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The Marin County “Community Service Contracts” Program - Investigative Report - PART III

Posted by: Bob Silvestri - July 18, 2019 - 8:53 AM PDT

This is PART III of a four part series (click these links to read Part I and Part II) based on Community Venture Partners' detailed, 14 month investigation into Marin County's Community Service Contracts program. The information presented is interdependent, so reading each Part in numerical order is recommended. Exhibits referenced in footnotes can be found in Appendix A - Exhibits and Appendix B. This series raises a number of legal and ethical questions that will be discussed in a follow up article.

CHRONOLOGY AND BACKGROUND

Since 2001, the County has been under scrutiny over the existence and operation of the Community Service Fund -- the so-called “Supervisor’s Slush Fund.” This fund, which gives away taxpayer monies in the form of grants to fund third-party, “community service” (mostly “nonprofit”) activities at the discretion of the Marin County Board of Supervisors is unique in the State of California. The Marin County Grand Jury looked into the disbursement methods and accounting practices of the Community Service Grants Fund in March of 2001, and again in May of 2013.

In its first Report, the Marin Grand Jury criticized the Fund’s operations and management. In response to that Report, the County Supervisors refused to substantially reform their discretionary funding methods, which gave them the ability to doll out “grants” of taxpayer funds to buy political support. In its second Report, the Marin Grand Jury evaluated if any changes had been made by Marin County since the first report in 2001.

In the Grand Jury’s May of 2013 Report, they found,

(1) there is a lack of knowledge of the CSF and the process for grant application throughout Marin County, (2) multiple grants often are awarded to the same organization, contrary to the stated criterion that grants should be for one time and/or emergency purposes, (3) there is an absence of consistent record keeping, particularly of rejections, and most importantly, (4) the individual supervisors have too much control over grant disbursement, creating the potential for patronage and possible impropriety. [Emphasis added]

As a result of these Findings, the GJ report recommended: (1) establishment of eligibility requirements and other criteria for potential grant recipients, (2) wide dissemination and availability of grant criteria, (3) elimination of direct control over the grant process by Supervisors, and (4) reduction in funding for the CSF, due to County budgetary constraints. The report continued by stating: “If, however, these steps are not taken, the Grand Jury believes that it is time to eliminate the CSF from the County budget." [Emphasis added]

The 2013 Grand Jury Report went on to say,

Our review of the current operation of The Fund identified the following major concerns:

In response, the County finally agreed to make changes in the operation and management of the Fund, but still refused to consider its elimination. Those commitments to new operational requirements included,

A key finding in this report is that all of these requirements were simultaneously circumvented by the County’s surreptitious use of ‘community service contracts,’ even while the County was assuring the Grand Jury and the public that it had reformed and changed its ways.

Increased public scrutiny starting in 2016

The use of ‘service contracts’ to pay out millions of dollars to favored nonprofits has gone on for more than 15 years outside the view of the general public. However, starting in 2016, members of the public began to question the financial relationship between MCBC and Marin County. This was driven, in part, by the County’s push and MCBC’s aggressive lobbying (paid for by taxpayer funds) to create and implement the Marin County Open Space Roads and Trails Management Plan, which MCBC had played a key role in creating, and to open more single-track hiking trails in Marin Open Space to mountain biking, and in particular the Bob Middagh Trail in the Alto Bowl Preserve.

It appears that the public’s questioning about the possible existence of a second channel of funding to nonprofit groups (in addition to the ‘reformed’ slush fund) took almost everyone at the County by surprise.

On January 27, 2016, Marin resident Francine Millman wrote to Kristi Villareal, who worked for the County, with the following questions,[1]

I was curious whether I could receive in some sort of report form the donation amounts you gave me over the phone for the MCBC? [Emphasis added]

Finally, I just thought of this last night – the funds any of these organizations receive – is it by Supervisor or just the generic ‘County Supervisors’? In other words, does it say who authorized these funds?

