SNOHOMISH — A local flood-control district broke state law by awarding construction and insurance contracts to companies partly owned by two of its three commissioners, a recent state audit found.

The state Auditor’s Office faulted French Slough Flood Control District for failing to follow state bid laws and for allowing an ethics violation. The business in question totaled more than $140,000 in 2008 and 2009.

The two commissioners involved said they were unaware of the problems until recent interviews with state auditors. They said their companies won’t be doing business with the district again.

“I didn’t know that we couldn’t,” said Commissioner Dave Remlinger, who owns 50 percent of Wetlands Creation Inc., which did the bulk of the levee repair work mentioned in the audit. “It was the least expensive way to accomplish those tasks by a considerable amount.”

The report released Feb. 7 by State Auditor Brian Sonntag’s office examines the district’s activities from 2007 through 2009. The state auditor has no legal authority to impose penalties, only to make recommendations about good governance.

The French Slough Flood Control District maintains a pump station and nearly 4 miles of levees between Monroe and Snohomish. Three elected commissioners govern the district; they are unpaid, but receive a $65 stipend for monthly meetings. They appoint a general manager to run day-to-day operations.

The district’s budget has been about a half-million dollars in each of several recent years.

The district’s job is to keep 5,500 acres, most of it farmland, along the Snohomish and Pilchuck rivers from flooding. About 200 or fewer people own that land, Remlinger estimated.

State law requires the district to put out competitive bids for all contracts. The law also bars public officials from having financial interests in contracts. There’s an exception allowing district employees to be reimbursed for construction work up to $5,000 without going through the bidding process.

The commissioners, the report says, “did not familiarize themselves with state law on beneficial interest in contracts. District commissioners stated they used common sense and awarded contracts to the only interested, qualified contractors.”

In 2009, Wetlands Creation did four projects for $110,893. For all of those projects, which mostly involved repairing levees, the district lacked evidence of formal, signed contracts and other necessary documentation, the report says.

The district did solicit bids for one of the four projects, which cost $48,064. Wetlands Creation was the lowest bidder. In that case, however, the district failed to open the bid in a public meeting and did not allow 13 days for bid responses, as state law requires.

Three other projects were not put out to bid, the report says. Wetlands Creation also received $10,616 for work in 2008.

“The district isn’t some big municipality — it’s basically a bunch of farm guys trying to keep their costs low,” said Remlinger, who has been serving the district since the 1990s. “We did it because we thought we were being helpful.”

Remlinger is widely recognized for his business savvy among Snohomish County’s farming community. He’s also a member of the county’s Agricultural Advisory Board.

On occasion, his business ventures have attracted notice of county code enforcement officials. About 10 years ago, code officers said he lacked necessary permits to host weddings at Lord Hill Farms. A few years later, the county shut down a motorcycle track that operated on some of Remlinger’s land.

Remlinger said saving time and money were his only considerations when his company did work for the flood district. Now that the audit is over, he said, he could understand the concerns.

In addition to Remlinger’s company, the state audit also noted that commissioner Scott Gunning owns a 20 percent stake in a Seattle insurance company that provided the district with liability insurance. Gunning & Associates received $9,770 in 2008 and $10,256 in 2009.

Gunning told The Herald his company acts as a broker and does not write the actual insurance policy. It’s something his company has done since the 1990s, years before Gunning was elected to the district.

“I know what the concern might be from an auditor’s point of view,” Gunning said. “Clearly, there’s never been any intent by anybody on the commission to benefit from the service. It’s basically a volunteer type of thing.”

In most areas, the district complied with state laws and its own policies and procedures, the audit notes. The state audits the district every three years. The district’s previous three audits have been clear.

Noah Haglund: 425-339-3465; nhaglund@heraldnet.com.