Englewood City Council debates path amid claims about EEF corruption

Council considers audit, restructuring of Englewood Environmental Foundation

Posted 11/15/18

Months of scrutiny over claims of various kinds of financial malfeasance in the City of Englewood — over a nonprofit body that's private but run by city officials — have come to a head, with city …

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Englewood City Council debates path amid claims about EEF corruption

Council considers audit, restructuring of Englewood Environmental Foundation

Posted

Months of scrutiny over claims of various kinds of financial malfeasance in the City of Englewood — over a nonprofit body run by city officials — have come to a head, with city staff advocating for looking into the claims.

“To be frank, some of the charges of embezzlement, corruption and illegal contracts we've heard are damaging to the reputation of the city,” said Dorothy Hargrove, Englewood's interim city manager, at an Englewood City Council study session Nov. 13.

The city must take action, Hargrove said, “to clear Englewood's good name.”

The council has seen repeated citizen accusations surrounding the Englewood Environmental Foundation and Englewood McLellan Reservoir Foundation — nonprofits commonly known as “EEF” and “EMRF” — that oversee property that the city has varying degrees of control over. EMRF has faced scrutiny, too, but the council considered changes to EEF specifically at the study-session meeting. The concerns center around alleged actions of past city officials.

City staff recommended the organization undergo a forensic audit that could examine mismanagement or alleged criminal behavior. Another option would be a performance audit, which evaluates the effectiveness of how an organization runs. The council could seek an audit for both forensic and performance matters, according to Hargrove.

Claims surrounding the two nonprofits abounded during the Sept. 18 election that sought to recall from office Councilmember Laurett Barrentine, who pushed for a forensic audit early this year, she said.

Legally separate from the city, EEF isn't bound by city government policies, a point Councilmember Rita Russell touched on at the meeting.

“They just need to follow the same policies that this city has in place,” Russell said. “I believe we probably would not have gotten in trouble if we had followed those policies.”

Thus far, alleged mismanagement hasn't been proven, but the council is debating the best way to address mounting concern.

'We cannot abandon EEF'

Multiple councilmembers expressed a desire to audit EEF's entire history, going back to its formation in 1997. The city created it to oversee redevelopment of the former Cinderella City mall into the CityCenter Englewood site, in the areas along Englewood Parkway east of South Santa Fe Drive, and to “shield the city from potential environmental liability” from issues including asbestos and gasoline contamination coming from nearby property at the time, according to a city fact sheet.

Although it's a separate entity from the city, EEF's governing board consists of the directors of the city's Public Works, Community Development and Finance departments, according to the city.

Mayor Linda Olson recently expressed a desire to look at restructuring EEF and EMRF. Hargrove pointed out at the meeting that it's not possible to make drastic changes.

"We cannot simply abandon EEF as it stands now," Hargrove said. "No matter what we think of the origins of the corporation, it is a legal entity."

Replacing EEF's current members by placing city councilmembers on the board could create oversight that has “clearly not been as strong as it has been in the past,” said Hargrove, adding that “some basic checks and balances are missing.”

A newly structured EEF board, rather than city staff, should oversee the audit, Hargrove said, but councilmembers balked at the idea of sitting on the board.

Olson wanted to examine what the other options would be — the federal Internal Revenue Service's designation of EEF as a nonprofit requires that the board be city employees, Hargrove said.

Entities similar to EEF exist in the metro area, Olson said. The City of Denver has had close ties with the private, nonprofit Stapleton Development Corporation, which was created to facilitate redevelopment of the Stapleton area, according to a 2000 Colorado court case. Two of the members of its board of directors are a Denver official and Denver city councilmember, according to the case.

A majority of the council voiced support for seeking an entity to perform an audit. Barrentine, the council's foremost advocate for examining EEF, said she was not in favor of moving forward with the audit unless the city hears advice from outside legal counsel. Russell also wants an outside legal opinion, she said.

Barrentine said she wants outside counsel in order to avoid a legal conflict of interest. Barrentine wanted information on options for who can sit on the board.

'Misstating what report said'

Olson said rhetoric surrounding EEF has been “stirred up by people who have intentions.”

“We had a criminal investigation on this,” Olson said. “We had a (DA's office) come back and said they found nothing, and if there were (crimes), the statute of limitations” would make legal action impossible.

The 18th Judicial District Attorney's Office did not absolve the city, Barrentine said.

“I am really tired of the mayor misstating what report said,” Barrentine said.

Barrentine's campaign website during the recall election said a report by the DA's office said there were “credible accusations” of practices such as improper payments and giving work to friends. A report by the DA's office in April 2017 centered around alleged practices of a previous public-works director for the city.

The report looked into the allegations to determine if a criminal investigation would be warranted, but the report itself was not a criminal investigation. Englewood's then-assistant city manager brought the matter to the office's attention. The report said an investigator believed a certain interviewee to be credible, but the report did not specifically say the person's accusations were credible. For instance, the person had “no concrete evidence” the previous director was “getting any kickbacks,” the report said.

That director, also a former board member for EEF and EMRF, said a company that was awarded a contract for maintenance of the CityCenter area was operated by a person whom he had known for years, and with whom he had played and coached hockey.

Based on interviews with several city employees and administration, the DA's investigator wrote that the city should have discovered the possibility for misconduct related to the allegations “as early as 2012” and that the statute of limitations — the period when legal action could be taken — had run out for any alleged crimes.

“I had no evidence to support any wrongdoing or criminal activity,” the investigator, Brian Ahlberg, wrote.

“It isn't illegal to waste the taxpayers' money,” Barrentine has said. Broadly, EEF and EMRF are not funded through Englewood's general fund budget, but the city does pay to lease the civic center from EEF.

The city has also faced claims that it lied about EEF's tax-exempt status. A “private ruling” issued by the IRS in 1998 deemed EEF tax exempt — as an “integral part” of the City of Englewood — according to the city. A copy of the IRS letter is attached to the Nov. 13 study-session agenda on the city's website.

Englewood Environmental Foundation, EEF, Englewood McLellan Reservoir Foundation, EMRF, Englewood Colorado, Englewood financial, Englewood City Council, Laurett Barrentine, Linda Olson, Ellis Arnold

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