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METRO EDITION

L O UIS VILLE, KENTUCK Y

courier-journal. com

SUND A Y , MARCH 20, 2 0 1 1

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Fu ll-page graphic. A6 Radiation fo und in milk, spinach, officials say. A7

Giant ga p found in city grant re porting

Ne ighborhood fund data fe ll through metro cracks

By Dan Klepal

dklepal@courier-journal.com Th e Courier-Journal

Only about 10 percent of 145 Neighbor- hood Development Fund grants handed out by the Louisville Metro Council in the past two years have spending reports filed with the city’s budget office, according to records

inspected by The Courier-Journal. Those grants, each of which exceeded $5,000, collectively total more than $1.9 million, and the lack of financial report- ing underscores a prob-

lem identif ied in an au- dit of the city last year — that the budget of- fice had no system to ensure that grant recip- ients filed expenses or for checking that the spending was proper.

Mayor Greg Fisch- er’s administration re- cently announced that it will assign a staff person in the Office of Management and Budget to monitor all neighborhood grants, regardless of the amount. The Courier-Journal contacted nearly a dozen agencies that were grant recipients, and several said there were legitimate rea- sons why the city budget office has no record of their expenses. Some said they filed expenses with their Metro Council representative or the council clerk; others said they haven’t received their funding yet, so they have no expenses to file. The Louisville Metro Parks Foundation, which is approved for a $10,000 grant this fis-

Se e GRANTS , A5, col. 1

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ALLIES ATTACK LIBYA DEFENSES

U. S., Europeans strike to enforce no-fly zo ne, bl unt Gadhaf i

strike to enfor ce no-fly zo ne, bl unt Gadhaf i Pa trick Ba z, AFP/G

Pa trick Ba z, AFP/G etty Images

A parachute, left, is ejected from a Libya n jet as it crashes after being hit over Benghazi on Sa turday as Libya ’s re bel stronghold came under attack from Moammar Gadhafi’s fo rces.

By Ryan Lu cas and Hadeel Al-Shalchi

Associated Press

BENGHAZI, Libya — The U.S. and European nations pounded Moammar Gadhaf i’s forces and air defenses with cruise missiles and air strikes Saturday, launching the broad- est international military effort since the Iraq War in support of an uprising that had seemed on the verge of defeat. The Libyan leader vowed to defend his country from what he called crusader aggres- sion” and warned the involve- ment of international forces will subject the Mediterranean and North African region to danger and put civilians at risk. Libyan state TV claimed 48 people had been killed in the attacks, but the report could not be independently verif ied. The U.S. military said 112 Tomahawk cruise missiles were fired from American and British ships and submarines at more than 20 coastal targets to clear the way for air patrols to ground Libya’s air force. French fighter jets fired the first salvos, carrying out sever- al strikes in the rebel-held east. President Barack Obama said military action was not his first choice and reiterated that he would not send American ground troops to Libya.

Se e LIBYA, A2, col. 1

Dealings by MSD ‘d isturbing’

Ex pert questions ethics of using board members’ co mpanies

By James Bruggers

jbruggers@courier-journal.com Th e Courier-Journal

jbruggers@courier-journal.com Th e Courier-Journal Board Vice Chair- man Mar ty Hoehler co -owns Market-
jbruggers@courier-journal.com Th e Courier-Journal Board Vice Chair- man Mar ty Hoehler co -owns Market-

Board Vice Chair- man Mar ty Hoehler co -owns Market- graphics of Lo uis- ville, which MSD paid $23,70 0.

Market- graphics of Lo uis- ville, which MSD paid $23,70 0. Helton Chairman Audwin Helton is

Helton

Chairman Audwin Helton is fo under of Spatial Da ta In- te grations Inc., which wa s paid $58 4,899 by MSD.

A company owned by the

chairman of the Metropolitan Sewer District board has been paid nearly $600,000 for work

done for the agency over the past five years — none of it ob- tained through competitive bid- ding.

In addition, MSD has hired

Wheatley Hoehler

MSD board mem- ber Beve rly Wheatley owns Wheatley Ro ofing Co. Inc., which wa s paid $25,035.

businesses owned by the MSD board vice chairman and one other board member, paying them a combined $49,000 since July 1, 2006, according to docu- ments obtained by The Courier- Journal through a Kentucky

Open Records request. Only be violations if MSD were for-

part of that work was competi- mally part of Louisville metro

tively bid. Those business deals would

government, which it isn’t, even though its board is appointed by the mayor and its two top staff members are hired by the mayor.

