Piedmont Pays Big Chunk of Alameda County Program Debts
Shutting Down Mismanaged Program Costs Piedmont $146,000 – so far
The City of Piedmont has agreed to make a payment of $146,000, plus pay additional amounts in the future as needed, to shut down an organization located in Alameda County intended to provide programs to low-income residents. The cost to fully resolve the debts and pending litigation of the Associated Community Action Program (ACAP) has not been estimated. (Staff report of 5/2/11t; staff report of June 20, 2011, fn at p. 2.) Piedmont’s obligation for these liabilities stems from its participation in a Joint Powers Agreement (with Alameda County and 11 other cities) creating the ACAP.
The demand for payment from Piedmont came after an Alameda County audit “confirmed the [ACAP] program has “grossly” mismanaged hundreds of thousands of dollars of grant monies and attributed the loss to lack of oversight by its governing board” according to an Oakland Tribune article.
An Alameda County audit reveals that the board only met twice in 2010, although it was required to meet at least once every 90 days. The audit also reports that ACAP was not audited in 2010, despite the 2008 and 2009 audits showing “significant deficiencies in ACAP’s accounting controls.”
ACAP’s governing board consists of 13 signatories to a Joint Powers Agreement governing the program: one county supervisor and one elected official from 12 cities in the county, including Piedmont. (See members) Piedmont City Council members Abe Friedman, Margaret Fujioka, and Jeff Weiler have each served on the ACAP Board as Piedmont’s representative over the past 5 years. (See dates below.)
Over the course of two hearings in May and June, the City of Piedmont executed a Reimbursement Agreement which confirmed Piedmont will pay an equal share of all liabilities and legal costs for terminating this county program and authorized an initial amount of $146,000 for payment. Additional amounts may be necessary to resolve ACAP debts, including unpaid payroll and legal costs for ongoing litigation.
The Executive Director, Nanette Dillard filed legal action against ACAP after being terminated, arguing that the group’s governing board violated the state’s open meeting and public records laws when it placed her on leave. While the current lawsuit does not seek monetary damages, a successful action would allow a future suit for lost wages. Dillard’s husband, Paul Daniels, was also terminated from his position as the ACAP Grants Manager, but there is no indication he has filed a lawsuit.
A History of Difficulties
Alameda County, Fremont, and a few other cities entered into a 1974 Joint Powers Agreement to form the ACAP. By 1984 all cities in Alameda County had joined except Oakland and Berkeley (which hosted independent programs). The JPA, amended in 1994, provides that the signatories shall pay judgments against ACAP “equally in proportion to their ACAP vote”, though the ACAP did not have programs in Piedmont.
Several years ago, ACAP began to expand its role beyond making sub-grants. The agency was successful in obtaining additional grants and contracts and began offering a multitude of youth, employment, and financial literacy programs. By 2010-11, ACAP’s budget had grown to approximately $3.5 million annually. More details: City of Fremont staff report, item 7.2.1.
As ACAP’s budget increased, the agency began to experience what were described as “cash flow” difficulties. In February 2009, the Alameda County Board of Supervisors approved a revolving trust fund of $250,000 for the ACAP to assist with these difficulties. However, by February 2011, numerous employees and sub-contractors reported that they had not been paid money owed to them, and the agency indicated it could no longer make payroll.
Instead of the funds being used as intended to help extremely poor families in Alameda County with incomes below 75% of the federal poverty threshold, the Oakland Tribune states that the audit suggests:
“ACAP officials used most of a $500,000 federal grant . . . for unqualified payroll and unsubstantiated operating costs.”
Inappropriate expenditures allegedly included alcohol, massages, and work on the homes of the Executive Director and her brother.
Equal Payment of Costs
In May of 2011, after the program was unable to make its February payroll and dissolved, the county plus the 12 cities participating in ACAP agreed to pay a total of $1.9million to cover back wages and legal costs, Each, including Piedmont, will contribute an equal amount. The reimbursement agreement contains no limit on the total contribution which may be required, nor prohibits claims by participants against one another. Per the JPA, liabilities which cannot be satisfied by ACAP grants are shared by the JPA participants based on their “representative vote”. The county and 12 cities each have one vote.
