It has come to my attention that clarification is needed on the post about the General Fund “special events” account named 8306.

If you contact City of DeKalb and they tell you that 8306 is for events such as helping with the expenses of July 4th festivities at Hopkins Park, that is 100% correct.

However, it is also correct to say that funds coded to expense account 8306 pay for employee events (parties and picnics) and special compensation (gift cards). The February 2016 expenditures report(p. 9), for example, included payouts for an employee potluck and a spree on gift cards for employees that’s becoming infamous. Read the rest of this entry

Account 8306, Special Events

City of DeKalb has an account in its General Fund called “Special Events,” 8306 in the budget. I always thought special events were public events, such as the open house that was held for visitors to tour the new police station. Then I came across an expenditure of $5,400 for Target gift cards for employees that was coded to this expense account, which prompted me to look more closely. It appears to be an account that pays for employee parties and gifts.

Here are the amounts budgeted over the past few years from this account:

2012: $ 7,000
2013: $12,000
2014: $15,000
2015: $19,750
2016: $22,850

Even if all of the expenses are legit — and I’m not sure they are — the more-than-tripling of what’s budgeted into this account needs to be explained. I also note that the extravagance in this area comes on top of similarly large increases we’ve observed for membership dues/subscriptions and professional development expenses over the past 2-3 years.

But back to the question of legitimacy. Let’s consult the Illinois Constitution.

ARTICLE VIII

FINANCE

SECTION 1. GENERAL PROVISIONS
(a) Public funds, property or credit shall be used only for public purposes.

Are private parties and gifts for city employees a public purpose? I think not.

DeKalb isn’t particularly good at observing boundaries. One example is that DeKalb’s contracted attorney is allowed to sit with the city council during planning sessions as an assistant in setting strategic priorities. In other words, a contractor gets to step out of his assigned role to provide unfettered input into public policy that the public itself never gets to enjoy.

But while the attorney’s extra privileges are plenty objectionable from an ethics standpoint, the most egregious errors in failing to maintain separation of roles have arguably come about in DeKalb’s dealings with the city clerk’s office beginning in 2012, when clerk Steve Kapitan was forced to resign. Here’s what city staff said about it at the time (my emphases):

[City manager Mark] Biernacki explained that because of Kapitan’s unique situation as both an elected official and city employee, certain confidentiality rights are in place.

The city, as the former employer of Mr. Kapitan, has certain obligations to keep his personal records confidential,” said city attorney Dean Frieders…

City of DeKalb again combined the roles of city employee and city clerk when Diane Wright was appointed in Kapitan’s place later that year, yet also kept her administrative job with the city (again, my emphasis):

With recent changes in City Hall staffing, a proposal has been developed to provide more efficient use of City personnel to perform administrative functions for the City, by utilizing the currently serving Acting City Clerk in a dual role as City Clerk and Executive Secretary.

These moves are problematic specifically because citizens of DeKalb have voted twice in the past 10 years to retain their municipal clerk as an elected position. While certainly “unique” and possibly even “efficient,” these elected official-city employee hybrids are not allowed under Illinois law. Elected officers are intended to serve only one master, and that’s the electorate. Read the rest of this entry

**Update: More about this now posted at Barry’s Blog.**

KishHealth System officials answered questions from the public following a presentation before the DeKalb County Board last night. While the Daily Chronicle chose not to address an exchange regarding who owns the real estate where Kishwaukee Hospital operates (as well as other KishHealth System holdings acquired by Northwestern Medicine), journalist-cum-blogger Barry Schrader did. Here’s an excerpt from an emailed statement (my emphasis added): Read the rest of this entry

In a recent post, CityEthics’ Robert Wechsler tackles the issue of public officials’ attacking citizens who question their ethics (my emphasis).

…[W]hen they engage in ethical misconduct, when they misuse their office or deal irresponsibly with their conflicts of interest, then they are acting not in their own right, but as government officials. And as government officials, they have an obligation not to attack those who make accusations against them. This is a misuse of office for one’s own benefit that, in most cases, is worse than the ethical misconduct they have been accused of. Government officials can deny that they engaged in this misconduct (if indeed they didn’t) and they have a right to defend themselves in an ethics proceeding, but that is all.

