Last year, Stockton City Council members asked city officials to hire consultants to investigate Stockton’s finances, including the skyrocketing costs of building New City Hall and the city’s spending of sales taxes voters approved to strengthen public safety.
But former interim City Manager Steve Colangelo and then-Deputy City Manager Rosemary Rivas hired the consultants through a contract that should have been approved by the City Council, city business officials told the City Council’s audit committee this week.
“Should this have come to council?” Vice Mayor Jason Lee, who leads the committee, asked Stephennie Link, Stockton’s acting procurement chief, in the near-empty City Council chamber Tuesday.
“Technically, yeah,” Link answered.
Colangelo and Rivas both signed the contract, a copy linked to Tuesday’s agenda shows. Neither Rivas — who has since returned to her prior role as the city’s HR chief after her stint as a deputy city manager — nor Colangelo, who left city employment last summer, were present at the meeting. Neither responded to Stocktonia’s requests for comment.
What’s more, the investigation the contract authorized never began, officials at Tuesday’s session said.
Councilmembers ordered the forensic audit — a type of detailed review of an organization’s books, often used to pinpoint financial misconduct — sometime before mid-April, meeting minutes and video recordings show.
The exact date is unclear: City Council and committee minutes do not spell out when councilmembers made the request, a keyword search of the records shows. When asked by Stocktonia, Stockton’s city clerk couldn’t recall the date the investigation was authorized.
But it was likely in early 2025, according to footage of last year’s meetings: a video of an April 14 Audit Committee meeting shows Rivas discussing plans to start the audit, and Mayor Christina Fugazi mentioned it at City Council the next day.
“We want to make sure that everybody knows exactly where we are fiscally in this city, that there is no smoke and mirrors, that there is no stone unturned,” she said.
That hasn’t happened — at least, not through the forensic audit councilmembers ordered at least 11 months ago, Tuesday’s audit committee discussion revealed.
The committee meeting marks the latest instance of councilmembers questioning financial practices by city officials, particularly Colangelo. Over the past year, Lee and others have investigated Colangelo’s alleged use of money originally meant to pay the city’s diversity, equity and inclusion specialist to hire Lathrop’s city manager to coach him in his own role.
And councilmembers also questioned Colangelo’s promise to put roughly $800,000 toward a nonprofit’s clinic project to help them clinch a state grant, saying he broke city rules barring the city manager from spending $100,000 or more without council approval. The year featured multiple other alleged financial anomalies.
Yet the recent revelations about the investigation contract, which the city signed with Ryland Strategic Business Consulting in May, also come as the state controller, one of California’s most powerful financial accountability officials, investigates several of the financial red flags Lee, Enriquez and others discussed last year.
The vice mayor learned the investigation was never begun during a passing conversation with city staff, he said Tuesday.
“I believe that we’re currently under this forensic audit, so to find out in a hallway conversation that we haven’t even started — I mean, that was pretty alarming,” he said. That was a few weeks ago, he told Stocktonia after the meeting.
The investigation was supposed to cover fiscal years 2021 through 2025, and examine the purchase and renovation of the downtown Waterfront Towers to serve as Stockton’s new City Hall, according to the contract, as well as all city transactions using Measure A money — long a source of criticism among some Stockton taxpayers.
“That work was never begun, nor completed,” Gilbert Garcia, Stockton’s chief financial officer, said at Tuesday’s meeting.
What happened?
On May 1, Colangelo signed a contract with Ryland to do the investigation, the agreement shows. Colangelo’s signature wasn’t dated. The deal was for up to $99,000.
But instead of ordering a forensic audit, the contract told consultants to carry out a “forensic examination” — which has different standards than an audit, the company’s president, Terri Ryland, told Stocktonia in May.
Neither Colangelo nor Rivas responded to an emailed question about why the investigation type was changed.
The month before, Colangelo had signed another $99,000 contract with Ryland for the company to provide Stockton a temporary CFO, after Colangelo fired the person previously in the role early last year.
Officials should have brought the agreements to the City Council for approval, because they were collectively worth $198,000, according to Garcia — nearly double the $100,000 limit that is supposed to trigger council oversight.
“Because the two (contracts’) value, the combined value … exceeds the $100,000 Council limit, I directed staff to cancel the one for which no work had been completed, so that we did not authorize work that exceeded Council limit without going to council,” the CFO said.
Neither Rivas nor Colangelo responded to questions about why both contracts were priced at $99,000. They also didn’t answer questions about why the agreements weren’t brought to the council for approval. Charts included in both contracts with spaces to list specific cost breakdowns were left blank, copies of the agreements show.
Ryland didn’t respond to an emailed question about whether the company believes the contracts should’ve gone before the City Council.
By August 5, the investigation still hadn’t begun, former Deputy City Manager Chad Reed told the Audit Committee at the time, saying the city hadn’t received a schedule for the project.
But Ryland’s president told Stocktonia in an email Wednesday that city officials never told the company to start the work.
“Ryland SBC did not receive authorization from the City to begin work under that agreement, nor were documents or data provided to initiate the analysis,” Terri Ryland said.
No investigative work has been started to date, she said, adding, “We do not anticipate proceeding with these services.”
Neither Colangelo nor Rivas responded to questions about why the investigation didn’t happen — and who made that call.
Councilmembers on the Audit Committee also got no definitive answers Tuesday.
Rivas wasn’t at the meeting, and didn’t answer an emailed question about why she was absent. Another official present told the committee Rivas was ill.
Councilmember Michele Padilla was also absent. Councilmember Mario Enriquez filled in for her.
All councilmembers present — which included Councilmember Michael Blower in addition to Lee and Enriquez — expressed confusion and concern about the investigation never having started.
“Once (a contract) is signed, there’s a timeline, you need the deliverables … it would be great to get some type of update as to why this didn’t happen,” Enriquez said. The councilmember couldn’t recall another recent time that city officials didn’t carry out a council order, he said.
Lee saw the contract problems as part of a parade of irregularities he’d encountered as chair of the Audit Committee since taking office last year, he said.
“I have found a lot of things here that have concerned me. And I was kind of joking earlier, saying, you know, ‘what’s taking the police so long?’ Because at some point, when taxpayer dollars are being treated like Monopoly money … I mean, something has to change,” he said.
Ultimately, the committee voted 3-0 to refer the two contracts with Ryland to the California State Controller’s Office, to investigate as part of their ongoing inquiry in Stockton.
Committee members plan to receive an update from Rivas before taking further steps, they said at Tuesday’s meeting. Another discussion of the Ryland contracts is scheduled for Monday.