Blame over the demise of the Tuolumne County Economic Development Authority rests squarely on the agency’s governing board, according to the findings of a new Grand Jury report released on Tuesday.

The report stated that the failure of the TCEDA resulted from a “culture of insufficient oversight” during the 10 years the agency existed, an inability to show the benefits reaped from investing nearly $4 million of taxpayer money over that same period, and not living up to the public’s expectations of leadership.

“The 2018-19 Grand Jury recognizes that effective economic development is crucial to Tuolumne County and supports the county’s current plan to restructure an agency within the county’s purview,” the report stated. “However … changes must be made in the management structure and in the process of accountability of such an organization, in order for a new agency to be successful and to be trusted by the public.”

Frank Cooper, foreman of this year’s jury, said they were just days from releasing an earlier version of the report that was going to recommend that the TCEDA be shut down when the county Board of Supervisors and Sonora City Council beat them to it and unanimously voted to do so on Feb. 19.

Despite the decision, the jury decided to complete and release the report because it wanted to put the scope of the issues on record and make recommendations for future economic development efforts.

Many issues the report touches on were previously reported in The Union Democrat and a management audit that was completed and released last month under a recommendation from last year’s Grand Jury, which also investigated the TCEDA and raised concerns about the agency’s practices.

This year’s jury also looked at the TCEDA’s nonprofit arm, the Economic Prosperity Council of Tuolumne County, and determined the public should be able to see the findings from a review of potential conflicts of interest that was conducted by the County Counsel’s Office.

County Counsel Sarah Carrillo stated her office would conduct the review in response to a recommendation made by last year’s Grand Jury, which found that a potential for conflict possibly existed among some of the board members, but the results were kept secret due to attorney-client privilege.

The most recent report stated that the TCEDA board, which also governed the Economic Prosperity Council, has the ability to waive attorney-client privilege over the findings but refused to do so when this year’s jury requested that information.

“The public has a right to evaluate whether any conflicts existed, and whether conflicts permeated the decision making process of TCEDA board members,” the report stated.

However, the jury didn’t pursue the matter any further to avoid additional costs to taxpayers, which have already grown to hundreds of thousands since the decision to dissolve the agency.

Excessive employment contract

Among the evidence of mismanagement by the TCEDA board cited in the report was an “overly generous and excessive” employment contract for former CEO Larry Cope, who was let go in March after the agency was disbanded.

Cope was being paid an annual base salary of $163,325 per year when his contract was terminated, the fourth highest of any other employee in county government behind the county administrator, health officer and psychiatrist.

In addition to salary, Cope’s was receiving health and retirement benefits and monthly allowances for a personal car, cell phone and high-speed Internet that brought his total compensation to $253,000 per year.

The report stated that Cope’s total compensation was 28 percent more than the director of the office of Economic and Workforce Development for the City of San Francisco, and slightly less than the economic development director for Santa Clara County.

Cope received a $200 per month allowance for personal broadband and cell phone use and $500 per month for use of his personal vehicle. The jury reported that all other county employees are reimbursed $15 to a maximum of $30 per month for personal cell phone usage, while very few receive allowances for personal vehicles.

Health insurance for both Cope and his wife was covered 100 percent by the TCEDA, which amounted to a total of $21,795.12 per year, according to the report. The jury found that no other spouses of county employees receive such medical benefits, and only single employees receive 100 percent coverage.

One of the findings in the latest Grand Jury report stated that, “Private allowance and benefit negotiations of the TCEDA Director’s contract hid the true and far-reaching compensation package from other county employees, and the public.”

A separate investigation by The Union Democrat — published hours before elected officials disbanded the TCEDA in February — also found that Cope’s travel and business-related expenses totaled more than $100,000 for 2017 and 2018.

The spending, which drew outrage from many commenters online, included trips for conferences in other states where he sometimes stayed in hotel rooms that cost more than $500 a night, about $11,000 in charges for meals at local restaurants, a $1,000 drone, multiple Microsoft computer tablets, and other equipment purchases.

Cope could not be reached for comment on Tuesday, but his public profile on LinkedIn has been updated to show he no longer works for the TCEDA. He lists an “excellence in government” award from the Tuolumne County Chamber of Commerce in 2017 that states he “demonstrated good working relationships with members of the business community, shown honesty and integrity in the conduct of his duty and sound management of public monies.”