And, ahem, about the hired attack dogs:

And their agents have no more right than this. Officials should make this clear to their attorney (government attorneys should already understand their own fiduciary obligations) and publicly counter any inappropriate statement, as well as apologizing to anyone an attorney has attacked on their behalf.

DeKalb citizens who speak up are no strangers to bad treatment from this city regime as well as the one it replaced. Indeed, during the last council meeting, Alderman Noreiko used the time usually devoted to ward reports to attack citizens who had spoken during the public comment portion of the meeting.

Wechsler says that ethics commissions should intervene when public officials or their attorneys go on the attack. DeKalb, of course, doesn’t have one yet but this is another good reason why we should.

Related:

Illinois’ Model Ethics Ordinance & City of DeKalb

Public Participation Project: Your State’s Free Speech Protection

If you haven’t heard, banker Tim Struthers has been appointed by Governor Rauner to the NIU Board of Trustees, pending approval by the Illinois Senate. Trouble is, there’s compelling evidence of major conflicts of interest in his appointment, which the Edgar County Watchdogs have outlined admirably.

Struthers presently serves on the DeKalb County Sanitary District, The NIU Foundation Board, and holds over five million dollars of NIU money on a daily basis in his bank. If the past informs the future, we should look closely at an incident in recent history where Mr. Struthers leveraged his banks [sic] relationship with NIU, the City of DeKalb, and the NIU Foundation.

The Watchdogs are speaking, of course, of the College Town Partners public-private partnership deal for redevelopment involving NIU, City of DeKalb, two banks and a developer.

Representatives of Struthers’ bank drafted the partnership documents, which included a memorandum of understanding and a 50-page operating agreement that were secret until leaked to members of a neighborhood group following a May 2014 meeting of the parties.

To look at the agreements it’s obvious they were unworkable. For example, there is no way DeKalb’s city manager could legally have managed a private partnership operating in the same city and using DeKalb taxpayers’ money; a confidentiality clause was also problematic. As I wrote at the time, “Whoever developed [these agreements]…possesses no grasp of the ‘public’ part of public projects.”

Emails obtained through the Freedom of Information Act indicate that a press release distributed by Preserve Our Neighborhoods on May 27, 2014, resulted in a local radio station contacting Mayor John Rey about the partnership. Rey in turn contacted Struthers and NIU officials to discuss the matter. Struthers responded in detail.

By the way, Michael and Misty Haji-Sheikh of Preserve Our Neighborhoods have spent the past year and a half requesting, fighting for, and sifting through emails, calendars and other records obtained under the Freedom of Information Act, and whether or not the College Town Partners signed something is still anything but clear.

…the Illinois model ordinance [for adoption by local units of government] is not even minimal. It only deals with political activities and gifts. There is nothing about conflicts; the word doesn’t even appear. To call it an ethics ordinance is like calling a burglary law a criminal code.
~ Robert Wechsler, CityEthics.org

Minimal as it is, City of DeKalb still can’t get it right. Remember when DeKalb Mayor Rey was called out for using his city email account for political activities? He was “admonished” by the city manager, who is the designated ethics advisor for the city. Even beyond the fact that city council members are the collective boss of city staff and shouldn’t be “admonished” by any city employee, that’s not how a complaint is supposed to be handled. Here’s what the Office of the Attorney General has to say:

Because it is vital that officers and employees understand the ethics laws, Article 15 of the Model Ordinance provides for the designation of an Ethics Advisor to whom officers and employees can address questions or concerns regarding compliance with its provisions, as well as other ethics matters, such as filing Statements of Economic Interest, where required.

Get it? Advisor. Handles questions and concerns, not complaints. Complaints are supposed to go to an ethics commission if the local unit has adopted this part of the model ordinance, and if the local government has not adopted a commission (as DeKalb has not), complaints are supposed to go “to an attorney representing the entity for review and prosecution.”

Did the city attorney not know this, or was he counting on no one’s looking it up?

