AGENDA Committee of the Whole Monday, October 28, 2013 6:30 p.m.

. 10th Floor Council Chambers, City Hall

Councilmember Carol Wood, Chair Councilmember ALynne Boles, Vice Chair

1. Call to Order 2. Roll Call 3. Approval of Minutes Minutes of October 14, 2013 Minutes from Closed Session October 21, 2013 4. Public Comment on Agenda Items 5. Discussion/Action:
A. Board of Water and Light Audited Financial Statements BWL Return on Equity Agreement Verification if a RFP was done for the BWL Outside Counsel List Internal Auditor Memo Dewpoint Inc. Internal Auditor Memo Outside Counsel Breakdown (FY)

B. C.

6. Other 7. Adjourn 8. Pending

Budget Policies Vacant & Unfunded Positions & Position Eliminations- Administration provide City wide organization chart for FY 2013-14, and provide detail department list Capital Improvement Projects - Internal Auditor Report FY overruns and under expenditures. Deadline 1/31/2014 City Capital Improvement & Maintenance Plan Review by 9/1/2013

Pending from 9/16/2013 Verification if a RFP was done by BWL for their Outside Counsel List IT Department Restructuring Update- Administration Internal Auditor Report Dewpoint Inc. Progress Spreadsheet on the items in the Financial Health Team Plan Memo on items that were eliminated in the Financial Health Team Plan Provide a breakdown of the expenditures for the pool at the Schmidt Center. This is to include the renovations and upkeep of the pool. (Originally requested 8/5/2013) Provide Council with a detailed listing on how the millage funds for the Fire Department were spent in FY2013. (Originally requested 6/10/2013) Pending from 8/5/2013 Provide information on the safety at Frances Park Pending from 7/22/2013 Provide an update on the street signage on Lenore Avenue Provide an update concerning the signs in the right-a-way for Parks and Recreation Pending from 06/24/13 meeting Provide information regarding the flooding prior to the year 2000. Provide information on the assessment district and supporting documentation. Pending from the 06/10/13 meeting Provide information regarding the Basement Back-up Program to be initiated in Fall 2013

