Council Members Kept in Dark About Specifics of Sweetheart Deal for Staffer Who Resigned

by P.D. Lesko

IN JANUARY 2015, City Administrator Steve Powers told Council members that Building Dept. staffer Ralph Welton had resigned. Council members took that to mean that Welton had left the employ of the city and its payroll. Records revealed the opposite was true: Between Dec. 2014 and April 2015, Welton remained on the city’s payroll, but under the auspices of a Separation Agreement that required him to do no work.

Powers sent Council members a Jan. 30, 2015 email in which he wrote that Welton’s resignation would not take effect until May 7, 2015. He provided a copy of the email to The Ann Arbor News.

In his email, Powers wrote, “Given that Mr. Welton is near retirement, a standard separation agreement was executed between the city and Mr. Welton to provide the transitional assistance.”

That “transitional assistance” was not specified to Council members as a lifetime pension, allowing Welton to cash out hundreds of accrued sick and vacation hours, as well as health care benefits for Welton and his spouse, if any. Neither does the email from the City Administrator include any specifics about the terms of the Separation Agreement. Further, characterizing to Council members the agreement was “standard,” triggers questions about whether paying an employee for months while specifically requiring that individual not to work is standard practice.

The Ann Arbor Independent has requested copies of the five most recent Separation Agreements executed by the city’s Human Resources Dept. in order to compare those agreements to the agreement made with Ralph Welton.

First term Council member Julie Grand (D-Ward 3) knew nothing of the terms of Welton’s Separation Agreement and said she did not wish to “micromanage” city administrators. Nonetheless, she told The Ann Arbor News she wished there had been “more transparence.”

So does The Ann Arbor News. In January 2015, that paper quoted City Administrator Steve Powers as saying Welton had resigned. In an article published on Apr. 24 about Welton’s Separation Agreement, the Ann Arbor News reporter writes, “…In early January, following inquires from The Ann Arbor News, Powers confirmed Welton had recently resigned, but he didn’t mention Welton was still technically employed by the city and would be on paid leave until early May.”

The Ann Arbor Independent broke the story of Welton’s Separation Agreement that gave him months of pay, required him to do no work and postponed his resignation date so he could collect a lifetime pension and health care benefits. Welton worked for Ann Arbor for 54 months. Under the auspices of a loophole crafted by city staff charged with revising the city’s Pension Ordinance in 2011, employees hired at age 60 or older are allowed to vest in the employee pension plan after five years.

In 2011, the vesting period was widely reported to have been upped from five to ten years. The loophole, however, got little attention from Council members who voted unanimously to adopt the modifications to the Pension Ordinance. Likewise, local media glossed over what has turned out to be a back door exploit used by those who wished to extend the generous deal to Ralph Welton.

The question remains why Welton was investigated twice in six months and why he was given the sweetheart deal.

An email turned over in response to a Freedom of Information Act request may help answer that question. On Mar. 3, 2015, Asst. City Attorney Abigail Elias mentions a “protective order,” for Welton to excuse him from being deposed by the attorneys of a couple suing Ann Arbor.

Council approval is required of contracts worth more than $25,000.

Welton’s Separation Agreement specifies that he will be paid (or could be forced to repay the city) hundreds of thousands of dollars. The agreement lays out the payment of salary, health insurance, benefits, pension and accruals.

Council member Jack Eaton (D-Ward 4) said: “The contract should have been brought to council for approval and we should have received an explanation as to why he should receive five months of pay and eligibility for pension and lifetime health care benefits.”

City Administrator Powers said in an email that Welton’s Separation Agreement was not a contract, but rather “simply set the separation date and the terms of the resignation.”

Welton resigned amid a second investigation into his work conduct in the space of six months. In July 2014, his superiors launched an investigation into allegations that Welton had refused to comply with a request from his supervisor, Sumedh Bahl, to complete reinspections of properties.

Welton was eventually slapped with a three-day unpaid suspension (the equivalent of an almost $1,000 fine). On appeal, City Administrator Steve Powers reduced that unpaid suspension to one day.

Four months later, in a Nov. 4 email, City Administrator Powers wrote to Bahl asking about the “status of improved communication” between Bahl and Welton.

Records show that on Nov. 4, 2014, City Administrator Powers also sent an email to Welton in which the staffer was told that, as a building official, he had “duties and statutory responsibilities” and “must communicate with Bahl,” his supervisor.

While this suggests Welton was insubordinate, as do the unpaid suspension imposed on Welton in July of 2014, and the Dec. 4, 2014 investigation into his conduct, there have emerged new details that suggest other possible scenarios.

Council member Jack Eaton (D-Ward 4) has expressed concerns that Building Dept. staffer Welton’s Separation Agreement may have something to do with ongoing litigation over the city’s Footing Drain Disconnect (FDD) program—launched in 2001. It’s a lawsuit that, should City Attorney Postema lose, could result in a payout of hundreds of millions of dollars to thousands of city residents.

