Porterville clashes with TCRTA over transit provider

(Karis Caddell)

Dispute between Porterville, Tulare County Regional Transit Authority unfolds over abrupt change in transit providers; documents reveal potential conflicts of interest, financial irregularities

TULARE COUNTY – The city of Porterville and Tulare County Regional Transit Authority (TCRTA) have come to a head over a recent change in transit providers, which ultimately uncovered years-worth of conflicts of interests, transparency issues and financial discrepancies between the agencies, according to the TCRTA.

This dispute came about not long after the City of Porterville chose to withdraw from TCRTA completely after the agency removed SM Transit from the TCRTA as a provider. This decision created a conflict between the entities, as the City of Porterville has made significant use of SM Transit’s services.

According to a letter written in March from Porterville Mayor Martha Flores to the TCRTA Chair, Jose Sigala, as well as its board members, the City of Porterville was upset and shocked that their transit provider of 28 years would no longer be providing services for the town.

In her letter, Flores explained that SM Transit provided the town of Porterville with transit that was local, cost-effective and dependable. On top of that, the City of Porterville was already planning to withdraw from the TCRTA on June 1, which will make changing transit providers for the town for a couple of months stressful and costly. Because of this, the Mayor asked TCRTA to reinstate SM Transit through the month of June.

“This creates an unnecessary burden on TCRTA staff and Transdev to find solutions as well as city staff. In order to avoid service disruptions, added costs and other negative effects of this decision, we request that the TCRTA board promptly act to ensure that SM services may continue services within the city through the end of the fiscal year,” Flores stated.

She continued to explain that Porterville was not aware that TCRTA would be changing their providers, which made the city feel as though the organization was not being fully transparent. Flores goes on to hold the new executive director Abul Hassan responsible for the changes, saying he initially stated that he would be “instituting some soft oversight changes to the transit operations of the City of Porterville.”

However, according to a response letter from TCRTA Chair Sigala, this decision was made after Hassan started to uncover concerning information about SM Transit.

Sigala explained in his response letter to Flores that this decision to remove SM Transit as a provider was made after Hassan ensured TCRTA was in accordance with state law.

“We appreciate that you are concerned with the perceived treatment of a home-grown business with a 28-year history with the City of Porterville. However, we are confident that TCRTA acted as required by law and attempted to give Porterville staff appropriate notice of the needed corrective action,” Sigala said in the letter.

The letter goes on to explain that when Hassan took the reins following the previous director’s departure, Richard Tree, he uncovered that his predecessor had been running the TCRTA with a strong conflict of interest.

“Records show that Richard Tree, Executive Director of TCRTA at the time the contract was awarded to Transdev, has had a long and close relationship with SM Transit. As early as 2000, Richard Tree was listed as the General Manager of SM Transit,” Sigala stated in the letter.

The letter explains that when TCRTA was formed in 2020, the agency brought Tree on as the executive director to manage and guide the organization since he previously managed the transit for the city Porterville and had institutional knowledge of the field.

When it was time to make a TCRTA contract, Tree reviewed the bids and awarded the contract to Transdev without mentioning that SM Transit would be a subcontractor through Transdev, which was responsible for handling 40% of the transit service, according to the letter.

On top of not disclosing SM Transit as a subcontractor, Tree never disclosed that the company was incorporated by Steven Tree, a first-degree relative of his, or that he was a managing agent for SM Transit while working for the City of Porterville as their transit manager.

It wasn’t until 2022, when Richard Tree became the executive director of TCRTA and was recommending the Transdev contract, that SM Transit’s managing agent was switched to another first-degree relative, Robert Tree.

“This direct relationship with someone that has a financial interest in SM Transit creates a clear conflict of interest, a conflict that existed at the time of the bidding process, the award, and the administration of the contract with Transdev,” Sigala stated.

A conflict of interest isn’t the only concern according to Sigala, as there were financial disputes as well.

“Looking into the billing practices, it became apparent that billing irregularities by SM Transit led to TCRTA overpaying approximately $100,000 a month for five straight months. As these irregularities were investigated, it also became apparent that there were significant conflicts of interest surrounding how the Transdev contract was awarded,”  Sigala stated.

According to the letter, SM Transit acted as if it was the prime contractor for Porterville and surrounding regions even though it was a subcontractor to Transdev. From the TCRTA’s perspective, this is a huge liability as a violation of the Federal Transit Administration.

“As an FTA grant recipient, this conflict of interest has serious ramifications for TCRTA. As made clear in (the) FTA Circular 4220.1F (code) – ‘A person with a personal conflict of interest cannot be involved in awarding or administering a contract that leveraged FTA funds’,”  Sigala stated.

According to the policy, a violation of these FTA Circulars can result in a suspension, termination and disgorgement of the federal grants that the TCRTA needs for operations. On top of the grant funding being at risk, violations of FTA policy can also have criminal ramifications.

“With such federal direction it is TCRTA’s absolute duty to remedy a conflict of interest once it is found. TCRTA must demonstrate due diligence and a good faith effort to remedy these problems as they are discovered are necessary for FTA to keep vital sources of funding available. Without this funding, TCRTA is not viable,” Sigala stated.

Sigala explained that they are determined to take corrective action with the FTA before the next federal triennial audit. He said they’re planning to do this by sharing this violation with the FTA in hopes of preventing the U.S. Department of Justice and the California Attorney General’s Office from taking action.

The TCRTA also noted it was surprised to hear Porterville felt as though the agency failed to prioritize communication with the city, saying that the TCRTA executive director accepted the city’s invitation to attend a recent Porterville City Council meeting on Jan. 16, 2024. On top of that, the letter notes TCRTA staff members have had many discussions with the City of Porterville administration.

“Not only was Porterville’s Director Weyhrauch never excluded from board meetings discussing the issue, but Executive Director Hassan made sure to meet with Director Weyhrauch on Feb. 15, 2024 to discuss the contractual defect with him. There was no hiding the ball here, transparency was paramount,”  Sigala stated.

While the TCRTA held firm in their decision not to work with SM Transit, it reaffirmed its commitment to the city of Porterville and its residents.

“Because Porterville is a valued member of TCRTA, the staff makes it a priority to provide Porterville with relevant information. … It was important to TCRTA that Porterville understand the concerns we had with subcontractor SM Transit,”  Sigala stated.

It is unclear how much the situation has developed as of report. However, it seems as though the TCRTA and the city of Porterville were not able to get on the same page regarding the transit issues. At a recent Tulare County Board of Supervisors meeting on May 8, Porterville Mayor Flores made mention of the City of Porterville’s decision to part ways with TCRTA.

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