Some of the 12 cities initially objected to the reimbursement, including Albany and Emeryville, but eventually agreed in order to avoid the legal costs of, potentially, facing a separate lawsuit. Part of their reluctance was said to stem from the fact most ACAP’s endeavors were centered in San Leandro, Hayward and Fremont. Equal reimbursements place the greatest burden on the smallest cities in the county (Piedmont, Albany and Emeryville), while placing a very small burden on Fremont, Hayward and the County, forcing the smaller cities to subsidize their much larger neighbors.
The 12 cities and Alameda County will be contributing equally despite large disparities in size and tax revenues. Fremont has a population of 210,445, while Piedmont has a population of 11,055, a 20 to 1 difference. However, one rationale for equal payments might be that each city had one representative on the governing board and, therefore, all had an equal opportunity to provide oversight and prevent mismanagement of ACAP activities.
12 Contributing Cities** 2005 Population
| ALAMEDA |
74,581 |
| ALBANY |
16,743 |
| DUBLIN |
39,931 |
| EMERYVILLE |
8,261 |
| FREMONT |
210,445 |
| HAYWARD |
146,027 |
| LIVERMORE |
80,723 |
| NEWARK |
43,708 |
| PIEDMONT |
11,055 |
| PLEASANTON |
67,650 |
| SAN LEANDRO |
81,442 |
| UNION CITY |
70,685 |
| Balance of County (not including Berkeley or Oakland) |
139,390 |
**Berkeley and Oakland, which run separate programs, did not have a representative on the governing board of ACAP and will not be contributing to the $1.9 million cost of terminating the program.
*Piedmont City Council Representatives to ACAP Board
- 11-12 Jeff Weiler
- 10-11 Margaret Fujioka No audit performed
- 09-10 (not found) Audit showed delinquencies
- 08-09 Margaret Fujioka Audit showed delinquencies
- 07-08 (not found)
- 06-07 Abe Friedman
- 05-06 Abe Friedman
Background Materials: Oakland Tribune May 10, 2011 article; Oakland Tribune August 5, 2011 article, attendance information, detailed history of the ACAP, timeline of ACAP shut down, 1994 Joint Powers Agreement for the ACAP.
Members of the ACAP board as of February, 2011:
Supervisor Nate Miley, Alameda County
Mayor Marie Gilmore, Alameda
Councilman Robert Lieber, Albany
Vice Mayor Kevin Hart, Dublin
Mayor Nora Davis, Emeryville
Mayor Bob Wasserman, Fremont
Vice Chair, Councilmember Francisco Zermeno, Hayward
Councilmember Jeff Williams, Livermore
Councilmember Ana Apodaca, Newark
Councilmember Jeff Wieler, Piedmont
Vice Mayor Cheryl Cook-Kallio, Pleasanton
Chair, Councilwoman Diana Souza, San Leandro
Vice Mayor Jim Navarro, Union City
Did Piedmont ever receive any federal block grant funding or any other benefit from being part of this organization?
Editor’s Response:
There is no reference in the City minutes or staff reports to Piedmont receiving federal Community Service Block Grant (CSBG) monies. Piedmont does receive Community Development Block (CDBG) Grant funds each year, as shown below, but these are administered by a different agency, the “Alameda Urban County”.
2007-8: $33,215
2008-9: $32,189
2009-10: $10,503
2010-11: $30,029
See Staff Reports of 5/7/07, 4/21/2008, 9/8/09, and 6/20/11
Great post, one correction, the Alameda (City) representative for the ACAP was Council member Doug deHaan, and had been since 2009. If you’d like to email me, I can send you the City rosters.
ACAP was such a mess that they had no idea who was supposed to be attending meetings and Board President Diana Souza asked staff to include Mayor Gilmore in the agenda mailings. Gilmore has never been a representative on the ACAP. This is just another example of the organizations lack of oversight and organization.
more information specific to this issue can be found here:
http://www.theislandofalameda.com/2011/03/city-hall-confidential-11/