Our research shows that it was clear that in Ms. Millman’s conversation with Ms. Villareal, Ms. Villareal’s understanding was that all the funds historically paid to MCBC had been “grants” (not payments for services under specified contracts). Ms. Villareal’s response was to contact Matthew Hymel on January 28th and say,

I called Francine Millman… to respond to her questions about funding that the County has given to MCBC. She wanted to know more detail than I could provide. [Emphasis added]

Notice she uses the term “given” and not funding that the County has paid to MCBC, which is how one would normally refer to payments for services.

Others also began to inquire. On April 4, 2016, Rick Fraites, representing the Community Marin Action Committee, wrote[2] to Matthew Hymel, saying,

We are writing with regard to a grant of $30,000 that was awarded to MCBC in current FY 2015-16. We are concerned that the grant appears to lack a defined scope of work. The normal process for a grant of county funds should include a description from the applicant describing the specific planned use of the funds, and a report upon completion of the work. We have been unable to locate that information. [Emphasis added]

This is an important letter on several counts. First, there is no question in Mr. Fraites’s mind that this was a “grant” (it appears he had attended the hearing when it was “awarded). Mr. Fraites is just arguing about the terms of the grant and brings up key points about there being no measurable outcomes and the inappropriateness of MCBC receiving this funding because of their advocacy.

Among those seeking clarification was also former Marin County Planning Commissioner Randy Greenberg of Tiburon. In her letter to Kate Sears on July 7, 2016, she wrote,[3]

I would like to find out the application process, funding source and contract content for the $35,000.00 contract referred to in the attached 5/27/16 status report from the Marin County Bicycle Coalition to the County. [Emphasis added]

My interest is threefold:(1) transparency, (2) how many and which groups are funded in this manner, and (3) concern about possible county funding of advocacy for significant expansion of trails for mountain biking. [Emphasis added]

Do you have any suggestions on how to find this information? Since this is a county contract, the information should be available to the public. [Emphasis added]

Supervisor Sear’s office referred her to Matthew Hymel’s office, with whom Ms. Greenberg subsequently had a conversation. As a result, on July 28th, she reported back to Kate Sears’s office as follows,[4]

He [Mr. Hymel] was very responsive to our concerns (the funding is buried in the Quarterly Reports, which the BOS gets months after funding is dispersed, essentially cutting the public out of the process.The Quarterly reports list disbursements under $50,000, which Hymel handles after general approval by the BOS).

He said in future “if” MCBC is funded, their requests would appear on BOS agendas.He agreed to make the contract more specific and require MCBC to specifically account for how the funds are spent. [Emphasis added]

This exchange is remarkable because it comes 15 years after the Marin County Grand Jury criticized the County for its discretionary expenditures and lack of both transparency and public accountability, and it is one among many documents that evidence the inscrutable nature of the County’s accounting methods. It is also important to note that Mr. Hymel’s promise that “in the future… their requests would appear on the BOS agenda” was never followed through on.

But even more remarkably, Mr. Hymel refers to MCBC’s funding as “their requests.” This is yet another confirmation of the fact that these ‘contracts’ were driven by requests for funds from the recipients and not because the County had identified a service needed.

In the midst of the investigation by former Planning Commissioner Randy Greenberg and the Community Marin Action Committee, Supervisor Rice wrote to County Administrator Matthew Hymel on July 27, 2016, as follows.

Hi Matthew,

… spoke with Marin Group today per their "investigation" re the $30 k grant MCBC receives. Can we talk some time tomorrow or Friday about both? Friday afternoon best for me. [Emphasis added][5]

It is affirmative that Supervisor’s Rice’s understanding here is that the $30,000 MCBC is receiving is a “grant” not payment for services, in spite of fact that this funding had supposedly been presented and endorsed by her, according to Matthew Hymel, as a ‘contract.’

Likewise, recipients, such as MCBC, also didn’t seem to understand that the funds they had been receiving for so many years were not grants or how they were supposed to be accounting for the funds. On January 28, 2016, Matthew Hymel wrote to Kristi Villareal, regarding discussions she was having with MCBC on this subject, to try to correct 15 years of MCBC accounting.

