20101105 - gghcdc hotline investigation 11-5

8/2/2019 20101105 - GGHCDC Hotline Investigation 11-5

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OFFICE OF THE CITY AUDITOR1010 SECOND AVENUE, SUITE 1400 SAN DIEGO, CA 92101

PHONE 619 533-3165, FAX 619 533-3036

DATE: November 5, 2010

TO: William Anderson, DirectorCity Planning and Community Investment Department

FROM: Eduardo Luna, City Auditor

SUBJECT: Hotline Investigation of Contract Administration with the GreaterGolden Hill Community Development Corporation

________________________________________________________________________

The Office of the City Auditor conducted an investigation of the Greater Golden HillCommunity Development Corporation (GGHCDC) and the Citys Office of SmallBusiness (OSB) in response to a complaint made to the Citys Fraud Hotline. Thecomplaint alleged a lack of fiscal control in the administration of contracts betweenthe OSB and the GGHCDC. Our investigation concluded that the allegations aresubstantiated in part. We found that the OSB did not document the required on-sitemonitoring visits, and it appears that the GGHCDC did not properly solicit enoughbids before a contract that was awarded.

Background

The GGHMAD was formed in 2007 and a contract between the City and GGHCDCwas established in FY 2008. As contractor for the Greater Golden Hill MaintenanceAssessment District (GGHMAD), the GGHCDC provides services that include but arenot limited to: debris and litter control, tree maintenance and replacement, landscapeservices, graffiti control, sidewalk safety hazards, sidewalk sweeping and power-washing, lighting services, large bulk item pickup and removal of illegal dumping,enhanced trash receptacles and recycling, decoration and banner installations, and trailbeautification. The GGHCDC Fiscal Year runs from September 1st through August31st.

We noted that a CPA firm provided an audit report dated 11/23/2009 to GGHCDC

that stated in their opinion the financial statements present fairly, in all materialaspects, the financial position of Greater Golden Hill Community DevelopmentCorporation as of 8/31/2009. Note 7 to the financial statements states, The CDC isin compliance with the terms of the agreement for the contract year ended 6/30/2009.


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Page 2William Anderson, Director City Planning and Community Investment DepartmentNovember 5, 2010

INVESTIGATION PROCEDURES

The following interviews were conducted and documents were reviewed during theinvestigation:

1. FY 2009 (RR-303907-5) and FY 2010 (RR-305178-5) funding source agreementsbetween the City and the GGHCDC for services provided by GGHCDC. Inaddition to the contracts for FY 2009 and 2010, the GGHCDC had one smallagreement (less than $25k) in FY 2009 for Community Parking Districts (RR-303939) for parking related activities.

2. Monthly reimbursement requests for each funding source agreement for FYs 2009and 2010 through 12/31/2009 submitted to the Citys Office of Small Business(OSB) by GGHCDC.

3. Audited financial statements for GGHCDC for FY 2009 as required by agreementwith the City. The audit was dated 11/23/2009 for the fiscal year ending8/31/2009.

4. Interviews and discussions with Community Development Specialists andGGHCDC staff.

INVESTIGATION RESULTS

Office of Small Business (OSB) Monitoring of GGHCDC Expenditures

We found that the Citys OSB is monitoring the expenditures requested forreimbursement from GGHCDC. We reviewed the monthly reimbursement invoicessubmitted by GGHCDC to the Citys OSB for the period July 2008 through December2009 and the account information, budget category, check number, description, andamount were listed on each invoice. Expenses totaling $1,638.43 were disallowed byOSB staff in the GGHCDC reimbursement request for the Community Parking Districtfor the period 9/3/08 through 4/3/09. The FY 2010 reimbursement requests submitted byGGHCDC had approval stamps that were signed by City staff. Our review ofexpenditures found only one exception with the threshold to require GGHCDC to get twoadditional bids in writing.

