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Joyce Clark Unfiltered

For "the rest of the story"

Stories about Glendale keep popping up like daisies. The Arizona Republic takes positive glee in reporting negativism witness 2 hits on August 30, 2013. Paul Giblin did a story on the fall out of senior staff in the wake of the external audit and Laurie Roberts takes a pot shot at elected officials. Horatio Skeete, former Assistant City Manager, has been fired and Sherry Schurhammer, former Executive Director of Finance, has resigned. So the pound of flesh sought has been realized.  Make no mistake; they should not be absolved for they carried out the City Manager’s direction. Its’ similar, although not nearly as grievous, to those in Nazi Germany who either carried out Hitler’s directives or did not protest them. The reasons for silence in both instances were similar – fear of serious retribution. But they did not order the direction taken. Will those ultimately responsible be held accountable?

Laurie Roberts casts a wider net and accuses city council of mismanagement saying, “The mismanagement in that place apparently knows no bounds…” Mismanagement is defined as the exercise of executive, administrative and supervisory direction. How could council have given direction when senior staff conspired to hide the truth on actions it had taken by not advising council of the facts? If she had read the external audit thoroughly she would have read on page 19 of the report, “From the onset of the ERP, City Management and staff failed to keep the City Council appropriately informed, at times misled them and/or provided incorrect information. Under the previous administration, City staff was hindered and/or prohibited from providing valuable information to the City Council.”

The news media also reported that former Glendale City Attorney, Craig Tindall, has been hired as General Counsel for IceArizona, the new owners of the Coyotes. This development is not so surprising. Mr. Tindall was intimately involved in all of the arena management deals council considered.   I had several telephone conversations with Mr. Tindall during negotiations of various arena management deals over 4 years. I am sure others on council had similar conversations. There was one conversation in particular that stuck in my memory. I did not record it. I did not take notes but it was unusual enough that I remember the gist of it. During the course of the Jamison negotiations, Mr. Tindall alluded that he had been contacted by other, serious buyers of the team and if the Jamison deal fell through there were others waiting in the wings. It is not hard to imagine one buyer could have been Anthony LeBlanc. Mr. Tindall never named anyone. What did Mr. Tindall share with these other serious buyers that was not privileged or confidential information about contract negotiations? We’ll never know but it appears that some of these serious buyers could have been grateful.

To the news media Glendale has turned into the entrée of the day. Slow news day? I can hear it now. Editor: Geez, there’s not much happening right now. Let’s have Giblin write another story about Glendale. Problem solved. You can tell when it’s a slow news day – just look for a regurgitated story about Glendale. They have created a daisy chain of stories about Glendale, day after day, citing the same information over and over and over again.

I’ll be blogging again after Labor Day.

©Joyce Clark, 2013

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On August 29, 2013 Paul Giblin of the Arizona Republic wrote a story about the Coyotes parking situation. Here is the link: http://www.azcentral.com/community/glendale/articles/20130829free-parking-westgate-may-cost-coyotes.html . Hard core, dedicated Coyotes fans are well aware that this season there will be a parking fee for Coyotes games. They have already made clear that they are on board and comfortable with the new parking fees. They understand that it is part of their bargain to keep the Coyotes playing at Jobing.com Arena. Season ticket holders have already been charged for their parking – anywhere from $300 to $600 for the season.

What about the casual Coyotes game attendee? Giblin raised the specter of all of the free parking available in Westgate in lots not controlled by the Coyotes as an alternative that will impact expected “enhanced revenues.” I think his angst was misplaced and deliberately designed to raise an irrelevant issue.

Currently Westgate charges $10 Parking* on Cardinals Home Game Days at Westgate Entertainment District designated lots. Free parking for pre-season games.*Cash Only. Here is the link: http://westgatecitycenter.com/visitorinfo/parking/ . It is logical to expect Westgate to employ the very same system for Coyotes games. If it is not immediately instituted, it certainly will be after a game or two. If one is going to a movie, shopping or eating and not attending a game, look for some kind of rebate system. Westgate cannot allow its customer parking to be usurped by Coyotes fans looking for free parking.              

We can also expect the Cardinals to come up with a parking fee structure for Coyotes games. When the Glendale city council was considering the current ownership deal rumblings were floating that the Cardinals would charge to park (and perhaps undercut the Coyotes’ fees). The city council was well aware of those rumblings. Of course, the council knew about the proposed Coyotes’ parking fees. It was discussed publicly and in its presentation to Council estimates were made by the new ownership of how much revenue would be generated. After 20% is taken off the top by ownership for each game, the balance will become part of the “enhanced revenue” package promised to the city to recoup the additional $9M unbudgeted for the annual arena management fee.  Inevitably, all of the Westgate lots and the Cardinals’ lots will be fee for parking.  

The Cardinals include their parking fee into the cost of each ticket and assign parking lots, i.e., Red, Green, etc., to the ticket holder. A pricey ticket gets you the Red lot. A nose bleed seat gets you the Brown lot and a shuttle over to the stadium. As the former councilmember representing the Desert Mirage and La Buena Vida neighborhoods I raised the concern that fee for parking could push fans into those neighborhoods directly east and across 91st Avenue. The city agreed and established a Neighborhood Protection Program. All mega events (Cardinals’ football games, major concerts, etc.) with attendance of over 40,000 initiate neighborhood protection. Manned barricades are put up and residents have an ID placard identifying their residence in the neighborhood.  It is a system that has worked very well but even with it in place there is a small amount of fan parking that still occurs in those neighborhoods.                                                                    

Back to that casual fan that doesn’t want to pay any fee — $10, $15 or $20 to park. Coyotes’ games have a maximum attendance of nearly 18,000. That is far below the 40,000 needed to initiate the city’s Neighborhood Protection Program. If casual Coyotes fans park in large numbers in those neighborhoods there will be no manned barricades and no means of keeping those fans out of these neighborhoods. There is certain to be push back from residents.  No one wants to see that happen. Is Councilmember Chavira concerned about this issue? Who knows? He was the 4th vote of approval for the IceArizona deal. You would think he would have some clout with them. He should be asking the new ownership group to institute and to pay for the Neighborhood Protection Program for all Coyotes games. That kind of program would drive people back to the fee parking lots – resulting in a better parking payday. After all, part of being a good community partner involves protecting your neighbor from the unintended consequences of your actions. 