Hymel wrote Villareal,[6] instructing her to tell MCBC,

They should not list us as a donor. Listing county contracts as a source of income is fine, but it is not a donation.

Randy Greenberg, this time representing the Community Marin Action Committee, wrote again on August 1, 2016, referring to her meeting with Matthew Hymel in July of 2016, this time specifically addressing Mr. Fraites’s previous concerns,[7]

We expressed our concerns that (1) the funding process for MCBC was not readily available to the public, (2) the funding Community Service Agreements lacked specificity and accountability, and (3) the provision of funds to a non-profit organization, one of whose functions is to advocate for increased bicycle access to off-road single track (i.e., “narrow”) trails. [Emphasis added]

But Ms. Greenberg was not the only member of the public to bring up the apparent incongruity of MCBC getting paid to carry out their advocacy mission on the public’s dime. On October 1, 2016, Sharial Good-Swan wrote to Supervisor Damon Connolly[8] (a big bicycle advocate), to note,

A friend has turned up surprising research re MCBC finances. The Marin Board of Supervisors financial support for the Marin County Bicycle Coalition advocacy group, steadily growing since 2001-2, began to reach El Nino proportions in 2006-7 when the Supes gave $40,000 from their discretionary funds.[9] And, as the table below shows, it's no stretch to say that most years since have also been El Nino years for MCBC, courtesy of the reigning Supes' so-called "slush" funds.

Likewise, on October 1, 2016, resident Tiffany O’Hara reached out to Marin County Parks about the same concern, and received this response from Max Korten, at that time its Interim Director and Manager.[10]

Hi Tiffany,

Thanks for your interest. As far as I know Marin County Parks does not have a role in the administration of the Marin County Community Service Fund grant program which you may be referring to. Here is the website for the fund: http://www.marincounty.org/depts/ad/service-fund-program-information Let me know if you have further questions.

Thanks so much, Max [Emphasis added]

Here we see, once again, that even county staff, who are intimately involved in working with MCBC, have no idea how they are funded and are under the distinct impression that what funding they have been receiving from the County has been in the form of grants. This and other evidence shows that virtually everyone involved in disbursing or receiving these ‘contracts’ payments assumed the funds were grants, up until public scrutiny began in 2016, at which time Matthew Hymel began to create a cover story.

The County attempts to cover its tracks

In response to these inquiries, Supervisor Steve Kinsey, who was instrumental in creating this ‘service contracts’ funding mechanism a decade before, writes to Matthew Hymel on October 2, 2016, in what appears to be an effort to come up with an agreed upon ‘story’ to deny the allegations being made that these funds have been illegitimately accounted for.

Supervisor Kinsey wrote,[11]

Matthew,

It appears that we will be challenged on our MCBC contributions. Please consider whether there are other non-departmental contributions to MCL, Audubon, Horse Council, etc. In addition, I know we have made capital contributions for open space purchases and Max should be able to help us identify those. (I.E.- Sky Ranch, Green property, Bucks Landing)

SK [Emphasis added]

What is so remarkable here is that Supervisor Kinsey inadvertently admits that the ‘service contracts’ payments are in fact “contributions.” Adding fuel to the fire, it appears that Supervisor Kinsey made a speech at the Marin County Open Space hearing on October 4, 2016, during which he tried to defend all the reasons why the County had “donated” large amounts of money to MCBC over the years. In response, other attendees wrote to the County in protest.

Finally, on October 28, 2016, in response to increasing inquiries from Marin residents and due to escalating internal confusion, Matthew Hymel send an email[12] to the Marin Board of Supervisors, in which he attempts to create a false narrative about ‘contracts’ to try to get the Board of Supervisors and county staff on the same page in their conversations with the public, even though they have all been referring to the funds as ‘grants,’ internally, for more than a decade.

