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The following four part series is 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, below. This series raises a number of legal and ethical questions that will be discussed in a follow up article.
In the years leading up to Community Venture Partners (“CVP”) filing its Writ of Mandate, challenging the Marin County Open Space District’s (“MCOSD”) decision to open the Bob Middagh Trail to mountain biking, CVP submitted a number Public Records Act requests to gather evidence to support our case. Among the documents we received in response were several that indicated unusual financial transactions between the County of Marin and bicycle advocacy groups.
As a result, beginning in early 2018 CVP submitted a series of Public Records Act requests specifically focused on financial transactions between the County of Marin and its agencies and bicycle advocacy groups, and subsequently, between the Transportation Authority of Marin and bicycle advocacy groups.
Our investigation took more than 14 months, included a dozen Public Records Act requests, and involved reviewing more than 500 documents, records, accounting ledgers, emails and other communications. Most of the documents we requested initially were denied, then slowly being produced by the Office of County Counsel. However, after a stop-and-go beginning, the Office of County Counsel was very cooperative, though they themselves had significant difficulty in obtaining documents from various county agencies.
Although our investigation was initially focused on contracts and payments to bicycle advocacy groups, based on our findings it was expanded to look at all recipients of such payments from what are called “Community Service Contracts.”
Purposes of our investigation
The findings in this Report are not intended to disparage the work of our county’s nonprofit organizations or to allege wrongdoing on their part. It is common for nonprofits to maximize the funding they get from public agencies by lobbying and doing whatever is necessary. That’s an unfortunate fact of life and the public can decide on the ethical questions this raises on a case by case basis. Some of these funding recipients have been performing essential services in mental health, housing, and conservation, though the majority of them are not. However, that is not the issue here.
What is important is the County’s mischaracterization and accounting misclassification of these funding activities.
Our interest is in ensuring that Marin County handles public monies in a fair, equitable, and fully transparent manner. This Report does not make any determinations regarding the legality of the activities investigated. However, our findings raise serious questions about the conduct of the Marin County Board of Supervisors and the County Administrator, Matthew Hymel, and the County’s record-keeping practices. And this Report does raise significant public policy questions regarding the County’s accounting practices, its priorities, and its lack of a public mandate to give away tens of millions of dollars in taxpayer funds at their sole discretion.
Findings of our investigation
The preponderance of evidence we have reviewed suggests that for more than 15 years the County of Marin, under the direction and at the sole discretion of the Marin County Board of Supervisors and the County Administrator -- and often in close, private collaboration with funding recipients -- have knowingly and intentionally engaged in highly irregular and potentially fraudulent funding and accounting practices by which third-party nonprofit organizations have received gifts of tens of millions of dollars of taxpayer monies under the guise of what are referred to as “community service contracts.”
The ‘payments’ on these ‘contracts’ were and are, for all intents and purposes, outright grants of taxpayer monies and have essentially been treated as grants funding by the recipients.
The County’s unequivocal insistence that these agreements and disbursements of general funds are for “contracts for community services” that are determined on a competitive basis is on its face and in light of the evidence, indefensible. There was and is nothing remotely “contractual” about these agreements, the decisions made to distribute them, or the payments made to the recipients.
The evidence of this is overwhelming.
- The decisions regarding who receives funding are completely arbitrary, subjective, and at the sole discretion of the Board of Supervisors and the County Administrator, without any public participation, whatsoever;
- There are no public notices or Request for Proposals or any other form of solicitation for competitive bids for the services contracted;
- There are no application forms or other discernable methods of applying for these ‘contracts’;
- There are no guidelines or voting procedures or stated criteria regarding selection of awardees;
- The need for the ‘services’ proposed in the ‘contracts’ are promoted by the recipients, not created by the County;
- The scope of work described in the ‘contracts for services’ generally matches the stated charitable missions and initiatives of each nonprofit recipient, and the contractual scope of that work is proposed and drafted by these recipients, not the County;
- The work described in the ‘contracts’ is work which the nonprofit recipients are already doing with or without the County’s support;
- The amounts paid to organizations, year after year, are often exactly the same large, round numbers -- something that is virtually impossible when there is competitive bidding by service providers. The pricing of actual bidders offering services always varies due to inflation, competition, etc.;
- The ‘contract’s’ payments are made in full and in advance of the ‘services’ being performed – something that is unheard of in legitimate contractual agreements for services;
- The County has not done any oversight, whatsoever, of the recipient’s activities and has relied solely on “self-reporting” of results by the recipients a year after the monies have been disbursed (a method commonly used by grantors and grantees), as a means of verification that the ‘services’ were rendered, without measurable deliverables. There were no independent verifications performed by the County;
What these facts describe is the very definition of “charitable grants” and “gifts” for “general support,” not contractual agreements for services. The total annual payouts on these contracts have averaged approximately $1.8 million dollars per year, or $27 million dollars over the past 15 years (2004 to 2019). These payouts are in addition to the funding to nonprofits from the Marin County Community Grants Fund (See Appendix B).
To be perfectly clear, the Marin County Community Service Contracts program payments (see Appendix A -  Exhibit 19 04 15 19 – List of Community Service Contracts 2005 – 2018) and the Marin County Community Service Grants Fund payouts (See Appendix B) are completely separate, concurrent funding sources: the latter, known as the Supervisor's "Slush Fund," was investigated by the Marin County Civil Grand Jury in 2001 and 2013 but the former has been essentially unknown to the general public for more than two decades.
There is significant evidence that the process by which the “contracts,” processed through the Marin County Community Service Contracts program, have been approved, the methods by which these funds have been disbursed, and the accounting practices employed by the County have been intentionally concealed from the public to the point that in some instances, records are nonexistent. This has been done with the full knowledge and cooperation of the Marin County Board of Supervisors.
The amounts of money involved are also far in excess of the much-maligned “Community Service Grants” Fund, (the Slush Fund). The evidence suggests that following the criticism of the Slush Fund by the Marin County Grand Jury in March of 2001, the County shifted many of its payouts to nonprofits to this new ‘contracts for community services’ funding method, and in doing so was able to perpetuate their ability to give away taxpayer monies at their own discretion.
Another important question, which we did not have the time or resources to investigate is did these discretionary gifts of public funds to favored nonprofit organizations result in political endorsements and other forms of support that helped certain County Supervisors win county elections.
Our findings are supported by the documents and records referenced herein and provided as Exhibits in APPENDIX A: Exhibits
 Exhibit 19 04 15 19 – List of Community Service Contracts 2005 – 2018, 3 years missing data
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.