Non-Compliance with Competitive Bidding Requirements

It appears that the GGHCDC did not properly solicit enough bids before a contract wasawarded. The Conflict of Interest and Procurement Policy for Nonprofit CorporationsContracting with the City of San Diego requires GGHCDC to obtain three written priceproposals for expenditures between $5,000 and $25,000. Our review of the invoicesattached to the request for reimbursements identified the following payments to a vendorthat exceeded $5,000 without GGHCDC obtaining three written or verbal price proposalsfrom vendors:


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Date Invoice # Amount Description

6/5/2009 I3443 $4,741.00 Logo master for Clean, Green & Safe, et al

6/2/2009 I3444 $1,077.00 Printing of graphic collateral items11/11/2009 I3482 $1,524.67 Printing of graphic collateral items

The expenditures to this vendor were for creating a logo and providing other services. AGGHCDC staff member stated that the initial cost of the branding strategy was a $4,741contract with this vendor to produce the logo along with 10 additional items to includewebsite banner, magnets, door hangers, postcards, etc. The GGHCDC staff memberstated that since the contract was under $5,000 competitive bids were not sought, butrather went to this vendor who the staff member had met through prior employment. Itwas believed that the vendor could provide quality work at a fair price. The staff member

stated that the accounting classification of Other Services was utilized to fund thiscontract, and since the board approved this budget, discretion could be used to spendOther Services funds on the logo.

The CGGHCDC staff member did not recall that the contracts evidenced by invoicesI3443 and I3444 above were made at the same time. It was stated that the printingcontract was arranged after the initial design contract and its actual date should have been7/2/2009. The staff member recalled having a conversation with a staff member of theOSB and in the conversation it was determined that the invoices represented expendituresin two fiscal years. However, even though the payments may not have exceeded $5,000during a single fiscal year and were for various services, the expenditures did exceed

$5,000 from a single contractor in a 12 month period. This appears to be not incompliance with the Conflict of Interest and Procurement Policy requirement to obtainthree written price proposals for expenditures between $5,000 and $25,000 from a singlecontractor in a 12 month period. The OSB indicated that changes were made to the MADagreements regarding the definition of a 12 month period in Fiscal Year 2011, but thetransactions we reviewed were for Fiscal Years 2009 and 2010.

Improvements Needed in OSB Monitoring

We found the allegation that the OSB is not adequately monitoring the GGHCDC wassubstantiated in part. We found the OSB is not documenting its required on-siteinspections. Article II B.1 of the annual Maintenance Agreement between the City andGGHCDC states that: The City shall conduct at least four on-site inspections of theDistrict during the period of this Agreement. In the event the City determines from such

inspections that the District is not being properly administered by the GGHCDC, a

report of such findings will be presented first to the GGHCDC, and if not satisfactorily

corrected within thirty calendar days will then be presented to City Council. City

Council may use such findings as the basis for the termination of this Agreement

pursuant to Article VI hereof and the San Diego Municipal Code Section 65.0212.


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We requested the documentation for the required on-site inspections of GGHCDC madeby the OSB during Fiscal Years 2009 and 2010, and no documentation or reports wereprovided. The OSB responded by stating that MAD staff did not find deficiencies withrespect to any referenced standard in Article I, Section B, and therefore no Cityinspection report was supplied to GGHCDC. We should note that the OSB was unable toprovide any documentation showing that inspections were conducted confirming that noreportable conditions were found. A GGHCDC staff member recalled that OSB hasmade onsite visitations. However, the OSB should prepare and maintain documentationof inspection activities performed as proof that the required visits are being performedtimely and sufficiently, and the outcome should be documented.

Recommendations

1. We recommend that the Office of Small Business (OSB) establish policies andprocedures to require written documentation of all on-site inspections required bymaintenance agreements with the City and non-profit corporations retained toprovide services. The report or checklist should include but not be limited to dateand time of visit, list of participants, records reviewed, specific topics ofdiscussion, observations made by the OSB staff member, and list of any follow-upactions as a result of the visit.

2. We recommend that the Office of Small Business establish policies andprocedures to verify that procurement policy guidelines are being followed byrecipients when payments to an individual vendor exceed any threshold amountsthat require the contracting agency to seek multiple bids prior to award. This mayinclude periodically reviewing recipients procedures used to ensure compliancewith the procurement policy guidelines during on-site visits.