©Joyce Clark, 2013

FAIR USE NOTICE
This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to:http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.

Golly, can you believe that in a year from now, August 26, 2014 to be exact, Glendale voters will be casting ballots in its Primary Election? It seems we just went through this exercise. We did. Every two years, Glendale votes for 3 out of 6 City Council seats. In 2012, the 3 district seats were Yucca, Cactus and Sahuaro. In the 2014 election it will be Cholla, Barrel and Ocotillo districts. Candidate nominating petitions will be available this fall and are due for submission by the end of May, 2014. No candidate will wait until the last minute to pick up nominating packets or to submit petitions to run. So it begins.

While the political picture is still very murky some rays of light are just beginning to emerge. Vice Mayor Knaack was recently asked by the media if she would be running for her Barrel district seat again. Knaack was decidedly non-committal but bets are that she will run for her seat… but wait, there’s more. Many feel that her ambition runs far greater and that she will make a run for mayor in 2016. That may pose a real head scratcher for the Glendale fire union. To date they have supported Weiers (current mayor) and Sherwood (new councilmember) and Knaack (in every one of her elections). If this scenario comes to pass it will be interesting to see whom fire puts its money (which is substantial) on…Weiers? Sherwood? or Knaack?

Councilmember Alvarez has declared that she is not running for reelection but she also declared that she would resign after the results of the external audit were publicly released. Well, that hasn’t happened, has it? If she decides to leave her seat look for a “free for all” in the Ocotillo district. Candidates will be multiplying like rabbits. Ocotillo voters beware. Alvarez is sure to endorse someone and that almost guarantees more Alvarez-esk shenanigans for another 4 years. Lord, help us out here!

Councilmember Martinez has recently announced that he will not seek reelection in the Cholla district. He has been a good and faithful servant of the people and others – perhaps a future blog will be in order. He is in his 80s and there are subtle signs that his faculties are not as sharp as they once were. His announcement comes as no surprise. What is surprising is Robert Petrone’s announcement of his candidacy for the Cholla district council seat. Petrone is the current Chairperson of the citizen Planning and Zoning Commission. What is even more surprising is the story that was run by KPHO Channel 5 News on August 26, 2014. Here is the link:  http://www.kpho.com/story/23261106/glendale-city-council-candidate-looks-to-win-publics-trust . The story by Jason Barry reports, “CBS5 did some digging and found a long history of financial problems in Petrone’s past, dating back to 2003, including not paying credit cards, bounced checks and thousands of dollars in unpaid debt. CBS5 uncovered more than 20 civil and criminal cases in Valley justice courts, all connected to Petrone or his landscaping business.” Petrone attributes his financial woes dating back to 2003 to the national recession but, excuse me, didn’t the recession start in 2007?

courtesy Channel 5 KPHO news

Robert Petrone
Courtesy of KPHO
Chennel 5 News

Petrone says in his interview, “one of his first orders of business is to stop the mismanagement of money that’s plagued the city.” Ahem. Isn’t that a little like the pot calling the kettle black? He then goes on to say, “I see money that was $5.5 million to $6 million of citizens’ money that was tainted, misappropriated, done without the knowledge of the City Council…How many fire trucks and police cars could we have bought with $5 to $6 million?” And the answer is….None, Mr. Petrone, absolutely none. Why? The money he refers to were transfers out of the city’s trust funds which if and when recovered, must go back into the trust funds for risk management and workmen’s compensation. The $5 to $6 million cannot be used to buy fire trucks or police cars…or anything else for that matter. This issue has been widely publicized and one would think Petrone would have a better understanding. Obviously, he didn’t read my “Mushroom” blogs! 

Manny, say it ain’t so. You couldn’t have really endorsed Petrone, could you? In the blink of an eye — no, make that a 2 minute story on Channel 5, Petrone’s viability as a serious candidate was obliterated. Their strategy was transparent. Martinez’ endorsement of Petrone was supposed to create a chilling effect and cause others to reconsider a run for the Cholla seat. Perhaps it would have succeeded if Channel 5 hadn’t reported that Petrone had been practicing a little mismanagement of his own. Let the games, political that is, begin!

 

©Joyce Clark, 2013

FAIR USE NOTICE
This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. For more information go to:http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.

RESULTS

My previous blogs reviewed the cast of characters, the items under investigation, the city hall atmosphere, and the how, why and what was done. Now its time to look at the results that the external audit produced. The following recommendations are relatively easy to implement and some have already occurred. Frankly, that’s the easy part. These recommendations will enforce and safeguard sound, fiscal policy positions for the city.

