Privates Beach problems on public view: Small Opal Cliffs Recreation District cited for lax bookkeeping

By Jason Hoppin

Santa Cruz Sentinel

Posted: 07/10/2013 02:49:02 PM PDT

OPAL CLIFFS — The public agency that oversees Privates Beach has a history of questionable finances and poor management, including not being able to locate its own bylaws, according to audits reviewed by the Sentinel.

The Opal Cliff Recreation District oversees access to the small, gated Pleasure Point beach, which is the only public access to the ocean between the Hook and Capitola Village. It is overseen by an elected board, but some are now raising questions about everything from sloppy record-keeping to a bash at a local Chinese restaurant.

“I don’t want to ascribe a motive to it, but it clearly results in a lack of accountability to the public,” Supervisor John Leopold said of the practices at Opal Cliffs.

Leopold, who represents the area, sent a stern letter June 26 to the district urging it to clean up its finances and management practices. But the county Board of Supervisors has no official authority over the district, and some local officials have spent years trying to get Opal Cliffs to shape up.

John Griffith, Opal Cliffs board president, said the district is taking the county’s concerns seriously. The board met with county officials last week and is changing how it handles revenues and is in contact with a consultant about bringing the district into compliance with state rules.

“It feels like we’re on the right track here,” Griffith said.

The district generates revenue through neighborhood property taxes, state park bond revenues and the sale of beach access cards at Freeline Design Surf Shop. It is the latter, which are deposited in the county treasury, which Santa Cruz County Auditor-Controller Mary Jo Walker has raised the most questions about.

For fiscal year 2010-11, the county determined $11,090 was unaccounted for. The district was able to document $5,121 in spending, including $1,000 held as petty cash. But that leaves nearly $6,000 unaccounted for, and the county was not exactly pleased with receipts for the spending that was documented.

One board member apparently paid for the district’s $1,442 insurance bill out of the member’s own pocket and was at least partially reimbursed. One $650 bill went for “bluff protection” — apparently for labor costs, which has potential income tax implications — but no further explanation was noted.

And one receipt was for $772.81 in food at Capitola’s Canton restaurant. The receipt said $337.90 was spent on alcohol, but did not explain the purpose of the spending. However, a handwritten note on a May 2011 district agenda reads “June 9th — Freeline party,” which coincides with the receipt.

Focused on issues

Griffith said the board previously was focused on fixing public safety issues at Privates, which included everything from discarded hypodermic needles to a reputation as a party spot. With that done, he said the board has implemented a tighter key card system, blaming financial discrepancies on bad bookkeeping rather than malfeasance.

“We believe the families that live around here or anywhere really do appreciate having a safe, family-oriented beach,” Griffith said. “And so now it’s a matter of tackling all the governance stuff and getting all the paperwork in order.”

Griffith also said the board has dispatched what he described as an “independent contractor,” who previously handled cash management duties. He said the board also holds an annual party for Freeline, which handles the key cards for no charge, and said the board would look to scale down the next event.

“It’s just been a thank you party that we’ve done annually for them,” Griffith said.

Griffith also said he is looking to bring on a new board member who has experience dealing with the county, and wants to come into compliance with governance rules, which he said can be hard to ascertain for a volunteer board.

“That’s the hardest stuff for us. We all have real jobs and this is what we do in our free time,” he said.

Lax oversight

There are more than 90 special self-governing districts throughout the county. They can oversee water, parks, firefighting, facilities and other services, and they are subject to the same open meeting laws and accounting standards as city councils and other government entities.

But it can be tough to attract leadership, and lax adherence to financial standards is not unusual. A 2009 Santa Cruz County Grand Jury report found larger districts functioned well, but that smaller ones “may fall into gray areas of minimal compliance with guidelines and statutes in the operation of their districts.”

The problems at Opal Cliffs have been raised repeatedly, with county officials — including the county’s top lawyer — meeting with the district and even offering the name of a bookkeeper to help keep things in order.

The Opal Cliff Recreation District dates to the post-World War II era, and its management of Privates Beach has been controversial. Prior to 2009, it allowed the public access to the stairway leading to beach for an annual membership of $100.

The state Coastal Commission saw that as exclusionary, and in 2009 agreed to approve bluff-top improvements, including a shower, if the district sold daily passes to members of the public. Those passes cost $5, with revenues kept separate from the register at Freeline, which has not been accused of wrongdoing.

It is the handling of those revenues that are raising the most questions. While the district is subject to county audits, it does not fall under the control of the county Board of Supervisors. Even if Opal Cliffs fails to clean up its books, the county has no power to act.

But the Local Area Formation Commission, or LAFCO, does oversee aspects of special districts, including their dissolution. That can occur through the district’s own initiative, a petition, or a lengthy, LAFCO-initiated process.

If Opal Cliffs were dissolved, it appears Privates Beach would revert to county management and be subject to the same rules as other county parks. Leopold said he doesn’t think the issue needs to go that far.

“I think there are qualified people who would be committed to running the district efficiently that live in the neighborhood,” he said. “I’ve talked to many of them.”

Two Opal Cliffs board members, famed surfer Robert “Wingnut” Weaver and Michael Carlton, are up for re-election in November.

When asked, Griffith said he did not think the county was targeting Opal Cliffs in order to take over Privates.

“Not at all, and they don’t want to take it over either,” Griffith said,