Monday, September 24, 2012

North Canton’s Search for a Full-time Law Director Was a Charade That Calls for Close Examination!

Prepared Comments Made to
September 24, 2012 

       The public announcement at the July 2, 2012, Committee of the Whole meeting of City Council that North Canton Law Director Hans Nilges had submitted his resignation came as a shock to me and I am sure many other city residents. 
       A July 3, 2012, Repository story titled, “North Canton law director resigns,” reports that Mr. Nilges had submitted a resignation letter, dated June 29, 2012. In the story Mr. Nilges states, “…his move was sparked by council’s ‘desire to transition from a part-time director of law to a full-time director of law [and] it is the council’s belief that such a move will result in a savings to the city’….” 
       The resignation of Mr. Nilges came little more than five-months into a one-year professional services agreement that this council approved with the firm of Morrow and Meyer, Ltd., on January 30, 2012, where then Law Director Nilges was a law partner.
       The legislation, Ordinance No. 12-12, authorizing the agreement passed unanimously as “emergency legislation” and was touted as a way to help cut legal costs.
       A January 30, 2012, Repository story titled, “North Canton hires law firm to handle legal matters,” reports, “Councilman Timothy Fox, Ward 3, noted the city is getting good legal service at a rate of $52 per hour. Fox and Councilman Dan Griffith, at-large, both are lawyers and sided with fellow council members to unanimously approve the contract.” 
       In a July 10, 2012, online news report titled, “City Law Director Says Goodbye at Final Council Meeting,” North Canton Patch Editor Morgan Day writes, “Talks of what to do with the city law director position started at council’s Jan. 23 meeting, when members brought up the possibility of a legal firm assuming the duties of the city law director.”  
       How long and in what manner those talks progressed over time to arrive at a decision by City Council to announce the creation of a full-time law director position is a question that requires close examination by individuals with the proper authority.
       The point of my remarks tonight is two-fold.  
       First, I do not believe that the decision to create, for the very first time in the City’s history, a full-time Law Director position for the City of North Canton, appeared spontaneously. I believe, as stated in the North Canton Patch, what to do with the Law Director position was discussed by all members of city council for months. That is my opinion. 
       I also question what remaining council members were thinking or discussing when time after time, the former Ward 3 Council member excused himself from executive sessions in which the announced topic of discussion was either the creation of the full-time Law Director position or the subsequent interview of applicants.
       Didn’t the repeated absence of one of your own Council members at these executive sessions generate concern or raise questions amongst anyone of you in attendance at these meetings held behind closed doors?
       Second, I am stunned by the manner in which the City of North Canton filled the position of full-time Law Director. I am talking about “due process” or should I say the lack thereof. 
       On Sunday, July 8, 2012, the City of North Canton ran a classified employment ad in the Repository, titled Director of Law. The deadline to apply, clearly stated in the ad, was July 16, 2012. The ad cost the City $348.00. 
       The Repository reported sixteen attorneys had applied for the Law Director position in a July 21, 2012, news story and followed with another report on August 30, that five of the sixteen applicants were to be interviewed. 