  • The City of Glendale should implement an anti-fraud program that would include the following:
  • Conduct a fraud risk assessment to identify areas that are vulnerable to fraud, waste and abuse and/or employee misconduct;
  • The City should implement a code of conduct and provide training for that code;
  • Create an ethics hotline where callers could be allowed to provide information anonymously. The calls should be investigated (by whom? At the very least, a third party, neutral, should be used. Perhaps it’s time to create an Employee Ombudsman) thoroughly and immediately with reports provided at least quarterly to the City;
  • Implementation of the ethics/antifraud program should be communicated to all levels of employees.
  • Retention policy for emails/server information should be reconsidered. Sixty days for email backup is not adequate for litigation and investigative purposes. The minimum should be one year.
  • Decisions on significant programs, such as the ERP, should be supported by sound financial analysis and supporting documentation discussing both the short-term impact, and potential long-term impact of the program. It should also document City Management’s consideration and reasoning for recommending or implementing such a program.
  • Have Risk Management and Workers’ Compensation trust fund boards meet more frequently than once a year. (Already implemented before I left as Chairperson)
  • City should evaluate its current policies and guidance as to required authorization for transfers and revise if necessary. These policies should be assessed by City attorneys for consistence with applicable statutes, regulations and ordinances. (The City Attorney Office’s oversight has been nothing short of abysmal)
  • Revise charter/ordinances to require the notification and/or involvement of the City Attorney over all significant transactions.
  • To the extent that budget appropriations transfers are a practical necessity during the year, update or revise the policies to clearly set out what is and is not permitted, as well as what transfers and when those transfers must go for City Council approval.
  • To the extent that the City desires to pay certain administrative costs and salaries related to the appropriate trust fund purposes [as with other cities] -ordinance or amendment to governing documents should be considered and approved by City Council to authorize these expenditures. (Had been proposed to Council but not yet implemented)
  • Premium levels charged to City departments are subject to the recommendations and the discretion of the City Management. Premiums should be based on sound long-term evaluations rather than by short-term cash needs.
  • Significant changes in trust fund premiums (e.g. >20%) paid by City departments should be authorized to the City Council in advance.
  • City Auditor should report directly to the City Council rather than the City Manager. This recommendation has already been made implemented.
  • The City’s external auditor should be engaged to perform at least an annual audit of internal controls.

REPERCUSSIONS

This is not an easy topic nor are there any easy fixes. Today’s City Hall environment is positively toxic. Hopefully the new City Manager will make it her priority to reverse this situation. Obviously politics is not confined to politicians. It’s pervasive throughout this city organization and can be found in every other city. It’s not an aberration confined only to Glendale. When Beasley came on board as City Manager, if nothing else, his control of the organization was absolute and during his tenure political intrigue simmered under the surface but never erupted into outright warfare.

When he left all hell broke loose. Two staffers, Assistant City Manager Horatio Skeete and City Attorney Craig Tindall, were within shouting distance of grabbing ultimate power, that of Interim City Manager. Both probably felt that an outstanding performance could land them the job permanently. Each had their supporters and detractors but vied for the job in dramatically different ways. Craig Tindall’s supporters, were rumored to include among others, Jim Colson, Economic Development Director; Julie Frisoni, Communications and Marketing Director; Fire Chief Mark Burdick and City Auditor Candace Macleod. It is assumed that they knew or at the very least had suspicions of or had heard rumors about the ramifications of the ERP before its eventual disclosure. If they knew and said nothing until disclosure became useful then they are complicit in the cover up. They finally released information about the Trust Fund transfers and the Employee Benefit Program in an effort to smear Skeete. There was no mention of the City Attorney Office’s failure to provide oversight over the ERP. We’ve all heard the phrase that ignorance is no excuse in the eyes of the law.

This information was released despite the fact that these decisions were Beasley’s, not Skeete’s. After all, Pam Kavanaugh as Assistant City Manager began the implementation and then retired. When Skeete assumed that role, he was tasked with continuing the implementation. I once asked Skeete why he didn’t play the same game and he told me that was not how he wanted to get the job. There were no monkeys on Skeete’s desk. Council chose Skeete as Interim City Manager and rejected the tactics employed by the Tindall faction.

If council had been informed of the facts when the ERP was first implemented different direction would have been given to the City Manager. To say we were not informed by city management is an understatement. Many of the allegations came to light after Beasley had retired. If the Workmens Compensation and Risk Management Trust Fund Boards had been told the truth reforms could have been instituted.

Now there is a new regime in city management with a new City Manager and soon, presumably a new City Attorney. Heads are rolling with Bolton, Goke, Schurhammer and Skeete placed on administrative leave. It is a strong signal that poor decision making based on a lack of integrity will not be tolerated. The first appointments by City Manager Brenda Fischer are Frisoni as Acting Assistant City Manager and Macleod as Interim Finance Director both of whom appeared to have been actively embroiled in the Interim City Manager warfare. What about Jamsheed Mehta, Stuart Kent, Jon Froke and Erik Strunk who kept their noses clean, hunkered down and did their jobs? What kind of signal has been sent through the organization? House cleaning of a selected few while others suffer no retribution for their actions or lack of disclosure until it became useful does not bode well.

AND THERE’S MORE

The call for an external audit was Norma Alvarez’ baby aided and abetted by a newspaper, the Glendale Star, that appears to have become the mouthpiece for her agenda. She obviously hoped for two outcomes from the audit: finding a pot of gold that somehow had been overlooked; and placing blame directly on former councilmembers. Neither outcome was achieved but it has made her vindictiveness apparent for all to see. She had publicly stated that after the external audit became public she would resign. To date that has not happened but it should. Her contributions to Glendale governance are non-existent. Now she says she will not run again in 2014 but reneging on her promise to resign now signals that she may change her mind as it gets closer to the time to declare reelection intent.

AND THERE’S MORE STILL…MUCH, MUCH MORE

Then there is the question of former mayor Scruggs. Was she involved? That is your decision to make. She has many supporters to this day who will reject the notion of any involvement. I am not a supporter having worked with her for 16 years. Many inside and outside of City Hall were quite aware of her ambitions and her modus operandi. We were never personal friends and for many years were often diametrically opposed on policy issues. Various staffers would often remark privately that there was nothing that went on in Glendale that she did not know about and either approved or disapproved.  In retrospect it appears that this assertion by those staffers seems to be quite accurate.

