TDH Finance Chief Alleges Misconduct

By Julie Fernandez

Tulare - Tulare District Hospital's chief financial officer has asked the hospital board to allow her to discuss with them—in public— allegations of financial misconduct and her concerns about plans for a proposed medical office development on hospital property adjacent to Evolutions on East Prosperity Avenue.

Lucy Reimche, who was granted a six-month sabbatical in June, requested the meeting in an Oct. 5 letter sent to board members. In the same letter, she said Chief Executive Officer Bob Montion had launched an investigation against her in retaliation for her disclosing her concerns.

In a prepared statement, hospital attorney, Suzanne D. McGuire, said the personnel investigation began before Reimche raised any allegations to the board.

“The validity of the CFOs allegations has not been established, but the board of directors takes very seriously the claims now being raised and is taking appropriate steps to ensure those issues are fully investigated,” McGuire said.

“The board will receive a full report upon completion of the investigation and will take appropriate action if any allegations are found to have merit,” she said.

When LeRoy Trippel, president of the Tulare Local HealthCare District board, replied to Reimche's letters of Oct. 2 and 5, he also said the board took her concerns seriously and urged her to continue to cooperate with the investigation.

He also said Montion had come to the conclusion it was in the best interest of the hospital for her not to return because her relationships with her peers and subordinates were “severely impaired.”

But when Montion became aware that his motivation was being called into question, he removed himself from the process, authorized an outside investigation and notified the board, Trippel said.

That Montion and Reimche have had a major falling out is particularly surprising given their many years of working together, first at Alta District Hospital in Dinuba and for the past nine years at Tulare District.

The situation is further surprising because of the memorandum Montion wrote to the board on June 19, when he was asking for permission to hire Mike McGinnis as interim financial officer in Reimche's absence.

Calling Reimche “the architect of the hospital's financial success,” he reported that under her direction “the hospital had seen nine consecutive years of profitability in the most volatile hospital market in the past 50 years and in one of the poorest markets in California.”

Cash reserves had increased from $4 million to $20 million and she had refinanced and restructured the hospital's debt “saving millions in interest costs,” he said.

“It is my opinion that Lucy Reimche is among the best CFOs in the state and certainly the Central Valley,” he said. “She is an outstanding partner and we compliment each other's skills and temperament very well. This is an unusual partnership that has lasted far longer than the common CEO/CFO relationship.”

Her hard workhe said she had easily worked the equivalent of 12 years in the last nine yearshad exhausted her and she was ready for extensive time off.

$300,000 Investment

In her Oct. 5 letter, Reimche said one of her concerns was that Montion had deposited money in Valley Business Bank for “less than optimum interest and which may not be fully insured.” Trippel is a vice president at the bank.

In response, hospital officials said $300,000 was deposited in both Valley Business Bank and Citizens Business Bank after an annuity contract became due.

The move was part of a conscious decision to invest some of the hospital's money with local banks “as long as they are competitive” because they lend locally, interim Chief Financial Officer McGinnis said.

McGuire said: “The chief executive officer decided to invest back into the community in appreciation for the overwhelming support shown by the community in approving Measure D [which raised millions to expand the hospital].”

As for the safety of the investments, McGinnis said the federal government insures deposits up to $100,000 and in the case of public monies California requires banks to collateralize the rest at 110 percent. The money is safe, he said.

Calling suggestions of a conflict of interest because of Trippel's employment “misguided,” McGuire said: “Under California law, the mere fact that a board member works at a bank where the agency deposits money does not amount to a conflict of interest.”

The 5.50 percent the certificate of deposit is earning at Valley Business is the second highest yield among the 22 banks where the hospital has purchased certificates, according to an investment report provided by McGinnis. Citizens is providing the highest rate of return 5.52 percent.

East Campus

Hospital officials also challenged Reimche's allegation that a deal to sell hospital property “under horrible economic terms” was in the works, saying it is premature to come to a conclusion about the financial worthiness of the east campus concept.

The hospital is considering a joint venture with doctors and a developer to build a medical office complex and surgery center next to Evolutions, but more work needs to be done before the board can determine if it will be financially beneficial to the district, hospital officials said.

“The board will meet on Oct. 25 to consider a retainer agreement with the developer,” McGuire said in her prepared statement. “The retainer agreement is a preliminary step in the process and, if approved, does not guarantee the project will go forward.”

Reimche's conclusion about the deal was likely based on a report she did in June and sent to Montion to identify areas of potential concern, hospital spokesman Rick Elkins said, adding the numbers available were rough then and remain so today.

“Any numbers up to this point, other than the appraisal, are speculation at this point,” Elkins said.

Hospital Directors

Hospital board members say they cannot comment on personnel issues but several said they are willing to meet with Reimche as a board to discuss her concerns.

“I'm definitely open to the idea of her doing that, but I was hoping the personnel issue would have some resolution prior to that,” director Deanne Martin-Soares said.

