Pasco group faces lawsuit after damning WA audit claims secret meetings, missing money
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Unwinding the Downtown Pasco Development Authority
The City of Pasco gears up to dissolve the flawed Downtown Pasco Development Authority after a decade of spotty audits, dubious accounting practices and some illegal activity.
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An open government activist from Western Washington is filing a lawsuit this week against the Downtown Pasco Development Authority over alleged violations to state meeting laws.
Arthur West alleges that authority board members and staff “knowingly violated” the state’s Open Public Meetings Act by “deliberating and taking action” at several illegal meetings from April to December 2022.
“This particular agency seems to have gone rogue,” West told the Tri-City Herald in a phone interview this week.
“Redevelopment, developing downtowns and having economic vitality in our downtowns is a good thing. But it’s also a good thing to have reasonable public oversight over these agencies when they’re performing these laudable goals,” he said.
“The citizens in Pasco, who pay their tax money to have this done, deserve to have an open process so they can see where the money is going and who is making the decisions,” he said.
Washington’s open meetings law requires the governing bodies of all public agencies to notify the public of all meetings and make them open to anyone.
West, an Olympia resident, is a prodigious amateur litigator who has served as a government watchdog for nearly four decades.
He has filed “scores” of lawsuits against municipal governments, and has often made them fork over cash through settlements.
That includes, more recently, a suit in 2023 over the Washington Senate’s “silently withholding” of public records and another in 2022 over an illegal meeting the Richland School Board held to make COVID face masks optional.
“Usually if the agencies are not following the sunshine laws, they’re doing something wrong,” West said.
He believes a state audit this year of the Downtown Pasco Development Authority may have only scratched the surface. He would be interested in seeing a more thorough autopsy of the organization’s structure, processes and accounting practices, and hopes discovery in his lawsuit will answer questions.
“At this point, I’m not sure if everything they’ve done has been brought to light yet,” he said.
Troubled downtown group
The downtown group is an independent public development authority and nonprofit with a mission to support economic revitalization around the downtown area.
Under Washington state law, local governments can create or contract with public corporations, commissions, or authorities to do that work with public money but they must follow laws on open meetings, public records and more.
West alleges in the lawsuit obtained by the Herald before he filed it that the downtown group participated in secret meetings, failed to reach a quorum needed to hold public sessions and talked and made decisions outside of meetings.
West will ask a Franklin County Superior Court judge to assess penalties — $500 for each known violation of the open meetings law — against its executive director and board members at the time.
He names former executive director Jerry Martinez, as well as former board members Gabriel Portugal, Kylie Grimes, Claudia Tapia, Alexia Estrada, Jose Iniquez and Christina Viera.
It’s unclear what legal protection the employees and board members could have under the organization’s charter documents that established the downtown authority.
The Herald reached out to Portugal and Grimes about the suit but did not hear back.
Dissolving a dysfunctional organization
The DPDA is the combination Main Street program-development authority that’s been mostly funded by the city since its creation in 2010 to help lead downtown revitalization.
It operates independent of the city, although the city council is responsible with appointing its board members.
It used to put on some of the region’s most popular events and programs, including Cinco de Mayo, the Fiery Foods Festival, the Pasco Farmers Market and Pasco Specialty Kitchen.
But those responsibilities were turned over to Pasco after Martinez — the organization’s third executive director in three years — stepped down from the job in 2023.
Now, the DPDA exists in name only while the Pasco City Council undergoes the process to dissolve it. A public hearing is set for 7 p.m. Monday, April 15, at city hall to gather feedback on the issue.
The organization has undergone a slow and precipitous fall from grace over its lifetime, beginning with the 2016 conviction of its former executive director, Michael Goins, who embezzled $140,000 over a two-year period.
Years later, a state audit scrutinizing the organization 2017-19 revealed the extent of its poor financial condition, saying it was at risk of not being able to meet financial obligations and that it lacked internal controls to ensure the proper use of public money.
A clear lack of financial management led to the ballooning of the 2022 Cinco de Mayo festival’s budget, from $30,000 to $250,000. That included $42,000 to re-book performers for the events after erroneously canceling their appearances.
The violations laid out by West in his lawsuit were previously highlighted in a Feb. 1 accountability audit released by the Office of the Washington State Auditor.
The audit, which scrutinized activity and financial reports from January 2020 to December 2022, says the DPDA failed to publish its meeting agendas and that its meeting minutes lacked a “significant record of business.”
Meeting minutes were not available for nine meetings throughout that three-year period, and 11 executive sessions were held without reference to a state law allowing them to be closed to the public.
It’s also unclear if a quorum was present for at least six meetings, a requirement under state law.
“Authority leadership and management did not have an adequate understanding of state laws, including those that require open public meetings and filing annual reports with the state auditor’s office,” the Feb. 1 audit determined.
The audit also detailed several other inadequate financial accounting practices that have contributed to the DPDA’s downfall. That includes weaknesses in how it handled $630,000 in private grants it received to support people and families affected by the COVID-19 pandemic as well as $300,000 in payments that couldn’t be properly accounted for.
No explicit details of fraud or criminal malfeasance on the part of the organization were included in the audit.
The auditor reached out to former DPDA board members, who all declined the opportunity to respond to their findings.
Despite plans to make the DPDA an independent and functioning organization at its inception, the city has been its largest subsidizer over its 14-year lifespan. Most recently, in 2023, it gave $120,000 to the chartered organization and promised more if it met certain incentives, which were never met.
On March 29, the city announced it had hired a forensic accounting firm to review the operations and practices of the DPDA in 2022, with the possibility of broadening out the investigation to include other years.
This story was originally published April 12, 2024 at 5:00 AM.