Mr. Hymel wrote,

You may be getting emails about a public information request concerning County contracts with the Marin County Bike Coalition over the past 10 years. Here’s what I sent earlier this week. [an email to a resident denying that funds to MCBC were grants - clarification added]

It seems as if they were alleging that these contracts were entered into under the old Community Services program and being directed by individual Supervisors. I shared with them that this was not the case, but their claims may persist. ‐mh

Hymel’s ‘story’ is a fabrication, though he’s technically correct that these grants were not from the “old Community Services program,” they were now under the guise of the Community Services Contracts program. However, the preponderance of evidence noted in this Report suggests that the community’s allegations are exactly what had been going on at the County for more than a decade: creating nonsensical ‘contracts’ to justify continuing to give out grants to their favored nonprofits on a discretionary basis.

Documents show that the Supervisors were willing participants in steering these discretionary ‘contract’ funds toward their favored organizations, exactly as they had been doing with the Community Service Grants Fund’s money, but now for much larger amounts. In fact, in many cases, it is obvious from the evidence that the “recommendation” of the Supervisors was the only reason these most of these ‘contracts’ were undertaken.[13]

Documents show that the County Supervisors and the recipients clearly understood the so-called ‘contracts’ to be grant funding that could be influenced at their discretion. On February 12, 2014, Andy Peri, then the Advocacy Director or MCBC, wrote to Supervisor Kate Sears and Supervisor Steve Kinsey, saying,

Dear Kate and Steve,

I would like to request a meeting to discuss MCBC's recent emails requesting a grant of Community Service Funds from the Board of Supervisors. I spoke with Steve and he recommended that me, my Executive Director Kim Baenisch and you sit down to discuss the request and MCBC's needs in more detail. [Emphasis added]

Thank you so much!

Andy

Notice again MCBC refers to their funding request as a “grant,” not a contract for services.[14] Likewise, follow up correspondence between Supervisor Kate Sears and Matthew Hymel on March 18, 2014,[15] clearly indicate that Supervisor Sears literally dictated the list of ‘contracts’ to be let for the 2014-2015 fiscal year. And on Apr 24, 2014, at 5:27 PM, "Hymel, Matthew" wrote back saying, “I’ll take care of it.-mh”

This was followed some time afterward by Mr. Hymel sending Sears ‘his final contracts’ list, which matched hers exactly (date uncertain).[16]

The unique history of payments to MCBC

Our investigation began looking into financial transactions between the County and bicycle advocacy groups, so as a result, we have more information on the MCBC / County relationship that for other recipients. Aside from our comments about their political access and their professional qualifications, noted above, their ability to obtain funding year after year with little or no effort, and no competition, was not unique. It’s hard to blame nonprofit organizations who were receiving these funds for the County’s subterfuge, since the methods they were allowed to use to solicit for and obtain funding were pretty much the same as how one secures a grant, except for the signing of a piece of paper that called it a “contract.”

Over the last 14 years, the County has paid out approximately $500,000 to MCBC under the Community Services Contracts Program.[17] At the same time, MCBC has also received occasional “grants” from the Community Services Grants Program. For example, on September 29, 2009, MCBC received a grant of $5,000[18]. On September 23, 2009, six days prior, MCBC had signed a ‘contract’ in the amount of $40,000 for identical ‘services.’[19] MCBC also received a $5,000 “slush fund” grant in 2011, while also being awarded a $40,000 ‘contract’ for the same purposes.

The County Counsel’s office denied the existence of this “double-dipping,” in writing until we showed them the evidence found in the documents they themselves had provided. In addition, this is not confined to MCBC. The records of Community Service Grants shows that other agencies have also received funding from both sources for the same “work” in different years.

During this same time period, MCBC was also billing other Marin County agencies for smaller amounts of fees and expenses (e.g., approximately $1,700 per year for bicycle “valet services” at the County Fair, etc.). But more significantly, during these same years, MCBC was also simultaneously billing the Transportation Authority of Marin (TAM) for services that in some instances were overlapping or very similar to the ‘bicycle promotion and advocacy services’ they were being paid by the County to perform.

