City Vendor Records Reveal Handful of Board/Commission Members Paid $1.33M

by Patricia Lesko

NextDoor is a city-wide listserv where neighbors can post everything from requests for babysitters to football tickets for sale. Neighbors have also taken to posting information about local city government. In Feb. 2017, a neighbor in the Dexter-Miller NextDoor neighborhood posted a comment about the Ann Arbor Downtown Development Authority’s (DDA) proposal to raise parking rates (again). One of the people who chimed in on the convo was DDA Board member Al McWilliams. Among several comments he posted was this one:

Al McWilliams from Dexter-Miller · 4d ago
Oh hey everyone. I didn’t see this until just now. I’m your neighbor and I’m on the DDA board. Hi! It’s clear by these (and other comments) that the reasons for parking enforcement, or why cities charge for parking in the first place, aren’t well communicated. I’m happy to discuss anytime, but to assure you of a few things right now:

1. DDA is a volunteer position. Any comment on this or any other issue regarding “filling the coffers” or “money grab” confuses me. You know we don’t get to keep the money right? Sometimes we get tacos for our time.

Tacos for his time.

The less-than-neighborly content and tone of other comments contributed to the discussion by McWilliams prompted a neighbor to send the snippet above to me. I enjoy tacos as much as the next gringa, but Al McWilliams’s breezy assurances sent me to the City of Ann Arbor’s Data Catalog where there is a link to every vendor payment made going back to 2009. I found public records that showed after his appointment to the DDA Board in 2013, Al McWilliams’s marketing firm QuackMedia! (recently renamed to Q & M) had received vendor payments, including one payment record that showed as “open,” i.e. yet to be paid.

I then searched for vendor payments made to the companies or employers of eight members of a few of Ann Arbor’s Boards and Commissions (DDA, Planning Commission, LDFA, i.e.). A few of hours of work uncovered that between 2010 and 2016, there were $1.33 million in vendor payments made to eight of the city’s Board and Commission members.There are more than 300 individuals who serve on the city’s dozens of Boards and Commissions according to Legistar records maintained by the City Clerk’s office. I copied and pasted the public records from the vendor payment website and then created an Excel spreadsheet so that I could total the amounts and better visualize the information.

Manipulating the data showed that only 10 percent of the contracts were above the threshold price of $25,000 that would have required a City Council vote.

Then, I penned an email to my Ward 1 Council members Jason Frenzel and Sumi Kailasapathy, Ward 2 Council member Jane Lumm, Ward 4 Council member Jack Eaton and new City Administrator Howard Lazarus. That email follows:

Good afternoon,

Attached to this email is a PDF of an Excel spreadsheet I made this morning. DDA Board member Al McWilliams posted public comments on the NextDoor group concerning the DDA. A neighbor in that area forwarded the discussion thread to me with a question concerning McWilliams’s assertion that he has not benefitted from his position on the DDA Board. [McWilliams employs Ward 5 CM Chuck Warpehoski’s wife, Nancy Shore. As a courtesy, I have included Chuck in this email.]

I searched the City’s online vendor payments (as always, my sincere thanks to CFO Tom Crawford’s staff for their upkeep of that important resource). After I found records of McWilliams’s city contracts, I dug a bit deeper into the city’s vendor payment records. I only checked a few names of individuals who have been appointed by Council, individuals who serve on the DDA, Planning, LDFA and Public Art Commission.

The PDF spreadsheet shows you quite clearly a pattern that emerged by which eight political appointees to high profile Boards and Commissions have, indeed, allegedly benefitted from city contracts to the tune of over $1.33M dollars between 2010 and 2016. These few people whose names appear on the spreadsheet I’m giving to you own or work at companies that have been awarded over $1.33M in city contracts, according to the city’s online records.

For example, the city’s records show that Al McWilliams’s company QuackMedia! [whose name was changed to Q&M] only begins to get city contracts regularly AFTER his appointment to the DDA Board. LDFA member Maria Klopf’s non-profit, likewise, begins to get city contracts after her appointment. First Martin gets city contracts after DDA Board member McKinnon’s appointment. DDA Board member Narayan, similarly, sees an increase in the regularity of city contracts after his appointment to that Board.

Alas, Mr. Lazarus [City Administrator], as a member of the DDA Board faces questions about whether he knew of this practice as his fellow DDA Board members’ companies and employers were awarded city contracts during Mr. Lazarus’s time on that Board. It’s quite possible of course he, like Council, was never given any information by city staff.

Not only have these political appointees’ whose company/employer information I cross-checked allegedly benefitted from city contracts, you’ll see that of the over 140 contracts awarded to the company owners or their employers, only about 10 percent of the $1.33M in contracts were for individual amounts which would have required the scrutiny (and a vote) of City Council.

This is a particularly troubling pattern that plays out repeatedly over the six-year period between 2010 and 2016.

Keeping contract amounts below the amount which would require Council approval could be construed by taxpayers as an effort to thwart transparency. It is a pattern that could be reasonably viewed by voters as having circumvented Council oversight of staff spending. Worse, keeping contracts to amounts that would not require a Council vote could have been done to allow Council members’ political allies and donors to benefit while at the same time insulating Council from potential consequences of voting to award such contracts.

