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City of Pacifica Finances in a World of Hurt

City Budget: What DID I Do With That $2.2 Million?

By Lionel Emde, Riptide Correspondent

Pacifica City Council's agenda packet for the June 9 meeting was a long one, but if you read only one thing in it, it should be our new City Manager Lori Tinfow's budget report. In it, she details things such as:

§ Fund 25, Parking In-Lieu Fund. "This fund holds developer fees paid for meeting parking requirements in-lieu of building the actual parking required for a project. Of note here is that in November 2012, a sizable portion of the funds held ($308,000) was mistakenly included in information reported to the State of California as part of the Redevelopment Agency and transferred to the State. While unfortunate, such mistakes are not surprising given the high level of confusion for cities trying to meet changing State requirements surrounding the elimination of Redevelopment Agencies. The City will be requesting the return of the funds from the State in the next fiscal year."

And even better is the loan that time forgot: § Fund 09, Street Construction Fund. "This fund loaned approx. $2.2 million to Fund 22 in 2003. So far, staff has not discovered any repayment of the loan to date so the entire amount is shown as an “outstanding receivable” or “amount due” to the fund. Should we find evidence of any payment, an adjustment will be made."

Then there is deficit spending, which municipalities aren't supposed to engage in: § Fund 22, General Capital Improvement Fund. "In this fund, there are two items of note. First is the deficit shown at the end of each fiscal year-as of June 2014, the amount totals approx. $1.08 million. The City has been spending on projects that are not fully funded. Second, in parallel to Fund 09, the interfund loan of $2.2 million is shown here as well, as an 'outstanding loan repayment obligation.'"

I think these are the most logical questions I've heard from a public official in a long time: Fixing the Fund Deficits and Getting a Second Opinion. "A natural question after reviewing the All Funds Budget Summary (Attachment 2) and adding together the deficits would be “how did we get here?” While staff is still collecting history to better understand the answer to this question, our primary focus at this time is 'How are we going to fix this?' and the answer to this question is where I plan to focus most of my attention."

But the sum total of past fiscal mismanagement is staggering: "… the approximately $4 million total deficit shown across several funds is a problem that isn’t required to be fixed overnight. The City will continue to meet its obligations and City services will continue to be provided. …These deficits surfaced over the past few weeks in large part because of a new approach to presenting this information... As such, I have not had adequate time to fashion a complete plan to correct a problem that has likely been years in the making."

No kidding. Seven years to be precise, since our last finance director was shown the door by council, and an interim city manager going out the door. It's hard to know what went on, because apparently no one knew what they were doing. Tinfow states that she'll have to hire more outside financial help to figure out what's going on.

One of the best things council has done is to hire Tinfow as city manager. Her documents, methodology, and language are clear and straightforward. And council members should be hanging their heads in shame at what has been revealed – it's inexcusable.


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This song just about sums it all up:


My bills are all due and the baby needs shoes and I'm busted
Cotton is down to a quarter a pound, but I'm busted
I got a cow that went dry and a hen that won't lay
A big stack of bills that gets bigger each day
The county's gonna haul my belongings away cause I'm busted.

I went to my brother to ask for a loan cause I was busted
I hate to beg like a dog without his bone, but I'm busted
My brother said there ain't a thing I can do,
My wife and my kids are all down with the flu,
And I was just thinking about calling on you 'cause I'm busted.

Well, I am no thief, but a man can go wrong when he's busted
The food that we canned last summer is gone and I'm busted
The fields are all bare and the cotton won't grow,
Me and my family got to pack up and go,
But I'll make a living, just where I don't know cause I'm busted.

I'm broke, no bread, I mean like nothing, It's over

So in the accounting I've reported on, I'm getting a total of $3,588,000 missing, including the $308,000 gift we mistakenly sent to the state as a part of the redevelopment wind-down. There may be other items that the city manager did not detail. There may be other developments to come.

Tom, if I understand you and Lionel, there is an outstanding loan of more than $2 million that one city fund gave to another city fund that has become unaccountable -- AND there is approximately $1.5 million in restricted funds for the Palmetto improvements that is also unaccounted for. Almost $4 million that has disappeared with a shrug. Is this what I'm understanding?

The basic concept of a loan appears to have been lost, along with unknown millions of dollars. We have, by the current count, a $4 million deficit all of a sudden.

I will be looking closely to see if the "m" word becomes involved in this affair.

Todd: This loan is an inter-fund loan, not a loan from an outside source.
Just another $2.2 million that nobody kept track of after the deal was done. I hope we got some benefit out of this money.

The other big mystery is what happened to the $1.5 million that was supposedly set aside for the first phase of the Palmetto streetscape. That is a lot of money to misplace.

Well done, Lionel. BTW, the $2.2 million loan for street improvements I think was from the San Mateo County Transportation Authority way back when the City of Pacifica was directing the highway widening project. That money was spent on Wilsey Ham and associates for various studies. SMCTA Director Joe Hurley has told me several times he doesn't expect that money back. You may want to call San Carlos and check this out, as I doubt Van Ocampo would volunteer it to the new city manager.

But if, as you say, there is finally someone at City Hall who understands city finance since Ms. Lennon's sacking, then bravo. I can only hope Ms. Tinfow finds Maureen's home phone number.

The City of Millbrae appears to lead by example: "With revenue expected to decrease this fiscal year in Millbrae, city officials are being cautious with city expenditures. ... "

I have a great deal of respect for Ms. Tinfow, and these latest revelations about how badly our finances have been handled only makes me more opposed to any new internal borrowing plan.

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