       A September 4, 2012, North Canton Patch online post titled, “Appointment of City Law Director Still up in the Air” reported the following: “After a round of interviews last Wednesday and Thursday, members of the city’s Personnel and Safety Committee are now ready to present their thoughts about who should be the next North Canton Law Director…. ’It could go pretty quick. We may ask for another round of interviews. We may make an appointment….’ Peters said.” 
       The Patch report gave the names of the five individuals in the running: Stephan Babick of Cleveland, Rodney Baca of North Canton, Julie Bickis of North Canton, Judith Carlin of Hudson, and Donald Wylie of North Canton. 
       After listing the attorneys, the Patch quotes Mr. Peters as saying, “…The interviews went well and all five are clearly qualified for the position – there was no question about that….And in our minds we had a couple that stood out….” 
       Two days later, on September 6, 2012, both the Repository (story titled, “North Canton councilman resigns”) and the North Canton Patch (story titled, “Tim Fox Resigns From Council Seat [to] Pursue Law Director Position”) report that Tim Fox had resigned from Council to pursue the Law Director position. Patch reported that the resignation was effective immediately. 
       Wasn’t the application deadline for the advertised position clearly stated as July 16, 2012?  
       The September 6, Repository story, states, “…Council President Jon Snyder, Ward 4, said council members will interview Fox on Monday evening and council will likely decide then whether to appoint as law director Fox or one of the five candidates interviewed last week….Fox said he decided to apply for the full-time law director position after Councilman Jeff Peters, Ward 2, the chairman of council’s personnel committee, asked him this week if he would be interested in the job.” 
       The Repository continues its report on the resignation of Fox stating, “Peter’s inquiry on Fox’s interest in the job indicates that Fox is the favorite for the position.” 
       There is no arguing with that statement. People do not leave a position voluntarily unless they have a position ready and waiting for them. 
       One would think that attorneys are quite attentive to deadlines and that they understand “due process.” After all, it is safe to say that most attorneys earn their bread and butter insuring that “due process” is followed. “Due process,” is what we all depend on to insure fairness and transparency.
       There was no “due process” for the applicants who responded to the classified employment add for Law Director.
       There was no fairness or transparency for the applicants or for the citizens of North Canton. 
       We have all seen Mayor Held ignore “due process” in his hiring practices as he appoints neighbors and friends to fill high-level positions in the city. That is what we can expect from North Canton’s highest elected official. 
       For city council to totally abandon “due process” and fill the position of Law Director as it has done with the appointment of the former Ward 3 council member is indefensible. 
       The City Law Director is the highest law enforcement officer in the city. How can we expect the City’s Law Director to insure “due process” is followed when there was no “due process” followed when filling that very position?  
       All attorneys have ethical standards and canons they must comply with as officers of the court. That is what makes this situation that much more egregious.
       At the very least, North Canton has a major PR problem as a result of the way it has conducted itself in the search for and appointment to, the full-time position of Law Director.
       At most, North Canton may very well have invited calls for outside review and examination as a result of the apparent “charade” it conducted in the search for its first full-time law director. 
       North Canton can do better than this! 

