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As Budget Woes Mount, City Managers/Staff Spend On Extravagant Meals & Luxury Resorts At Taxpayer Expense

A2P Notes: This is filed under “Scoops & Scores” because you read it here first.

Over the past 36 months Council has struggled with budget “deficits,” threatened to close Mack Pool and the Burns Park Senior Center to make ends meet, powered down streetlights, cut spending on parks, cut fire coverage to inadequate levels, left vacancies in the police department and reduced police staffing, raised fees for sewer, water, solid waste, and parking to plug holes in a budget stretched thin by over-spending and debt payments. At the same time, Mayor and Council have continued to allow city employees to lodge at some of the most exclusive and expensive resorts in Michigan and elsewhere—at taxpayer expense, as well as enjoy extravagant meals at restaurants all over town, spending as much as $1,900 for meals at times.

A2Politico examined city staff credit card records, and they show that Ann Arbor taxpayers have paid for city employees (primarily senior managers) to stay at resorts such as the Grand Hotel on Mackinaw Island, the Grand Traverse Resort, Crystal Mountain Lodgings, Hilton Hotels Disney, Hilton Hotels Waldorf, Radisson, Hyatt, and Loews hotels, Disney Resorts, Mission Creek Resort & Spa, Shanty Creek Resort & Spa, the Soaring Eagle Hotel, and Great Wolf Lodge.

Ann Arbor’s CFO and current interim Administrator Tom Crawford and his Finance Department have, once again, been cited by auditors for allowing credit card purchases without proper documentation. Ann Arbor’s CFO Tom Crawford, former City Administrator Roger Fraser, John Hieftje and City Council members together, have a history of poor oversight of City credit card use. At the end of April 2011, Fraser went to work in the administration of Republican governor Rick Snyder as the deputy state treasurer for local government services. As a part of his new job, Fraser will recommend whether Michigan cities in financial trouble need to be taken over by Emergency Financial Managers.

In 2006, the city’s auditor, Abraham & Gaffney, flagged Ann Arbor for allowing use of city credit cards without proper documentation. Then City Administrator Roger Fraser was one of the most flagrant abusers. FOIAs revealed that auditors caught Fraser charging airfare, hotel and other costs for his wife to his city credit card. The auditor writes in the 2006 report, “Instances were noted where purchases were made using the City credit cards (meals, recognition functions) that violate Michigan State law or Attorney General Opnions as compiled in Michigan Department of Treasury’s Document ‘Detemining Lawful Expenditures.’”

Under the heading UNLAWFUL EXPENDITURES the auditors wrote: “Specifically disallowed are expenditures for meals (with some exceptions) and employee recognition. Numerous instances of meals being purchased were noted.”

The auditor suggested corrective action: “We recommend that all expenditures that do not have a documented public purpose be discontinued.”

Instead, Hieftje and Council changed City policy so that city employees were allowed to use city credit cards for travel and entertainment. Prior to the change, it had been forbidden to use city credit cards for travel and entertainment expenses. In addition to changing the rules, the City of Ann Arbor responded to the 2006 audit by promising to put stricter controls into place to make sure that employees provided documentation of all credit card purchases.

However, in 2010, the auditor once again found that 25 percent of the purchases using the city credit cards contained no documentation.

On March 13, 2011 Second Ward Council member  Stephen Rapundalo complained loudly to a receptive media about the overly-generous benefits and pay offered to the city’s unionized employees:

He’s staring at a new report on city employee compensation, pausing at a chart showing what individual workers in each of the city’s nine different labor groups contribute toward the cost of their health care benefits. He can’t get past the zeros on the page.

“Where do I sign up?” says Rapundalo, D-2nd Ward and chairman of the council’s labor committee. “It’s unbelievable. In this day and age, this is kind of unrealistic.”

Rapundalo is one of two Democratic members of City Council who gave donations to the Republican gubernatorial candidate in 2010. Rapundalo’s current run for re-election against a Democratic challenger may explain the sudden inability to “get past the zeros on the page.” The truth is that as a member of the Council’s Labor Committee (along with John Hieftje, Fourth Ward Council members Margie Teall, Marcia Higgins [facing a Republican opponent for her seat on Council] and Second Ward Council member Tony Derrezinski) Rapundalo recommended Council approval of the very same benefit packages at which he is now feigning utter shock.

