UCCF 8/14/14: Resolutions Miscellany

By John Bury | August 19, 2014

2014-690 Amending Resolution 2014-13, designating official newspapers of the County of Union, to reflect a change in name from the “Star Ledger” to “NJ Advanced Media.”
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2014-661 Resolution modifying the 2014 Budget in the amount of $165,000 as a result of notification received from the State of New jersey, Department of Labor and Workforce Deve1opment for a program entitled: Workforce Learning Link Program
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2014-681 Authorizing the County Manager to utilize 51.300,000.00 in Federal Workforce Investment Act Grant funding from the New Jersey Department of Labor & Workforce Development in the form of Individual Training Contracts, as stipulated in the grant agreement, for the period of July 1 2014 through June 30, 2015. The training providers will be taken from the NJ Eligible Training Provider List. The One-Stop Career Center will determine part1c1pant eligibility for training services and execute Individual Training Contracts appropriate for eligible individuals.
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2014-689 Authorizing the County Manager to execute a Memorandum of Understanding with the Rutgers Cooperative Extension c/o Cook College of New Brunswick, NJ for the purposes of utilizing the educational services of certain members of the Rutgers faculty and staff of Cook College for the period of January 1, 2014 to December 31,2014 in the amount of $91,078.
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2014-685 Resolution concurring with the Township of Cranford ratifying the approval given to close Spnngfield Avenue between North Avenue and North Union Avenue on Tuesday, August 5, 2014, from 5:00p.m. to 10:00 p.m. for the Cranford National Night Out Celebration Event.
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2014-670 Authorizing the County Manager to enter into an agreement with Purple Forge, Ontario, Canada, to develop, maintain and support an election application for smart phones as a way of imparting important election information to voters for the contract period August 15, 2014 through August 14, 2016 in the amount not to exceed $35,000.
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2014-665 Amending Resolution Number 2013-1058, to reflect an increase to the contract amount awarded to Pit1o Consulting Group,
West Windsor, New Jersey, in the sum of $16,000 for consulting services for the preparation of Indirect Cost Plan and Medicare and Medicaid Cost Reports for Runnells Hospital for new sum not to exceed $96,000.
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2014-669 Authorizing the County Manager to adjust and/ or change his Internal Position Control schedules.
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2014-678 Authorizing the County Manager to award a contract to the John J. Heldrich Center, New Brunswick, New Jersey, for Workforce Development at Rutgers University to work with the Union County Workforce Investment Board to conduct a qualitative evaluation of the Ut1ion County public workforce system, including the primary One-Stop Career Centers in Elizabeth and Plainfield, in the a1nount of $23,103. (Federal & State Grant Funded)
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2014-673 Authorizing the County Manager to award a professional engineering contract to CME Associates, Howell, New Jersey, to provide professional planning and design services for the preparation and development of the Watchung Reservation Trails Plan in an amount not to exceed $43,000. (Union County Engineering Project Number 2014-024)
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2014-642 Authorizing the County Manager, through the Office of Cultural & Heritage Affairs, to execute any and all agreements for the 2014 HEART Grant in an amount not to exceed $75,000.
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2014-674 Authorizi11g the County Manager to award the proposed contract obtained through advertised public bidding in accordance with the Local Public Contracts Law. Department of Economic Development, Division of Engineering: Rich Picerno Builders. LLC of Kenilworth. New Jersey, for the purpose of providing Briant Park Improvements, in the amount of $308,294. (Union County Engineering Project Number 2013-021)
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UCCF 8/14/14: Sinking Money Into Rinks

By John Bury | August 18, 2014

2014-677: Authorizing the County Manager to award a Professional Architectural/Engineering Service Contract to Netta Architects, Mountainside, New Jersey, to provide architectural and engineering design services and construction administration and inspection services for the Warinanco Park Ice Rink – New Clubhouse Improvement Project, Roselle, New Jersey in an amount not to exceed $381,000. (Union County Engineering Project No. 2014-021).

In 2012 the talk was about building ice rinks at Oak Ridge costing $8.8 million.   Does upgrading the Warinanco rink mean that these plans are on ice?
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UCCF 8/14/14: Stipend Scandal Update

By John Bury | August 18, 2014

Questions asked; suggestions offered.

