Can Beaumont Gain Fiscal Stability After Losing $Millions In Corruption Scandal?

May 23, 2016

Credit www.mrrealestate-inc.com

Last week, seven former Beaumont city officials were arrested due to a corruption probe jointly coordinated by the Riverside County District Attorney’s Office and the FBI. While that investigation went on for more than a year, KVCR’s Matt Guilhem reports the Pass community still faces huge financial questions.

Between the seven men rounded up by authorities last week, there are 94 corruption related felony charges. The investigation that nabbed the suspects claims that they collectively misappropriated around 43 million dollars.

A majority of that figure, around 37 million, came from TUMF funds. Riverside County District Attorney Mike Hestrin explained how those funds were handled inappropriately at a press conference.

Hestrin: Although the defendants caused the city to collect the TUMF, they failed to give the money over to the regional program as required by the law. Instead they maintained control of the TUMF and used the money on projects in Beaumont, awarding the work their own companies.

TUMF stands for Transportation Uniform Mitigation Fees. Typically, municipal governments in Riverside County pool their TUMF money to fund regional transportation infrastructure projects like roads and bridges. However, the Press Enterprise reports that through a laundry list of bogus excuses, Beaumont managed to hold onto to its TUMF money and never contributed to the kitty.

Eventually, the Western Riverside Council of Governments – WR-COG, the group who administers the TUMF money – sued Beaumont for not paying its share. That lawsuit spurred Mike Lara, a county employee and now Beaumont’s mayor, to run for office in 2014.

Lara: My staff collects what we refer to as the TUMF fees, the transportation uniform mitigation fee. So it was concerning to me that the city would sign up as a member of WR-COG and then not move the monies where they were supposed to go.

Lara is at the helm of a community in financial shambles. While the recent corruption probe has put a spotlight on alleged misdeeds by former city officials, it does nothing to help with the money problems the small city of just over 40,000 faces.

Beaumont lost its lawsuit with WRCOG over keeping the TUMF fees. Not only does it owe the agency the original fees, but as Beaumont’s appeal meanders through the court system, interest on the debt continues to accrue daily. The total sum is somewhere north of 60 million dollars at this point.

Because many of those named in the corruption probe had influence in the city’s government for around 20 years, it’s unclear just how connected all of Beaumont’s current monetary issues are. Mayor Mike Lara sounds pained when reflecting on how much scheming was going on among former leaders.

Lara: You know what, it’s extremely disappointing that you would have officials allegedly taking advantage of a system in this regard. And the people who are paying for it are the taxpayers.

Lara views the current situation as a double-edged sword.

Lara: I’m glad that it’s happened, because we can start moving forward to put this behind us, but then there’s frustration that—of the devastation that’s left behind with the money issues.

The sense of pyrrhic victory is shared by Lara’s colleague on the Beaumont City Council, Lloyd White.

White: So every step along the way when something new has happened, it’s like yes, you know, there’s some validation, but – boy, what are we going to do next?

Along the way and on top of the TUMF issue, an audit by the State Controller’s office last year found that for years there were no set accounting practices in the city. That audit also couldn’t account for what hundreds of millions of dollars in bonds was spent on. To try and crack that mystery, Beaumont is now asking the state to probe Union Bank – the issuer of around 200 million in city bonds. Councilman Lloyd White says the bank is being less than forthcoming in providing documentation.

White: We’re Union Bank’s customer, and we pay them a lot of money to be our trustee. And I believe we’re entitled to all the documentation that they have. And when they don’t have it, or suggest that documents have been destroyed, then I want to know why it’s happened; I just want to get to the bottom of our accounting.

Unraveling the Gordian Knot with tweezers would probably be easier than getting to the bottom of Beaumont’s accounting. Mike Lara, the city’s mayor, seems apprehensive but undeterred by the host of unknowns in the city’s immediate future.

Lara: Our citizens have been through a lot. And our goal is to continue to build that trust. It’s not going to happen overnight – this things been going on for 20 years – but the longer that we can continue to build that trust, our hope is the better our city will be.

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