The Downtown Pasco Development Authority is no more.

The Pasco City Council voted to dissolve the DPDA in mid-April following a public hearing – and following months of discussion about what to do with the group after a state audit report highlighted sweeping financial mismanagement and other issues.

The council’s vote to dissolve came during its meeting on April 15.

The council heard from two community members with differing opinions on whether to dissolve, but ultimately voted to end the DPDA’s roughly 14-year tenure.

“DPDA didn’t live up to its promise, and as the audit report has indicated – and many other reports – I think it’s time to dissolve this thing,” said Councilman Leo Perales.

Perhaps in the future, the city could consider another nonprofit entity, “but I advise this board tonight to dissolve (the DPDA) so we can move on,” he said.

Councilman Peter Harpster said he had no doubt that the city staff and council members who helped form the DPDA in 2010 had the best of intentions, and the city has seen improvements in downtown since that time. “Moving forward, I have complete faith in staff, specifically our (Community and Economic Development) department and (Director Jacob) Gonzalez, and I’m looking forward to the work that they’ll do,” he said.

Plagued by problems

The DPDA was formed in 2010 to help revitalize downtown.

It managed the Pasco Specialty Kitchen and downtown farmers market and ran events such as the popular Cinco de Mayo and Fiery Foods festivals. But it’s been plagued by problems over the years, including staff turnover and even a criminal case.

Former Executive Director Michael A. Goins in 2016 admitted to embezzling at least $90,000 from the group and was sentenced to a year in prison.

While the city provided some funding to the DPDA and the city council appointed its board members, the city had limited oversight of the group’s day-to-day operations.

The city offered training and help in establishing financial controls and structures, but “unfortunately, significant turnover in the executive director position and organizational culture issues appear to have hindered the establishment of a disciplined and efficient organization,” according to information from the city in the April 15 council packet.

City steps in

When the last executive director stepped down in 2023, the city took over the DPDA’s “critical services,” including the specialty kitchen, farmers market and festivals.

The state audit report came out this past February, covering 2020-22.

It said the DPDA “did not provide adequate controls over safeguarding of public resources in most of the areas we examined” during that time, including accounts payable, cash receipting, compliance with private foundation grant contract terms and more.

It found hundreds of thousands in payments and purchases that weren’t adequately backed up with documentation, plus issues with cash receipting and grant oversight. DPDA also dropped the ball on keeping meeting minutes, complying with rules for holding closed-door sessions during public meetings, and filing annual reports, auditors said.

City officials “highly regard” the audit findings, City Manager Adam Lincoln said in a statement provided to the Journal of Business at the time.

The city is “dedicated to transparency, accountability and the prudent use of public resources. To that end, (we) will continue to work with the state auditor’s office and any other relevant authority for a full accounting of the DPDA’s finances,” he said.

Investigation underway

The city council later directed staff to hire a forensic accounting firm to examine the DPDA.

The initial review, conducted by Clark Nuber PS in Bellevue, is underway and is expected to wrap up in June. It’s covering 2022, although “the results of this preliminary forensic review period will inform the audit of activity prior to 2022,” the city said in a statement. 

The contract is for no more than $25,000. 

During the public hearing on the DPDA during the April 15 city council meeting, community member Carl Holder urged the council to table the potential dissolution of the group while “legal, policy and financial items” are resolved, including a complaint filed in April in Franklin County Superior Court by open government activist Arthur West.

West alleges the DPDA violated the state Open Public Meetings Act.

The complaint names the most recent executive director and board members.

“Don’t throw those volunteer board members under the bus. The existence of DPDA is the corporate veil that the city must have at this time for this civil action,” Holder said, adding that missing minutes have been found and an updated audit report has been requested.

The DPDA brings economic development advantages, such as grants and business and occupation tax offsets, among others, he said, and “it would be prudent to maintain DPDA to participate in the future of downtown Pasco.”

Community member David Cortinas, meanwhile, said he’s been investigating the DPDA since 2012 and feels even more funds are missing than have been brought to light.

“This organization has been corrupt for many, many years,” he said.