Del Rey’s newly elected neighborhood council took office with an auspicious beginning when its members were hit with the knowledge that they cannot spend any of their annual $45,000 city allotment until further notice.
The Department of Neighborhood Empowerment (DONE), which oversees the 90 Los Angeles neighborhood councils, took the unusual measure of suspending the council’s ability to allocate money for local projects due to missed deadlines for filing financial paperwork and cash statements.
“They have not submitted their petty cash closing accounts,” DONE General Manager BongWan Kin confirmed Thursday, July 1. “Their funds have been suspended.”
The council treasurer, Brett Flater, has been a member of the neighborhood council since 2008 and was recently reelected when he ran unopposed in April. Flater was scheduled to be sworn in at the board’s first meeting Thursday, July 8.
The council will not be able to use its credit card, known as a purchasing or P-card, until the proper paperwork and record of cash on hand is submitted to DONE, although the council’s ongoing expenses will be paid by DONE, Kim said.
Past Del Rey Neighborhood Council President Mark Redick is troubled by what he believes to be a lack of transparency regarding the council’s duty to fiscal responsibility.
“This (revelation) leads to even more questions, and perhaps even disturbing questions,” he said.
Kim issued a memo in April that outlined a set of financial conditions that all neighborhood council treasurers must provide to DONE, including bank statements and other information related to expenditures from each local council.
Redick asked Flater at the council’s May monthly meeting if the treasurer had the current financial statements and if they had been submitted. According to the May minutes, Flater did not produce them, which led to a heated discussion regarding the meaning of Kim’s memo and how the funding statements should be tendered.
While Redick said the statements should be submitted at board meetings, Flater argued that the memo meant it could be done at any meeting called by the council.
In his directive, Kim wrote the following: “Because the entire board shares the fiduciary responsibility for the expenditure of their public funds, all U.S. Bank purchasing card transactions and monthly bank statements must be approved by every (neighborhood council) board in a public meeting.”
The memo leaves no doubt regarding DONE’s instructions, Redick said.
“Either Mr. Flater didn’t get the memo, or he chose to ignore it,” he said. “To date, the past board and the current board has not seen any of the bank statements.”
Kim said that the council had been informed that its funding has been suspended until the necessary financial data was turned in to his department.
The suspension will be lifted if and when Flater turns in the proper filing reports, said Kim.
According to DONE, in order to maintain their funding, each neighborhood council is required to have a board member trained in neighborhood council funding matters to process paperwork after the funding is approved by the board. The treasurer also maintains the records using general accounting procedures and must submit all paperwork to DONE for quarterly audits.
Neighborhood councils, many of which have grown considerably in stature since their inception in 2001, have faced increased fiscal scrutiny from city officials as their ability to influence public policy has grown. Last year, five advisory council presidents and treasurers were indicted by the Public Integrity Unit of Los Angeles County District Attorney Steve Cooley’s office on felony charges for reportedly misappropriating taxpayer funds.
Asked when the freeze would be lifted if all requirements are met, Kim responded, “About a week or so,” adding that it was contingent upon all the financial information being in order.
The council has a motion on its July 8 agenda to appropriate $1,000 to purchase supplies for the Del Rey Soccer Cup.
Incoming Del Rey Neighborhood Council President Eric DeSobe said he learned a short time ago that the council’s allotment had been suspended and attributed it to an April election challenge.
“We were recently made aware of the temporary hold on our funding related to the election challenge and subsequent delay in granting the new board authority,” DeSobe told The Argonaut. “Now that the new board is sworn in, we can finally resolve the issue quickly and begin investing in great community projects and services.”
Regarding the July funding motion, the council president said, “I do not anticipate the temporary freeze of funds to affect the Del Rey Cup, which is likely to occur in August.”
Redick said it would have been perplexing had DeSobe not known about of the council’s financial dilemma.
“I would have found it extremely difficult to believe that Mr. DeSobe would be unaware of the current situation, especially given the closeness of (his and Flater’s) relationship and the fact that they are roommates,” the former council president asserted.
Flater also said he was only recently made aware of the funding suspension and attributed it to the election challenge.
“I just recently found out that there was a temporary hold on the (neighborhood council’s) account. Once I found out about the delay, I researched what was missing and completed all documents,” Flater, who recently returned to Del Rey from an out of town trip, said. “Unfortunately, the challenge to the election and the delay in seating the new board prevented me from getting the necessary signatures to submit the completed paperwork.”
A longtime board member, Stephen Knight, filed a series of complaints to the city clerk’s office in April, alleging that improprieties had taken place during the election. Of the seven challenges to the election, only one was investigated and that charge was dropped last month, clearing the way for the new members to take office this month.
Kim did not specify that the freezing of the council’s funds was related to the election.
“The city will have all necessary documents prior to Thursday’s meeting,” Flater added. “It will in no way impact our ability to continue to support great projects in the Del Rey community.”
Redick said it was essential to learn the answer to when and if Flater knew the council’s funding was in jeopardy, paraphrasing former U.S. Sen. Howard Baker during the Watergate hearings.
“I think the question that should be,” Redick asked, “what did the treasurer know, and when did he know it?”