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NEWS RELEASE
Councilmember Carol Schwartz, At-Large
For Immediate Release Contact: John Abbot
June 13, 2003
(202) 724-8105
Schwartz Prods Colleagues to Follow Up On Lessons Learned from Addison Road Debacle
Also Calls on DPW Director to Perform Cost Analysis
DC At-Large Councilmember Carol Schwartz, in a letter on Wednesday to Councilmember Jack Evans (Ward 2), and in separate letters late yesterday
to Councilmembers Kathy Patterson (Ward 3) and Vincent Orange (Ward 5), called on her colleagues to review findings of an audit she requested on the
proposed purchase of 4800 Addison Road, in Prince George's County, Maryland
and the sale of District-owned property at 438 Massachusetts Avenue, NW.
D.C. Auditor Deborah Nichols found that, "the Office of the Chief Financial Officer prepared an inaccurate, poorly drafted fiscal impact
statement to support the proposed resolution submitted for the Council's approval to purchase 4800 Addison Road, and failed to address the sale of
438 Massachusetts Avenue, NW ... The (CFO) should have prepared a more substantial, factually correct, detailed, analysis-driven fiscal impact
statement... Had this been done properly, questions should have been raised,
at a minimum, regarding the financial prudence of this transaction." With
regard to that finding, Ms. Schwartz wrote to Councilmember Evans, Chair of
the Council's Committee on Finance and Revenue, "It is hard to comprehend how or why our CFO could have approved such an error-laden fiscal impact
statement. I am asking that your Committee begin its own investigation into
the OCFO. I believe the handling of this matter may be indicative of behavior or lack of oversight, which should be of concern to all of us."
Also uncovered by the Auditor was evidence that the Office of the Corporation Counsel (OCC) provided guidance to officials in the Office of
Property Management on how to structure the terms of the lease for the Addison Road property in order to circumvent Council review of this lease.
Additionally, despite OCC's contention that it never had knowledge of fire
damage to the Addison Road property, the proposed purchase and sale agreement drafted by OCC for this property clearly recognized the existence
of fire damage. In her letter to Committee on the Judiciary Chair Kathy Patterson, Ms. Schwartz wrote, "The function of OCC is to utilize its
employees' legal skills to serve the best interests of the residents of the
District, not to help facilitate property deals which gouge District taxpayers or act as a private law team for the Mayor and for agencies in the
Executive Branch. The OCC should be reminded of their official function and
the role which they are expected to play in District government."
In a letter to Councilmember Orange, Chairman of the Committee on Government Operations, Ms. Schwartz reminded Mr. Orange that she had
requested that the D.C. Auditor identify all government contracts which require expenditures ranging from $950,000 to $1 million. The request,
which covers a period beginning with fiscal year 2000 through the present,
was spurred in part by the DC Auditor's conclusion that, "there is ample evidence that the $998,250 lease price...was intentionally manipulated to
circumvent review and approval by the Council of the District of Columbia."
Ms. Schwartz added that the auditor's finding "echoes my longstanding concern on the issue."
All contracts that require an annual expenditure of $1 million or more are
automatically subject to Council review. In her request to Ms. Nichols, Ms.
Schwartz said, "I believe that there may be additional contracts that may have been priced just below $1,000,000 for the same nefarious purpose."
In addition to correspondence with her colleagues, Ms. Schwartz also
wrote Department of Public Works (DPW) Director Leslie Hotaling urging compliance with the Auditor's recommendation that DPW perform an analysis of
the costs incurred by DPW in operating a vehicle impoundment lot at 4800 Addison Road in comparison with conducting the same operation at the former
Brentwood Impoundment Lot site.
Ms. Schwartz said she decided to write these letters because, "I feel it very important that we delve deeply into even the most minute of
details with regard to this matter so that we can learn lessons from the Executive's and other Offices' actions with respect to the purchase of 4800
Addison Road and the sale of 438 Massachusetts Avenue."
Copies of the letters to her colleagues, to Ms. Hotaling and to Ms. Nichols are attached.
