Crescent City Councilors on Monday allowed Rural Human Services two weeks to convince city staff that it should keep grant dollars that help fund its food bank and domestic violence shelter.

This decision ran contrary to the advice of Interim City Manager Michael Young, who recommended the council terminate its 2016 Community Development Block Grant subrecipient contract with RHS.

This recommendation comes after Young notified the council on July 17 that he had terminated the contract providing 2014 CDBG dollars to the RHS food bank and the Harrington House due to “multiple violations of the subrecipient agreements.” RHS’s 2014 contract with the city is set to expire Aug. 31.

On Monday, Young outlined three possible actions the council could take: One was to ignore RHS’s alleged violations of its subrecipient agreement with the city. The second course of action was to try to find another subrecipient or subrecipients to award CDBG funds to. A third alternative was to try to resolve the alleged violations with RHS, which Young called a waste of time.

“The first alternative runs the very real risk of jeopardizing the city’s entire Community Development Block Grant program,” Young said. “If we just ignore what has happened we have attempted to act what we feel is reasonably because these contracts are also between the state and the city. The state looks to the city to enforce those same regulations they have upon any subrecipients that we pass the money on through to and so a violation by them is seen as a violation by us. The exception is if we act expeditiously and reasonably to take correction.”

RHS had been slated to receive $158,140 each in 2016 CDBG dollars for the food bank and the Harrington House. Those contracts have not yet been prepared or executed, Young said. If those funds were allocated to another program, a public hearing would be required and the city may have to amend its CDBG contract with the state, a process that could take three to four months, Young said. The grant dollars must be spent by October 2019, he said.

When making their case before the City Council, Rural Human Services representatives pointed out that while the termination of the CDBG contract wouldn’t result in the elimination of the food bank or the Harrington House, it would result in a reduction of services to the community.

“We’re trying to give you everything we have. As far as I know we have and if not, we’re still working on getting it to you,” said Eli Naffah, who sits on the RHS board. “It’s a partnership — the city, the county and RHS. We’re working together to help resolve these critical issues that our community faces.”

Alleged CDBG violations

City staff and CDBG consultant Lorie Adams, of the Adams Ashby Group, discovered RHS’s alleged violations during an April 12 audit of the nonprofit’s grant programs, Young said.

Young noted that the 2016 CDBG dollars are only supposed to fund 15 percent of the food bank’s entire budget and 12 percent of the Harrington House’s budget, but RHS representatives have claimed that the city’s CDBG dollars fund 39 percent of the Food Bank program and 56 percent of the Harrington House program.

According to Young, in April, RHS’s former executive director Scott Feller had asked to transfer 20 percent of the 2014 CDBG dollars slated for food purchase to personnel and operations. In June, the organization asked to transfer an additional 27 percent from food purchases to personnel, Young said.

“We’ve asked if they could justify why this increase from the functions that we thought the money was going to, namely the purchase of food for distribution to personnel, we still haven’t received any response,” Young said. “The reporting has indicated — from their figures also — that the food bank served 40 percent fewer households in 2017 than in 2016 and provided 73 percent fewer food boxes and yet expended 20 percent more. There’s some double reporting on boxes versus meals.”

Young said the city typically audits the CDBG grant programs it funds every quarter. To receive CDBG funds, 51 percent of the program’s client base must live within city limits, he said.

Young also brought up the recent $152,000 settlement of a lawsuit filed against RHS by the California Department of Fair Employment and Housing (DFEH) that accused Feller of sexually harassing a former Harrington House director.

In a July 19 letter to RHS, the city requested the following items: A summary of the investigation into the sexual harassment claims against Feller; a copy of RHS’s corrective action plan; proof or evidence that the corrective action plan had been implemented; a copy of the nonprofit’s zero tolerance policy regarding unlawful discrimination, harassment and retaliation; the status of a worker’s compensation claim of job stress “due to continual harassment and sexual harassment by Scott Feller” filed by RHS employee Rachel Marler; and a status update on the nonprofit’s search for a new executive director.

