Tuesday, April 26, 2011

Was $15,000 Review of Performance Audit Beneficial to North Canton?

Prepared Comments Made to
April 25, 2011

It is no secret that the City of North Canton is struggling financially. Not only is that fact front and center in weekly discussions at city council meetings, it is apparent in the condition of the City’s infrastructure in this community we call home. Are City dollars being spent wisely?

Three years ago on February 11, 2008, North Canton City Council passed legislation to authorize the Auditor of State to undertake a Performance Audit to identify cost savings for City operations. On January 6, 2009, after nearly a one-year audit of city operations at a cost of approximately $62,000, the Auditor of State made 40 recommendations to the City in a 123 page report.

Not long after the release of the Performance Audit by the Auditor of State, City e-mails, dated May 14, 2009, indicate that then City Administrator Earl Wise was advised by Bruner-Cox that Mayor Held had asked their CPA firm “to assist The City of North Canton in regards to the January 6, 2009, Performance Audit….”

On July 13, 2009, Mayor Held signed a Letter of Agreement (LOA) with Bruner-Cox, LLP.

On October 14, 2009, former City Administrator Earle Wise signed a purchase order authorizing the expenditure of $15,000 for the review of the Performance Audit by Bruner-Cox. Three months later on January 9, 2010, a 32-page draft report labeled “Review of the North Canton City Performance Audit Project” was released.

Why has North Canton not received the final report that is contractually promised in the LOA? The last two bullet points in Attachment A of the LOA state that “[Bruner-Cox] will meet with North Canton City Council to review the draft of the report….[and] issue a final report to mayor and council.” This has never happened!

I spoke on this issue before City Council on July 12, 2010, in a presentation titled “$15,000 Audit of State Auditor’s Performance Audit Was an Utter Waste of Public Funds” (found in the minutes of the meeting
and online at http://opengovernment4nc.blogspot.com).

The Bruner-Cox review consisted of a replication of the recommendations made in the Auditor of State’s Performance Audit with the addition of very brief information from city department heads that was already generally known or could be found out in a brief telephone call.

Mayor Held, you stated last year that “[you] did support and authorize Bruner Cox to come in and provide oversight to the City… and that [you were] very confident, very comfortable with the work that Bruner-Cox did.”

I do not believe that North Canton City Council shares that position given that there was discussion under the Finance and Property Committee on July 6, 2010, to limit spending by your administration without an appropriation from council. Unfortunately, Council never moved forward with action on this.

Given that taxpayers have paid out $15,000 for this review, I ask that the Bruner-Cox Draft report be posted on the City’s Web site along with the State’s Performance Audit to allow residents to judge whether the City really benefited from a review of the Performance Audit for an added expense of $15,000 to the City.

Thank you,
Chuck Osborne,
Resident, City of North Canton

Monday, April 11, 2011

North Canton Finance Chairman Acts to Quash Illegal City Contract

Prepared Comments Made to
April 11, 2011

The City of North Canton is currently at odds with the Ohio Department of Development (Ohio DOD) as to whether North Canton did or did not follow proper bidding procedures as required by the terms of a JRS grant awarding $5.0 million of State funds to the City for the Hoover Campus Redevelopment project.

Although North Canton explained to DOD in a letter dated September 7, 2010, that the City did follow proper procedures, DOD concluded in a January 7, 2011, letter to the City that North Canton did not follow proper competitive bidding procedures in the procurement of goods and services in the expenditure of $3.0 million.

The stakes are high for North Canton at the present time. Development officials have stated that if the City is unable to demonstrate that proper bid procedures were followed, they will demand repayment of the $3.0 million already paid to the City and terminate the Grant Agreement without disbursement of the remaining $2.0 million of grant funds.

One would think that the Held Administration would be mindful of the laws regarding the expenditure of public funds and of competitive bidding procedures, especially in light of the fact that the City is playing a high-stakes game with the Ohio Department of Development that could cost North Canton millions of dollars, but apparently that is not the case.

