James Pilcher, and Carrie Blackmore Smith

Cincinnati

Cincinnati Park Board officials used no-bid contracts for $40 million of publicly funded work on the Smale Riverfront Park construction project, failing to provide oversight over subcontractor hiring or wage standards, an Enquirer investigation has found.

In fact, by funneling tens of millions of construction work through pre-existing contracts not designed for that purpose, the board violated city ordinances requiring full bonding and insurance, leaving the city vulnerable to lawsuits or faulty construction. The Park Board even received a warning from city purchasing officials that "this contract is not to be used for new construction," yet continued the practice.

City lawyers are reviewing the deals to see if any other city ordinances or state laws were violated in building the overall $97 million project.

When initially asked about the contracting and bidding process for Smale, board officials weren’t truthful in answering how the park was financed and built.

For example, Park Board Executive Director Willie Carden initially said last month the privately funded portion of the project was publicly bid, when it was not. He also previously stated the entire project was publicly bid. In fact, any major firm hired to do work on Smale had a previously bid contract for regular maintenance and not for the park project, a fact Carden only acknowledged this week.

Still, parks officials defend their approach, saying they built a world-class park in time for last summer's baseball All-Star Game.

“We followed all the procedures that were in place at the time,” Carden said Monday. “We were told at that time to get it done as quickly as possible, and we have done nothing illegal. We feel like we did everything right.”

But in an interview with The Enquirer, City Manager Harry Black said Carden’s argument creates “a slippery slope” for government agencies.

“Just because you need to do something faster does not give you the right to circumvent,” said Black, whose office has been investigating the Smale contracts since last November. “When you circumvent policies, procedures and rules, you put the governmental entity at risk, which means you put the public at risk.”

Mayor John Cranley, who at one point nominated Carden to be city manager and who proposed a tax levy for the parks system that voters rejected last fall, said plainly that use of the no-bid contracts was "wrong."

"The public deserves transparency and good government and I will level with the public even when it hurts," the mayor said in a written statement. "I have been a fan of Willie for as long as I've known him. But the contracting practices were wrong and the previous administration that allowed parks and other departments to proceed unchecked have done the public a disservice."

The arrangements the Park Board used to build Smale date to the mayoral administration of Mark Mallory and City Manager Milton Dohoney. Cincinnati mayors appoint Park Board commissioners, who have fiduciary and hiring responsibility for the Parks Department.

“It’s shocking and disheartening,” said Councilman Kevin Flynn, chairman of council's audit committee. “And I consider Willie a friend – I coached his daughter at one point.

“But this shows once again why we need separate and independent oversight and a stronger audit function within the city.”

City officials expressed concern that city and state taxpayers didn’t get the best possible deal for their money on Smale.

“A project of such scale and magnitude ... should always be competitively procured and never done under a contracting mechanism … that evades public light,” Chief Procurement Officer Patrick Duhaney wrote in a memo to City Manager Black released late Tuesday. “Where it stands now, since this project was not competitively bid, it is not transparent as to how these contractors were chosen to provide these services and if the price paid for the work was the most advantageous for taxpayers.”

What are master service agreements?

The Enquirer has looked at issues of parks financing and administration since its coverage of a November vote on a permanent property tax levy that would have raised roughly $8 million a year for the parks system.

Prior to Election Day, The Enquirer reported the Park Board funneled bonuses through its nonprofit arm for Carden and his top lieutenant Marijane Klug, as well as paid for car allowances, travel and dining using public money donated to the agency by private individuals. In the wake of Enquirer reporting, the Park Board also voted to return to a parks endowment an improper $200,000 transfer of funds intended to promote the parks levy.

Cincinnati Park Board using endowments for cars, food

How we reported the Smale Riverfront Park story

Cranley and Black subsequently ordered a full audit of the public Park Board and its finances and relationship to the private nonprofit Parks Foundation, as well as a moratorium on discretionary parks spending.

Voters rejected the parks levy by a 3-2 margin.

Following that defeat, Park Board officials turned to City Council, asking for $4 million more a year to repair crumbling infrastructure. That request would be considered during budget season this spring.

In December, The Enquirer made records requests for parks documents and emails detailing spending patterns. Those records and numerous interviews resulted in the findings presented in this story.

The portrait the records paint is one of a highly visible public works project along the Ohio River completed in a manner that flouted the law and accepted good-government practices.

Smale Riverfront Park, the sparkling new expanse of green space, opened last spring as a new jewel in the city’s already world-renowned parks system. Situated on The Banks, the park anchors the rapidly developing area that also includes a new General Electric building and new apartments.

In building it, parks officials leveraged pre-existing contracts for maintenance work to build the park without putting any of the work out to bid.

These contracts are known as master service agreements, or umbrella contracts with a particular company for ongoing maintenance and upkeep.

The Park Board used 12 such contracts to cover publicly funded portions of the Smale project. The construction manager for the project was Universal Contracting Corp., a Bond Hill firm that earned roughly $6.4 million from the Smale construction, the most of any private firm hired to do work on the park.

