Sonoma County Board of Supervisors prepares to award another $3.3 million to DEMA to manage 3 housing sites, as audit continues

The Sonoma County Board of Supervisors is poised to extend DEMA Consulting & Management’s contract and award it $3.3 million to manage three housing sites for homeless people through November even as an audit of the company’s previous billing continues.

Though the Sonoma County Department of Health Services put management of the three sites out for competitive bidding Aug. 8, the process is not complete, so supervisors are expected to vote Tuesday to maintain DEMA’s management for the next three months while the county works to create new housing sites.

The $3.3 million would pay for work the company has already performed since July 1 and future services through Nov. 30. A portion of the money will go to DEMA’s private security subcontractor.

DEMA is being audited by the office of Erick Roeser, Sonoma County’s independently elected auditor and controller. Roeser launched the audit in the wake of a Press Democrat investigation that raised questions about the company’s billing.

The investigation outlined how DEMA billed more than $26 million to taxpayers without going through a competitive bidding process, which was allowed under emergency rules during the pandemic.

On Friday, Roeser confirmed that his investigation is ongoing and said it was too early to say if there were billing issues.

In an interview Thursday, board chairman Chris Coursey said the county needed to continue using DEMA even as the financial review continues.

“We have the need to run those (homeless) sites until we transition,” Coursey said, “I am OK with that.”

Michelle Patino, DEMA’s CEO, told The Press Democrat in August her bills were appropriate and denied any wrongdoing. She said her company has provided a valuable service to the county and saved taxpayer dollars by diverting homeless people from emergency rooms.

Roeser told The Press Democrat his auditors had met with Patino and her wife and business partner, Mica Pangborn, to request financial records, payroll documents and data on client residents, he said.

DEMA has provided some of the records but asked auditors for more time to produce others, he said. The records his office is requesting is information DEMA is required to provide through its contracts, he said.

“They’ve asked us to be patient as they gather the information and respond to our requests,” he said. “At some point if it appeared that they were being uncooperative then we’ll have to consider what the next steps are.”

Patino and Pangborn previously told The Press Democrat they will cooperate with the county’s audit as well as with a separate inquiry by the health department. The health department opened its own audit into all its homeless service providers after The Press Democrat published its two-part investigation into DEMA.

On Friday, Patino said in a phone interview that DEMA continues to successfully serve the county at its newest shelter site, the managed camp at the county administration campus.

“We've implemented some great programs, and it seems that a lot of people are working through all of their barriers and working with our resource navigators and case managers,” she said. “I'm very happy with the way things are going.”

The emergency shelter site has sheltered about 107 people between March and August in orderly rows of tents behind privacy fencing. Of those 107 people, three have moved into permanent housing, county data shows.

Officials have cited a shortage of permanent housing options as the primary reason for the low rate of placements.

DEMA today runs three sites, Mickey Zane Place, a former hotel near downtown Santa Rosa; the managed homeless camp; and a site at the Sonoma County Fairgrounds where people are housed in trailers.

The contract extension will cover DEMA’s work at all three sites, and a portion of the $3.3 million will be paid to a security subcontractor.

During the pandemic, DEMA ran seven sites, growing rapidly after Patino and Pangborn launched it in May 2020. By April 2023, DEMA had billed the department of health more than $26 million, most of which was paid for by the Federal Emergency Management Agency.

None of those contracts went through a competitive bidding process as the health department responded to the pandemic and emergency orders suspended regular rules for government vending.

With the managed homeless encampment too, DEMA was awarded the job without going through a formal competitive bidding process, after the county supervisors passed an emergency order to confront the latest in a series of unsanctioned tent villages along the Joe Rodota Trail.

Tuesday’s vote to again extend contracts for DEMA and other vendors was initially scheduled for the board’s regular meeting agenda, allowing public comment and discussion before the vote.

Coursey, however, moved the item to the meeting’s consent agenda — where supervisors will vote on a package of different items and, unless one chooses to pull the item off that list, will likely vote without public discussion.

Coursey said he ordered the change because renewing contracts, even the controversial ones, is routine business and typically conducted through a consent agenda vote.

“Some of the public may not view them as such but that is what they are … when it comes to county processes,“ he said.

With the same vote, the county will also authorize $754,507 for St. Vincent de Paul to manage Los Guilicos through Oct. 31, and will continue a food contract with Taqueria Sol Azteca for $621,090, that also goes to Nov. 30.

By November, the landscape of the county’s transitional housing sites may look very different. In a plan to be discussed separately on the supervisors’ agenda Tuesday, county officials propose restoring a pair of old dormitory buildings on the Los Guilicos campus. They also propose closing down the emergency shelter site and opening a new facility elsewhere on the county administration campus, and closing the ball fields site.

The request for proposals sought bids for managing the different shelter sites and indicated both those sites could change. Dave Kiff, director of the health department’s homelessness services division, said the county wants to see proposals from vendors that can serve in different arenas.

The core job the vendors will provide, case management of people seeking more permanent housing and social services, does not change depending on the type of housing structures or sites, Kiff said.

You can reach Staff Writer Andrew Graham at 707-526-8667 or andrew.graham@pressdemocrat.com. On Twitter @AndrewGraham88