Friday, November 26, 2010

November 26, 2010 Final Judgment in Holden v. Swann: Hamblen County Ethics Committee and Its Members Violated the Tennessee Open Meetings Act

The Tennessee Open Meetings Act, like the Tennessee Public Records Act, is an extremely important law for those who truly support open and accountable government.

Ironically, the Hamblen County ETHICS Committee violated this law in December 2008 and failed to even attempt to correct its violation of the law until after a citizen, Gwen Holden, filed suit on February 17, 2009. I represented Ms. Holden in this matter (Holden v. Swann, et al)

The 3-page Final Judgment in Holden v. Swann was signed on October 1, 2010, finding that the Defendants (Hamblen County Ethics Committee, Joe Swann, Stancil Ford, Bill Brittain, James Harrison, and Jack Cartwright) violated the Tennessee Open Meetings Act.

The Judgment enjoins the Defendants from future violations of the Open Meetings Act and provides that the County pay all court costs ($282.50) in the matter and pay $1500 for attorney fees and discretionary costs incurred by Ms. Holden.

You can click on each page to enlarge, read, and print it out. 

Interestingly, the Hamblen County Ethics Committee was dissolved by the Hamblen County Commission on February 18, 2010, while Holden v. Swann was still pending and before any Judgment had become final in this case.  

When it dissolved the Ethics Committee, the Hamblen County Commission, in a divided vote, appointed the county's attorney, Frank "Rusty" Cantwell, as the "County Ethics Officer."  [Cantwell, acting as county attorney, represented the Ethics Committee and the individual defendants in Holden v. Swann, et al.]

All future Ethics Complaints against a county official or county employee will be referred to County Ethics Officer Cantwell.

Then County Ethics Officer Cantwell, who is also the county's attorney for county officials and employees, will decide what to do with any complaint against his client(s).  More on this set-up later.

Thursday, November 25, 2010

Wednesday, November 24, 2010

November 24, 2010 Morristown Sends Bill for New $10/Month Garbage Fee To Some City Residents But Not To Others

I asked a simple question at the Morristown City Council meeting on November 16.

Short Question: Are some city residents paying the garbage fee while other city residents are not?

Short Answer: Yes. 

My question and City Administrator Tony Cox's response were not reported in the "news"paper, but two days later Bob Moore had a front page article trying to provide cover for the fact that the City of Morristown is charging the new $10/month garbage fee to some city residents but not to others.

After this came out on November 16, Moore talked to Asst. City Administrator Buddy Fielder. Fielder apparently said that the city's billing system is 95% complete and added that the City is resolving all MUS-related bills before addressing billing difficulties in the Alpha-Talbott, Witt, and Russellville-Whitesburg  utility districts.

For some reason, Moore didn't describe the billing difficulties that the City needs to address in AT, Witt, and RV-WB utility districts. Why?

As soon as Fielder said there were billing difficulties with AT, Witt, and RV-WB, a reporter would ask certain obvious questions especially for a front-page news article: What are the billing difficulties with AT, Witt, and RV-WB? What are you doing to address these difficulties? When will these difficulties be resolved?

But IF Moore had asked the obvious questions, then Fielder's statement about billing difficulties in the Alpha, Witt, or RV-WB utility districts would have unraveled. 

There are no current billing difficulties to address with the Alpha, Witt, and RV-WB utility districts. Alpha, Witt, and RV-WB have NOT sent a single bill for the city's garbage fee to city residents in their areas  because the City has NOT yet asked or authorized them to add the city's garbage fee to water bills of city residents.

Moore, in my opinion, wrote the article solely or primarily to allow the City to provide front-page "spin" for its actions in billing some residents and not others. To make sure that the City had free rein to "spin" its response, Moore adopted a new journalism standard that could be described as "don't ask (the obvious questions) and don't tell (what's really going on)."  Just front-page governmental "spin."

