LET’S FIX THAT By George Lumley, CPA
QUESTIONS FOR CITY COUNCIL CANDIDATES
With the city election coming up does the Evansville electorate care about the knowledge, beliefs, and willingness to lead of the candidates, or is the election just a popularity contest? I thought running a city with a $300 million plus annual combined budget would require a very mature, knowledgeable and skilled group of people. However, with my recent introduction to Evansville’s government, I feel that I am back in junior high. The cliques, better-than-everyone-else attitude, secret note passing, private clubs and rumormongering seem to thrive among the elected and appointed. You say “ewe†can’t change city hall; I say, let’s fix that by electing leaders instead of sheep that follow blindly because they know no better.
It is easy to get candidates to speak in general terms as to items that have been in the news. Ask a candidate about a specific project: Do you support the new downtown hotel? The answer will be some general justification: We need to focus on saving our downtown and revitalizing the inner-city. When asked if it will be a big success and profitable venture, they quickly respond: Oh yes, with all the downtown improvements like the convention center, Ford Center, and medical school coming, it will be a big success and highly profitable. Then you ask something a little more complicated: If it will be so profitable, why do you think the private investors pulled their money out of the project, not wanting to risk anything? Then you get the deer-in-the-headlights look, and the candidate is quickly moving to other issues. They don’t even give you the opportunity to ask the really complicated analogy: If it is a 60 million dollar project and the city puts in 25 million as a gift and the other 35 million is a bank loan – isn’t this like filing a bankruptcy reorganization and getting rid of 25 million in debts and equity before the venture even gets started? Why is it a good project for us when we did not even leverage a few private dollars?
I was conversing with one candidate and asked for a position on the blight. The response was that he/she didn’t have one – the blight was not an issue at the primary and he/she really didn’t have any interest in it. Wow – so much for getting any details on fighting blight, demolitions, and land banking. I asked the candidate what his/her focus was, and the candidate said it was finance; the budget was out of control and needed to be balanced. I asked how he/she would balance the budget and they looked at me like, well stupid, raise revenues and cut expenses of course. Ok, what revenues are you going to raise and what expenses are you going to cut? Again, the deer-in-the-headlights look.
Not one that gives up easily, I thought I would try again with something pertinent to the zombie house cause that I am currently working on. At issue is the fact that money Evansville has received in grants and appropriated out of local funds for the demolition of residential zombie houses is being spent on other things.
Some, like the Director of Department of Metropolitan Development, don’t see this as an issue. He told me that not taking out 50 houses five years ago under a grant did not cause the blight problem we have today. Well it did not cause the problem but it sure has contributed to the continued spread. Zombie houses are like apples – one bad apple can spoil the whole bunch. If each zombie house contributed to spoiling just one more each year, that would mean that not taking out these fifty houses created 1550 just five years later. With one zombie house nearby, property values drop – no one really knows how much, because there are no longer any sales. No one wants to buy close to the zombie house. Zombie houses kill the value of a neighborhood.
Besides the grants, the county has appropriated funding for direct demolitions out of the riverboat fund. Appropriated means that the city council has by law (ordinance) agreed to allow the citizens’ funds to be spent for a particular purpose. The council has appropriated between $500,000 and $1,000,000 per year in the last 4 years out of the riverboat fund to be spent on direct residential demolition expenses. Most funds have been spent, but not for residential demolitions as the ordinance (law) requires. For example: In 2014, the city financial statement shows $640,000 to be spent for demolition out of the riverboat funds; however, records obtained through a public access request from the Building Commission show that the city only spent $346,000 on actual residential demolitions. I have not been granted access to additional records yet, but I suspect the additional charges were not legal expenditures of this fund.
We have the same problem in 2015. Although not yet provided access to the actual billings of what the expenditures were for, I was able to ascertain that in the first six months of 2015, significant amounts that are not residential demolition expense are being charged or hidden in this riverboat account. Just to make sure other expenses were not allowed by the council, I attended the joint finance committee and a regular city council meeting, and they clarified that only the direct demolition expenses were to be charged to this account.
Four items of expense that I could identify without the detailed records were related to a grant for taking down houses in the flood plains. According to the Courier and Press coverage, all of the expenses for the program were to be covered by the grant. So why was approximately $15,000 charged to the riverboat demolitions and not the grant fund. Was this poor accounting or creative accounting to take from this fund while leaving the $15,000 floating in the grant fund to be claimed as “found†money and used for special interest projects?
This sounded like a good question for a candidate. So I asked the next candidate I saw: There is an appropriation in the riverboat fund for paying for demolition of zombie houses. The council clarified that only direct demolition costs are to be charged to that fund. Things other than direct demolition are being charged, specifically grant expenditures, that may be illegal expenditures out of the riverboat fund – what do you think about that? Another deer in the headlights.
This candidate emailed me the next day with what they apparently considered a better answer. The following is most of what was said:
“I am not aware of any misappropriations in the city budget nor do I suspect any. The IN State Board of Accounts has reviewed the city books and given the city of Evansville a clean bill of health. The city also has an excellent credit rating. The Mayor prepares the budget and city council approves it and sometimes approves transfer of funds. I would encourage you to speak with Mayor Winnecke or the City Controller , Russ Lloyd, Jr. to answer any questions you have regarding the city budget. Additionally, Kelley Coures as head of DMD is the appropriate person to answer any questions regarding federal funds and blight elimination. He has been a great wealth of information for the candidates and I am sure would be available to any citizen.â€
Please people, vote for candidates willing to discuss the issues in depth while displaying that they have the knowledge to lead and not just follow like sheep to slaughter. The election is not a junior high popularity contest, and I hope you are not playing follow the leader but asking questions and making mature decisions. Ask your candidate about why money available for demolition of zombie houses is being spent on other things, and what does he/she intend to do about it? Why do we need to spend millions of dollars for a land bank now if we have not been spending everything appropriated to fighting blight in the recent past?
FOOTNOTE: George Lumley is a CPA and a past employee of the Indiana State Board of Account.  Mr. Lumley is becoming well known and respected for his outstanding work on “Blight Property” issues. Mr. Lumley as taken to task officials in the DMD because of the decisions that they are making to fund “Blight” programs are missing their intended mark significantly.
