What Every Depoe Bay Citizen Must Know

Seven Years.   Zero Valid Audits.   Millions Unaccounted For.

concerned citizens' Assessment

After exhaustive analysis spanning seven years of financial records, concerned citizens concludes:

"The City of Depoe Bay has operated a financial shell game for seven years. While extracting millions in increased rates and fees from citizens, it has systematically denied them the transparency to verify where their money goes. This is not mere incompetence – it is willful dereliction of fiduciary duty. The City of Depoe Bay's leadership has forfeited the benefit of the doubt."

The Bottom Line: What's Wrong with Depoe Bay's Finances

1. Complete Audit Failure – Seven Years Without Valid Financial Statements

• FY2019 & FY2020: Auditors issued rare "Disclaimer of Opinion" – meaning they could not verify ANY financial statements due to inadequate records and failed internal controls. This is virtually unheard of in Oregon cities.
• FY2020 audit completed April 30, 2025 – FIVE YEARS LATE. By law, it should have been filed by December 31, 2020.
• FY2021-FY2024: No audits completed at all. The City simply stopped producing audited financial statements, leaving citizens with no independent verification of how millions in public funds were handled.
• FY2025 Status: As of October 2025, still no clean audit opinion for any year since FY2018. The City remains in violation of state audit requirements.
• The City admits in budget documents that recent years "have not been audited and only adopted numbers are reflected." Translation: They're asking you to trust unverified numbers while extracting millions in increased rates and fees.

2. State Penalties and Interventions

• The Oregon Secretary of State flagged Depoe Bay as delinquent and imposed penalties.
• 10% of state-shared revenues were withheld as punishment for audit noncompliance – tens of thousands of dollars that should have supported city services.
• Only legislative intervention in 2023 returned these funds, but the City remains out of compliance.
• As of 2023, Depoe Bay was among 91 entities statewide with audits over a year overdue – placing it in a small group of chronic violators.

3. Harbor Fund: A $250,000 Annual Drain on City Resources

• The Harbor Fund loses $250,000 every single year (confirmed May 2025) and must be subsidized by tourism taxes and account transfers just to stay afloat.
• Over FY2019-2024, the Harbor required over $1.1 million in subsidies from the General Fund and tourism taxes – based on available budget documents.
• The 2025 dock replacement was funded by $2.9 million federal ARPA funds + $1.5 million state grants (secured by Rep. David Gomberg and Sen. Dick Anderson).
• Despite this $4.4 million in outside funding, the harbor still cannot cover its basic operating costs.
• The Harbor Fund repeatedly violated budget law by overspending its authorized appropriations – spending $64,745 over budget in materials alone in FY2019.
• In 2025, emergency measures included new $85,000 craft storage fees to address shortfalls being covered by lodging taxes.
• This is YOUR tourism tax money being diverted from other city services to prop up a failing harbor operation.

4. Budget Law Violations – Illegal Overspending

• The City repeatedly violated Oregon Local Budget Law by spending more than authorized in multiple funds.
• Specific violations include:
  • Harbor Fund overspent by $71,000+ in FY2019
  • Parks Fund overspent by $34,209 in FY2019
  • Street Fund overspent by $72,886 in FY2020
• One fund even ended the year in deficit (negative balance), which is illegal under Oregon law.
• No effective monitoring existed to prevent or detect these budget overruns.

5. Complete Internal Control Collapse

• Auditors found "material weaknesses" – the most severe rating – in internal controls year after year.
• Basic accounting procedures were not performed:
  • Bank reconciliations not done
  • Documentation not maintained
  • No segregation of duties
  • Records transferred to new software without proper procedures
• Controls were "inadequate to safeguard assets and ensure proper recording of transactions."
• Risk of undetected errors or fraud at every turn.

6. Governance Breakdown and Missing Public Records

• In 2022, after the City Recorder resigned, the City failed to produce Council meeting minutes for several months – a direct violation of Oregon public meetings law (ORS 192.650).
• Citizens had no official record of Council decisions, votes, or how public business was conducted.
• Councilor Jerome Grant: The situation is "wreaking havoc with transparency and trust... the public has no idea what we're up to."
• High staff turnover: Three City Recorders in four years, causing institutional knowledge to walk out the door.
• Mayor Kathy Short's response to missing minutes: "Who cares?" – symbolizing the City's indifference to legal compliance.
• February 2025: City finally issued RFP for accounting services, admitting being "four years behind in financial audits." This statement wasn't made in good faith as the city didn't also acknowledge the two DISCLAIMED (FAILED) audits from FY2019 and FY2020.

