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Payment of Commons lease source of confusion

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A year’s worth of unpaid rent and utilities by a tenant of the city-owned Commons slipped through the cracks in 2013, leaving city officials scrambling to determine why no one noticed or reported that Snappy Tomato Pizza restaurant wasn’t paying rent.

City officials realized two weeks ago that Snappy Tomato had not made rent or utility payments at all in 2013, for a total of $27,238. The city owns The Commons and subleases space there through the city’s Redevelopment Commission.

City officials were at a loss to explain exactly how the lack of payments escaped notice for an entire year.

Mayor Kristen Brown laid the responsibility on the outgoing parks and recreation director, Ben Wagner, who she reassigned as parks department marketing coordinator Dec. 30.

But Wagner, City Council members and Clerk-Treasurer Luann Welmer said the fault was more in the undocumented procedures put into place when the city, under Brown’s direction, moved away from Columbus Downtown Inc., the nonprofit development company formerly in charge of The Commons.

Brown cited the lack of payments and written procedures as one of the reasons she removed Wagner from his job as parks director. She said Thursday she viewed that lack of oversight as the largest catalyst in her decision to remove Wagner.

“This is a very big omission on city government’s part,” Brown said.

“The parks department is responsible for collecting these, and we had no system or processes in place to follow up and ensure that we were collecting this money.”

Although the mayor has responsibility for city operations through her appointed department heads and her control of city employees, she laid the blame on Wagner.

“Ultimate accountability of the day in and day out operations and finances of parks and rec is the director of parks and recreation,” Brown said.

However other city officials said

the oversight of those rent payments were murky:

No procedures were outlined at the time of the change on how that money should be handled. Brown said there was no written manual or documentation put into place.

The clerk-treasurer, the city’s chief fiscal officer, said she was never consulted on the best procedures to handle those funds.

The Columbus Park Board

never was notified the parks

department was expected to collect those funds and never voted to accept those responsibilities.

A master lease that was created when Columbus Downtown Inc. was dissolved and the restaurant subleases were assigned to the Columbus Redevelopment Commission does not contain procedures detailing how the rent payments are to be made or who is to receive the payments.

Columbus Downtown Inc., the former nonprofit downtown development company, was created by the city to develop downtown Columbus through various means.

Among its responsibilities, it managed the restaurant leases in The Commons and the Jackson Street garage. During the dismantling of CDI last year, led by the mayor, the leases were transferred to The Commons Board, which transferred the lease management duties to the Columbus Redevelopment Commission.

The commission then passed a resolution saying the parks department would collect and deposit the checks.

The revised leases that Snappy Tomato and the other restaurant owners signed when they were transferred to the Redevelopment Commission directed them to make payments to The Commons Board, by way of City Hall. City officials said they were unclear on when, who and how the restaurants were notified of the new procedures.

Welmer said that under the

CDI lease management, the rental checks were delivered to the clerk-

treasurer’s office for deposit and the money moved into a Commons fund for future expenses.

But in 2013, when Brown’s administration disentangled CDI from the workings of city government, those checks stopped going to the clerk-treasurer and instead began being collected by the parks department. Welmer said she never had a conversation with anyone about the change and was not notified about a new procedure; the checks just stopped arriving.

In a similar situation, when REI of Indianapolis took over management of the city-owned parking garages, Welmer said she insisted on documented procedures and she was involved in the discussion and implementation of those procedures.

But with the restaurant leases, she was cut out of the loop.

“They had no communication with us whatsoever,” Welmer said.

In 2013, a parks department employee, working in The Commons office, collected the rent payments and deposited them in the bank, Wagner said. There was no physical checklist kept of which businesses paid, or software with the capability to flag whether or not payments were received from each of the four restaurants in The Commons, Wagner said.

Matt Caldwell, the city’s director of operations and finance, agreed that the parks department system did not work in that way and in a memo on the new procedures outlined his intention to either upgrade the system or find some other workaround.