3. We recommend that the Office of Small Business determine what actions shouldbe taken regarding the Greater Golden Hill Community Development Corporation(GGHCDC) not following the Citys contract (or procurement guidelines) in itstransactions with a vendor by not receiving three price proposals for expendituresbetween $5,000 and $25,000.


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We appreciate the cooperation we received from the City Planning and CommunityInvestment Departments Office of Small Business and the Greater Golden HillCommunity Development Corporation staff. Attached is the written response youprovided on November 3, 2010. Thank you for taking action on this issue. Pleasecontact me with any questions.

Eduardo Luna

City Auditor

cc: Honorable Mayor Jerry SandersHonorable City Council MembersHonorable Audit Committee MembersJay M. Goldstone, Chief Operating OfficerWally Hill, Assistant Chief Operating Officer

Mary Lewis, Chief Financial OfficerJan Goldsmith, City AttorneyAndrea Tevlin, Independent Budget Analyst


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April 24, 2012

Maintenance Assessment District (MAD)Business Improvement District (BID)

South Park Neighborhood Association (SPNA)Golden Hill Neighborhood Association (GHNA)

Golden Hill Community Association (GHCA)Greater Golden Hill Planning CommitteeFriends of Balboa Park & Golf Course

Anti-MAD Community Volunteers

Verses

City of San DiegoGrater Golden Hill Community Development Corporation (GGHCDC)

These documents are related to an ongoing 17 years conflict between the Citizens

(Property owners) of the communities of SOUTH PARKand GOLDEN HILL, of SanDiego, California, battling against the employees of the City of San Diego, and the GreaterGolden Hill Community Development Corporation (GGHCDC) who dishonestly andmaliciously caused the illegal establishment of a Maintenance Assessment District over themajority objections of the Citizens [property owners]. This to specifically provide fundingand support with additional property assessments (taxes/fees) to be provided revenue to aprivet membership corporation (GGHCDC).

In 2012 the battle is continuing although the Citizens clearly and decisively won every courtcase, which ORERED a Writ of Mandate, vacating the unconstitutional and illegalgovernmental actions/proclamations establishing the Grater Golden Hill Maintenance

Assessment District (GGHMAD) for the benefit of and administration by the Greater GoldenHill Community Development Corporation (GGHCDC). As of today the City employees arecontinuing the Battle and are refusing to return the stolen monies by the government to theproperty owners.

These Documents are provided to CITIZENS to assists you in fighting the tyranny of ourGovernments uncaring Politicians, and their dishonest, officious, manipulative, bullingBureaucrats. They were obtained and provided from many sources and volunteers towhom we shall never forget their goodwill and good-works.

I recommend you to first review the following document repaired by community volunteers

to better understand what has transpired to this point in time:

20111031 - GGHCDC MAD HISTORY.pdf

I also would recommend that you contact the following Anti-MAD Points of Contact:

www.goldenhillmad.blogspot.commadmatters@cox.netwww.madenoughyet.com
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INDEX [LIST] OF RELATEDDOCUMENTS & PUBLICATIONS

19720000 - Landscaping & Lighting Act of 1972.pdf19890000 - MAP - South Park & Golden Hill.pdf

19940000 - GGHCDC Revitalization Project.pdf19951010 - GHCDC Excutive Director Report.pdf19951010 - GHCDC Revitalization Plan Community.pdf19951019 - GHCDC Boad Directors.pdf19951024 - South Park Association 01.pdf19970000 - CA Gov. Code section 53753.pdf19970000 - TAX Right to Vote Proposition 218.pdf19970609 - MAD City Resolution 288830 MAD Ballot.pdf19980608 - SD MAD MuniCode.pdf

20000614 - MAD local-light mad.pdf20000628 - GGHCDC Board Agenda.pdf20000810 - GGHCDC MAD Misc Docs.pdf20000810 - MAD GGHCDC - Kessler Letter.pdf20000901 - GGHCDC MAD Hal Tyvoll Protest Flier - Tovel.pdf20010213 - CDC Newsletter.pdf20010305 - GGHCDC MAD Reminder Letter.pdf20010330 - No GGHCDC MAD Flier.pdf20010401 - MAD GGHCDC Status Report.pdf20010401 - MAD SD Park Dept.pdf

