The city of Imperial Beach will vote Wednesday whether to approve an official response to a series of critical findings made in a report by the San Diego County Civil Grand Jury following an audit conducted within the last year.
The report criticized city, redevelopment agency and redevelopment agency successor agency spending and accounting practices and concluded that the city "needs to take strong action to get their financial house in order."
The city called 20 of 21 facts or findings addressed in the 15-page response to the report inaccurate, misleading or incorrect.
The Imperial Beach City Council, Mayor Jim Janney and City Manager are required by state law to issue an official response to San Diego County Superior Court Presiding Judge Robert Trentacosta by Aug. 26.
Instead the city issued a single letter on the behalf of all three parties.
The report titled "Imperial Beach Finances – A City Under Stress" was released May 28. The audit was carried out by San Diego County accounting staff for the civil grand jury and stated that the city and redevelopment agency kept inaccurate legal services records and made several other mistakes in its accounting.
Among statements labeled facts by the grand jury that the city disagrees with:
- The city continues to be dependent on redevelopment agency tax increments for a substantial amount of its operating budget.
- Legal services were not properly recorded.
- Redevelopment expenses were understated $1.7 million in fiscal year 2010-11.
- Shared labor costs that allowed redevelopment funds to pay part of city salaries were inadequately accounted for and incorrectly reported.
The only fact or finding Janney in part agreed with is that the city's redevelopment agency accounting procedures were flawed, noting that "there is always room for improvement."
"The city partially agrees with this finding, although the city object to the use of the word 'flawed' which may have an unnecessarily harsh connotation not applicable to immaterial misstatements," the letter stated.
Several of the report's recommendations have already been implemented, the letter stated. The city does not intend to follow a recommendation that it study the amount of time spent on redevelopment activity versus city activity.
The city also does not intend to follow a recommendation that it change how it classifies legal costs between the city and redevelopment activity, calling the step "unwarranted."
In April, in what is thought to be one of the first actions of its kind in San Diego, the city filed a temporary restraining order against the grand jury in April to block their ability to use specific records related to the city's legal fees.
A Superior Court judge sided with the grand jury and lifted the restraining order at a court hearing month later.