Thank you,
Chuck Osborne
City of North Canton

Monday, August 27, 2012

North Canton Tax Abatements Fund European Vacations?

Prepared Comments Made to
August 27, 2012

     We have all heard the amusing elementary school kid’s explanation that “My dog ate it” when asked why he does not have his homework.
     A variation of that explanation was given to Council President Jon Snyder last week when Mr. Snyder queried Mr. Patrick J. Palonder as to why he failed to appear at an annual meeting in March of the Tax Incentive Review Council to explain his failure to comply with the terms of a tax abatement agreement.
     Mr. Palonder replied that he and his wife were out of the country vacationing in Europe. Mr. Palonder’s candid response prompts me to ask this question: Are North Canton tax abatements given to businesses being used instead to help fund European vacations?
     Mr. Snyder, as President of City Council, Chairman of the Finance Committee, and a member of the Tax Incentive Review Council (TIRC) who recommended the termination of the agreement, I heartily concur with the recommendation of the TIRC committee. Furthermore, I concur with your admonishment of Mr. Palonder when you suggested that Mr. Palonder should have notified the TIRC committee of his inability to appear at the annual meeting to review compliance of tax abatement agreements.
Mr. Cerreta, I must say I was dumbfounded with your suggestion that a modification of the tax abatement agreement for Mr. Palonder might be in order. As was explained by TIRC member Snyder, the TIRC exhaustively discussed the issue at their March meeting. The decision by the TIRC to terminate the agreement did not come without care and due diligence.
     Mr. Palonder further explained last Monday that there had been a parting of the ways with his business partner and that his former partner had taken away the very jobs that led to the creation of the tax abatement.
     Paragraph 2 of the agreement requires the hiring of 2 full-time positions and an increase in payroll of $50,000 per year. That is gone with the departure of the business partner. The Repository states that these requirements were not met for a portion of 2010 and all of 2011. On an annual basis, Mr. Palonder has failed to meet these requirements for the last two years.
     Why is it only now that this agreement is being scrutinized?
     Paragraph 3 of the agreement requires Mr. Palonder to alert the Community Reinvestment Area Housing Officer of any new tenant during the abatement period. Doesn’t it stand to reason that the Housing Officer would naturally be notified when a new tenant leaves the property as well?
     Mr. Snyder’s remarks last week detailing that one of Mr. Palonder’s employees was a 1099 contractor who had not paid all of the income taxes owed to the city also does not bode well as it undermines the sole purpose of the tax agreement, to increase tax revenue through increased payroll taxes.
     Mr. Palonder’s business partner was the key component of the job creation requirement for the tax abatement agreement and this individual left North Canton along with the jobs needed to qualify. Clearly, one cannot buy loyalty to the community with tax incentives.
     The tax incentives that this city has given out over the last ten years do not seriously factor into the decision of businesses to locate or stay in North Canton and yet they continue to be handed out. This flies in the face of the hundreds of other businesses who support the city and the school system by paying their fair share.
     Mr. Fox and Mrs. Kiesling, I also noticed that each of you were sympathetic to Mr. Cerreta’s suggestion of modifying the tax abatement agreement. I can only surmise that you want to make sure that Mr. Palonder is able to continue to take vacations in Europe at the expense of the North Canton City Schools. For it is their revenue you are giving away willy-nilly to individuals who appear not to need the money.
     On tonight’s agenda is Ordinance No. 68-12 authorizing the Mayor to enter into an Industrial and Commercial Retention Grant for Crowl, Montgomery &, Clark, Inc.
     An Industrial and Commercial Retention Grant is just another fancy name for corporate charity.
     The Community & Economic Development Committee, on June 4, 2012, tabled discussion of a Retention Grant for Crowl, Montgomery & Clark for the purchase of new furniture for their existing offices in North Canton on Wilbur Drive NE.
     According to a July 2, 2012, memo from Eric Bowles, Director of Permits and Development, the company has been in North Canton for a number of years. If Crowl, Montgomery & Clark had plans to upgrade their long-time office on Wilbur Drive NE, that would indicate they are happy staying in North Canton.
     We all talk about how great it is to live, work, and play in North Canton and yet city leaders feel compelled to pay businesses to come or stay in our community.
     The corporate charity that city leaders hand out is unfair to all the other businesses in North Canton who pay their fair share.
     I did not attend the ribbon cutting by Mayor Held for the new North Canton Dollar General that Mr. Bowles announced would take place this last Saturday but that store did not require incentives to bring them to North Canton.
     The owners of North Canton Collision on South Main Street have not asked for assistance to improve the appearance of their business on South Main. Why do we continue to provide handouts to a select few while other businesses pay their fair share to support our City Schools and maintain city services?
     Lastly, I would like to know if former Mayor Tom Rice, the seller of the property at 713 South Main Street that was purchased by Crowl, Montgomery & Clark had any bearing on the decision to enter into the Industrial and Commercial Retention Grant for this company. After all, assistance with property improvements would sweeten the sale for both the seller and the buyer, all at the expense of The North Canton City Schools and the City.
     I urge that this council terminate the tax abatement agreement with Patrick J. Palonder as recommended by the Tax Incentive Review Council and further urge this council to say NO to entering into an Industrial and Commercial Grant for Crowl, Montgomery & Grant as proposed in Ordinance 68-12.
     Threats by a business to leave the city if they do not get corporate handouts should not be the criteria for handing out tax incentives. Businesses either desire to locate here for viable business reasons or they do not.
     Revenue desperately needed for City Schools and City coffers should not facilitate lavish vacations in far off places for owners of select businesses in North Canton.
Thank you,
Chuck Osborne
City of North Canton

Monday, March 26, 2012

North Canton’s Personnel Regulations & Policies Fail to Protect Taxpayers

Prepared Comments Made to
March 26, 2012

Most of us have the understanding, whether one works in the public sector or the private sector, that vacation days must be accrued before they can be taken. To be voted on tonight, titled as Ordinance 24-12, is an ordinance amending Chapter 155 of the City’s Personnel Regulations, which will allow the taking of vacation days without the requirement of accrual.