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MINUTES Committee of the Whole Monday, October 14, 2013 6:30 p.m. Tenth Floor Conference Room Lansing City Hall CALL TO ORDER The meeting called to order at 6:34 p.m. ROLL CALL Councilmember Carol Wood, President Councilmember ALynne Boles, Vice President Councilmember Derrick Quinney Councilmember Jessica Yorko-arrived 6:36 Councilmember Kathie Dunbar Councilmember Brian Jeffries Councilmember Jody Washington Councilmember Tina Houghton OTHERS PRESENT Don Kulhanek, Law Office Sherrie Boak, Council Staff Randy Hannan, Mayors Executive Assistant James DeLine, Council Internal Auditor Karl Dorschimer, LEAP Steve Willobee, LEAP Mary Elaine Kiener, Citizen Dale Schrader, Walnut Street Neighborhood Renee Risper, Walnut Street Neighborhood Association APPROVAL OF MINUTES COUNCILMEMBER BOLES MADE A MOTION TO APPROVE THE MINUTES FROM THE SEPTEMBER 30, 2013 MEETING AS PRESENTED. MOTION CARRIED UNANIMOUSLY (7-0). PUBLIC COMMENT ON AGENDA ITEMS Renee Risper, acknowledged LEAP for the work they had done with Niowave, LLC and the neighborhoods, and City Council. Ms. Risper spoke in support of the tax abatement for Niowave, LLC. Dale Schrader spoke in support of the tax abatement for Niowave, LLC, and acknowledged Council and LEAP for working with the neighborhood on the issues. Mary Elaine Kiener spoke in support of the tax abatement for Niowave, LLC.
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DISCUSSION/ACTION RESOLUTION PPE-01-12; Application for Exemption of New Personal Property submitted by Niowave, Inc. for property located at 1012 N Walnut Street Mr. Dorschimer gave a brief overview of the project, explaining about the public hearing held on March 11, 2013, and neighborhood concerns with regards to the faade of building. Since the public hearing, the issue was moved to Committee of the Whole and the action to table until concerns with the faade are addressed. Mr. Dorschimer stated that after working with the neighborhood and Niowave, there was an amendment to the development agreement for Niowave to address the faade concerns within one year of the approval of Personal Property Exemption. Mr. Willobee referenced faade and color rendering in the Committee packet, cost breakdown on costs covered under the 328 Agreement, and clarified that the revolving fund will not cover costs to fix the faade but to demolish the existing faade. Based on an approval, Niowave LLC would have 365 days to make the faade corrections, at which point LEAP will file a report stating the conditions have been met. This requirement is part of the development agreement, as the 5th Task, and if the task is not completed, they could have their tax incentives revoked. Council President Wood asked who would be making the recommendation to Council if the agreement was not fulfill. Mr. Dorschimer stated that EDC does all the development agreements, and an audit, and will in turn report to the Director of Finance. There is wording in the amendment that states the incentive may be revoked, however the company will have an opportunity to explain why they might not have met the requirements to the Council and they would make the recommendation. Council President Wood asked if the agreement had been reviewed by the City Attorney office with regards to may be revoked. Mr. Dorschimer stated the same language has been in all the agreements, and gives the City Council the opportunity to review the project and act accordingly. Mr. Willobee stated that the funding source is a local site remediation revolving fund, and the project was approved previous as Brownfield Plan #28, where funds were captured and used for other project. This project is a grant. Mr. Dorschimer added that funds have been used over years, and used up front on some projects, and in this case they do not expect to recover it. Councilmember Jeffries asked if the landscaping plan that was presented was part of the required work that needed to be completed in one year. Mr. Willobee confirmed that everything must be complete in one year. Councilmember Quinney asked about the AE fees. Mr. Dorschimer stated those are architectural engineering fees, and the demo fees are for demolition of the faade structure to make room for the improvements. Councilmember Yorko acknowledged all the groups willingness to discuss options and obtain a solution, and reminded the public that an ordinance was passed to prevent any situation like this in the future. Council President Wood informed Mr. Dorschimer that the two (2) parking signs in the R.O.W. are to be removed, because they are not allowed by ordinance. Mr. Dorschimer stated he would investigate the signs.
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MOTION BY COUNCIL VICE PRESIDENT BOLES TO APPROVE THE RESOLUTION FOR PPE-1-12; NEW PERSONAL PROPERTY EXEMPTIONFOR NIOWAVE, INC. AT 1012 N WALNUT STREET BASED ON THE AMENDENT DEVELOPMENT AGREEMENT. MOTION CARRIED (8-0)

INFORMATION No further information. OTHER No Comments PENDING Pending from 9/16/2013 IT Department Restructuring Update- Administration Internal Auditor Report- Dewpoint Inc. Internal Auditor Memo- Outside Counsel Breakdown (FY) Verification if a RFP was done by BWL for their Outside Counsel List Progress Spreadsheet on the items in the Financial Health Team Plan Memo on items that were eliminated in the Financial Health Team Plan Provide a breakdown of the expenditures for the pool at the Schmidt Center. This is to include the renovations and the upkeep of the pool. (Originally Requested 8/5/2013) Provide Council with a detailed listing on how the millage funds for the Fire Department were spent in FY2013. (Originally Requested 6/10/2013) Pending from 8/5/2013 Provide information on the safety at Frances Park Pending from 7/22/2013 Provide an update on the street signage on Lenore Avenue Provide an update concerning the signs in the right-a-way for Parks and Recreation Pending from 06/24/13 meeting Provide information regarding the flooding prior to the year 2000. Provide information on the assessment district and supporting documentation. Pending from the 06/10/13 meeting Provide information regarding the Basement Back-up Program to be initiated in Fall 2013. ADJOURN The meeting was adjourned at 6:54 p.m. Respectfully Submitted by, Sherrie Boak, Council Staff Approved by the Committee on _________.

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CITY OF LANSING
INTERNAL AUDITOR
124 W MICHIGAN AVE FL 10 LANSING MI 48933-1605 (517) 483-4159 Fax (517) 483-7630

REPORT
DATE: October 23, 2013 TO: City Council Mayor Virg Bernero Chris Swope, City Clerk FROM: Jim DeLine, Internal Auditor RE: Audit of City of Lansing Relationship with Dewpoint, Inc.
Per the City Charter, The Internal Auditor shall make a full report to the City Council of each individual audit and file a copy with the Mayor and City Clerk.

