City of Beaumont Audit
On Tuesday, May 7, 2013 Council for the City of Beaumont voted 5-0  to adopt a Resolution to: 'Approve the Freeway Agreement with Caltrans and Authorize the City Manager to execute the Agreement'. The Resolution presented to Beaumont City Council includes the following information that show the Agreement is detrimental to the City and Taxpayers of Beaumont.

Obligations of State: Page 2 of the Construction Cooperative Agreement lists the responsibilities of the City and Caltrans. No. 13 & 14 states the only obligations of Caltrans is to act as 'lead agency' for the California Environmental Quality Act and the National Environmental Policy Act. There is no funding or other any obligations from the State to complete the Project.

Cities do not build state roads because state roads are the property and responsibility of the State. Page 4 No. 34 states: “Upon Obligation Completion, ownership or title to all materials and equipment constructed or installed for the operations and/or maintenance of the State Highway System within SHS right of way as part of the work becomes the property of Caltrans”.

The City is obligating the Taxpayers of Beaumont to fully pay for a state construction project instead of sharing the costs throughout the state or even other cities within the Riverside County.

Obligations of the City: This Contract has several clauses that will obligate and burden the City.

Page 10 Item No. 80 states: “...if there are insufficient funds available in this agreement to place the right of way in a safe and operable condition, the Implementing Agency (City) accepts responsibility to fund these activities until such time as Partners amend this agreement”. This clause forces the City of Beaumont to 'find the money' to continue the project.

Page 13 Item No. 97 – 99: These clauses allow the State to force the City to complete the Project and states: “...if any Partner stops fulfilling Obligations, any other Partner may seek Equitable relief to ensure that Obligations continue”. This allows the State to sue the City of Beaumont and force completion of the Project.

Funding: The Agreement is very clear that all funding responsibilities will be the burden of the City of Beaumont. Page 2 Item No. 9 of the Agreement lists the City as: 'Sponsor for 100% of the Project' and Item No. 12 states: 'City is the only Funding Partner'. Page 21 shows a Funding Summary listing the costs and funding of various aspects of the project.

There was $5 Million in Federal Funding for this Project, but the Funding Chart on page 21 shows this money has already been received and spent. There is no other funding sources listed – only 'City'. The City has not stated how it will pay for the Project and the City can not received funding because Highways are State Property.

The Resolution obligates the City to complete the Project once it's started, but does not mention how the City will fund the Project. It obligates the City to pay $70 Million in the next three (3) years with any revenue source.

Item 4.b.1 on the Council Agenda is the Financial Update as of February 28, 2012. Total Revenues listed for the 8-month period are $11 Million. Expenses on the Financial Update are listed at $15,828,304, but these are only the expenses to operate the City. The City neglected to declare $8.3 Million Bond Debt paid in September, $3 Million spent through Fund 35, and $1 Million spent through Fund 35 to pay Penalties to the Riverside Auditor/Controller. Actual Expenses for the first 8-months of this fiscal year were $28 Million.

Projected forward; the City will receive a total of $49.5 Million in Revenues in the next three Fiscal Years and incur $71 Million in Expenses for the Basic Operations of the City. Another $45 Million is obligated to pay past Bond Debt. The City of Beaumont currently spends money 2 ½ times faster than it receives money.

This Agreement would obligate the Taxpayers of Beaumont to pay another $70 Million by 2016 and Page 6 No. 45 states: “...If implementing Agency (City) anticipates that funding for work will be insufficient to complete work, Implementing Agency (City) will promptly notify Sponsor (City). This leaves the City open to request more funds 'if needed' instead of staying within the Budget.

The City of Beaumont has already spent $10,689,836.92 directly related to the Potrero Bridge Project with the following Vendors:

 Department of Fish & Game - $2,101.50
Harmsworth Associates - $49,835.00
Union Pacific - $85,646.86
Natures Image Inc - $148,170.03
Community Bank - $497,218.81
Los Angeles Engineering - $3,157,068.51
Urban Logic Consultants - $6,749,796.21

As of March 1st the City of Beaumont had $7,958,155 in General Fund Checking, $43,199.03 in Savings, and $1.8 Million in the LAIF Account. There have been rumors of $10 Million in Reserves, but there are no additional Reserves. As of this writing the City of Beaumont has not produced a 2012 GAAP Audit.

State highways are for state-wide use and all funding for state highway projects should be paid for with State funding, not the Taxpayers in one small City. It is not practical or financially feasible for the City of Beaumont to continue with this project.


This project gives high chance to obtain success and receive the profit.

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