Universal had a previous master service agreement with the city for about $500,000. That agreement's purpose was “building maintenance, repair and upkeep," records show, yet it was used in lieu of competitive bidding to give Universal the park construction work.

Universal Contracting officials declined comment, saying they do not speak publicly about customer contracts.

All told:

* The Park Board spent nearly $40 million in city, county and state funding using such agreements, not putting that work out for bid, documents show and city officials confirm.

* A public bidding process was used for about $15 million in separate federal dollars that went toward the project. Many of the same companies the city used were also hired by federal agencies to work on Smale.

* Universal contracted directly with the nonprofit Parks Foundation to build Smale's carousel pavilion and to do other work using $43 million in privately raised funds.

The Park Board issued requests for qualifications for the privately funded carousel through the city’s public process, but then simply passed on a recommendation to the Parks Foundation. City officials who reviewed the requests for qualifications documents said those should not be considered official bids. The two other companies that submitted answers to those requests did not receive any work, and did not have master service agreements.

There was little to no oversight or verification that contractors or their subcontractors met city and state minority hiring and prevailing wage laws on any of the work, Duhaney's memo indicates.

“These contracts were set up to cover the as-needed routine maintenance and repair needs of existing City buildings spanning various City departments and, as such, they were not structured for or put in place for construction or renovation work of the scale and scope" of the Smale project, Procurement Officer Duhaney wrote in his memo.

The setup violated city ordinances, which supersede state laws because of Ohio's home rule requirements. This particular ordinance requires contractors to be fully bonded, or insured, for the work they do. A city analysis outlined in Duhaney's memo shows that at one point, the companies involved with Smale were only insured for about $1.67 million while they were doing nearly $15 million worth of work.

If anything had gone wrong, including an accident or fatality during construction, or if there were defects in any of the buildings involved, the city would have been on the hook for up to $13.2 million, according to Black and Duhaney. (Universal was originally bonded at about $500,000 and in December raised its bonding to nearly $6 million after being approached by the city over the parks work.).

Black said he suspended the master agreements used for the Smale project in November after he learned of them, prohibiting any new work from being awarded under such arrangements.

Others wonder if other portions of the law were bent or broken, including city ordinances and state laws requiring public bidding on major projects.

“They had a thin excuse when they were circumventing the process using the private foundation money, but now that’s evaporated since they were using public money,” said Over-the-Rhine lawyer Tim Mara, one of the leading opponents of last fall’s failed levy. “They never publicly announced these contracts, as required by state law. They never gave everyone a chance to bid, which is another violation.

“Who knows how much we would have saved or what contractors didn’t get a chance at this work?” Mara said.

Approach of All-Star Game made pressure 'intense'

The Park Board chairman is Otto M. Budig Jr. He said the pressure from the community to get Smale Park done by July's All-Star Game was “intense” and led to the decision to use the master agreements instead of a bidding process.

"We heard from everyone ... city leaders, city fathers, business leaders," Budig said Monday. “And maybe not creating a competitive bidding process meant that there were a few more dollars spent, but Smale Riverfront Park was ready when we wanted it to be ready."

Yet documents show parks officials were skirting competitive bidding rules long before the 2015 All-Star Game. In fact, work on Smale under the service agreements began as early as 2001, when initial design and clearing work initially began on Smale.

Last month, Carden told The Enquirer that the privately funded Smale work had been bid out and that Universal won that bid. He said on video that requests for proposals were issued and bids taken. In fact, those bids never existed, according to city records, only the requests for qualifications, a different exercise.

This week, Carden said he was referring to the original master service agreements. The original contract with Universal was bid competitively and rebid twice over the course of six years but only at about $500,000 each time.

He also acknowledged Tuesday that he "misspoke" about the requests for qualifications in regard to the private foundation contract. Carden still deemed the contract to be properly bid because two finalists were chosen and the lowest, most qualified bid won the deal. But the Park Board has not provided any such documents after Enquirer open records requests.

Carden and Klug also said use of such service agreements was "commonplace" at the time and no laws or regulations were broken. Any discrepancies should have been caught by other city officials more familiar with the initial contracts, they said.

Those statements came this week after Carden previously said that the entire project was publicly bid, referring to the master service agreements and not any new bidding for the Smale work.

But an internal email from 2012 shows concerns were expressed at City Hall over the use of such agreements for the Smale project.

Deanna Brown, who was then the city's interim procurement officer and a finance department employee, had ruled that the Universal contract was only for ongoing maintenance “and that new construction should go out for bid," according to an email written by senior accountant Charles Grimes.

Grimes sent the message to his boss, chief financial officer Klug, and chief architect Steven Schuckman, who wrote he would “get back" to Grimes.

There is no record of any follow-up action or conversation regarding Brown's determination.

Grimes resigned as a senior accountant last fall, eight days after the levy failed. In his resignation letter, Grimes gave no reason for his immediate departure.

Klug said Grimes’ “job performance issues stemming from some personal issues led him to resign.”

Requests for interviews with Grimes, both at the time of his resignation and after the discovery of his email challenge to parks officials' use of master service agreements, were not returned.

Brown left city government at the end of 2013. She, too, could not be reached for comment.

