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VOL. 129 | NO. 69 | Wednesday, April 9, 2014

City Blight Effort Faulted in Audit

By Bill Dries

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Memphis Mayor A C Wharton Jr. came up with the anti-blight initiative 25 Square specifically to attack overgrown lots in a systematic and targeted approach.

Lifeline To Success workers remove a fallen tree limb from a property. The company was one of three spotlighted in a report for submitting “questionable” invoices.

(Daily News File/Andrew J. Breig)

But the city’s internal auditors concluded in a report released this week that city leaders of the “grass mitigation” program didn’t use a “targeted approach” at all.

“It was difficult to ascertain the propriety and validity of vendor invoices due to the sheer volume of property locations mitigated on the invoices and the inconsistency in invoice documentation,” the audit report concludes.

And much of the work over two calendar years, according to the report, went to McGhee Lawn Service, with $448,000 of the city funding to McGhee going directly to the son of Public Works Deputy Director Onzie Horne. Horne’s son worked as a subcontractor with the company.

Horne was the deputy director who oversaw the grass-cutting effort. He resigned late last year at the end of the city’s grass-cutting season after some vendors complained that they weren’t being paid timely.

The auditors concluded Horne never disclosed the conflict of interest.

The report also cites an environment where Horne “failed to provide the tone at the top for an ethical culture within his area.”

And the companies and agencies that worked through the city to cut the areas overgrown with weeds and brush and filled with garbage billed the city with little regard for accounting for what lots were cut, even showing up at City Hall to lobby for more work.

“Contractors often visited the employees’ work areas and made direct attempts to influence work assignments and invoice processing by touting political affiliations with (city) council members, administration or (Horne),” the report reads, citing interviews with city employees who worked under Horne at City Hall.

“We believe transparency is an important part of this,” Horne said in a May 2012 interview with The Daily News. “And we want to get those mechanisms in place where there’s not only metrics where citizens can evaluate and look what we’re managing to accomplish and not accomplish, but also so that they can actually see what we do.”

Formerly, the city’s process was for city employees to cut the overgrown lots, with the city later billing and trying to collect from property owners. In 2012, the city switched to paying contractors.

At the beginning, the city hired 18 contractors, according to the audit report. In 2013, 14 more contractors were hired.

“Auditors found no plausible reason for the number of contractors hired when considering the actual work distribution based on payment history to contractors,” the report concluded.

The first year of the effort began in 2012. For that fiscal year, which began July 1, 2011, 7,173 properties were “mitigated” by contractors hired by the city. For the next fiscal year, the number of properties cut in the program ballooned by five times that to 36,906, and for just the first six months of the following fiscal year – from July 1 to Dec. 31, 2013 – the number was 35,559.

The sudden jump overwhelmed the Grounds Maintenance staff at Public Works, which was overseeing what little paperwork there was.

Horne had also gone to a method of having the contractors canvas areas and make their own judgments about properties that needed tending regardless of whether there were code violations or not.

A total $2.8 million, or 45 percent, of the $6.4 million in total payments by the city from March 1, 2012, to March 23, 2014, went to three contractors: Turning Point, Lifeline To Success Inc. and McGhee Lawn Service – in that order.

Unique Professional Cleaning and Staffing as well as Turning Point and Lifeline To Success were also spotlighted in the report for each submitting “questionable” invoices to the city that were flagged by grounds maintenance staffers.

The dollar total of questioned invoices for Unique was $223,944 in October and November of 2013.

In the case of Turning Point, that came to $384,302 in invoices for October and November of 2013. With Lifeline To Success, it was $3,725 in invoices in December 2013.

The auditors said they “did not find sufficient evidence that allowed us to make the determination as to whether the entries on the invoices were due to human errors or irregularities.”

McGhee, Lifeline and Turning Point were also given preference, according to the audit report, because they hired ex-offenders, a preference confirmed by the Wharton administration.

“However, the administration expected management to properly superintend their work and to operate within the appropriated budget,” the report reads.

The auditors concluded that there was “no process to provide an equitable distribution of work to other contractors that hired ex-offenders.”

PROPERTY SALES 51 334 9,936
MORTGAGES 41 330 10,946
BUILDING PERMITS 348 1,216 22,173
BANKRUPTCIES 43 348 6,311