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Sonoma County Water Agency

Employee Housing Contract Review

Auditor-Controller’s Review Report

For the Period October 31, 2005 – May 12, 2010

RODNEY A. DOLE
SONOMA COUNTY
AUDITOR-CONTROLLER
TREASURER-TAX COLLECTOR
Sonoma County Water Agency
Employee Housing Contract Review

Auditor-Controller’s Review Report

For the Period October 31, 2005 – May 12, 2010

Table of Contents

Page

Auditor-Controller’s Review Report ................................................................................ 1-6

Appendix A – Scope of Work for Agreement Dated October 31, 2005 ......................... 7-8

Appendix B – Scope of Work for Agreement Dated January 23, 2007 .......................... 9 - 11

Appendix C – Scope of Work for Agreement Dated January 27, 2009 .......................... 12 - 15

Appendix D – Water Agency Consulting Agreements


Schedule of Amount Billed and Unbilled ............................................... 16
Auditor-Controller’s 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 the
agreements with the Sonoma County Water Agency (Agency), we have performed a review concerning
allegations that Michael Allen did not perform all of the work required under the agreements with the Agency.

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 scope
of work within the agreements dated October 31, 2005, January 23, 2007 and amendment
dated 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 agreements
between 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 be
constructed on the site of the Agency’s soon-to-be-vacated operations and maintenance facility at 2150
College Avenue. The Santa Rosa resident is claiming that Mr. Allen did not perform all of the work
required under the agreements. The resident also claims that a report prepared by Mr. Allen in 2006
was plagiarized, and taken from an article by another individual that was posted on the Internet.

Source Documents

We reviewed the following documents:

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


x Copies of Mr. Allen’s invoices submitted to the Agency.
x Email communications from Ms. Hogan.
x Copies of Mr. Allen’s invoices submitted to the Agency.
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x Email communications from Ms. Hogan.


x Reports prepared by Mr. Allen for the Agency.
x Reports prepared by HartMarin for the Agency.
x Paper written by Daniel Hoffman, former Research Director of the American Affordable Housing
Institute at Rutgers University.

Summary of Procedures Performed

x Reviewed the scope of work section of the Agreements executed:


¾ October 31, 2005, not to exceed $24,500
¾ January 23, 2007, not to exceed $70,000
¾ January 27, 2009, not to exceed $25,000
x We reviewed the related documentation provided by consultants to the Agency.
x Discussion with Mr. Thompson, Deputy Chief Engineer, Water Agency.
x Discussion with Mr. Allen, Consultant

Summary of Results

Based on our discussion with Mr. Thompson, he indicated that although issues with some of the
documentation have been identified, the Agency is satisfied with the work performed and
documentation provided by Mr. Allen. The total not to exceed amount of the agreements and
amendment 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 the
Schedule of Amounts Billed and Unbilled.

I. The Agency received all of the documentation identified in the scope of work within the agreement
dated October 31, 2005, except for one item. The “the Agency’s and employees’ estimated costs
for the housing and a description of the administrative legal requirements” was missing from the
document 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 or
ideas of others. A portion of the report on Employee Housing Program Alternatives received by
the 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 Sector
Employer Assisted Housing Programs, provided for task 1 and contained source information. The
report on Employee Housing Program Alternatives prepared by Mr. Allen included language from
Mr. Hoffman’s report which had previously been submitted to the Agency, this subsequent report
did not identify Mr. Hoffman’s document as a source. However, Mr. Hoffman is aware that
language from his document was used in Mr. Allen’s 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 agreement
and 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 management
of 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 for
Agency employees”, (see results I.2d).

II. We identified one change to the scope of work for the Agreement dated January 23, 2007, the
change was not made in writing and therefore not signed by the Agency’s General Manager or
Chief 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 identified
within Task 2 of the Agreement. The Agency received and was satisfied with the draft document
related 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 (see
Appendix A) within the agreement dated October 31, 2005. We reviewed invoices, reports
and memos submitted by Mr. Allen to the Agency, and compared them to requirements in the
scope 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 Housing
Programs 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 1
a. 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 for
the Water Agency and Recommendations. Except for the cover letter and the
recommendations, a portion of the report received by the Agency contains language identical
to a paper written by Daniel Hoffman titled A Blue Print for Employer Assisted Housing
Benefit Programs. The document written by Daniel Hoffman was included as exhibit 5 of the
report titled California Public Sector Employer Assisted Housing Programs, provided for task
1 above, it contained source information.

