No Improper Use of Loans Found

An in-house audit of Channel Islands Harbor’s finances released Thursday has found that state loan money was not directly used to illegally subsidize Ventura County parks.

But due to shoddy record-keeping practices by county officials, the review by the auditor-controller’s office was inconclusive on whether state money had been funneled to the county’s park system.

“We’ve found no evidence that any funds were stolen or misappropriated,” Auditor-Controller Thomas O. Mahon said in a news conference at his office. “We’ve found no evidence of that whatsoever.”

However, Mahon conceded that the inquiry was ultimately unable to determine if the money was used correctly because his office could not locate important supporting documents.

Up until last year, part of the money generated by the harbor--as much as $1 million annually--was going to the parks system to help subsidize its operations.

Since 1970, the county has borrowed $7.8 million in construction loans for Channel Islands Harbor from the California Department of Boating and Waterways, the National Oceanic and Atmospheric Administration, and other lenders.

To ensure that such loans are paid back, government lenders generally require revenue derived from projects that benefited from the loans to be spent solely in that specific area. As a result, the Harbor Department has a state loan fund where it places some Channel Islands Harbor revenue.

The Harbor Department is legally entitled to use a portion of the state loan money to pay for its overall administrative and maintenance expenses. But records should exist that explain how harbor officials came up with the percentage of those costs they charged the state fund--and they are nowhere to be found, according to the audit.

Four months in the making, the audit examined harbor operations during the period from fiscal years 1992-93 to 1996-97.

“We cannot find documentation to support the level at which they charged the state loan,” Mahon said, adding that the paperwork that did exist was scattered between the harbor and parks department as well as the General Services Agency. The Harbor Department was part of the General Services Agency until 1996.

Harbor officials improved their record-keeping practices six months ago and have also changed the way they calculate charges to the state loan fund.

Any mistakes in managing the fund should not affect future loan agreements, Mahon said, noting that the county has an excellent record of repayment and is up to date on all harbor loans.

“Our focus has really been on the future,” Harbor Director Lyn Krieger said, “and we are working with the auditor’s office to establish a strong records trail so that this does not happen again.”

That is important because a 1980 audit showed similar record-keeping problems with the state loan fund, Mahon said. And although the paperwork process was apparently improved several years later, according to an audit at the time, it fell back into disrepair, he said.

“If you’re saying that problems have reoccurred, yes, problems have reoccurred,” he said.