Interim City Manager Joe Lopez apologized to the City Council on Tuesday night for the breakdown in its systems that let Modesto pay for $9 million worth of asphalt repairs to streets even though the council had authorized $6.8 million in work.
It was a tough night for the city, with audience members questioning how a mistake of this magnitude could occur, criticizing the city report on this matter for being unintelligible and claiming council members were not sufficiently alarmed or upset, though council members said they were very concerned and want to know what went wrong.
Dave Thomas — who is president of the Stanislaus Taxpayers Association — said he was sure council members had read the four-page report “a few times because it’s impossible to understand.” He also criticized the staff presentation and said taxpayers deserve much more from city staff.
Council members rejected staff’s recommendation on how to deal with this matter because they want more information on exactly what happened before approving anything. Councilwoman Jenny Kenoyer was the lone holdout.
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Kenoyer said while she and other council members were appalled, the city and its auditors were investigating the matter and she wanted Modesto to honor its obligations by paying a contractor the $306,000 the city owed it for asphalt work it had done but not been paid for. That payment was among the items staff was asking the council to approve and was in addition to the $9 million in asphalt repairs Modesto already has paid for.
This matter is scheduled to come back to the council at its Sept. 26 meeting. Lopez said while the city will have more information by then, the review will take 10 to 12 weeks. Lopez has said Modesto discovered this problem about a month ago as part of a review of all of the city’s contracts.
The city report states former Finance Department employees entered higher amounts than approved by the council in the accounting system and then incorrectly approved those amounts as being accurate. Lopez said Monday that Modesto had not interviewed the former employees.
Lopez told council members he is aware of the magnitude of this matter and how mistakes like this erode the public’s trust. He said the city will be diligent in conducting the review of all of its contracts and the review of this particular contract.
“All we can do at this point in time is rectify this situation,” he said. “We have identified holes in the system that have allowed this to happen. We will fix this. .... I apologize to all of you (for putting) you in this situation.”
City staff put this matter on what is called the consent section of the council meeting agenda. Consent items are voted on all at once without discussion. But Mayor Ted Brandvold pulled this item from consent to ensure a public discussion before the council voted on it. Other council members said they also wanted this item pulled for discussion.
The city report says in September 2012 the council approved $3.7 million in asphalt repairs over five years and then increased that amount by $3.1 million in December 2014 for $6.8 million over the five years.
Modesto-based Garrett Thompson Construction was designated as the primary contractor. The work is for repaving the part of the street crews dig up to replace a water main, install a water line and similar work. Garrett Thompson Construction performed $8.75 million of the $9 million in asphalt work.
The $9 million is $2.2 million more than the council authorized.
Council members were asked Tuesday to approve the $2.2 million in spending that took place without authorization, an additional $306,000 to Garrett Thompson Construction for work it has not yet been paid for, and $310,000 for work the company is expected to perform through Sept. 24, which is when the current agreement ends.
Garrett Thompson said Monday that he did not know Modesto had exceeded the amount authorized by the council. “Trust me, I did the work. I didn’t know they went over budget.”
Acting Finance Director DeAnna Christensen told council members that the documentation Thompson receives from the city would not include the total amount of the contract. Thompson said Monday that he receives purchase orders from the city as it needs paving work.
Kevin Valine: 209-578-2316