What we have is the City directing MUS to jump in and add the $10/month garbage fee to water bills for city residents in September 2010, but the City did NOT and still has NOT (as of November 16) directed or authorized AT, Witt, or RV-WB to add the $10/month garbage fee to water bills for city residents in September or in October or in November. Why start billing some but not others?

Assistant City Administrator Buddy Fielder said that City residents who weren't billed for September, October, and November won't be charged for past service. "Those were issues on our part, not on their part....I don't think it makes sense to do that."

As a matter of fairness, Fielder is probably right that the City should not go back and try to collect past garbage fees from city residents who didn't receive a garbage fee on their utility bill because of the city's "issues."  Especially when the "issue" in this whole thing is that the City didn't even try to bill city residents served by AT, Witt, or RV-WB.

But what do Fielder and City Administrator Tony Cox and Mayor Barile and City Councilmembers think about the flip-side of this mess? What about those city residents who did receive a bill and who did pay the $10/month garbage fee for a service that others didn't pay for? What's fair for them? 

Just looking at what's fair and addressing some potential legal problems in this "charge some/don't charge others" situation, the City should stop billing the garbage fee to city residents served by MUS until the city residents served by Alpha, Witt, and RV-WB utility districts have been billed an equal number of months.

After all city residents served by Alpha, Witt, RV-WB utilities have been billed for the same number of months that MUS customers have already been billed for, then billing of city customers thru MUS would resume. 

Sadly, this post is about proper billing of a new garbage fee instead of the fee itself.  The new garbage fee is the city's poster child for years and years of financial mismanagement and an almost total lack of accountability.

The new garbage fee is nothing more than a way for the Mayor and City Council to take more money from the citizens and use that money for pet projects--like brick pavers on city roads--while providing financial cover for the problems brought about by years of financial mismanagement, sweetheart deals, and illegal money switcheroos.  

It's not rocket science. Mayor Sami Barile and City Council wanted more of "other people's money" so they decided to make city residents start paying a separate and new "fee" for garbage pick-up, a service which used to be provided thru property taxes and other city revenues.

[The only person to vote against the new $10/month garbage fee was Councilman Gene Brooks.]

Of course, making the taxpayers shoulder the financial burden created by the Mayor and City Council's years of financial mismanagement, neglect, and lack of accountability is nothing new.

Let's tax increase in 2007, sales tax increase in 2008, red light cameras, sewer increases almost every year, and now a new garbage fee!  Next year?

Sunday, November 21, 2010

November 21, 2010 The Lowland "Asset Purchase Agreement" (15- Page Contract)

Above this post is Page 1 and following are Pages 2-15 of the Lowland "Asset Purchase Agreement" that was negotiated by former City Administrator Jim Crumley and that was approved by the previous City Council in a 5-1 vote in February 2009. Voting YES: Mayor Barile, Claude Jinks, Frank McGuffin, Doc Rooney,and Kay Senter. Voting NO: Rick Trent. Click on each page to enlarge and read or to print the page. 
When two new councilmen were elected in May 2009, one of them--Gene Brooks--spearheaded the initiative to terminate Crumley who "retired" in the face of termination proceedings. This was probably the most important action of the new council. Everything else has been like peeling an onion as the true magnitude of Crumley's financial shenanigans have gradually come out layer by layer. 
After addressing the Crumley matter, Brooks turned to another major concern and campaign platform-- the Lowland Wastewater deal with MPLG (Mike Ball and Joe Fielden). After new City Administrator Tony Cox was in place, Brooks told Cox of his concerns about the Lowland purchase and requested copies of all Lowland documents. Brooks reviewed the documents, showed them to several people, and continued to have serious concerns not only about the Lowland Agreement but also other financial issues. 
Since the State Comptroller was already looking at city financial actions, Brooks went to Nashville to discuss his concerns about the Lowland Agreenent, illegal interfund "loans," and other financial questions directly with the Comptroller's Division of State and Local Finance. Carl Murphy and I accompanied Brooks. (Carl is Gene's father-in-law.) Shortly after that meeting, the Comptroller's Office sent a letter to the City in July 2010, pointing out discrepancies in the 2009 audit, raising questions about illegal interfund "loans," and perhaps most importantly raising serious questions about the Lowland Wastewater Plant Agreement. Click here to see the Comptroller's 5-page July 8, 2010, letter. Click here for a very brief discussion of just a few of the questions that surround the terms of the Lowland Agreement and its approval.  

