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'Clowns' and 'weed huts:' New Times reviews hundreds of pages of emails between Morro Bay and its business license auditor

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Early in the afternoon last October, Kevin Weigant of the Fresno-based firm Municipal Auditing Services (MAS) sent an email to Morro Bay City Manager David Buckingham. In it, he laid out four points in defense of his company from what he characterized as exaggerations and “BS” from some upset members of the Morro Bay business community, and in anticipation of a pending City Council meeting.

“I will not tolerate any taxpayer slandering our name or reputation,” Weigant wrote. “Anyone who steps to that podium and makes such an allegation, I would like their name, and business name. In return, I will give you a complete breakdown of their case and a copy of all phone calls. After which we can discuss the taxpayer slander (libel—actually). The bottom line is that these clowns don’t understand that the City Council proceedings are recorded and broadcast. MAS will defend itself to the fullest extent of the law.”

The email was one of hundreds New Times obtained through a public records request for communications between Weigant’s firm and city staff. In total, there were 492 pages, with topics that included hammering out details on specific cases, closing cases, rebutting claims from protesting business owners, and forwarding several medical marijuana establishments to police.

As New Times reported in November, MAS was contracted to audit the past four years of business licenses in the city, shoring up gaps in licenses that occurred due to a shortage of available city staff. The city expects to find about $1.6 million in owed license fees, of which MAS will draw a 40 percent fee (about $640,000). To date, MAS has collected $31,183.

Weigant in his emails characterized some business owners who had allegedly failed to obtain or renew their business licenses as “scofflaws,” liars, and 
“child like.”

In one such email, Weigant wrote that a business owner was reportedly “engaging in an emotional appeal that ‘sounds’ like it has some basis in fact, but it is really about shielding corp pirate from taxation at the expense of himself, and fellow business owners, and the city.” Weigant wrote that the local business owner was protecting a major outside vendor, adding, “Sorry—the taxpayers [sic] position is child like.”

In another email sent June 18, Weigant wrote that “discovery letters are mailed to unlicensed taxpayers (read corporate criminals),” and that if a “taxpayer is complaining to City Hall—they are a discovery case.” He ended the email saying that such taxpayers “have spent years, if not decades, placing your City and its local businesses (read good corporate citizens) at an economic disadvantage.”

Of course, not all of MAS’s cases against Morro Bay residents stuck. In one instance, which Weigant’s email described as a “clear cut case,” a taxpayer’s attorney protested a $1,252 bill from MAS. The taxpayer initially protested in person at City Hall with no success, but his case was closed after his attorney sent a written legal challenge.

In other emails, Weigant characterized people who appealed directly to the city as attempting to dodge the audit. On Oct. 3, Administrative Services Director Susan Slayton wrote to him and asked that his staff be more clear in directing residents to protest in writing, rather than coming in person to City Hall.

“Taxpayer’s are fully informed on how to protest and are given written instructions,” Weigant responded. “We are getting a ‘f*** you’ I am going to take this up with the city. It’s kind of like the kid playing mom against dad thinking that they don’t talk. Turn them around, without comment, and point them back to us.”

About a month later, the issue of appeals roused questions from at least one city councilmember. Councilman Noah Smukler, concerned about a constituent who was billed $254 despite being unemployed for most of the year in question, asked if MAS communicated the appeal process. Weigant responded, “No, MAS did not communicate that there is an appeal process option directly to the city.”

At that time, it was becoming clear that the audit had turned into a political mess for city officials, and in the subsequent months they have taken steps to resolve the issue and ease tensions. On Nov. 6, the City Council voted to grant an amnesty period that waived penalty fees through mid-March of this year, as well as to lower fees for those making less than $12,000 per year. City officials also successfully amped up public communication efforts in recent weeks.

Back in November, Buckingham told New Times the city had received about 10 appeals. As of press time, he said more than 100 had been processed. Morro Bay has also issued about $28,000 in refunds to business owners who paid penalties in full before the amnesty period was implemented.

Smukler explained that he wanted residents to know they could appeal directly to the city because MAS was contracted to collect business license taxes and follow the law “to the T,” but there can be gray area.

