City of Cave Junction could be liable for $441,666
From our weekly issue dated January 23, 2008
“Repeated failure” to comply with grant requirements may have left the city of Cave Junction liable for some $440,000 expended to extend water and sewer lines to the new Siskiyou Community Health Center clinic on the city’s north side.
Additionally, the city faces an investigation under direction of the U.S. Dept. of Housing and Urban Development’s Office of Labor Standards.
Reimbursement of the $441,666 was to have come through an Oregon Community Development Block Grant (CDBG). However a letter obtained by Illinois Valley News claims that “the City has not maintained the required records” to comply with grant requirements, “nor made (the records) available to the State.”
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The letter, dated Jan. 18, 2008, was sent by Ann Hanus, manager of the Community Development Division of the Oregon Economic Community Development Division, addressed to Mayor Tony Paulson. It outlines the state’s attempts throughout 2007 to ensure the city’s compliance with the grant requirements.
The letter carries an attachment citing 16 specific findings or areas of concern, 11 of which could not be cleared, meaning no corrective action is possible. Several “severe violations” of federal or state law, which were summarized as findings in the letter, include:
*Construction and engineering services contracts were signed prior to completion of required federal environmental clearances or exemptions for construction and nonconstruction activities. Federal law prohibits expenditure of CDBG funds for any activity or project where appropriate environmental clearances have not been completed in advance.
*The city did not demonstrate reasonable likelihood that the project will meet federal objectives of creating or retaining 13 jobs, 51 percent of which must go to low- and moderate-income (LMI) persons by April 15, 2008. Furthermore, by not documenting job creation, the city could not document the “minimum public benefit,” figured to be $35,000 for every full-time job created or retained as a result of the project.
*The city administered the grant itself, using “already budgeted full-time existing City staff.” The administration work is therefore not eligible for reimbursement under the block grant program.
Additionally noted are the city’s repeated failure to provide requested and required documentation; the submission of incomplete documentation; and failure to clear findings identified in a monitoring report dated Aug. 10, 2007, all of which require OECDD to take action to “ensure compliance” to the grant program.
Hanus writes that “due to the severity of the findings not cleared” OECDD had no other recourse than to “take the following actions” --
*The $441,666 grant withdrawn without payment.
*OECDD is required by federal law to investigate labor standard compliance for the project, under direction of HUD’s Office of Labor Standards.
*The city is ineligible to apply for a CDBG for two years.
Withdrawal of the grant likely leaves the city liable for the cost of infrastructure development.
Other violations listed revolve around the city’s failure to provide an environmental assessment prior to awarding the construction contract to Copeland Sand & Gravel, of Grants Pass. Concerning the environmental assessment, the city included an EA prepared by “paid consultant” Ken Houck, of Cave Junction.
However that document, prepared by Houck for a separate grant project, was specific to the clinic location and did not include the infrastructure for which the grant was submitted. Further, the state contends that Houck was not authorized to act as a certifying officer for the infrastructure project.
A timeline included in the letter indicates that the city first given was notice of the areas of concern on July 17, 2007 during a visit by the OECDD regional coordinator. Hanus states that a list of concerns and the corrective actions necessary “was left with the City Administrator.”
Another letter was mailed to the city Aug. 10, 2007 again listing the deficiencies and the corrective actions necessary. It gave the city until Sept. 14 to respond.
At this point the city requested and was given a two-week extension on the Sept. 28, 2007 deadline. There is no indication that the city attempted to respond to this deadline.
A “certified mail return receipt” letter was then sent by OECDD and was signed for by the city on Oct. 30 2007. A final 30-day period was given to complete the necessary paperwork.
The OECDD regional coordinator then sent an e-mail and followed up with a phone call offering assistance three days prior to the Nov. 30 deadline. The offer apparently was declined.
On Dec. 10, 10 days past the final deadline, the state concluded that the city’s response had been inadequate. As a result, the $441,666 grant was withdrawn without payment.
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