An email turned over in response to a Freedom of Information Act request suggests Asst. City Attorney Abigail Elias doesn’t want Ralph Welton deposed in the FDD litigation. It was Elias who, in 2001, vetted the FDD program for potential legal snags. As a result, her FDD legal work has come under intense scrutiny by the plaintiffs’ lawyers.

On Mar. 3, 2015, Asst. City Attorney Elias writes in an email to the plaintiffs’ attorney about a “protective order,” for Welton to keep him from being deposed. Elias writes, “If you can explain the relevance of Ralph Welton’s testimony to…issues that remain in this case and why you need to depose him for that purpose as opposed to someone else who has personal knowledge (which you would need to do in response to our motion for protective order), we would be in a better position to respond to your proposal.”

A source close to the litigation suggests the purpose of Ralph Welton’s Separation Agreement was to “secrete a witness.” The fact that the Separation Agreement imposed a de facto gag order on Welton, his spouse, accountant and attorney only adds to such speculation.

Documents shared with The Ann Arbor Independent show that on Mar. 7, just days after the City Attorney’s Office learned Welton was targeted to be deposed, and months after Council members were told Welton had “resigned,” Welton filed a notarized affidavit which states, “Although I stopped serving as Building Official around Dec. 11, 2014, I am still employed by the City of Ann Arbor in the position of Chief Development Officer.” However, Welton’s Separation Agreement executed in Dec. 2014 states that Welton shall “not be required to perform any duties in relation to his current position of Chief Development Official.”

The Mar. 2015 affidavit signed and filed by Welton goes on to allege that Ralph Welton has “no personal knowledge of any actions by the City of Ann Arbor…including any actions that were a part of the city’s FDD program.”

It’s unclear who wrote the Mar. 7, 2015 affidavit which seeks to quash any effort to depose Welton in the matter of the City’s FDD program. The affidavit contains a significant error, however.

In one section of the signed, notarized affidavit, Welton swears that he was “first employed” by the City of Ann Arbor in Feb. 2010. Three lines later, Welton attests to not having worked for the City of Ann Arbor before Feb. 2012.

Under the auspices of the FDD program, city residents were forced to disconnect from the stormwater sewer system and have sump pumps and back-up sump pumps installed. Residents who refused, faced stiff fines.

City residents suing the City as a result of their own Footing Drain Disconnects allege the program constitutes “illegal taking” of their private property. There have been numerous complaints that the FDDs have resulted in flooded basements, sewage back-ups and mold infestations.

Irv Mermelstein, the attorney for the plaintiffs, says that mold and raw sewage may be the least of the problems facing those in the thousands of  homes where contractors pre-approved by the city dug sump crocks (holes) for the required sump pumps.

“We’ve got radon data now,” says Mermelstein, “and in one home in which a sump crock was dug, the reading is in the 50s.”

There is no safe level of radon gas—a naturally occurring radioactive substance. The national average of outside radon levels is 0.4 pCi/L. According to information from the EPA, “It is estimated that a reduction of radon levels to below 2 pCi/L nationwide would likely reduce the yearly lung cancer deaths attributed to radon by 50 percent. However, even with an action level of 2.0 pCi/L, the cancer risk presented by radon gas is still hundreds of times greater than the risks allowed for carcinogens in our food and water.”

According to the Centers for Disease Control, radon levels below 4 pCi/L still pose some health risks.  Radon levels can be reduced in most homes to 2 pCi/L or below through testing and mitigation.

Every year, radon gas is responsible for 15,000-22,000 lung cancer deaths in the U.S., according to the EPA’s 2003 Assessment of Risks from Radon in Homes.

If the city’s sump pump program—which did not include radon testing or mitigation— was found to have directly contributed to increased radon levels in people’s homes, the legal ramifications could be staggering.

The Mar. 25, 2015 deposition of Sue McCormick, Director of the Detroit Water and Sewerage Director, and former City of Ann Arbor Public Services Administrator, reveals city officials knew about potential radon exposure as a result of digging FDD sump crocks.

Twice, McCormick reveals that she had “recommended sealed sumps so that the radon gas would not be an issue….”

When asked about her expertise with radon gas exposure and mitigation, McCormick then says she relied on the advice of city engineers, as well as consultants. She could not, however, remember the names of any of the individuals with whom she claimed to have consulted about the radon gas exposure and mitigation.

Later in the deposition, McCormick admits that sump crocks “sealed” to protect against radon exposure would need to be opened.

Emails turned over in response to Freedom of Information Act requests show that Ralph Welton openly criticized to another city employee public arguments made by city officials in support of the FDD program. While Welton wasn’t employed in 2001 when the FDD program was launched, he put his opinions about the city’s FDD program in writing.