San Diego Audit Committee Meeting - September 2, 2026

The San Diego Audit Committee met on Wednesday, September 2, 2026, at 9:00 AM. Chair Moreno presided with Vice Chair Foster and Committee Members Halpern, Mafia, and Tab Shuri present. The committee reviewed and approved the consent agenda, discussed the Fiscal Year 2027 risk assessment and audit work plan, and considered a hotline investigation of the city's lease with Barnes Tennis Center. The meeting adjourned before reaching items four and five due to time constraints.

Consent Calendar

• Item 1: Approval of committee minutes from March 11, 2026, and April 23, 2026.
• Item 2: City Auditor's Quality Fraud Hotline Report, Fiscal Year 2026, quarter four.
• Item 3: City Auditor's monthly activity reports.
• All consent items passed unanimously 5-0 after public testimony.

Public Comments & Testimony

• Non-agenda public comment: Joyce Sanyada discussed ambiguity in audit focus and thanked the committee. Paul Krueger praised the auditor's work on the Barnes Tennis Center and the employee hotline. Madison requested a complete accounting of the cannabis industry's financial impact (both revenue and costs). Blair Beekman commended streetlight repair audits and urged open communication regarding 9/11. Natalie Ratchke advocated for ethical use of AI by the city. Lori Saldania raised flood hazard concerns in the Midway area, citing outdated FEMA maps and unaccredited levees. Becky Rapp urged prioritizing an audit of the cannabis business department, noting the audit department is understaffed.
• Consent agenda testimony: Joyce Sanyada, Blair Beekman, Lori Saldania, and Natalie Ratchke spoke on items 1-3, commending the hotline report and monthly activity report, with Sanyada noting the word "abuse" in fraud reports and requesting alternative wording.
• Item 7 testimony: Joyce Sanyada supported the audit work plan and independent legal counsel. Blair Beekman emphasized the need for better communication within SDPD and interest in smart streetlight audits. Natalie Ratchke supported utilizing AI to improve audit processes.
• Item 6 testimony: Jesse Steinberg, Ryan Redondo, Whitney, and Paul Krueger ceded their time to Jack McGrory, who spoke for approximately eight minutes. McGrory (former city manager, now president of Utah San Diego, operator of Barnes Tennis Center) argued that the hotline investigation lacked due process, denied allegations about the overflow parking lot's history, and stated the lease ($600/year from 1994) was standard at the time. He claimed the city ignored his requests to negotiate a new lease for over three years. Paul Krueger expressed public frustration over the city's failure to manage real estate assets and urged the committee to address systemic issues. Natalie Ratchke and Blair Beekman also spoke in support of resolving lease issues promptly.

Discussion Items

• Item 7: Fiscal Year 2027 Citywide Risk Assessment and Audit Work Plan & Request for Independent Legal Counsel

  • City Auditor Andy Henau and Assistant City Auditor Matt Helm presented the work plan, which includes audits of emergency contracts, affordable housing covenant enforcement, water billing, lifeguard dispatch, public restroom maintenance, special use permits, municipal airports, and an IT risk assessment. The plan also includes a request to use independent legal counsel for the ongoing audit of SDPD's internal affairs unit.
  • IBA's Trisha Tackey noted that the council restored $208,000 in ongoing personnel funding and $55,000 in non-personnel funding after initial budget cuts. She highlighted the municipal code requirements for using independent counsel and defined the public interest standard.
  • Committee Member Halpern questioned governance gaps in real estate oversight (citing Fairbanks Ranch lease at 7% vs Torrey Pines at 9.9%, costing over $500k annually). He asked for an update on outstanding real estate audit recommendations. Committee Member Foster raised concerns about the strong-mayor form of government creating deficiencies. He also asked whether the affordable housing covenant audit would examine developer commitments for amenities and location equity; the auditor confirmed it would focus on existing covenants but could include amenities.
  • The committee voted unanimously 5-0 to approve both sub-items (work plan and independent counsel).

• Item 6: Hotline Investigation of City's Lease with Barnes Tennis Center

  • Senior Fraud Investigator Andy Haridas presented findings: The lessee illegally graded approximately two acres of city-owned land in 2022-2023 without a permit, using it for parking, in violation of the lease and a state grant agreement. The city had disbursed $2.5 million in advance state grant funds but only recovered $260,000 in reimbursements as of mid-2026. The lease ($600/year, flat rate since 1994) allows termination for lease defaults. The city does not enforce code violations on city-owned property, creating an enforcement gap. Recommendations include taking timely enforcement, developing a citywide policy for code enforcement on city property, and comparing market rental rates for any new lease.
  • IBA's Trisha Tackey noted that the lease terms predate current staff and that council policy has since been updated to allow gross revenue sharing. She questioned whether Recommendation 2.1 would be considered implemented if the policy merely codifies the status quo given current staffing limitations.
  • Jack McGrory (Barnes Tennis Center) responded by stating the overflow parking lot has been used since the center opened (not just after 2022) and that the city did not properly engage in lease renegotiations. He committed to negotiating a new lease that complies with current council policy.
  • Committee Members expressed frustration: Tapshuri noted that long-term leases disincentivize lessees from making improvements; Halpern questioned whether lease violations could justify termination (City Attorney confirmed yes, following cure periods); Foster pressed on the $2.5 million grant risk and whether the city had notified the state. Parks Director Andy Field confirmed the state was notified in September 2025 but only verbally, and that the city faces potential repayment exposure. Chief Housing and Community Development Officer Casey Smith stated a notice of violation was issued in August 2024 and again recently with 7- and 14-day deadlines. Chair Moreno expressed anger at the low rent ($50/month) and lack of enforcement, calling the situation "bananas."
  • The committee voted unanimously 5-0 to accept the report and forward it to council. Chair Moreno directed staff to return with an update in November 2026, including an appraisal timeline, the status of violations, and a City Attorney opinion on who has authority to issue violations on city-owned property.

Key Outcomes

• Consent agenda approved unanimously (5-0).
• Item 7 (FY27 work plan & independent counsel) approved unanimously (5-0).
• Item 6 (Barnes Tennis Center) report accepted unanimously (5-0) with directives:
  • City Attorney to provide a written opinion on authority to issue code violations on city-owned property.
  • Staff to provide an update at the November 2026 committee meeting, including appraisal progress, compliance status, and enforcement actions.
• Items 4 (brush audit) and 5 (unsafe camping ordinance) were not reached; meeting adjourned before 12:00 PM. Next regular meeting scheduled for Wednesday, October 7, 2026, at 9:00 AM.