On The Record: Mayor Scott Coleman’s Claims and Council’s Push-Back

On May 1st the News-Herald published a story detailing business transactions between the city and two appointed city officials-- i.e., the "matter of serious concern" that was brought to council's attention in March.

With regard to the almost $ 30,000 in payments made to W.F. Hann & Sons, Mayor Scott Coleman was quoted in that story as saying, "

Everything was documented. We had invoices signed off on by the Legislative and Finance Committee.”

Coleman clearly implies, in his comments, that these transactions were properly and legally handled and that council approved of them.

Push-Back One
Councilwoman Cathy Murphy, a long-standing Legislative & Finance Committee member, objected to Coleman’s comments, so much so that she wrote a Letter to the Editor, which was published by the News-Herald on May 8th. The letter is not available to view online. I reproduce it here:

"I wish to respond to comments made by Mayor Coleman in the News-Herald on May 1. I am a council representative and a member of the City’s Legislative and Finance (L&F) Committee. Normally I would not comment on a matter under investigation, but since Mayor Coleman is quoted in the article, I am compelled to set the record straight.


I take issue with Mayor Coleman’s comments regarding nearly $ 30,000 in payments to W.F. Hann (a company owned by a public official). Mayor Coleman said, “Everything was documented. We had invoices signed off on by the (council’s) Legislative and Finance Committee.”


First, everything was not “well documented”. Municipal and state law requires that public officials must file a disclosure of their interest in any company that desires to do business with the city, before any such business transaction occurs. This disclosure gives council the information it needs to make sure ethics laws are complied with. However, no such disclosures were ever filed.


Mayor Coleman said that L&F signed off on payments to W.F. Hann. However, in reality, L&F only knew of, and signed off on, two of the invoices, and to my knowledge the committee was never told that W.F. Hann was owned by a public official.

Mayor’s Coleman’s comments are also misleading. City law states that council must give prior approval by voting at its formal council meeting, for any payments, no matter the amount, made to the business of any public official or any business of such official’s family. However, this was not done because council was in the dark, unaware that any payments were being made to a company owned by a public official.

Sometimes what we don’t do is as important as what we do. This is one of those times. These failings must be addressed. I will say no more, as this matter remains under investigation."

Push-Back Two
At the May 11th Council meeting, Council President Scott Mills presented a motion that authorized referring the matter to the State Auditor and the State Ethics Commission for review of the financial (Auditor) and ethical (Ethics Commission) issues raised by the business transactions, for issuance of any necessary findings, and "most importantly" said Mills, for recommendations for improving the city's laws and procedures.

 Mills demonstrated responsible leadership in presenting that motion and asking for council's unanimous approval of it.  

Council did as Mills asked. It agreed to add the motion to the agenda and then passed it unanimously.
As Mills said when presenting the motion, because of the individuals involved, it makes sense to seek the help and guidance of outside, independant experts. Only then will council be able to properly and appropriately put the matter to rest.

I applaud Scott Mills and council for taking affirmative action, for removing the matter from the local political sphrere, and for seeking help and advice from two state agencies that are experts in the area of financial and ethics laws. It is a sensible approach that should result in findings that residents can trust and believe in.

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A Matter of Very Serious Concern

Almost 8 weeks ago I talked to council about a “matter of serious concern” and gave them documentation showing why I was so concerned. I asked for only one thing in return: that Council President Scott Mills let me know, within “two weeks or so,” how council was going to address the matter.
I am still waiting to hear back from Mills. Council has had more than enough time to start taking action to hold the involved individuals accountable. That hasn’t happened.

It’s time to let you know what’s going on.

City financial records show that two heads of the city’s Park & Recreation Commission, Tony Valentino and Rocco Dolciato, have been doing business with the city for several years, through businesses that Valentino and Dolciato either own or are affiliated with (W.F. Hann & Sons and Utilities Construction Co., dba Utilities Equipment and Supply Company).

Highland Heights’ ethics ordinances closely resemble state ethics laws. Those laws apply to both elected and appointed city officials and generally bar such officials from doing business with the cities that they serve.

Those laws and ethical restrictions apply to Mayor Scott Coleman, Tony Valentino and Rocco Dolciato.

In addition, Highland Height financial ordinances specifically require that council pass a motion, resolution or ordinance at a regular council meeting formally approving all business transactions that involve purchasing of, or paying for, goods and services provided by “any elected or appointed official....or business entity in which (they have) a direct or beneficial interest” .
That approval must be obtained before the transaction is entered into, and the law states that no”payments shall be made from City funds” unless council’s prior approval has been obtained.

The minutes are the official record of council meetings held in the city. I have read all of the minutes for the regular council meetings that took place between January 2005 and December 2009. Those minutes show that council never passed a resolution, ordinance or motion authorizing the business transactions involving Valentino, Dolciato and the city.