But since its creation by the Kentucky General Assembly in the 1940s, the district’s business dealings with board members have been legal — yet troubling, ethics experts say. While it may be legal, it is most disturbing ethically,” said Edward L. Queen, director of leadership education programs at Emory University’s Center for Ethics in Atlanta. At a bare mini- mum, it generates a level of sus- picion that cannot be helpful to doing the public’s business.” Details of the payments are documented in records The Courier-Journal obtained after a state audit of MSD was f inished in February. It cited the relation-

Se e MSD, A8, col. 1

in February. It cited the relation- Se e MSD , A8, col. 1 MT SUN WEATHER

MT

SUN

It cited the relation- Se e MSD , A8, col. 1 MT SUN WEATHER | B2
It cited the relation- Se e MSD , A8, col. 1 MT SUN WEATHER | B2

WEATHER | B2

INDEX

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Time: 03-19 -2011 21:12 User: mstollhaus PubDate: 03-20-2011 Zone: KY Edition: 1 Page Name: A 8 Color: CyanMagentaYellowBlack

A8 | SUNDAY , M ARCH 20, 2011 | T HE COURIER-JOURNAL

FROM PAGE ONE | courier-journal.com

KY-

MSD | Board defends its use of fi rms

Continued from A1

ships but couldn’t conclude whether conflicts existed. The records provided by MSD show:

Spatial Data Integra- tions Inc. was paid $584,899 between July 1, 2006, and

Feb. 22, 2011, for helping mine whether conflicts ex- ity for MSD business.

MSD with computerized isted with board members,

mapping. The company’s founder, president and chief executive officer, Audwin Helton, has been on the MSD board since 2003 and

serves as chairman. His term ends in July 2012.

Marketgraphics

of sue (of conflict),” adding bids.

business was doing anything wrong. He said he has been as- sured his business could do work for MSD, adding, I

MSD BOARD

Members are appointed by the mayor:

Beve rly Wheatley , ow ner of Wheatley Ro ofing Co.; star te d with the board in 19 98; te rm ended June 30; can serve until re placed or re appointed. Arnold J. Celentano , re tired wa stewater engineer; star te d with the board in 2007; te rm ended July 31; can serve until re placed or re appointed. Mar tin Hoehler , co -owner of Marketgraphics of Lo uisville; star te d with board in 2002; te rm ends July 31. Ben Richmond , president of the Lo uisville Urban Le ague; star te d with the board in 19 90; te rm ends Aug. 31. Marvin D. Stacy , Fo rd Motor Co. re tiree; star te d with the board in 2005; te rms ends Aug. 31. Jerome L. Clark , re tired electrician; star te d with the board in 2007; te rm ends July 31, 2012. Audwin Helton , president and chief executive officer of Spatial Da ta Integrations; star te d with board in 2003; te rm ends July 31, 2012. Charles E. We iter , consult- ing engineer; star te d with the board in 2006; te rm ends June 30, 2012.

ment. Poynter said the differ- ence is that MSD isn’t for-

MSD, which had operat- mally a part of metro gov-

ernment. MSD doesn’t have to follow the city’s ethics policies or its ethics ordi- nance, which he said basi- cally means you can’t be do- ing business with the agen- cies of the board you sit on

ing to come to pay for a or with metro government,”

he said. The city’s stricter ethics

part of a 2005 settlement policies would apply to

19-year, $850 million sewer rehabilitation program as

businesses to seek contracts with them, said Marion Gee, MSD’s finance director.

Future Fund, a land trust government agencies plan

that’s fighting a sewer line their infrastructure needs.

extension in eastern Louis- ville. While the auditors found no evidence of fraud or abuse” in MSD financial

practices, they wrote that precluded from competing

with others in the commun-

they weren’t able to deter-

Wheatley said that she’s done very little” business with MSD and that each she was the low bidder. She said board members shouldn’t be

ing expenses of about $125 million last year, has be- come the target of growing controversy and criticism. It is carrying a debt of about $2.6 billion, including interest, with more borrow-

MSD staff members de- fended the hiring of the

because there is no account-

ing standard def ining what board members’ companies,

constitutes a conflict. Helton, who was named to the board by former May- or Jerry Abramson, said that is very sensitive to that is-

saying they followed the provisions of state law that allow them to contract for professional services with- out seeking competitive

with the U.S. Environmental Protection Agency and Ken- tucky water-quality regula- tors.

Customers have seen Commission, Louisville

rates rise 5 percent to 7 per-

cent a year since the Authority of River City

mid-1990s — and 33 percent in 2007 — and MSD officials

have said they can expect River City Board of Direc-

more of the same for years to come.

