Sonoma County supervisors to weigh fate of controversial homeless provider DEMA Tuesday

Sonoma County supervisors on Tuesday will take up the thorny issue of its relationship with the controversial for-profit homeless services company DEMA Management and Consulting, which has been unable to account for millions of dollars billed to taxpayers.

Supervisors will choose between two options presented by the Sonoma County Department of Health Services, or perhaps craft a directive of their own, during a busy Tuesday meeting agenda.

One option staff presented is that county supervisors award DEMA a new, multiyear contract through 2027 to continue managing Sonoma County’s homeless housing sites. But, the health department’s report states, “based on extenuating concerns that have come to light,” the department recommended against that choice.

Instead, it asked supervisors to once again offer a short-term extension of DEMA’s contract, this time until July 31, while the department conducts a new competitive bidding process for a long-term housing site operator.

Today DEMA is running two county housing sites — a tent camp on the county’s administrative campus and Mickey Zane Place, a housing facility in a former hotel in downtown Santa Rosa.

DEMA came under scrutiny for its billing practices the pandemic after a Press Democrat report published in July 2023. In the wake of the newspaper’s investigation, Sonoma County’s indepedently-elected auditor opened a financial inquiry, that resulted in a damning report officials made public March 26.

That report, written by Santa Rosa-based accounting firm Pisenti & Brinker, did not conclude whether DEMA had overbilled in its invoices — which totaled as much as $26 million in the first 26 months of the company’s existence. Instead, the accountants found they couldn’t properly assess DEMA’s billing because the company had not tracked the work of its salaried employees.

DEMA CEO Michelle Patino has denied any impropriety and said she can account for every hour of wages the county paid for, and she has questioned why the health department paid her bills for years if they weren’t accompanied by sufficient documentation.

Tuesday also marks the first time the Sonoma County supervisors could conduct any significant, public discussion of the company. They have spent considerable time addressing DEMA in closed session, after Patino threatened to sue the county for harassment and discrimination.

County officials have yet to decide whether or how to investigate DEMA’s billing further, though as much as $11 million in taxpayer dollars may have paid out to DEMA without proper documentation, according to an estimate from the county auditor, Erick Roeser.

Roeser told The Press Democrat on Monday his office continued to collect documentation from DEMA as it prepares to present its pandemic response costs to the Federal Emergency Management Agency for reimbursement. Officials say that reimbursement now in doubt, given DEMA’s lack of supporting documentation.

As the county’s financial investigation dragged on over seven months, the Sonoma County Health Department was conducting a competitive bidding process for a long-term operator of several housing sites. A panel of three county officials from the health department and one from an outside department, the Sonoma County Fairgrounds.

That process resulted in the board recommending DEMA take on a new contract to manage the county’s homeless housing sites over the next few years, according to a health department report last week — the first indication that county staff chose to award DEMA a new long-term contract even amid the financial investigation.

DEMA has never won a Sonoma County contract through a competitive bidding process — their previous contracts came amid pandemic-era suspensions of normal government contracting procedures.

You can reach Staff Writer Andrew Graham at 707-526-8667 or andrew.graham@pressdemocrat.com. Follow him on X (Twitter) @AndrewGraham88