Stephen Rapundalo has also been exceedingly generous with taxpayer funds with the city’s managers and other non-unionized employees, including those whom the Charter requires Council members to directly supervise. Ann Arbor City Council and its Mayor, John Hieftje, have given free reign to Ann Arbor’s non-unionized employees to spend tens of thousands of dollars on $1,000 meals, travel, four star resorts, and entertainment in the midst of the worst economic downturn since the Great Depression.

Over the past 36 months, city employees have charged taxpayers to eat at restaurants all over the city at functions which had no documented public purpose and, many times, for meals that had no documentation at all. Council has debated closing Mack Pool and the Burns Park Senior Center to save money, whether to park cars at Allmendinger Park to raise revenue, and whether to layoff firefighters. City staffers enjoyed a $1,909.17 meal at the French Quarter restaurant, in Ypsilanti. In December 2009 Roger Fraser stood before Council to warn of projected revenue reductions. The December 5, 2009 headline in AnnArbor.com was “Ann Arbor’s Budget Problems Grow More Imminent.” On December 11, 2009 city employees enjoyed a $600 meal at Moe’s Southwest Grill. One month later, in January 2011, taxpayers paid a $423.36 room charge for a city staffer at the Crystal Mountain Resort & Spa and over $2,000 in airfare for city staff travel.

In March of 2009, Roger Fraser recommended laying off firefighters. That same month, taxpayers treated staffers to an $871.50 meal at Afternoon Delight. In March 2009 Ann Arbor taxpayers also footed the bill for a $382.60 room charge at the Grand Traverse Resort & Spa, a $427.14 charge for a room at the Hilton, in Miami, Florida and a $578.91 room charge at the Omni Hotels Royal Hotel & Resort in New Orleans, Louisiana, a hotel described thusly on its web site: “The Omni Royal Orleans is a four-diamond luxury hotel located in the historic French Quarter.”

May 12, 2009 Roger Fraser told the Ann Arbor News, “Our approach in the coming year is to be extremely frugal.” To makes ends meet, Council approved a budget which eliminated downtown beat cops. One week later, on May 19, 2009 city staff enjoyed a $449.94 meal at Cottage Inn restaurant, on William Street in Ann Arbor. On May 21, 2009 taxpayers paid a $610.35 charge for a city manager to stay at the Grand Hotel on Mackinaw Island. On May 30, 2009 taxpayers paid $625.32 for a city staffer to enjoy a stay at the Hilton Hotels Disney Resort, as well as $630.75 for charges at the Shanty Creek Resorts.

There are, literally, dozens of credit card charges for food from Zingerman’s Bakehouse and Zingerman’s Coffee, and many of those meals, not surprisingly, cost taxpayers hundreds of dollars. If you’re cutting back on takeout pizza to save a little money, Ann Arbor city staffers are more than making up for your frugality. There are, again, dozens of City credit card charges for pizza from shops all over town.

Credit card spending records for 2010 look much like that of those for 2009. While Council discussed the idea of a city income tax, voted to cut city services such as leaf collection, voted to layoff firefighters, increase water rates, increase fees for the use of recreational facilities and programs, power down streetlights and once again raise parking rates, city staffers and their managers were allowed to continue to book rooms in luxury hotels & spas and eat meals costing hundreds of dollars—all on the taxpayer dime.

It seems that under the leadership of Mayor John Hieftje not only has he been “comfortable” cutting services such as police and fire, cuts which have resulted in slower response times and, quite possibly, the deaths of more residents in house fires, he has been equally comfortable looking the other way while city managers and staff bilked city coffers for stays at luxury resorts and hotels in Michigan, as well as in Colorado, Florida and New York. Ann Arbor City Council members have allowed city managers and staff to continue to charge taxpayers for tens of thousands of dollars worth of meals out, while at the same time voting to cut services to residents.

