Email sent today (and copied to Matt, the Bobs, the Ethics Board, and a ton of County, State, and Federal agencies.)
City Council Members:
Please do not ignore this message and concern regarding City of Snoqualmie Finances.
Because City Council continues to approve additional debt;
because City Council agreed to a One Million dollar transfer of REET funds during Budget Meeting #9 in November 2018; and
because according to the 2018 Washington State Auditor Exit Interview conducted on Thursday, December 13, 2018 which concluded, among other issues, that:
$127,000 is missing from City Finances without any explanation;
City of Snoqualmie Financials are not reconciled, and Bond issuance and rates hinge upon Financial reports from the City (and ratings from Dunn and Bradstreet impact interest rates); and
Pension Accounts are out of compliance (guidelines went in to effect June 2012. Considering it is almost 2019, this is unacceptable.)
and because the Office of the Auditor, Washington State, clearly outlines expectations of Local Government in the following statement:
City of Snoqualmie Financials are not reconciled, and Bond issuance and rates hinge upon Financial reports from the City (and ratings from Dunn and Bradstreet impact interest rates); and
Pension Accounts are out of compliance (guidelines went in to effect June 2012. Considering it is almost 2019, this is unacceptable.)
and because the Office of the Auditor, Washington State, clearly outlines expectations of Local Government in the following statement:
Management is responsible for ensuring compliance and adequate safeguarding of public resources from fraud, loss or abuse. This includes the design, implementation and maintenance of internal controls relevant to these objectives.
I respectfully ask each City Council member to immediately consider the Financial affairs of the City of Snoqualmie as an Emergency, and please consider the following immediate action:
1. Immediately arrange and conduct an independent Forensic Audit of all Financial Records, including all sets of books, bank accounts, and all records of historical wire transfers, incoming and outgoing;
2. Recommend the City of Snoqualmie immediately terminate Robert (Bob) Larson for failure to implement and adhere to internal controls over Financial accounting standards. Especially as identified in the 2010 State Auditor Report. The lack of internal controls attributed to a misappropriation of $127,000 of City of Snoqualmie funds, and it requires immediate attention and investigation;
3. Remove Bob Larson and Matt Larson from having the ability to access all Financial Resources, including transferring funds out of the City of Snoqualmie; and
4. Assist your constituents by immediately tracking all previously-approved loans, grant applications and Grant Revenues, before assuming any more debt on behalf of the City of Snoqualmie; and
5. Inspect the Financial Reports sent to Dunn and Bradstreet from the City of Snoqualmie and compare that report to the results of the Forensic Audit.
Please find two attachments (only two, of the numerous Audit issues under Matt Larson's reign):
1. Wa St Auditor Report for 2010 Violations
2. Wa State Auditor Report for Jan-Dec 2014
Each report has highlighted areas of concern, Financial and Legal, relating to Matt Larson, Bob Larson, and City Attorney Bob Sterbank.
The 2010 State Auditor Report clearly outlines multiple areas of Financial and Legal concern.
Reminder: Matt Larson was elected as Mayor in 2005. Prior to that, he sat on Snoqualmie City Council. Prior to this, Larson's claims of holding an architectural firm yields zero results. Zero clients. The same can be said for his claims of leading a "large youth nonprofit". Separately, Contracts referenced in this report were not open-ended; Contracts must be renewed. It appears the contracts referenced may not have existed, despite contractors being paid, when these Audit findings were compiled.
At the end of the 2010 Audit report, Matt Larson detailed an Action Plan and commitment to immediately ensure his Administration would be compliant with the Audit findings. This is to ensure Contractors would not be overpaid, unsupervised, and put the city and taxpayers at Risk.
This did not happen.
According to the 2017 Ethics Investigation with Dan Marcinko which concluded in February 2018, the investigation, in addition to concluding Marcinko violated the City of Snoqualmie Code of Ethics, also disclosed numerous legal issues involving a Contractor working for the City of Snoqualmie (drafted and approved by Dan Marcinko, Bob Larson, Bob Sterbank, and Matt Larson).
Matt Larson's action plan to the State Auditor in 2010 was merely fodder?
Matt Larson and Bob Larson ignored the 2010 Audit, did not correct the Contractor Agreements with the City of Snoqualmie, and allowed the problem to continue through 2017, putting the City at risk, and to the detriment of taxpayers.
