In-depth investigation into troubled Pasco group ordered after damning WA state audit
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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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Pasco has hired a forensic accounting firm to scrutinize the operations of a troubled downtown group almost two months after a damning Washington state audit detailed dubious accounting practices.
The announcement came Friday as the city gears up for dissolving the Downtown Pasco Development Authority — a combination Main Street program-development authority that’s been mostly funded by the city since its creation in 2010.
Bellevue-based Clark Nuber will conduct the city’s audit and forensic accounting investigation, starting with a review of activity in 2022 and possibly broadening the scope to include other years.
The city is paying the firm an amount not to exceed $25,000.
“The trust our community places in the city is paramount,” Mayor Pete Serrano said in a statement. “Engaging an independent forensic accountant to scrutinize the DPDA’s audit findings signifies our commitment to thoroughly investigating these matters.”
City staff say this initiative reflects the city council’s “proactive stance in addressing the limitations” in the Washington State Auditor’s Office’s investigation and underscores the city’s “commitment to a detailed, secondary analysis to rectify any issues uncovered.”
An accountability audit published in February showed the DPDA could not account for hundreds of thousands of dollars amid widespread management failures and illegal public meetings between January 2020 and December 2022.
In its report, the Auditor’s Office said it reached out to former and current board members, all of whom declined to respond to the findings.
The audit did not explicitly mention any details of criminal malfeasance or fraud.
The city council also plans to host a public hearing at its regularly scheduled 7 p.m. business meeting on Monday, April 15, to gather community feedback on dissolving the current authority.
Troubled downtown agency history
The DPDA was once responsible for some of the most popular events and programs in Pasco, including the Fiery Foods festival, Cinco de Mayo, the Pasco Farmers Market and the Pasco Specialty Kitchen.
But it 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 organization’s executive director — its third in three years — resigned in June 2023. Soon after, the city took control of the farmers market and specialty kitchen, and eventually took over planning for Cinco de Mayo and the Fiery Foods festival events.
Despite creating the DPDA and having bankrolled it since its inception a decade ago, Pasco has had very little oversight over its day-to-day operations. The city council had been responsible for appointing its board members and negotiating a hefty financial allocation every year, but was mostly hands off.
The city benefits from funding the DPDA because it can recoup part of its investment through a public utilities tax credit. The goal in creating the organization was to strengthen the city’s downtown business core.
The city had viewed the DPDA as a key component in its plan to revitalize downtown and invest in programs that would improve its weakened economy. The city had invested $50,000 for a consultant to evaluate the structure of the organization in anticipation of splitting it into two separate entities: The Main Street program nonprofit and a public development authority.
But last year’s departure of its executive director all but ensured the organization was on borrowed time, and the February 2024 accountability audit sealed the deal.
The audit also found:
- Weaknesses in how DPDA handled $630,000 in private grants it received to support people and families affected by the COVID-19 pandemic.
- Meeting violations by the nonprofit’s seven-member board, who reportedly routinely violated the Washington Public Meetings Act and voted on DPDA business in secret meetings.
- Unaccounted for payments totaling $300,000, including $1,000 in “unallowable” payments and nearly $8,900 for assets that couldn’t be tracked.
- An unnamed executive director also used electronic payments and a debit card to spend more than $285,000, which included $80,000 paid to 14 people outside of the U.S. and two outside of the state.
This story was originally published March 29, 2024 at 2:28 PM.