7. Massive Tax and Fee Increases While Denying Financial Transparency

• While failing audits for 7 years, the City imposed crushing rate and fee increases on citizens:
• Water rates increased 43% from 2019-2025 (bi-monthly base from $45 to $64.61) – during the period with no valid audits.
• Sewer rates more than DOUBLED – a 111% increase from 2019-2025 (bi-monthly base from $32 to $67.52).
• Resolution 513-21 (September 2021) locked in automatic annual rate increases through 2030 – imposed while already 2+ years behind on audits.
• Resolution 585-25 (June 2025) imposed $503,500 in property taxes for water debt service – approximately $335 per resident.
• Property tax for sewer bonds jumped 64% in a single year (from $9,092 to $14,902 in FY2019-20).
• Harbor moorage fees increased 3% annually starting in 2021 despite the harbor losing $250k+ per year.
• In 2025, the City more than doubled the fuel surcharge at the harbor from $0.61 to $1.34 per gallon – a 120% increase.
• New $250 crab pot storage fee and $85,000 craft storage fees implemented in 2025.
• Transient lodging taxes hit record levels ($1.85 million in FY2023) throughout the audit failure period.
• Citizens are being financially exploited – forced to pay dramatically more while denied the transparency to verify necessity.

8. Impact on Other Agencies and Citizens

• Gleneden Sanitary District reported that "Lack of timely and accurate reporting by Depoe Bay has left Gleneden Sanitary unaware of Depoe Bay's financial position... causing impacts on Gleneden's budget."
• Partner agencies cannot plan because they don't know Depoe Bay's true financial condition.
• Citizens are denied transparency – you literally cannot know how your tax dollars are being spent because there are no valid audits.
• Local media dubbed the situation "Depoe Bay's fiscal abyss."

The Harsh Reality: What This Means for You

What Must Happen Now

Immediate Actions Required:

1. Complete all delinquent audits immediately – this is the absolute highest priority.
2. State-appointed financial monitor should oversee the City until it demonstrates two consecutive years of clean, timely audits.
3. Reinstate financial penalties if deadlines are not met – no more legislative bailouts.
4. Public town hall meeting where officials explain what went wrong and how they will fix it – with state auditors present.
5. Harbor Fund restructuring – either make it self-sustaining or acknowledge the permanent $250,000 annual subsidy in transparent budgeting.
6. Monthly financial reporting to the public until trust is restored.
7. Restore credit rating – requires 3+ years of clean audits to regain access to federal grants and lower borrowing costs.
8. Reform Charter residency requirements – remove the restrictive 12-month city limits requirement that artificially limits qualified candidates and excludes experienced professionals who could bring needed expertise to address these governance failures.

Key Numbers Every Citizen Should Know

Your Right to Accountability

As a Depoe Bay taxpayer and citizen, you have the right to:

• Audited financial statements that verify how your money is spent
• Legal compliance with Oregon budget laws
• Transparent governance with proper public records
• Responsible stewardship of public funds
• Honest reporting about the City's true financial condition

The City of Depoe Bay has violated every one of these rights for the past seven years.

Take Action

Conclusion: A City in Financial Crisis

The City of Depoe Bay's financial governance has fundamentally collapsed. For seven years, citizens have been denied their basic right to know how public funds are managed. The Harbor Fund hemorrhages $250,000 annually while tourism taxes prop it up. Budget laws are violated with impunity. Internal controls don't exist. Public records go missing. The City lost its investment-grade bond rating. And through it all, no one is held accountable.

Meanwhile, citizens have been subjected to:

• 43% water rate increases (bi-monthly base from $45 to $64.61)
• 111% sewer rate increases (bi-monthly base from $32 to $67.52)
• $503,500 in annual property taxes for water debt service – approximately $335 per resident
• 64% property tax increase for sewer bonds in a single year (from $9,092 to $14,902)
• Delayed infrastructure improvements and deferred maintenance costs
• Reduced property values from financial instability and governance failures

All while being denied their legal right to transparency.

This is not acceptable. This is not normal. This is ILLEGAL

The era of lawlessness in Depoe Bay must end immediately. We deserve accountability. Demand it now.