Santa Rosa canceled its contract with the nonprofit providing community media services following an audit that concluded the organization misspent funds and was insolvent.
CMedia has for 20 years broadcast public meetings and provided video education services to the public. Its latest three-year contract was set to expire in March. It fired its director and assistant director in late October, and laid off its entire staff after discovering possible financial mismanagement.
The city followed up with an audit that found the organization could not account for nearly $330,000 in city funds that were supposed to be spent on computers and video equipment, but instead appears to have improperly funded staff salaries.
“We have an obligation to make sure the people’s money is being properly handled,” Mayor John Sawyer said.
Supporters of the center urged the City Council not to shut it down but give it time to regroup.
“We want to get to the bottom of this, and if there was unlawful use of funds, we want to find out about it as well,” Rob Olmsted, vice chairman of the board, told the council.
The city hired Daedalus Howell, a Petaluma writer and artist, in 2013, to be its executive director and diversify the group’s revenue stream. But Howell largely failed to do so and took out a cash advance on a CMedia credit card to pay salaries, including his own at $85,000. The audit also found he regularly used a CMedia credit card for at least $10,000 in charges at coffeehouses, wine bars and restaurants that Howell said were efforts to win new business but which the city said appeared inappropriate.
Howell has since said he is “perplexed” by the audit findings. He suggests a more thorough review of CMedia books will show the $330,000 was, in fact, used “in good faith with the knowledge and oversight of the CMedia board and the City of Santa Rosa.”
He did not attend Tuesday’s meeting.
City attorney Teresa Stricker said the city had found “substantial evidence that there has been misuse of funds.” She called it “unlawful” for the capital funds to have been used to fund salaries.
The city has temporarily hired five of the seven CMedia employees to ensure certain functions, like broadcasting public meetings, continue, said Eric McHenry, the city’s chief information officer.
He said he’s looking at whether the city can partner with the Sonoma County Library to provide some of the access to video services.
The city struck an agreement to keep the center on the Santa Rosa High School campus open through the end of the month.