Most guys carry pictures of their kids in their wallets.

Colorado Springs City Auditor Denny Nester carries one of his beloved dog, O.P.

O.P. is no ordinary dog.

O.P. was named Best of Breed for Ibizan Hounds at the AKC/Eukanuba National Championship in Orlando this past weekend. The championship is described as “one of the most prestigious dog shows in the world.”

“He’s actually on his way back from Texas now,” Nester said Wednesday about his dog, whose show name is Arbeca’s Opus for Danzante.

“My daughter’s driving him home today because I had taken him down to Texas a couple of weeks ago for him to make this trip down to Orlando. I don’t like to fly the dogs if we don’t have to,” he said.

Nester said getting O.P. and his other dog, Dori, to dog shows can be a “logistics nightmare.”

“Plus, it’s rather expensive,” he said.

“This Best of Breed, I won $200, but don’t tell everybody that I probably spent $2,000 getting him there, competing and all that,” Nester said, laughing.

Dori, who is O.P.’s 8-month-old daughter, didn’t come home with empty paws either.

Dori was recognized as Winners Bitch, Nester said.

“We bred O.P. to a bitch in Wisconsin named Roxy,” Nester said in a follow-up email.

” Dori is registered to my wife— Jill, me and Wendy Anderson— the breeder in Wisconsin.  In the dog show world, it is common for multiple people to be listed as the owners,” he said.

More information from the release:

“The AKC/Eukanuba National Championship is the largest prize money dog show in the world, with cash and prizes awarded totaling more than $225,000. Although prior editions were invitation-only, beginning this year, the event is an open show for all dogs that awards Championship and Grand Championship points.  O.P. was a special qualifier since he had earned his Grand Championship earlier in 2012. O.P. also qualified for the event as one of the top 10 point earners in 2012 in his breed.  O.P. was celebrated with an invitation granting special recognition and placing him on the AKC/Eukanuba National Championship Honor Roll.”

City Auditor Denny Nester urged the City Council last week to put the brakes on a proposal from Mayor Steve Bach to change a policy that defines the compensation and benefits of civilian employees, according to an email obtained by The Gazette.

“As you consider the changes the Mayor requests, please remember that part of your role is (to) ensure there is a balance of power, i.e., the Mayor should not be allowed to conduct business as he pleases,” Nester wrote in an email Saturday afternoon. “He should conduct business within the guidelines established by Council via policy.”

In an interview earlier this week, Nester said Bach seemed to be rushing the proposal.

The proposal called for, among other things, a suspension of performance-based pay increases for civilian employees. Bach requested the hiatus until the completion of a compensation study. Read more about what happened to the mayor’s request here.

“I don’t think he’s considered my office because I don’t think that it would be appropriate for the mayor to be making decisions for the City Auditor’s Office,” said Nester, who reports directly to council.

“It seems like it has been pushed through a little bit fast,” he said.

In the past, Nester said, any changes to the Policy and Procedures Manual would be vetted by management and explained to the workforce.

“As far as I know, that hasn’t been done, but maybe I missed it,” he said.

“When you write a policy, you have to consider everybody that is affected by it,” Nester added. “I don’t think that the mayor has given consideration to my office…I do not report to the mayor. I report to City Council.”

Nester declined to provide a copy of the email he sent to council, saying it was not a public document.

“I’ve been advised that the email you requested is not a ‘public record’ under (the Colorado Open Records Act) as it is work product for elected officials,” he said in an email.

“The email that I prepared for City Council falls within this exception and therefore is not a public record under CORA,” he wrote.

The email was leaked to The Gazette this week.