State and local ethics laws reminder:
State law provides a special code of ethics for city officials. RCW 42.23.070 prohibits a municipal official from:
Using his or her position to secure special privileges or exemptions for himself, herself, or others.
Directly or indirectly, giving or receiving any compensation, gift, gratuity, or reward from any sources, except the employing city, for a matter related to the o cial’s services.
Accepting employment or engaging in business that the o cer might reasonably expect would require him or her to disclose con dential information acquired by reason of his or her position.
Disclosing confidential information gained by reason of the officer’s position, or use of such information for personal gain.
The second attachment, the Wa State Auditor Report, January through December 2014, has several highlights about City of Snoqualmie Finances:
Please note the HAWK signal funding in 2014 (Over $400,000). As Council Members who voted to approve more HAWK funds in 2017, in addition to hearing an attorney speak of the safety danger to Citizens (at no cost to the City of Snoqualmie) this may be of interest to you. Was due diligence exercised prior to approving additional funds for a project previously approved, but left undone?
Please note the significant amount of Debt the City of Snoqualmie prviously adopted, and the Construction Projects listed. Please relate these projects to the current amount of money being approved in recorded City Council meetings (which can be found on YouTube). Are any of you concerned?
SOUTH KOREAN DELEGATES fund. This is money used for Snoqualmie Sister Cities Association activities.
In the 2017 Audit Responses, Bob Larson is on record stating to the Washington State Auditor that the City of Snoqualmie does not fund/cross-fund SSCA, yet this 2010 State Auditor Report proves otherwise.
In the 2017 Audit Responses, Bob Larson is on record stating to the Washington State Auditor that the City of Snoqualmie does not fund/cross-fund SSCA, yet this 2010 State Auditor Report proves otherwise.
Additionally, Matt Larson, in a meeting on March 5, 2018 at the Snoqualmie TPC Board Room, shared with 3 people he diverted $10,000 of a $30,000 INTERNATIONAL donation from South Korea meant for 501c3 non-profit SSCA, and he placed those funds into City of Snoqualmie Finances.
Does this diversion of funds satisfy the elements of Wire Fraud, and perhaps International Wire Fraud?
An Immediate Forensic Audit is Imperative and Necessary.
Funds designated under South Korean Delegates are problematic to Bob Larson and Matt Larson, and appear to contradict the information relayed to the Washington State Auditor.
If Bob Larson, Matt Larson, and Bob Sterbank have no problem being dishonest to the Auditor for the State of Washington, and have no problem continuing to employ a Department Head found guilty of violating the City Code of Ethics, what else have they done or will they do?
The following information has been highlighted from the MRSC Mayor-City Council Handbook, 2017:
Legal restrictions: "...the city’s adopted ordinances, typically codified as your municipal code, must be followed until the council takes action to amend them. And that’s just the beginning – the number of federal and state laws and regulations that also govern your actions...." are numerous.
NOTE: Have meetings designated as "Code Cleanup" and conducted in 2018 violated these laws?
NOTE: Have meetings designated as "Code Cleanup" and conducted in 2018 violated these laws?
City revenues are limited by laws.
NOTE: Revenues are not properly tracked or reconciled, as per the Exit Interview last week, so as City Council Members, how could you properly Budget for 2019?
NOTE: Revenues are not properly tracked or reconciled, as per the Exit Interview last week, so as City Council Members, how could you properly Budget for 2019?
Some things that you may just consider “good business sense” could run afoul of our state constitution’s prohibition against “gifts of public funds.” (See Article VIII, § 7 of the state constitution.)
All Public works projects and contracting often must go through a public bidding process.
NOTE: No evidence exists the City adhered to the public bidding process when hiring the Event Planner directly from the Snoqualmie Chamber of Commerce. In addition, City Council voted NO on consolidating the Department hiring this Contractor when it was presented to City Council. Despite the No vote, Matt Larson, Bob Larson, and Bob Sterbank proceeded.
All Public works projects and contracting often must go through a public bidding process.
NOTE: No evidence exists the City adhered to the public bidding process when hiring the Event Planner directly from the Snoqualmie Chamber of Commerce. In addition, City Council voted NO on consolidating the Department hiring this Contractor when it was presented to City Council. Despite the No vote, Matt Larson, Bob Larson, and Bob Sterbank proceeded.
