Monday, October 25, 2010

North Canton Increases Debt While City Leaders Stockpile Cash

Prepared Comments Made to
October 25, 2010

On tonight’s agenda are five pieces of legislation dealing with the issuance and sale of bonds on behalf of the City of North Canton. Three of the five proposed bond issues will increase North Canton indebtedness by $2.4 million. The remaining two proposed bond issues seek to convert existing debt, totaling $1.6 million, from short-term notes to long-term bonds.

The proposal to convert the $700,000 short-term note of indebtedness on the former Arrowhead Golf Course property to a long-term bond is the purpose of my remarks tonight. It is titled on tonight’s agenda as Ordinance No. 78-10.

The City of North Canton paid a total of $4.2 million for the Arrowhead property in 2003. Two million dollars was taken from the city’s reserves and $2.2 million was rolled into a short-term note. North Canton made annual payments of $300,000 on this note but found itself unable to make those payments without subsidies from the City’s General Fund. This practice forced the city to divert funds that could have been used for city services to make the annual note payments.

Per recommendations of the 2008 Performance Audit by the State (R2.11), the City reduced its annual payments on the Arrowhead note to $100,000 per year. The present balance on the note is $700,000 which is the amount of the proposed bond on the agenda tonight.

If passed tonight, the annual bond payments will further reduce the annual payments on the Arrowhead indebtedness. Recommendation 2.11of the Performance Audit cautions that, “by prolonging the debt, the City will incur additional interest and issuance cost, and the note will not be paid off until 2015 or 2016.” In discussions, some council members have also made this point regarding the increased interest expense if the debt is extended further into the future.

Doesn’t this sound like someone who is overextended on his credit cards and can’t make his credit card payment so he only makes the minimum payment each month?

Paralleling, what I believe to be, the ill-fated decision to purchase the Arrowhead Golf course property was a decision in 2005 to remove $1.5 million from the City’s General Fund and begin making $100,000 per year payments to the North Canton Community Improvement Corporation (CIC).

Of the original $1.5 million removed from the General Fund, $757,000 remains in an escrow account controlled by the City.

To date, $743,000, or about one half of the original $1.5 million has been given to two businesses with no requirement to repay those funds back to the North Canton CIC. City leaders promised in 2005 when the $1.5 million was removed from the City’s General Fund that the CIC would operate as a revolving loan fund.

Sadly, that has not been the case.

The North Canton CIC currently has a balance of approximately $190,000 and can ask for the balance of the $1.5 million at any time. As I noted earlier, $757,000, currently sits in an escrow account controlled by the City.
City leaders are waiting for the next opportunity to hand out the remaining nearly one million dollars with no obligations for repayment while the city struggles to pay its expenses.

Should North Canton pay its bills with money it has on hand or should the city borrow and increase its indebtedness?

At this time, North Canton has cash funds available to wipe out, entirely, the $700,000 note owed on the Arrowhead property. There is no need to issue and sell long-term bonds.

If this council and the Held Administration are truly serious about the fiscal plight of the City of North Canton, it would use those escrow funds and extinguish that indebtedness.

North Canton’s fiscal future continues to hang by a thread and North Canton increases debt while city leaders stockpile cash.

There is no logic in continuing to hand $100,000 per year to the CIC through the year 2017 while the city faces fiscal crisis. As it is, this council is borrowing $1.3 million to replace the very roof over our heads here at City Hall and at the Civic Center along with another $1.1 million for other infrastructure improvements in the city.

This $2.4 million in new debt is in addition to the more than $16.0 million of debt the city already has on its books. Whether the debt is enterprise debt or general obligation debt makes no difference.

Debt is debt and it all must be paid back.

The purchase of Arrowhead Golf Course property for $4.2 million in 2003 along with the removal of $1.5 million dollars from the City General Fund in 2005 constituted nearly one third of the $18.0 million dollars the city had in reserves in 2003. With spending decisions such as these, it does not take long to blow through $18.0 million. And that is what has happened before our very eyes.

Economic conditions are not good and economic prospects are not bright, locally or nationally. If this council and the administration are remotely interested in fiscal stewardship for the City of North Canton, it is time
it demonstrated its beliefs in actions instead of letting business and politics continue as usual.

Thank you,
Chuck Osborne
Resident, City of North Canton

Monday, October 11, 2010

New Position of Assistant Law Director for Mayor’s Court Has No Functional Role Whatsoever

Prepared Comments Made to
October 11, 2010

Two weeks ago this council passed Ordinance 73-10 establishing the position of Assistant Director of Law/Mayor’s Court Prosecutor. The legislation was passed on its second reading on an emergency.

