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While preparing to ask Monterey County voters to approve a sales tax increase to finance highway improvements, the Transportation Agency for Monterey County is also preparing to repay the state $821,858 because an audit found the agency had failed to follow standard procurement procedures when it awarded four construction-related contracts totaling $9.4 million.

The procurement problems, including lack of competitive bidding, loose purchasing protocols and non-existent spending limits, were uncovered in a Caltrans audit of TAMC contracts from for July 2011 through May 2013.

A 2014 letter from Caltrans to TAMC identifies the recipients of those contracts as the Parsons Transportation Group, which is one of the nation’s largest engineering and consulting firms, and a California company, Harris & Associates, which maintains an office in Salinas.

TAMC originally awarded Parsons a $974,000 contract to design light rail systems connecting Monterey to Marina and beyond and connecting Salinas to the Bay Area. Caltrans auditors complained that the contract was awarded without appropriate competition, without any valid cost estimate for the work to be performed, and without any cost cap or completion date. Over time, the contract was amended and extended 12 times and ended up costing TAMC just under $9 million although the rail projects remain unfunded. As with most TAMC projects, Caltrans was the source of most of the money.

As a result of the audit, Caltrans initially sought to collect some $9.4 million from TAMC, contending that numerous standard contracting procedures were violated. In one case, Harris received a contract after having been hired to essentially write the specifications for that contract, Caltrans found. Auditors contended that amounted to a conflict of interest.

TAMC officials disputed most of the points raised in the audit but have adopted numerous procedural changes recommended by Caltrans and have agreed to provide procurement training to its staff.

While Caltrans sought to recover the $9.4 million,  two years of negotiations between the agencies resulted in an agreement in June under which TAMC will reimburse Caltrans $821,585 each year for 10 years. The money is to come from the local agency’s reserve funds. The agency’s executive director, Debbie Hale, told her board of directors that the agency could pay the full amount now but decided it would be better to keep the reserve fund healthy.

TAMC is essentially a transportation planning agency and joint powers agency linking most of the political jurisdictions in the county. It is governed by a board consisting of the Monterey County Board of Supervisors and representatives of most of the cities in the county along with other agencies. The Caltrans audit faulted TAMC for having lent money in the past to some of the member agencies, most recently Monterey-Salinas Transit.

Hale said this week that her staff provided Caltrans with ample documentation to disprove many of the audit findings, “but basically they had their mind made up – you can tell that by the tone of the audit.”

She denied that Harris was involved in any conflict of interest and said that regional Caltrans officials approved TAMC’s processes only to be overruled by state-level officials.

Hale said TAMC agreed to receive additional training so the agency, along with regional Caltrans officials, can understand what the auditors want to see. She said the agency has prepared a 200-page procurement manual that awaits Caltrans approval. Among the auditors’ concerns was that the agency had few written guidelines for procurements and the awarding of contracts.

Hale said the state agency appears to be conducting audits of relatively small transportation agencies in an effort to prop up its budget because it is difficult for a state agency to increase its revenues. Such actions, she said, demonstrate why TAMC needs an additional revenue stream, the planned sales tax measure.

“Frankly, this is exactly why we need local money. It is locally controlled with local oversight, and the state can’t take it away.”

The agency hopes to put a sales tax measure on countywide ballot next year, one that would raise the sales tax by three eights of a cent. Because of other potential tax measures on the ballot, however, the amount sought might have to be lowered.

The larger amount would raise about $20 million annually, some of which would be used directly for road work and some of which would be used to leverage additional state and federal dollars.

TAMC has been conducting surveys and performing various outreach efforts in preparation for the tax measure. It awarded a $135,000 contract earlier this year for those purposes. TAMC’s last effort to boost the sales tax received a majority vote but fell short of the required two-thirds vote.

The audit and the $821,000 penalty are no secret – many of the details are posted online — they have received virtually no public attention until now, something of a surprise considering that more than a dozen elected officials sit on the TAMC board. One board member, who asked not to be identified, speculated that no board members “saw any advantage to speaking up.” A representative of the Monterey County Taxpayers Association was at a TAMC board meeting in June at which Hale gave a brief update on the plan to reimburse the state.