As cities grow and the complexities of city administration become more difficult for a part-time mayor and a city clerk to handle, some cities choose to create a new position titled “city administrator” to help with city administration, under the direction of the mayor. The individual in such a position is generally appointed by the mayor and performs tasks within the statutory authority of the mayor. The council can establish the qualifications and the duties of the position.
The city council determines the number of employees that can be hired and those employees’ duties. The council establishes salaries and other forms of compensation paid to city workers. The council may also establish job qualifications.
NOTE: It appears most administrative support employees in the City of Snoqualmie only work 3 to 4 days per week. Consider this fact when claims arise from Matt Larson, Bob Larson, and Bob Sterbank regarding the lack of staff ability in procuring Public Records. Also note other cities have designated Public Records staff. Additionally, all Public Records procured by the City *should* be made available on the City of Snoqualmie website to alleviate duplicate production efforts by staff, and encourage transparency.
The city council determines the number of employees that can be hired and those employees’ duties. The council establishes salaries and other forms of compensation paid to city workers. The council may also establish job qualifications.
NOTE: It appears most administrative support employees in the City of Snoqualmie only work 3 to 4 days per week. Consider this fact when claims arise from Matt Larson, Bob Larson, and Bob Sterbank regarding the lack of staff ability in procuring Public Records. Also note other cities have designated Public Records staff. Additionally, all Public Records procured by the City *should* be made available on the City of Snoqualmie website to alleviate duplicate production efforts by staff, and encourage transparency.
The state statutes provide details concerning the mayor/city manager’s responsibility to prepare the preliminary budget and a “budget message.” Their authority to make transfers within individual funds is also spelled out in the statutes.
NOTE: In Budget meeting #9 on November 2018, information was requested which should have been provided by the time Budget Meeting #1 took place. Only ten meetings are allowed by law, and the basics hadn't even been addressed at Budget Meeting #9. (The City was busy requesting a one million dollar transfer of REET Funds.)
NOTE: In Budget meeting #9 on November 2018, information was requested which should have been provided by the time Budget Meeting #1 took place. Only ten meetings are allowed by law, and the basics hadn't even been addressed at Budget Meeting #9. (The City was busy requesting a one million dollar transfer of REET Funds.)
How on earth did the 2019 Budget become finalized on time, considering the numbers the City of Snoqualmie presented hadn't been reconciled?
State law governs municipal budgets. Although no uniform budget document exists for cities, cities must use uniform revenue and expenditure categories specified by the state auditor (known as the BARS system). Cities can use either annual or biennial budgets, but most use annual.
NOTE: Bob Larson has been City Administrator for approximately 15 years, if not more. There is no excuse for State Audit findings concluding Financials are not reconciled, especially to bank statements. In 2006 the City of Snoqualmie paid to acquire Software to assist with Financial Accounting. Was this software actually purchased and utilized?
The City of Snoqualmie has never been fully and completely Audited under Matt Larson and Bob Larson.
Financials are not Reconciled, and their accuracy is obviously questionable, regardless of the system used, and that information MUST be accurate. Abiding by Municipal, State, and Federal Laws is not optional.
In Washington, budgets must be balanced – anticipated revenues must equal forecasted expenditures. Unexpected revenues can be appropriated by a supplemental budget modification or can be allocated to reserve funds or to the following year’s beginning balance. Expenditures which exceed revenues can be made only by the council transferring funds from reserve accounts (subject to council approval) or by issuing interest bearing warrants.
NOVEMBER 2017: Bob Larson issued TWO checks in ONE week which resulting in DOUBLE PAYING two contractors. One check totaled approximately $400,000 payable to RH2 Engineering, and it required FIVE signatures from staff. Not one person who signed this check, a procedure designed to catch errors, caught this $400,000 Double Payment. It as RH2 Engineering who notified the City, and mailed the check back. City Administrator Bob Larson was never held accountable, and STILL, internal controls are lacking.
NOTE: Please require Administration to provide all Bond information, including the dollar amount and corresponding Bond Interest Rate for each. Please obtain the Financial Reports sent to Dun and Bradstreet. Please exercise due diligence in determining reasons for the prevailing Bond rates when continuing to borrow money.