Stan Gamso, the attorney for the Redevelopment Commission, told commission members Thursday that he couldn’t find documentation giving the responsibility for collecting the rental payments to the parks department.

However on Friday afternoon, he unearthed a resolution from the commission dated Dec. 17, 2012, that directed “Parks and Recreation to receive... all income and utility payments from the tenants in the Commons Retail Spaces for the 2013 calendar year.”

It is unknown if the park board

or parks staff even knew that the

redevelopment resolution existed. City Council President Ryan Brand pointed out that in the resolution Gamso uncovered, no one from the parks department or park board signed off on accepting the responsibility for collecting the lease payments.

Two members of the park board, Nancy Ann Brown and Jim Hartsook, said the board, which oversees parks department operations, never conducted a vote to accept that responsibility.

City Council members, in a joint statement released Friday, defended Wagner. The mayor’s letter accuses Wagner of failing to notify the mayor for more than a month after the payment lapse was discovered.

“In truth, Ben was only notified

by members of the Redevelopment Commission, who were ultimately

responsible for collecting the rent, just six days before he took responsibility for an oversight that was not the Parks Department’s to begin with,” the council members wrote.

Wagner said that there is plenty of blame to spread around.

“If someone were wanting to point the finger of blame, I would say that we all bear some responsibility, including parks and rec,” Wagner said.

Wagner said he is not sure why the parks department was ever designated to receive the money. He believes it makes more sense for the payments to come to the leaseholder — the Columbus Redevelopment Commission.

“During the transition and the dissolution of CDI, there was at some point, and I am not sure how, those decisions made,” Wagner said. “The issue probably is that there is no written agreement, no memorandum of understanding between the Redevelopment Commission and the Parks and Recreation Department. So there was some confusion as to how to handle the revenue from the tenants.”

Gamso urged the Redevelopment Commission to adopt some policies and procedures on how those funds should be handled.

Brown said while she didn’t think the Redevelopment Commission needed to vote on them, on Thursday she and Caldwell, the city director of finance, released a detailed plan of who should be receiving the lease payments.

At the oversight level, the park board, Redevelopment Commission and city administration were looking at the overall income figures, not the exact sources of the income, Wagner said.

Brown and Wagner said that the higher-than-expected revenues from meeting and performance space rentals in The Commons masked the fact that Snappy Tomato was not paying the $1,500 in monthly rent. Because the revenue stayed consistent throughout the period when the parks department began handling payments, it raised no red flags, he said.

Further muddying the oversight, at about the same time that Snappy Tomato stopped paying rent, the city also was having difficulties with another Commons restaurant, Scotty’s Burger Joint. The owners of Scotty’s were feuding with the city over payments for utilities and buildout costs, and eventually abandoned The Commons in March after changing the restaurant’s name and management company.

New procedures

Mayor Kristen Brown, Matt Caldwell, the city’s director of operations and finances, and Jamie Brinegar, the director of business services for the parks department, put in place new controls Thursday on how the payments from The Commons leaseholders should be handled. Among the decisions outlined in the memo:

Lease payments

Several employees will create digital calendar reminders of the due dates of the tenant leases.

If no payment is received, parks department managers will email the tenant a reminder.

If payment is not received in five business days, the president of the Redevelopment Commission and the commission’s attorney will be notified and begin discussing actions to secure the payments.

Utility payments

Each tenant will receive a combined electric, water and sewer invoice by the 28th of each month.

Each invoice will state the payment is due within 30 days.

If payment is not received, the tenant will be emailed a reminder.

If payment is not received in five business days, the president of the Redevelopment Commission and the commission’s attorney will be notified and begin discussing actions to secure the payments.

Monthly financial report

The parks department’s director of business services will provide the city’s director of operations and finance with a monthly financial report.

The report will include the total lease revenue for the month and details of each tenant’s payments for rent and utilities.

The report also will be provided to the park board at its monthly meetings.

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