Here is the full text of the email:

Subject: Concerns related to the Mayor’s requested chages to the PPM

President Hente, President Pro Tem Martin, and Honorable Members of City Council,

I have concerns about the proposed PPM modifications the Mayor is proposing, which are included with the Agenda for the Informal City Council Meeting for this coming Monday.  My concern comes from various perspectives:

As your consultant/advisor:  I want Council to make the best decisions possible, based on as much known information as possible.   From that perspective, I am concerned that the proposed changes have not been vetted through the established processes, which have been used for year.  Normally, all proposed changes to the PPM are circulated to City Management and employee for their feedback and input.  While I recognize the Strong Mayor is not required to take this action, it concerns me that there could be unintended consequences from the proposed changes that may be avoided if the established processes are followed.  For example, it might decrease morale to state that “Future salary increases for employees are at the sole discretion of the Mayor or the Mayor’s designee.”  While a Council ordinance can “trump” the PPM, is it accurate that Council will not have a say in future salary increases?  Do you want to send the message to employees that performance does not matter?

As your appointee, who abides by the City’s PPM:  I believe the proposed wording of the Policy related to Salary Range Progression would be inappropriate for my office.  Since I do not report to the Mayor, I believe it would be inappropriate for the Mayor or the Mayor’s designee to determine the amount of salary increase I award my employees.  While I have abided by the rules established by the Human Resources Department of the City in the past.  The wording of the proposed changes appear to be too arbitrary and capricious based on the discretion that the Mayor is requesting.  If you choose to adopt the Mayor’s proposed change, I would ask that you consider modifying the wording to consider my office and whether you want to give me similar authority for my staff.

As you appointee, who respects the effort Council has made concerning transparency:  I believe the Mayor may need to explain the changes he is enacting with the wording changes to the Workers Compensation Policy.  In the audit of Workers’ Compensation that I issued on April 28, 2010, I recommended many of the changes the Mayor is now proposing.  As I understand it, he is proposing that the City abide by the State Workers’ Compensation Act and no longer provide benefits in excess of State requirements, which previously have been paid by the City.  For example, the current policy allows employees, who are injured on the job to receive 85% of their normal compensation while they are receiving treatment and recouperating.  The State policy only requires payment of 66% of the normal compensation.  While I agree with the recommendation, I believe this change is a policy decision that should be fully explained to City Council for their discussion and action.

Article III of the Charter specifies the duties of City Council.  City Charter 3-10(f) was enacted as part of the change to the Council/Mayor form of government.  It read, “Personnel Policies. The Council shall review and approve by ordinance personnel policies and procedures for all City employees, including civil service employees, but specifically excluding employees of City Utilities and the City’s health system; and all municipal purchasing and contracting rules and regulations, it being determined that, as a matter of policy, City Council shall undertake those tasks through the legislative process. (2010)”  To me, the fact that the Personnel Policies were specifically referenced in establishing the new form of government underscores the importance of City Council establishing the policy (boundary) within which, the Mayor is called upon to administer.  Therefore, I believe Ciy Council should consider each policy change to the PPM very carefully.

Below are my brief thoughts concerning the proposed changes to the PPM Policy #8.

The Mayor proposes changes on Page 2, change “will establish” to “strives to have“.   This Policy is where Council is directing the Mayor (the City) concerning a salary plan.  Does Council want to direct the Mayor to establish such a plan or is Council willing to allow the Mayor to strive to have a plan?  What is the direction of Council?

The Mayor proposes changes on Page 3, change “City Council based on budget restrictions” to “the Mayor“.  Does Council want to give the power to the Mayor to declare a salary freeze?  If you do, do you want to limit when it can be declared such as based on budget restrictions or some other basis?

The Mayor proposes changes on Page 3, change “shall” to “may, among other things“.  Do you want to direct the Mayor concerning what should be considered in recommending changes to the salary plan or are you willing to leave such changes to the Mayor’s discretion.  Should it include whether the individual made contributions to his campaign?  I am not implying that the current Mayor would include such considerations, but one of the potential down sides of the Strong Mayor form of government is that political machines such as the Daley Machine in Chicago can lead to ineffective government due to political factors replacing some of the factors expressed in the current policy.

