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McCaskill Presents State Audit Findings

$700,000 loss on Gerber site noted in state audit

September 16, 2005
Missouri State Auditor Claire McCaskill on Monday expressed surprise at the number of Rock Hill residents on hand to hear the results of the state audit report for the city of Rock Hill.

Approximately 100 people sat in a sweltering Steger School Auditorium Monday night to hear her presentation.

Obviously the heat got to some attendees. As soon as McCaskill finished her presentation and asked for questions, many asked for ways of recalling board members or having them overseen by an independent party. One man suggested disincorporating the city.

McCaskill kept her cool while she was repeatedly asked in various forms about how best to remove the board of aldermen.

She said that the best way was "through the ballot box."

As far as the audit itself, McCaskill summarized audit results by saying that most of the problems in Rock Hill were no different than the majority of cities in the state. She emphasized that the current board was working to correct the problems of the past administration.

The first audit finding concerned Rock Hill's unsuccessful attempt to build a new City Center at the 7.7-acre Gerber site that resulted in the city losing $700,000. The eventual cost of the site was $2.7 million including real estate and feasibility studies, and various other costs. The recent sale price to Mills Corporation was $2 million.

"We found problems with documentation not being available for RFPs (request for proposals)," McCaskill said. "We found problems that feasibility studies were contracted for prior to these being done. The property was bought, expenses were incurred, and eventually the project was abandoned.

"The question can be asked: Was the former mayor or administrator and former board of aldermen acting in the best financial interests of Rock Hill?" she said.

The next finding was that former Mayor Robert Salamone received compensation exceeding $33,600 while acting as the pension plan "selling" agent.

Salamone's written response to the audit allegations was that, during an investigation of the city's retirement plan, that the "failure of the city to fulfill its fiduciary responsibilities to its uniformed employees resulted in a $1.3 million deficit over a 30-year actuarial period."

He said that while he was hospitalized for three weeks, four documents relating to his compensation were "fraudulently signed using my name."

Other audit findings were:

Invoices and supporting documents were not always retained and expenditures not paid in a timely manner, such as not having contracts for $209,011 in street repairs and $243,311 in city attorney fees.

The city did not have ordinances establishing duties for some officials and employees.

The city spent city funds for gifts and dinners, without proper explanation on invoices as to reason.

"You want to do something to build morale, but perhaps it should be done with a special fund," McCaskill noted.

The city does not have a policy regarding cellular phone usage or mileage for city vehicles.

Board meeting minutes were not always maintained, signed or approved in a "timely manner," and sometimes lacked detail.

The city has not established separate accounts for various funds such as a debt service fund for street bonds or gas taxes, nor records to account for all city-owned property.

The city did not evaluate the costs and benefits of running its own dispatching service versus contracting for the service, nor did it solicit proposals for this service.

"The vast majority of these findings came under the watch of the former mayor and former city administrator," McCaskill said. "There is a lot of explanation in here (audit) from the city as to why things happened the way they did. Remember, that the people who made these decisions that resulted in the audit are no longer here and I believe this board wants to go forward and do better."

Resident Lorenzo Ibanez asked if anyone would be held responsible.

"Salamone gave the orders and the board of aldermen followed through without the public's support. We got him out, but we still have the people responsible," Ibanez said.

McCaskill said Rock Hill is no different than any other city in terms of a democracy.

"If you are unhappy, then it's up to you to make sure they don't hold that office anymore," she said.

When one resident asked about getting someone to "oversee" the city, McCaskill said, "What if he thinks the city is fine? Then what do you do?"

Resident Jeanne Weider said residents should come to the meetings every other week.

"Then you'll understand what is going on," Weider said.

The topic of closed meetings caused a spirited debate between McCaskill and former mayor Mike Conran.

McCaskill said it was "tacky" to hold a closed meeting before adjourning the regular meeting, and keep the public waiting for the board to return.

"There is never a requirement to close a meeting, ever. You can close a meeting for discussion on personnel or real estate transactions, but it is not a legal requirement," McCaskill said.

"You can't talk about HR (human resource) items in public," Conran said. "And if we're considering offers for buying and selling property, you don't expose that to the public."

"You have to have the attitude that everything is the public's business," responded McCaskill. "If you get in closed meetings, then drift to another subject, and that happens, you're talking about things that shouldn't be talked about."

Conran said that in the closed meetings he and the board held, they always stayed on the subject.

"There were good reasons not to talk about those in public," he added.

McCaskill said the audit findings were not binding and that it was up to the people to make sure that the board implements the suggestions.

"Many times, cities ask us to come back in six months to check and see how they are doing," she noted.

Resident David Arnold organized the petition drive last year, and got 507 signatures from residents requesting the audit.

Anyone requesting wanting a copy of the Rock Hill audit can visit www.auditor.mo.gov.

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