The contract between the Agency and Mr. Allen did not prohibit Mr. Allen from using the
work or ideas of others. The report on Employee Housing Program Alternatives prepared by
Mr. Allen included language from Mr. Hoffman’s report which had previously been
submitted to the Agency, this subsequent report did not identify Mr. Hoffman’s document as a
source. However, Mr. Hoffman is aware that language from his document was used in Mr.
Allen’s report which was submitted to the Agency

The report of Draft Alternatives for the Water Agency provided by Mr. Allen does not include
“the Agency’s 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 report
provided 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 and
time spent. The Agency received recommendations related to the employee housing program
as part of Task 2, which were satisfactory to the Agency and therefore no additional
recommendations were considered necessary. In our opinion the documents submitted to the
Agency 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 them
to requirements in the scope of work within the agreement dated January 23, 2007.

I.2a) Result – Task 1 Investigate existing public employee housing programs


HartMarin was retained by Mr. Allen to prepare a master plan and fulfill other requirements
listed within Task 1 of the Agreement dated January 23, 2007. The Agency received several
documents from HartMarin, including one titled Master Plan, and one titled Business Plan. In
our 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 necessary
to allow management of the employee housing project by a non-profit land trust”. According
to our discussion with Mr. Thompson, the Agency felt that Mr. Allen's time would be better
spent investigating and developing a housing assistance program for Agency employees with
Northbay Family Homes. Mr. Thompson made a verbal request for Mr. Allen to perform this
new task instead of the one listed within 1.2a of the agreement. This appears to be in
violation of Section 9 of the Agreement, which required changes or extra work to be
documented in writing and signed by both parties. The Agency received a draft document
titled “Sonoma County Water Agency CASA Home Loan Program”. In a subsequent
amendment dated January 27, 2009, within Task 3, 1.6 was added to “Evaluate Alternate
Home Ownership Programs”. According to Mr. Thompson due to a down turn in the
economy 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. Thompson
stated that Mr. Allen did not perform nor bill for any additional work related to Task 6 within
the amended agreement. The intent of the draft document titled “Sonoma County Water
Agency CASA Home Loan Program” was to provide affordable home loans to Agency
employees, instead of providing “Land Trust Alternatives for Long-Term Management of the
Employee Housing Project”. Although the Agency was satisfied with the documents they
received from Mr. Allen, in our opinion the documents submitted to the Agency did not meet
the 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 Agency
meet 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 all
requirements related to this task, except the one related to “descriptions of home ownership
financing alternatives for Agency employees”. The requirements within Task 4 are subjective
in nature and the language in the consultants report does not clearly address “descriptions of
home ownership financing alternatives for Agency employees”. In our opinion the documents
submitted 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 and
4, as part of our procedures at I.2. We reviewed invoices, reports and memos submitted by
Mr. Allen and other consultants to the Agency, and compared them to requirements in the
scope 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 any
additional 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 our
opinion these report meet the requirements of Task 7.

II.1) Procedure – Determine if scope changes were properly authorized


We met with Mr. Thompson and reviewed the scope of work (Appendix A, B and C) within
the agreement dated October 31, 2005, January 23, 2007 and January 27, 2009. We reviewed
invoices, reports and memos submitted by Mr. Allen and other consultants to the Agency, and
compared 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 other
changes to the Agreement may be authorized only by written amendment to this Agreement,
signed by both parties”. This section further states that “Agency’s General Manager/Chief
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Engineer is authorized to amend that Agreement” and “Agency personnel are without
authorization 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 was
not 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 that
has been made with the employee housing program.

Based on our procedures and related results, the Agency received all documents as described in the
scope of work for the Agreements with Mr. Allen, except three (see results I.1b, I.2b and I.2d). A
document written by Daniel Hoffman was included as exhibit 5 of the report titled California Public
Sector Employer Assisted Housing Programs, provided for task 1, it contained source information. The
contract between the Agency and Mr. Allen did not prohibit Mr. Allen from using the work or ideas of
others. The report on Employee Housing Program Alternatives prepared by Mr. Allen included
language from Mr. Hoffman’s report which had previously been submitted to the Agency, this
subsequent report did not identify Mr. Hoffman’s document as a source. We identified one change in
scope of work, which was not properly authorized by the Agency’s General Manager or Chief
Engineer.

Limitations
Due to the specialized and unique field of employer housing programs, we did not address the
sufficiency of the services and documents provided by Mr. Allen to the Agency. If we had obtained
the services of an expert in the field of employer housing programs, information may have come to our
attention that could have materially changed our results and conclusion.
May 19, 2010 Appendix A
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Agreement dated October 31, 2005
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May 19, 2010
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Appendix B

Agreement dated June 1, 2006

B-1
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B-2
May 19, 2010 Appendix C
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Amended Agreement dated January 27, 2009

C-1
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C-2
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C-3
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