No answers provided, no suggestions accepted:
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UCCF 8/14/14: Baby Boomers Bolting Union County

By John Bury | August 16, 2014

Kean University held a panel looking for solutions to the problem of retirees leaving the state of New Jersey (and Union County especially) in droves but one freeholder sees that as good news:
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UCCF 8/14/14: Bond Ordinance – $6,742,000

By John Bury | August 15, 2014

758-2014: BOND ORDINANCE TO AUTHORIZE THE MAKING OF VARIOUS PUBLIC IMPROVEMENTS IN, BY AND FOR THE COUNTY OF UNION TO APPROPRIATE THE SUM OF $6,742,000
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Take 1:
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Take 2:
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What Will Union County Self-Report to the SEC?

By John Bury | August 14, 2014

Is there anything Union County wants to straighten out with the Securities & Exchange Commission (SEC) regarding past bond disclosures?
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Freeholder Kowalski cited the ratings agencies support of the county debt:
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But ratings agencies are not the SEC which cannot be bought off with over $500,000 in fees since 2004 to buy ratings.

Freeholder Bergen calls anyone taking this response to the SEC program as anything other than good fiscal policy a liar:
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Yet look at excerpts from Local Finance Notice 2014-9 issued on July 23, 2014:

Recently, the SEC and the financial community have focused attention on what is alleged to be a widespread failure of local government issuers across the nation to meet their continuing disclosure obligations. They maintain that local government issuers of debt frequently fail to meet their continuing disclosure obligations and misrepresent (sometimes innocently or inadvertently and other times fraudulently) their past compliance when issuing new debt.

Earlier this year, the SEC adopted a program to encourage local government issuers to self-identify past noncompliance and improve timely continuing disclosure in the future. Their program, known as the “Municipalities Continuing Disclosure Cooperation Initiative” essentially establishes lesser enforcement actions provided local government issuers (and others) self-identify past noncompliance and agree to a plan designed to prevent future noncompliance.

You should also ensure that past official statements — or similar documents issued with respect to new issuances of debt — have accurately reported your past compliance with continuing disclosure requirements. While not required, the Chief Financial Officer is encouraged to seek the assistance of an experienced professional to assist or undertake such self-assessment.

At this stage a competent outside professional is the last thing Union County officials what to see looking over the junk they have been slinging to get suckers to buy their bonds.

Will Union County Turn Itself In To The SEC?

By John Bury | August 14, 2014

Tonight’s freeholder meeting agenda includes a seemingly innocuous resolution:

2014-664: Directing the undertaking of a continuing disclosure review and authorizing participation in the municipalities continuing disclosure cooperation initiative of the Division of Enforcement of the U.S. Securities and Exchange Commission.

But google ‘ SEC muncipalities continuing disclosure cooperation initiative’ and you find yourself at an SEC website that explains:

The Municipalities Continuing Disclosure Cooperation Initiative (the “MCDC Initiative”) is intended to address potentially widespread violations of the federal securities laws by municipal issuers and underwriters of municipal securities in connection with certain representations about continuing disclosures in bond offering documents.

As described below, under the MCDC Initiative, the Division of Enforcement (the “Division”) of the U.S. Securities and Exchange Commission (the “Commission”) will recommend favorable settlement terms to issuers and obligated persons involved in the offer or sale of municipal securities (collectively, “issuers”) as well as underwriters of such offerings if they self-report to the Division possible violations involving materially inaccurate statements relating to prior compliance with the continuing disclosure obligations specified in Rule 15c2-12 under the Securities Exchange Act of 1934 (the “Exchange Act”).

Did Union County make “materially inaccurate statements” in their bond disclosures?  Of course they did, most notably in regard to their OPEB disclosures but also in failing to mention how they are raiding the Open Space Trust Fund (a $10 million annual tax that sunsets in 2020) to pay operating expenses (or it could be something else that was better hidden).

Are the freeholders aware of these materially inaccurate statements?  It’s hard to tell from the resolution which first directs the “undertaking of a continuing disclosure review”.  How would they know if there is anything to disclose if the review has not yet been undertaken?