Recognizing this email is already too long, I will not examine each proposed change as I have done fro Policy #8.  I ask that each Council Member consider the changes the Mayor is requesting very carefully.  I believe legislation and policy are the responsibility of City Council.  As you consider the changes the Mayor requests, please remember that part of your role is ensure there is a balance of power, i.e., the Mayor should not be allowed to conduct business as he pleases, he should conduct business within the guidelines established by Council via policy.  Something as simple as changing the definition of Salary Range (Page 16 of the Mayor’s proposal) could have consequences recognizing that the City currently has employees who are being paid above the Control Point.

While looking over the Charter and Code in preparing this email, I also noticed the following:

Per City Code: 1.2.203: COMPENSATION:  Each officer appointed by the Mayor and City Council shall receive a salary set by ordinance⁵ 

Considering all the changes the Mayor announced this past week, has an ordinance been prepared or presented to Councilrelated to the Mayor’s recent appointments?

I apologize for the length of this email.  I hope it is received in the spirit of respect with which it is sent.

Sincerely,

Denny Nester

City Auditor

An audit of a contract between the city of Colorado Springs and a company that sells advertising space on government-owned bus benches and bus shelters found that the terms are generally being met.

But the audit found a few holes, including the city’s inability “to perform reconciliations to ensure they were receiving the correct amount of revenue” from Lamar Corp., city documents state.

Lamar was providing the city a collections report that “was insufficient to verify that all receipts due the City have been recognized and paid,” documents state.

On the bright side, the contract requires the city to be paid at least $50,000 a year, and the amount has been exceeded every year for the past 10 years. However, the audit doesn’t say by how much.

City Auditor Denny Nester issued a series of recommendations to fix the deficiencies, and the city’s Transit Services office, which oversees the contract, accepted them all.

“The new revenue contract in 2012 will state that payment has to be made on an ‘accrual’ basis,” Transit Services wrote in its response to the audit. “In the new contract, Transit will also require monthly reports that support the current period advertising, amount due to the City and the advertising locations so that spot checks could be performed by the City.”

The audit found two other areas that needed improvement.

They include:

The contract language and processes were lacking.

Lamar and the city each have a list of inventoried bus benches and bus shelters, the audit states.

But the numbers don’t match up.

Lamar counts 491 bus benches and 140 bus shelters while the city says there are 495 bus benches and 125 bus shelters.

Also, the contract states that revenue owed the city can be offset through in-kind services.

“City personnel indicated approximately $7,000 of in-kind services were provided in lieu of revenue in 2009. Our review noted insufficient documentation of the activities provided or City approval of such activity for adequate internal controls,” the audit states.

The contract does not address discounts Lamar provides to some of its customers.

Since “Lamar provides productions and other services, it is possible that a discount could be taken on advertising to obtain greater production cost. This would maximize Lamar’s revenues and reduce the revenues due the City,” the audit states.

To read the entire audit, click here.

Terri Velasquez

“Robyn Cafasso, Chief Deputy District Attorney with the El Paso County District Attorney’s Office called at 11:48am (May 23, 2011). She said they are prosecuting Ray Marshall and Landco and are looking for additional information on the construction projects at 19 N. Tejon and the Gas Ops building related to El Pomar’s contract. She said they are interested in construction invoices from Landco or whatever we might have related to the two projects. She said she knows there is a confidentiality agreement for the civil lawsuit, so the D.A.’s Office would be happy to provide a Court Order or whatever is needed to enable you to turn the documents over. She has already spoken with Elena Nunez and Pat Kelly and has been referred to various people and your name also came up.”

– city employee Denise Hoover wrote in an email to Terri Velasquez, the city’s former director of finance and administrative services.

Velasquez’s response?

“Denise, there is very little information that I can provide. Please have her work with (City Attorney) Pat Kelly and (City Auditor) Denny Nester.”

