Questions remain after parks bond audit

Possible conflict of interest, timing of buys cited

The day an independent auditor’s report that showed the city of Santa Fe misspent approximately $2 million of a $30.4 million voterapproved bond intended to improve parks and trials throughout the city, Mayor Javier Gonzales released a statement that almost sounded celebratory.

“Not a single dollar is unaccounted for or missing, there is zero evidence of fraud or malfeasance,” he said, adding that “after two years, two independent audits and hundreds of thousands of taxpayer dollars, we have our answers, and it is time to close the book and move forward.”

But several questions were left unanswered in the auditor’s report. The parks bond was designated by the state Auditor’s Office for a special audit after a preliminary report raised red flags about how the city handled spending from the bond. Together, the city spent more than $200,000 on the two audits.

One finding of the state-supervised audit, performed by the Albuquerque accounting firm Atkinson & Co., referred to “a certain vendor” who did work for the city on 15 different projects on which “many purchase orders were executed after the goods were received.”

Not only is that a violation of city policy, but also it could be an indication that the procurement process was bypassed. But the report states only that purchases totaling $115,163 from that vendor were made in violation of city ordinance “for the timing of completion of purchase orders.”

That vendor was successful at winning city jobs. Of the 15 projects, the vendor’s price was “slightly lower than the others” in all cases except one, according to the report.

In addition, the audit states that, during one fiscal year, the city purchases from this vendor

exceeded the threshold that, once met, is supposed to require a competitive bid process instead of getting mere price quotes from contractors. Yet the vendor was still allowed to offer on jobs without having to go through a sealed bid process.

Also, the report says a “possible conflict of interest” between the unnamed vendor and an unnamed city employee arose after the employee was promoted and became a part of the decision-making process for procurement.

But the city has no record of how that conflict of interest was addressed, the audit states. “We requested documentation of the City’s resolution of a conflict of interest circumstance with this vendor,” the report states. “The circumstance seems to be undocumented.”

City officials acknowledge there was no documentation, but they insist the matter was addressed and the employee in question was removed from the decisionmaking process.

Possible conflicts

It’s not uncommon for audit reports to leave out specifics, such as names and exact dates. This week, city public information officer Matt Ross confirmed that the “certain vendor” identified in the audit is Ulibarri Landscaping, a local company with a plant on Agua Fria Street that has been doing business with the city for decades.

The auditor’s report said that purchases of totalling $115,163 from the unnamed vendor were made in violation of a city ordinance. An examination of city records shows that the city made purchases totalling $115,162.57 from Ulibarri Landscaping for parksrelated improvements over a three-year period.

The audit states that the cited vendor exceeded the threshold after which a competitive sealed bid process is supposed to kick in, which the city says is $50,000, during one fiscal year. In fiscal year 201011, Ulibarri Landscaping secured $52,020 of the city’s business.

The potential conflict of interest?

Ben Gurule, a longtime parks division employee who was a parks project administrator and later became parks division director, is married to the daughter of the late Alfonso Ulibarri, who was the landscaping company’s owner until his death two years ago. Ross confirmed that Gurule is the unnamed city employee cited by auditors.

Gurule was among the “key people who implemented the bond,” according to a report by the city’s Parks and Open Space Advisory Commission, which for years was critical of the how the parks bond was handled.

The corporations directory on the Secretary of State’s website shows that Alfonso’s widow, Berta, is now president of Ulibarri Landscaping Materials, Inc. Their son Reyes is vice president and Suzanne Gurule, Ben’s wife, is treasurer.

Repeated efforts by the Journal to reach Reyes Ulibarri and Ben Gurule by telephone were unsuccessful. A reporter visited the office of Ulibarri Landscaping this week and was told by Suzanne Gurule that the family hadn’t seen the audit and had no comment other than to say, “We have done nothing wrong.”

A variety of jobs

Asked whether the Atkinson & Co. accountants found anything that might constitute illegal activity, Justine Freeman, deputy chief for the state Auditor’s Office, responded with a statement: “The audit report shined a bright light on numerous problems with the City’s financial controls,” she said, adding that the audit was made available to law enforcement agencies to examine any potential violations of law. “The State Auditor will test whether the City has fixed these problems in their next annual audit and will support any law enforcement agency requesting further information.”

The city was aware of any potential conflict of interest, but there’s no record of anything being done about it, the audit says.

“The City indicated that a possible conflict of interest was disclosed to Public Works management when a city employee was promoted and became a part of the decision-making process for procurement. This circumstance appears to be undocumented,” the audit report reads.