NOVEMBER 2017: Bob Larson issued TWO checks in ONE week which resulting in DOUBLE PAYING two contractors. One check totaled approximately $400,000 payable to RH2 Engineering, and it required FIVE signatures from staff. Not one person who signed this check, a procedure designed to catch errors, caught this $400,000 Double Payment. It as RH2 Engineering who notified the City, and mailed the check back. City Administrator Bob Larson was never held accountable, and STILL, internal controls are lacking.
NOTE: Please require Administration to provide all Bond information, including the dollar amount and corresponding Bond Interest Rate for each. Please obtain the Financial Reports sent to Dun and Bradstreet. Please exercise due diligence in determining reasons for the prevailing Bond rates when continuing to borrow money.
Implementing the budget: The mayor/city manager’s job is to implement the budget adopted by the council and to provide the council with periodic reports that show a comparison of accrued revenues and expenditures to the budget projections and appropriations. The law also requires the city to present a report of remaining expectation and unexpended balance for each appropriation to the council on a quarterly basis, however depending upon the nancial condition of the city, it may be appropriate to provide a report more frequently. It is important to carefully monitor these budget results, which may be a function of the mayor’s office.
A December 2017 complaint revealed a City Department Head, Dan Marcinko, whose Department utilizes most of the City of Snoqualmie funding and resources, violated the Code of Ethics. Matt Larson's choice to not hold this Department Head accountable for violating the Code of Ethics is problematic.
As is Matt Larson's decision to not follow Civil Service Rules when hiring Officers to the Snoqualmie Police Department, and passing over viable candidates who were not previously fired for cause, as the hiring of Nick Hogan demonstrated.
Hogan failed his Oral Board with the Commission. Instead of being disqualified as Civil Service Rules dictate, Larson enlisted Police Captain Nick Almquist to invite Hogan back for a second Interview attemp. Hogan passed and was hired, and the other three viable candidates were never considered. And in the process, a longtime valuable hourly employee (Whistleblower?) was fired for "dishonesty" in the process.
This same police Captain, who is Matt Larson's right-hand man, is involved in covering up Hit and Run charges for the same Contractor associated with Dan Marcinko's Ethics violation. On January 28, 2017, this Contractor hit a King County Metro Vehicle, then took off until her own car broke down in the middle of the street, inside Snoqualmie City Limits. She resisted arrest, did not have Insurance for the vehicle she was driving, did not have a valid Drivers License, tabs on the vehicle were expired, and when she finally agreed, she blew over THREE times the legal limit. Officers invloved only ticketed her for DUI and Improper Lane Change. King County confirmed as a result of the Contractor not having Insurance, they had to pay for all repairs and towing fees amounting to over $7000.00. When this Contractor appeared in Issaquah Municipal Court, because all information disclosing the Hit and Run was not included, and because Dan Marcinko and other City Employees perjured themselves in Declarations of support for this contractor, she demanded and was granted a DUI Deferral.
Additionally, a School Board Member for the Snoqualmie Valley School District, Gary Fancher, may have utilized this Contractor's court information to get out of his own DUI and Hit and Run charges ticketed earlier this year.
Enough is enough.
City Council Members, please make the right decision, not the easy decision,and require an immediate Forensic Audit. Please properly address an entirely new set of problems:
A City of Snoqualmie Administration responsible for a lot of missing money, as they continue a years-long outright willingness to disregard laws designed to prevent mismanagement of Public Funds, ensure the Safety and Security of Citizens and taxpayers, and reduce risk.
The City of Snoqualmie refuses to act with Integrity and Transparency.
The irresponsible lack of internal controls has led to severe mismanagement of City Finances, Assets, and Revenues. There is no excuse for the current State of Affairs.
In a public City Council Meeting in the fall of 2017, as a result of the Ethics violation, Council stated all Contracts would be reviewed immediately to ensure they were accurate, legal, and enforceable. City Council has not updated the Public regarding the status of this concern. Considering the 2010 State Audit report identified a severe lack of Internal Controls attributed to overpayment of Contractors, it is clear this situation was never resolved or rectified, and it has been allowed to continue all the way to 2017.
In addition to the other resources listed below, I'll leave you all with one last item to peruse.
Public Corruption is a bipartisan sport.
