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 Monday, March 7, citizen Leslie Hoefle came before the council
and raised questions about the financial accountability of the Logan
County Alliance and the Logan County Tourism Bureau. Hoefle’s
presentation pointed out what she considers as gaps in those groups
financial records. Included in that, was a theory that the city’s
$60,000 investment in 2015 for economic development work done by the
LCA, did not go to its intended use. Hoefle suggested the city
should investigate this, and demand a refund of money that went
unspent.
On Tuesday evening, Jonie Tibbs brought up the topic under the
“Other discussion” portion of the agenda. She said that she wanted
it put on the agenda for Monday, March 21st, that the city would
order an independent audit of the financial records of the Logan
County Alliance.
Tibbs referred to the Hoefle presentation and said she felt the city
had a duty to hear “both sides” of the story and felt an audit would
answer the questions raised.
Todd Mourning said that while he has never seen one, he has been
told that annual audits of the books are conducted for the LCA by
Abbott and Associates in Lincoln. He wondered if those audits were
relevant and up to date, could they be presented to the council.
 Michelle Bauer wondered about the city’s involvement with the
organization before 2015. City Administrator Clay Johnson said that
prior to the Economic Development Agreement, the involvement had
been with the Lincoln/Logan County Chamber. The city had a
membership with the chamber and also sponsored a hot air balloon at
the annual Lincoln Art and Balloon Festival.
Bauer then asked about before 2015, where is the city interest in
those prior year’s financial records?
Rick Hoefle said that since last week’s meeting, he has been
approached by several constituents who do want to know what happened
to the $34,000 that Leslie Hoefle questioned.
“They have had a couple of weeks now to put everything together, and
I think they should want to prove themselves,” Hoefle said. He went
on to say, “I think it is time to step forward and show that we as a
council are going to do the right thing. There are people looking at
us, and there are six of us who will come up for re-election in
2017, this isn’t going to be forgotten.”
Bauer said she did not disagree with Hoefle at all, but she did
question if the city had an investment prior to 2015 that gave them
the right to request audits of prior years. Hoefle said he agreed
with Bauer from that perspective. He said the city’s primary concern
should be the year of the contract for Economic Development.
Mourning asked if the city had any overpayment coming back to it
from the Alliance ending the contract. Johnson said the contract had
been terminated in March, and the city had paid through February
only; so no, there was not a refund coming back for that reason.
Tracy Welch said he too agreed with Bauer on the LCA, but wanted to
clarify that the discussion going on was not just about the Economic
Development Agreement, but also about the city’s commitment to the
Tourism Bureau.
Welch went on to say, “At that presentation last week I didn’t say
anything, quite honestly because I was overloaded with information.
I think someone told me this, "Where is the truth? It lies somewhere
in between," and I think the only way we are going to figure that
out is with an audit. I think as a council we would be remiss not at
least to hear the concerns of the community and follow through.”
Welch went on to say that he didn’t want it to look like the council
was “pointing fingers” at the LCA, but just that we are doing our
due diligence.
City Treasurer Chuck Conzo also weighed in on the discussion saying
that with the structure of the LCA, Chamber, and Tourism, he wasn’t
sure how the three could be separated now that the decisions have
been made to combine the three. He reminded the council that he
believed that combination was ill-advised, but now that it does
exist, it would be difficult to audit only one of the three.
Welch said there were separate sets of books, and that was part of
the gray area for him.
Steve Parrott mentioned that at last week’s meeting, Maggie
McMurtrey and Sal Pollice had spoken on behalf of the Tourism
Bureau. He said that Pollice has indicated that he believes the
tourism's accounting is sound. Parrott said his main concern was the
Alliance, but he did realize that perhaps the two could not be
separated. He concluded saying he is in favor of the audit.
Johnson said he wasn’t sure what the city’s legal strength was in
this case. He said he didn’t know if the city could legally request
a full audit of the LCA. He explained that the LCA has funds that
are not from the city, so it is unclear what the city’s authority
would be. But he added, he did believe the LCA could provide an
accounting of the dollars that were spent on economic development.
Welch said that one of the most difficult parts of understanding
this organization is that it is an umbrella with a DBA (Doing
Business As). It is the Chamber “Doing Business As” the LCA. He said
Tourism is one side of the LCA, and Chamber is the other. He said he
felt that the economic development dollars would be in the chamber.
He said it was all a very gray area, and he thought that is why
“people” are confused and concerned.