20010403 - MAD GGHCDC Status Letter.pdf20010412 - MAD GGHCDC Letter.pdf20010425 - GHHCDC NewCity 01-10.pdf20010425 - No GGHCDC MAD Flier.pdf20010600 - GGHCDC MAD Newletter.pdf20010608 - CMADJuneNewsletter2001.pdf20010613 - MAD GGHCDC Letter - Councilmember.pdf20010623 - MAD GGHCDC Letter - Mayor.pdf20010710 - MAD GGHCDC Letter - Atkins.pdf

20020108 - MAD SD Process Ord1975.pdf20020108 - The MAD Process.pdf20020313 - No GGHCDC MAD Flier.pdf20020430 - GGHCDC $150 Council Agenda.pdf20021021 - BID GGHCDC.pdf20021029 - GH Planning Committee - GGHCDC Business Districts.pdf20021029 - GH Planning Committee - GGHCDC Community Center.pdf20021029 - GH Planning Committee - GGHCDC Joint Committees.pdf20030500 - SD Code MAD Lighting.pdf
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20040000 - SD Policy#100-21 MAD Formations.pdf20040913 - MAD Formation Handout.pdf20040913 - San Diego MAD Formation Handout.pdf20050000 - MAD BUDGETS 2004-8 v6_cedadmin.pdf20050425 - No GGHCDC MAD Flier.pdf20050622 - MAD SD Self-ManagedMAD-CityFY2006Budget.pdf20060000 - GHCDC BoardRooster.pdf

20060311 - MAD Court Rulling Greene.pdf20060318 - GHCDC ActionPlan.pdf20060401 - GGHCDC strategicPlan2006.pdf20060600 - GGHCDC eLetter3_06.pdf20060601 - SD Block Grants amendfyar07.pdf20060627 - MAD Council Meeting pmfinal.pdf20061200 - MAD FUNDING SIDEWALKS pmpchap7.pdf20070000 - FY08 MAD 06v3revenue.pdf20070000 - San Diego CityBEAT - poochPolitics.pdf20070101 - GGHCDC Self History.pdf

20070300 - GHCDC MAD SD CITY Survey.pdf20070300 - MAD North Park AER.pdf20070400 - GHCDC MAD SCI Engeneers Report-NO APPENDIX.pdf20070400 - GHCDC MAD SCI Engeneers Report.pdf20070400 - SD Developemnet services.pdf20070401 - GGHCDC MAD Tony Atkins News.pdf20070406 - No GGHCDC MAD Flier.pdf20070423 - GHCDC MAD Request Council Agenda JUNE 2007.pdf20070511 - City San Diego City GGHCDC MAD - Ohedia.pdf

20070521 - Hal Tyvoll MAD Ltr to Council.pdf20070600 - GHCDC City Grants FY07.pdf20070600 - MAD City FY08v3 CIP Budget.pdf20070607 - Plan Group juneagenda.pdf20070608 - MAD GGHCDC Letter 01 - Mayor.pdf20070608 - MAD GGHCDC Letter 02 - Aguirre.pdf20070609 - GGHCDC Meeting.pdf20070612 - Council Agenda - GHCDC MAD1.pdf20070615 - GGHCDC MAD cert of mailing_1.pdf20070615 - GGHCDC MAD cert of mailing_2.pdf

20070616 - MAD GGHCDC SD City Flier.pdf20070617 - NP News- GHCDC MAD SD CITY Advertisement.pdf20070618 - GGHCDC MAD SD City Ballot.pdf20070618 - GHCDC MAD SD CITY Letter.pdf20070619 - GHCDC MAD - SD City Opposition Consultant.pdf20070621 - Citizen No GGHCDC MAD Ltr to James T. Waring.pdf20070630 - GHCDC MAD SCI Engeneers Report-02not complete.pdf20070701 - No GGHCDC MAD Flier.pdf20070702 - Citizen No GGHCDC MAD Ltr to Toni Atkins.pdf
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20070702 - GHCDC MAD SD CITY Flier.pdf20070702 - Toni Atkins Leter.pdf20070706 - Dear Neighbor Letter - No MAD tax.pdf20070708 - MAD GGHCDC Todd Gloria TaxpayersAdvocate.org.pdf20070709 - MAD Fellow Neighbor Helpful Note.pdf20070710 - GGHCDC MAD Ben Hueso Website.pdf20070710 - GGHCDC MAD Vote No Flier.pdf

