THE DEARBORN COUNTY REGISTER
THURSDAY, SEPTEMBER 12, 2019
PAGE 7
DOCUMENTS From Page 6
Impromptu press conference given by Lawrenceburg Utility Director Olin’s Clawson’s attorney Dave McGimpsey of Bingham, Greenbalm, Doll law firm. …This legal opinion does not site a single statute. It does not site a single case. It doesn’t site a single administrative rule, regulation or policy. It is just smoke and mirrors, designed for one purpose and one purpose only, and that is to discredit the utility. There is one allegation that Weldon talked to you [about] a state board of accounts member. That member is not identified. The State Board of Accounts did not talk to the utility. The State Board of Accounts did not talk to the USB [Utility Service Board]. The State Board of Accounts did not talk to any council member, so really, what information is the city … woking off of here. … working off one-sided information. He didn’t do any independent investigation. That is not how the State Board of Accounts works. They don’t come out if someone calls them and (garbled) their opinion. So take that with a grain of salt on the unidentified State Board of Accounts person that Mr. Weldon contacted. The next thing in the opinion is supposed to be based on facts. The opinion gets all the facts wrong. First it says the Fourth and Front street project had USB minutes on April 29, 2019, and June 24, 2019. … Look at the bottom of the first page, the opinion states at the April 29 USB meeting Colin Browning [LMU accountant] stated the pole relocation would cost $223,000. That is the first statement we need to look at. The second statement we need to look at is that Colin stated the project would cost $359,000 and that was at the June 24, 24, 2019, meeting. And the third statement we need to look at, quote, Olin Clawson stated the project could get as high as $400,000. Since the opinion’s language is that there is a ceiling on the cost of $400,000. Those are three factual statements that I want you to keep in mind. … [He goes to next page] That is the official city record, the official city minutes of the April 29, 2019, Board of Works meeting. First off, first thing, I want you to notice in the very first paragraph where it identifies who was present at this meeting, you will notice that Del Weldon, the city attorney, was present at that USB meeting representing the utility. He was council to the utility. He knew what was going on. He had personal knowledge of exactly what was transpiring at that meeting. [New page] Collin Browning presented that they were reporting on the cost associated with electric relocation. As of date, $223,392. The opinion states that is the estimate for the whole cost. This, the official city records state that it is $223,392 as of that evening. Those are the invoices that had been submitted as of April 29, 2019. As you read further, the very next sentence the official city minutes states Mollaun asked how far into the project we are. Olin
LST
From Page 1 back to the United States where it is now docked for 11 months of the year in Evansville, Ind. Along with the tours there will be docking port info, veterans dedication, ship facts and figures, and videos. The LST visit is made possible by the city of Aurora, the Dearborn County Convention, Visitor and Tourism Bureau, and the Lesko Park Veterans Committee. They received a 5,000 grant award from the Civista Charitable Foundation for the USS LST-325 visit. But that is not the only event happening over the weekend. On Friday, Sept. 13, a Fall Paint Party will be at Great Crescent Brewery, 315 Im-
stated we started the project last week. They are going to jack the two poles together. Once that is done, then we will run the pipe that will allow relocation. They are just starting this project and they are already $223,000 into it. But the opinion represents that one of the facts is that in April 29, 2019, the total cost was going to be $223,000. That is completely wrong. It’s a mis-reading, a mis-representation of what the official city records demonstrate. Some of the other things you need to be aware of, later down in the same paragraph in these official city records, Mel [Davis] asked if it was their idea to bill the city for the costs. Olin said they were fine with the way they were, not their issue and the cost [belongs] to the city. Mel asked if we had a half million dollars in cost benefits. They knew it was going to be more than $223,000. It’s disingenuous. At that time, they knew it was $223,000. They knew it was going to be well over $223,000. The other thing is the city minutes reflect this is not an LMU project. He is just trying to confirm with Mike Clark what needs to be done. Again, this is a city