When asked about his city contracts in a NextDoor post, Al McWilliams responded that “Ann Arbor is a small town” and everyone knows everyone else. Among the policies and procedures used in the solicitation/evaluation of bids for city contracts, I hope the option to award city contracts based on who knows whom (nepotism) isn’t practiced by city staff. It’s also worth mentioning that McWilliams’s company has been given contracts by the AAATA [and the AADL].

Many of the electronic records I examined for these contracts awarded had missing information. For instance, the unit that had contracted for the work is not included in the city’s public records, and in many cases the nature of the work is undefined. This concerns me for obvious reasons.

I believe Council has a duty and obligation to direct the City Attorney Mr. Postema and City Administrator Lazarus to investigate these contracts as well as AAATA contracts awarded to board or commission members (Council controls AAATA appointments, after all, and taxpayers fund AAATA with a perpetual millage that generates $11-$12M per year).

I hope Council members would agree that they have the duty, and the city’s taxpayers have the right, to know each and every time going forward one of our mayor/Council political appointees or the appointees’ employers is awarded a city, DDA or AAATA contract, regardless of the amount of the contract.

I look forward to replies from my Ward 1 Council members whom I would ask to spearhead an effort to improve transparency in city government by working with Mr. Lazarus to help the public understand the nature and extent of the issue I’ve brought to your attention, and whether the public’s trust has been violated, and if so, by whom and how. I urge Council to direct Mr. Lazarus to provide a public reckoning of his findings. This way, the full extent of the total amount of taxpayer money allegedly given over to Council’s political appointees and donors by the City of Ann Arbor and AAATA since 2000 would be revealed to taxpayers.

Thank you, as always, for your service to our City and its residents.

Patricia Lesko

Council member Eaton emailed the City Administrator for an answer that Eaton could share with me. Mr. Lazarus responded that he would investigate the vendor payments to make sure that all city policies and procedures had been adhered to properly. Here is the email Lazarus sent to Mayor and Council:

Mayor and Council Members:

I received the e-mail below from Ms. Lesko late yesterday afternoon, and the request from Mr. Eaton this afternoon. Kindly note that I have asked Purchasing staff to inquire into the means by which the contracts with the organizations cited have been awarded. We will also look at the dates of service of the individuals identified with the dates of award. Finally, this provides an opportunity to review and validate our contracting procedures with regard to conflicts of interest.

Howard S. Lazarus
City Administrator
City of Ann Arbor
301 E. Huron Street
Ann Arbor, MI 48103

I posted my email to Howard Lazarus and the Excel spreadsheet to NextDoor on Feb. 9 along with this message:

Neighbors,

I was recently forwarded a thread from the Dexter-Miller NextDoor on the DDA Board’s proposed parking rate hikes (since abandoned). The neighbor who sent the thread asked me about a DDA Board member’s assertion on Nextdoor (speaking as a DDA Board member) that he didn’t benefit from his appointment to that Board. Using the city’s online records, I searched the vendor payments and found multiple contracts given by Ann Arbor to that DDA Board member. I then did a limited search of a few other board/commission members’ companies/employers. What I discovered is reflected in the email I sent to Ward 1 CMs Jason Frenzel and Sumi Kailasapathy (as well as the City Administrator and a couple of other Council members). I want to share it. I am interested in what others think and what others would like to see done (if anything) by Council. The PDF attached is the spreadsheet sent to my Council members with the names, contract amounts, etc….

The Michigan Daily, tipped off about the questions I raised, published a piece about the City Administrator’s response and promised investigation: “Investigation probes potential conflicts of interests in allocation of city contracts.”

Ward 5 Council member Chuck Warpehoski, whose wife works for Al McWilliams and who formerly worked for AAATA, told The Michigan Daily: “I don’t think we should have a policy where the only way to serve on a board or commission is to give up your hope of being able to do any business with the city or the DDA or the AAATA. I want our local units of government supporting local businesses. I want local business leaders sharing their expertise of local government and contributing in that way. But I don’t think that should give anybody any special treatment.”

A few days after the article was published, a local attorney contacted me and tipped me to section 14.4 of the Ann Arbor City Charter:

Business Dealings with City SECTION 14.4. An officer of the City, who intends to have business dealings with the City, either directly or indirectly, whereby the officer may acquire any income or benefits, other than such as are provided as remuneration for the officer’s official duties, shall file with the Clerk a statement, under oath, setting forth the nature of such business dealings, and the officer’s interest therein. The statement shall be filed with the Clerk not less than ten days before the date when action may be taken by the Council or any other agency of the City upon the matter involved. The statement shall be spread upon the proceedings of the Council and published in full therewith. Approval of any such business dealings shall require a concurring vote of at least eight members of the Council, not including any member disqualified under Section 4.4 of this charter. Any business dealing made in violation of this section shall be void.

City Council members asked City Attorney Postema for an explanation as to why section 14.4 of the Charter had not been enforced. Postema delivered his reply via an email in the form of advice which is confidential and so hidden from the public. I have been told that Council expects Postema to share his legal opinion on the matter in public and should that opinion be open to legal challenge Council will ask for an independent investigation as to why the City Attorney did not enforce the Charter and require the necessary public disclosures and filings.