YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

The Oak Grove Development Foundation (the Foundation) was established to provide financing for city capital improvement projects and to vest in the city the ownership and control of those facilities; however, there has been a deviation from this purpose and a lack of accountability to the city.� During the past several years, there has been much controversy involving city officials and the Foundation, centered on the funding and control of the Davis Memorial Center, a community building built by the Foundation in 1992-1993.� This has resulted in various actions and litigation involving the city and the Foundation. 

Based on our review of this situation, we identified various problems with past actions of the Foundation and/or former city officials.� When the Foundation revised its By-Laws in December 1989, this effectively took the Foundation and its activities away from the control of city officials.� Considering the stated purpose of the Foundation, the involvement by the city in the leasing of the facilities and issuance of the related bonds, and the extent of city funds expended through the leases, it is important that the city maintain control of the Foundation and ensure that it is accountable to the city.� It was also noted the Foundation has not been in compliance with some provisions of the lease agreements with the city, some information was not disclosed to bondholders, and some information in the bond documents was not accurate.� In addition, various deficiencies were noted in the Foundation�s records and procedures. 

Because of the city�s involvement with the Foundation, past city officials share in the responsibility for many of the problems reported.� We determined the city was justified in taking action to address some of the concerns noted and make the Foundation accountable to the city. 

This situation has been very costly to the city.� As of July 2001, the city had incurred legal expenses of approximately $200,000, paid over $500,000 in lease payments to the Foundation (since 1992), and was owed approximately $158,000 from the two Foundation boards.� It is important that the city resolve the situation and put this matter behind it.� In December 2001, a settlement agreement was entered in by the various parties involved in the litigation related to the Foundation and the Davis Memorial Center.� This agreement was subsequently approved by the Circuit Judge in January 2002. 

The city has a lagoon system to treat its wastewater.� In recent years, the Missouri Department of Natural Resources (DNR) has identified problems with this sewage treatment system.� In an effort to address the problems noted, in 1999 the city hired a consulting engineer to prepare a wastewater master plan.� A bond issue to finance the plan was defeated by the city�s voters in November 2000. 

A recent DNR inspection concluded the overall operation and appearance of the facilities was unsatisfactory and if the city continues to grow, it would have to upgrade its facilities.� As of August 2001, the DNR has prohibited new connections to the north lagoon and has limited new connections to the south lagoon.� The city submitted a revised plan to DNR and put another bond issue on the November 2001 ballot to help finance this plan; however, it was also defeated. 

Our review of the board�s minutes disclosed formal written minutes are not prepared for all closed meetings.� Currently, minutes are prepared only if a decision is made.� In addition, some decisions made in closed meetings were not subsequently disclosed in the open meeting minutes.�  

The city allows police officers that live outside the city limits to take their city-owned patrol cars home daily at the end of their shifts.� Allowing police officers living outside the city to take their patrol cars home is not a common practice, results in additional costs to the city, and any tangible benefits the city derives from this practice are not apparent.� The city should review this policy. 

The city allowed supervisory and professional employees to earn and accumulate a significant amount of compensatory time.� At June 30, 2001, the city�s liability for compensatory time totaled $72,800 and over 75 percent of this related to hours accumulated by supervisory or professional staff. The city is not required to provide compensatory time to these employees, and by their nature, these employees should not necessarily receive overtime compensation or compensatory time if extra hours of work are required. 

The city reimbursed the former City Administrator for miles driven in his personal vehicle commuting between his home and city hall.� There was no documentation indicating these reimbursements were authorized and they were not properly reported as compensation for tax purposes. 

Our review of police department procedures and activities disclosed various concerns.� A $500 cash bond collected by the police department is missing and it appears this money was not remitted to the municipal court.� Also, the police department took various actions apparently contrary to the municipal judge�s orders without getting documented approval from the judge.� We noted instances in which the police department released defendants without collecting the required bond amount, reduced the bond amount established by the judge, closed a warrant issued by the judge without collecting the bond amount, or released a prisoner early from jail.

Also included in the audit are recommendations related to the calculation of sewer bills, the monitoring of sales tax collections, procurement and expenditure policies and procedures, and travel expenses. The audit also suggested improvements in the city�s handling of restricted revenues, personnel matters, fixed asset records and procedures, and the municipal court.�

Complete Audit Report