Placentia Repaid Its Gas Tax Fund

The city of Placentia, which has gone heavily into debt to pay for a controversial rail corridor project, has reimbursed its gas tax fund more than $3.5 million to correct irregularities in the account, state auditors concluded Thursday.

After a seven-month review, the California State Controller’s Office found the city had complied with state recommendations to return about $2.3 million in gas tax revenue lent improperly to the OnTrac project from 1998 to 2000.

Auditors also found that the city had fixed a $1.24-million deficit in its gas tax fund that had existed since 1997. City officials said the city had overcharged the account for projects and continued to report the negative balance for years.

All the money was returned to the gas tax fund on June 30, shortly after the state launched an audit based on a tip.

“Our auditors not only recovered the misappropriated funds, but also drove the city to get its books in order,” said State Controller Steve Westly.

Community activists for years have questioned whether state funds were improperly diverted to bail out OnTrac, a city effort to rebuild the rail corridor through town and boost downtown redevelopment.

“From a citizen’s point of view, the audit is very positive because the misappropriated funds were put back to where they are supposed to be,” said Craig Green, a member of Citizens for a Better Placentia. “The cookie jar has been replenished. At least one of them.”

Another part of the audit concluded that the city had accounted for other state funds earmarked for traffic projects. But the audit found that the city’s annual report detailing expenditures of state funds for street projects had been inaccurate since 1999. City officials said Thursday they had fixed the problem.

“Misappropriation was never our intention. We want to use state funds properly,” said Mayor Scott P. Brady. “We never want to go down this path again. I’m looking forward to putting these things behind us.”

OnTrac has been controversial for years. Facing a $12-million shortfall in state grants and uncertainty in federal funding, officials mortgaged city property, auctioned parkland, sold $22 million in bonds and cut services to keep OnTrac afloat.

In addition to the state scrutiny, the Orange County district attorney’s office has been investigating the project, including potential violations of state conflict-of-interest laws involving Christopher Becker, OnTrac’s executive director.

The district attorney is looking into whether Becker, when he was the city’s public works director, improperly influenced his hiring by the city as OnTrac’s manager at a salary of more than $400,000 a year. Becker has denied any wrongdoing.