A state audit released Thursday attacks the Veterans Home of California in Yountville for allegedly squandering hundreds of thousands of dollars on a never-finished adventure park and a coffee house operated on a no-bid, virtually rent-free contract.
The Veterans Home’s former administrator, Marcella McCormack, wasted $652,919 in state-controlled funds by allowing contracts for the adventure park and cafe without the consent of the state Veterans Affairs or General Services departments, state Auditor Elaine M. Howle wrote in the 42-page statement.
“The contracts were a product of the administrator neglecting her duty to evaluate whether the contracts complied with state contracting requirements, constituted a prudent use of the home’s resources and served the best interests of the resident of the home,” the auditor’s office said.
McCormack retired Sept. 20 after 13 years as the home’s day-to-day leader. Efforts to reach her for comment Thursday were unsuccessful.
The alleged abuses centered on money the Veterans Home drew from its Morale, Welfare and Recreation Fund, which totals more than $8 million for CalVet’s six veterans homes — with $5 million reserved for the Yountville center. The recreation fund, which represents reimbursement for care by the estates of residents who die, pays for veterans homes’ amenities such as general stores, hobby shops, movie rooms and libraries.
Work on the adventure park, which featured a “zip line tour” comprising seven connected cables, situated on Veterans Home property, began without any survey of residents’ opinions of the plan, the audit said. About 1,100 former service members and their spouses, many of them elderly or disabled, live at the Yountville home, CalVet’s largest.
The park also was to include hiking and cycling trails and was to be open to the public, with free admission for Veterans Home residents, the audit stated. The contractor, Napa Valley Bike Tours owner Brad Dropping, was to build and operate the adventure park on about 200 acres at the Yountville home.
After McCormack entered the adventure park contract in June 2010, $228,612 of CalVet funds were spent on the plan before the agency learned of it and halted construction after two months, according to the audit. Taking down the nearly completed zip line course itself cost $18,612, the report added.
In July 2010, McCormack also entered a contract with Peter McCaffrey, owner of Wine Valley Catering, to run an on-site cafe and tavern without looking for other vendors or checking the contractor’s financial terms, the state audit said.
The deal with the cafe operator charged only $1 of annual rent, paid it a $75,000 management fee per year and further subsidized the two businesses, according to the report. The contract was allowed to run for more than a year over the objections of General Services, ultimately costing CalVet $424,307, the audit stated.
State law requires General Services to approve any lease on the grounds of a veterans home, and limits such leases to five years. In addition, vision-impaired contractors have top priority for any food concessions on state property, under a Department of Rehabilitation program.
Howle’s report also criticized McCormack’s former supervisor, who retired in June 2011, for “neglecting his duty to oversee the administrator’s activities” and not preventing the contracts from being carried out. The supervisor’s name was not mentioned in the audit.
Officials note that administrators of the state’s veterans homes, when spending special morale, welfare and recreation funds, have traditionally not had to follow the same strict spending protocols for projects financed from the state’s general fund.
The audit did not find evidence that any Veterans Affairs employee benefited financially from the contracts, only that proper procedures were not followed.
In response to the allegations, CalVet Undersecretary Diane Vanderpot has begun personally approving all recreation fund expenditures at the state veterans homes since taking over the post in August, and the agency has started an independent review of all recreation spending at the Yountville facility, CalVet Secretary Peter J. Gravett said in a statement.
Citing the California Whistleblower Protection Act, the State Auditor began investigating contracts at the Yountville facility after receiving allegations of improper governmental activities. The identity of the whistleblower was not revealed.
Accusations of improper contracts by the Yountville home also played a role in a lawsuit its former spokeswoman, Jody Price, filed last year against CalVet. In addition to alleged sexual harassment, Price claimed she suffered whistleblower retaliation for complaining about questionable deals with outside vendors. The suit was settled out of court in July.