project not a utility project. When the city authorizes this, or when the city wants a utility relocate, the city needs to pay for the work. Finally, again, the official city records … Paul Seymour asked if we had grants on this project. Mollaun stated we do not, but it may be part of the Community Crossings [grant]. This was not part of the grant. So any representation in that opinion that the pole relocation was part of the Community Crossings Grant is just false. It’s not true. [New page] Those are the official minutes of the June 24, 2019, meeting. Again, city attorney Del Weldon was representing the USB. He was there representing the board that oversees the utility, so he has personal knowledge of this. So we turn to the next page, Colin gave an update as to what the pole relocation cost was. So far, the expense is $359,502. That is not the estimate of what is going to be. That is the expense occurred to date. It says Paul Seymour asked if this was an LMU project, Olin stated that it was not. LMU was asked to remove the pole to soften the corner. Again, it’s a city project. Later on in that same paragraph, Olin states that LMU would easily get $400,000-plus by the time the project is complete, and the city will have to reimburse the utility for this project. The opinion provides that $400,000 as a ceiling. The official city records clearly indicate the $400,000 is the floor. And as we all know, the other official city records indicate that it is going to be probably more, at least a half a million. Those are some very important factual discrepancies, I find, which the opinion evades. This opinion doesn’t site any law, not a statute, not an administrative rule, not an administrative regulation, not even a policy. It doesn’t site any case law whatsoever. It isn’t worth the paper it is
written on. It cites unnamed sources who are not independent that didn’t do an independent review. The opinion, in terms of whether or not the bill can be paid, just has no merit. It’s an opinion that is completely worthless. The other thing that went on at that meeting is that the allegation was made that somehow $10.1 million has disappeared from the utility. That’s a false allegation as well. Reedy Financial Group was indicated as one of the CPA firms that Mr. Weldon had hired to make an investigation of this. No documentation has been provided from Reedy Financial Group, let alone their opinion. At the very end of the legal opinion says for, again no law cited, reasons and based on the law, the opinions of Reedy Financial Group, and the recommendations of the State Board of Accounts, it’s our opinion that we cannot pay this invoice. Reedy Financial Group has not rendered an opinion, and I bet if you call them up and have them speak to the public they would not provide, quote, their opinion. As I indicated at the beginning here, opinions have special meaning in the professional services community. Baker Tilly, again, I do not think would provide, quote, their opinion. … I have the Baker Tilly report right here. It is dated Sept. 3, 2019. Let me read the cover letter to this report. It is addressed to Richard Richardson, clerk treasurer. Dear Richard: The attached schedules listed below present unaudited and limited financial information for the purpose of discussion and consideration of the financial position by the appropriate officers, officials and advisors of the utility. Use of these schedules should be restricted to this purpose for internal use only, as the information is subject to future revision and final report. Number one, Mr. Weldon took this information, this Baker Tilly report, and not only disregarded what Baker Tilly said what its proper use would be, he broadcasted at a public meeting trying to accuse the utility director, or the utilities of squandering $10.1 million. Also, if you look at Page 2 of that report, it’s called Lawrenceburg, Indiana Municipal Fiber Utility Management Summary, it says at the end of calendar year 2018 they had $5,052,000 in cash and investments, and yes on July 19 that cash balance had declined to $687,987. If you look at the rest of the report here is what the rest of that money was spent on. There was a $1.4 million loan to the fiber utility … [Interruptions, considerable talking and background noise. See report.] …capital and other assets. The utility invested $1,382,279 in infrastructure. That is exactly what you want your utility to do. We have all heard about America’s crumbling infrastructure. You want your utility to invest in capital assets to promote safe and reliable service, to promote resiliency because that’s what you need to provide service. You can’t provide service if your economic base is going to crumble.