Below you will see 2 emails that require some explanation.  A Glendale resident, a very intelligent gentleman, now deceased, who had been CEO of several well known national corporations, became concerned about the bonds being issued by Glendale for construction of the arena and surrounding infrastructure. He made a series of Freedom of Information queries. During the course of his inquiries he often updated his progress via email. These are but two of many. The first email forwarded to me relates to the former mayor’s treatment of this gentleman after he spoke publicly about his concerns. The second email on which I was copied, confirms her extensive knowledge of arena finances and her need to know everything. The names of individuals and the topic raised at the time are not pertinent to the illustrations being used to offer some insight into her behavior.

First email********************

From: XXXXX

To: XXXXXX

Sent: Monday, April 17, 2006 6:05 PM

Subject: Re: FOI items for Friday

I included the entire exchange because this XXXX gentleman (XXXXX) is asking Glendale some critical questions about the Arena deal. They aren’t answering. He went to Council, waited until the end and stepped up with his questions. Elaine took him aside and berated him for saying these things on Glendale TV. She “doesn’t want the sort of thing out there for the citizens who don’t understand to see”. Scroll down to the last message he sent me. Elaine listened in on a conference call this man had with the financial people of Glendale. She is hiding something…he is close to it….

Second email******************

From: XXXXXX

To: XXXXXXXXX

Cc: XXXXXXXXXXXXXXXX

Sent: Monday, April 17, 2006 6:37 AM

Subject: Re: FOI items for Friday

Hi! I called Mr. Schuey (sp.?) at nine am on Friday, as planned, for an hour. I said that I expected to talk primarily to Steve Szymanski because he is closest to the data I desire. He said Steve’s boss would be taking his place instead. I asked who was on the line with him. He said that Steve’s boss, Art Lynch, Mr. Perkins (sp.) and Mayor Scruggs were also there!!!! I wasn’t surprised. I couldn’t tell who was doing the talking, but at least the Mayor kept silent (an amazing act of constraint). With such a large cast of characters, I didn’t expect much. They did clarify some things. 

For example, they said that 4 bond issues were for infrastructure only ($30Million), so not with the Taxable, Tax exempt and a small issue associated with the Arena. All together, the total bond amount is $180Million (Arena plus infrastructure). “They” said that I should only be concerned with the Arena bonds, even though in the budgets all six were together. They said that two of the smaller bonds had been dedicated to other purposes via ordinances passed some time ago. In summary they seemed to be defensive on this small issue. I said that I would concentrate on the two Arena bonds and one small one ($150Million), which is my main interest.

 

They went on about their AAA rating and that Mr. Perkins was their expert, etc, etc. and that they had sculptured the Bond allocation to make it easier to keep the early years payments lower so that their payments would not be too tough at first.

 

This was said because I had previously told Art that the distribution used caused a lot of excess Interest. They don’t like criticism.

So, not much accomplished.

Regards, XXXXXXX

These emails are illustrative of the belief by some people that the former mayor was involved in the slightest minutia of Glendale operations and especially when the issue was a “hot topic.”  What did she know about the Early Retirement Program (ERP) and when did she know it? According the findings of the external audit report the ERP was initiated in March of 2009. At the end of the same month (March, 2009) at the first FY 2010 council budget workshop it is now evident that she had knowledge, not readily available or shared with the councilmembers, of the program’s costs as can be seen from the questions and statements she made relative to the issue. Her actions raise more questions that remain unanswered. Many readers of this blog have knowledge of or examples that attest to her intense and perhaps sometimes, inappropriate, involvement in city affairs. If anyone cares to share please send an email to clarkjv@aol.com. Your information will be handled discreetly.

There you have it – the players, the City Hall climate, the actions taken and the repercussions. It’s not a pretty picture. If you are as angry and disgusted as I, you have every right to feel that way. It’s a bitter chapter in the history of Glendale that occurred on the watch of former City Manager Ed Beasley (retired 2012)/Interim City Manager Horatio Skeete (on administrative leave, 2014) and former Mayor Elaine Scruggs (retired 2013). The mushrooms were former Vice Mayor Steve Frate (retired 2013) and Councilmembers Clark (me, retired 2013), Martinez, Lieberman, Knaack and Goulette (former Ocotillo CM prior to 2010)/ Alvarez (current Ocotillo CM from 2010 to present).

The reforms and controls that will be adopted will help to restore confidence in a financial system run amok. Could it happen again, if not in Glendale, somewhere else? Yes because we are all fallible and can make disastrous decisions. You cannot legislate good character, morality or integrity.

©Joyce Clark, 2013

FAIR USE NOTICE
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In the August 24, 2013 edition of the Arizona Republic there is a story entitled Glendale ratings lowered by Russ Wiles and Caitlin McGlade. They report that Moody’s Investors Service downgraded Glendale’s credit ratings from A2 to A3. Even with the downgrade, Glendale’s credit ratings remain in the superior “investment grade” category. It is an omen of Glendale’s future if this council does not act boldly.

Moody’s says, “The downgrade of the GOULT (General Obligation Unlimited Tax) rating primarily reflects unusually weak management practices denoted by ongoing internal and state-controlled investigations of certain financial actions dating back to 2009. The report also cited the “outsized” risk exposure to the Coyotes under a new arena deal that requires the city to pay an annual $15 million management fee to the team’s owners.” Moody’s concerns relate to Glendale’s large debt burden and an overburdened General Fund. It went on to say, “Additionally, the outlook reflects our expectation that Glendale will remain challenged to balance its budget over the medium term due to a high level of fixed costs.” What does it mean and what effect does it have on Glendale?

It means that Glendale’s financial debacle on instituting the Employee Retirement Program (ERP) at a cost of over $6M taken primarily from its Trust Funds, the continuing high fixed costs to the General Fund and its commitment to pay Coyotes ownership $15M a year have been recognized and are of concern to credit rating agencies. The downgrade means that when Glendale has to issue bonds the interest rates will be higher, considerably higher. A simple analogy is that when you wish to buy a house you are pre-qualified. If you have a good credit score your interest rate is low. If you have a poor credit score your interest rate is much higher. Your monthly mortgage payment incorporates that interest rate causing your payment to be within a comfortable or decidedly uncomfortable range. It affects the size of and the quality of the house you can afford to buy.

