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Pasco officials to discuss relationship with DPDA following critical state audit

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(The Center Square) – Pasco officials intend to discuss the city’s relationship with the Downtown Pasco Development Authority following a new state audit which questioned nearly $300,000 in disbursements by the DPDA that lacked documentation.

State auditors cited critical findings in an accountability report issued Thursday for a two-year period covering 2020-22.

“Our audit of purchases found check payments totaling $299,826 were not adequately supported,” the report said of DPDA operations. “This included $1,050 in payments that were unallowed because they did not appear to be for a clear business purpose, and $8,861 in unaccounted-for asset purchases.”

On Monday, City Manager Adam Lincoln issued a statement about the auditor findings and saying the city council “will be deliberating on the future of our relationship with the DPDA.”

The discussion is planned for a council workshop scheduled Feb. 12, said Lincoln.

“We are dedicated to transparency, accountability, and the prudent use of public resources,” he wrote. “To that end, the City will continue to work with the State Auditor’s Office and any other relevant authority for a full accounting of the DPDA’s finances.”

In an emailed reply Tuesday to The Center Square, Adam Wilson, an information officer for the state Auditor’s Office, said the agency’s investigative work included subpoenaing bank records and visiting the authority’s office in person to review records.

“Ultimately, however, we were unable to determine whether a misappropriation occurred,” said Wilson, because of the lack of DPDA’s documentation. He referenced the report which stated, “The lack of controls and oversight increase the risk that a misuse or misappropriation of public funds could occur, and the Authority would not be able to prevent or detect it in a timely manner, if at all.”

Asked if there were any referrals to police for an investigation, he said, “Our report is public and available to law enforcement.”

In Washington, public development authorities are public corporations created by a city or county for a specific purpose and partially funded by taxpayer dollars; in Pasco’s case, to strengthen and develop the downtown area as “a center for culture, business and community spirit.”

Until last year, the DPDA was overseen by an appointed seven-member board of directors and managed a local farmers market, a specialty kitchen, a “Fiery Foods” festival, and Cinco de Mayo celebrations. Now seemingly defunct, the accountability report said the authority experienced turnover of three executive directors during the 2020-22 period, which compounded problems in providing adequate fiscal oversight.

The audit stated that one executive director – who was not named – used electronic funds transactions and a debit card to make purchases totaling $285,141 “that were not adequately supported.” Of that amount, $79,517 was paid to 14 people outside of the country and two people outside of the state using money transfers. Additionally, the audit noted:

The authority’s debit card was used to withdraw $2,740 in cash from an ATM, and over-the-counter cash withdrawals totaling $30,404 which lacked supporting document;The authority received $630,000 in grant funding from private foundations to provide financial support for local businesses and individuals affected by the COVID-19 pandemic, but could not show whether the funding was passed on to eligible recipients for purposes specified by the grant; andThe authority and its directors did not comply with the state’s Open Public Meetings Act by failing to post agendas online, post minutes of regular and special meetings in a timely manner, or explain why 11 executive sessions were conducted without specifying allowable reasons defined by state law.

“Our audit found the Authority lacked effective internal controls for ensuring it safeguarded public funds and complied with state law,” the report said. It also said current and past board members of the DPDA declined to talk to auditors about the findings.

Auditors continued to analyze the authority’s financial condition through last fall and said the authority’s total operating revenue had declined from $791,849 in 2020 to $246,477 by Aug. 31, 2023 with an ending cash balance of $13,393. At the end of last September, the authority owed $67,759 in outstanding payables of which $57,964 were outstanding for more than 90 days.

Findings were also issued against DPDA in prior audits covering years 2016 through 2019. In 2016, former DPDA executive director Michael A. Goins pled guilty to first-degree theft and was sentenced to a year in prison for allegedly embezzling at least $90,000 over a two-year period, according to news reports.

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