Bauer posed a question to city attorney Blinn Bates, does the city
have the authority to request such an audit. Bates said the city
could ask, but the LCA could also say “No.” Welch said then that
it sounded like the city had invested in an organization without the
power to hold it accountable. Johnson said perhaps so, but he said,
the city does this with other entities. When the city enters into an
agreement with for example “Vendor Plumber X, because we pay them a
contract for service, we can’t require, we can ask, but we cannot
require.”
Welch said in the Economic Development Agreement with the LCA there
is a provision for the city to request an audit that the LCA has to
comply with. He said he didn’t know that the city could require an
audit of the Tourism Bureau.
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Bauer said then, yes, the city could do the audit on the E.D. Agreement, but she
wasn’t sure the city could do one on the Tourism Bureau.
Hoefle commented that the Alliance should want to give the city permission for
the audit. He said, “I would think they would want to give us the audit. This is
their opportunity. Mr. Pollice said above and beyond he wouldn’t be in something
like this if it wasn’t straight forward. I would think it would be in his best
interest.”
Parrott said that he felt that if he asked for this audit and the LCA refused,
then he would be hesitant to ever do business with them again.
Bauer said she still wanted to try and clarify who the council is questioning.
She indicated she wasn’t opposed to asking the LCA to be accountable, but she
wasn’t clear on what the city wanted them to be accountable for.
Hoefle referenced an article written and published by Lincoln Daily News on
March 7th where that LCA treasurer Keith Snyder had said that the tourism bureau
paid one-sixth of the salary paid to the LCA’s CEO/President, Andi Hake.
Therefore, he feels the audit must include both.
Hoefle said he had gotten several calls from people wanting answers to the
questions posed last week. He concluded, “I think an audit clears the air, they
can stand on their own, and tell us what is going on.”
Jeff Hoinacki asked about the cost of the audit. Conzo referenced the audit done
annually for the city and said the cost involved there was more than $25,000. He
would later note that he used that only as a reference point, and that the
city’s books are surely more complicated than the accounting records of the
Alliance.
Tibbs said that she felt the cost of the audit didn’t matter, what mattered was
the council and city’s obligation to the taxpayers. She commented, “The
taxpayers are laughing at us, and they are getting mad at us.”
After a brief side discussion on how that the city used to have separate
committees with chairmen who were responsible for viewing receipts and
expenditures, the discussion moved back to the audit of the Alliance. Hoefle
asked if the council could put something on the agenda.
Hoinacki said okay, but what was that agenda item going to be? Mourning
suggested that before council vote to order an independent audit, perhaps they
should ask to view the existing audits. His point was that perhaps the city
could get the answers it is looking for without expending for a fresh audit.
Hoefle asked for some opinions from Conzo. He wanted to know who Conzo thought
should do the audit. Conzo said the city uses Estes, Bridgewater, and Ogden; but
several reputable firms would be more than capable. Hoefle then wanted to know
if Conzo would supervise or oversee an audit of the LCA books for the city.
Conzo said that was not the practice when the city is audited.
Hoefle then said, “Audits can go any way you want. You can make them go in a
certain direction, can you not?” Conzo said a lot of the time, it would depend
on the diligence of the people doing the audit. He concluded, “A good auditor
would not allow itself to be manipulated.”
Hoefle went on to say, he wanted the audit, and also if the money is not
accounted for, he wants a refund. He said that should be in the motion.
As the discussion moved forward, the decision was made not to ask for the refund
in the first motion, but only to request the audit. Wording for the motion
became a challenge with Tibbs questioning the word “allow” she said she wasn’t
in favor of a motion that would include “asking the LCA to allow an
audit.” But the verbiage went back to Bates saying that the LCA can say no, and
Welch saying they cannot say no to an audit of the economic development
contract.
Mourning said rather than a motion and a vote, perhaps the council should start
with a simple conversation.
Hoefle said, “That ship has sailed. Mr. O’Donohue (LCA Chairman Tom O’Donohue)
is a professional. He’s been the president of the LCA two years now. He knows
this is coming. He knows it is in the contract. We’re not surprising him. Let’s
just move forward and get this done. Once it is done, if he is as professional
as he should be, its all in the clear.”
Welch commented that there had been a lot of feedback as to why the council
asked no questions last week. He said the work ahead could not be done behind
closed doors, which everything needed to be out in the open.
Hoefle concluded that this had to be a vote for the benefit of the constituents.
He commented, “The city (referencing constituents) is watching, I think we do
take a vote. I think the city has to know who is on board to get this audit and
who is not, and I think if you are not on board, the city is going to remember
it.”
[Nila Smith] |