“The idea was, let’s work with a contractor like MAS to take care of the bulk of the issues and then make sure that the gray areas, whether they’re legitimate or not, get a chance to be reviewed locally,” Smukler said.

Both Smukler and Buckingham said they listened to calls between MAS staffers and Morro Bay taxpayers, including specific calls in which the taxpayer had complained MAS was overly aggressive or rude. Both said they found MAS to be professional over the phone.

Smukler added that he previously received multiple complaints from constituents upset by the audit, but the community outrage has calmed recently due to the city outreach and new amnesty for penalties.

“From the council side, we immediately said, ‘Whoa, we made a mistake here; we need to work backward and correct this, and this is an important thing to do, but we need to take some action immediately to make this a better process,’” Smukler told New Times.

When asked specifically about Weigant’s use of the word “clowns,” Buckingham responded, “I don’t consider any of our residents or business owners clowns; I would prefer that we not use that terminology.”

He followed up with an email saying, “I do not condone anyone referring to any citizen as a ‘clown’ and our city staff has a duty to treat all of our residents with respect. I am confident our staff does a great job working with, and demonstrating respect for our citizens.”

In response to Weigant’s email requesting the names and business names of anyone who “slandered” his company, Buckingham said he didn’t interpret the language as retaliatory.

“I think he’s being more defensive and saying, ‘If anybody slanders the way that we’re doing work, let me know what they’re saying so I can give you the facts,’” Buckingham said. “… If somebody slanders MAS, then [Weigant] would like to be able to defend the case on its merits, and I understand that.”

But the emails revealed that MAS’s audit led to more than just business license checks; it also triggered increased scrutiny of medical marijuana establishments. In one email with the subject line “Weed Huts,” Weigant wrote, “We have identified a couple in your community. Your options range from license them to hand the info over to law enforcement.”

Then law enforcement got involved.

None of the marijuana-related business owners MAS identified has been criminally charged since the audit began, according to a court records search, but Cmdr. Bryan Millard confirmed that police were notified after several establishments turned up during 
the audit.

“What we’re doing right now is basically just investigating to determine if any laws have been broken,” 
Millard said.

While the department was already aware of medical marijuana businesses in the city, Millard said the question of how the city regulates different types of dispensaries has resulted in the department now looking further into the issue, which could potentially result in an ordinance modification coming back to the City Council.

“I can tell you that specific task was brought to us for the purpose of looking at it from an ordinance standpoint,” 
Millard said.

Though medical marijuana dispensaries aren’t allowed in Morro Bay, city codes are fuzzy on what constitutes a dispensary. In one email pertaining to a business called Cannado, Weigant wrote, “This is a weed hut.”

Cannado owner Rosellen Anderson told New Times she has a business license and had one at the time of the audit. She said there was no issue with the business because she was properly licensed, and police hadn’t contacted her.

In another email, Weigant notified the city of United Cannabis Workers, which he said looks like a labor union, but “they arrange weed tasting tours via a limo company.” He added, “We are passing this on for law enforcement. We can’t see dispensing or anything overt.”

The website for United Cannabis Workers explains: “We are a different kind of labor union, specializing in the unique needs of everyone in the cannabis industry.” While the website does advertise limousine tasting tours, it also includes a video interview describing how the union operates. (A representative didn’t return a call for comment from New Times.)

Buckingham told New Times that four of the five marijuana establishments were found to be operating without a city business license. Another was compliant with the license requirement, but the owner indicated it was “an herbal supplement business.” Asked if business owners are required to specify that they work with medical marijuana, Buckingham first said he was unsure, then followed up by email:

“While the license application does not specify that an entity must identify themselves as being in the medical marijuana business, there are portions of our municipal code that address medical marijuana and therefore knowing an entity is in the marijuana business is an important fact to help us ensure they are in compliance with current code.”

Weigant previously told New Times that it’s company policy not to speak with media and referred questions to the city. He didn’t respond to more recent phone and email requests for comment.

 Read a transcript of the email correspondence between the city of Morro Bay and Municipal Auditing Services (.pdf).

Contact Senior Staff Writer Colin Rigley at crigley@newtimesslo.com.

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