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SDI committee presses city for answers over missing funds; council directs manager and attorney to act
Summary
SDI committee members told the council they cannot trace about $1.3 million in street reserves and said bond trades and accounting gaps reduced the fund’s value. After public testimony the council voted unanimously to direct the city manager and city attorney to respond to the committee’s questions and to bring SDI governance into compliance with municipal code.
The SDI (Subdivision Deferred Improvement) advisory committee told the City Council that documents and bank records needed to reconcile the SDI fund have been missing for years and that the fund lost value through bond 'shorting' and untracked transfers.
"We don't understand who to hold accountable," the committee's presenter said, recounting that auditors could not obtain bank statements and that $1.3 million in SDI street reserves could not be traced. The presenter asked the council to finish the forensic audit and, if necessary, make restitution to the stakeholders.
Council members and several residents repeated calls for transparency. Public commenter JM Powers summarized the city's obligations in plain terms and urged immediate accounting: "The total documented city indebtedness, liabilities, and future obligations stands at negative $81,640,000," he said, and he urged precise tracking of fee and grant revenues.
Council members framed the response as a fact-finding exercise rather than an accusation. "We want to get to the bottom of it," the mayor said before the council voted 4–0 to give direction to the city manager and city attorney to answer the SDI committee's questions. The motion specifically requested explanations for the missing $1.3 million in street reserves and why certain bond positions were closed early ('shorted'), and instructed staff to bring the SDI advisory processes into conformity with the California City municipal code.
City manager Grayson said staff would compile the requested materials, work with legal counsel and the auditors where necessary, and return to the council with a standing SDI update item and any documents that can be posted for stakeholders.
The committee and members of the public urged additional steps including completion of the forensic audit and clarifications of signatory authority on SDI accounts. The council directed staff to prioritize responses and to report back at the next meeting with available documents and a plan for completing outstanding audit work.
The council vote followed hours of testimony and a lengthy committee presentation documenting historical loans, alleged audit gaps, and disputed transfers. The SDI fund, the presenters said, is a restricted trust for specific improvements in 29 tracks and is held by the city as trustee; committee members argued the city must provide routine quarterly reports and accessible bank statements to fulfill that role.
Next steps: staff and the city attorney will compile the requested records and return with an update; the council did not approve any immediate financial restitution during the meeting.
