Alderman’s motion to hire firm Crestwood once sued fails for lack of second

Citizen, ex-alderman oppose hiring of Hochschild, Bloom

By Mike Anthony

Crestwood aldermen declined last week to approve an agreement for financial support services with a company the city once sued for alleged professional negligence and breach of contract.

Ward 4 Alderman Michael Vincent’s motion for the first reading of an ordinance to hire Chesterfield-based Hochschild, Bloom & Co. as a consultant for the city’s Finance Department did not receive a second at the May 27 Board of Aldermen meeting.

City Administrator Mark Sime recommended aldermen approve the agreement, in which Hochschild, Bloom & Co. would replace the city’s full-time finance officer position. The city filed the lawsuit in 2003, and Hochschild, Bloom & Co. settled it in 2006 for $170,000 with no admission of wrongdoing.

Before Vincent’s motion, aldermen discussed Sime’s recommendation at length and also questioned a representative of Hochschild, Bloom & Co., Tamber Alsop.

Board President Mike Tsichlis of Ward 4 asked Alsop, “… Are any of the principals of the firm that were involved in that litigation still present and still work at the firm?”

She replied, “… Yes, there’s still partners at the firm, two of them …We actually had a person from the GASB (Governmental Accounting Standards Board) come and review our work papers also, and they looked at our work papers and they said everything was fine — no problem. I really don’t know a whole lot about the lawsuit. I was not the partner on the job.

“But, I mean, I believe that we did nothing wrong … I have no ill will toward anybody at this city. We’re all here to help the city, and that’s what we want to do. I don’t feel that this case has anything to do with the work that we’re going to be providing for the city …”

During their discussion, some aldermen said their preference would be for the city to have a full-time finance officer, which it has not had since Greg Kremer resigned in August. As proposed, the agreement would run through Dec. 31, Trueblood said, noting that if the board approved the pact, he would not vote to extend it.

“… I’m not sure that I can vote for this proposal as it’s designed tonight. But I can promise you that when it comes up to expire, if it passes, I will not vote for it then because I would like to have another firm or a person at that point put into it to really start this process in a different direction … If this passes, from my standpoint, it will be one six-month contract with your firm. Does that change your bid?”

Alsop said it did not.

Vincent later said, “… It’s simply a personal opinion that says, I would prefer having someone who is here all the time, dedicated to Mark (Sime), and it’s — I guess what I’ll call the difference between an auditor and a manager and someone with skin in the game who intimately loves this city and is committed to us.

“So that’s not to say you aren’t, but I think that is what I would prefer, and if it costs more, I would want that for Mark and the city. But he has told me that he wants to try this. He thinks it’s a good plan moving forward … I’m going to support Mark even though my heart says there may be something better,” he added.

Ward 2 Alderman Mary Stadter said she’s been uncomfortable with the city not having a finance officer, but was prepared to support Sime’s proposal on a trial basis.

During a period for public comment, resident David Brophy referenced comments Sime had made earlier about the lawsuit.

“… Mr. Sime, when you were discussing the incident (of) eight years ago, you discussed talking to the attorney who was in charge of that incident, and you indicated that he alluded to the fact that Hochschild, Bloom … had found some discrepancies and were backing out those discrepancies. My question is this: Why didn’t they alert the city officials, the mayor and the city attorney at that time, when they found the discrepancies? …,” Brophy asked.

“The fact of the matter is, is I view this as a dereliction of duty on the part of Hochschild, Bloom, and I would oppose their being hired in this position. If it was another company with somebody who was no longer anywhere associated with the eight-year-ago incident, I would support it — temporarily. I will not do that given what I know now …”

Former Ward 3 Alderman Jerry Miguel asked Sime, “… If the board rejects this request, would you, could you accept that decision in all good faith and move forward and fill, with a good heart and mind, the position of financial officer in this city and do so with a reasonable speed?”

Sime replied, “Absolutely. This is a decision of the board. I’m bringing this to them with a recommendation. It’s something that we’ve been working on for quite a while … I’ve been trying to keep the board up to speed on what’s been going on, and at this time we had four proposals. I’ve brought them forward with my best recommendation on how to proceed from those proposals.

“If the board decides to reject this proposal, this course of action that I have presented, then my hope is that they’ll say we are rejecting it with this consideration: Would you either go out with another RFP, go to another one of the proposals that came out? Or, absent those, then it might be time to proceed with an advertisement for a full-time financial officer for the city.”

Miguel said, “… So you would not have a problem moving forward if this were turned down? You would not hold any grudge against anyone? …”

Sime said, “Heck, no.”

Miguel also contended the request-for-proposals, or RFP, process was “flawed.”

The city received four submissions, with Hochschild, Bloom & Co.’s proposal the lowest at $6,400 per month, or $76,800 annually. Also responding to the city’s RFP were Swink, Fiehler & Co., $12,000 per month, or $144,000 annually; Schmersahl Treloar & Co., $195,000 annually; and Brown Smith Wallace, $17,000 per month, or $204,000 annually.

“… We’re comparing apples and oranges. The RFP went out and it listed a whole bunch of work,” Miguel said. “Three of the four people responded to what was requested, and their estimates were in the $200,000 area. Hochschild kind of came in the back door and said, ‘… To help you stay within your budget, we can work for 16 hours a week, use your two employees that you currently have instead of letting them go,’ which was the indication in the (first) RFP from the get-go of last October.

“So to me, you’re comparing apples and oranges. To validate what I just said, look at the budget for 2014. There’s nothing in there for salaries in the finance area …,” he added.

Hochschild, Bloom & Co. served as the city’s independent auditing firm from 1998 to 2002. Miguel noted that the city’s financial statements for fiscal 2001 and fiscal 2002 had to be restated by Brown Smith Wallace, the same firm that conducted a forensic audit of the city’s books for those two fiscal years.

The restated financial statements for fiscal 2001 showed a general-fund deficit of $204,072 instead of the previously reported positive fund balance of $45,928, while the restated financial statements for fiscal 2002 showed a general-fund deficit of $973,497 instead of the previously reported positive fund balance of $132,334.