It would prudent to review the information attached to the link below and make sure Adminstration and City Officials for the City of Snoqualmie are exercising due diligence in every area of the law, as it would seem everyone attached to collusion and corruption would be impacted under this Federal definition.
Thank you for your immediate consideration of these requests,
Kelly Spratt
Pension Plan Requirements, GASB
The Governmental Accounting Standards Board (GASB) approved Statement No. 67, Financial Reporting for Pension Plans, in June 2012. The Statement is available free of charge at www.gasb.org. (Separate fact sheets describe the GASB’s new pension standards for government employers that provide pension benefits to their employees.) Statement 67 contains guidance for pension plans that prepare and issue their own financial reports, as well as for plans that are reported as a fiduciary fund by a government.
Pension plans are required to put the new standards into effect beginning in fiscal years ending June 30, 2014, and later. The GASB does, however, encourage plans to implement the new standards sooner.
REET Reporting Requirements
The use of either REET 1 or REET 2 for maintenance requires additional reporting requirements. These same reporting requirements are applicable to the use of REET 2 funds for homeless housing or REET 1 defined capital projects that are not included in the REET 2 definition.
The local government must prepare a written report demonstrating that it has, or will have, adequate funding from all sources of public funding to pay for all capital projects identified in its capital facilities plan for a two-year period. This report must be adopted as part of the city’s or county’s regular budget process and must include:
Information necessary to demonstrate that the local government has, or will have, adequate funding from all sources to pay for all capital projects identified in its capital facilities plan.
How revenues collected under REET 1 and REET 2 have been used during the prior two-year period.
How revenues collected under REET 1 and REET 2 will be used for the succeeding two-year period.
What percentage of funds for capital projects is attributed to REET 1 and REET 2 revenues compared to all other source of capital project funding.
Posting of Disclosure Requirements
How revenues collected under REET 1 and REET 2 have been used during the prior two-year period.
How revenues collected under REET 1 and REET 2 will be used for the succeeding two-year period.
What percentage of funds for capital projects is attributed to REET 1 and REET 2 revenues compared to all other source of capital project funding.
Posting of Disclosure Requirements
If the local government has imposed any requirements on landlords or sellers of real property to provide information to a buyer or tenant "pertaining to the subject property or to the surrounding area," the requirements must be posted on the MRSC website in accordance with RCW 43.110.030(2)(e).
ACCOUNTING OF REET FUNDS
Because this revenue source has a dedicated purpose, it must be accounted for separately in a capital projects fund. Those cities and counties that are planning under GMA and levying both REET 1 and REET 2 need to keep track of each of these revenues separately because the uses to which they may be put are different (RCW 82.46.010(5)(b) and 82.46.035(5)).
The optional REET funds received under RCW 82.46.010(3) are general fund revenues and do not require separate accounting.
Although no special direction is given in the statutes as to how to account for funds collected under RCW 82.46.070 for conservation areas or RCW 82.46.075 for affordable housing, both of these statutes explicitly state that “the proceeds of the tax shall be used exclusively” for those respective purposes, so we recommend keeping these revenues in separate special revenue funds.
Examples of REET Ordinances/Documents
MRSC has prepared several sample ordinances for imposing REET 1 and REET 2:
MRSC REET 1 Sample Ordinances
Cities and towns planning under GMA and population over 5,000 (2012)
Counties planning under GMA and population over 5,000 (2012)
MRSC REET 2 Sample Ordinances
Counties planning under GMA and population over 5,000 (2012)
MRSC REET 2 Sample Ordinances
Cities and towns planning under GMA (2012)
Counties planning under GMA (2012)
Recommended Resources
Counties planning under GMA (2012)
Recommended Resources
WA Department of Revenue Real Estate Excise Tax Rates - Shows REET rates for all cities and counties
WA Department of Revenue 2016 Tax Reference Guide: Real Estate Excise Taxes
Ask MRSC Archives: Real Estate Excise Tax - Selected inquiries we have answered regarding REET
WA Department of Revenue 2016 Tax Reference Guide: Real Estate Excise Taxes
Ask MRSC Archives: Real Estate Excise Tax - Selected inquiries we have answered regarding REET
The SAO BARS manual chapter on Capital Asset Management states in item 3.3.8.40 (5), “As a steward of public property, a government has the obligation not only to safeguard assets from loss but also to ensure that they are not neglected or wasted.”
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