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June 12, 2003
Councilmember Vincent Orange
Chair, Committee on Government Operations
The John A. Wilson Building
1350 Pennsylvania Avenue, N.W.
Washington, DC 20004
Dear Vince:
As you know, a little less than a month ago I requested that the
District of Columbia Auditor perform an audit to identify all contracts
from $950,000 to $1,000,000 in a 12-month period awarded in fiscal years
2000, 2001 and 2002, and thus far in fiscal year 2003. In my May 16th
letter to D.C. Auditor Deborah Nichols (see attached), I cited a finding
in her audit report on 4800 Addison Road, writing, "In your recent
audit … you stated, ‘There is ample evidence that the $998,250 lease
price…was intentionally manipulated to circumvent review and approval by
the Council of the District of Columbia,’ which echoes my longstanding
concern on the issue. I believe that there may be additional contracts
that have been priced just below $1,000,000 for the same nefarious
purpose."
I feel it very important that we delve deeply into even the most minute
of details with regard to this matter so that we can learn lessons from
the Executive’s and other Offices’ actions with respect to the
purchase of 4800 Addison Road and the sale of 438 Massachusetts Avenue.
I anticipate the audit findings on the contracts issue will merit a
full public airing, and I look forward – albeit with some trepidation
– to receiving the results of the audit.
Sincerely,
Carol Schwartz
Councilmember, At-Large
Enclosure
Cc: All Councilmembers
CS/ja
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May 16, 2003
Ms. Deborah Nichols, Auditor
Office of the District of Columbia Auditor
717 14th Street, N.W., Suite 900
Washington, D.C. 20005
Dear Ms. Nichols:
I am writing to request that you perform an audit to identify all
contracts from $950,000 to $1,000,000 in a 12-month period awarded by the
District of Columbia in fiscal years 2000, 2001 and 2002, and thus far in
fiscal year 2003. In your recent audit, $1 Million Lease and Proposed
$12.5 Million Purchase of 4800 Addison Road, you stated, "There
is ample evidence that the $998,250 lease price…was intentionally
manipulated to circumvent review and approval by the Council of the
District of Columbia," which echoes my longstanding concern on the
issue. I believe that there may be additional contracts that have been
priced just below $1,000,000 for the same nefarious purpose.
If you have any questions regarding this request, please contact me or
my Legislative Counsel, Lee Smith, at (202) 724-8105. Thank you and I look
forward to getting your report.
Sincerely,
Carol Schwartz
Councilmember, At-Large
Cc: All Councilmembers
CS/ls
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June 11, 2003
The Honorable Jack Evans
Chairman, Pro-Tempore
Councilmember, Ward 2
Chair, Committee on Finance and Revenue
1350 Pennsylvania Avenue, N.W., Suite 106
Washington, D.C. 20004
Dear Councilmember Evans:
I am writing regarding a specific finding by District of Columbia
Auditor Deborah Nichols with respect to an audit I requested concerning
the City’s proposed purchase of property at 4800 Addison Road in Prince
Georges County, Maryland for use as an impoundment lot, as well as the
planned sale of valuable and historic District-owned property at 438
Massachusetts Avenue, N.W.
Ms. Nichols discovered a very incomplete and incorrect fiscal impact
statement containing ambiguous language as well as a completely fabricated
statement that the District was attempting to purchase property at 438
Massachusetts Avenue, which it had been leasing at a cost of $83,175.50
per month. It is important to keep in mind that the District could not buy
this property nor lease it at that rate as it already owned the property.
The auditor wrote the following with respect to that fiscal impact
statement prepared by the Office of the Chief Financial Officer:
"The Office of the Chief Financial Officer prepared an
inaccurate, poorly drafted fiscal impact statement to support the proposed
resolution submitted for the Council’s approval to purchase 4800 Addison
Road, and failed to address the sale of 438 Massachusetts Avenue, N.W…The
(CFO) should have prepared a more substantial, factually correct,
detailed, analysis-driven fiscal impact statement... Had this been done
properly, questions should have been raised, at a minimum, regarding the
financial prudence of this transaction."
It is hard to comprehend how or why our CFO could have approved such an
error-laden fiscal impact statement. I am asking that your Committee begin
its own investigation into the OCFO. I believe the handling of this matter
may be indicative of behavior or lack of oversight, which should be of
concern to all of us. For your information, I am attaching a copy of Dr.
