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YELLOW SHEET Office of the State Auditor of Missouri |
Report No. 2005-61
September 2005
The following problems were discovered as a result of an audit conducted by our office of the City of Rock Hill, Missouri.
The City of Rock Hill's financial condition is contingent upon the sale of the city center property and the successful completion of the Northwest/Southwest Manchester and McKnight (NW/SW) redevelopment project.
In the summer of 2002, the city proposed building a new city center complex. The city could not locate documentation of the requests for proposals (RFP) for a project manager or the analysis documenting how and why the architect hired was selected. Contracts for these services were signed in February and April of 2003.
The Board requested former Mayor Salamone to perform some preliminary analysis on the feasibility of the city center project. Although his review indicated the project was feasible, the Board requested quotes for two outside firms to conduct separate real estate and recreational feasibility studies in July 2003. By the time these contracts were signed in October 2003, the city had already committed to purchasing the land, which eventually cost $1.75 million, and had spent approximately $307,000 for other services. The Board eventually terminated the city center project, but not before spending an additional $412,300. In addition, the city also incurred costs associated with the purchase of the land and financing totaling $279,800. Through the termination of the city center project, it is estimated that the city has spent approximately $2.7 million. With the recently negotiated sale of the property at a price of $2 million, there is approximately $700,000 in city costs that will not be fully recovered with this sale.
The city indicated RFPs were requested for the NW/SW redevelopment project (including the Sayer and City Hall properties) in December 2002, but that no responses were received. The planning board then heard presentations from three firms and made a recommendation to the Board of Aldermen. After a developer had been selected, the city determined there was no documentation that it had formally advertised for proposals. In September 2004, the board approved advertising of a new RFP. Due to the restrictive nature of the RFP, including a $10,000 non-refundable deposit and a due date of 30 days, the city only received one proposal, from the same developer with whom they had already been working. The city has recently negotiated for the sale of the combined Sayer and City Hall properties to the developer for $3.6 million, however the city did not have a recent appraisal for the City Hall property.
Former Mayor Salamone received commissions totaling $33,600 from the retirement plan investment manager while acting as the pension plan "selling agent", which appears to be a violation of state statutes regarding related parties. The city retained special counsel to investigate this matter and, as a result, a lawsuit has been filed against the parties involved.
Former Mayor Salamone was elected in April 2002 to a four year term and received a monthly salary of $275 for his official duties. Additional compensation granted him totaling $3,637 was unsupported by state law, including $937 for time spent in court hearings and depositions on behalf of the city, which appear to be an extension of his official duties and would, therefore, not require additional compensation. Also, the city did not have a written contract with former Mayor Salamone for his additional duties.
Several expenditures were not adequately supported by vendor invoices. The city did not enter into contracts or could not locate contracts for services provided for some expenditures, including: street repair, $209,011 and the City Attorney's legal fees, $243,311. Because the city has not clearly described the relationship they intended to create with some individuals providing services through a written contract, it is not clear why these individuals were considered independent contractors or if they actually met the IRS criteria. Additionally, the city either did not always solicit bids/proposals in compliance with their bidding policy or did not always retain bids/proposals, discussed in board meeting minutes, documenting their compliance with the policy.
The city held dinners and purchased gifts for employees that did not appear to be prudent uses of public funds, including: an employee farewell dinner, an appreciation dinner for 35 employees and officials, and an employee Christmas party where each employee received a $50 gift certificate.
The city does not have a formal policy regarding credit card usage. Several expenditures for local meals were incurred, but the invoices did not document who attended and why a meal was necessary.
Some meeting minutes were not retained and others did not include sufficient detail of matters discussed and action taken. In addition, closed meetings were not always adequately documented or conducted in accordance with state law.
Also included in the report are recommendations related to payroll and personnel, expenditures, ordinances, financial reporting, budgets, dispatch services, cellular phones, fund accounting, and capital asset records.