You can read the minutes for yourself. They are posted online:
http://www.highlandhts.com/city-council/agendas-minutes.php

In the absence of proper prior authorization by council, the city was legally barred from purchasing services from the Valentino and Dolciato-affiliated companies and from using public funds to pay for those services.  Yet the purchases were made, and public money was spent, anyway.

You might wonder how this could occur. How could taxpayer money be spent, in violation of local and state law? I can’t say for sure, but this is my best guess:

Under normal circumstances---when a business transaction does not involve an elected or appointed city official---Mayor Scott Coleman has sole authority to authorize the payment of bills totalling $ 3,000 or less. Coleman isn’t even required to notify council about those bills or his approval of them.

It appears that the transactions between the city and the companies with which Valentino and Dolciato are affiliated were treated as falling with the mayor’s general authorizing authority---even though, by law, they did not.

Finance Director Anthony Ianiro (the brother of Recreation Director David Ianiro) is supposed to be the city’s financial cop. It’s his job to make sure that all requisitions and vouchers are properly approved, in compliance with our financial ordinances, before he uses any public funds to pay for those bills. (Read my “Financial Primer” blog posting for more information on how that works.) Ianiro apparently paid W.F. Hann & Sons and Utilities Construction Co, even though the business transactions with those companies had not been pre-approved by council, as required by law.

The details:
City records show that W.F. Hann & Sons was the exclusive provider for HVAC services to the city for three years, beginning in May 2006. Some of the services were provided in the park and were paid with Park & Rec funds---payments which, by law, had to be authorized by Mayor Coleman and Tony Valentino. All but two of the checks issued to W.F. Hann & Sons were for $ 3,000 or less, which means that under normal circumstances they would fall within Mayor Scott Coleman’s exclusive authorizing authority. With regard to the two bills above $ 3,000, a long-time member of council’s Legislative & Finance Committee told me that Valentino’s connection to the company was never disclosed to L&F, when Finance Director Tony Ianiro presented those two bills to L&F for approval.

By law, of course, neither Mayor Coleman nor L&F had the authority to approve payment of the bills. To be authorized, council had to pass an authorizing resolution, motion or ordinance before the services were rendered, which (council minutes show) never occurred.

I have not seen records pertaining to the payments made to Utilities Construction Company. But at the April 27th meeting of council’s Safety Service Committee, Service Director Thom Evans indicated that the city has paid the company to accept the city’s leaves and brush since 2004.

I have a copy of the proposal that was submitted to the city by Dolciato on March 10, 2010 on that company’s behalf. The proposal asks for payment of an initial flat fee of $ 2,400, with additional an additional sum to be determined at a later date based on “space and economic factor’s”. Thus, the proposal divided up the payments from the city into several separate payments, rather one large payment, with the initial payment ($2,400) falling within Mayor Coleman’s normal exclusive spending authority.

The News Herald has published a story in today’s paper about this:
http://www.news-herald.com/articles/2010/05/01/news/doc4bdb216141a40071599098.txt

And again, read my “Financial Primer” blog posting to learn more about our laws and how financial matters are supposed to be handled in the city.

It is beyond my comprehension that Mayor Scott Coleman, who has served as an elected Highland Heights official for over a decade, would so blatantly ignore Highland Heights’ financial ordinances and state and local ethics laws by entering into business transactions with two appointed Park & Recreation Commission officials.

By going public with my concerns, I hope to spur council to undertake a prompt and adequate investigation of the situation. And, if any money has been paid out illegally, council should take whatever steps are necessary to return those funds to the city treasury.

This situation did not occur because of bad or confusing laws. Our laws are clear and straight forward.

No one is above the law. Not me, not you, and certainly not the mayor and his appointed officials. It is up to council to hold Mayor Coleman and the involved individuals accountable for their actions.

A Primer on Public Finances

Recent talk about deficit spending, pay freezes and tight budgets might may make you wonder about how city finances work. I can’t tell you how finances are actually handled in the city, but I can give you an idea about how the system is supposed to work.
Step One. The Budget
The mayor submits a budget for council’s approval each year. The budget sets financial limits on spending in the city. By law, the finance director can’t issue a payment check unless there is money in the budget to pay for the goods/services that have been purchased.

Step Two. Approval of Requisitions & Vouchers
Proper approval is required before any city funds can be used to pay for goods/services provided to the city.
Highland Heights ordinances clearly spell out which city officials have authority to approve requisitions and vouchers. It's a pretty small list.. This is what our laws say:

(1) Service Director Thom Evans has to submit requisitions for labor and materials to Mayor Coleman "or other authorizing official“ for their signature (§ 172.02(b));

(2) Police Chief Cook and Fire Chief Turner have to submit requisition forms to Mayor Coleman for the labor and material that their departments need (§§ 131.04; 133.04); and

(3) Mayor Coleman and the head of the Park & Recreation Commission (Tony Valentino thru 2009; Rocco Dolciato in 2010) must both sign vouchers before any money can be spent using Park & Recreation funds (§ 139.03).