Ghandi’s fiscal impact statement.
Mr. Evans, this entire process started with the Mayor’s need for
swift passage of emergency legislation authorizing the aforementioned
purchase and sale of property at 4800 Addison Road and 438 Massachusetts
Avenue, and has unfortunately morphed into something far greater. One can
almost see why the Executive hoped the matter would achieve quick tacit
approval by the Council. Thankfully though, my initial investigation, and
the good subsequent follow-thru by my Committee and Councilmember Graham’s
Committee, have prevented what could have been a huge disaster, from
occurring.
I feel it very important that we delve deeply into even the most minute
of details with regard to this matter so that we can learn lessons from
the Executive’s and other office’s actions with respect to the
purchase of 4800 Addison Road and the sale of 438 Massachusetts Avenue. I
again urge your Committee to look into the CFO’s role related therein.
Thank you.
Sincerely,
Carol Schwartz
Councilmember At-Large
Chair, Committee on Public Works And the Environment
Cc: All Councilmembers
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June 12, 2003
Ms. Leslie Hotaling
Director, Department of Public Works
2000 14th Street, NW, 6th Floor
Washington, DC 20009
Dear Ms. Hotaling:
I am writing with regard to a specific recommendation made by District
of Columbia Auditor Deborah Nichols in her audit entitled, "$1
Million Dollar Lease and Proposed $12.5 Million Dollar Purchase of Addison
Road: An Example of Official Misfeasance and Malfeasance," which I
requested.
The recommendation I referenced states:
"The Director of the Department of Public Works perform an
analysis of the costs incurred by DPW in operating a vehicle impoundment
lot at 4800 Addison Road in comparison with conducting the same operation
at the Brentwood site. The analysis should be detailed and take into
consideration the lowest level of costs, including the costs of towing
each impounded vehicle to Addison Road and to Brentwood, the length of
time to tow impounded vehicles to Addison Road and Brentwood from
different parts of the City. The analysis should also include labor,
equipment, fuel, and maintenance costs, at a minimum, for a one-year
period."
I ask that you perform that analysis and that you apprise myself and
Ms. Nichols how long you feel such an analysis would take. Thank you.
Sincerely,
Carol Schwartz
Councilmember At-Large
Chair, Committee on Public Works And the Environment
Cc: All Councilmembers
Deborah Nichols
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June 13, 2003
The Hon. Kathy Patterson
Council of the District of Columbia
Chairperson, Committee on the Judiciary
1350 Pennsylvania Avenue NW
Washington, DC 20004
Dear Kathy:
I am writing to express my sincere displeasure regarding the activities
of the Office of the Corporation Counsel of the District of Columbia (OCC)
with respect to the series of events surrounding the proposed purchase by
the District of property located at 4800 Addison Road in Prince George’s
County, Maryland and the proposed sale of a District-owned firehouse
located at 438 Massachusetts Avenue NW. As revealed in the recent report
regarding these proposed transactions prepared by the Office of the
District of Columbia Auditor and in several public hearings held by the
Council, OCC provided guidance and advice to officials in the Office of
Property Management on how to structure the terms of the lease for the
Addison Road property in order to circumvent Council review of this lease.
Additionally, despite OCC’s contention that it never had knowledge of
fire damage to the Addison Road property, the proposed purchase and sale
agreement drafted by OCC for this property clearly recognized the
existence of fire damage. Also, the purchase and sale agreement prepared
by OCC for the Addison Road property contained a provision authorizing the
payment of broker’s fees to Cushman & Wakefield, the same company
that performed the appraisals of this property. (This section was
apparently lined out by hand in the version of the purchase and sale
agreement which was transmitted to the Council for approval, followed by
the handwritten initials "ML.")
The function of OCC is to utilize its employees’ legal skills to
serve the best interests of the residents of the District, not to help
facilitate property deals which gouge District taxpayers or act as a
private law team for the Mayor and for agencies in the Executive Branch.
The OCC should be reminded of their official function and the role which
they are expected to play in District government.
Thank you for your attention in this matter.
Sincerely,
Carol Schwartz
Councilmember, At-Large
Chair, Committee on Public Works and the Environment
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