From 2013 to 2018, MCBC billed TAM over $56,000 for such services. And from 2005 to 2018 MCBC billed TAM approximately $4 million for consulting services and direct expenses (gas, coffee, supplies, etc.), through subcontract agreements with other TAM service contractors.

While it is true that the majority of their activities included promotion, marketing, and coordinating various “Safe Routes to Schools” programs, their ‘services’ also appear to be related to promoting and lobbying for bicycle use in Marin, in general, and participating in promotional events around the County. MCBC members were paid hourly (up to $75 per hour) and reimbursed for all associated expenses.

Similar to the situation at Marin County, the vast majority of the payments did not show up anywhere in the TAM Annual Budget as being paid to MCBC, where the general public would be made aware of these expenditures. The majority of the MCBC payments were made through an intermediary, pass-through contractual relationship with Parisi Associates (copies of all MCBC billings to TAM are available upon request).

We did not have time to fully investigate the nature of all the contracts and activities between MCBC and TAM and suggest that others consider doing so. However, the reason we bring this up is that there is clear evidence that Marin County officials were well aware of this potential duplication of ‘services’ and payments.

In fact, CVP’s submission of a Public Records Act request to TAM was only undertaken because our Marin County PRA produced a number of TAM internal accounting documents noting these TAM contracts and payments to MCBC.This evidence of awareness of MCBC’s service contracts with TAM, by our County Supervisors and our County Administrator, apparently did not diminish their zeal to fund everything MCBC requested of them, every year.

On being questioned about this, the County’s legal representative said they had no idea why those documents were in the possession of County Supervisors and the County Administrator.

Our findings are supported by the documents and records referenced herein and provided as Exhibits in APPENDIX A: Exhibits

[1] Exhibit 16 01 28 16_Millman-Villareal-MCBC donations

[2] Exhibit 16 04 04 16 _Rick Fraitas compliant MCBC Grant

[3] Exhibit 16 07 07 16_Greenberg-Sears--Funding Source for MCBC contract

[4] Exhibit 16 07 28 16_Alden-Greenberg--MCBC Payments not disclosed to public

[5] Exhibit 16 07 27 16_Rice-Hymel re MCBC grants

[6] Exhibit 16 01 28 16_MCBC calling contracts donations

[7] Exhibit 16 08 01 16_Greenberg-Hymel--re MCBC concerns

[8] Exhibit 16 10 01 16_Goodswan inquiry to Connolly about MCBC grants

[9] In actuality, MCBC had received as much as $50,000 in previous years.

[10] Exhibit 16 10 01 16_Ohara-Korten--MCBC funding as grants

[11] Exhibit 16 10 02 16 - Kinsey-Hymel -- cover story discussion

[12] Exhibit 16 10 28 16_Hymel-Board of Supervisors – ‘clarification’ narrative

[13] Exhibit 14 03 18 14_Sears-Hymel -- Sears Funding list

[14] MCBC received a contract for $30,000 in 2014; Exhibit 14 03 27 14_MCBC-Sears--30k contract request

[15] Exhibit 14 03 18 14_Sears-Hymel -- Sears Funding list

[16] Exhibit 15 00 00 15_Hymel-Sears--Final Funding Items for 2014-15

[17] In and of itself that amount is not extraordinary: The Marin Economic Council received close to $2 million during that time.

[18] Exhibit 09 09 29 09 MCBC Community Service Fund Grant

[19] Exhibit 08 09 23 09_Marin County-MCBC--Approval of Contract for Services

CLICK HERE TO READ PART I

CLICK HERE TO READ PART II

CLICK HERE TO READ PART IV

Bob Silvestri is a Mill Valley resident and the founder and president of Community Venture Partners, a 501(c)(3) nonprofit community organization funded only by individuals in Marin and the San Francisco Bay Area.

Appendix A - Community Service Contracts Program Exhibits (pdf 13.65 MB)
Appendix B - Marin County Community Service Grants Fund Allocations 04 29 10 to 04 08 18 (pdf 4.88 MB)