Recall Campaign Divides Incline Village

Two recall petitions circulating this past summer have reportedly collected the number of signatures needed for a special election to remove two elected officials, Trustees Matthew Dent and Sara Schmitz, who serve as Chair and Vice Chair of the Board of Trustees that oversee the Incline Village General Improvement District. (IVGID).

The recall campaign has not only divided the unincorporated community of Incline Village, but raises many questions and concerns on the role of a government agency, IVGID, to a governing five-person Board of Trustees who are elected every four years to set policy, provide financial oversight, and determine strategies for accomplishing its charter.

IVGID was established under Nevada Revised Statute, Chapter 318 and chartered to provide water, sewer, trash and recreation facilities for the communities of Incline Village and Crystal Bay, Nevada. The public works agency is managed by a General Manager and has full-time and seasonal employees.

Recall Background 

Back in June, a recall petition to remove Trustees Matthew Dent and Sara Schmitz was filed by former board Chair Tim Callicrate, who had served 12 years on the board, and two Incline Village residents.

Chair Dent has served on the board since 2015, Vice Chair Schmitz was appointed in January 2020, and both were elected in November of 2020. Treasurer Ray Tulloch was elected in 2022 but could not be recalled since he hadn’t served a full six months prior to the recall filing, although his name curiously appears on the recall petitions.

In 2022, when Tim Callicrate was the Chair, the Board undertook the “monumental task” to update its recreation ordinance specific to a 1968 beach deed which provided private beaches for the residents/parcel owners and their tenants. The beach deed ordinance had not been updated in 24 years.

Due to overcrowding issues which elicited residential complaints, litigation, and related expenses, the board unanimously passed the updated ordinance to protect the deed and the district from costly litigation. “We had to eliminate the ability to have unlimited access, that’s really what started the issues,” former General Manager Indra Winquest told the Sierra Sun.

This unlimited access became a perk for non-resident IVGID employees and their guests. A recall supporter told The Globe: “The employees deserve it. They have been using the beach for decades. We need to advertise this perk for employee recruitment and retainment.”

According to a flier distributed from the recall tables and volunteers in the community, Trustees Schmitz and Dent “have taken actions that are causing severe financial and community damage to Incline” by:

• Continuously overstepping their Trustee role and creating a toxic environment within IVGID that has caused senior staff resignations and poor morale among those remaining.
• Have added new regulations and restrictions negatively impacting residents and IVGID staff.
• And the loss of a $25 million donation from the Duffield’s for recreational facilities for our kids.

Although a “hostile, toxic environment”, “micromanaging” is subjective and argumentative, similar and arguably misleading language appears on the two recall petitions.

According to NRS 306.21: A person shall not knowingly or under circumstances amounting to criminal negligence:

      (a) Misrepresent, attempt to misrepresent or assist or conspire with another person to misrepresent or attempt to misrepresent the intent or content of a petition for the recall of a public officer which is circulated pursuant to the provisions of this chapter.

There is numerous case law that provides a challenge to the signature petitions’ language, including a case involving the Nevada Supreme Court who found that signature petition language was “inaccurate,” “misleading,” and “argumentative,” and therefore mislead signers.

The Globe is not aware of any pending litigation to challenge the recall efforts.

Financial (Mis)Statements

Numerous resignations have occurred since the Board of Trustees began providing financial oversight and  implementing changes that were seemingly ignored for years, not only to the beach deed, but to the financial reporting by IVGID to the Board and community.

A newly formed audit committee uncovered millions of dollars unaccounted for in revenues, expenses, a surplus of millions of dollars charged to the community through recreation fees after payment of a bond (a violation of Nevada Statute), zero bank reconciliations for over a year, and an out-of-balance general ledger.

As IVGID has not reconciled its bank records since at least 2022, a local veterans club that raises money through local events for veterans and the ROTC program has been negatively impacted.

A resident familiar with the veterans club told the Globe, “Over the last couple years, getting the status of revenues and expenses has been difficult. The statements received are out of date and this makes it difficult to know how much funding there is and where the revenues came from, which makes it difficult to know how much money we can give to our students and veterans.”

On August 11, 2023, Audit Committee Chair Chris Nolet warned the community and the Board of the “gross mismanagement” by IVGID of the general finances during public comment:

Below is a partial transcript of Nolet’s statements:

In three minutes, I can’t possibly address the current state of complete disrepair faced by our Director of Finance, Bobby Magee, and his few team members. His memo to the board package tonight provided some insight into the rather frightening circumstances they face.

No bank reconciliations for one year, an out of balanced GL [General Ledger] that has not been closed for the past two months. An implementation system, which is months, if not years late and still incomplete in the aggregate. These circumstances represent an extremely daunting set of conditions, even for a GID [General Improvement District].

Contrary to the refrain “I quit because of the board”, I find it rather obvious that Navazio [Paul C. Navazio, Director of Finance: 2020 to June 2023] quit because he knew these circumstances would finally catch up with him in the current year and close end related audit.