In a city where elected officials, such as Third Ward Council member Christopher Taylor, repeatedly claim in public there is no money to fund services at their present levels, and seek to explain (using inaccurate numbers) why we should be comfortable that our city debt has doubled, it seems particularly thoughtless and even negligent to continue to allow city managers and their staff to spend on extravagant meals out, travel, entertainment, and lodging at luxury resorts in the French Quarter in New Orleans, Miami Florida and Disney World.

Elected officials all over the country are instituting policies that strictly limit, and in some cases have eliminated, city staff travel and meals thanks to budget woes. To pay the credit card charges of staff who do not provide documentation for the charges is simply an example of poor oversight of the taxpayers’ money.

You can download City staff credit card receipts for meals, travel, and hotel/resort & spa accommodations here. Council has yet to finalize the city budget. You can contact John Hieftje and City Council members with your feedback and suggestions by clicking this link

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Short URL: http://www.a2politico.com/?p=8211

34 Comments for “As Budget Woes Mount, City Managers/Staff Spend On Extravagant Meals & Luxury Resorts At Taxpayer Expense”

  1. So why do the voters of Ann Arbor fear the Republicans?
    Keeping voting Democrat and this is what you get!

    • @extreme I don’t think voters fear Republicans as much as we have lived with a really bad local press for, literally, decades. In cities with local media that aggressively investigates local politics, voter turnout is much more robust. I wrote about this recently here: http://www.a2politico.com/?p=9754. Basically, low quality reporting is partially the culprit (and thus a partial motivation for A2Politico).

  2. @Alan, as much as you would like to heckle AA.com into doing investigative reporting, I don’t think it’s working. Someone recently did it in response to an editorial Dearing wrote and he linked to two “investigative” piece Stanton had “recently” done. The two pieces had been written, literally, months apart.

  3. Alan Goldsmith

    I’ll post this again.

    “Still not a peep on this from AnnArbor.com. Ryan, Tony and Nate…we know you are reading this. Lol”

  4. Alan Goldsmith

    Still not a peep on this from AnnArbor.com. Ryan, Tony and Nate…we know you are reading this. Lol.

  5. @John, I got a tip about the television purchase scam, and the tipster said exactly what you did about the reward points.

    One of the comments from the tipster is that city managers would not reveal the name(s) of the employees involved in the Wheeler Center television purchase scam. A2P is looking into it. A2Politico.com is still censored by the City of Ann Arbor web servers. City employees can visit Facebook and AnnArbor.com, but not A2Politico. When AnnArbor.com is censored, that will be a sign that it is no longer “a blog and a voice for the City.”

    If those in charge in city government have acted unethically, it’s because for many years no one was watching, much less writing about these perks, scams, and sweetheart deals.

    If readers have tips, send ‘em along to A2P@A2Politico.com.

  6. Ask Sue McCormick about how the employee buying the TVs used their personal Best Buys reward card to get the reward points for all of the purchases. Remember people, AnnArbor.com is nothing more than a blog and a voice for the City. Don’t expect them to report or actually expose on there own the corrupt behavior of City officials. Those in charge are crooks while the rank and file pay the price. Fraser was the worse of all the offenders and look where he is at now.

  7. From FACEBOOK: “Totally amazing…..its too bad that my tax dollars are going to pay for food for everyone…..maybe i should just walk into the fire dept and hand over my taxes???? at least the firefighters could eat that way!”—Erin Haywood

  8. From FACEBOOK: “Unreal, but not very surprised. I said they were dirt bags from the very beggining.”—Don

  9. There should be an investigation and recoupment of colossal wastes of city funds (cited in that article) on blatant nonsense. I am absolutely appalled this garbage is going on is going on when City Council is considering layoffs of public safety personnel and many other useful services.

  10. @Gene County Washtenaw Commission Kristin Judge is of the opinion that travel that does not result in an immediate return on the investment for the community is travel that is not necessary and should not be charged to taxpayers.