20070712 - MAD 18July07 MAD Meeting CHANGE.pdf20070712 - MAD GGHCDC City SAN Diego Parcels.pdf20070712 - NoMADTax - Gerrymandering.pdf20070716 - Neighbors Communications & Response from SD Clerk.pdf20070718 - GHCDC MAD Meeting CHANGE.pdf20070719 - SCI MAD san diego golden hill response.pdf20070723 - CA Code 549546.pdf20070723 - CA Code R28830.pdf20070723 - CA Constitution-ARTICLE 13 _Prop. 218_.pdf20070726 - San Diego Reader - GGHCDC MAD.pdf

20070726 - San Diego Reader MAD GGHCDC.pdf20070730 - MAD GGHCDC - NOT A HONEST VOTE.pdf20070800 - NP NEWS - GGHCDC MAD.pdf20070900 - NP NEWS - GGHCDC MAD.pdf20071000 - GGHCDC MAD Directory.pdf20071000 - GGHCDC MAD Oversite Committe.pdf20071100 - NP NEWS - GGHCDC MAD.pdf20071207 - GGHCDC MAD Ballots Oversite Committe.pdf20080000 - GGHCDC brochurefinal_so (3)_1.pdf

20080000 - GGHCDC MAD City Contract 2008-9.pdf20080123 - GGHCDC MAD Oversight Committee.pdf20080200 - GGHCDC MAD Oversight Committee.pdf20080200 - NP NEWS - GGHCDC MAD.pdf20080204 - GGHCDC MAD Oversight Committee.pdf20080225 - GGHCDC MAD Oversight Committee By Laws.pdf20080225 - GGHCDC MAD Oversight Committee.pdf20080317 - GGHCDC MAD Oversight Committee.pdf20080421 - GGHCDC MAD Oversight Committee.pdf20080519 - GGHCDC MAD Oversight Committee.pdf

20080519 - San Diego Reader - GGHCDC MAD.pdf20080521 - San Diego Reader - GGHCDC MAD.pdf20080600 - GHCDC MAD SCI Engeneers Report.pdf20080602 - GGHCDC MAD Oversight Committee.pdf20080616 - GGHCDC MAD Oversight Committee.pdf20080617 - San Diego Reader - GGHCDC MAD.pdf20080620 - San Diego Reader - GGHCDC MAD.pdf20080714 - GGHCDC MAD Oversight Committee.pdf20080715 - GGHCDC MAD Notice of Inviting Bid .pdf


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20080723 - San Diego Reader - GGHCDC MAD.pdf20080730 - San Diego Reader - GGHCDC MAD.pdf20080818 - GGHCDC MAD Oversight Committee Procedures.pdf20080818 - GGHCDC MAD Oversight Committee.pdf20080819 - San Diego Reader - GGHCDC MAD.pdf20080900 - GGHCDC MAD Newspaper.pdf20080915 - GGHCDC MAD Oversight Committee.pdf

20080917 - San Diego Reader - GGHCDC MAD.pdf20081020 - GGHCDC MAD Oversight Committee.pdf20081022 - San Diego Reader - GGHCDC MAD.pdf20081112 - SD 21.reporttocitycouncilfy09.pdf20081117 - GGHCDC MAD Oversight Committee.pdf20081118 - San Diego Reader - GGHCDC MAD.pdf20081215 - GGHCDC MAD Oversight Committee.pdf20081216 - MAD MAP SD City.pdf20081230 - HUD Audit - San Diego ig0991005.pdf20090105 - GGHCDC MAD Oversight Committee.pdf