Glendale ‘s Capital Improvement Program (CIP) will not see new parks, libraries or pools for quite some time because its bond issuances are impacted by the downgraded credit rating. But there are other needs. Bonds are issued to maintain and upgrade Glendale’s basic infrastructure. Moody’s kept the A2 bond rating intact for Glendale’s water and sewer bonds primarily because those services are funded by the users of those services and are not typically impacted by its General Fund. Although Glendale receives Highway User Revenue Funds (HURF) and other shared revenue funds they typically are supplemented by bond issuances for such projects as major road construction. One example is the construction of the Northern Avenue Parkway. Although the state and other cities are sharing in the costs of construction Glendale’s costs are substantial and it issues bonds to cover those costs. There will be impacts, immediate impacts to the issuance of bonds for Glendale’s aging and new but critical infrastructure.

What does Glendale need to do to reverse the downgrading of its bonds? How does Glendale fix it?

SOLUTION ONE: One issue cited by Moody’s is being dealt with now and is the implementation of the recommendations offered in the external audit report. Their adoption will strengthen Glendale’s financial policies, restore integrity to the system and send a signal not only to the bond market but to its citizens that it is serious about reform.

SOLUTION TWO: Another issue cited by Moody’s is the $15M payment to the Coyotes ownership. I can see it now. Members of the Coyotes nation saying here she goes again…blaming the Coyotes. I fully understand the desire to protect from and deflect away any unfavorable information associated with the deal or ownership. Yet it remains the “elephant in the room” that must be acknowledged. It is a decision that Moody’s has used as one of the factors in downgrading Glendale’s bond rating. That’s a fact. There is no immediate fix. Glendale is bound by a 5 year contract and expenses of $75M in management fees over the next five years. It will have to reassess its position after a year’s worth of hockey games to see if the “enhanced revenues” did indeed produce the $9M a year so desperately needed. If the goal is accomplished it provides Glendale some much needed breathing room. If the goal is not achieved Glendale will have to compensate for the revenue loss by making even further adjustments to its General Fund.

SOLUTION THREE: The last major issue is Glendale’s overburdened General Fund — not the Enterprise Funds of Water, Sewer and Sanitation. These funds derive their revenues from rate payers, you and me, when we pay our monthly water, sewer and sanitation bills. The General Fund’s expenses continue to outstrip the revenues it receives in the form of sales tax collection and state shared revenue. Options are limited: sell city assets (a short term fix); further employee reductions; create more efficiency; make draconian cuts; or a combination of all of these options. This is a painful and touchy subject for all. 60% of General Fund expenses are attributable to public safety. Glendale is at the point where it has gangrene in its leg. Do not amputate the leg and watch Glendale die as the gangrene rapidly spreads through the body or amputate the leg; stop the gangrene and Glendale will live long into the future. This is no time for political posturing. This council, each and every one of them, must adopt the will and the internal grit to do whatever is necessary, including cuts, to guarantee Glendale a healthy future. Can they? I hope so. There is no way around it. Their only mandate is to fix it.

©Joyce Clark, 2013

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In my previous blog I outlined the cast of characters, what actions were to be investigated and the city hall atmosphere when these actions were taken. In this article we’ll look at what was done and how it was done. Before that, there is the why. The “why” is based upon assumption. Some of the actions were taken as early as 2008. The city was on the precipice of a great National Recession.  City revenues were declining. The city was facing a budget shortfall of over $14M. Rather than provide direction to city council to begin to make the necessary cuts, including employee terminations, management staff tried to avoid the cuts with other strategies. They were protecting their turf and the jobs of many employees. They thought they were not only staving off inevitable employee cuts but that their strategy would buy the necessary time needed to weather the recession. Their options were limited and they chose actions that produced disastrous consequences when discovered five years later, in 2013.

What did they do? When did they do it? How did they do it? They set their sights on an Early Retirement Program (ERP). They touted that it would result in cost savings in excess of $5M.

What they failed to take into account was how much this program would cost to implement – a price tag of $6.1M. The program was far more popular than they anticipated and 55 employees, many of them middle to upper management representing upper pay ranges and serious money, took advantage of it.  Costs started to balloon. $1.34M in retirement incentive costs; $1.36 in vacation and sick day payouts; but worst of all, the Arizona State Retirement System slapped on a penalty of $2.75M. How could they have not seen it coming? Scottsdale tried the same ERP in 2009 and incurred millions of dollars in penalties. The State Retirement Laws had changed in 2004. Why was no one in then City Attorney Craig Tindall’s office aware of the changes in the law? Why did no one in the city attorney’s office review current law on the use of ERPs when Alma Carmicle first proposed the idea in the fall of 2008? Ignorance is not a legitimate answer, especially at the time of ERP’s publicly advertised implementation in 2009. The city attorney’s office should have been all over it.

Unfortunately, the report does not answer those questions. It merely paints a picture of what was done. Even when staff realized that there were penalties associated with using ERP, the assumptions staff provided to and used with the State Retirement System representatives were woefully under reported. Now staff, in desperation, had to find the money to cover the ERP expenses and the state assessed penalties.

They turned to the Workmens Compensation Trust Fund (WCTF) and the Risk Management Trust Fund (RMTF) as sources to fund the ERP. Then to compound their actions they used a “premium holiday” concept which involved withholding the city’s portion of payment to the Employee Benefits Trust Fund (EBTF) eradicating its stability as well.  They withheld $83 thousand per month for a total of $1M/year in both 2008-09 and 2011-12 from the EBTF. The trust funds, especially the WCTF, began to experience shortages. Over a period of two years (2010-2012) $2.6M was transferred from RMTF to the WCTF. All the while they publicly assured city council and the general public that cost savings from the Employee Retirement Program was being generated.

