State audit finds Stevens County misspent $121,000 in homelessness funds

In four years, the Stevens County commissioners misspent more than $121,000 from a fund dedicated to fighting homelessness, state auditors have found.

That sum includes more than $30,000 that went to a couple whose home was damaged by historic flooding last spring, and nearly $91,000 that two nonprofits used to build a transitional home for people with spinal cord injuries.

The state auditor’s office published its findings in a report on Feb. 21, saying the flood payment constituted an “unallowable gift of public funds” and the other payment relied on a misinterpretation of the state constitution.

Auditors also urged Stevens County to establish uniform criteria and an application process for homeless housing and assistance money, and to consult with lawyers “before approving extraordinary or unusual expenditures of homelessness funds.”

Stevens County Commissioner Don Dashiell, who won re-election in November, said he and the other commissioners, Wes McCart and Steve Parker, were exploring an avenue to appeal the auditors’ findings. Dashiell referred to a five-page statement, included in the audit report, in which the commissioners defended the payments in question.

“In both instances cited by the auditor, the intended use of funds was ‘for the necessary support of the poor and infirm,’ ” the commissioners wrote, using a phrase from the state constitution.

The county’s homelessness fund consists of surcharges that people pay when they record documents such as property deeds. State law requires counties to collect those fees and maintain homelessness funds to pay for services such as shelters and low-income housing programs.

In Stevens County, some of that money flows through a nonprofit social services agency called Rural Resources Community Action, while some goes to N.E.W. Family Life Services, a faith-based, anti-abortion organization that runs a three-bed maternity home in Colville, where pregnant, homeless women can live for up to a year.

In a public meeting in August, the commissioners approved a payment of $30,128 to reimburse Joseph and Alena Boharski for the cost of moving their house onto a new foundation on their property north of Kettle Falls, along with $198 to cover site analysis and permitting fees. A few months earlier, the Kettle River had overflowed with rain and snowmelt, eroding the shoreline and sweeping away the couple’s front porch.

Stevens County Prosecutor Tim Rasmussen raised questions about that payment in September during a contentious local election season. He sent letters to the state auditor’s office and the Washington State Patrol, asking for investigations and noting that misuse of public funds can amount to a felony.

The commissioners argued the Boharskis were at risk of becoming homeless because the flooding made their house unsafe to occupy and they did not have insurance for such an event.

“The water well was exposed and the county was forced to tag the home as uninhabitable,” the commissioners wrote. “The family was elderly, living in their shop/garage, a structure not meant for human habitation. This clearly met the definition of homeless.”

A message left with a phone number listed for the Boharskis was not returned.

The auditors, meanwhile, agreed with Rasmussen that the payment was inappropriate.

“Because the homeless housing plan only allows for minor repairs and alterations for single-family, owner-occupied housing, the owner’s request did not fall within the plan’s allowed activities and therefore constitutes an unallowable gift of public funds,” their report states.

Stevens County Auditor Lori Larsen wouldn’t say Tuesday whether she agreed with the state auditors’ findings, though she had questioned the flood payment in the run-up to the November election, in which she defeated former County Auditor Tim Gray.

Gray said he initially had no concerns about the flood payment because it had been subject to a public vote and he saw no indication the commissioners were enriching themselves or their friends. But after approving the payment, he began to question whether it was appropriate and “whether everybody is entitled to a $30,000 benefit of some sort.”

“What concerned me most, with both of these cases, was there was no thought-out process as to how people could access these funds,” Gray said.

The other payments totaling $90,893 went to the Colville affiliate of Habitat for Humanity and another nonprofit, Casey McKern’s Pay It Forward, named for a Kettle Falls man who was left paralyzed below the neck after a diving accident in 2008.

Ian Pickett, a spokesman for the Habitat for Humanity affiliate, said Commissioner Dashiell attended a meeting in 2014 and offered the organization $50,000 in county funds to help build a house in Kettle Falls for McKern and his foundation. Pickett said Habitat for Humanity used that money to help build the frame of the house and “that was the extent of our involvement.”

The auditor’s office determined the payments to the two organizations constituted an “unallowable use” of “restricted funds” because nonprofits don’t meet the definition of “poor and infirm” under the state constitution.

Attempts to reach McKern were unsuccessful. Emails sent to all seven members of his foundation’s board of directors returned automated messages indicating problems with their internet server. Phone calls left with several of those members were not returned.

The commissioners said the house accommodates multiple families and loved ones who have suffered spinal cord injuries. They said McKern, the “spokesman” of the organization who owns the house, had lived in his parents’ garage before the home was built.

“Since completion of the home nearly a year ago, there have been at least two individuals and their families residing in the home,” the commissioners wrote. “Foundations often start around one individual and a cause. This case is no different.”

Kathleen Cooper, a spokeswoman for the auditor’s office, said the agency would look for changes during its next audit of Stevens County’s finances, but it would not take enforcement action.

“We are not an enforcement agency,” Cooper said. “We are a reporting agency, and so our tool is public disclosure.”

Rasmussen, meanwhile, said he has some decisions to make now that the auditor’s office has confirmed his assessment of the expenditures.

“The (Washington) Constitution provides that misuse of public funds ‘shall be prosecuted,’ ” Rasmussen said in an email. “I have sworn to uphold the constitution and the law. I have options and decisions to make regarding these violations of the public trust and what should be done.”