Wednesday, November 17, 2010

November 17, 2010 Mayor, City Council, And the Nutty Lowland Sewer Contract

Yesterday, City Council approved ("ratified") City Administrator Tony Cox's hiring several weeks or maybe a month or more ago of an outside attorney (Mark Mamantov) to help the Council handle numerous financial issues with the State Comptroller's Office.  Click here for the State Comptroller's July 8, 2010, 5-page letter to the City.

[Cox did not have the authority to hire outside counsel.  A City Ordinance states that the Council, not the City Administrator, may hire outside counsel. Council's after-the-fact approval of what Tony had already done provided cover for Cox's violation of the City Ordinance. There is no doubt that Mr. Mamantov is an outstanding attorney.  Cox, however, jumped the gun and exceeded his authority in presuming to retain an attorney without a vote by Council.]

The big issue that Mamantov, City Attorney Dick Jessee, Mayor Barile, and City Councilmembers must deal with is the Lowland Sewer Contract ("Asset Purchase Agreement" is its title).

I'll put the contract on the blog soon. Yesterday, I spoke about the contract briefly during public comments. Much of the Lowland agreement is one-sided with just about every major term in favor of the Sellers (MPLG/Joe Fielden/Mike Ball).  Parts of the contract are outrageous/borderline outrageous. Former City Administrator Jim Crumley apparently negotiated the terms of the agreement and then brought the contract to Council in February 2009.

Crumley may have fed the Council a lot of bull when he presented the contract to them, but even with Crumley's sugarcoating, there is no doubt that several provisions in the contract should have raised serious questions and should have caused the current contract to be rejected by the entire Council in February 2009. Instead, five voted in favor of the contract (Mayor Barile, Councilmembers Rooney, Senter, McGuffin, and Jinks) and only one councilman (Rick Trent) voted "no."

Here are three of the contract terms that should have raised red flags and caused the contract to be revised or rejected:

1) Flow fees: The contract provided that the City would make a one-time payment of $750,000 to the Sellers and then pay "flow fees" of $182,500+ per year to the Sellers for 25 years. A total payout of about $5 Million.  Then a CPA came in for the City and converted the "flow fee" payments to a principal and interest schedule.  This 25-year flow fee/principal and interest schedule sent up big, red flags at the Comptroller's Office.  Apparently, the State Comptroller views the 25-year agreement (whether flow fees or principal and interest disguised as flow fees) as the equivalent of a long-term loan--the type of loan agreement that requires approval by the State Comptroller's Office. The City, of course, never requested approval of this contract/loan by the Comptroller's Office. Had it gone through that office as required, some of this mess might have been straightened out at the start.

2) Abandonment clause: This is a one-sided contract term that leaves you scratching your head.  The City paid $750,000 down for the plant and has already made the first $182,500 annual "flow fee" payment. The City will have to spend $50-$70 million or more in improvements to the plant. The "abandonment clause" says that if the City later decides to abandon or quit operating the Lowland Sewer Plant, the City must GIVE the Plant with the millions of dollars of improvements back to the Sellers AND still make all remaining payments for the 25-year term of the contract.  Sweet clause for the Sellers. Poison clause for the City.

That's like a businessman buying a small store, making a downpayment of $5,000, making payments of $10,000/yr, fixing it up at his expense, and then when he decides to quit operating the store, the contract says that he can't sell the store with the improvements he has made to the best bidder and pay off what he owes and keep the rest----no, he has to GIVE it back to the person who sold it to him AND STILL MAKE THE MONTHLY PAYMENTS to that person. No sane businessman would sign a contract with such a clause.

