water agency review report

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Auditor-Controllers Review Report

May 19, 2010

Dear Mr. Shupe,

In response to your request that we conduct an audit of the work performed by Mr. Allen under theagreements with the Sonoma County Water Agency (Agency),we have performed areview concerningallegations that Michael Allen did not perform all of the work required under the agreements with the Age

The results of our review are documented below.

Objectives

The objectives of the review were to:

1. Determine if the Agency received all of the documents and or services identified in the scopeof work within the agreements dated October 31, 2005, January 23, 2007 and amendmentdated January 27, 2009 between the Agency and Michael Allen.

2. Determine if changes to the scope of agreements above were properly authorized.

Scope of the Review

The scope of our review was limited to the agreements and amendments dated October 31, 2005,January 23, 2007 and January 27, 2009 between the Agency and Michael Allen.

Background Information

The Board of Supervisors received information from a Santa Rosa resident relating to agreementsbetween the Sonoma County Water Agency and a consultant, Michael Allen. The Agency hired Mr.Allen to assist the Agency in the development of a possible workforce housing project to beconstructed on the site of the Agencys soon-to-be-vacated operations and maintenance facility at 2150College Avenue. The Santa Rosa resident is claiming that Mr. Allen did not perform all of the workrequired under the agreements. The resident also claims that a report prepared by Mr. Allen in 2006was plagiarized, and taken from an article by another individual that was posted on the Internet.

Source Documents

We reviewed the following documents:

Copies of consulting agreements between Mr. Allen and the Agency.

Copies of Mr. Allens invoices submitted to the Agency.

Email communications from Ms. Hogan.

Copies of Mr. Allens invoices submitted to the Agency.


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Email communications from Ms. Hogan.

Reports prepared by Mr. Allen for the Agency.

Reports prepared by HartMarin for the Agency.

Paper written by Daniel Hoffman, former Research Director of the American Affordable HousingInstitute at Rutgers University.

Summary of Procedures Performed

Reviewed the scope of work section of the Agreements executed:

October 31, 2005, not to exceed $24,500

January 23, 2007, not to exceed $70,000

January 27, 2009, not to exceed $25,000

We reviewed the related documentation provided by consultants to the Agency.

Discussion with Mr. Thompson, Deputy Chief Engineer, Water Agency.

Discussion with Mr. Allen, Consultant

Summary of Results

Based on our discussion with Mr. Thompson, he indicated that although issues with some of thedocumentation have been identified, the Agency is satisfied with the work performed anddocumentation provided by Mr. Allen. The total not to exceed amount of the agreements andamendment we reviewed was $119,500, the Agency paid approximately $109,858 for services related

to the agreements. Approximately $9,642 was not billed by Mr. Allen; see Appendix D for theSchedule of Amounts Billed and Unbilled.

I. The Agency received all of the documentation identified in the scope of work within the agreementdated October 31, 2005, except for one item. The the Agencys and employees estimated costsfor the housing and a description of the administrative legal requirements was missing from thedocument submitted for Task 2, (see result I.1b).

The contract between the Agency and Mr. Allen did not prohibit Mr. Allen from using the work orideas of others. A portion of the report on Employee Housing Program Alternatives received bythe agency contains language identical to a document written by Mr. Hoffman. The document

written by Daniel Hoffman was included as exhibit 5 of the report titled California Public SectorEmployer Assisted Housing Programs, provided for task 1 and contained source information. Thereport on Employee Housing Program Alternatives prepared by Mr. Allen included language fromMr. Hoffmans report which had previously been submitted to the Agency, this subsequent reportdid not identify Mr. Hoffmans document as a source. However, Mr. Hoffman is aware thatlanguage from his document was used in Mr. Allens report which was submitted to the Agency(see result I.1b).

The Agency received all of the documentation identified in the scope of work within the agreementand amendment dated January 23, 2007 and January 27, 2009, except two items. The Agency did


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not receive a report describing the legal and administrative steps necessary to allow managementof the employee housing project by a non-profit land trust, (see results I.2b). The Agency did not

receive documentation regarding descriptions of home ownership financing alternatives forAgency employees, (see results I.2d).

II. We identified one change to the scope of work for the Agreement dated January 23, 2007, thechange was not made in writing and therefore not signed by the Agencys General Manager orChief Engineer as required by the Agreement (see result II.1a). It is our understanding that Mr.Thompson verbally requested that Mr. Allen work on a different task instead of the one identifiedwithin Task 2 of the Agreement. The Agency received and was satisfied with the draft documentrelated to the change in scope.

