Conservancy Spending Assailed

A state audit has accused the Santa Monica Mountains Conservancy of mismanaging $7 million in voter-approved bond money that was supposed to be used to acquire and restore parkland.

In a scathing report, Department of Finance auditors found that the conservancy “does not adequately manage, control, or oversee” $115 million in bond funds, funneling away money to pay for legal fees, office expenses, conferences, cars, travel, vacation and sick pay, and “excessive” overhead charges.

“In our opinion, they’re not spending funds in line with the bond measures,” said Samuel E. Hull, chief of the Office of State Audits and Evaluations. “Some of the things they did I’ve never seen before. They are creative, I’ll give them that.”

Jerome C. Daniel, the conservancy’s chairman and a longtime board member, defended the agency. “I don’t know what the numbers are, and I don’t care what the numbers are, frankly. All I know is we are the most successful land acquisition agency in the state of California,” he said. “It bothers me to be questioned about the way we’re doing business, when what really matters is the end result.”

Created by state lawmakers in 1980, the conservancy has secured more than 55,000 acres of protected open space in Los Angeles and Ventura counties. The agency acquires private land through purchases or donations, creating public holdings that have helped expand the Santa Monica Mountains National Recreation Area to 154,000 acres, a patchwork of hilly chaparral and oak savannas overlooking the Pacific Ocean that is billed as the world’s largest urban park.

The conservancy’s legacy is a reflection of its longtime executive director, Joseph Edmiston, a politically shrewd administrator who has aggressively expanded his agency’s reach over 24 years of shifting administrations in Sacramento and Washington. Its jurisdiction now stretches beyond the Santa Monica Mountains, from Whittier Narrows to a nature park in South Los Angeles; from the Santa Susana Mountains on the San Fernando Valley’s edge to the Santa Clara River in the Santa Clarita Valley to the San Gabriel Mountains.

Among the audit findings:

* For each parcel it acquired, the conservancy’s land-management arm, the Mountains Recreation and Conservation Authority, assessed 9% to cover administrative overhead. That amounted to more than $1.5 million for 29 land purchases.

Calling the fees “grossly out of proportion to services provided,” auditors reported that the authority charged 350 times the overhead assessed by six other state agencies, including the Department of Water Resources, Coastal Conservancy and Department of Fish and Game. The audit said $2.2 million in bond funds had already gone to the agency to cover overhead costs, raising “questions about duplicate funding.”

* The conservancy awarded the authority more than $4.2 million in bond money for planning, education, and renovation of facilities, rather than parkland purchases.

* The conservancy used bond money to pay $690,000 in legal costs and to make a $500,000 loan to cover a legal judgment.

The audit examines the conservancy’s spending through June 2003, and covers Proposition 12, a $2.1-billion park bond measure voters approved in 2000; Proposition 13, a $1.97-billion clean-water initiative passed in 2000; and Proposition 40, a $2.6-billion park bond approved in 2002. The conservancy’s share of the state bond measures totals $115 million.

The audit also said Edmiston made unallowable expenditures, including $1,716 in long-distance telephone charges from Mexico, $500 for membership in a VIP airline club and $577 in room service in excess of state travel allowances. The conservancy wrongly paid for $456 in airfare for Edmiston’s wife, Pepper, the audit said, plus $16,151 for meeting expenses, food and beverages that did not comply with state travel-entertainment policies.

The conservancy and authority defended their practices, answering the May 4 state audit with an avalanche of documents. Their responses echo a persistent theme: Unlike other government agencies, we slash through red tape to get things done.

When auditors criticized the conservancy for loaning the authority $500,000 in bond money to pay a legal judgment, for instance, they noted that no other state bond agencies made such loans. The authority replied: “Probably true, but no other state agency has so innovatively sought and acquired parkland.”

Edmiston, whose land deals have won him friends among many elected officials throughout the region, called the audit “constructive,” but took issue with many of its findings. He said that because the conservancy received so little direct state funding -- just $676,000 this year, enough to pay for five staff members and limited office expenses -- bond money had to be used to cover operating costs.

“In acquiring 55,000 acres in the last 20 years, the conservancy has been very careful about the expenditure of public funds,” Edmiston said. “You can always do better, but we’ve done pretty darn good.”

State auditors have chided the conservancy in the past. In 1997, an audit found that the agency had paid $2.2 million in interest because it used promissory notes to acquire land rather than buying it outright.

The May audit was particularly critical of the close ties between the conservancy and the authority, a joint powers authority that the conservancy created 19 years ago to manage its land acquisitions. Edmiston directs both groups, and the auditors found that the relationship “compromises both organizations’ ability to adequately protect the bond funds from waste, abuse or irregularities.”

State Sen. Sheila Kuehl (D-Santa Monica) defended the conservancy, saying that its “great acquisition victories” outweighed minor procedural lapses. The conservancy, for example, is negotiating with Soka University to buy a long-sought 600-acre parcel in the heart of the Santa Monica Mountains, she said, “and I don’t want any crossing the Ts or dotting the I’s that aren’t substantive to interfere in any way.” Kuehl said she “made that very clear” to state Finance Director Donna Arduin.

But critics question why state officials haven’t been tougher on the conservancy.

“Propositions 12 and 13 were passed in 2000. Why did it take 3 1/2 years to look at the books of a state agency that appears to be politically covered by elected politicians who allow a state employee to play ball with taxpayer money?” said Patricia Bell Hearst, chairman emeritus of the Federation of Hillside and Canyon Assns., which represents many mountain homeowners. “It’s really the politicians who have allowed all this.”

In a written response to the audit, authority Chairman Michael D. Berger called it “highly misleading” to compare his agency’s overhead charges to those assessed by other state agencies that acquire land. Those agencies also spend millions of bond dollars on personnel and operating expenses, he argued. The governor and the state Legislature allocated about $10.7 million to the Department of Fish and Game, for example, for support costs.

The difference, state audits chief Hull said, is that lawmakers did not set aside similar support dollars for the conservancy.

“It looks like the Santa Monica Mountains Conservancy got around that restriction by granting the money out to their sister agency,” which levied a 9% fee on land acquisitions to cover administrative overhead.

The money goes to pay operating expenses such as staff salaries, office and vehicle expenses, and telephone bills.

“It buys the ability to get the job done,” Edmiston said.

The authority plans to revise the system for charging overhead, but Daniels said that “the overall result is not likely to change much.” Officials also defended using bond funds to plan for land acquisitions, run education programs and pay legal fees.

“I guess people vote for bond money to acquire property,” said Ron Schafer, a conservancy board member and a district superintendent in the state Department of Parks and Recreation. “But to protect the property, purchasing it is just the first step. Then you have to patrol it. Whether [using bond money] is legal or appropriate, that’s for someone else to decide.”

Still, the conservancy and the authority did agree to make some changes. They amended the joint powers agreement to add more oversight of contracts between the groups. Now, instead of Edmiston signing off on contracts, it must be done by the board chairmen.

Edmiston also paid back the money spent on his wife’s airline ticket, his airport club membership and the phone bill from Mexico.

He said he was conducting state business while on vacation, and used the computer hook-ups in the airline club’s lounge for conservancy business.