“We noted that Net Assets were reported as $1,496.6 million which is an overstatement of $180 million due to the error. Colorado Springs Utilities issued a subsequent update to the Board on April 1, 2011 based on the audited financial statements in which the Net Assets were correctly stated at $1,316.6 million. This was a reporting error only and did not affect the CEO’s compliance with the policy prohibitions.”

— interim City Auditor Denny Nester wrote in an audit of Colorado Springs Utilities’ asset protection and financial conditions and activities.

Denny Nester

The Colorado Springs Regional Economic Development Corp., which has received more than $1 million in public funds in the last six years, is poised to be the subject of an independent city audit for the first time in 2011.

Interim Colorado Springs City Auditor Denny Nester is proposing an audit of the EDC in his 2011 audit plan, which he will present to City Council today.

“The audit plan is not a legal document requiring approval by City Council,” Nester said in a memo to Mayor Lionel Rivera and council members.

“However, the interim city auditor is presenting the audit plan to City Council at their informal meeting to ensure that the majority of City Council concurs with the plan,” the memo states.

An audit of the EDC was first proposed in August by Councilman Sean Paige, which generated a contentious debate – and a bigger rift – between Paige and council members Bernie Herpin and Jan Martin.

“During our discussion for the need of an EDC audit, each member supporting a city audit of EDC remarked that they did not expect to find any ‘irregularities’, or words to that effect,” Herpin said in an e-mail to his colleagues. “Given the estimated time and cost of such an audit, I cannot justify spending city resources on an audit when there are no grounds to believe that any impropriety has occurred.”

Paige reacted with dismay.

“Perhaps you are willing to lay out significant taxpayer and ratepayer funds annually, without exercising some independent oversight, blindly trusting that EDC is using these funds wisely, and that they are delivering the results they say they are. But I am not,” Paige said in an e-mail.

“At a time when locals are nursing a deep cynicism and distrust toward City Hall, maybe a little confidence can be restored if we turn words like transparency, accountability and oversight into action,” Paige wrote.

In the memo to council, Nester said “the purpose of the audit is to answer specific questions concerning the use of public funds provided to the Economic Development Corp. as requested by” council members.

Last week, Councilman Sean Paige ruffled feathers when he called for an audit of the Colorado Springs Regional Economic Development Corp.

According to Paige, the EDC has received more than $1 million in public funds from the city government and Colorado Springs Utilities in the last six years.

After Paige called for the audit, the City Council decided to ask interim City Auditor Denny Nester to research how much it would cost and how long it would take.

Nester’s response, which can be read by clicking here, has generated some interesting reactions among some council members, according to e-mails obtained by The Gazette.

Here are excerpts of some of the e-mails:

E-mail from Paige to Nester:

“Mr. (Mike) Kazmierski or some other EDC representative at a recent meeting made a point of saying that they were going to more carefully segregate funds for such purposes (which seemed a belated acknowledgement that this hasn’t been done in the past) and I would want you to confirm that such controls are in place now. Mr. Kazmierski’s statements in today’s Gazette make it clear that the EDC has not “gotten out of politics,” as a representative also recently said, and it’s important, in my view, that controls exist to ensure that public funds are being used for job retention and creation, not political posturing.”

E-mail from Councilman Bernie Herpin to City Council:

“During our discussion for the need of an EDC audit, each member supporting a city audit of EDC remarked that they did not expect to find any ‘irregularities’, or words to that effect.  Given the estimated time and cost of such an audit, I cannot justify spending city resources on an audit when there are no grounds to believe that any impropriety has occurred.

In addition, we receive an annual audit report that is directed by the EDC Board of Directors using an independent auditing firm.  While this audit does not specifically detail where Colorado Springs city and utility money is spent, nor does it contain any specifics on exactly where any of the other sources of funds are spent, it does review the proper accounting of funds.  Just as we don’t track how a specific taxpayer’s funds are spent (all taxes go into our general fund), I wouldn’t expect the EDC to specifically track our funds.  They are used to fund the operation of the EDC.”