Procedures and Related Results

I.1) Procedures Agreement dated October 31, 2005

We interviewed Mr. Thompson and reviewed tasks 1, 2 and 3 in the scope of work (seeAppendix A) within the agreement dated October 31, 2005. We reviewed invoices, reportsand memos submitted by Mr. Allen to the Agency, and compared them to requirements in thescope of work within the agreement dated October 31, 2005.

I.1a) Result Task 1 Investigate existing public employee housing programs

The Agency received a report titled California Public Sector Employer Assisted HousingPrograms from Mr. Allen, which contained documents related to various Employee housing

programs. In our opinion this report provided by Mr. Allen meets the requirements of Task 1a. and b.

I.1b) Result Task 2 Formulate agency housing program model

The Agency received a letter and report dated February 9, 2006, of the Draft Alternatives forthe Water Agency and Recommendations. Except for the cover letter and therecommendations, a portion of the report received by the Agency contains language identicalto a paper written by Daniel Hoffman titled A Blue Print for Employer Assisted HousingBenefit Programs. The document written by Daniel Hoffman was included as exhibit 5 of thereport titled California Public Sector Employer Assisted Housing Programs, provided for task1 above, it contained source information.

The contract between the Agency and Mr. Allen did not prohibit Mr. Allen from using thework or ideas of others. The report on Employee Housing Program Alternatives prepared byMr. Allen included language from Mr. Hoffmans report which had previously beensubmitted to the Agency, this subsequent report did not identify Mr. Hoffmans document as asource. However, Mr. Hoffman is aware that language from his document was used in Mr.Allens report which was submitted to the Agency

The report of Draft Alternatives for the Water Agency provided by Mr. Allen does not includethe Agencys and employees estimated costs for the housing and administrative and


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describe legal requirements as required in the scope of work. In our opinion the reportprovided by Mr. Allen does not meet all of the requirements of Task 2 a. and b.

I.1c) Result Task 3 Outreach efforts

The Agency received monthly invoices which included summaries of outreach efforts andtime spent. The Agency received recommendations related to the employee housing programas part of Task 2, which were satisfactory to the Agency and therefore no additionalrecommendations were considered necessary. In our opinion the documents submitted to theAgency meet the requirements of Task 3 a. and b.

I.2) Procedures Agreement dated January 23, 2007

We interviewed Mr. Thompson and reviewed tasks 1, 2, 3 and 4 in the scope of work(Appendix B) within the agreement dated January 23, 2007. We reviewed invoices, reports

and memos submitted by Mr. Allen and other consultants to the Agency, and compared themto requirements in the scope of work within the agreement dated January 23, 2007.

I.2a) Result Task 1 Investigate existing public employee housing programsHartMarin was retained by Mr. Allen to prepare a master plan and fulfill other requirementslisted within Task 1 of the Agreement dated January 23, 2007. The Agency received severaldocuments from HartMarin, including one titled Master Plan, and one titled Business Plan. Inour opinion these documents meet the requirements of Task 1 a. and b.

I.2b) Result Task 2 Investigate Land Trust Alternatives for Long-Term Management of the

Employee housing project

The Agency did not receive a report describing the legal and administrative steps necessaryto allow management of the employee housing project by a non-profit land trust. Accordingto our discussion with Mr. Thompson, the Agency felt that Mr. Allen's time would be betterspent investigating and developing a housing assistance program for Agency employees withNorthbay Family Homes. Mr. Thompson made a verbal request for Mr. Allen to perform thisnew task instead of the one listed within 1.2a of the agreement. This appears to be inviolation of Section 9 of the Agreement, which required changes or extra work to bedocumented in writing and signed by both parties. The Agency received a draft documenttitled Sonoma County Water Agency CASA Home Loan Program. In a subsequentamendment dated January 27, 2009, within Task 3, 1.6 was added to Evaluate AlternateHome Ownership Programs. According to Mr. Thompson due to a down turn in theeconomy and budget cuts, the Agency decided not to fund the program. Approximately$8,892, related to the amendment executed January 1, 2009 was not billed. Mr. Thompsonstated that Mr. Allen did not perform nor bill for any additional work related to Task 6 withinthe amended agreement. The intent of the draft document titled Sonoma County WaterAgency CASA Home Loan Program was to provide affordable home loans to Agencyemployees, instead of providing Land Trust Alternatives for Long-Term Management of theEmployee Housing Project. Although the Agency was satisfied with the documents theyreceived from Mr. Allen, in our opinion the documents submitted to the Agency did not meetthe requirements of Task 2 a.


