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Millions at stake with no-bid work in Milwaukee

By: Kirsten Klahn//February 27, 2012//

Millions at stake with no-bid work in Milwaukee

By: Kirsten Klahn//February 27, 2012//

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By Kirsten Klahn

A looming deadline to file an assessment report is pressuring the city of Milwaukee to approve two no-bid contracts.

“These contracts are crucial to getting our work done on time, Assessment Commissioner Mary Reavey said. “If we don’t get the report done, they don’t give you the money from the tax increments.”

Each year, the city is responsible for assessing the values of its tax increment districts, she said. Based on those values, Reavey said, assessors then determine how much tax money has been generated by each TID.

In 2011, Reavey said, the city collected $29.4 million from its TIDs. The city, which must now start assessing 51 TIDs, uses that money to pay off expenses from improving the TIDs for development, she said.

The only way to get that money is to send a TID Assessment Report to the Wisconsin Department of Revenue by the second Monday in June, Reavey said.

And the only way to hit that deadline, she said, is to renew the contracts with two former city assessors. There’s not enough time, Reavey said, to put the contracts out for requests for proposals.

That’s the argument Reavey on Thursday presented to the city’s Finance and Personnel Committee, which unanimously forwarded the contracts to the Common Council. It’s an argument that swayed Alderman Nik Kovac, a committee member.

“In general, we want to bid the work out, but there’s going to be an exception to every rule,” he said. “If the city purchasing director and assessment commissioner are saying no one else can do the work, it seems reasonable to me.

“We’ve got to get the assessments done, so what are you going to do?”

Alderman Jim Bohl, who serves on the city’s Judiciary and Legislation Committee, which reviewed the contracts three times before sending them to Finance and Personnel, said he anticipated Reavey would use the TID deadline to justify the lack of bids.

“I don’t think it’s reasonable, but I’m just one person with one person’s views,” said Bohl, who did not vote on the contracts as a member of Judiciary and Legislation. “At the end of the day, I have to work with a body of people.”

It would have been reasonable, Reavey said, to put out RFPs for the contracts in fall, when the city still would have had time to line up new assessors for the work.

“Maybe we should have done an RFP to show that effort and transparency,” she said. “But I hadn’t considered the option at the time.”

Instead, Reavey in November filed two exception-to-bid requests, which the city’s Procurement Services Department approved. The waivers were necessary because a city ordinance requires contracts valued at more than $30,000 be bid out.

But Procurement Services guidelines require market research to support any exception-to-bid request.

City Purchasing Director Rhonda Kelsey, who directs Procurement Services and approved the requests, has said her department did not conduct the market research because she knew competitors for the contracts would not have the same experience as the two former assessors.

City attorneys do not review no-bid contracts unless there is something unusual about them, Deputy City Attorney Linda Burke said.

The two contracts are with retired assessors Darryl Malquist and John Meyer, who worked for the city for 30 years and almost 40 years, respectively, and now continue to work for the Assessor’s Office on contracts that are extended each year.

Malquist signed his first sole-source contract with the city in 2007 for $50,000. If the city approves the latest contract extension, his compensation would total $300,000. Meyer signed his first sole-source contract with the city in 2010 for $40,000 and is awaiting city approval that would bring his total compensation to $120,000.

Meyer specializes in assessing the value of equipment and furnishings that businesses use, and he trains the city’s appraisal staff members in assessing personal property.

Malquist designs and manages Assessor’s Office networks, databases, reports, Internet and intranet operations, department financials and systems.

Alderman Joe Dudzik, who voted in favor of the contracts as a member of Finance and Personnel, said Malquist’s contract is of particular concern because of the number of contract renewals.

“That seems problematic,” Dudzik said. “I want to make sure I’m not just giving someone’s buddy a contract.

“I can’t believe there isn’t anyone in the state that is qualified to do this work for us, but I believe (Reavey) did try to bid the work out.”

She didn’t.

Reavey said she is convinced Meyer and Malquist are the only people for the jobs.

“I just felt then, and I still feel now,” she said, “that no one else would be able to do the same level of work.”

Reavey said there are three primary reasons for her decision: the experience Meyer and Malquist have with the city, their familiarity with its assessment software, and their availability to train city employees to take over the positions.

Reavey also said contracting assessment work out is too impersonal. If the city bids the work out, she said, those contractors wouldn’t be available to answer assessment questions from the public.

But many municipalities bid out assessment work, said David Toennies of Equity Appraisal LLC, Middleton. His company, he said, does real and personal property assessments for about 25 Wisconsin municipalities.

“We have one-, two- or three-year contracts,” Toennies said, “and are on call all the time and available for any tax questions someone could have.”

With 17 years of experience as an assessor, Toennies said, he has helped with training others throughout his career.

Software could be a sticking point

Equity Appraisal, Toennies said, uses a common software program called Market Drive.

Milwaukee, Reavey said, uses a specialized database that was developed by the city to value personal property.

“We could upgrade our system to something else,” she said, “but it’s a costly endeavor.”

Reavey said the original contracts with Malquist and Meyer happened when the city lost personnel and needed to quickly replace the employees. She said she didn’t think it was necessary to bid the work out when she had qualified retirees who could do it.

But it’s that dynamic that now requires Common Council approval of the contracts. An ordinance that went into effect in December requires that approval when contracts between retired city employees and their former departments last longer than 18 months.

Both no-bid contracts have lasted longer than 18 months. The Common Council is scheduled to vote Tuesday, and Dudzik said he intends to more closely examine Reavey’s justification for sidestepping the bidding process.

“Based on what I find out,” he said, “I might say those answers aren’t good enough and vote no on Tuesday.”

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