The city’s letter to RHS also asks for a copy of a new sexual harassment claim filed with DFEH against RHS. RHS Board President Celia Perez had notified the city of the new DFEH claim on July 17, stating that it was made after the Triplicate articles on the first settlement ran in May.

Young said while RHS has provided the city with its new sexual harassment policy, the organization has not provided evidence that it has implemented the new plan. There is also no evidence in the RHS board meeting minutes indicating that had taken any action in response to the initial sexual harassment claim made in November 2015, Young said.

“The stories aren’t coming together properly,” he told the City Council. “We’re being told they did act appropriately, but yet why do you settle the claims the way you do? Their own minutes don’t tell that story. There’s no explanation other than ‘trust me, here’s what happened.’ I’m afraid we need more than that.”

Young also brought up an e-mail Adams received from Max Emami, of the California Housing and Community Development Department stating that if “CDBG funds were used to pay the executive director’s salary during the time the violations were occurring, that could be an issue because he was not in compliance with CDBG rules and regulations.”

“They haven’t said precisely what that means, but in conversations with our consultant that issue means they would potentially be looking at the return of funds,” Young said.

RHS responds

According to Ron Phillips, RHS’s food and family director, 1,136 families between from June 2016 to July 2017 applied to receive food from the food bank. Of those 1,136 families, 176 lived outside the city service area. Distribution sites outside the city service area include Smith River, Klamath and the Lighthouse Community Church in the Bertsch Tract, he said.

Six-hundred and fifty families a month receive food bags, Phillips said. Families of five receive two food bags and families of eight receive three, he said.

In 2015, RHS received approximately $150,000 in CDBG dollars with $25,000 allocated toward operations, $50,000 to be used to pay employees and $75,000 to buy food, Phillips said. Those dollars were to be spent by October 2017.

Phillips told the City Council on Monday that RHS spends about $4.26 in CDBG funds per family each month.

“I don’t know how you shop, but when I shop I look for the best deal I can find and make my money stretch as much as I can,” he told Councilors. “On $4.26 you don’t get to buy a lot of items. You’re not buying filet mignon. You’re lucky if you can even afford ground beef.”

RHS’s other funding sources for food purchases include about $5,000 to $6,000 a year from the state’s Emergency Food Assistance Program as well as dollars from California Grown, which is through the California Department of Social Services and must be spent on food grown within the Golden State, according to Phillips.

RHS usually receives $5,000 to $6,000 a year through the California Grown grant, but this year the nonprofit received about $21,000, Phillips said. Those dollars were to be spent by Jan. 1, 2017, he said.

Responding to Young’s assertion that the number of food bank recipients were down, Phillips said some families applied to receive food bags two years ago and they’re still coming.

When asked about the requested budget adjustment in June, Phillips said when RHS was notified that it would have to go before the City Council it decided not to move forward on its request.

“We changed our mind and didn’t do that,” Phillips said. “If (Young) is counting that as an adjustment then he needs to take that away because we didn’t do anything with it.”

Sexual harassment claims

In regards to the settlement of the DFEH sexual harassment lawsuit, Naffah said he and his colleagues on the RHS board received notification from its insurance, Nonprofit Insurance Alliance Group, that they have met DFEH’s terms.

Both Naffah and Perez offered the city a timeline of the actions the board took from the time its human resources department received the first official complaint on Nov. 10, 2015 until Jan. 8, 2016 when the plaintiff resigned.

In a June 18 letter to the city, Perez states that the plaintiff filed an official complaint with RHS’s human resources staff on Nov. 10, 2015. RHS staff notified the nonprofit’s board of the complaint 10 days later. After being notified of the complaint, RHS Board Chair Don Micheletti contacted the organization’s insurance company and a specialist in sexual harassment issues who advised the board to interview the two parties involved in the complaint.