I am curious as to what has prompted this change in vacation policy and if this change has come about for political expediency.

In recent weeks after securing payroll records of an employee recently hired by the City, I found that the employee has taken all their personal days allowed for the year, all their sick leave allowed for the hours worked and the one vacation day they had accrued on the job. Even with the sick time, personal days, and vacation time taken, the employee lost several days of work due to the need for major surgery.

The changes proposed in Ordinance 24-12, would have allowed this new employee to use their ten days of vacation to cover their lost work days even though they had been on the job for only a few weeks.

This begs the question. Does the City require a pre-employment physical before hiring an individual for employment and are political appointees made promises as to the availability of medical benefits for known major health problems before they are hired?

In recent weeks, I have received two frantic calls from Mayor David Held asking me who is revealing this information. The source of the information is not relevant. But information available says that the new employee was unable to physically perform all the duties of the position from the first day of their employment and has had to undergo major surgery. Mayor Held himself has acknowledged to me that the employee did indeed have major surgery and was later readmitted to the hospital shortly after the surgery due to complications.

If this information is true, what kind of financial hit does the City’s self-insured health insurance plan take with major claims such as was apparently required in this situation? It is, after all, the taxpayers you are asking to foot the bill for an individual who begins their employment with the City, allegedly, needing very expensive surgery and unable to perform the duties of the position from the outset.

Hiring individuals needing major surgery drives up the City’s healthcare costs and jeopardizes the availability of healthcare for all other individuals covered under North Canton’s self-insured health benefits plan.

Are North Canton’s personnel regulations and policies protecting the taxpayers of the City? North Canton must implement common sense personnel policies in the recruitment, screening, and hiring of city employees and political appointees to minimize the risks to the city and to protect taxpayers.

I ask this council to vote down Ordinance 24-12 as it only serves to facilitate manipulation of personnel actions.

As recommended to me by the Stark County Prosecutor’s office, I urge this council to ask that the FBI be contacted, as was done recently in Canton, to investigate the events surrounding the recent employment of this individual.

Thank you,
Chuck Osborne
City of North Canton

Monday, January 30, 2012

Legal Services Agreement with Law Director’s Firm Violates City Charter

Prepared Comments Made to
January 30, 2012

On tonight’s agenda is legislation proposed as Ordinance No. 12-12, and titled as “An ordinance authorizing the Mayor of the City of North Canton, through the Board of Control, to enter into a Professional Services Agreement, by and between the City of North Canton and Morrow and Meyer, LLC (“M & M”) for the purpose of providing legal services….” As is the usual course for North Canton legislation, it is to be passed as an emergency.

Unfortunately, as is the normal course of legislation before City Council, there was little or no discussion or debate at last week’s Council of the Whole meeting. Before this council affirms passage of this legislation in the unanimous fashion that it does, I would urge more deliberation before voting and suggest all city council members consult Section 3.04 of the North Canton City Charter, titled Director of Law, which states:

"A Director of Law shall be appointed by Council as legal counsel for all divisions of the municipality in connection with municipal affairs and may be removed at any time by an affirmative vote of four (4) Council members.

The Director of Law shall be an attorney-at-law admitted to practice by the Supreme Court of the State of Ohio, and shall have engaged in active practice in excess of five (5) years prior to appointment."

Clearly, the City Charter specifies that the Law Director shall be an attorney. There is nothing in the Charter that says a Law Firm can fill that role and that is exactly what is being proposed in the Legal Services Agreement before you tonight.

Paragraph 1 of the proposed Agreement states, “The Law Firm shall perform those duties as are customarily performed by a Director of Law of a municipality….”

The North Canton Law Director is a person who is appointed to handle the legal affairs of the City. At this moment that person is Hans Nilges. The City Charter does not allow the Director of Law to delegate his duties and responsibilities and that is what is being proposed in this Agreement with the law firm of Morrow and Meyer.

