To the Editor,
Beaumont’s two workshops made it abundantly clear to the citizens that the city will continue the practices of the past until they are forced to stop. The Citizens packed the Beaumont School District Board Room and demanded that the city stop the illegal overcharging of Mello-Roos taxes and to account for the $300 million in Municipal Bond Funds that are missing.
The city responded with “CFD 101” as Shane Spicer from Webb and Associates called Monday’s Workshop. Citizens will be billed for the bond sales pitch presented by two Lawyers and three consultants. As one property owner stated: “It was the most expensive circus I’d ever attended.”
Wednesday’s workshop was to let the citizens know that Beaumont Staff and Council will make any attempt to limit development very costly to the citizens.
Wednesday’s workshop spoke of the need for fire stations, a recycled water facility, roadways, and staffing for fire and safety protection; but there is no financial plan to pay for the facilities or services.
Housing and retail are secondary markets that are driven by primary markets such as the tech or resort industries, but Beaumont doesn’t have one lawyer or consultant that will tell the city the truth regarding sustainable growth. Beaumont cannot acquire primary market industries until they build fire stations, roads, recycled water facility, and the sewer lines to support a primary market.
It has been 10 months since the city was raided by the Riverside District Attorney’s Office and the FBI and four months since the State Controllers’ Investigate Report listing the city’s numerous violations of law and overall mismanagement; yet Beaumont City Council has yet to hire one person that isn’t associated with the former staff.
There is $300 million in Mello-Roos Municipal Bond funds missing. The city claims that it is not their debt, but it is the debt of the district and authority that acquired the illegal bonds. And yes, it’s time to accept the fact that Beaumont’s Bonds are illegal for a multitude of reasons;
The city can not legally be a joint powers authority:
Beaumont never financially qualified to be a Joint Powers Authority. We have $11 million in reserves” is a lie Kapanicas had Beaumont’s Mayors repeat because the qualifications to be a JPA include financial reserves and an increase in financial revenue for five consecutive years. Beaumont’s financial statements were forged by the auditing firm of Moss Levy Hartzheim for the past 20 years.
Beaumont City Council has neglected to have the 2014 Financial Statements Audited by a reputable auditing firm and the city cannot close the books for Fiscal Year ending June 30, 2015, because they have no finance department or accountants on staff.
City staff’s private companies profited from the bonds
The City has released 65 percent of the Bond Requisitions that list who was given bond money and for what purpose. Of the $200 million in requisitions $34 million was paid to Urban Logic; $300,000 was paid to city attorney Aklufi/Wysocki; $245,000 paid to finance director William Aylward; and $678,000 was paid to General Government Management Services, owned by city manager Alan Kapanicas and risk manager James Gregg.
Mello-Roos funds can not be used to pay mitigation fees:
There is no provision in Mello-Roos laws that allow for the funds to be used to pay the developers’ Mitigation Fees. Council knew or should have knows as this information was disclosed during the Western Riverside Council of Government’s TUMF lawsuit that is now two year in appeal at the cost of $3 million/year in interest. The bond requisitions lists $60 million in Mello-Roos Bond funds were used to pay or reimburse developer mitigation fees.
The housing market in Beaumont is flooded. City attorney Pinkney has told council that they must acquire bond debt for the developers or the developers will sue. This is incorrect. There is no recourse under the law for an illegal activity.
Beaumont lists their Mello-Roos Bonds with the IRS as “tax-exempt.” However, paying Developer Mitigation Fees changes the status of the bonds from tax-exempt to private sector bonds.
On Sept. 23, 2015, Willdan Financial told council that in the 20 years of acquiring bonds the city had never filed arbitrage reports with the IRS; however, bond requisitions show that Kapanias and Gregg were paid $56,000 through General Government Management Services for Arbitrage Services. Willdan was gifted a $110,000 contract to calculate the city’s arbitrage and submit the reports to the IRS by Dec. 2015. It is unknown if Kapanias and Gregg just billed the city and never submitted the arbitrage reports or if Willdan Financial was lying to council as they never returned and there has not been any mention of the Arbitrage Reports again. How much money the City of Beaumont owes the IRS is unknown.
Union Bank:
Union Bank, as Bond Trustee, was responsible for establishing and maintaining Beaumont’s Municipal Bond Fund Accounts. Union Bank has refused to release the city’s documents. The city has issued a subpoena to compel Union Bank to release the bond documents by March 10 or stand before council on March 15.
Stephen Boughton, former vice president of Union Bank Trust Department, was terminated after the FBI Raids in April 2015. We know that Union Bank embezzled over $20 million from Beaumont’s Municipal Bonds, but if Union Bank’s involvement was simple embezzlement; they would release the documents and blame Boughton for the embezzlement.
There is a big ugly reason why Union Bank refuses to release Beaumont’s Bond Fund Accounts that is beyond Riverside County’s ability to prosecute. Riverside County Treasurer is legally responsible for monitoring Mello Roos Bonds, but the county has put in writing that they have not and will not take any responsibility for the bonds.
The county’s acknowledgment of negligence gives the state the legal right to take over the duties of the county.
I encourage all Beaumont Citizens to contact the California State Treasurer and Attorney General’s Office and request intervention as the county has refused to regulate Mello Roos and prosecute for the crimes committed. Many State Agencies have been monitoring the city and are aware of the situation.
The property owners of Beaumont did not vote for the bonds, did not receive facilities built from the bonds’ money, and are not responsible for the repayment of the bonds or any additional charges the city adds because they need money to pay lawyers and consultants.
Libi Uremovic, Rancho Cordova