Director Roger McPhetridge said he would like to listen to her because “she certainly has a wealth of knowledge and background” but the hospital's attorney will have to decide if a meeting could take place in open session.

“Absolutely, I'm willing to listen [to Reimche] and I want it in open session,” said Dr. Parmod Kumar, who objected last month when the board went into close session to discuss the next step in connection with the east campus.

“This is a public hospital and this is a big project,” he said. “They [the public] need to be informed of every action, every discussion we have.”

At that meeting, McGuire said the Brown Act allows closed session when trade secrets are involved.

Trippel said the board will meet with Reimche but no date has been set. Director

Victor Gonzalez said that while he could not comment on the letter, he wanted to assure the public complaints, especially those relating to financial issues, are thoroughly investigated.

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Redevelopment Takes on 'Health and Safety Risk’

Tulare - The Tulare Redevelopment Agency is preparing to clear away the brush and debris on the long-time vacant Imperial Anchor Pallet Company property so experts can test the soil for contamination.

The agency wants to buy the five county-owned acres, which are to the east of South K Street in a redevelopment area, but not until it knows the extent of the contamination and how much it will cost to clean up the site.

“If we find it would cost $2 million, we may decide not to go forward [with the purchase],” said Betsy McGovern, redevelopment project manager.

The county of Tulare, which owns the two parcels because the late property owner defaulted on his taxes, posted them for sale with minimum bid prices of $71,000 and $20,900.

The Redevelopment Agency and the county have a $28,000 purchase agreement, which is the amount of taxes owed, that has gone to the State Controller's Office, McGovern said. The agency is now asking the Board of Supervisors for a 181-day extension in the process and for permission to do the testing.

An $83,000 grant from the Department of Toxic Substance Control and a $50,000 Environmental Protection Agency grant will pay for the work, McGovern said.

The property, an eyesore visible from the freeway, was the site of a small arson fire in March 1985. While fighting the blaze, the Tulare Fire Department found about 600 drums filled with resins and labeled “hazardous.” The 55-gallon barrels, some of which were rusted and leaking, were removed.

“All the waste above the ground has been removed,” redevelopment project manager McGovern said. “The drums there appear empty, except for rainwater. What hasn't been done is extensive soil testing … to see what was leaked and to see what was buried.”

After the fire, the owner sold the front parcel he owned in the 4200 block of South K Street and then walked away from the two rear parcels where the drums had been stored, McGovern said. He later died.

Whether an insurance company or anyone else can be held responsible for the cleanup is not yet known, McGovern said.

“There's a legal process that still needs to happen … because it was a major, major case of negligence,” she said.

URS Corporation of Fresno, which conducted a visual survey of the site, found areas of depression in the ground, which could mean items are buried there, and a former employee also reported waste was dumped onto the ground, McGovern said.

“Normally an individual would not even go close to purchasing this type of property,” she said. “We're taking a more aggressive approach to it because it's been contaminated for so long. If there were another fire, it could be extremely hazardous to the community. We're looking at it as a health and safety risk.”

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Plan Could Generate $32 Million for Major Projects

By Julie Fernandez

Tulare - A recent study indicates the Tulare Redevelopment Agency could accelerate its attack on blight in west Tulare and elsewhere if it issued nearly $16 million in tax anticipation bonds and merged its three redevelopment project areas.

And if City Manager Darrel Pyle and Finance Director Darlene Thompson can find an annual lending source for the agency other than the general fund, then the city could also afford to float a $16 million bond.

The agency currently borrows $2 million a year at 8 percent and pays $1.2 million back. The interest rate is advantageous to the city only if the debt gets paid back and at this point the agency owes almost $50 million to the general fund, “most of which is just interest compounded on interest,” Pyle said.

Proceeds from a $16 million bond would allow the city to tackle major projects such as replacing the antiquated storm drainage system downtown, funding the Del Lago Park project or purchasing the 100 acres of excess land College of the Sequoias has for sale here, he said.

Members of the City Council and Redevelopment Agency who attended a joint study session on Oct. 10 to hear recommendations from consultants Seth Merewitz and Don Fraiser appeared excited about the possibilities.

“Let's work together on this wish list,” Councilman Craig Vejvoda said.

Redevelopment board members Patrick Isherwood and Art Cabello were initially worried about what west Tulare residents, who waited for a long time for redevelopment to come to their neighborhoods, would think about a merger of the project areas.

The merger actually would provide more housing money for west Tulare, Mayor Phil Vandegrift and Pyle said.

The agency must set aside 20 percent of all new property tax growth in redevelopment project areas for housing in that area, they said. In the case of the South K Street Project Area, an industrial corridor, the opportunity to provide housing is almost non-existent and a merger would allow the city to use the money in other project areas.

“It might be a way to infuse more money into it [west Tulare] and jump start redevelopment,” he said. “We need to shoot an arrow into the middle of the west side. …We're going to fix the west side. I'm committed to it.”

Isherwood commended Vandegrift for his comments.

“We're not just planning for dollars, but for that social side as well,” he said.