Furthermore, the Law Director is a member of the Law Firm of Morrow and Meyer and thus Mr. Nilges has a financial interest in this Agreement. This is a conflict of interest and raises the appearance of impropriety for all parties.

Law Director Nilges, in the last paragraph of a letter to Council President Jon Snyder dated January 19, 2012, you state, “…as a technical matter, please note that the Charter requires that a Director of Law is a person licensed to practice law for at least five years, rather than a firm. Accordingly, I would continue to serve as the Director of Law, but would receive no compensation for doing so.”

There is compensation being paid. Paragraph 4 of the Agreement, states “The City shall pay the Law Firm Four Thousand One Hundred Sixty-Six Dollars and Sixty Seven Cents ($4,166.67) each month as compensation….” This equates to $50,000 per year.

Is this how we circumnavigate the City Charter?

Telling the public that the Law Director will receive no compensation and then sending the salary the Law Director now receives to the Law Firm of Morrow and Meyer where he is a law partner does not undo the violation of the City Charter as Mr. Nilges suggests in his letter to Council President Snyder.

As for the Law Director’s presentation last week that the legal affairs of the City can be handled by attorneys with various specialties, I am not swayed.

Mr. Nilges, you are the individual appointed to the position of Director of Law. I would expect you to be the attorney handling the legal affairs of the City of North Canton. You and no one else have been given that responsibility and title.

I think the City of North Canton deserves better than to see any one of six attorneys on staff at Morrow and Meyer show up to handle law director duties on a particular day at City Hall.

I do not imagine you handle the legal affairs of other clients in this manner. If you were my attorney, I would speak only to you and you alone. Not to whatever attorney happens to be available at your firm.

Mr. Nilges, is it also your intention to use attorneys outside your law firm to handle the duties of Law Director in addition to attorneys affiliated with your firm?

I ask this because the attorney’s name you proffered last week to handle some of the law director duties is not listed as a staff attorney on the Website of Morrow and Meyer.

A revolving door of attorneys handling City affairs is no way to run a municipal law department.

In spite of the Law Director’s recognition that there is a “technical matter” regarding the City Charter, if City Council is still inclined to affirm this Agreement, I would ask that this Agreement and a copy of the City Charter be reviewed, either by the State Auditor or the State Attorney General as was done before the creation of the North Canton Community Disaster Relief Fund.

Ordinance 12-12 comes from thinking outside the box as they say. Unfortunately it is thinking that violates North Canton City Charter, creates conflicts of interest, and has the appearance of impropriety for all parties. It also creates revolving door legal representation for the City of North Canton.

This Agreement should not be enacted.

Thank you,
Chuck Osborne
City of North Canton

Wednesday, January 18, 2012

Amended Lease of Arrowhead Golf Course Proposes Taxpayers Finance Unadvertised Sale of Property to Current Operators

Prepared Comments Made to
January 17, 2012

A little over a month ago on December 12, 2011, Finance and Property Committee Chairman and City Council President Jon Snyder held a committee meeting prior to that night’s council meeting to discuss authorizing legislation to amend the lease agreement between the City and R & S Golf Properties, Inc.

Chairman Snyder’s public explanation for amending the Arrowhead Golf Course lease was that without amending the lease, the City was precluded from selling the property if it chose to do so.

This explanation rang hollow with me as Law Director Nilges had previously notified the Lessees five-months earlier in a July 13, 2011, letter that as a result of the Lessees’ default in its Lease obligations, the City was exercising its right to terminate the Lease, effective December 31, 2011, pursuant to Article XII, Section 12.1.1 of the Lease.

With termination of the lease just a little more than a handful of days away from the December 12 council meeting, the City would have had no limitations on selling the golf course property. Thus the reason provided by Chairman Snyder for amending the Lease on the Golf Course was little more than political misdirection.

The agenda for the December 12 council meeting was amended after the published agenda items were addressed and Ordinance No. 114-11, proposing to amend the Lease, was added. The added agenda item was titled: “An ordinance authorizing the Mayor to enter into an Addendum to the Lease by and between the City of North Canton and R & S Golf Properties, Inc., an Ohio Corporation and Robert C. Purcell and David Scott DeMuesy as individuals (“Lessee”) executed on December 22, 2008, for the premises known as The Fairways fna Arrowhead Country Club, and declaring the same as to be an emergency.”