porting St., from 6:30-10:30 p.m. Cost is $40 and RSVP to Southeast Indiana Board of Relators, 218 Forth St. The party benefits Safe Passage Inc. The final Summer Outdoor Movie – “Hotel Transylvania 3” – presented by the Aurora Lions Club will be shown in the Main Street parking lot at about 9 p.m. There will be free admission and free popcorn. Hotdogs, hamburgers and drinks will be available for purchase. Saturday is a full day of activities for all ages. You can Celebrate Aurora at 9 a.m. with coffee and doughnuts at The Depot, 510 Second St. From 10 a.m. to 2 p.m. there will be horse drawn trolley tours through downtown with information on the landmarks
in town. From 2 p.m. to 4 p.m., at Southeast Indiana Art Guild will show off Aurora artists with a display and reception. Then at 4 p.m., Roy Lambert will portray Dr. Jacob Ebersole at the Aurora High School Museum, 232 Main St. Ebersole was a well-known Cincinnati surgeon, born May 15, 1820, near Eaton, in Pribble County, Ohio. After he graduated from the University of New York he began medical practice in Aurora where he remained for nearly 20 years. The doctor served during the Civil War, and was at the Battle of Gettysburg. Lambert, an Aurora historian and Aurora Public Library District employee, has portrayed Ebersole during several Talk About Aurora events, welcoming bus tours at city
City of Lawrenceburg City Attorney’s Office Lawrenceburg, Indiana 47025
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It is the position of the City Attorney’s Office that the invoice submitted for work done at Fourth and Front Street cannot be paid, and to do so would violate the law. This expenditure was never voted on, never appropriated, never budgeted, and never bid, all steps required by law. There are also significant issues with the invoice itself, both direct and indirect, which we will discuss. For these reasons, it cannot and should not be paid. Furthermore, the Indiana State Board of Accounts and Reedy Financial Group support the position that we cannot pay this invoice. In order to review this bill appropriately, Reedy Financial Group was asked to conduct an accounting and provide an analysis, and the Indiana State Board of Accounts was contacted for review. The SBOA stated that they “know of no law that would allow the City to pay this bill”, and suggested that the City Attorney write a legal opinion. To prepare the legal opinion, all applicable State and local law was reviewed, as was the invoice with supporting documentation and the meeting minutes related to this project. In 2017 City Council discussed widening the turn at Fourth and Front Streets by moving infrastructure off of the curb. At that time, the City Engineer asked for an engineering estimate for the cost to move the pole so it could be submitted in a Community Crossing grant application. Olin Clawson provided a cost estimate of $180,000. This is contained in the grant application prepared by Land Consultants and submitted to the State. The pole relocation project was never presented for a vote of approval, no engineer’s estimate was obtained, it was never sent out for bids, was never appropriated, and never budgeted. In fact. It seems that it was only discussed at two utility board meetings. At an April 29, 2019 USB meeting, Collin Browning stated that the pole relocation would cost $223k. No engineer’s estimate was presented and no vote was taken. It was again discussed at the June 24, 2019 meeting. Collin stated the project would cost $359k. Olin Clawson stated the project could get as high as $400k. Olin also stated that the work would be done “in house”. Again, no vote was taken.
At the end of August Olin Clawson submitted an invoice for $1,327,987.87 to the City to be paid using City taxpayer funds. A financial analysis was conducted and revealed the following: •
$848,689.31 to outside vendors for working on the project, including labor for linemen, apprentice linemen, foremen, and other contracted labor starting in March of 2019.
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$331,833.61 in materials
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$228,827.08 in “admin fees” added to each invoice (approx. 40% markup by LMU)
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$147,464.95 in LMU wages, marked up to “recover benefits” (benefits added to hourly wage even though the City already pays them) LMU Wage Breakdown:
• • •
10 hours of overtime at $210/hour for Olin Clawson = $2100 (he is a salaried employee) 20 hours of overtime for two internet workers at $94.68/hour = $946.80 7 linemen each working 280 hours at $63.12/hour = $17,673.60 1 foreman working 280 hours at $66.97 = $18,751.60 (280 hours billed for the month of July for each employee = 12.7+ hours every working day or 35 8 hour days??)