I appealed to this council in remarks prior to each of the two readings to reconsider this course of action and urged this council to restructure the position of Law Director to a full-time position and get control of legal fees and services for the City which presently come at a very high cost. A sixteen-hour work week for the City Law Director in this day and age is inadequate.

Two weeks ago I noted that North Canton has expended $414,870.41 for outside legal services over the last five years. Adding in the $245,000 paid to the City’s law director for each of the last five years at $49,000 per year for a sixteen-hour work week results in the expenditure of nearly $660,000 ($659,870.41) for legal services in the last five years. This is an average of $132,000 per year.

North Canton is paying $62.50 per hour for the services of an attorney to fill the role of Law Director while the Stark County Prosecutor’s office pays $39.14 per hour to its most senior attorney. Nearly two dozen other attorneys at the prosecutor’s office earn less than $30.00 per hour.

My point tonight after further research on this issue is the fact that the newly passed legislation creates a position of Assistant Law Director to serve specifically as a prosecutor in mayor’s court when in fact there is no role for a prosecutor in mayor’s court.

Councilmembers should avail themselves of the time to sit in on a North Canton Mayor’s Court and see how the process works.

Mayor’s Court is an administrative action. People are cited to appear for violation of local ordinances and traffic laws. The city official charged with enforcement of local ordinances issues the citation. In the case of traffic offenses, it is the local police. In the case of zoning violations it is whoever is responsible for enforcement of local zoning laws, which in North Canton is the Superintendent of Permits.

Mayor’s Court does not unfold as a capital case as seen on TV. There are no prosecuting attorneys. There are no defense attorneys.

The individual simply appears before a magistrate and pleads guilty, no contest, or not guilty. If the individual pleads either guilty or no contest, the magistrate levies a fine and the individual pays the fine and court costs. If the individual is found guilty after pleading not guilty, the ruling can be appealed and heard in Canton Municipal court and proceeds as a trial de novo per ORC 1905.25, meaning a new trial in a new tribunal.

Further research has uncovered a contract between the City of Canton Law Department and the City of North Canton for the purpose of providing legal representation in Canton Municipal Court for $17,000 per year.
This annual contract expense with the Canton Prosecutor’s office raises North Canton’s legal costs per year to $149,000 per year.

The latest contract covers 2010 and 2011 and was approved by council in Ordinance No. 99-09 on November 23, 2009.

Among the list of services itemized in the contract with the Canton Law Department is Item a. – Acceptance for prosecution of transfers from Mayor’s Court.

Thus there is no role for a prosecutor in North Canton Mayor’s Court nor is there a role in Canton Municipal Court. What exactly is North Canton’s new Assistant Director of Law going to do?

Ordinance 73-10 narrowly defines the duties and compensation of the Assistant Director of Law as pertaining to Out of Court and In Court Work as a prosecutor in Mayor’s Court.

What work is there to do? Can this legislative act of North Canton City Council serve any purpose?

I would say nothing has been accomplished with the passage of Ordinance No. 73-10.

I also would say that North Canton should have been working harder long ago to maintain neighborhoods in the City and citing violations of its zoning laws.

You do not need a prosecutor in North Canton Mayor’s Court. Furthermore, the services of the City of Canton Prosecutor’s Office also preclude the need for a prosecutor for enforcement of local ordinances.

Lastly, I am compelled to ask why the City has been billed $1,548.90 by the law firm of Morrow & Meyer, LLC for prosecution of the Prater zoning violation when there are provisions in place to deal with enforcement of the zoning violation in both Mayor’s Court and then in the Canton Municipal Court.

The zoning violation could very easily have been handled administratively in North Canton Mayor’s Court and if forced in to Canton Municipal Court, handled per the contract in place with the City of Canton Prosecutor’s office.

As events have unfolded, the City of North Canton chose not to utilize the services of the Canton Prosecutor’s Office and paid a second time for legal services of a private law firm for which it need not have paid.

I believe this is a violation of public trust and is most certainly fiscally irresponsible.

I ask at this time that the law firm of Morrow & Meyer, LLC refund back to the taxpayers of North Canton the $1,548.90 it has received regarding the prosecution of the Prater zoning violation case as the Canton City Prosecutor’s Office was under contract to provide such legal services in Canton Municipal Court and would have done so without added cost to the taxpayers of North Canton.

I urge this council to also ask that those funds be returned. The city has been double-billed for legal services and taxpayers are due a refund.

Thank you,
Chuck Osborne
Resident, City of North Canton