Operating without a license
Cibola foundation gets nearly $90,000 in public funds despite PRC revocation of permit

Copyright © 2009
Gallup Independent
By Helen Davis
Cibola County Bureau

GRANTS — The Cibola Communities Economic Development Foundation, Inc., in Grants is a non-profit charitable corporation created to disseminate development information to local agencies involved in economic development and to provide other assistance in developing Cibola County.

To that end, Grants city government holds a service contract with the foundation that stipulates that the CCEDF will, “establish and maintain working relationships with other entities involved in economic development in order to foster a spirit of cooperation, eliminate duplication of effort, and maximize resources to ensure the success of economic development with the city.”

The contract further states that the city will pay $64,359.99 per year for services including: “ business recruitment, business retention, business expansion and any other such activity that enhances opportunities for economic development.”

According to the contract, the city retains the right to audit records of service detailing the kinds and time of service and records of services should be maintained going back three years.

City Manager Robert Horacek said contract payments to the foundation come from gross receipt taxes.

The current contract with Grants expires June 30.

Under a nearly identical contract, the Cibola County government pays the foundation for $20,000 annually for the same services. The county contract omits the auditing clause. The current contract with Cibola County also expires June 30.

The contracts, or “professional service agreements,” can be extended, amended and renegotiated, or terminated.

Both city and county contacts stipulate that the CCEDF maintain financial records and that the records “shall be available for inspection at reasonable times and upon reasonable notice.” However, it is unclear whether reasonable notice is a few hours or several weeks. No oversight provisions beyond records access are stated in the contracts.

The foundation had its licensed revoked by the Public Regulation Commission for failure to submit annual reports updating corporate information; it failed to register with the Attorney General’s Office’s charities division, according AGO spokesman Phil Sisneros; and there are no IRS form 990s on file according to online charities database Guide Star. CCEDF Executive Director Star Gonzales said she believes the foundations form 990s may be with the foundation’s bookkeeper.

Horacek said the city does not check with the PRC or the attorney general’s office to monitor the status of the non-profit before making a payment to it. City Clerk Denise Baca said she could find no reports of any nature from the foundation in city records.

The county also reported an absence of records concerning activities of the foundation. Acting County Manager Norman Ratlif said he could not locate any written reports from CCEDF. County Finance Manager John Alexander said Gonzales does deliver periodic oral reports on foundation finances at County Commission meetings.

N.M. Economic Development Department media relations officer Toni Balzano said the Economic Development Department does not monitor local economic development organs, which are independent entities encouraged by the department, unless a foundation requests grant money.

Balzano said the department will verify a group’s legal standing before awarding grants, however.

Milan Village Manager Marcella Sandoval said the village has asked the questions. Milan has been invited to join the foundation, and pay $15,000 to do so, but has not been able to get any details of what the CCEDF does. The village has asked for but not received the information it needs in order to commit the money, she said.

The manager said the trustees should get copies of reports or something quantifying the foundation’s work. “Even (reports of) phone inquires, something,” she said.

The village has helped prepare a packet for a current development endeavor, she said and added, “Why do we want to give them money when we do most of the work?”

But Milan gives CCEDF some money because the board of trustees supports economic development and wants to stay involved.

Foundation Treasurer Clemente Sanchez said Milan gave $5,000 last year and $2,500 this year, with a promise to give $2,500 more if they can. He added that he did not know anything about a $15,000 joining fee and did not pay one himself.

Horacek said Grants did not pay the foundation a $15,000 fee.

Gonzales said that the amount to join as a voting member with “two seats” is actually $20,000 and is stated in the bylaws. Speaking by phone from a training session in Oklahoma, the director said she could not provide details but would furnish The Independent with a copy of the bylaws as soon as she returned to town.