City of Forney violated CARES Act to replace vehicle(s), skirt state and federal guidance to substantially increase its fleet

FORNEY, Texas — The City of Forney's use of Coronavirus Relief Funds (CRF) to replace certain vehicle(s) and substantially increase its non-emergency vehicle fleet violated CARES Act provisions and skirted guidance issued by federal and state regulators.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020, and appropriated $150 billion to the Coronavirus Relief Fund (CRF) — which provided funding to state and local governments to cover expenditures specifically incurred "due to" the COVID-19 public health emergency, according to the U.S. Department of Treasury.

inForney.com has learned that certain purchases by the City of Forney to replace currently in-service or aging vehicle(s) violated the CARES Act and attempts to skirt state and federal guidance to substantially increase the city's non-emergency fleet may, too, be violations of the CARES Act. Instances of those violations include the use of CRF funds to purchase new vehicles to replace older in-service vehicles; the purchase of vehicles to adjust or reassign vehicles to staff a newly created department not dedicated to mitigating or responding to the COVID-19 public health emergency; and the purchase of vehicles — in lieu of short-term leases as such purchases exceeded their capitalization threshold — not necessary, cost-effective, or that would not meet the need arising from the COVID-19 public health emergency.

A number of Freedom of Information Act requests have been filed by inForney.com with the City of Forney and the Texas Division of Emergency Management for a to-date reporting of CARES Act CRF funds and if those funds were used to purchase 22 new vehicles.

inForney.com's request with the City of Forney for vehicle purchases however, were returned incomplete — while providing purchase records, invoices, and check registry details on some vehicles, the same documents were not made available for others despite the City of Forney purchasing and taking possession of all but one of the vehicles by the time the request was fulfilled. Despite the incomplete vehicle purchase records, inForney.com verified the vehicles weren't funded in the Fiscal Year 2021 budget, which was recently approved by the Forney City Council and began October 1, 2020, as the budget did not provide funding for any previously approved capital purchases, including vehicles, citing budget uncertainties.

City purchased 22 vehicles during October & November, only handful in service

Of the 22 vehicles purchased, records released by the City of Forney verifies at least 12 of the vehicles were specifically paid for with CARES Act funds. Because complete records weren't released and the remaining vehicles weren't accounted for in the most recently approved budget, inForney.com has sent a follow-up request for the missing documents to determine if the remaining 10 vehicles, which were purchased in the same manner and delivered during the same time period, were also purchased with CRF funds.

On November 17, 2020, inForney.com further verified the purchase of the vehicles by obtaining aerial photographs of the vehicles which were hidden in a field, out of service, at the Forney Police Department's gun and training range at the end of West Trinity Street in the East Fork Trinity River flood plains. One of those vehicles was verified as delivered and funded in the Fiscal Year 2020 budget and is not among the 22 suspected of being purchased with CRF funds. At least 17 of the remaining vehicles in the photograph appear to be the vehicles described in the released purchase records — which include 13 Ford F-150s, three Ford F-250s, four Ford Explorers, a Ford Interceptor, and a Ford Transit van. Two Ford Explorers, as of November 20, 2020, had already been placed in service, marked as "Operations," and were photographed near City Hall. The Ford Transit vehicle was in-process and awaiting delivery, as of that date.

The vehicles, according to City of Forney records, were or will be assigned to Operations(4), the Parks Department(4), I.T.(4), Public Works(8), the Forney Fire Department(1), and the Forney Police Department(1). Several of the Public Works or Streets assigned vehicles will either be assigned to or used to fill a gap in available vehicles due to the creation of a new 7-member Grounds Crew, responsible for mowing the city's right-of-ways, as approved by the Forney City Council on Tuesday night.

inForney.com received copies of purchase orders for 18 of the 22 vehicles and, a total accounting of all 22 vehicles purchased, equals $662,120.03 — nearly half the funds allocated to the City of Forney to be used for expenditures specifically described by the U.S. Treasury Department as being incurred due to the COVID-19 public health emergency.

Prior to the recent new vehicle purchases, the city's non-emergency vehicle fleet included approximately 35 vehicles, according to City of Forney records. With the increase of 20 new non-emergency fleet vehicles, the fleet saw an increase of 57% in one budget year.

Over the last 11 budget years, the City of Forney has only averaged 3.82 new vehicle purchases each year in their Capital Purchase Fund for all vehicle purchases throughout all the city's departments, including the police and fire department — the data used to calculate this average excludes two large fire department apparatus which were paid for with tax notes in 2018 and two fire department vehicles identified in the Capital Purchases Fund in 2012 and 2011 which were either entirely paid for by grants or donated by a neighboring department.