By law, only the individuals listed above have the authority to approve requisitions/vouchers. No other city administrator or city official does. For example, Recreation Director Dave Ianiro is not authorized to approve vouchers. If he needs goods or services for the park, he must ask the mayor and Park & Rec commissioner to sign a voucher for those goods/services.

Step Three. Approval of the Expenditure of Public Funds to Pay Approved Requisitions/Vouchers
After a requisition/voucher is signed by the proper city official(s), one more step is required before Finance Director Anthony Ianiro can pay it. Final approval to pay the bill must also be obtained. Who can give that final approval depends on who the goods/services are being purchased from.

Regular purchases
For regular purchases, either the mayor, council’s Legislative & Finance Committee (L&F) , or council as a whole must approve paying for the goods/services listed in the requisition/voucher.
Under our laws, Mayor Coleman generally has sole authority to approve expenditures up to $ 3,000. After that, approval by either L&F ($ 3,000 to $ 75000) or council as a whole ($ 7,500 - $25,000) is required. (§ 117.04(a)) Under state law, no one in the city can authorize payment of purchases over $ 25,000; those have to be put out to bid, using formal bidding procedures.

Purchases of Goods/Services From Elected or Appointed Officials
Highland Height law imposes special authorization requirements---regardless of the $$ amount involved -- when the services/goods at issue are being bought from, or provided by: (1) an elected or appointed official; (2) that official’s spouse; (3) that official's lineal ancestors/descendants; or (4) a business connected to that official/spouse/descendant.  By law, only council is authorized approve such a transaction, and council must formally give its approval before any purchase is made or any money is paid out. § 117.04(b) states:

“No goods or services shall be purchased, and no payments shall be made from City funds, regardless of the amount of such purchase or payment, without prior approval of Council, acting on motion, ordinance or resolution at a regular meeting, if …The purchase is made from, or the payment made to any elected or appointed official of the Municipality, the spouse, lineal ancestors or lineal descendants of any such official, or any corporation, partnership, association or other business entity in which any person included in any of the foregoing categories has a direct or beneficial interest."

§ 117.04(b) doesn’t outright forbid the city from purchasing goods/services from an official/spouse/descendant or affiliated business---after all, the city should be able to take advantage of a good business deal, if one is offered---but the law clearly requires, regardless of the amount of $$ involved, that the business transaction is disclosed to, and formally approved by, council ahead of time, before the services are purchased or paid for.
§ 117.04(b) is clear and straightforward. Anyone who tells you otherwise is pulling your leg.

Other Laws That Limit Financial Transactions Between the City and Elected & Appointed Officials
Our city’s financial ordinances aren’t the only laws that protect taxpayer money. While § 117.04(b) imposes a preapproval requirement for business transactions involving elected and appointed officials, state and local ethics and criminal laws may also apply to prohibit those transactions entirely.

Ethics Laws
Highland Heights’ ethics ordinances (§§107.01-107.99) borrow much of their language from, and closely resemble, state ethics laws. Our ordinances impose several different types of limits on officials. Violations of these laws constitutes misfesance or malfeasance in office---i.e. official misconduct. (§ 107.99).

(1) § 107.02(c) bars elected and appointed officials from participating in any transaction that directly affects/involves: the official; an immediate family member; a business entity in which the official/family member owns more that 5% interest; or a business entity with which the official/family member has done more than $ 1,000 in business in the preceding year unless the official first files a written acknowledgment with the council clerk disclosing his interest in the transaction;

(2) § 107.03(b) bars elected and appointed officials from selling or agreeing to sell, except through competitive bidding, any goods or services to the city or to any city department, board, commission or agency---but § 107.03(c) allows appointed officials (only) to sell goods/services if they file a detailed disclosure statement with the council clerk beforehand which states, among other things, the goods or services to be provided/purchased and declares that the official won't participate in any official capacity in the purchase of those goods/services.(Under § 117.04(b), council would also have to formally pre-approve the purchase of/payment for those goods/services ).

Criminal Laws

§ 525.10(a)(2) makes it a crime for an elected or appointed official to knowingly have an interest in the profits or benefits of a public contract with the city or with the agency/ instrumentality that the official is connected with.
§ 525.10(a)(3) makes it a crime for an elected or appointed official to knowingly have an interest in the profits or benefits of a public contract that is not let by competitive bidding, if required by law, and that involves more than $150.00.

Our financial, ethics and criminal ordinances work together to ensure that city officials don’t take advantage of their positions for their own personal gain. They also ensure that there is accountability, on the part of city administrators and officials, with regard to each penny that is spent from the public treasury.
Shouldn't this make you feel more secure about how your tax dollars are spent?

All of the ordinances are pretty clear and straightforward. See for yourself. They are available to read online.
http://www.highlandhts.com/city-council/ordiances-resolutions.php or http://www.conwaygreene.com/Hlandhts.htm
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