[1st-mile-nm] REDI Net Audit Update

[Richard Lowenberg]

The REDI Net is an important broadband initiative in the north-central 
NM region, originally funded with ARRA broadband stimulus program 
monies.  The project is now governed by joint powers authority, made up 
of key community and Pueblo partners, with Rio Arriba County as fiscal 
agent.   Past poor accounting and management practices are now harming 
this project which can otherwise vitalize the lives and livelihoods of 
regional people, unfortunately.
RL

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Audit finds $1 million missing from federally funded broadband project

By Joseph Ditzler | The New Mexican Mar 27, 2018

http://www.santafenewmexican.com/news/local_news/audit-finds-million-missing-from-federally-funded-broadband-project/article_5512b99c-e125-5d1c-813c-8defe19886af.html

Results of a state audit released Tuesday found nearly $1 million in 
unaccounted-for-expenses and $200,000 worth of fiber-optic cable missing 
from a federally funded project that brought broadband connectivity to 
Northern New Mexico.

State Auditor Wayne Johnson, in a letter Tuesday that accompanied the 
audit, said the North Central New Mexico Economic Development District 
“is unable to provide multiple source documents” to account for the 
missing funds and cable. If the district has those records, Johnson 
wrote, it should immediately provide copies to both the project’s 
general manager and the Office of State Auditor.

Three contractors that worked on the project, called REDI Net, have been 
or will be subpoenaed to provide records, said State Auditor spokesman 
Enrique Knell. He did not identify the contractors.

“There’s a million missing,” Knell said. “That doesn’t necessarily mean 
it went into somebody’s personal pocket. It just means they can’t 
account for where it went.”

A comparison of inventories in January 2013 and June 2014 revealed the 
missing fiber-optic cable, according to the audit report. The project 
started with 34.65 miles of cable, of which 14.35 miles was used for the 
project and 8.18 miles were sold to Los Alamos County, leaving 12.12 
miles unaccounted for.

The yearlong audit, by the independent Jaramillo Accounting Group of 
Albuquerque, showed the district used inaccurate or incomplete practices 
to account for the REDI Net project funds. REDI Net “still does not have 
a complete listing of its capital assets that were constructed with 
money from the federal grant,” Johnson wrote.

The North Central district is an association of local governments in 
Colfax, Los Alamos, Mora, Rio Arriba, San Miguel, Sandoval, Santa Fe and 
Taos counties. It had responsibility to administer $10.5 million from a 
July 2010 federal grant from the Obama-era American Recovery and 
Reinvestment Act to develop a high-speed broadband network in Northern 
New Mexico, a project that became REDI Net.

In 2015, Rio Arriba County asked the North Central district for 
financial information as part of an accounting before taking over fiscal 
responsibility for REDI Net, according to the audit summary. As part of 
that process, “questions arose and information came to to the attention 
of the REDI Net board that caused concerns about certain transactions 
(the district) had charged to the grant.”

Those questions triggered the state audit, which began in May 2017 and 
concluded Friday with a presentation to the district and REDI Net. 
Jaramillo Accounting Group found that the economic development district 
had failed to comply with a joint powers agreement, under which the 
district took responsibility for building the broadband network on 
behalf of its eventual users. Those users include Los Alamos, Rio Arriba 
and Santa Fe counties and the pueblos of Okhay Owingeh, Santa Clara, 
Pojoaque and Tesuque.

The audit found “significant violations” of that agreement by the 
district, including its withdrawal of $198,767 from the REDI Net account 
at the Los Alamos National Bank in March 2016 “without prior notice or 
approval.” Most of the missing $1 million — $955,792 — was traced to 
failures by the district, according to the auditors, to provide 
“supporting documentation for all disbursements.”

The North Central district’s “inability or unwillingness” to provide the 
Jaramillo Group auditors with complete records and “the severe 
disorganization of and missing records” meant “serious delays” in the 
audit and limited results, according to the report.

Tim Armer, executive director of the North Central New Mexico Economic 
Development District, did not return a call Tuesday seeking comment.

This is not the only state audit of the North Central New Mexico 
Economic Development District. Johnson announced in January that the 
district would be scrutinized for its administration of funds, including 
billing practices, vendor reimbursement and federal grants related to 
the district’s contract with the state Aging and Long-Term Services 
Department. The North Central district administers the Non-Metro Area 
Agency on Aging for the state.

Contact Joseph Ditzler at 505-986-3034 or jditzler at sfnewmexican.com.



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Richard Lowenberg, Executive Director
1st-Mile Institute     505-603-5200
Box 8001, Santa Fe, NM 87504,
rl at 1st-mile.org     www.1st-mile.org
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