Timing plays a part here.  This SEC self-reporting program started on March 10, 2014 and the deadline for getting into it is September 10, 2014.  The next freeholder meeting after tonight is on September 11, 2014.  Is this just a precaution in case the review that is undertaken does turn up “materially inaccurate statements” that someone (other than any freeholder) decides are of such a nature as to require self-reporting?

Questions to be asked and answered (maybe) in tonight’s blog.

 

Consultants for Union County

By John Bury | August 12, 2014

Based on Check Registry data (as interpreted through sometimes sketchy descriptions of services provided) Union County has spent over $3 million on consultants since 2004 but this is not your typical pay-to-play category.  Unlike outside counsel (and except for Strategic Media Group) these consultants do not seem to be hired primarily to repay campaign donations but rather to provide a service.  That service being to try and put a patina of respectability on those crackpot ideas that the county comes up with which often do work to repay campaign donors.

Complete Healthcare Resources: $60,000 Runnells Sale

James M. Davy Associates, LLC: $25,750 Public Safety Report

Luminosity The Solution: $271,518 Jail Management

Mareth Advisors, LLC: $47,400 Galloping Hill Banquet Center

Miedasquared: $380,474 Creative consulting services

Rutgers – $6,325 Musicfest makes money

O’Sullivan Associates: $9,000 Lifetime health benefits for 600 employees

Perselay Associates, Inc.: $18,700 Jail Management and Finances

Rink Management Services Corpo: $17,800 Hockey rinks at Oak Ridge

Strategic Media Group & as a company: $713,520 Media Consulting

 

Employee lawsuit update – LaPolla vs County of Union

By Tina Renna | August 11, 2014

On July 11, 2014, a second amended complaint was filed in the on-going matter titled Richmond LaPolla vs County of Union; George Devanney, County Manager and individually, adding a Third Count for Retaliation for Filing a Lawsuit seeking his rights under New Jersey Civil Rights Act. The original complaint was filed In September 2011. The Third Count is in response to LaPolla being passed over for a position that was filled in June 2014. The case is set for trial on October 16, 2014.

Richmond LaPolla has been employed by the County of Union since September 15, 1979 – going on thirty-five years. According to his lawsuit, LaPolla received many positive reviews and worked under a number of County Managers appointed by both political parties – never with any problems until George Devanney. LaPolla claims to have been punished because of his brother Michael LaPolla’s falling out of favor with then power-broker Charlotte DeFilippo whom he openly criticized her use of power and authority to manage and manipulate county workers as well as most of the county manager’s duties.

Michael LaPolla retired from the positon of County Manager, and George Devanney filled the spot. He then set out to harass Richmond LaPolla. During the height of his career Richmond LaPolla was Director of Department of Operations and Facilities. In this position LaPolla managed a work force of over 200 county employees and maintained over one million square feet of office space. Despite his extensive experience and skill, Devanney had him transferred to a position at the Union County Vocational School and thereafter to the Union County Juvenile Detention Center where his office was a utilities closet. In November 2011, LaPolla was transferred to Watchung Stables where he remains to the present time. In all of these positions, although LaPolla receives a salary of $126,780, he has no meaningful duties to perform.

According to his lawsuit, in September 2013, LaPolla became aware that the position of Division Head in the Department of Facilities Management, a position that he held for many years, had become vacant when Niel Palmieri resigned. LaPolla made a request that he be given this position, restoring him to his rightful civil service job.

Niel Palmieri resigned his position as Director of Facilities Management on Friday, September 27th via an email from his iPhone to his boss, Joe Graziano. The following Wednesday, on October 2, he pleaded guilty in Federal court in Newark to mail fraud. Palmieri admitted to filing purchase orders for goods which were never received, the vendor, Viva Group, then paid Palmieri. Frank Vicendese of the Viva Group also pleaded guilty. Neither Palmieri or Vicendese have been sentenced to date.

In February 2014 LaPolla learned that the position, which had been temporarily filled, was being posted and he timely applied for it and was interviewed. LaPolla believed he was the most qualified individual for this position and as he repeatedly advised the decision makers, he had experience performing the duties of the position, further the county giving him the job would save the county a considerable amount of money.