If you agree to make the payments NO MATTER WHAT, why would you ever agree to GIVE the plant back if you decide to quit operating it?  If you have to make the payments, for Pete's sake make sure the contract says that you get to keep the plant or that you can sell it to whoever you want to!!

And, no, this nutty abandon, give it back, and keep paying clause was not hidden in legalese in the 2009 contract. It was in plain English in black-and-white. It makes you wonder if the Lowland Sewer Contract was like the national healthcare bill. Nobody paid attention and read it.

3) Operating permit: Before approving the Lowland contract in 2009, the City knew that it would have to get a permit to operate the Lowland Wastewater Plant.  According to a statement made at yesterday's meeting by George Haggard,  the City does not have an operating permit. Sixteen months after purchasing the plant and $932,000+ later, the City doesn't have a permit to operate a plant that it "owns."

The City may get a permit --later.  The crazy part of the contract is that any businessman who was spending his own money would have held off on signing the contract or would have simply paid some earnest money and included a clause stating that the contract would not take effect and no further payments would be made until such time as the City obtained an operating permit. [Sort of like a real estate contract where you put down earnest money with the provision that you will make a good faith effort to obtain a loan, but if you are unable to get a loan, then the whole purchase agreement is void and you get your earnest money back.  The City, like any business or individual, should have had a clause stating that nothing would be paid until the City got its operating permit.]

Councilman Gene Brooks stated that he had been concerned about the Lowland deal before he was elected in May 2009. Brooks added that he got the Lowland documents, reviewed them, and went to Nashville to discuss this situation and other financial matters with the Comptroller. Carl Murphy and I went with Gene on that lengthy trip to discuss the legality of terms of the Lowland contract, the "flow fees" and principal/ interest schedule, and the illegal sewer fund to general fund loans that had been made in 07,08, and 09.

George Haggard, a local businessman, made some strong and important public comments yesterday.  Haggard noted that the City paid $750,000 down and has paid out over $182,000 more and still has no permit to operate the plant. Haggard added that the Lowland facility is in poor shape, that the Lowland contract was a bad deal, that Jim Crumley did not tell them the truth back in 2009, and that the City should try to get out of or renegotiate the Lowland contract now that the Comptroller has stepped in and everyone is looking more closely and questioning the original contract.

Although Councilman Brooks requested public discussion of this matter, the Mayor cut his remarks short. Brooks then added that Tony Cox has asked councilmembers to talk to Dick Jessee one-on-one about the Lowland deal. If Cox has his way, there will be little, if any, public discussion about the Lowland Contract and the huge costs that loom ahead if the City doesn't at least try to get out of this.

Once Cox decides that he has the magic number (four) in hand, then he'll put it on the agenda for a quick vote. There will be little or no public discussion because all the discussion will have taken place outside of the public eye.  Cox wants to minimize public deliberation by Council in regular meetings. and the Mayor and most councilmembers are going along for the ride with Cox just like they did with Crumley.  And we know where that got us!

Cox has made it clear that he prefers a tiny, cosmetic "patch" to the contract and then proceed down the $50-$70 million dollar path of more debt. Now the public is waiting to see if and when the Mayor or any councilmember has the courage to engage in public discussion of this important public issue.

Thursday, November 11, 2010

November 11, 2010 Veterans Day

In honor and in remembrance of all who have served the United States of America in the armed forces at home and abroad...

In honor of all who currently serve the United States of America in the armed forces at home and abroad...

In remembrance of all who, in service to the United States of America, gave the last full measure of devotion...

The American Soldier

It is the soldier, not the reporter,
Who has given us freedom of the press.

It is the soldier, not the poet,
Who has given us freedom of speech.

It is the soldier, not the campus organizer,
Who has given us freedom to demonstrate.

It is the soldier who salutes the flag,
Who serves beneath the flag,
And whose coffin is draped by the flag,
Who gives us freedom.