  11. I understand that as the City Manager, Fraser may need to attend some conferences or seminars and they are often held at some resort facility that can accomodate large groups as well as provide other activities. However the dinners, lunches, etc. need to stop. The annual Ann Arbor/UofM dinner could be funded with the billions of dollars the UofM is currently holding. City Council and the Mayor need to put a stop to all unnecessary spending until there is adequate funding to allow some things.

  12. [...] also revealed recently that in the midst of growing budget woes, non-unionized Ann Arbor city staffers, some of the same [...]

  13. @Rster and @Alan this must be an example of that great reporting Stanton does that Tom Gantert mentioned in his piece about why AnnArbor.com is nothing special. LOL.

    This is real investigative work. AnnArbor.com has spent the better part of the time it has been in business not doing investigative work. One could argue the story about the hungry coyote, then, is exactly the kind of news we should expect from AnnArbor.com. On the other hand, this story is exactly the kind of work we have come to expect from A2Politico.com.

    As for SPARK, we’ll have to wait and see what A2Politico digs up!

  14. Don’t worry everyone – Ryan Stanton will be all over this story (like he was on SPARK’s financial irregularities) and will be seeing the expose soon on AA.com.

    Yeah….

  15. Here are some highlights of my FOIA request for Fraser’s credit cards. In FY 2006 there were over $16,000 of charges on Fraser’s city card. $9,000 was for conferences in places like Crystal Mountain, Garland Resort, Minneapolis and Denver/Boulder. $2,000 was for meals in Ann Arbor restaurants with council members, Mayor Hieftje, city staff, the U of M’s Jim Kostova, Mike Finney and others. $3,000 was for conferences at the Eagle Crest and Kensington Court. In FY06 the council retreat was held at Eagle Crest. The remaining $2,000 was for Pizza and catering.

    When Fraser goes to a conference, he often takes a delegation from the city, as well as his wife. For example, his then assistant, Pam Antil attended the Minneapolis conference. An October 2004 conference in Sarasota, FL was attended by Antil, Crawford, McCormick and Fraser.

    Fraser reimburses the city for his wife’s airfare, but not the additional room charges. His stays often include the weekend. He reimburses any extra cost of a weekend golf package included in the conference registration but not the cost of staying in the hotel over the weekend.

    Fraser’s card includes charges for monthly meetings of top city staffers at a local restaurant. There was also an 11/14/04 charge for a meal at the West End Grill for $2,536.65. The supporting documentation indicated it was the UM/Ann Arbor annual dinner. The supporting documentation was just the charge receipt so there is no way to determine the number of people served or whether alcohol was served. Michigan Department of Treasury guidance says coffee and donuts for employees are not a legitimate city business expense. In FY2006 the auditor wrote up the city for local meals, indicating the auditor did not think these montly lunch staff meetings were a legitimate expense. Fraser continued to charge lunch meetings even after the auditor wrote the city up for “illegal expenses”. Maybe Fraser thought he was addressing the problem with a 12/6/06 book purchase: “The Ethics Edge 2nd Edition”.

  16. Alan Goldsmith

    And of course, not a peep or even a link to this story from our sleeping lapdog friends at AnnArbor.com. But if you want to read about hungry coyotes…they’ve got it covered. Lol.

  17. I am appalled at this behavior.

    There needs to be accountability.

  18. Kelly,
    Monthly staff meetings at at restaurant?? I have a hard time thinking any real work gets done at these. “okay, lets go over budget issues… oooh! What kind of rolls are those?” I just can’t picture everyone at the table with papers and work folders spread out all over amidst food plates. This Parent Trap mom has tried this at home with our teeny family meetings while eating ice cream… it DOESN’T work. It is time the staff meetings headed back to the meeting room and maybe, MAYBE, order some bagels.

  19. Someone do the math, please.. The dollars for luxury spending equlal what? A firefighter? Mack Pool? Leaf collection? Asbestos removal?

    Why do these thieves keep getting away with this? Why don’t we storm the castle?

  20. From FACEBOOK: “I am beyond words. And that takes a lot.”—Barb McMullen

  21. Karen thank you very much for sharing this information. I am still flabbergasted. We have a CFO whose department has allowed credit card fraud to the extent that it has been flagged by auditors not once but twice. Council people made him the interim administrator because he does such a great job? This is mind boggling.

