Busted

Back in July 2001, then–San Diego mayor Dick Murphy and the rest of the city council voted to give a cool $1 million of taxpayer money to a small nonprofit outfit called the San Diego Public Library Foundation, which promised to raise contributions for construction of a new downtown library. The group, then presided over by lobbyist James Dawe and La Jolla socialite and fundraising executive James Bowers, spent much of the cash on consulting fees and public relations, with relatively little to show in the way of donations. Despite that embarrassment, the group has lived on, each year promising to raise $85 million or so in private funds that the City says is needed to build a “world class” central library near the baseball stadium.

The foundation has missed repeated deadlines to come up with at least $50 million as a show of progress to its ultimate goal. The group reportedly told the Union-Tribune late last year that it has raised at least $15 million toward its goal, but a new report by Eduardo Luna, the City’s internal auditor, has cast fresh doubts on the group’s credibility.

Luna’s audit, undertaken after a complaint was phoned in to the City’s whistleblower hotline, concludes that the foundation “has not always retained records necessary to clearly document contract compliance and proper authorization of expenditures of City contributions.” Luna determined that, as of May of last year, $858,000 of the City’s initial $1 million payment was gone, leaving a balance of $142,000. At the same time, the foundation reported it was holding only about $1.5 million in contributions in trust “for the benefit of the San Diego Public Library System.” (At the end of last June, according to the foundation’s audited financial report, its total assets were worth only $1,201,138. By that time, the remainder of the City’s million-dollar contribution was down to $112,448.)

In addition, the foundation wasn’t able to document completely the status of its pledged donations: “Although there is a written statement from one donor, it implies additional terms are necessary in order to make the promise binding,” Luna’s report says. “We requested documentation to support the pledges, but the Library staff was unable to provide information to support the pledges.”

Making things worse, the foundation “used City contributions to pay for fiscal year 2006 administrative expenses, including $72,000 paid to a consultant for prior year services. The fiscal year 2005 notes to the audited financial statements did not disclose this liability.” In its response to Luna’s report, the foundation noted that “the audit took place in the first year of new administration for the Library Foundation, including less than two months into the tenure of a new office manager who was just beginning to re-organize some systems and procedures.” Foundation officials did not respond to requests for comment made through the library's fund-raising office.