Thurston County disagreed with the State Auditor’s Office (SAO) findings regarding its alleged noncompliance with state laws after a million-dollar administrative headquarters build-out and furnishing, the county reported on June 18.
Last month, the State Auditor released its Accountability Audit Report for the county. The report stated that the county “did not comply with state procurement laws and improperly used Real Estate Excise Tax (REET) 1 funds.”
This is connected to the million-dollar funds from the REET used to improve a 90,000-square-foot leased office building, The Atrium, which is located at 3000 Pacific Avenue SE.
The SAO’s report stated that the county did not follow proper procurement procedures for the build-out and should not have utilized REET funds for the building’s furniture and equipment.
The report also emphasized that the county did not perform competitive bidding when it used $7.5 million of REET 1 revenue to make leasehold improvements on the building, and there was also no competitive bidding for the $242,224 of furniture and equipment that it purchased through a contract amendment.
The county also allegedly used $1,855,201 of REET 1 funds to purchase furniture and equipment for the Atrium, which, per the auditor, is not an allowed use of these revenues.
The SAO recommended that the county replace $1,855,201 with the REET fund from another funding source.
“With a topic as technical as this, there are times when attorneys disagree on interpretations of codes and statutes,” said Thurston County Prosecuting Attorney Jon Tunheim. “In this case, we respectfully disagree with the auditor’s opinions, and stand behind our team’s analysis of the law."
"However," continued Tunheim, "we also will respect the process and the county will follow the SAO recommendations."
”In the article, the county asserted it acted in good faith and exercised due diligence when reaching the opposite conclusion." Tunheim said. "The county reviewed state law, the Municipal Research and Services Center County Bidding Book, and lease agreements with similar terms agreed to by the Washington State Department of Enterprise Services (DES).
The county’s legal counsel gave advice supporting a determination that bidding was not required for the build-out work since the county would never own the building.
Regarding the use of REET funds to purchase furniture, the county explained that the REET statute’s declaration of legislative intent indicates the definition of ‘capital improvements’ specifically includes the ‘acquisition of real and personal property associated with such local capital improvements.
The county shared its legal analysis with the SAO, but the office declined to change its conclusions.
“While the county does not agree with the State Auditor’s Office, we are prepared to repay the REET fund with $1,855,201 from the county general fund,” said County Manager Leonard Hernandez.
“Processes are already in place to ensure funds do not have negative cash balances. The funds transferred to the REET account will be available for future county capital improvement projects,” Hernandez added.
The review is part of a routine audit of county expenditures from January 1, 2021, through December 31, 2022.
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OlyBlues
Instead of county Prosecutor Tunheim acknowledging his elite civil attorneys were flat wrong in their interpretation of the law, as usual, it is nothing to see here folks. Tunehim should be pressed on 1. Why was the county auditor who is familiar with state procurement regulations intentionally not consulted on such a major purchase by the county? 2. Why not seek legal advice from the state auditor's office that the county knows will be reviewing their actions to ensure proper protocols are being followed before making questionable purchases? Once again, the county acts as if it can do what it wants with taxpayer funds. The Atrium is a huge, expensive boondoggle that was a pet project of the former county manager Ramiro and endorsed by Commissioner Mejia and Menser. Millions of county tax dollars poured into a rental building and improvements to a building that the county doesn't even own. And now we hear the county wants voters to trust them and approve funding for a new $400 million courthouse downtown. What a joke. It is time for major oversight and full accountability at the county. The county prosecutor's civil attorneys who are not even working full time in the office and making over $150K/year and giving bad legal advice is the tip of the iceberg.
Friday, June 21 Report this
Claire
Another property tax increase to make up the $1.855M ? Thurston County residents should be made aware of this malfeasance via a mailer to all county residents. They ran on 'Transparency", however the BOCC is hiding this information from the citizenry.
Friday, June 21 Report this
JW
These are the people that want to raise taxes for a new courthouse
Friday, June 21 Report this
damn_tam
I agree with you DeeperThoughts and the questions you pose are undeniably reasonable. It concerns me that Mr. Tunheim and the attorneys under his leadership don’t appear to have asked themselves those same questions. Equally troubling is the blatant disregard for our increasingly scarce resources, which could have been put to far better use than addressing this preventable issue. Thanks SAO for your work.
Friday, June 21 Report this
MamaBear
And for some reason most voters wanted to pay 5 commissioners instead of only 3.
Friday, June 21 Report this
HarveysMom
I thought we owned the building??? And that was why we were fixing it all up. It was supposed to be a great purchase, sort of rushed through, a few years ago, by other county commissioners besides the ones Deeper Thoughts named. My memory seems to be faulty. I can see why the county would like to gather their different offices together, seems efficient. That doesn't bother me and it would be appropriate to spend tax payer dollars on it.
That said, I am glad the SAO spotted this extreme example of the avoidance of competitive bidding. I can hardly believe there was nobody at the county having heartburn over this, especially for a building we do not own.
Looks now that property developers have not only targeted naive city politicians for unnecesary tax breaks for building downtown Olympia market rate residential buildings (and also getting code exceptions featuring an intentional lack of parking places for their prospective residents), they have also influenced the county.
Saturday, June 22 Report this
HotTractor
What about the building on Mottman road across from the college the county sunk so much money into with a 5 year lease? It seems the county is constantly spending money on rentals and when it does actually buy a building it's in poor repair and require large sums to get it up to usable status, ala the Tyson Seafood building.
Sunday, June 23 Report this