The City of Forney told the Texas Department of Emergency Management the funds were for payroll

According to Texas Division of Emergency Management (TDEM) data obtained by inForney.com, the City of Forney was allocated $1,395,405 in CRF funds for eligible expenses and initially received an automatic 20% allocation of $279,081. Those funds were to be used as described by the CARES Act, accounted for, and returned if not expended. The City of Forney requested the remaining 80%, or $1,116,324, in a Payment of Funds Request Form which specifically indicates the money would be used for payroll for public health and safety employees. Supporting documents attached to that request noted total payroll expenditures for the police and fire departments during the grant-specified dates at $3,783,931.92. In those documents, the City of Forney additionally claimed $71.88 for ambulance mileage transporting COVID-19 patients, and $250 for four webcams and $250 for Zoom subscriptions to improve telework capabilities of public employees.

Although the City of Forney had already purchased and took possession of the 21 of the 22 vehicles in late October and early November, according to the records obtained by inForney.com, the City of Forney recorded, signed, and submitted their Payment of Funds Request Form to TDEM on November 17, 2020, indicating the money would be expended as described in the supporting documents and not for the purchase of new vehicles. That form also certifies the funds would only be expended on the scope of work provided in the city's supporting documents and, if not, the city would be required to refund the payment to TDEM within 30 days of receiving a deobligation notice.

inForney.com sought clarification from TDEM on whether or not such purchases were a "cost-effective manner" or "eligible expense" as defined by the U.S. Department of Treasury and guidance provided by TDEM.

"TDEM’s goal is to ensure the efficient and compliant distribution of CRF dollars to jurisdictions with eligible expenditures as outlined by US Treasury," stated TDEM's Chief of Media and Communications, Seth Christensen, in response. "Compliance with Treasury guidelines is key in preventing clawback by the federal government for funds awarded to jurisdictions for ineligible expenses."

"These guidelines specify procedures that must be followed when using CRF to cover various expenditures," he said. "Specific to the question of vehicle or other equipment purchases, an entity must make a determination that it is not able to meet the need arising from the COVID-19 public health emergency in a cost-effective manner by leasing property or equipment or by improving property already owned and maintain documentation to support that determination."

Each individual jurisdiction is responsible for determining their own compliance with CRF fund expenditures, stated Christensen, citing Treasury guidance.

"The purchase of the vehicles may be an eligible expense under the CRF; however, the cost may be considered unreasonable if there are cost effective alternative solutions," reads a TDEM response to an FAQ regarding the purchase of vehicles. "Additionally, expenditures reimbursed through the CRF must be limited to those that are necessary due to COVID-19. Prior to making a large capital expenditure such as the purchase of a vehicle, jurisdictions should document that they have analyzed any lease versus purchase alternatives and performed any other appropriate analyses to determine the most economical approach."

U.S. Treasury Department guidance states governmental agencies may not use CRF funds to fill shortfalls in government revenue or as a revenue replacement.

"Funds may not be used to fill shortfalls in government revenue to cover expenditures that would not otherwise qualify under the statute. Although a broad range of uses is allowed, revenue replacement is not a permissible use of Fund payments," stated the U.S. Treasury Department.

Many agencies say vehicle purchases don’t meet CARES Act Funding legislation

In an October updated Guidance for State, Territorial, Local, and Tribal Governments, the U.S. Treasury Department answers whether payments from the Fund could be used for real property acquisition and improvements and to purchase equipment, including vehicles, to address the COVID-19 public health emergency. The Treasury responded, in part, "In particular, a government must (i) determine that it is not able to meet the need arising from the public health emergency in a cost-effective manner by leasing property or equipment or by improving property already owned and (ii) maintain documentation to support this determination."

Other states have specifically advised their local governments that CRF funds could not be expended on the purchase of vehicles.

As is the case with some of the vehicles purchased in Forney, the State of Colorado, in their guidance, says vehicles cannot be purchased to accommodate physical distancing.

"No, buses and other vehicles have a useful life of over one year and likely exceed the entity capitalization threshold and would not be eligible for CARES Act funding," stated Colorado officials citing Treasury guidelines. "However, CRF allocations may be used for the short-term lease expenses of, for example, temporary facilities to improve COVID-19 mitigation measures between March 1, 2020 and December 30, 2020."

Massechuettes state officials, agreed, stating CRF funds may not be used to purchase new vehicles or make major capital upgrades.