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I.2c) Result Task 3 Data Collection and Outreach Assistance

The Agency received monthly invoices which included summaries of outreach efforts and

time spent. In our opinion the invoices with included summaries submitted to the Agencymeet the requirements of Task 3 a.

I.2d) Result Task 4 Develop Recommendation for an Agency Housing Program

The Agency received several documents from HartMarin, including one titled Business Plan.According to Mr. Thompson the Business Plan submitted by HartMarin, includes allrequirements related to this task, except the one related to descriptions of home ownershipfinancing alternatives for Agency employees. The requirements within Task 4 are subjectivein nature and the language in the consultants report does not clearly address descriptions ofhome ownership financing alternatives for Agency employees. In our opinion the documentssubmitted to the Agency did not meet all of the requirements of Task 4 a.

I.3 Procedure Amended Agreement dated January 27, 2009

We interviewed Mr. Thompson and reviewed tasks 5, 6 and 7, in the scope of work(Appendix C) within the agreement dated January 23, 2007. We reviewed Tasks 1, 2, 3 and4, as part of our procedures at I.2. We reviewed invoices, reports and memos submitted byMr. Allen and other consultants to the Agency, and compared them to requirements in thescope of work within the agreement dated January 23, 2007.

I.3a) Result Task 5 Assist in the Santa Rosa General Plan Amendment

There were no documents required for this task. Based on our review of monthly invoices,progress reports and our discussion with Mr. Thompson, Mr. Allen did assist the Agency with

the planning, research and collaboration as part of the Santa Rosa General Plan Amendment.In our opinion the requirements of Task 5 were met.

I.3b) Result Task 6 Evaluate Alternate Home Ownership Programs

As noted in I.2b above, Mr. Thompson stated that Mr. Allen did not perform nor bill for anyadditional work related to Task 6 under the amended agreement.

I.3c) Result Task 7 Bimonthly Reports

The Agency received monthly progress reports on invoices submitted by Mr. Allen, in ouropinion these report meet the requirements of Task 7.

II.1) Procedure Determine if scope changes were properly authorizedWe met with Mr. Thompson and reviewed the scope of work (Appendix A, B and C) withinthe agreement dated October 31, 2005, January 23, 2007 and January 27, 2009. We reviewedinvoices, reports and memos submitted by Mr. Allen and other consultants to the Agency, andcompared them to requirements in the scope of work within the agreements noted above.

II.1a) Result

Section 9 of the agreement dated January 23, 2007, states extra or changed work or otherchanges to the Agreement may be authorized only by written amendment to this Agreement,signed by both parties. This section further states that Agencys General Manager/Chief


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Engineer is authorized to amend that Agreement and Agency personnel are withoutauthorization to order extra or changed work or waive Agreement requirements. As noted in

result at 1.2b above, Mr. Thompson verbally requested a change in scope to the Agreement,the request was not in writing, was not signed by either party. In our opinion the change wasnot properly authorized.

Conclusion

Based on our discussions with Agency staff they indicated that although issues have been identified,the Agency is satisfied with the work and documentation provided by Mr. Allen, and the progress thathas been made with the employee housing program.

Based on our procedures and related results, the Agency received all documents as described in thescope of work for the Agreements with Mr. Allen, except three (see results I.1b, I.2b and I.2d). Adocument written by Daniel Hoffman was included as exhibit 5 of the report titled California PublicSector Employer Assisted Housing Programs, provided for task 1, it contained source information. Thecontract between the Agency and Mr. Allen did not prohibit Mr. Allen from using the work or ideas ofothers. The report on Employee Housing Program Alternatives prepared by Mr. Allen includedlanguage from Mr. Hoffmans report which had previously been submitted to the Agency, thissubsequent report did not identify Mr. Hoffmans document as a source. We identified one change inscope of work, which was not properly authorized by the Agencys General Manager or ChiefEngineer.

Limitations

Due to the specialized and unique field of employer housing programs, we did not address thesufficiency of the services and documents provided by Mr. Allen to the Agency. If we had obtainedthe services of an expert in the field of employer housing programs, information may have come to ourattention that could have materially changed our results and conclusion.


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Appendix A

Agreement dated October 31, 2005


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Appendix B

Agreement dated June 1, 2006

B-1


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Appendix C

Amended Agreement dated January 27, 2009

C-1


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C-2


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C-3


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D-1