Background / Research This audit was prompted by the Committee of the Whole on Monday, September 16, 2013, after hearing from Lynne Meade, Business Representative of the Teamsters 580 bargaining unit, during public comment at its regular biweekly meeting. Ms. Meade expressed a concern that, per Chad Gamble, City of Lansing Chief Operating Officer, an agreement with Dewpoint, Inc. was being entered into by which the City would pay $52,000 per month to take over the core functions of the Citys Information Technology (IT) section. It was her understanding that the agreement was for two years. Her concern was that, at the end of the two years, the City employees whom she represents would have lost some of their IT skill sets and their upward mobility would be severely limited. Present at the September 16, 2013 meeting was Randy Hannan, Executive Assistant to Mayor Bernero, who was requested to work with me to provide the Request for Proposal / Quote (RFPQ) for any current Dewpoint purchase order as well as the contract. He agreed to do so. On Tuesday, September 17, 2013 I met with Stephanie Robinson, the Citys purchasing agent to request the RFPQ and learned that none was on file as Dewpoint had been granted sole source status. She agreed to provide documentation to that effect, but later in the day, informed me that none was available as Dewpoint was, in fact, a vendor with a contractual agreement with the State of Michigan and, per the Citys purchasing ordinance, could be granted a purchase order without competing bids being requested. Ms. Robinson provided me this information via email with a copy sent to Angie Bennett, Interim Finance Director. Ms. Robinson suggested I contact Eric Tumbarella for additional information and Ms. Bennett informed me that Mr. Tumbarella was out for the week and I should request information regarding Dewpoint from Chad Gamble.
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Through a search of the Citys IFAS accounting software, I was able to view purchase orders and payment history to Dewpoint. Line item detail on purchase order (PO) P083382 issued July 5, 2013, simple read, Project Management and was issued for 2,088 hours of services @ $90.00 for a total of $187,920.00 charged to IT fund 630. Upon pulling an invoice paid on P083382, it simply itemized a Dewpoint employee and time spent. No detail as to services performed was provided on the invoice. I went to the City Clerk and, searching back to July 1, 2013, could find no contract with Dewpoint on file there. On Wednesday, September 18, 2013 I sent an email to Chad Gamble requesting to know the scope of services being performed by Dewpoint relative to P083382. On Friday, September 20, 2013 Mr. Tumbarella came to my office and told me that he was approved to provide any / all information that I requested. I asked if I would be getting a signed contract and he indicated that I would be getting that and more. A follow-up email was sent to Mr. Tumbarella on September 26, 2013 asking for when I might receive the information. As of the date of this report, none of the information requested of Randy Hannan, Chad Gamble or Eric Tumbarella has been received.

Analysis Without the cooperation of the administration, I am still able to conduct research on the IFAS accounting system, in the vaults and archives of the Finance Department, and in the office of the City Clerk. For this audit, that has been (for the most part) the extent of my research. As of the date of this report, promises made by the administration to provide information have not come to fruition. An analysis, at this point, would be incomplete. The audit is considered incomplete. Certainly, if Dewpoint is providing technical support services previously performed by City employees, the next step in this audit would be to ask the administration if a cost / benefit analysis (CBA) had been conducted.

Recommendation It is recommended that the administration be more forthcoming to the Internal Auditor. The lack of cooperation does not bode well for them. It might lead the City Council, the press and the public to believe they are not willing to be forthcoming with how tax dollars are being spent. Last fiscal year, the City of Lansing paid over $250,000 to Dewpoint, Inc. An audit of the Citys current relationship with Dewpoint is very much in order. It is my contention that the City Charter mandates that any / all information requested by the Internal Auditor be supplied to them. A further lack of cooperation would indicate that I need to employ other forms of information gathering. Sadly, these include
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requesting information under the Freedom of Information Act (FOIA), and utilizing the subpoena power granted to City Council by the City Charter. These steps are extreme and, hopefully, can be avoided. While, as stated above, this audit is considered incomplete, attempts will continue to be made to obtain the information necessary for its completion.

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CITY OF LANSING
INTERNAL AUDITOR
124 W MICHIGAN AVE FL 10 LANSING MI 48933-1605 (517) 483-4159 Fax (517) 483-7630

REPORT
DATE: October 23, 2013 TO: City Council Mayor Virg Bernero Chris Swope, City Clerk FROM: Jim DeLine, Internal Auditor RE: Audit of City of Use of Outside Counsel in FY 2013
Per the City Charter, The Internal Auditor shall make a full report to the City Council of each individual audit and file a copy with the Mayor and City Clerk.

