Central Basin Doubled Consultant Contract to $500K While Skirting Bid Process

The contract started at under $25K, approved by the GM without board oversight. Its quiet expansion to over $500K hearkens back to the no-bid consultant deals of the Tom Calderon and  Central Basin GM Art Aguilar era.

July 11, 2025

By Brian Hews • [email protected]

In 2015, after three years of investigations by Los Cerritos Community News triggered a state audit, the California State Auditor confirmed, among other things, that Central Basin “repeatedly and inappropriately circumvented its competitive bidding process,” awarding contracts to favored vendors without legal justification. 

These lucrative no-bid deals, which LCCN traced to companies like Pasadena-based Pacifica Services and Tom Calderon, the former member of the California State Assembly who became a political consultant who pleaded guilty to money laundering taking bribes, often ballooned in value through multiple no-bid amendments.

The state audit mandated that Central Basin implement safeguards to prevent the abuses which had been working well, that is, until November 2024, when current Board President Nem Ochoa and Directors Joanna Moreno and Juan Garza called an illegal special meeting and removed President Art Chacon.

Central Basin Board Fires GM Rojas, Removes Art Chacon as President

Within days, the new majority violated the competitive bidding mandates set out in the 2015 state audit and it involved a company called MV Cheng and Associates.

MV Cheng and Associates (Cheng), according to its website, “services cities and special districts by providing consultants at any level in the areas of Finance, Purchasing, Human Resources/Risk Management, and Information Technology.” MV Cheng is owned by Misty Cheng.

A visit to Cheng’s corporate website, in direct contrast to the IT Consultant claim, shows a very amateur presence, with blurry canned stock photos, no testimonials, no client list, and an outdated “News” page where the latest post takes the visitor – via a cache link – to a seven-year-old news story. 

Cheng “Headquarters” are Homes, One in Texas

On her website, Cheng indicated she has two corporate “headquarters,” both in Southern California, one in Upland and one in Pasadena. Property title records show that the “headquarters” are actually single-family dwellings; Ms. Cheng is the primary owner of the Pasadena home.

The same title records revealed that the Upland home’s primary owner is MV Cheng Properties LLC, a company unknown to anyone at Central Basin. LCCN research found a Facebook page claiming” MV Cheng Properties LLC is owned and managed by Misty Cheng for properties in California and Texas.” Searching the Texas Secretary of State’s site found that that MV Cheng Properties LLC is a Texas-registered company owned by Ms. Cheng.

Registration from the Texas Secretary of State’s website showing MV Cheng Properties LLC.

This indicated that Cheng was operating a Texas company from her Upland home, what is called a “Foreign LLC” by the California Secretary of State.

Under California law, any out-of-state LLC conducting business in the state—such as operating a headquarters or managing contracts—must comply with several requirements. This includes filing a Statement and Designation by Foreign LLC (Form LLC-5) with the Secretary of State and paying taxes.

A search of thee SOS’s website found that MV Cheng Properties LLC and Ms. Cheng have not filed a Statement and Designation by Foreign LLC. Without this registration, the company is operating illegally in the state and risks penalties and legal limitations—such as being unable to enforce contracts or qualify for public agency contracts, like the current one with Central Basin.

How Did the Central Basin GM Find Cheng?

In June of 2024, just one month after current Central Basin GM Elaine Jeng took over, Cheng secured a consulting agreement with Central Basin. Cheng and Jeng have not answered questions asking if they had worked together before Central Basin.

The contract was just under $25,000, which is not indicative of an upcoming long-term, lucrative contract. The agreement was executed under GM Jeng’s authority, which allows contracts of up to $25,000 to be executed without board approval. No background check was done on Cheng.

$250,000 No-Bid Amendment in Five Months

In just a few months, without going out to bid, the Board of Directors approved Amendment No. 1, which expanded the scope and increased Cheng’s contract amount to just over $250,000.

They awarded the no-bid contract after Nem Ochoa, Joanna Moreno, and Juan Garza illegally removed President Art Chacon; newly elected Director Gary Mendez, who knew nothing about the Cheng contract and has no accounting experience, voted with Ochoa, Moreno and Garza to complete the majority.

A couple weeks later, after only four weeks on the board and with no water experience, Mendez was appointed as Board Vice President.

