Wednesday, February 11, 2009

$15,000 assignment evolves into $1.1 million plum

Third in a Convention Center Authority series by James D. Sneddon

Virtually unknown to the public, in the summer of 2004, Penn Square Partners recommended to the Lancaster County Convention Center Authority that each agree to spend $15,000 to bring in a couple of high-powered, out-of-state consultants.

For Penn Square Partners it was an inexpensive investment. For the Authority, however, that $15,000 would eventually drain more than $1.1 million of tax dollars to another consultant over a 22-month period.

The chain of events began in August 2004 when the Authority board unanimously agreed to engage Jones Lang LaSalle of Washington, DC and Kaufman & Canoles of Norfolk, Vir. Jones Lang LaSalle is a real estate investment group and is involved with hotels world wide. Kauffman and Canoles is a law firm, specializing in many areas, including public-private partnerships.

David Hixson, the Authority Executive Director, told the board at the time:

"The thought process was to bring business advisors on board to help us to strengthen the mutual operations between the two partners and also some of the processes that we have associated with our partnership."

A number of things were happening at this time. Significant progress had been made in 2004 to get the Convention Center moving toward construction. Among items that remained, however, was a revision of the contract between Penn Square Partners and the Authority because of the new role of the Redevelopment Authority of the City of Lancaster as the owner of the land and new hotel. That was necessary in order to gain additional state funds and grants for the project.

Beginning in the summer of 2004 and for months afterward, there were many discussions and meetings held outside of the public’s view. They led eventually to the first public mention of the Redevelopment Authority’s involvement in the project at the Dec. 16, 2004 meeting of the Authority.

Although meetings with the consultants apparently took place at F&M, very little information was made available to the public at that time, even though 2004 marked the beginning of an extensive, costly public relations campaign carried out by Kelly Michener of Lancaster.

Snippets of an extensive review of Authority records reveal the following:

• Herman Bulls and Alan Tantleff of Jones Lang LaSalle and Doug Smith from Kaufman & Canoles traveled to Lancaster from Sept. 01 to 04, according to expense reports filed for which they were reimbursed. They were to conduct interviews and then prepare a report.

• There is little evidence of participation in interviews on other consultant bills. Metro Vision billed $700 for a PSP/LCCCA history recap.

• Fairmount Capital Advisors, the financial consultant to the Authority, billed for 11 hours over this time frame. There is no description on his invoices for Thomas Beckett’s hours worked.

• Dan Logan of Growth Business Development has a vague "Community update meetings" on his bill for those dates, but no specific detail about meeting with any other consultants.

• According to Hixson’s expense statements, he had an "interview w/ Organizational Consultants at F & M." on Sept. 1.

• Then on Saturday, Oct. 25, again according to expense receipts, they returned to deliver that report. It isn't clear to whom it was presented. There was no Authority board meeting that day. Nor, according to its own minutes, did it have an executive session on that date. No mention of any meeting or report surfaces at the November board meeting. Kelly Michener, however, bills for four hours for a joint communications meeting with PSP on the 24th. There is nothing on the 25th, but Lori Hixon, an employee who handled a portion of the LCCCA account, worked most of the day Sunday on "core message development, special session talking points and joint meeting" according to the Kelly Michener bill.

Nothing further emerges from the two consultants except for final bills. Bulls, however, upped the Jones Lang LaSalle fee to $20,000 which was paid with no public questions asked.

Then, after several months had passed, Hixson felt compelled to add another consultant in the spring of 2005.

In March 2005, at $350 per hour, Bulls traveled to Lancaster. According to documented times on the expense records submitted, he was in Lancaster from 11:30 a.m. to 4 p.m. That 4.5 hours cost the Authority $1,575. He also billed 5.5 hours for travel, an additional $1,925. There is no evidence of why he came to Lancaster. But this time Bulls was representing his own firm, the Bulls Advisory Group.

Another Bulls client, according to his company web site, was the University of Pennsylvania. And on April 5, Hixson traveled by train to Philadelphia where he met with Bulls for seven hours according to records. Hixson bought lunch at the Inn at Penn for $42.06. Bulls billed $195.75 for travel expenses.

At this meeting, Bulls began crafting a position that the Authority will fill with another member of the Bulls Advisory Group. Recommendations were made concerning a new strategy, structure, and systems and staffing plan for the Executive Director. It's not clear why Bulls was chosen to craft this, because he does not appear to have expertise in this area.

He does, however, have the man for the job. In June, the board approves a contract with Bulls that brings Maurice Walker on board at $300 an hour. Walker was Managing Director of Bulls Advisory Group.

His expertise was the commercial real estate and finance industries. Over an 18-year period Walker worked in the areas of development, technology, operations, investment asset management, compliance and business development/retention.

At the Convention Center Authority office his duties outlined in the original contract expanded before he started. And, they kept expanding. He took on the chief role for the project. Walker’s position expanded to reviewing all project consultants' roles and realigned responsibilities, taking on the roles of financial advisor, public relations and minority business administrator.

The contract, as with most the Authority approved, was open ended. It had a 36-month time frame, but no cap on how much would be billed.

Walker submitted bills that were far more detailed than any of the other consultants. While that was a major improvement over what the other consultants had been submitting, they reveal how Walker’s role kept expanding, overseeing projects and people that could have been done by the executive director.

It was an extensive examination of those billing details during this investigation that provided examples and raised questions if anyone at the Authority reviewed how many hours Walker was billing and how many hours he was actually working.

As with other consultants there appears to be little checking of his bills. He is paid for whatever he submits. Here are a few examples.

He bills twice for Sept. 21, 2005. The identical billing is listed consecutively. A mistake by Walker when he created his bill? Perhaps, but it should have been caught and flagged by someone at the Authority. That 14-hour double billing cost the Authority $4,200.

On one day Walker listed 17.75 hours worked from his office. He noted that he created budget drafts and distributed them to board members. Almost 18 hours worked is a lot for anyone on a single day. This day, however, was New Year's Eve. Dec. 31, 2005. That means he would have worked from 6:15 a.m. until the stroke of midnight, no breaks, no time off for lunch or dinner. What a dismal way to end the year.

Travel was included in the contract to be paid, but again, there were no stipulations or parameters. So for each four-hour round-trip from Bowie, Maryland to Lancaster and back again, Walker was paid $1,200. Walker also was paid mileage for use of his own car.

The authority also reimbursed Walker for meals, both while traveling and in Lancaster. Walker, in spite of being paid $300 an hour, often billed the Authority for very small amounts, such as $1.51 for breakfast on Nov. 29, 2005 for which he had no receipt. There were no receipts submitted on 26 different occasions between May 30 and December 31, 2005, but Walker was reimbursed for all of them. At other times the expenses don't match the time frames submitted, such as the $7.26 he billed for breakfast on Aug. 17, 2005, but the receipt from Greenfield Getty Mart shows the items were purchased at 9:32 p.m. the night before.

In October 2005, Walker submitted some substantial receipts for meals reimbursed by the Authority. He was reimbursed $233 for Carr’s, $103 for Molly’s Pub, $101 for the Belvidere Inn, $77 for Steakhouse, $64 for Lancaster Dispensing Co. and $55 for The Brassiere.

These few examples are enough to ask why more questions were not asked by someone at the Authority during Walker’s 22 months of consulting.

Finally, some $1,124,642.61 later, in April 2007, it all ended for Bulls Advisory Group when Interstate was given the reigns.