County audit proposes suspension of Los Altos Hills fire district authority

Updated June 3:  An audit review of the Los Altos Hills County Fire District nearly two years in the making culminated Friday (May 22) in the release of a scathing report that includes allegations of improper use of taxpayer funds, potential Brown Act violations and failures to adhere to a competitive bid process for awarding contract work.

“The fire district has spent millions of dollars of taxpayer funds to upgrade infrastructure it does not own to improve provision of services it is not responsible to provide,” auditor Cheryl Solov of Harvey M. Rose Associates wrote in an introductory letter to Santa Clara County Supervisors Dave Cortese and Cindy Chavez, members of the board’s Finance and Government Operations Committee. “The fire district has spent millions more to prune and remove trees not identified as hazardous for private property owners in areas that are not identified as high risk for fire.”

Chavez and Cortese will review the audit during a teleconferenced meeting June 25. Later, they will present recommended actions to the entire board.

The fire district provides fire prevention services to approximately 12,000 residents of Los Altos Hills and unincorporated parts of the county. Established in 1939 by a Board of Supervisors resolution, it is subject to periodic review by the board’s Management Audit Division, which commenced an examination of its management practices, operations and finances in August 2018. Across more than 60 pages, the resulting report outlines alleged deficiencies and presents recommendations to bring the district into compliance with state and county laws. They include suspension of the authority the board grants to the seven-person commission governing the district until review by county counsel. A lengthy rebuttal from the commission follows.

“The district stands on its eighty-one-year history of contributions and dedication of its current and prior board of commissioners,” commissioners wrote in the rebuttal. “The district is proud to be a good steward of district taxpayers’ dollars, to have created no debt or liabilities that burden government, and to responsibly practice governance of local control for the benefit of its constituents.”

Solov did not respond to Town Crier requests for comment. Commissioners declined to comment, stating their official response “speaks for itself.”

The allegations

The audit describes the fire district’s history of funding improvements to hydrants, tanks and water mains within its boundaries that are presumably owned by the Purissima Hills Water District and California Water Service. In recent years, that work amounted to approximately $6.4 million.

“Some of these expenditures, contracts and ‘donations’ raise legal concerns, including but not limited to whether they could constitute a ‘gift’ of public funds that could be prohibited by the California Constitution,” according to the audit.

And while state law allows the district to remove vegetation on private property that could pose a public fire risk, it is required to do so at property owners’ expense. Instead, the audit states, the district has used public money to offer free pruning and landscape work at the discretion of private citizens who request it. Between 2003 and 2019, the district spent $22 million to prune and remove trees on private property. During one three-year period, 94% of removed trees were considered “low-risk” by the county’s Community Wildfire Protection Plan, providing proof that the district’s fire prevention programs are not aligned with fire risks.

“The top 20 single-family residential properties served by the program had a median estimated home value of $5.2 million,” according to the audit. “These residents presumably had access to capital resources that could be used to mitigate the risk on their properties without taxpayer subsidy. The misaligned programs divert resources from comprehensive wildfire prevention planning and spending within the fire district and by extension the county as a whole.”

The fire district is subject to the Brown Act, California’s open-meetings statute, but the commission potentially violated the act in 2017 and 2018, Solov noted. During those years, she wrote, the district allowed a subcommittee without legal authority to create a general manager position, failed to provide public notice of the position and held closed meetings without public notice to make salary decisions for the position. It also narrowly averted a violation after the election of fire commissioner George Tyson to the Los Altos Hills City Council in November 2018. At the time, both council members Michelle Wu and Roger Spreen served as fire commissioners as well and the participation of all three in discussion of district business that overlapped with council business would have been prohibited.

The audit suggests some of the confusion about the Brown Act might stem from the fact that the district insists on relying on outside legal counsel despite a county ordinance requiring the use of county counsel; commissioners reported receiving Brown Act training from the district’s contracted attorneys.

Furthermore, the audit states, the fire district does not adhere to either state or county contracting and purchasing procedures, and instead adopted its own set of rules to follow in February 2016. They don’t require competitive bidding for projects valued up to $10,000 and they allow the commission to waive competitive bidding for projects exceeding that amount when a majority vote deems it appropriate. The district has, at times, declined to award contracts to vendors proposing the lowest bids for jobs, instead assigning greater weight to factors such as “firm profile, background, experience and financial stability.”

The district responds

Fire commissioners’ response to the audit argues the district’s expenditures and procedures have consistently remained in line with its mission and warns that suspension of its authority or consolidation with other fire districts within the county, a suggestion Solov made in her December 2019 audit of the South Santa Clara County Fire District, would jeopardize the safety of the people it serves.

“Preservation of the district’s local control is critical to continue the district’s programs which support its purpose of fire prevention and suppression,” commissioners wrote.

The water infrastructure updates criticized by the audit included the replacement of 525 district-owned fire hydrants within the Purissima Hills Water District, according to the response. Many of the hydrants had exceeded their useful life of 50 years and some included valves that don’t conform to a state standard, rendering them useless in an emergency. Other updates to improve water-tank resiliency and increase water pressure were completed for the purpose of fire protection enhancement, and so the district either covered the cost or shared it with the water purveyor.

“The forward thinking of the commissioners to conservatively spend in years leading up to the end of the useful life of important infrastructure ensures more funds are available when those major improvements and repairs are needed to ensure the district is properly equipped and prepared for fire suppression and is especially important during catastrophic events, including major fires and earthquakes,” commissioners wrote.

The response states Solov relied on “stale information” when making her findings, misguidedly focusing on district projects that took place more than a decade ago. A eucalyptus tree removal program, for example, has since evolved into a hazardous fuel reduction program based on Community Wildfire Protection Plan guidelines. Commissioners also refute allegations district programs were ever offered at the mere discretion of property owners and insist their sole purpose has been to prevent another devastating event like the Liddicoat Lane fire of 1985.

Commissioners maintain it is in the district’s best interest to retain separate legal counsel, as past lapses in communication prove county attorneys “do not have the bandwidth to provide those needed services” and that they risk a conflict of interest by representing both the county and the district.

In any event, the district has “gone above and beyond” to comply with Brown Act requirements, commissioners contend. The commission, not a subcommittee, created the district’s general manager position and provided substantial notice for all closed meetings related to it. Likewise, careful consideration was given to prevent any overlap of district and Los Altos Hills City Council business; after Tyson’s election to the council, commissioners canceled their December 2019 meeting, Wu skipped the January meeting and she submitted her commission resignation in February.

“It is important to note that any potential violation of the Brown Act regarding members of the city council attending fire district meetings was not created by the fire district, as the fire district has no control over who is appointed to the commission,” commissioners wrote.

Commission appointments are the responsibility of the county supervisor representing District 5 – currently Joe Simitian – but the rest of the board approves them.

The commission denies the audit’s final charge, a failure to comply with state and local procurement requirements, and states that county laws allow it to consider criteria beyond who made the lowest bid, including a history of positive relations between a known local contractor and the district residents that contractor provides services for.

“These considerations were weighed against associated risks of the lowest responder being unknown to the district and were balanced with the respectful use of the taxpayers’ money,” commissioners wrote.

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