None of the reviewed guidances, Section 5001 of the CARES Act, or Section 601 of the Social Security Act, which specifically address eligible CRF expenditures, allow for the indiscriminate expenditure of funds to bolster a city's vehicle fleet while avoiding the standard budget process for capital purchases.

City Manager was empowered to purchase vehicles without council approval

Twice this year, in May and October, the Forney City Council voted unanimously the approval of resolutions which granted City Manager Anthony "Tony" Carson the authority to execute all necessary grant applications, accept grant funds from the CRF, and to authorize expenditures of grant funds related to COVID-19. This would mean large capital purchases such as these would not have to go back to the Forney City Council for deliberation or approval.

In October, Carson attempted to authorize COVID-19 grant funds, which were designated by grant criteria for first responders, to issue hazard pay to all other city employees. After announcing all city employees would receive the hazard pay, the agenda item was pulled from the Forney City Council's agenda. The council was asked in a subsequent meeting to approve a budget amendment to provide the hazard pay, from the city's budget, for non-police and fire department employees as it was not an eligible expense under the grant criteria.

U.S. Department of Treasury, federal oversight committee will determine whether city must refund money spent on vehicles

The Pandemic Response Accountability Committee, which is a committee of the Council of the Inspectors General on Integrity and Efficiency, has been charged with compiling CRF funding expenditure data and, in coordination with federal law enforcement partners, will use the data to independently detect and combat fraud, waste, abuse, and mismanagement. The committee is expected to receive a bulk upload from prime recipients and their sub-recipients in December for an initial release of their data on CARES Act spending in January.

Due to the facts of this story, the U.S. Department of Treasury did not respond to our request for comment through the traditional means of contacting their press office, instead, our inquiry was directed to their Office of Inspector General which investigates CARES Act audits, fraud, and mismanagement of funds. A representative from that office could not be reached by press time Saturday.

The U.S. Department of Treasury, in their September guidance, issued the following nonexclusive list of examples for eligible expenditures:

1. Medical expenses such as:

• COVID-19-related expenses of public hospitals, clinics, and similar facilities.
• Expenses of establishing temporary public medical facilities and other measures to increase COVID-19 treatment capacity, including related construction costs.
• Costs of providing COVID-19 testing, including serological testing.
• Emergency medical response expenses, including emergency medical transportation, relate to COVID-19.
• Expenses for establishing and operating public telemedicine capabilities for COVID-19-related treatment.

2. Public health expenses such as:

• Expenses for communication and enforcement by State, territorial, local, and Tribal governments of public health orders related to COVID-19.
• Expenses for acquisition and distribution of medical and protective supplies, including sanitizing products and personal protective equipment, for medical personnel, police officers, social workers, child protection services, and child welfare officers, direct service providers for older adults and individuals with disabilities in community settings, and other public health or safety workers in connection with the COVID-19 public health emergency.
• Expenses for disinfection of public areas and other facilities, e.g., nursing homes, in response to the COVID-19 public health emergency.
• Expenses for technical assistance to local authorities or other entities on mitigation of COVID-19-related threats to public health and safety.
• Expenses for public safety measures undertaken in response to COVID-19.
• Expenses for quarantining individuals.

3. Payroll expenses for public safety, public health, health care, human services, and similar employees whose services are substantially dedicated to mitigating or responding to the COVID19 public health emergency.

4. Expenses of actions to facilitate compliance with COVID-19-related public health measures, such as:

• Expenses for food delivery to residents, including, for example, senior citizens and other vulnerable populations, to enable compliance with COVID-19 public health precautions.
• Expenses to facilitate distance learning, including technological improvements, in connection with school closings to enable compliance with COVID-19 precautions.
• Expenses to improve telework capabilities for public employees to enable compliance with COVID-19 public health precautions.
• Expenses of providing paid sick and paid family and medical leave to public employees to enable compliance with COVID-19 public health precautions.
• COVID-19-related expenses of maintaining state prisons and county jails, including as relates to sanitation and improvement of social distancing measures, to enable compliance with COVID-19 public health precautions.
• Expenses for care for homeless populations provided to mitigate COVID-19 effects and enable compliance with COVID-19 public health precautions.

5. Expenses associated with the provision of economic support in connection with the COVID-19 public health emergency, such as:

• Expenditures related to the provision of grants to small businesses to reimburse the costs of business interruption caused by required closures.
• Expenditures related to a State, territorial, local, or Tribal government payroll support program.
• Unemployment insurance costs related to the COVID-19 public health emergency if such costs will not be reimbursed by the federal government pursuant to the CARES Act or otherwise.

6. Any other COVID-19-related expenses reasonably necessary to the function of government that satisfy the Fund’s eligibility criteria.