That brings us to Art Lynch’s retirement as Assistant City Manager in October of 2009 and the use of his consulting firm, SRJ Consulting. Mr. Lynch was part of Mr. Beasley’s “inner circle” of trusted advisers. One could assume that Mr. Beasley wanted to make sure his friend was financially comfortable before he, Beasley, retired. So began a series of highly questionable actions performed by Mr. Beasley. Employees, in order to be eligible for the ERP, had to meet a deadline of March, 2009. Mr. Lynch did not retire until October, 2009. By placing Mr. Lynch in the ERP it added another $121,000 to the State penalty. Mr. Beasley approved Mr. Lynch’s participation in the ERP and in fact, granted Mr. Lynch an extension to accomplish that objective. Mr. Beasley also approved an additional $25,000 in deferred compensation to Mr. Lynch. The day after Mr. Lynch’s retirement, he returned to duty as SRJ Consulting, with a contract that never went out to public bid. As a consultant, over several years, SRJ Consulting received nearly a million dollars. These maneuvers cost the city an additional half million dollars. This information is available on pages 23-24 of the external audit report.

It was generally assumed that Ms. Alma Carmicle was also a member of Mr. Beasley’s “inner circle” and a trusted adviser to him. Some people might view Ms. Carmicle’s job arrangement as an example of “power corrupts and absolute power corrupts absolutely.” In the summer of 2010 Ms. Carmicle moved permanently to Mississippi and Mr. Beasley approved her job retention via telecommuting. This accommodation lasted until her retirement in February of 2012. The rationale for allowing her to stay on as a full time employee through the use of telecommunication was that Mr. Beasley felt that she was needed to negotiate the public safety Memoranda of Understanding (generally recognized as union contracts). Mr. Beasley certainly led me to believe that he was heading up the MOU negotiations. From October of 2011 until her retirement in February of 2012 Ms. Carmicle participated in 26 MOU meetings/telephone calls lasting a total of 13 hours and 55 minutes. During those four months Ms. Carmicle managed to give the City of Glendale almost 14 hours of her time, talent and expertise. Yet she was paid as a full time employee. All of her other duties as Human Resource Director had been absorbed by Mr. Brown, the Assistant Director. During this time Ms. Carmicle received her full salary and car and phone allowances estimated to be about $140,000. This information is available on page 25 of the external audit report. Was it blatant cronyism in the cases of Lynch and Carmicle? You decide.

These were the major issues of the external audit: city nonpayment to the Employees Benefit Trust Fund as “premium holidays” so that those funds could be used else where as needed; transfers from and between the Risk Management Trust Fund and the Workmens Compensation Trust Fund to cover the costs incurred in the Employee Retirement Program; and the unusual job arrangements for Mr. Lynch and Ms. Carmicle.

Ms. Goke and Mr. Bolton are the latest to fall. They have been placed on leave by the new City Manager Brenda Fischer and Candace Macleod, the City Auditor, has been appointed as Interim Executive Finance Director. The bodies are starting to pile up…Skeete, Schurhammer, Goke and Bolton. I am sad on one hand because these are people I admired and respected professionally. I knew and liked some of them personally. I sought their advice and counsel on city matters for years. Did they hide other information from me when I went to them on city issues? They destroyed any semblance of trust and abdicated their fiduciary responsibilities to the city. I am outraged that they could sit before us at budget workshops and hide the truth. Yet they are just the fall guys. They did not make the final decision to implement the ERP program – City Manager Beasley did, presumably after consulting with his “inner circle” of trusted advisers. The four on leave (and others) were directed to make the program work and later told what they could and could not say about the results of the program. They could have but chose not to, blow the whistle. In that atmosphere at that time they may have felt they had no choice. Does that make them less responsible and accountable for their participation? No, of course not. Yet they are not the lead actors in this sordid drama. Some of those who refused to be interviewed were the decision makers and should be held accountable. Will there be criminal or civil action against the major players? I am not an attorney and could not begin to guess. Remember, I am but a lowly mushroom.

Next up…results, repercussions and much more.

©Joyce Clark, 2013

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On August 21, 2013 at 1:18 PM I received the following email: “Since you were interviewed as part of the process, I wanted to let you know that the City-Council-directed-external-audit of the city’s finances is complete and is being released to the public and media today. The documents will be posted on the city’s home page and are available for you at this link: http://www.glendaleaz.com/documents/SpecialProject-SummaryofFindingsandConclusions.pdf    Julie Frisoni”

This short and not-so-sweet email went to people interviewed for the external audit (or declined the request for an interview) but are no longer working for the city. It would have included me, former Mayor Elaine Scruggs, former City Manager Ed Beasley, former Assistant City Manager Pam Kavanaugh, former Finance Director Ed Lynch, former Human Resources Director Alma Carmicle and former Risk Manager Jim Loeb. I assume another email went to currently employed city personnel who were interviewed.

I had not checked my email all day but I did so late in the evening. I immediately went to the link provided in the email (you can do so as well), downloaded and printed out the 250 plus page external audit produced at a cost of half a million dollars. Then I spent the next couple of hours reading and analyzing it.

Finally, finally, finally, the city has released the results of the external audit. This is an issue for discussion that is long overdue. To do it justice there will be this article to be followed by two more. This first section will flesh out the scope of the audit, the players and the atmosphere surrounding the actions that occurred. It’s time to set the record straight.

The firm hired to perform the external audit was Haralson, Miller, Pitt, Feldman & McAnally, PLC (HMPFM). They, in turn, subcontracted Fidelity Forensics Group, LLC., the Law Offices of A. Bates Butler and Evidence Solutions, Inc.

