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Audits question spending for still-unfinished evacuation center

  • Author: Lisa Demer
  • Updated: May 31, 2016
  • Published August 30, 2015

MERTARVIK – Five years after work began on a critical building for Newtok's new village site, the evacuation center remains an unfinished skeleton. There's a steel frame foundation but no building on top.

It is intended to house up to 300 people in crisis, and to provide sanctuary for nearby villages too. It could serve as a tribal office, a temporary school, a community gathering place.

State audits describe the project veering off course in 2011 when the old tribal council canceled an agreement for the state Department of Transportation and Public Facilities to oversee construction. The tribal council wanted to manage the project itself using pre-fabricated panels. The council said its system would be cheaper.

A state financial audit detailed questionable spending by the old group, Newtok Traditional Council, including double billings, an unsupported advance, retroactive pay and a lump sum paid to the chief executive of a tribal nonprofit corporation.

The FBI has made inquiries, state officials said.

The Legislature approved $4 million for the Mertarvik Evacuation Center in 2010 and another $2.5 million in 2011. But under the old council's control, the project stalled.

A new group of village leaders was elected in 2012 take over the tribe, but the old council wouldn't step down. Last year, federal and state agencies ultimately recognized the new group, called Newtok Village Council, as the legitimate authority. An appeals board in August upheld that recognition.

Now the newly confirmed Newtok Village Council is working with a multi-agency team to figure out how to complete the Mertarvik Evacuation Center.

Scott Ruby, then-director of the state Division of Community and Regional Affairs, in May 2014 sent a letter to the Newtok Traditional Council seeking repayment of or justification for $365,844 in state grants.

"If the issues cannot be resolved, legal action may be pursued by the state to recover these funds," Ruby wrote to the old council. The group didn't respond, according to state officials.

The FBI contacted the division about the financial issues related to the evacuation center in February, said Katherine Eldemar, the current division director. It was her first day on the job.

"They requested information and we gave it to them," she said. The division doesn't conduct criminal investigations. Any effort to go after the money in court would come through the Attorney General's office, she said.

The state is evaluating its next step, she said in a recent interview.

DOT began working on the project in the fall of 2010. It hired architects to design the MEC. Contractors erected a steel pile foundation and drilled a well. Then, in September 2011, then-tribal administrator Stanley Tom asked for the tribe's agreement with DOT to be dissolved, according to the state financial audit. The state had spent $2.6 million. The foundation was ready for the construction of the building structure.

But that never happened. The financial audit describes a series of questionable actions by the Newtok Traditional Council and the man it hired to lead the project, George Owletuck, who was chief executive officer of a nonprofit created by the tribe, Mertarvik Community Development Corp

Among the questioned spending was more than $20,000 paid to Owletuck for what the financial audit called "bogus reasons."

It came after he emailed the tribe's payroll service contractor in February 2012 asking to be paid for time from 2011.

"Ladies: I helped engineer this $2.5 M (million) appropriation for Newtok. Please see the spreadsheet; I am owed pay for my hours remaining; what is the status?" he wrote, according to the audit.

The payroll contractor said Owletuck had already billed the state grant $72,957 for his time in 2011 but there was still $20,643 in the grant fund for CEO wages. He was paid that amount, but it was not "bona fide services rendered," the audit said.

Asked about his role, Owletuck responded with dozens of emails, most with multiple attachments, that he said proved his extensive work on the project. He said the audit findings were incorrect about him and his role. Owletuck last year began working for Calista Corp. as government relations liaison.

When he was involved with Newtok, the tribal council abandoned the DOT-supported architectural plans and switched to a design with pre-fabricated insulated panels.

It contracted with a Colorado firm, Earthcore SIPs, to build them and Kenai Manufacturing LLC, a newly created company, to serve as project superintendent and oversee their assembly into a building, the financial audit said. Both companies were owned by the same person, Scott Anderson of Colorado, the audit said. The Kenai company was not a licensed Alaska general contractor, the audit said. Under its contract with the old tribal council, Owletuck would serve as its $60,000 project manager -- a conflict since he was also working for the tribe, the audit said. Owletuck told auditors he never intended to serve as the project manager and was surprised to see his name listed on the contract.

The insulated panels were supposed to be about 10 inches thick, but the ones delivered were thinner. Most remain in crates at the new village site, near the unfinished building. One crate was opened and those panels are exposed and crumbling.

The Newtok Village Council, which replaced the old council, is looking into how to finish the building.

It would take $5 million to $5.5 million to complete the 7,500-square foot building, using the existing foundation and crated panels, then purchasing additional beams and posts, plus finish materials, said Dave Cramer, the Tok-area president of Summit Consulting Services Inc., an engineering and construction management firm hired by the tribe this summer. Cramer and another engineer inspected the work.

"There is a significant amount of material to buy and get out there, but the basic building envelop is there," Cramer said. "Frankly, the foundation is in pretty good shape."

Of the money needed, $1.9 million is in hand, said Romy Cadiente, who is working for the Newtok Village Council as the relocation coordinator.

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