Obviously, the city has not yet adopted enough of the state’s model ordinance language to address its responsibility to penalize ethics scofflaws like Mayor Rey. Considering that local units of government, home rule or not, are required to adopt regulations that are “no less restrictive” than those contained in the Ethics Act, and “admonishment” is lesser than prosecution, DeKalb should correct its ethics ordinance right away.

The AG’s model ordinance is here. It is 11 pages long.

DeKalb’s ethics ordinance is here. It is two pages long.

Mayor Rey accepted the gift of a trip worth more than $1,000 in September 2013, according to Northern Illinois University records recently obtained under the Freedom of Information Act.

Rey and NIU President Doug Baker traveled to Moscow, Idaho, to foster better “town-gown” relations and to take in a football game between NIU and the University of Idaho.

NIU paid for the mayor’s plane tickets and reimbursed him for his hotel stay. See the documentation here.

State of Illinois rules allow for some exceptions to its gift ban, such as travel expenses incurred “to discuss State business” and for “intergovernmental gifts” and these exceptions have no specified monetary limits. DeKalb has adopted state rules in their entirety into its Municipal Code, so it doesn’t appear any were broken.

However, that should not preclude the public from making judgments about Rey’s judgment, the size of the gift (which, after all, involves public funds) and its implications for town and gown.

And Illinois law does allow local governments to pass ethics ordinances that are more restrictive than what’s on the state books.

Remember Mark Todd? He’s the former VP of Farmers and Traders State Bank in Shabbona who got himself appointed DeKalb County Treasurer, ran unopposed for the same office as the bank failed, and then resigned to move to Hawaii.

The Federal Deposit Insurance Corporation (FDIC) is just finishing up with him.

The FDIC considered the matter and determined it had reason to believe that:

(a) The Respondent has engaged or participated in violations, unsafe or unsound banking practices, and/or breaches of fiduciary duty as an institution-affiliated party of Farmers’ and Traders’ State Bank, Shabbona, Illinois (“Bank”);

(b) By reason of such violations, practices acid/or breaches of fiduciary duty, the Bank has suffered financial loss or other damage, the interests of the Bank’s depositors have been or could be prejudiced, and Respondent has received financial gain or other benefit; and

(c) Such violations, practices and/or breaches of fiduciary duty involve personal dishonesty on the part of the Respondent or demonstrate the Respondent’s willful or continuing disregard for the safety or soundness of the Bank.

The FDIC further determined that such violations, practices and/or breaches of fiduciary duty demonstrate the Respondent’s unfitness to serve as a director, office, person participating in the conduct of the affairs, or as an institution-affiliated party, of the Bank, any other insured depository institution, or any other agency or organization enumerated in section 8(e)(7)(A) of the Act, 12 U.S.C. § 1818(e)(7)(A).

Todd has waived his right to a hearing on the above allegations and entered into an agreement with FDIC that he is prohibited (except with express written permission from FDIC) from “participating in any manner in the conduct of the affairs of any financial institution or organization” including voting for directors and so on.

To read the prohibition order yourself, go here to find and download the PDF file.

**Update** 1/26. Related: “Sales tax coffers could get boost with new law”. Discusses the Marketplace Fairness Act and its impact (if it ever passes the U.S. House) on state revenues.
**Update** 1 p.m. Related: “Now comes the Internet Sales Consultants”. It provides more food for thought on this scheme, as well as a description of an omission that sounds like a possible violation of the Open Meetings Act.

DeKalb’s city council is considering a new kind of retail revenue source. You should know about it because your tax money is involved.

Chronicle:

City leaders are trying to lure Internet retailers with an 85 percent sales-tax rebate.

The first step in the coaxing process came Monday when aldermen unanimously approved an agreement with a shell company called Great Lakes Economic Development LLC.

The company was created by Tom McPeak, a partner with Atlanta-based Barnwell Consulting, who said he has an undisclosed client interested in setting up shop in DeKalb.

McPeak is an acquaintance of Roger Hopkins. Hopkins used to head the DeKalb County Economic Development Corporation, and after that contracted with the city to provide economic development services for a time. And it looks like he’s done us a solid in facilitating an introduction.

Let’s take a closer look at the potential in this gift. Read the rest of this entry