Modesto agrees to pay city auditor $225,000 to resign after several months on the job

Modesto City auditor Monica Houston outside the City of Modesto offices in Modesto, Calif., on Wednesday, Oct. 10, 2018.
Modesto City auditor Monica Houston outside the City of Modesto offices in Modesto, Calif., on Wednesday, Oct. 10, 2018.

The Modesto City Council on Friday voted to approve an agreement that will pay Monica Houston $225,000 and end her employment as in-house auditor, a job she was hired to do less than eight months ago.

Houston came to Modesto to uncover inefficiencies in city operations. Since then, she became the focus of a political fight among council members who have either scrutinized her motives or defended her qualifications and experience.

The council’s vote Friday morning in a closed-session meeting was not unanimous. Councilmembers Bill Zoslocki, Doug Ridenour, Mani Grewal and Jenny Kenoyer voted to direct the mayor to execute the separation agreement with Houston, according to city clerk Stephanie Lopez.

Mayor Ted Brandvold and Councilwoman Kristi Ah You voted against the agreement. Councilman Tony Madrigal was absent from the vote, Lopez said in an email Friday.

When Houston was hired in April, she was the city’s first in-house auditor in several years. Brandvold persuaded the council to return to an in-house auditor after contracting a firm to perform those duties.

“I am clearly disappointed in the outcome, which is why I voted against the separation agreement,” Brandvold said in an e-mail Friday. “Some will think she wasn’t given a chance to provide the independent oversight the city desperately needs.”

Some have claimed that Houston, who is African-American, has been subject to harassment, retaliation and even racism. City officials vehemently denied any racial motivation in a series of job performance evaluations for Houston. Some council members have claimed Houston has attempted to overstep her authority.

The agreement between the former auditor and Modesto stipulates that Houston resign her employment, both sides agreed to a mutual non-disparagement clause and a waiver that promises no attempt to seek a claim or legal action.

Zoslocki said the agreement presented to the council was one that was negotiated between city officials and Houston’s legal representation. The agreement had already been signed by Houston.

“I think she’s a wonderful person, and this is what she wanted,” Zoslocki said in a phone interview Friday. “It’s the best action for the city.”

Ah You said Houston was doing her job and “all hell broke loose” as soon as she questioned a Highway 132 project and its compliance with state requirements. The councilwoman believes Houston was “bullied,” since some at city hall refused to work with her and some council members failed to understand the role of auditor.

“My opinion is she got run out of town,” Ah You said Friday in a phone interview. “They just wanted her out of there.”

The Modesto Bee’s attempt to reach Houston and her attorney, Jacq Wilson, by phone Friday were not successful. Wilson has told The Bee that Houston’s role in Modesto was to restore the public’s trust, and she just wanted to do her job.

The city agreed to pay Houston $225,000 to assist the former Modesto auditor in her career transition. Before she was hired in April, Houston was a manager for the National Futures Association in Chicago. She is a certified public accountant and a certified fraud examiner.

Houston already had earned $123,795 — including moving expenses and unused vacation time and sick days — working as the Modesto auditor since in April, according to city spokesman Thomas Reeves. He said Friday’s vote was part of a performance process undertaken by the city council.

“It’s a decision between the council and the charter officer (the auditor),” Reeves said in a phone interview Friday. “This is how our city is structured.”

Zoslocki said the circumstances surrounding Houston’s employment was highly politicized, which included some council members making “inflammatory” statements publicly. He said it could have been costlier for the city to continue to try to work it out with Houston.

“The council made the best decision based on the facts,” Zoslocki said about the settlement. “This was mutually agreeable.”

Houston’s review of one road project created some controversy among the council members and the city attorney.

In a July 19 memo, Houston warned city officials about a roughly $100 million project to realign and upgrade a stretch of Highway 132. Houston wrote that using Meyers Nave on the project would be “subject to and not in compliance with state and federal competitive bid process requirements.”

Meyers Nave is the Sacramento law firm Modesto hired four years ago to provide legal services. City Attorney Adam Lindgren is a principal in Meyers Nave and serves as the city’s top legal adviser through a contract with the firm.

Houston based her memo on a review of emails about the Highway 132 project between Modesto, Meyers Nave and the California Department of Transportation. But an attorney in Caltrans’ Sacramento headquarters on Aug. 1 sent an email to Meyers Nave, saying legal services were not subject to competitive bidding.

Ah You said Wednesday Modesto would be losing its best chance at real transparency if Houston left her job. She said Houston’s role was to mitigate risk; not maintain the status quo.

Since early August, Houston had been the ongoing subject of job evaluations in city council closed-session meetings. Ah you felt the city council should have discussed the role of the city auditor in meetings opened to the public.

“Let’s not just talk about transparency; let’s be transparent,” Ah You has said.

The city’s first in-house auditor, Frank DeMattos, was hired in 2008 and terminated after 18 months on the job. That was followed by a contract with Moss Adams LLP to perform the duties from 2011 until last year.

At that time, the city had set aside more than $360,000 for an in-house auditor, an assistant for the auditor, and $100,000 for outside help. That would be about twice the cost of Moss Adams.

Last year, Modesto discovered the city spent $16 million more than what the City Council had authorized. Since then, the city has conducted a comprehensive review of its purchasing practices.

City Manager Joe Lopez on Tuesday evening told the city council that he and his staff are working to change the workplace culture that allowed the overspending to happen and make sure it doesn’t happen again.

Brandvold said Friday he has learned a lot from this experience and is looking forward to working with his colleagues on the council as they look for a new independent auditor.

Ridenour said the council needs to discuss what type of auditor the city needs as it decides who should provide oversight.

“We have to have an auditor, whether it’s an in-house auditor or an external auditor,” Ridenour said Friday in a phone interview.

Zoslocki said it certainly makes sense for the city to hire an outside firm as the city’s auditor, because it would definitely satisfy the requirement of being independent and less susceptible to political influence.

Councilwoman Jenny Kenoyer said she would like for the city to return to contracting a firm to handle the duties of auditor if Houston left Modesto.

“I have never been in favor of a city in-house auditor,” Kenoyer said in a phone interview Wednesday. “It costs too much.”

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