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City reviews centennial loan

$83,000 not repaid, but committee acted properly

City reviews centennial loan

A statue of Turlock founder John Mitchell was one thing that the $90,000 city loan to the Centennial Committee helped to fund.


POSTED August 24, 2010 11:38 p.m.

A $90,000 loan from the City of Turlock to the Centennial Committee was never repaid in full but was spent in accordance with the loan agreement, according to a City of Turlock memo released Tuesday.

“I’m sorry that there were people who questioned the integrity of any of us, but I can ensure the celebration was done with nothing but great care,” said Sharon Silva, Centennial Committee co-chair.

The 219 page document, prepared by City Manager Roy Wasden and City Attorney Phaedra Norton, specifically states it is not a financial audit, investigative report or review of the misfeasance or malfeasance of any current or former city employee. The document serves only as a historical review of events surrounding the unpaid loan.

On Dec. 11, 2007, the Turlock City Council unanimously approved $173,500 in funding for the city’s centennial celebration, of which $90,000 — $50,000 earmarked for the documentary and $40,000 for the commemorative statue – was to be a loan paid back from community donations.

“Although the $90,000 was characterized as a loan, other than the resolution … there were no legal documents (e.g., notes or contracts) prepared to memorialize the terms and conditions for repayment,” reads the memo.

The resolution also approved the use of community donations to fund centennial activities and events as well as repaying the loan, with no priority placed on repaying the loan. According to the memo, city management authorized the use of donations for activities and events first, with remaining funds to be applied to the loan.

Currently, $6,787.50 has been repaid, leaving $83,212.50 outstanding.

“Obviously if there were a way to get that money back we’d look to get it back,” Wasden said.

Turlock’s only hope of recovering the funds lies in additional donations – some two years after the close of the centennial celebration – or in further sales of the documentary DVD, available for $25 plus tax at the Turlock Chamber of Commerce or the Turlock Historical Society.

In the process of preparing the memo, the City of Turlock reviewed the financial records of the Centennial Commission.

The commission’s financials were processed through a separate account held by the Turlock Chamber Foundation, a non-profit organization. The memo praises the records as “detailed and complete,” handled using standard procedures for foundation accounts and managed by the foundation’s outside accounting firm.

“The financial records indicate that the appropriation of taxpayer money, as set forth above, was utilized to produce the documentary, to procure the commemorative statue, and to fund centennial activities/events in accordance with the direction provided by the City Council,” reads the memo.

The memo goes on to answer several questions raised by council and the community by listing the members of the Centennial Committee, the approved centennial events, and the legal basis for transferring taxpayer funds to a non-profit, so long as the funds are used for a public purpose in accordance with direction from the City Council.

The memo also addresses concerns of improper record keeping.

On Nov. 18, 2009, a $600 check was written against the centennial account for a “deposit for Greek trip,” according to the check’s for line. That was determined to be a clerical error, corrected the same day with a $600 deposit from the correct Chamber account.

A second point of contention, that minutes from a Centennial Committee meeting indicate more than $10,000 should have been raised from 500 movie ticket sales, is also dismissed in the memo. Upon review, the figures discussed in that meeting appear to be attendance estimates, which were several times higher than actual ticket sales of 144, raising $2,880.

Lastly, the memo looks to clarify a misconception that the $90,000 loan was made to the Turlock Chamber of Commerce and not the Centennial Committee.

“The confusion regarding this issue may have been created by City management who inaccurately referred to the loan as the ‘Chamber’s outstanding loan,’” reads the memo. “It is clear from the resolutions adopted by the City Council that the loan was to the Centennial Committee, not to the Chamber of Commerce.”

The memo goes on to clarify that the Turlock Chamber Foundation, which held the Centennial Committee account, is a separate legal entity from the Turlock Chamber of Commerce.

 

Lazar cleared by FPPC

Not addressed in the memo, but covered by a separate document released by the City of Turlock on Tuesday, was Mayor John Lazar’s vote to appropriate funds to the Centennial Committee. Turlock City Council Candidate David “DJ” Fransen had questioned whether Lazar had a conflict of interest, and should have recused himself from that vote.

Before the vote, Lazar contributed $2,500 to the Centennial Committee from his campaign committee. After the $90,000 loan was made, Lazar’s campaign committee was refunded.

An Aug. 4 letter from the Fair Political Practices Commission finds that Lazar did not violate the Political Reform Act by participating in the vote. Lazar himself requested the FPPC review his potential conflict.

“At the end of the day my interest was really to get the centennial off the ground because the planning started so late,” Lazar said.

While an elected official has a financial interest in a decision if it will have a material financial effect on a source of income $500 or more, Lazar’s campaign committee funds were determined not to be a type of income nor Lazar’s personal finances. The donation falls under the act’s trust provisions, which allow expenditure of campaign funds related to a legislative, governmental, or political purpose.

 

Kerr’s involvement not included

Former City Manager Tim Kerr’s role in the loan repayment was not directly addressed in the memo.

Kerr was terminated in January 2009 for allegedly breaching his employment contract with the city. In October 2009 Kerr sued the City of Turlock for unpaid retirement funds.

The City of Turlock field a countersuit in March 2010, alleging that Kerr gave explicit instructions to the Turlock Centennial Committee not to re-pay a city loan of $90,000.

Tuesday’s memo only states that “city management” authorized donations to be used on events before repaying the loan.  The memo explicitly states that it does not address the misfeasance or malfeasance of any current or former city employee.

Wasden confirmed that there is ongoing legal action related to the loan, but declined to comment further.

Wasden did say that the City of Turlock would consider issuing loans to committees in the future, but those loans would be set up differently to ensure repayment.

Lazar agreed that the contract should have been worded differently, but remained pleased with the year of events, statue of Turlock’s founder, and documentary that commemorated 100 years of Turlock.

“If we had to do it again, maybe we would do it a little differently, but I wouldn’t change the way it turned out,” Lazar said. “Everyone seemed to enjoy it.”

To contact Alex Cantatore, e-mail acantatore@turlockjournal.com or call 634-9141 ext. 2005.

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