On June 10, 2014 LaPolla learned that another county employee had been selected to fill the position and that he was starting in the position that day. Charles Chirafesi, was first hired by the county in January 2003 and last worked a clerical position in the Park and Community Renewal Department. He has a Civil Service title of carpenter and is receiving a salary of $88,000 per year, a $20,000 increase. The individual selected has no administration nor supervisory experience and does not meet the minimum requirements set forth in the posted position.

LaPolla was never given any reason why he was not selected to fill the position for which he was clearly qualified and for which he was already receiving the job salary.

LaPolla amended his complaint to assert a third count alleging that the County had deliberately and intentionally continued to deprive Plaintiff of his rightful position in retaliation for his having filed a lawsuit asserting his rights under the New Jersey Civil Rights Act.

LaPolla is seeking to be reinstated to a position to commensurate with his civil service title, with all offices, staff, and duties of his civil service position and in a physical location where he worked before the harassment began.

UCUA Stipend Report, My Analysis

By John Bury | August 11, 2014

Based on scant real information at the February 27, 2014 UCUA Board meeting I expressed my concerns which primarily dealt with the tax consequences of paying employees through 1099 forms (though I was saying 1099-R when it was 1099-Misc that they used):
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Now that the report is out I see the accountants shared my concern:

Butvilla stated that he is the manager of the UCUA account on behalf of the auditing firm and has served in that role since 1983. ButviIla stated that the auditing firm is retained to audit the finances of the UCUA, to review the internal controls on “how revenue comes in and how it goes out”, to review payments made by UCUA and authorization for those payments, to review contracts, resolutions and board minutes to reconcile the payments and the general financial process at the UCUA. Butvilla stated that he became aware of the SSA in October 2013 when he received a call from Cardone, who at the time was running certain reports for the UClA. Cardone noticed the $15,000 payment, requested information on the payment and was advised that UClA was making a monthly payment to UCUA pursuant to a shared services agreement and that UCUA was using a portion of the payment to pay certain employees. Cardone relayed the information to Butvilla that payments were being made by UCUA to its employees as compensation but that the payments were not being run through payroll. Butvilla stated that the day after being informed by Cardone
in October 2013 about payments being made to UCUA employees outside of payroll, he contacted Brennan and advised him that he “cannot do that and that the payments have to run through payroll”. According to Butvi11a, Brennan informed him that he planned to send Tax Form 1099 to the employees and since it was already the end of the year, he would run everything through payroll in 2014.
Approximately 3 weeks after the call between Butvilla and Brennan, Butvil1a attended a meeting at the UCUA facility in Rahway, New Jersey, which was attended by Sullivan, Brennan, Williams and Dennis Enright from NW Financial, financial advisors to the UClA. After the meeting, Butvilla met with Sullivan and advised him that Brennan was not running the employee payments through payroll and that he could not do that since it would get the UCUA “in hot water” with the Internal Revenue Service. Sullivan stated that he would discuss the issue with Brennan.

According to Exhibit I of the report, eight 1099-Misc forms were issued (though only seven employees got the stipends) for 2013.  The problem here (and partially why I assumed the forms would be 1099-R) is that you never (NEVER) issue a 1099-Misc form to an employee.  There is no gray area here.  The instructions for the form define:

Box 7. Nonemployee Compensation
Enter nonemployee compensation of $600 or more. Include fees, commissions, prizes and awards for services performed as a nonemployee, other forms of compensation for services performed for your trade or business by an individual who is not your employee

No manner of convenient rationalization can justify this tax evasion. If you could pay your employees through a 1099-Misc instead of W-2 and avoid FICA taxes then everyone would be doing it. You can’t and the UCUA better get its people on doing some revised filings.

However the most disturbing, and telling, part of the report comes in its last non-redacted paragraph:

It appeared to me that Sullivan genuinely believed that he had the authority to act without the Board’s approval and that the comptroller and the agency’s auditors supported his actions.

This is a carryover from his freeholder days where he genuinely believed in solar panels, a wedding banquet hall, paying million dollar annual fees to DeCotiis, rewarding pay-to-players, and that he earned his paycheck for wielding his rubber-stamp.  Had he, and most of the other freeholders, not had a genuine belief in, what is obvious to everyone else, dysfunctional government then the real rulers of Union County would have never picked him.