Finance Chairman Jon Snyder has revealed to me that he is holding his ground regarding the recent purchase of new cell phones for City employees and is telling the Held Administration to return the recently purchased cell phones as their purchase has not followed proper bidding procedures and been approved by the Board of Control.

Chairman Snyder became aware of the purchase when the Finance Department was billed by Verizon for the initial purchase of the phones and for service but had no funds with which to pay the bill. Chairman Snyder has told me that he has told Interim Finance Director Loretto to return the Verizon bill to the Administration and to tell City Administrator Grimes to return the phones to Verizon.

Chairman Snyder also advised me that when he asked for a copy of the cell phone contract, the Administration was unable to provide him a copy. After my written records request, a copy of the cell phone contract was provided to me and Chairman Snyder.

The one-year Verizon contract was estimated to cost $37,165.08. This is well above the current statutory limit of $25,000 set by ORC 735.05 requiring competitive bidding.

The previous contract with Sprint cost the City $31,386.20 in 2010. An e-mail from North Canton Finance department (March 17, 2011, from Chris Leamon) indicates that the City had 44 separate lines under the Sprint contract. The Verizon contract is for 66 separate lines.

Does the City really need a 50 percent increase in the number of cell phones in use throughout the City? I thought North Canton was in financial distress?

Section 4.05 of the City’s Charter controls the procurement of goods and services for North Canton. One provision states, “No contract involving expenditures [in excess of the statutory limit set by ORC 735.05] shall be entered into without prior approval of the Board of Control.” There was no such approval.

Section 4.05 also states, “No purchase or contract involving expenditure in excess of … [the statutory limit set by ORC 735.05] shall be made except with a qualified, responsible bidder submitting the lowest and best bid as determined by the Board of Control….” There was no competitive bidding for the contract.

ORC 735.05 is intertwined into the City’s Charter and it states that “When an expenditure…exceeds twenty-five thousand dollars, the expenditure shall first be authorized and directed by ordinance of the city legislative authority….” The Held Administration had not been authorized or directed by legislative ordinance to proceed with the purchase of new cell phones.

Mayor Held, the City is currently at odds with the Ohio DOD over the issue of failing to follow proper competitive bidding requirements. How can you make the same mistake again and not competitively bid the cell phone contract?

On May 24, 2010, Mayor Held signed into law Ordinance No. 45-10 requiring the Director of Law to provide written approval of all contracts as to form and content.

Mayor, did your administration comply with Ordinance 45-10 before the City entered into the cell phone contract with Verizon, an ordinance you yourself signed less than one year ago? City Administrator Grimes has provided no written record to me that shows North Canton’s Law Director approved the Verizon contract.

I might add that state statute, ORC 705.11 states that, “No contract with the municipal corporation shall take effect until the approval of the... city director of law is indorsed thereon….”

North Canton’s Charter, Section 3.01, states, “The Mayor shall sign, on behalf of the municipality, all contracts…”

Not until the City complied with my records request did Chairman Snyder and I learn that Interim City Administrator/City Engineer Jim Benekos signed the Verizon cell phone contract.

Mayor Held, why did you not sign the contract as is spelled out as a duty of the Mayor under the City’s Charter?

The lapses of leadership and the bold non-compliance with state and local laws by your administration are becoming quite worrisome. The financial costs to the citizens of North Canton for the failed leadership of your Administration continue to take a toll.

I ask this city council to hold Mayor Held accountable for these lapses. Please do not just talk amongst yourselves privately about these lapses of leadership. The repeated violations of the City’s Charter and state law are taking a financial toll on the City with each revelation of failure.

North Canton citizens need to be informed of the actions of government if democracy is to work. I ask that this council do its part and investigate the lapses that have occurred with the Verizon cell phone contract and report the findings to the public.

Thank you,
Chuck Osborne,
Resident, City of North Canton