Background / Research This audit was prompted by a request from Councilmember Brian Jeffries made before I assumed the position of Internal Auditor. It was reiterated at a meeting of City Council on August 26, 2013 when passage of a resolution expanding the list of approved outside counsel vendors was approved. At that meeting, City Attorney, Janene McIntyre, agreed to work with me to provide a list of outside counsel firms utilized and the reason for such. On Thursday, August 29, 2013 I sent a follow-up email to her asking if we needed to meet concerning this report, and requesting if she could estimate a completion date. In my computer files, I found a spreadsheet done by my predecessor, Arnie Yerxa, itemizing invoices paid to outside counsel firms from fiscal year 2008 through and including fiscal year 2012. Also included, was the general ledger expense line to which each invoice was charged. Using this spreadsheet, I created pie charts to graphically illustrate the data. These were emailed to Council members on September 12, 2013 with the notation that I had not received any information from the City Attorney regarding our request. I sent another follow-up email to her on October 8, 2013.

Analysis As of the date of this report, the City Attorney has not provided the information requested. I have offered to research the Citys IFAS accounting software and provide similar data as Mr. Yerxa, but that offer has not been accepted. No analysis can be offered at this time. The audit is incomplete.

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Recommendation It is recommended that members of the administration, including the City Attorney, follow through on providing promised information on a more timely basis. While, as stated above, this audit is considered incomplete, attempts will continue to be made to obtain the information necessary for its completion.

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City of Lansing Outside Counsel FY 2008 - FY 2012

Expenditures by Firm
211,112 24,259 97,088 22,458 12,869 3,007 7,108 Clark Hill 694,559 Miller, Canfield Fraser Trebilcock Foster, Swift Varnum LLP Keller Thoma Plunkett&Clooney Brookover, Carr Oade Stroud 487,787 671,097 Knaggs Harter McGinty Jakubiak Murphy, Brenton

447,423

526,307

Firm Clark Hill Miller, Canfield Fraser Trebilcock Foster, Swift Varnum LLP Keller Thoma Plunkett&Clooney Brookover, Carr Oade Stroud Knaggs Harter McGinty Jakubiak Murphy, Brenton

Total Expenditures 694,559 671,097 526,307 487,787 447,423 211,112 97,088 24,259 22,458 12,869 7,108 3,007 3,205,074

Data Compiled By: Arnie Yerxa Chart Created By: Jim DeLine

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City of Lansing Outside Counsel FY 2008 - FY 2012

Expenditures by Department / Cost Center
23,613 17,085 17,732 85,760 13,366 9,456 8,756 72 365 212 9,876 3,623 85 19,572 General Admin Property Tax Levy 601,423 101,027 102,069 125,864 313,897 Finance-Operations Pension Contributions Transportation Other Fringe Benefits Transportation-Parking Maint City Attorney Tax Roll Adjustments Labor Relations Finance-Assessor 158,176 Workers Comp District Court 161,944 307,089 195,121 Sewage Disposal Transportation-N Grand Ramp Consolidated Facilities Proj Police Department Baseball Stadium 209,051 249,179 CDBG FY2011 284,639 Econ Dev Corp Mult Dwell Reg Code Compliance Tri-County Metro

30,000 49,815 84,677

21,533

Department / Cost Center General Admin Property Tax Levy Finance-Operations Pension Contributions Transportation Other Fringe Benefits Transportation-Parking Maint City Attorney Tax Roll Adjustments Labor Relations Finance-Assessor Workers Comp District Court Sewage Disposal Transportation-N Grand Ramp Consolidated Facilities Proj Police Department Baseball Stadium CDBG FY2011 Econ Dev Corp Mult Dwell Reg Code Compliance Tri-County Metro Human Resources Finance-Treasurer Retirement Contributions Public Service Department Act 51 Admin & Engineering Personal Property Tax Audit Recycling-Promo,Mkting Employees Retirement Fund

Total Expenditures 601,423 313,897 307,089 284,639 249,179 209,051 195,121 161,944 158,176 125,864 102,069 101,027 85,760 84,677 49,815 30,000 23,613 21,533 19,572 17,732 17,085 13,366 9,876 9,456 8,756 3,623 365 212 85 72 3,205,074

Data Compiled By: Arnie Yerxa Chart Created By: Jim DeLine

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