20090202 - GGHCDC MAD Oversight Committee.pdf20090302 - GGHCDC MAD Oversight Committee.pdf20090303 - San Diego Reader - GGHCDC MAD.pdf20090307 - San Diego Reader - GGHCDC MAD.pdf20090323 - GGHCDC MAD sidewalk repair Letter.pdf20090406 - GGHCDC MAD Oversight Committee.pdf20090504 - GGHCDC MAD Oversight Committee.pdf20090601 - GGHCDC MAD Oversight Committee.pdf20090606 - GGHCDC MAD Oversite Committe.pdf

20090629 - GGHCDC MAD Promotions Letter.pdf20090630 - COMMUNITY DEVELOPMENT BLOCK GRANT-fy092ndreprogramming.pdf20090707 - San Diego Reader - GGHCDC MAD.pdf20090717 - San Diego Reader - GGHCDC MAD.pdf20090814 - MAD Democratic Values and Special Assessments.pdf20090918 - San Diego Reader - GGHCDC MAD.pdf20090930 - GGHCDC MAD Disband Oversight Committee Vote.pdf20100000 - FY11 SD budget MAD 14v1appendix.pdf20100203 - MAD Court Final Judgment GHAA.pdf

20100203 - MAD Court Findings Judgment GHAA.pdf20100223 - GHNA - MAD help.pdf20100324 - MAD University Avenue - uampmtgpresentation.pdf20100411 - MAD GGHCDC Illegale $732,746 Budget.pdf20100421 - San Diego Reader - CDC No Refunds.pdf20100501 - San Diego Reader - GGHCDC MAD.pdf20100600 - MAD GGHCDC.pdf20100726 - fy11ao.pdf20100831 - GHHCDC Audit.pdf


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20100913 - MAD VENDOR LOT SUMMARY 9958.pdf20101001 - GGHCDC MAD Annual Report 2009.pdf20101105 - GGHCDC Hotline Investigation 11-5.pdf20101110 - UTSanDiego.pdf20101120 - 25th Street Project.pdf20101201 - San Diego Reader - GGHCDC MAD.pdf20110000 - MAD 25th Street.pdf

20110200 - MAD Oversight Cmte agenda-Feb 2011.pdf20110415 - GGHCDC 25thFINAL-FLYER#3.pdf20110504 - GGH CPUAC.pdf20110505 - GGHCDC 25th St Project.pdf20110510 - GGHCDC MAD Farmer's Market.pdf20110517 - SD Developemnet services.pdf20110600 - FY11 SD budget 10_37.pdf20110600 - SD Planning Groups contactlist.pdf20110604 - Fed Report CDC990-ending Aug 2010.pdf20110604 - Fed Report CDC990.pdf

20110711 - GGHCDC MAD Audit.pdf20110726 - San Diego Reader - GGHCDC MAD.pdf20110900 - GHHCDC Boardmembers.pdf20110922 - COURT Appellate-Final Ruling-D057004.pdf20110922 - D057004.PDF20110922 - San Diego Reader - GGHCDC MAD.pdf20111003 - Todd Gloria & David Alvarez GGH MAD D3_D8 Memo.pdf20111004 - San Diego Reader - GGHCDC MAD.pdf20111006 - GGHCDC MAD BMurry email.pdf

20111014 - California Taxpayers Association - GGHCDC MAD.pdf20111014 - San Diego Uptown News - GGHCDC MAD.pdf20111020 - NP NEWS - GGHCDC MAD.pdf20111021 - San Diego Reader - GGHCDC MAD.pdf20111031 - GGHCDC MAD HISTORY.pdf20111031 - GGHCDC MAD HISTORY.ppt20120000 - MAD 25th Street v3schedule1.pdf20120215 - UTSanDiego.pdf20120219 - SD Planning Groups contactlist.pdf20120312 - GGHCDC MAD City Dissolution.pdf

20120329 - Property Tax Letter 2011-12.pdf20120412 - Greater Golden Hill Planning Committee.pdf20120412 - UpTown News Artical.pdf20120419 - GGHCDC Meeting Agenda.pdf20120419 - GGHCDC WebPage.pdf20120422 - Marco LiMandri - New City America.pdf20120423 - GGHCDC MAD Trash Cans.pdf
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