More importantly, the presence of these circumstances in any organization has historically correlated to various financial frauds. While we’ve not seen any such specific circumstances. Sudden leadership resignations, unreconciled bank accounts, and our open and out of balanced GL are well known traits, all of which indicate that substantial skepticism and expanded audit scopes are warranted.

These deplorable circumstances don’t just develop overnight. For example, under the slipshod leadership of Tim Callicrate and Indra Winquest [former General Manager], two – TWO – different audit firms reported the district did not main effective internal controls over financial reporting.

Two different audit firms had to deal with restating our financial statements due to material errors.

Even worse, the Audit Committee felt that it could not approve of the Fiscal 21 CAFR [audited financial statements]. But Callicrate and his team voted to approve and submit the financials to the State anyway. These examples represent chronic worst practices.

Callicrate, Winquist, and [Kendra] Wong are the worst of the worst, and now we’re paying dearly for their years of ineffective leadership and gross mismanagement.

Editor’s note: Paul Navazio is now the Finance Director for San Rafael, CA and could not be reached for comment. Former Trustee Kendra Wong didn’t run for reelection in 2022 after 8 years serving on the Board. Attempts to reach Wong were unsuccessful.

Loss of $25M “grant”

The $25.6 million “grant” was actually a budget from the Dave & Cheryl Duffield Foundation and proposed to IVGID staff and negotiated by former General Manager Winquist. The “grant” was not initially presented in written or signed form to the Board of Trustees who is responsible for financial oversight. (Having worked with nonprofits, a grant is always presented in written form with terms and conditions clearly defined).

The large sum was intended to build a dedicated gymnastics room, an expanded gymnasium, and a dedicated space for youth and seniors at the existing recreation facility. Multiple estimates for the design exceeded the amount of the proposed budget and the design was ultimately reduced to a gymnastics room and a reduced space for youth and seniors. The multi-use gym was eliminated in the final rendering. (see PDF below)

Last year, with Sara Schmitz voting “no” on the final design proposal, due to the lack of an expanded multipurpose gym and the district’s need to allocate additional money for the final design, the “grant” was withdrawn by the Duffield Foundation.

A caveat to the verbal “grant” was the need for the unanimous consent of the Board on the final project. This caveat was not included in any staff report to the Board but instead verbally communicated to the Board members by former General Manager Winquest. Yet, according to public records, there was much confusion due to the lack of written correspondence regarding the terms and conditions of the “grant”.

“When I voted ‘no’ on the approval of the design, I did not know I would scuttle the entire project,” said Trustee Schmitz. “I voted ‘no’ on the design to allow the District time to allocate funding that could deliver a multi-use gym.”

Upon her vote, the Duffield foundation withdrew their “grant” and began building a gymnastics center on one of their properties permitted by the Tahoe Regional Planning Authority and Washoe County weeks prior to the board’s final vote.

Callicrate told the Tahoe Daily Tribune that Mr. Duffield personally told him, “The main reason we gave the money to the district was because of Indra. The main reason we took it away was because of Sara.” This statement was confirmed by Executive Director of the Dave & Cheryl Duffield Foundation Jim Dugdale to be “sustainably true.” The foundation indicates that they will continue to support the district.

Chair Dent stressed that “Everything should be in writing. We did not have anything in writing that assured if the project was stated, that it would be completed. All contracts were being done one at a time, with the ability for the termination at any point.”

A timeline related to the loss of the unwritten “grant” was provided during a Board meeting that summarily finds that miscommunication, the lack of a written proposal, missteps, and lack of communication between the Board of Trustees and IVGID staff.

Recall Update

According to the Washoe County Registrar, the counting of the number of unverified signatures was completed and sent to the Secretary of State yesterday, September 21. The SOS estimates it may take 20 business days to complete signature verification. The related costs are paid by The Committee to Recall IVGID Trustee Matthew Dent and The Committee To Recall IVGID Trustee Sara Schmitz.

Once the signature verification is complete, and one or both petitions obtain the needed 1,801 signatures for recall, a special recall election will be held in November.

During that special election, the voters will simply decide whether to recall or not recall the Trustees. If the Trustees are recalled, the remaining Trustees will appoint two new Trustees to complete Dent’s and Schmitz’s term which ends December 31, 2024.  If one Trustee is recalled, there is a risk of a split vote which will then be forwarded to the Washoe County Commissioners for appointment.

Editors note: Weeks ago, The Globe filed an open records request for financial documents. Most of those documents, including the general ledger, are not available in Excel format but the District has notified The Globe that “they are working on it and will provide when the format is available.”

The Globe has also reach out to the three recall committee members for comment. Two could not be reached, including Tim Callicrate. One committee member, who preferred not to be identified, indicated there was a Political Action Committee (PAC) formed for the recall effort but The Globe cannot find an associated PAC related to this effort. The Committee member did not know the name of the PAC. 

The article has been updated to reflect the appropriate and exact language of “recreational facilities” from Nevada Revised Statute, Chapter 318.