  22. Kelly

    When I saw the auditor’s comments in the 2006 audit, I filed a freedom of information request for the credit cards and supporting documentation of top city staffers. Roger Fraser was the chief culprit. In addition to travel for conferences (which always are held at nice resorts and he stays over for golf), Ann Arbor taxpayers foot the bill for a monthly staff meeting (top staffers only) at an Ann Arbor restaurant. The Real Seafood Company was a favorite. Most companies do not allow employees to charge the company expense account when they take each other to lunch but the city does.

    A couple of years ago the auditor wrote up the city for a year end spending binge to purchase flat screen TV’s for the Wheeler center. Sue McCormick showed up at a council audit committee meeting and “explained” that these employees were following the competitive bidding rules by driving around (probably in a city vehicle) to price shop TV’s at local stores. City staff refused to disclose the names of the employees involved.

  23. Robert C. Smith

    @A2Dem LOL. Nice. When Rapundalo responds we can all sign up.

  24. Dear Council member Rapundalo,

    Where do I sign up for a city credit card? I love to travel and enjoy staying at four and five star resorts and spas. I also like eating out but lately have been less able to afford most meals over $35. I would love to have a $2,000 meal just once in my life and if the city of Ann Arbor is willing to use taxpayer money to pay for me to eat that $2,000 meal so much the better. We have also been cutting back on pizza and so I would love to be able to buy $200-$300 worth of pizza for my friends, family and neighbors.

    If you could please reply to this blog with the details of how I can sign up for a city credit card I would be very grateful.

    Sincerely,

    A2Dem

  25. I just finished reading this post. I read it twice and my mouth is still hanging open. At our house we bagged over 100 bags of leaves last fall because the city told residents it could no longer afford to provide that service. Now I read that while we were bagging leaves city managers were living it up at resorts and spas all over the state? This is shameful and the mayor and council members need to change city policy to end this abuse of taxpayer money.

    As for Mr. Crawford, the first time his department’s work was flagged in the audit he should have been put on notice by his boss. He wasn’t it appears because his boss was one of the culprits abusing his credit card. That his department was flagged a second time for sloppy work is simply unacceptable. He should be fired. If he worked in any organization that valued competency he would be fired.

  26. @MSM sorry about that. Yes, if you want to see the original .csv file (which can be imported into Excel or some other spreadsheet program, sorted and viewed) you will have to click on the link and SAVE the file.

  27. Holy FUCK! Seriously? I just downloaded the spreadsheet. By the way you have to SAVE the file, not just click on the link. If you save you get the original .csv file. If you click on the link it’s a bunch of information that runs together. A2P can you fix this somehow? Thanks for writing this and providing the links. When do you think you’ll be able to match the names to the spending? I for one want to know who the entitled prince or princess was who taxpayers sent to the effing DISNEY RESORT HILTON.

  28. Robert C. Smith

    THE GRAND HOTEL?!?!? Can someone tell me why we need to pay for a city employee to lodge at the Grand Hotel? Mayor and Council have a lot of explaining to do and can start with an explanation of why when the administrator was caught abusing his city provided credit card he wasn’t fired. Then we can move right along to when the city intends to ask city staff who didn’t provide a receipt for their purchases for the money back.

    This is a scandal of serious proportions and I am absolutely outraged that while services were being slashed this was happening. HILTON HOTELS DISNEY RESORT?!? Jesus. These guys need to be prosecuted and Tom Crawford should be fired for incompetence.

  29. @Kevin, you’re welcome.

  30. From FACEBOOK: “Thanks for posting this info!!!”—Kevin J. Cook

  31. From FACEBOOK: “I guess Im not surprised!”—Kevin J. Cook

  32. @Lois, A2Politico is working on matching up names to the expenditures. I’d sure like to know who spent $1,900 on a meal and stayed at the Omni Hotels Royal Hotel and Resort in New Orleans in the taxpayer dime.

  33. From FACEBOOK: “If only names could be added!”—Lois Mayfield

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