Their mandate was to investigate actions related to the Early Retirement Program (ERP); transfers between and out of the Risk Management Trust Fund (RMTF) and the Workmens Compensation Trust Fund (WCTF); look at any other cash transfers into the city’s General Fund; and evaluation of city management’s disclosure of these actions to the city council. They would also be charged with identifying any civil or criminal liability related to these actions. As they worked their way through these issues council approved enlarging their scope of investigation to include lack of city contributions to the trust funds; the city’s actions under the Federal Early Retirement Reimbursement Program (FERRP); Art Lynch’s employment arrangements after he retired as well as city action associated with his retirement; and Alma Carmicle’s work arrangement after she moved to Mississippi. In other words did anyone deliberately misdirect city funds or use them improperly, was improper direction given and did the city council know?

We know who was hired to do the work and what they were hired to investigate. To do their work they secured 19 workstations and/or computers and/or other devices such as tablets and phones. They reviewed nearly 75,000 documents but perhaps, most importantly, they performed 37 interviews. 27 people were interviewed (some more than once) as follows:

*    Norma Alvarez        *   Don Bolton             *   Jim Brown               *    Cathy Mcintyre        *   Ann Buchmeier       *   Nick DiPiazza             *   Julie Frisoni             *    Diane Goke           *   Horatio Skeete          *   Julianna Lloyd        *   Christina Parry       *   Craig Sullivan              *   Candace MacLeod   *   John Stern               *   Darcie McCracken       *   Raquel Montero        *   Joyce  Clark          *   Robert Steele           *   Elizabeth Smith        *   Andy Jennings         *   Elaine Scruggs         *   Shelly Kitts               *   Lupe Sierra         *   Craig Tindall                    *    Jill Shaw                *   Jim Summers        *   Michael Morrison              *   Sherry Schurhammer

More telling are those who were asked for interviews but declined them:

             *   Ed Beasley                  *   Art Lynch              

              *   Jim Loeb                     *   Pam Kavanaugh

             *   Alma Carmicle 

Now we have our cast of characters. What was the environment under former City Manager Ed Beasley’s tenure? It can be characterized in two words — very controlling. I used to joke and say that councilmembers were mushrooms. There’s an old country saying that mushrooms are grown in the dark and fed horse manure. It turns out to be more colorfully accurate than anyone imagined. Page 19 of the external audit says, “From the onset of the ERP, City Management and staff failed to keep the City Council appropriately informed, at times misled them and/or provided incorrect information. Under the previous administration, city staff was hindered and/or prohibited from providing valuable information to the City Council. Until recently City staff was hesitant to make independent decisions or communicate directly with the City Council due to a mandate by City Management that all Council communications be run through the City Manager’s office. The few times City staff was allowed to present to the City Council, they were required to do a dry run for City Management and only present that which was approved at that rehearsal. These acts could be most readily observed in official communications by City Management and staff with the City Council.” Finally here is formal vindication of my actions as Chairperson of the Trust Funds and as your councilmember despite the smear tactics used by my opponent in my recent reelection campaign.

In my conversations with various staff, there was confirmation that not only did every council communication have to flow through the city manager’s office but that staff was required to report any verbal communication had with councilmembers. They also, I kid you not, had various staff members act in the roles of individual councilmembers and then rehearse the proposed presentation to be made to council. It was a formidable and intimidating atmosphere in which Beasley expected results. Policy direction was his forte. Immersing himself in detail to achieve the objective was not. Question: Who exactly constituted “City Management” at that time? Or did Beasley instead rely upon his “inner circle” of trusted advisers?”

What occurred disturbs me – no, it’s worse than that. It makes me sick to my stomach. Management staff, almost universally belong to the International City/County Managers Association (ICMA). ICMA’s Code of Ethics can be seen at this link: http://icma.org/en/icma/ethics/code_of_ethics.

Tenet 3 of the Code is as follows, “Be dedicated to the highest ideals of honor and integrity in all public and personal relationships in order that the member may merit the respect and confidence of the elected officials, of other officials and employees, and of the public.” Staff members involved betrayed the trust we placed in them and treated us as mushrooms.

Next up — what did the investigation reveal?

©Joyce Clark, 2013

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The most discussed item on the Glendale council workshop agenda of August 20, 2013 was that of prayer. This is not a council that questions staff reports or recommendations. There are several reasons that could account for their lack of inquiry. They could agree with all aspects of the item presented or they might not have done their homework and actually read the material. Take your pick. Keep in mind even when a councilmember agreed with an item, questions were often posed to staff to flesh out and offer further explanation.  In other words, it provided an opportunity to educate. Several councilmembers appeared to be reading the material in their workshop books for the first time. That is not as uncommon as you might expect. On previous councils there were always one or two councilmembers who were reading the material for the first time during meetings.

Glendale City Council

Glendale City Council

This is not a council of passionate belief or extraordinary intellect. Qualities required to create an atmosphere of forthright debate rather than passive acceptance. One exception is Councilmember Alvarez whose stubbornness and lack of understanding of an issue is often mistaken for passion.

Prayer is Mayor Weiers’ initiative. Coming from the state legislature where prayer is offered provided the impetus to introduce the concept in Glendale. He appears to have the support of Councilmembers Hugh, Sherwood, Alvarez and Chavira to bring it to a vote of approval. As stated in my last blog prayer may be fleeting as the Supreme Court takes up the issue of prayer at town meetings this fall. Councilmember Martinez and Vice Mayor Knaack dissented. They preferred continuation of the moment of silence and felt that the concept may cause problems in the future. They represent the sentiment of my unscientific blog poll to date. 67% of the responders do not support initiating a prayer and 33% of the responders do support it. Perhaps the best course of action would have been to “let sleeping dogs lie.”