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Those “Please Don’t Litter” ads will go back up on Monterey Salinas Transit buses now that the recycling coalition has agreed to make them look more commercial and less of a public service.

recyclephotoiMST officials had declared Monday that the ads sponsored by the Central Coast Recycling Media Coalition amounted to “issue” advertising. And though the message was benign, MST General Manager Carl Sedoryk said he feared that allowing such advertising would put the bus system on a slippery slope toward more controversial messages about issues such as religion and abortion.

So, to make them less about any message and more about commerce, the district will pay to add the logos of some of the corporate members of the coalition, which is mostly made up of cities and waste management districts.

Waste haulers Waste Management and Republic Services are also among the membership and they presumably have a vested interest in stopping littering because they make money hauling and recycling items that might have become litter. Or something like that.

The district also will give the coalition an extra month of advertising, so look for the ads to grace the buses well into autumn.

The district’s advertising policy, printed on its website, says it does not allow “political, religious or sexually explicit advertising nor does MST accept alcohol or tobacco messages.”

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The words “Please Don’t Litter” are about as controversial as “Don’t drive drunk” or “No U-Turn,” but apparently they’re too loaded for officials of the Monterey-Salinas Transit Authority.

The regional bus authority has canceled a $7,605 contract with the Central Coast Recycling Media Coalition to have anti-littering ads placed on the sides of 39 MST buses this summer. The signs had been posted on some of the buses already but were being removed Monday. Meanwhile, officials of the Santa Cruz Metro system said they had no problem with the same ads being posted on buses there.

The ads show a gull and a crab entangled with a cigarette butt and a hamburger container respectively and declare “Please don’t litter. The difference you make is real.”

recyclephotoiMST has no problem with the message itself and certainly isn’t in favor of littering, said General Manager Carl Sedoryk. The problem, he said, is that the ads are “issue ads” that take a position rather than promote merchandise or services. While other transit agencies have adopted policies that allow them to exercise discretion over the types of issue ads to accept, Sedoryk said public agencies that accept issue ads could be put in the position of having to accept other issue ads that are more controversial.

Sedoryk said MST’s goal is to avoid controversy and to stick with a simple and clear policy. He said issue ads of almost any sort can lead to efforts to place ads on much more controversial topics such as abortion, religion and gun control.

Though the district’s aim has always been to have a clear policy, determining what amounts to an issue ad and what constitutes a permissible commercial ad can be a “very fine line,” the manager said. Advertising from social service groups and non-profits generally would be accepted if they are promoting a service but not if they are merely promoting a cause, he said. Monterey City Councilwoman Libby Downey, who chairs the MST board, could not be reached to comment Monday.

Transit districts from Seattle to New York have wrestled in recent years with a similar issue but involving advertising far more pointed and controversial than those being rejected here. In 2012, ads placed by a pro-Israel group denouncing Islamists as “savages” led to legal action and a decision by the Metropolitan Transportation Authority in New York to prohibit ads that it “reasonable foresees would immediately incite or promote violence” or an “immediate breach of the peace.” Anti-littering ads presumably would be acceptable under that policy.

In Seattle, ads with Middle Eastern themes prompted transit officials to tighten their advertising policy but the rules were later loosened when the financial impact on the transit authority became clear.

This summer, Middle Eastern advocacy groups have taken out large ads on the sides of District of Columbia Metro buses to argue over the most contentious of issues. The Washington Post reported that one group bought ads featuring a drawing of Uncle Sam waving a Israeli flag and decrying U.S. support for Palestinian occupation, and another group countered with ads featuring a photo of Adolph Hitler and referring to “Islamic Jew-hatred.”

Sedoryk said MST had rejected previous ads as being too political but this was the first time the ads had actually been printed  installed on buses.

“The policy was adopted by the board (about a decade ago) and we have to enforce it.” He added, however, that the coalition could choose to appeal the rejection either to him or the authority’s board of directors.

A representative of the Central Coast Recycling Media Coalition said an appeal was likely. The coalition is made up of 24 public agencies and waste disposal operations, including the cities of Monterey, Pacific Grove, Carmel, Del Rey Oaks, Pacific Grove, Salinas and Sand City and Monterey County.

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