The amendment to Cheng’s contract represented a significant shift from a limited engagement, authorized by the General Manager, worth $25,000, to a comprehensive operational outsourcing agreement. This amendment expanded Cheng’s authority, enabling her to assign personnel across the Finance Department as needed, effectively allowing for the filling of multiple internal roles. 

Notably, the amendment lacked a sunset clause, which means there were no specified timelines or deliverable-based limits for scaling back services. Instead, the language used—particularly the vague phrase “where necessary”—left the option open for extended, undefined assignments with minimal oversight or accountability.

Six Months Later, Another $250,000 No-Bid Amendment

Then, on June 12, 2025, the Central Basin Board executed Amendment No. 2, which added another $250,000 and increased the total contract value to $501,125. 

The second amendment moved Cheng’s previously temporary support contract into a long-term outsourced staffing arrangement and raises several concerns: the amendment increased the contract amount without specifying any new tasks or deliverables, and it lacked a defined project completion date, suggesting that Cheng’s presence within the district may continue indefinitely. 

The June 2025 amendment notably left the agenda item number and board approval date blank, suggesting it was signed before formal board action violating the Ralph M. Brown Act regarding open meeting laws.

Additionally, the cost structure presents a financial issue for ratepayers; high hourly rates are applied across multiple roles for extended periods, potentially making this arrangement significantly more expensive than hiring qualified in-house staff, all without any public performance benchmarks or accountability.

The scale and duration of the engagement, combined with the absence of a competitive bidding process or a clearly defined transition plan, has raised concerns about transparency and accountability among Board Members Leticia Vasquez, Jim Crawford, and Art Chacon. “We don’t know what they are doing,” Director Art Chacon told LCCN, “I only see one person working for Cheng.”

Even more troubling, Central Basin’s decision to award and repeatedly extend the contract to Cheng without soliciting competitive bids is in violation of California’s Public Contract Code. Specifically, Public Contract Code section 20101 requires public agencies to competitively bid contracts for services exceeding $50,000 unless exempted by law. Central Basin’s piecemeal amendment strategy appears to have sidestepped these requirements.

“This is a textbook example of contract splitting to avoid competitive bidding,” said a municipal law expert familiar with California procurement law. “Once you amend a professional services agreement multiple times, well past the threshold, you are in dangerous legal territory unless you can prove it was an emergency or you’ve issued a proper exemption. The Public Contract Code exists to protect public funds from cronyism, and this contract raises major red flags.”

LCCN has confirmed that, under previous general managers, including Alex Rojas, Central Basin’s finance department never exceeded $250,000 in annual expenses. The current board majority—Nem Ochoa, Gary Mendez, Joanna Moreno, and Juan Garza—has now doubled that amount without offering a public explanation.

When asked about her firm’s incomplete and outdated website, Misty Cheng acknowledged the issues, telling Los Cerritos Community News, “Thank you for checking out my website and pointing out needed improvements. We are currently having the web designer fix everything.” 

LCCN noted that the website has remained essentially unchanged and dysfunctional for over five years.

Regarding the question of whether her Texas-registered company, MV Cheng Properties LLC, is conducting unregistered business in California in her Upland home, Cheng responded, “Correct,” confirming that MV Cheng Properties LLC indeed owns the residence.” 

Cheng further asserted that “What entity or who owns the office location is irrelevant. What is relevant is that my company, MV Cheng & Associates, is a CA S corporation and is in good standing per the State of CA website.”

She also confirmed that she manages rental properties in both California and Texas through MV Cheng Properties LLC, consistent with the language on her public Facebook page. When asked whether this activity constitutes doing business in California without foreign registration, she simply responded, “No violation.”

According to a municipal governance attorney consulted by LCCN, Cheng’s position will not hold up under California law. “It’s not about what you call a location—it’s about what you’re doing there,” the attorney explained. “If a Texas LLC owns property in California, and that property is used as the functional office of a related business—even just as a base of operations—that LLC is engaging in business in the state. Under California Corporations Code section 2105, any foreign LLC that holds real estate manages rental property or supports affiliated business activity in California must register with the Secretary of State and comply with tax and disclosure laws. Simply stating ‘there’s no violation’ doesn’t negate the legal obligation. If MV Cheng Properties LLC is managing rentals or housing another business, it’s doing business in California—period.”

Questions about Cheng’s Texas business and contract amendments into Central Basin GM Jeng, President Ochoa, VP Gary Mendez, and Directors Moreno and Garza went unanswered. Central Basin General Counsel Victor Ponto also did not respond.