E-mail in which Paige responds to Herpin:

“Perhaps you are willing to lay out significant taxpayer and ratepayer funds annually, without exercising some independent oversight, blindly trusting that EDC is using these funds wisely, and that they are delivering the results they say they are. But I am not. The expenditures highlighted in Denny’s letter don’t seem excessive, given the significant amounts (more than $1 million in the last six years, by my count) that flow to the organization.

At a time when locals are nursing a deep cynicism and distrust toward City Hall, maybe a little confidence can be restored if we turn words like transparency, accountability and oversight into action.”

E-mail from Councilwoman Jan Martin to City Council:

“It was my understanding at our Monday meeting that the Mayor asked for Denny’s assessment on time and cost before moving forward with the audit.  At this point, and with the additional size and scope being requested for the audit, I think it would be appropriate for us to either ask Council for another consensus vote or add it to our next agenda for a formal vote before moving forward with the audit.”

E-mail in which Paige responds to Martin:

“I don’t really believe this constitutes a major expansion of the scope of the project, just a clarification, since there was no discussion at Monday’s meeting about what time-frame this review would cover, or what constitutes an appropriate use of public funds. I just think, if we’re going to take a closer look, a year and a half isn’t adequate. And my latest e-mail to Denny simply gets a little more specific about what might be looked at, when we ask what public money is going for. Again, I think this is more of a clarification than an expansion. And it’s only one person’s opinion.

And by all means, let’s have a formal vote. I think the public should know who is interested in exercising oversight and who is not.”

Colorado Springs Councilman Sean Paige is calling for an audit of taxpayer money that the city has provided to the Colorado Springs Economic Development Corporation over the years.

“Not too long from now, we’ll be weighing new funding requests from EDC,” Paige said today in an e-mail to the mayor and council members. “I can’t in good conscience support those requests until we have a better understanding of how these funds are being used.”

Paige will ask his colleagues to support the proposed audit at today’s informal meeting.

“This organization has cumulatively received a lot of taxpayer and ratepayer money over the years, which makes up a sizable portion of its budget, but it has never, as far as I know, been subjected to an independent audit by the city,” Paige said in the e-mail.

“While I have no reason to suspect that this money is being misused, or being put to questionable purposes, I think any recipient of this much public money should be open to periodic review, given our obligation to ensure that these funds are spent in an appropriate, cost-effective manner.”

Here’s the full text of Paige’s e-mail to the mayor and council members: 

Colleagues:
 
At today’s informal I’ll be seeking majority support for a city audit of EDC. I thought I would let you know in advance. This organization has cumulatively received a lot of taxpayer and ratepayer money over the years, which makes up a sizable portion of its budget, but it has never, as far as I know, been subjected to an independent audit by the city. While I have no reason to suspect that this money is being misused, or being put to questionable purposes, I think any recipient of this much public money should be open to periodic review, given our obligation to ensure that these funds are spent in an appropriate, cost-effective manner. 
 
Not too long from now, we’ll be weighing new funding requests from EDC. I can’t in good conscience support those requests until we have a better understanding of how these funds are being used. Also, as you may recall, Mike Kazmierski at a recent meeting made a point of saying that he would welcome such an audit. I can’t imagine, under these circumstances, why we wouldn’t ask the auditor to conduct one.
 
I would like the audit to address the following questions. What specifically is public money used for? Do these uses conform with the uses outlined in annual funding requests from EDC? Are the EDC’s return-on-investment figures accurate? How many jobs are actually created using those funds? And, are the jobs credited to EDC activities actually the result of EDC activities? You may have other questions you want answered, but I think that’s a good starting point. I have spoken with (interim City Auditor Denny Nester) on several occasions about this, so it won’t be coming completely “out of the blue.”
 
Thanks for giving careful consideration to this issue. If you have any questions, please ask.
 
Sean