Wardrobe Malfunction - LMD Refunds Expose Indecent Accounting

Like the infamous Super Bowl wardrobe malfunction, Oxnard City Hall inadvertently exposed itself –- or at least its indecent accounting! –- when the court ordered it to issue refunds to its Landscape Maintenance Districts (LMDs).

As we previously mentioned, a court recently ruled that the City of Oxnard’s charges to LMDs for public outreach “violated both the statutory text and purpose [of the Landscape and Lighting Act].”

As a result, the City was ordered to stop charging LMDs for those expenditures, and to restore the amounts back to the LMDs…which means those districts will have more money to actually use for the proper purpose of tending to your landscaping!

The details of these refunds also reveal some behind-the-scenes naughty accounting. It turns out that some LMDs were made to pay for the expenses of other LMDs. That’s also not legal.

Thankfully, our successful argument that no LMD should have been charged at all also serves to fix the wrongful cost-shifting that the City orchestrated.

On Tuesday the City told the court what it did to comply with its ruling. As part of that filing, the City included a table spelling out how $219,388.23 of refunds were distributed among 36 LMDs – all of which were charged something during the planning stages – but mostly to the 16 LMDs – highlighted in the table – that were targeted for increased taxes.

Our lawsuit stopped this spending before the City executed its plan to spend at least $400,000 this way. (Check the map here to see whether you live in one of these LMDs.)  

The now-refunded expenditures were part of an Oxnard City Council-approved contract with a consultant (NBS) to do public outreach and try to convert the LMDs into Mello-Roos tax districts. The contract clearly promised the council and the public that no LMD would be charged more than $14,950 for this contract.

Here’s the relevant excerpt from that contract, and in this context “community” means LMD:

The invoices from NBS were generally structured with the expectation that the City would evenly spread the costs across LMDs listed on the invoices…but that is not what the City did when they received the invoices.

As you can see from the highlighted table, two LMDs are each being reimbursed more than $24,000 because each had been charged more than $24,000 – in spite of the established limit of $14,950 per LMD.

Several other LMDs were also charged more than the council had approved.

A curious elected official ought to ask, “Why were some LMDs charged more than the $14,950 cap?”

Well, if you compare each district’s fund balance to what each was charged, it yields a pretty clear pattern that the districts with more available cash were charged more, while districts with less cash were charged less, even though most of them were getting the same amount of “service” from the consultant.

But there’s more than just correlation; there was evidence provided in discovery, in the form of an email from City staff to NBS explaining that:

“Some of the Districts, as you know, have very limited funding and low reserves. We may have to get creative on some to fund the other parts of outreach.”

That “creativity” entailed illegal cost-shifting.

That same member of City staff made markings on the invoices instructing the City’s accountants on how to divide the charges among the LMD accounts, and those directions did not match what the invoices stated.

City management loves to tell the public that they’ve fixed these sorts of problems, but this story is about relatively recent transactions, and it demonstrates these types of problems still persist at Oxnard City Hall. 

See this link for our video exposing even more accounting problems we previously uncovered in Oxnard's LMDs.

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