While most of the key city officials involved in the 2008 parks and trails bond implementation are no longer on the city’s payroll, current Public Works Director Ike Pino still is. He did not return a phone message from the Journal, instead having Ross respond. Not all of the questions submitted through Ross were answered.

Ross did say that, according to Pino, Gurule disclosed his relationship to Ulibarri Landscaping to Pino at the time Pino was considering promoting him for the parks division director’s position. Based on the city’s records, that would have been during the latter half of 2012, after most of the bond spending was completed. Ulibarri Landscaping didn’t get another parks project job after July 31, 2012.

Ross said Pino was advised at the time by the city attorney’s office to inform the city manager of the situation and remove Gurule from any decisions involving Ulibarri Landscaping.

“That was done,” Ross said. “Any decisions involving Ulibarri went directly to Ike, bypassing Ben.”

And Ross said there was no conflict in procurements for Gurule as project administrator before he became the parks division chief.

Robert Romero, who served as city manager from 2010 until his retirement in May 2013, and who was in charge of parks prior to that as public works director, declined to comment for this story.

Purchasing records

The Journal’s examination of purchases the city made relating to the parks and trails bond shows that Ulibarri Landscaping Materials was paid more than $24,000 for city parks projects in 2009. The bulk of it was a “remodeling and replacement” job at Frank Ortiz Dog Park in April of that year.

City records show quotes were obtained from three vendors for 360 cubic yards of crushed gravel for the parking lot at the dog park. Ulibarri won the job with a quote of $13,320, bettering the next lowest bid by $9.30. The third bid was about $1,900 higher than Ulibarri’s.

The city provided price comparisons for just one other instance. In that case, Ulibarri’s quote of $11,725 for 335 cubic yards of wood chips to be used at the dog park was more than $1,000 lower than the next closest bid. A third quote received by the city was more than $1,200 higher than Ulibarri’s.

Ulibarri Landscaping won $37,000 worth of the city’s business in 2010 and was paid more than $46,000 in calendar year 2011.

Records show that the company received big and small jobs for such things as providing 44 bags of top soil for the community garden at Frenchy’s Field, 14 truck loads of humus for planting sod at the baseball/softball diamonds at Ragle Park, and 18.4 cubic yards of sand for an emergency repair of turf at the city’s downtown Plaza. Many of their jobs involved providing crushed gravel, sand or rock at city parks.

It was during fiscal year 2010-11 that Ulibarri exceeded the $50,000 per year threshold for the competitive sealed bid process. During that time, the company won jobs totalling nearly $25,000 at the Municipal Recreation Complex and more than $12,500 at Ragle Park.

In all, the city cut 52 checks to the company for jobs at 14 parks or city facilities from March 2009 to July 2012.

In response to Journal inquiries, the city indicated that Samuel Ulibarri, the nephew of Gurule’s wife, was first hired as a parks maintenance laborer in January 2010. He was promoted to construction lead worker six months later and held that position until June 2014 when he was promoted to parks supervisor, a position he still holds. However, records posted on the city’s website indicate he was working as a parks supervisor at Candelero Park in January 2013.

Asked about hiring for parks work when the city leaders’ stated idea behind using in-house labor on the parks bond projects — instead of the past practice of hiring contractors for capital projects — was to keep from having to lay off employees during economic recession, city spokesman Matt Ross said he could only speculate since so many of the people in charge are no longer employed by the city. “The goal wasn’t to create a bunch of new jobs, but to maintain jobs at the city and avoid layoffs,” Ross said.

The Journal reported in 2013 that Gurule was one of 64 employees awarded raises by Romero during his final five months as city manager. Gurule’s pay increased from $68,640 per year while he was project administrator on the parks and trails bond to $88,400 after he became parks and trails director.

The state audit recommended in its report that the city enhance training of its employees with regard to purchasing regulations. “Additionally, the procurement process should be used to increase efficiency in purchasing for large, long-term projects by the creation of a blanket purchase order or price agreement. Names of family members or other potential conflicts of interest should be compiled periodically and circulated to the purchasing department,” the parks bond audit report suggests.

Ross said that’s being done with newly proposed legislation.

“We’re moving our way through the process to address that problem, amending the language in the purchasing manual,” he said.

He said that a proposal with language adopted from best practices identified by the National Institute of Government Procurement is scheduled to come before the city’s Finance Committee on May 2.