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Fiber costs unrelated to the relocation project
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The tree that was billed to be removed as part of this project was actually a mulberry tree that fell in an alley on Center Street
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Multiple utility poles and other equipment unrelated to moving the pole
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By law, only the Mayor can propose an additional appropriation. Then Council votes to approve it and we can budget to pay a project. Before an appropriation can be proposed however, an engineer’s estimate is required as well as the lowest responsive and responsible bidder to determine actual cost. Again, there was no vote held, no appropriation, no line item in the budget, no engineer’s estimate, and no bidding was done at all. Even if those steps were taken, there are significant issues with this invoice that require further examination and reporting. Olin Clawson told the city this project would cost $180,000 and submitted that number to be included in a grant application. He then stated in a public meeting that it would cost $400,000 at most. Two months later we get a bill for more than $1.3m of taxpayer money.
During the analysis of the invoice, it is also important to take a look at the current state of LMU finances and their cash position. Our reports indicate that on 1/1/18, the electric utility had a cash balance of around $10.1m. On 12/31/18, that balance had decreased to around $4.1m. As of 7/31/19, the cash balance is only $688k. We can find no record of voting to approve spending of this nature. We have been cautioned that having such a low cash balance is not recommended for a utility. It is a concern that utility rates may be raised to recover the cash that was spent. We have been conducting an audit using Reedy Financial Group and Umbaugh (which is now Baker Tilly). Their findings are that this money has likely been spent on the fiber internet company. A review of the minutes show no votes were ever taken, no budget was ever presented, and this spending was not approved. We will continue to investigate this issue and other issues we have uncovered with the finances of LMU. We hope that LMU will cooperate fully with the investigation conducted by the Clerk-Treasurer’s Office and our accounting firms. It is concerning that this project, the tent construction, the rodeo, and the fiber internet project all seem to share in common a general lack of official voting, budgeting or reporting on spending. This should also be investigated further. For these reasons, and based on the law, the opinions of Reedy Financial Group, Umbaugh/Baker Tilly, and the recommendation of the Indiana State Board of Accounts, it is our opinion that we cannot pay this invoice. Regards,
Delmar D. Weldon III City Attorney, City of Lawrenceburg
hall as well as at the Franklin County Public Library District’s Ed Baker Civil War Study Room. A Stitch in Time Tea will be at 1 p.m. at Hillforest Victorian House Museum. It is a threecourse tea, quilt program and exhibit. For reservations, call 812-926-0087, or go to www. hillforest.org. The next day, Sunday, Sept. 15, a Veterans Ceremony will begin at 1:30 p.m., consisting of patriotic songs, guest speakers and will be concluded with a B-25 flyover. The schedule, which is subject to change, is:
■Linda ■ Rechtin School of Voice performing. ■March ■ of Veterans led by Mark Morton playing bagpipes. ■Presentation ■ of Colors and the National Anthem. ■Firing ■ of three volley by the Korean
War Veterans Association Inc. Color Guard. ■Taps ■ played by Paul Elliott in memory of his father, Nelson Elliott, all departed veterans and especially those for the D-Day invasion on June 6, 1944. ■National ■ Anthem sung by Linda Rechtin. ■Mayor ■ Donnie Hastings Jr. welcome to the LST captain and presentation of key of the city of Aurora. ■Introduction ■ of P.G. Gentrup (emcee) by Mayor Hastings. ■Introduction ■ of guest speaker John Popovich, WCPO Channel 9 sportscaster. ■Introduction ■ of Nick Ullrich, Purple Heart and Bronze Star recipient from the Vietnam War. ■Salute ■ to Armed Forces by Linda Rechtin School of Voice. ■Thank ■ you to all by Charlotte Hastings. ■Introduction ■ of State Rep. Randy Frye. ■Conclusion ■ of ceremony with Linda
Rechtin leading all in singing “God Bless America.” ■B-25 ■ flyover and firing of ships cannon. ■Live ■ music by My Brothers Keeper from 4-6:30 p.m.; DJ Adkins/Dave Lewis from 7-9 p.m. Also on Sunday, BB Riverboats will give three different cruises. A sightseeing cruise will be from 3-4 p.m.; an evening dinner cruise will be form 7:30 to 10 p.m. and an evening sightseeing cruise will also go up and down the river from 7:30 to 10 p.m. The evening will end with fireworks. There is a cost for all cruises. For reservations, call 855-6752617. On Monday, Sept. 16, the LST will be open for more tours. For more information, go to www. https://aurora.in.us/