Community value in special Kiewit Pacific
fund is expected to be diluted.

Posted: September 25, 2022
Newberry Springs Community Alliance
by Ted Stimpfel

CSD president Robert Springer is in denial
based on his predisposed misunderstanding.

Redistribution of reserve account.

    For 18 years, the Newberry CSD has been holding onto funds that were acquired through a settlement in which a few residents and the Newberry CSD had appealed a county mining permit for a construction company called Kiewit Pacific.

    The settlement funds have subsequently been referred to as the Kiewit Pacific funds and have been held in a separate CSD account.  Now a commingling of the funds with public funds is proposed during the CSD's monthly board meeting, Tuesday, September 27, 2022.

    The settlement enabled each appellant in the action to receive an equal portion of the settlement monies.

    As the appellants had done the appeal for the benefit of the community, it was agreed among the appellants that they would allow the elected CSD directors to distribute THEIR funds for the benefit of the community on matters that the CSD directors could not spend their County allocated public tax funds on.

    Based upon this agreement, rather than Kiewit Pacific issuing settlement checks to each appellant, Kiewit Pacific was instructed to write one check to the CSD directors who would as a separate organizational body, outside the scope of their LAFCO duties, distribute to the community.

    Restated, the funds are to be held in a separate account and not to be commingled into the CSD's general treasury as the directors were directed to use the funds for special purposes that the CSD could not use tax-generated funds on.

    An elected body of officials, such as the county's Board of Supervisors, routinely sit in seats of other administrative bodies, and this is what the CSD board in 2004 agreed to do, outside of their LAFCO duties.  The funds were not tied to the CSD (except for $20,000), but to the CSD's elected officials.

    As the board was handling the bequest funds of others, the board holds a fiduciary duty to properly administer the funds which include the highest and best use of the funds.

The proposed CSD's commingling of the Kiewit Pacific
funds (item #116) in the general Parks & Recreation account.

What is the Kiewit Pacific Trust Fund?

    In 2004, in settlement of a clever Conditional Use Permit appeal (extortion plot) brought by CEQA-NOW, the Newberry CSD, and community individuals against Kiewit Pacific, the appellants acquired a legal settlement of about one million dollars in benefits for Newberry Springs.

    Included was $350,000 in cash.  $20,000 was dedicated upfront by the settlement for the local fire department.  The remainder was in road improvements done by Kiewit Pacific.

    At the time of the settlement, there were multiple appellants.  By agreement between CEQA-NOW, the CSD directors, and various individuals, the CSD directors agreed to manage the remaining funds as a conditional bequest on the behalf of the appellants for the benefit of the community.

    As the CSD directors were considered the best representative entity to discharge the Kiewit Pacific funds, the CSD directors accepted the duty in a trustee relationship.

    The funds were to remain separate from the CSD's functions.  Except for the upfront $20,000 to the fire department, the funds were not to be merged into the CSD's general fund which would have restricted the fund's usage to only those current functions authorized under LAFCO.  Those are the CSD's support of the fire department, parks and recreation, and street lighting.

    To assist the CSD in the discharge of the funds, on November 19, 2004, the CSD held a community workshop where 21 ideas for using the funds were developed.

    Thereafter, the CSD appointed Fred Stearn, Wes Sperry, Wayne Snively, and John Olson, to do a communitywide survey via the mail and compile the results for guidance on how the community funds should be used.

    The 21 ideas from the workshop were presented to the community to vote upon.  The response was low but provided a cross-section of the community's desire.

    It is important to note that most of the CSD's suggestions in the survey have nothing to do with the CSD's LAFCO-authorized functions.  This clearly demonstrates that the intent of the funds was not to be solely used for the purposes under which the CSD is authorized.  Comingling of the settlement funds with the CSD's general fund is not something that CEQA-NOW would have agreed to.

    It should be further noted that the Newberry CSD did very little in the appeal, rather it was CEQA-NOW and the other appellants that originated and drove the appeal on behalf of the community.  It was felt that Kiewit Pacific's new mining operation owed some benefits to Newberry Springs for truck road wear and other considerations.

    Instead of distributing the funds for the benefit of the community, the CSD has sat on portions of the fund for 18 years.  With the rollover of new CSD directors and the passing of time, there has evolved a mistaken belief that the funds belonged to the CSD's general fund and can only be used for the CSD's limited functions as authorized by LAFCO.

    This misunderstanding has in recent years been fueled by a letter sent by CSD president Robert Springer asking an attorney for clarification on whether the funds were special or a general fund.

    The attorney responded the only way that he could based upon Springer's letter that was highly misleading and deficient in providing background information and documentation.  The attorney advised, based upon the information given to him, that the funds were general treasury.

    So, based upon this confusion and Springer's unwillingness to consider another, Springer has been directing the CSD down the wrong path.

Missing money?

    Only three authorized expenditures apparently have been made to distribute portions of the funds.  Two were to the fire department and one to the Senior Center.  When totaled and subtracted from the $350,000, it is reported that there is money unaccounted for.  The CSD may have mistakenly commingled the missing funds with other CSD expenditures or the money was stolen.  Without a forensic audit covering 18 years, the question is unanswerable.

    In the last report, only slightly over $139 thousand remains in the trust fund.  That appears to represent well over $100 thousand missing from the trust!

    The CSD directors accepted and have been handling the Kiewit Pacific funds as a bequest with directives to its use.  This established a fiduciary trustee relationship.  If there is unaccountable money missing, the CSD is responsible.

Why does the reclassification matter?

    (1)  Breach of contract and breach of fiduciary duty whereby the Newberry CSD can be held liable with punitive damages possible!  When money is given under a specified guideline, the guideline must be followed.

    (2)  Commingling the funds into the CSD's general treasury greatly limits the beneficial use of the funds.  For instance, although the CSD has no LAFCO powers to engage in community economic development, the directors could use the funds as contributing matching funds in a 1:5 or a 1:10 ratio economic development grant.  Commingling the funds removes this possibility.

    (3)  Or, let's say that the CSD would like to build a nice arch structure over Route 66 proclaiming Newberry Springs as the Gateway to the Mojave Trails National Monument or the Mojave National Perserve.  The CSD could not do it with its general funds, but it could with the separated Kiewit Pacific funds.

    The commingling proposal is a foolish mismanagement of funds during a time of tight money.  The funds should be used as intended.

The ineffective fiddling Nero
while Newberry suffers.

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