Sen. Dan Seum, R-Louis- operates is based on what

ville, who tried to bring MSD under the Kentucky Public Service Commission two years ago, called for a shake-

up — because the MSD MSD board’s composition.

By July 31, five of the eight positions will be eligible for reappointment or replace- ment. His management style is

themselves and feeding at all about transparency and

the trough, they need to go,” Seum said.

Diffe rent standards

Potential conflicts would be less likely to come up in other parts of local govern-

Reporter James Bruggers can be reached at (502) 582-4645.

Board of Health, the Parking

boards or commissions such as the Louisville Metro Air Pollution Control Board, the Louisville Metro Planning

Louisville was paid $23,700

between Aug. 3, 2007, and MSD officials, including request for qualif ications for Dec. 13 for providing MSD Zielke, whether he or his areas of anticipated con-

with information about real estate trends. The business is co-owned by MSD Vice Chairman Marty Hoehler, who has been on the board since 2002. His term ends in July. Wheatley Roof ing Co. Inc. was paid $25,035 by MSD between April 21, 2008, and Dec. 14, 2009, for roof ing

Bingham said that if a board member’s company is involved, MSD staff fully dis-

work. The company is his company’s contact be- cusses any potential con-

owned by board member and former MSD Chairwo-

man Beverly Wheatley, who started with the board in

1998 and whose term ex-

pired last year. State law al- lows her to continue serving until reappointed or re- placed. Only Wheatley Roof ing went through competitive bidding, the records show. State law allows government agencies to avoid competi- tive bidding for professional services, according to Larry Zielke, a Louisville attorney who advises the MSD board and handles litigation for the agency. Helton, Hoehler and Wheatley have said their work for MSD was above- board. MSD officials say no laws were broken and there are safeguards to protect against abuse, including a conflict-of-interest policy that requires disclosure. It is all done in the pub- lic,” Zielke said. No one is hiding (the contracts).” He also said the agency’s eight board members, who approve all MSD contracts larger than $50,000, must ab- stain from voting on any contracts involving their own companies. The posi- tions are essentially volun- tary but come with a $75-per-meeting allowance to cover expenses, MSD offi- cials said.

Po ssible conflicts

While no one has sug- gested that the three board members or MSD broke any laws, ethics experts say the payments to board mem- bers’ businesses could be perceived as a conflict — that could shake public con- fidence. It seems like a conflict of interest in a broad sense, even if it may not technically or legally be one,” said Ste- ven G. Koven, a professor of urban and public affairs at the University of Louisville, director of U of L’s masters in public administration pro- gram, and author of the 2008 book, Responsible Gover- nance: A Case Study Ap- proach.” I think public expecta- tions of government-run or- ganizations are that individ- uals working in the public sector should not be lining their own pockets at the same time.” Queen said he was partic- ularly troubled by the no-bid nature of some of the work. This seems to strike me as a disturbing gap in the law,” he said. To the extent you can minimize those (ethics) ap- pearances, it will help im- prove the public’s conf i- dence in government.” Mayor Greg Fischer de- clined to be interviewed. His spokesman, Chris Poynter, said he looks forward to learning more about” work being done for MSD by the businesses of board mem- bers. The state auditor cited the relationships during a special audit of the agency. In September, the state of- fice asked MSD’s private auditor, Crowe Horwath, to look into allegations of fi- nancial and other irregular- ities within the sewer agen- cy, after allegations of mis- management were raised by

questions to Zielke. Hoehler said there was no competitive bidding on

that he has repeatedly asked

Each year MSD puts out a

Board of Commissioners and the Transit Authority of

tors, Poynter said. Zielke said that how MSD

the agency is allowed to do by the law that created it. Poynter said Fischer hasn’t had time to review the

not having a perception of wrongdoing,” said Rebecca Fleischaker, another Fischer spokesman.

tracting work, said Brian Bingham, a senior MSD en- gineer. The companies pro- vide information about their capabilities, and as the need

didn’t want to put MSD in arises, staff review the ap-

any sort of predicament.”

propriate businesses on the

He referred all other list, he said.

cause its service is a sub- scription and isn’t offered by any other business. I didn’t go soliciting them,” he said of MSD. I do help other sewer agencies outside of MSD. We have a product that nobody else has in this market” by helping

board serves as the watch- dog for an agency that spends a lot of money, sets rates and has built up a large debt. If they are enriching

flicts and asks if other op- tions exist.” He said he made the deci- sions that Helton’s and

and Wheatley’s qualif ies as a

Hoehler’s firms were the woman-owned business.

MSD has annual targets for contracting with minority- and women-owned busi- nesses and encourages such

best companies” to do the work required. Helton’s firm qualif ies as a minority-owned business,

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