I would like to know who would like to take credit for drafting the less than two full pages of the Addendum to the Arrowhead Golf Course Lease and if council members read the amended lease before voting!

My concern is that each of the two sentences comprising paragraph 3.1.7 of the amended lease clearly violate Ohio state law and the Ohio Constitution.

The first sentence in Section 3.1.7 states, “Lessee shall have the option to purchase the Golf Course Premises for a mutually agreed upon amount not less than the appraised value of the Golf Course Premises provided Lessee exercises such option by the earlier of thirty days following any termination of the Lease pursuant to this Article III or December 31, 2014.”

I am stunned that anyone would propose to sell Arrowhead Golf Course property in this manner and codify this into law since the method of sale described in the amended lease clearly violates state law.

Ohio General Code Section 3699 specifies that the sale of real estate by a municipality must be advertised once a week for five weeks in a newspaper of general circulation within the corporation and bids secured before municipal real estate is sold.

The provisions as to advertising for bids are designed for the protection of the taxpayer. This procedure insures that the most advantageous terms possible are secured for the city, its residents, and its taxpayers.

The second sentence in Section 3.1.7 of the amended lease states, “The Parties agree to meet and discuss in good faith the possibility of the City holding a note for purchase in the event that Lessee exercises its option to purchase the Golf Course Premises.”

I am again stunned that members of this council and the Held Administration would propose the possibility that the taxpayers of North Canton finance the purchase of Arrowhead Golf Course to benefit private interests.

This is in direct violation of the Ohio Constitution, Section 8.06, which states in part, “No laws shall be passed authorizing any county, city, town or township, by vote of its citizens, or otherwise, to become a stockholder in any joint stock company, corporation, or association whatever; or to raise money for, or to loan its credit to, or in aid of, any such company, corporation, or association….”

As is typical of all voting of North Canton City Council, Ordinance No. 114-11 passed unanimously with seven votes in favor of amending the Lease that five months earlier the City of North Canton had already exercised its right to terminate following default R & S Golf Properties.

What I failed to note earlier regarding the Finance Committee meeting that preceded the vote to amend the Lease was that Councilmember at-Large Kiesling was absent for the committee meeting and heard none of the discussion and yet she voted on the legislation after arriving at the council meeting that was already in progress.

Equally noted in the vote to amend the Lease was the fact that Councilmember at-Large Cerreta voted on the legislation when Mr. Cerreta, as an abutting property owner to the Golf Course, clearly has a personal interest in the activities and use of the property. Mr. Cerreta, the prudent course of action for you would have been to abstain on the vote to amend the Lease. Furthermore, the praise heaped on you by Finance Chairman Snyder regarding your accorded prominent participation in negotiating the amended lease is equally disturbing as again you have a personal stake in the activities and use of the golf course property abutting your residence.

The amended Arrowhead Lease benefited no one but R & S Golf Properties. North Canton forgave R & S Golf Properties for property tax payments to the City owed by the Lessee in the amount of $16,089. Not addressed in the amended lease is whether the required annual $80,000 in capital improvement obligation has been met over the last three years and if the Lessee would or could continue meeting its infrastructure obligation in the future.

What are the odds that the current Lessee can exercise the option to purchase the golf course property if they are unable to pay the property taxes? Finance Chairman Snyder would have the public believe that is a possibility. If that is the case, advertise the property for sale and let all interested buyers submit a bid for the golf course property as the law requires.

The amended lease is flawed, taxpayers are fed political misdirection, and North Canton taxpayers continue to pick up the tab on this debacle.

At this time I ask that the amended Arrowhead Lease be voided and be replaced with
a new lease that does not violate the Ohio Constitution and Ohio State Law. If the Administration and this Council fail to correct the shortcomings of Ordinance No. 114-11, the violations in the amended lease can be resolved by the courts if that is the course the City desires to take.

Thank you,
Chuck Osborne
City of North Canton