Perez’s letter states that Feller was out of the office from Nov. 11, 2015 until Nov. 29, 2015. On Nov. 30, Feller met with the Board, who instructed him to have no contact with the complainant. The complainant was asked to meet with the RHS board, but wanted to speak with her attorney first, according to Perez’s letter.

On Dec. 2, 2015, Micheletti began acting as the primary contact for the plaintiff and the accused. The plaintiff appeared before the Board on Dec. 7, 2015 at which point the board decided to request an independent investigation from its insurance representatives.

On Dec. 21, 2015 the RHS board gave its insurance agent permission to proceed with arranging the investigation. On Dec. 24, 2015, the insurer notified RHS that it would only get involved if a lawsuit was filed and said it would be up to the nonprofit to find an independent investigator.

On Jan. 6, 2016, the independent investigator was approved to proceed with an autonomous independent investigation while the board chair and vice chair continued to act as liaisons between the complainant and the accused, according to Perez’s letter.

The complainant tendered her letter of resignation and met with the investigator on Jan. 8, 2016. She resigned on Jan. 15, 2016.

RHS has offered a timeline to the city of the actions the board took from the time its human resources department received the first complaint on Nov. 10, 2015 until Jan. 8, 2016 when the plaintiff resigned.

At the July 17 meeting, Naffah gave the Council a verbal rundown of the timeline. Perez included the timeline in a June 18 letter to the city.

According to Perez’s letter, the plaintiff filed an official complaint with RHS’s human resources department

The Department of Fair Employment and Housing filed a lawsuit against RHS on March 23, 2017. DFEH announced that RHS settled the case for $152,000 in early May 2017. Feller resigned as RHS executive director on May 17, 2017.

On Wednesday, Perez said discussion about the sexual harassment claim and potential lawsuit occurred during closed session meetings of the RHS board. Even though the RHS board provided copies of its minutes dating back to January 2015 to the city when requested, it did not include details from those closed session meetings because they involved personnel matters, Perez said.

RHS’s insurance company made the decision to settle the DFEH lawsuit and paid the $152,000 settlement, Perez said.

She said RHS is responsible for paying a $5,000 deductible, which will come out of its savings account. Perez said she couldn’t comment about the new DFEH sexual harassment complaint.

“I’m thankful for the opportunity the mayor and city council are looking to give us to clear our name,” she told the Triplicate.

In a later e-mail, Perez commended RHS staff and the community for their support and offers of help.

“The RHS staff are commendable in their ability to strive to meet the needs of our community while RHS is without an executive director,” she said.

Even though Perez is still acting as RHS’s executive director, Naffah said the board have begun interviewing candidates for interim executive director.

City Council weighs in

Before he allowed public comment, Crescent City Mayor Blake Inscore commented on the interim city manager’s decision to terminate RHS’s 2014 CDBG contract.

Inscore noted that Crescent City has invested more than $2 million in 2010, 2012 and 2014 CDBG funds into community services and about $3 million in city projects including the Fred Endert Municipal Pool.

“When our consultant communicates to us if we do not take certain courses of action we may find ourselves in a position to not be able to apply for funding, we are required as stewards of the resources that are available to us, to ensure we are doing our due diligence with all of this,” Inscore said. “It has been disappointing to me as mayor that in some light the city has been cast as if it is doing something wrong or that our intent is somehow to punish RHS. Our intent is to make sure that we have access to these monies to provide services to our community as we have done faithfully for years.”

Crescent City Mayor Pro Tem Darren Short pointed out that it was its CDBG consultant that warned them they could be ineligible for further funding if they don’t address RHS’s alleged violations.

“That was a place that we cannot afford to be,” he said. “It was not a knee-jerk reaction. We took the advice of a consultant that was a CDBG expert and based our decision on that advice. We can’t afford to lose that tremendous opportunity to receive the funds for our community.”

The City Council gave RHS until its next meeting on Aug. 21 to provide the requested information. Young said a public hearing will also be scheduled to discuss 2017 CDBG grant dollars.