When it came to Council Items of Interest, nearly all of the items were a recitation of the issues currently facing them, i.e., Camelback Ranch debt, the proposed casino, future revenue projections, the fire department’s “structural deficit,” and employee compensation. There were a few new ideas to explore. Councilmember Martinez asked to look at loose trash collection with the idea of changing it to a quarterly service or eliminating it altogether. That idea is sure to generate a lot of comment from Glendale’s citizens. Councilmember Sherwood suggested a look at the sister city concept with an intent to partner with a Canadian city that hosts hockey. Mayor Weiers agreed saying that Anthony LeBlanc (new owner of the Coyotes hockey team) had suggested the idea. Councilmember Chavira offered an idea, admittedly not his own, that asked staff to look at interim uses (such as an archery range) for the Western Area Regional Park (now called Glendale Heroes Memorial Park).

We know that critical issues such as the arena management contract, the external audit and meeting the City Attorney candidates occurred during what is turning out to be, all-too-frequent, closed Executive Sessions. The weighty issues are not for your consideration…only their eventual outcomes.

©Joyce Clark, 2013

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Instead of its regular meeting time of 1:30 PM the Tuesday, August 20, 2013 council workshop meeting will convene at 9 AM. The 64 million dollar question is will Councilmember Alvarez show up or call in? She’s on the injured reserve list once again. If she does show will pain medication affect her performance or lack thereof?

They will begin with an Executive Session to meet the candidates for the City Attorney’s position. Do we know how many finalists? Do we know who they are? At least when the City Manager’s position was up for grabs we knew a smidgeon about the finalists. This time there is a cone of silence.

prayerThe most interesting and possibly contentious issue for open workshop discussion is to pray or not to pray at the start of the evening meeting. FYI: Only Phoenix has prayer before its council meeting. The cities of Gila Bend, Winslow, Apache Junction, Litchfield Park, Benson and Florence have invocations before their meetings. What’s the difference between an invocation and a prayer? According to the dictionary an invocation is the act of asking for help or support from anyone or anything.  A prayer is a spiritual communion with God or an object of worship. Is it appropriate to start council meetings with a prayer? You can weigh in by participating in my unscientific poll to the left of this article. This issue could become a moot point of discussion as this fall the Supreme Court will take up the issue of prayer at town meetings as it hears the Greece, New York case.

After their discussion of prayer council will move into another Executive Session where once again they will receive information about the external audit. Apparently the audit has been completed. If that is the case, it’s time to let the citizens of Glendale review the result. After all, taxpayers paid a hefty price for it – a half million dollars. It should be presented to all on a gold plated serving tray! Come on, council, it’s time to give it up and direct staff to post the results on the city’s website.

The other item of note in Esession is discussion of the IceArizona management agreement. What could this be about? The council approved the contract with IceArizona with its public vote on July 2, 2013 followed by the sale of the team by the NHL to IceArizona.  Is the contract still under negotiation?  That is the only way it can be discussed in Esession. Here is the exact verbiage used: “Discussion and consultation with the City Attorney and the City Manager to receive an update, consider its position and provide instruction and direction to the City Attorney and the City Manager regarding Glendale’s position in connection with agreements associated with arena management, the Arena, and the Hockey Team, which are the subject of negotiations (bold emphasis mine). [A.R.S 38-431.03(A)(3)(4)(7)].” Note that discussion is permitted in Esession while the negotiations are in progress but negotiations were concluded with council’s vote on July 2nd. Hmmmm…

©Joyce Clark, 2013

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I am having a Monty Python moment – when he says, “Now, for something entirely different.” At this point in my life I can allow myself to take more risks. Even if I fall on my face, at least I have done something outside of my usual comfort zone. This is admittedly the most political blog I have ever written. I have been thinking about these things for quite awhile. Today my inner voice said, “Do it now. Write about something different – not just local politics, the Coyotes or the pond.” And so I have.

As I watch events unfold in our country concern about its future begs to be voiced. My husband and I are both retired. We are decidedly middle class and our retirement income is just enough. We were children of the 40s and 50s when America was kinder and gentler and there was still a whiff of innocence in the air we breathed.  Our front doors were never locked, we played outside without fear and a sense of patriotism was a virtue. Our parents worked hard so that we had opportunities for a better life, especially economically, than they had. There was a sense of belief, hope and optimism. All things were possible if one worked for it.

fog 2When the Great Recession of 2007-08 descended upon this nation it was as if we were traveling on a road where the fog laid thick and dank. Nothing was visible beyond the car’s headlights. Where were the road’s lane lines or markers to orient us? Was it possible to drift into oncoming traffic? All reference points were masked by the fog’s pervasiveness. It created a sense of unease and fear about the future.

As the fog recedes ever so slowly and we begin to leave it behind, large signs, billboards, become visible along the roadway. The first one says will we ever know what happened in Benghazi? Another reminds us of the federal investigations of reporters and the conspiracy charge levied against reporter James Rosen (eventually dropped). Yet another billboard depicts the Internal Revenue Service’s biased actions in determining 501-C4 status for some non-profit groups while another reveals the National Security Administration’s collection of data (some, it turns out, deliberate and unauthorized) on American citizens. The last two billboards show the government’s grant of a one year exemption for businesses from the new Healthcare legislation and a total exemption of Congressional men and women and their staffs from the requirements of this new law.

const 2These billboards are troublesome because they signify the erosion of our Constitution by the very people charged with its defense. The President continues to erode its meaning through Executive Orders while Congress is ineffectual in passing even the simplest of legislation. The stewards of our individual right to privacy with a wringing of hands and a gnashing of teeth eagerly cede bits and pieces of our foundational values in the name of security and safety.

The fog may have lifted but what happened while we were blinded by its effects? No longer do parents believe they will pass on greater opportunities to their children. Belief, hope and optimism have been replaced by divisiveness and the partisan        politicization of every important issue before us. Working hard has been replaced by who you know and what can you do for me. Our government is driving a train loaded with the cargo of political correctness and erosion of the very values we held dear for centuries.

Our familiar societal reference points have disappeared and fear and unease about the future persists not as an aberration of a difficult time in our history but as the norm. Many trust in God…but what about the federal government?

©Joyce Clark, 2013

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