Many of the increases in Cope’s salary were approved by the TCEDA board since 2014.

The seven-member TCEDA board consists of two elected county supervisors, two elected city council members, and three at-large members from the private sector. It was created through a joint powers agreement between the city and county in late 2008.

There were four consistent members of the board between 2014 and 2018: County Supervisor John Gray and at-large members Barry Hillman, Dave Thoeny and Jim Gianelli.

Others who have previously served on the board as primary members are: Former County Supervisors Dick Pland, Teri Murrison, Evan Royce, current County Supervisor Sherri Brennan, former City Councilmembers Hank Russell, Bill Canning and George Sergarini, current City Councilwoman Connie Williams, and at-large members Dennis Dahlin, Zach Britton, and Patricia Jones.

The current board also consists of County Supervisor Karl Rodefer, City Councilmen Jim Garaventa and Matt Hawkins, and at-large member Ron Patel, all of whom joined after first report by the Grand Jury was released last June.

Only the section of the Grand Jury’s report for 2018-19 pertaining to the TCEDA and its nonprofit arm, the Economic Prosperity Council of Tuolumne County, was released to the public on Tuesday.

Previous juries in the county have released the full report with all of the sections at once, typically at the end of June, but the current one chose to release it section-by-section this year to give the public time to read and contemplate the findings from each of the investigations.

Reaction to report

Hillman, who joined the board in 2012 and resigned in March, said he and other at-large board members were led to believe that they largely only had authority over approving the TCEDA’s annual budget and multi-year work plan.

He said he voted in favor of amendments to Cope’s contract under recommendations from city and county leaders that increased his salary and added benefits, including one that gave Cope a maximum of six months severance pay if his contract was terminated.

Cope received a total lump-sum payment of more than $120,000 when the board terminated his contract in March, which included more than $80,000 in severance pay.

“I just feel like the at-large board members have gotten burned on this whole thing and caught in the middle of what the city and county had proposed to do and now are unwilling to bear the responsibility they had at the time,” he said.

Hillman served as executive director and co-founder of the nonprofit organization HealthLitNow, which received grants from the Economic Prosperity Council while he served on its board.

He said that he recused himself before every discussion and vote that the council made related to HealthLitNow, and that the money was used to provide college scholarships for local high-school students planning to pursue careers in health care.

“I’ve got people who come up to me now, after 40 years of providing jobs in the county and running nonprofits, they think that somehow I’m unscrupulous in my dealings because of the work I did on the TCEDA board, and it’s so frustrating,” he said.

Gray, who has served on the TCEDA board since 2011 and as its chairman since 2014, said he briefly went through parts of the latest Grand Jury report on Tuesday and didn’t want to comment on the entire 20-page document until the board gets a chance to look at it together.

The three-term supervisor, who recently announced he will not seek re-election in 2020, said he supported increases to Cope’s salary and benefits over the years largely because of information provided by businesses located in the county that the TCEDA had helped, including Sierra Pacific Industries, Mictronics, Inc., Sandvik Thermal Process Inc., Zoo-phonics, Plum Construction and the Rush Creek Lodge at Yosemite.

“Whether he was worth what we were paying him, I think that’s going to be up to subjective analysis,” Gray said. “For the people he helped, he was probably worth every cent of it. For the people he didn’t, he probably wasn’t.”

The reporting on the controversy surrounding the TCEDA has hurt Cope’s reputation and hindered progress on economic development in the county, said Gray, who believes the board could have addressed the concerns without disbanding the agency.

“I think we’ve taken something we could’ve fixed and beaten it to where we pretty much destroyed a guy and destroyed economic development in Tuolumne County,” he said. “It’s going to be a struggle to get economic development going again in this county.

“Everybody involved has some sort of piece of the blame in this,” he continued. “The point I’ve been trying to get across is, if we’re going to fix this, then we have to move on.”

With regard to releasing the results from the review on conflicts of interest among TCEDA board members, Gray cited attorney-client privilege and referred further questions to the County Counsel’s Office.

Contact Alex MacLean at amaclean@uniondemocrat.com or (209) 588-4530.

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