
Yet the past year has been anything but uneventful.
City-commissioned audits and state reviews have revealed a fiscal mess of spending and accounting practices so awry that auditors could not determine whether millions of dollars in public funds had been properly spent.
Top administrators, including Kapanicas, who served 22 years as city manager, left city employment under the cloud of the District Attorney’s Office investigation. The city attorney and finance director also left.
URBAN LOGIC
For years, the city used Urban Logic for engineering services when the company owners held top administrative positions as contract employees. And a company formed by Kapanicas, General Government Management Services, billed Beaumont for work associated with issuing and managing city bond funds.
Former longtime Councilman Roger Berg said the City Council had approved the work done by these companies, and he expects nothing to come from the county investigation.
Still, Kapanicas left Beaumont in November and the city is phasing out its business with Urban Logic, which is now completing work under its previous agreements, said Nancy Carroll, the city’s elected treasurer.
And new city officials say they are working to make the city transparent and accountable.
Reforms, they say, already have curbed deficit spending, stopped inappropriate use of bond funds, brought competitive bidding to city contracts and added layers of oversight and transparency to city finances.
“For such a long time, the finances were hidden from the council and citizens of Beaumont,” said Councilman Mark Orozco, who was elected about five months before the raid.
Judy Bingham, co-owner of a tree nursery in Beaumont and a longtime critic of the city, sat in her trailer office recently and said she’s still skeptical that any reforms will last.
“They are trying to have the appearance of getting things cleaned up,” she said.
Carroll, who, like Orozco, was elected just months before the raids, said she understands Bingham’s concerns.
“We just got our toe in the water toward doing the right thing,” Carroll said. “We still have a long way to go to build integrity.”
One sore point is public records.
Bingham said she and others, including The Press-Enterprise, have been trying since the raids to get bank statements detailing how more than $200 million in bond funds had been spent over the past 23 years.
Most the bonds were issued to pay for streets, sewers, waterworks, and other public amenities as the city’s population exploded after the early 1990s.
Although thousands of pages of other bond records have been released, most bank statements have not.
Since most of the bond money was borrowed under Mello-Roos public finance rules, thousands of Beaumont residents still are paying these debts on their property-tax bills.
City Clerk Julio Martinez said he and other city officials are doing their best to find and release public records. But many were seized during the raids, and those left behind were not well-organized.
Another problem, Martinez said, is that shortly before Kapanicas left the city last year, he told Martinez that many city records were lost when a computer crashed. It is not clear when the crash occurred or what was lost, Martinez said.
The city, however, is taking unusual steps to account for how bond funds were spent, said City Attorney John Pinkney
In March, Pinkney issued legislative subpoenas to wrest thousands of pages of bond records from Union Bank of California, which acted as trustee in the city bond issuances and held various accounts for city bond funds.
The City Council also authorized Pinkney to use legislative subpoenas to get records from Urban Logic.
Pinkney said the city’s goal is to get a complete set of records so people can learn how all bond funds were spent.
The city also has hired an Orange-based consulting firm called Urban Future, which has no ties to Urban Logic, to piece together a report about how bond funds were spent during a 20-year period. The report is expected later this year.
Meanwhile, a state review of Beaumont finances overseen by California Controller Betty Yee released last fall has provided the city a blueprint on how to create new checks and balances, Orozco said.
The state found that 75 of the city’s 79 financial controls were inadequate.
Orozco said that a citizens oversight finance committee led by Carroll, the elected treasurer, has been has instrumental in bringing needed reforms, including new processes for awarding contracts to consultants and others who do work for the city.
Orozco said he’s eager for the District Attorney’s Office to complete its investigation, so the residents of Beaumont can have closure.
“If there has been wrongdoing, please present it to us,” he said.