Said parks critic Mara of The Enquirer's findings: “That shows that they were doing this well before the All-Star Game. They can’t rely on that anymore.”

In his recent memo, Procurement Officer Duhaney wrote the arrangements create confusion over which companies did what work on the Smale project.

“As it stands now, the City may have difficulty determining which of the several (master agreement) contractors is ultimately responsible should any issues arise due to lack of scope specifically inherent in the (master agreement) form,” Duhaney wrote.

Wife of Park Board official got contract

An Enquirer review of the Smale project vendor list shows at least two entities had ties to the parks system. One was the artist wife of a then-Park Board employee. The other company hired a Parks Foundation board member a year after it was paid for work on Smale Park.

Jan Brown Checco, wife of then-parks employee Gerald Checco, was paid $28,357.97 in public funds for “Arts Administration Services.” That included work consulting on creation of Smale's Black Brigade Monument and creation of an artists' directory for work at the park.

Gerald Checco began his city employment with the parks as an engineer and rose to parks superintendent before becoming sewers manager at the Greater Cincinnati Metropolitan Sewer District.

Brown Checco has a long career as a studio artist and community arts consultant, hired to do similar work for other public and private agencies. She began doing volunteer work for the Park Board but later asked for a fraction of the compensation she would normally receive for such work.

In an interview with The Enquirer, Brown Checco said she was approached by parks staff to apply for the Smale contract. She said she asked the Park Board to seek out another artist to apply. Ultimately, she called her relationship with Carden "murderous," after she was abruptly "fired" from the position of art director of the carousel project.

"That was quite shocking – 15 years of faithful service to the Park Board," Brown Checco said. "I do not feel I have taken advantage of any group for any project. Bottom line."

Brown Checco expressed disappointment that the contracts had not been competitively bid, saying it could diminish the work that was done.

“Competition should not be removed,” Brown Checco said. “Everybody should be given a chance, and I totally believe that as a woman and a small business owner.”

Also among the Smale contractors was Kolar Design, Inc., a Downtown-based branding, arts and strategic consulting firm. The company earned $106,754.52 for graphic design work and marketing materials for the Smale project in contracts through 2012.

Bill Thiemann, a Cincinnati Parks Foundation trustee since 2005, began working for Kolar as the company’s managing director in 2013, after Kolar finished its work on Smale.

Kolar has also done branding work for the Cincinnati Streetcar and The Banks.

Thiemann did not return requests for an interview.

Previous violations, controversies

This isn’t the first time that the actions of top Park Board officials have been questioned. Carden and Klug settled an Ohio Ethics Board complaint in May 2013 for taking bonuses from the Parks Foundation for their work for the nonprofit as well as a reward for their work for the Park Board. Under Ohio law, a public employee cannot receive extra compensation for their public job from an outside entity.

Carden’s bonuses continued from the Park Board for two years after, however, and were funneled through the foundation for tax purposes.

Mayor Cranley is holding off reappointing any members to the Park Board until the external audit is complete, his chief of staff Jay Kincaid said. Anyone appointed will have to agree to implement any recommendations to come out of the independent audit, expected sometime this spring.

The Park Board, which is appointed by the mayor, has any final say over hiring at the Parks Department, including its top officers. Carden currently earns about $137,000 a year, up from $100,000 under his original contract in 2000. That compares to Cranley's salary of about $133,000.

"We are focused on leveling with the public and cleaning up this mess," Cranley said in his statement.





Ohio state Rep. Tom Brinkman, R-Mount Lookout, was more blunt.

“I am just shaking my head, aghast at the lack of transparency and concerns over following basic procedures," Brinkman said.

Is $200K to boost parks vote legal?

Brinkman threatened a taxpayer lawsuit after The Enquirer reported last fall that the Park Board improperly donated the $200,000 to the parks levy campaign. He said he will wait for the results of the city solicitor's review of the Smale contracts before deciding on possible action.

“The ends do not at all justify the means and a lack of planning on the part of the government does not mean the taxpayer should suffer,” Brinkman said. “At no point did I ever hear a drumbeat of pressure to get this done for the All-Star Game.”

The Park Board is still seeking $25 million from public and private sources to complete Smale Riverfront Park, including $1.5 million from the city to complete a marina.

Who got the contracts

* Overall, Universal Contracting Corp. earned roughly $6.4 million on the Smale Riverfront Park project, followed by lead architectural firm Sasaki Associates Inc., based in Watertown, Massachusetts, which earned nearly $4.8 million. Sasaki was a subcontractor of Universal.

* Two other companies that had master services agreements also were among the top earners; Little Miami Construction Co., based in Cincinnati neighborhood of Linwood, earned roughly $3 million and B & J Electrical Co., based in Golf Manor, earned $2.6 million.

* MLH Cincinnati USA, the official business name for the Moerlein Lager House restaurant, was given $2 million in public funds as well. Moerlein owner Greg Hardman also donated $8 million to the Smale project. Hardman had been nominated to join the Cincinnati Parks Foundation Board of Trustees in the middle of last year, but did not ultimately join the board due to family health reasons.