A merger of the combined Alpine/Downtown Project Areas, the South K Street Project Area and the West Tulare Project Area would be financially beneficial to the agency and facilitate the administration of the programs, the consultants said.

They recommended another study to further evaluate the feasibility. They also recommended the agency hire a financial advisor to work with Fraser & Associates to plan for a bond sale.

Pyle said he will work with Redevelopment Director Bob Nance and Finance Director Darlene Thompson to see how the city can stop the accrual of interest the agency owes the general fund and find a way to reduce the debt.

“This discussion needs to stay fresh,” Vandegrift said, suggesting the council and agency board meet every other month. “We won't get anything done if we go away and forget.”

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Former Council Woman to Leave Tulare

Tulare - Nettie Washington, who served 12 years on the Tulare City Council and is chairwoman of the Community Relations Commission, plans to move to the desert community of La Quinta.

Washington has tendered her resignation from the Community Relations Commission, effective Oct. 31. She was the commission's first chairperson.

“We're just waiting to sell our house,” she said. “Hopefully it will sell by the end of the month.”

She retired from her job with the Tulare Adult School in 2001 and from the City Council two years ago. Her husband, Willie, a carpenter and lead craftsman for the Tulare Joint Union High School District, retired more recently.

“The air here is causing him health problems and he thought it would be better for us to move,” Washington said.

La Quinta is 30 minutes from Palm Springs in the Coachella Valley and the Washingtons will live in a development planned for people 55 years and older, she said.

During her 12 years on the council, Washington championed efforts to give residents a greater voice in local government, to bring city services closer to the people and to make sure residents received equal treatment no matter where they lived in the city.

She also served many years on the Tulare County Economic Development Corporation board and in top leadership positions with the League of California Cities and the national League of Cities.

In addition to her role with the Human Relations Commission, Washington is the immediate past president of the Tulare Sunrise Rotary a member of the Sequoia Christian Educators Association of Kings and Tulare Counties.

Maria Grijalva, who serves on the Human Relations Commission, said she is glad Washington agreed to serve as commission chairperson after leaving the council.

“We were like her students; we were learning from her,” Grijalva said. “Now it's her time to enjoy life and move on. I'm sure she feels confident, we'll be able to stand up on our own two feet.”

She will miss Tulare, Washington said.

“There are good memories here,” she said. “There are good friends here. Willie's mom and dad are still here so we'll probably be in Tulare once a month.”

Asked if she intends to get involved with city government in La Quinta, Washington said: “When I leave here, I hope to be as far away from politics as I possibly can. I'm going to just enjoy and take life easy and with as little stress as possible.”

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One Challenger Faces Three School Board Veterans

Tulare - Four candidates are involved in a low-key race to fill four slots on the Tulare Joint Union High School District board of trustees.

Elva Strawn, 58, a retired Tulare County Health Department employee who counseled teenagers for part of her 40-year career, is facing three veteran incumbents who say they want to serve four more years to help open the third high school and to support new Superintendent Howard Berger.

“We seem to have a well-functioning board right now,” said trustee Steven Lessley, 48, an optometrist seeking his third term. “I feel right now experience is very important. We have a new superintendent, the biggest project we have had in 50 years [the third high school] and a boundary issue.”

Board Chairman Adrian Holguin, 66, who manages his family's real estate investments, is seeking a fifth term and Craig Hamilton, 56, a dairy nutritionist, has served 12 years

. Strawn said two of the things she would like to do if elected is change how transfers from one school to another are done and authorize special training for teachers so they can better handle bullying, sexual harassment and gang problems.

“A quality education needs a good environment,” Strawn said.

If students find themselves in a threatening situation and cannot either transfer to another school or find support and assistance from teachers then their education is jeopardized, she said.

The district needs to be more flexible about transfers and streamline the process, which she said is “too cumbersome and takes too long.” She also said she was worried the board will split up families when the third high school opens in 2008 to only freshman and sophomores.

Holguin said the board does not want to split families up.

“We're going to come up with a policy that's going to try to keep these kids together,” he said. “To her (Strawn's) credit, she's thinking on the right track.”

Lessley said no one on the board has anything to gain by splitting up families and that the board needs to sit down and think out every scenario it might face once the new school opens.

The board spends considerable time on transfer requests and tries to accommodate students as much as it can, Hamilton said.

“We can't be more flexible now than we are,” he said. “We individually talk to, listen to and are responsive to each family's needs. It's difficult now because both schools are impacted.” The third school will provide more space and the board can be more flexible, the incumbents said.

“The third high school will relieve some of these issues,” Lessley said.

As for splitting up families when the new school opens, Hamilton said. “We're not going to disrupt any more than we have to.”

As for bullying, the incumbents said school safety is an on-going issue of concern to them.

“Do we have adequate training and focus on that? I think we do,” Hamilton said. “Can we do better? We can always do better. I would say we are sensitive to students' needs in terms of safety and a good safe learning environment.”

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