Last Wednesday night the Park Ridge City Council took its first stab at cleaning up a mess made in 2008 by previous mayor Howard Frimark and the two previous City Councils, which we first wrote about in our 05.30.08 post, “Going Into Hock For New City Manager.”
The mess? A $350,000 interest-free loan to then-incoming city manager Jim Hock, on which Hock is now welshing.
Back in 2008, some “genius” – we’re not quite sure who exactly, although a safe bet would be Frimark – apparently concluded that a $165,000 salary, health insurance, defined benefit pension, the use of a car, free gasoline and insurance, and a variety of other perks weren’t quite enough to lure Hock to our cozy bedroom community from his home in Michigan. So the “genius” proposed a $350,000 interest-free loan with which Hock could buy a residence here.
We’ll call that “Mistake No. 1.”
That mistake was compounded when City Attorney Everett “Buzz” Hill drafted an “Employment Agreement” that provided for the interest-free loan but stated (on Page 3) only that the loan would be “secured by the home” – without specifying that the City’s security for the loan would be a “first mortgage” or “first position” security interest on that home. Judging from excerpts of the May 5, 2008 Council meeting minutes, then-aldermen/now mayor Dave Schmidt and fellow Alds. Rich DiPietro, Don Bach, Jim Allegretti, Robert Ryan, Tom Carey and Frank Wsol unanimously rubber-stamped that agreement without discussion, even though there is nothing in those minutes or in the Council materials for that meeting to suggest they even saw or read the actual agreement.
We’ll call that “Mistake No. 2.”
When Hock decided to buy a $550,000 townhouse and wanted/needed additional financing from a private lender, however, that lender demanded a first mortgage – notwithstanding that it was financing less than half the amount of the City’s loan. So the lender called City Attorney Hill with its demand that the City subordinate its security interest to the private lender’s.
And guess what?
Instead of informing the City Council of that demand and seeking its input, Hill inexplicably went straight to Frimark, who – without advising the Council – told Hill to make it happen. And Hill did so, with neither he nor Frimark giving the Council even the simple courtesy of an after-the-fact “here’s what we’ve done without consulting you” announcement.
We’ll call that “Mistake No. 3,” even worse than the first two because of the disappointing way Frimark and Hill concealed this key information about Hock’s loan from the Council.
Under pointed questioning by Schmidt last Wednesday night, Hill explained his first-mortgage faux pas with an almost surreal matter-of-fact wrong-headedness: Hill believed Frimark had the authority to give away the City’s first-mortgage position because the Employment Agreement provision Hill drafted and the Council approved didn’t expressly require a first mortgage; so Frimark’s putting the City behind the private lender wasn’t technically a “change” in the terms of the Council-approved agreement that needed additional Council approval.
None of this would have come to light but for the fact that Hock recently announced that he won’t be honoring his Employment Agreement commitment to repay the loan “within six (6) months of the date that [Hock] is no longer employed by the [City]” – because he hasn’t yet sold his townhouse. Hock wants more time to sell before he has to repay the approximately $288,000 of remaining loan principal due the City.
And an inexplicably accommodating City Attorney Hill promptly drafted – on the City’s (a/k/a, the taxpayers’) dime, not on Hock’s – a “Forbearance Agreement” which could give Hock up to an extra year to sell his townhouse, presumably at a higher price that would let him recoup more of his heretofore unsuccessful townhouse “investment.” But the terms of this new agreement are so squishy that even its arguably “toughest” provision (Paragraph 4, ostensibly giving the City the right to force Hock to accept or reject an offer) contains the squishy qualifier “reasonable,” thereby giving Hock plenty of legal wiggle room should push come to shove.
Call it Hock’s customized individual Troubled Asset Relief Program (“TARP”) bailout, compliments of City Attorney Hill and all us Park Ridge taxpayers whom Hock served with such distinction during his four year tenure that he was fired this past May by a unanimous vote of the Council.
After almost 50 minutes of discussion (from 0:50:30 to 1:40:44 of the City’s meeting video) during which the Council couldn’t even get a straight answer about whether what’s left of Hock’s $100,000-plus severance is legally considered “wages” that can’t be forfeited to further reduce his outstanding loan principal – a question that should have been answered back in 2008, and/or again when his new contract was signed in 2010 – a decision on signing the Forbearance Agreement was properly deferred.
That’s a good thing, because although Hock reportedly owes the City $288,000 and his private lender $133,000, neither Hill nor Acting City Manager Shawn Hamilton were able to produce any authoritative documentation of those purported facts. Meanwhile, Hock continues to live in his taxpayer-financed townhouse which is reportedly listed for $459,000 with no takers.
So a bad idea from 4 years ago, kept secret from the Council by Frimark and Hill until now, continues to insult us taxpayers.
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6 comments so far
Isn’t this fraud or negligence? It is truly unbelievable.
EDITOR’S NOTE: It seems to have been more a case of very bad judgment, followed by a cover-up.
I know this was four years ago but there is one question that I find striking. Schmidt voted for it without even a question????? I mean it is odd enough to think of the guy voting for something like this but with not even one question!?!?!?! Good lord the man seems to question everything (apparently his questions on Wednesday were even “pointed”), especially related to money. It just seems so out of character.
EDITOR’S NOTE: From what we’ve seen, Schmidt has learned a whole lot about all aspects of City government over the last few years, unlike a lot of his fellow public officials at the City – and at D-64, D-207 and the Park District – who seem incapable of learning or growing in their jobs.
What we find most disturbing about this situation, however, is the role City Attorney Hill played. We cannot conceive how a city attorney could not fully inform the Council about this situation.
PD:
All due respect but I just do not buy the whole “learned a whole lot” explaination.
You always bring up trying to understand the new Aldermen and their “pholosophy of government”. To me that what this issue is in a very basic way…..should the government (especially a small city government) be in the business of providing six figure zero interest loans to as a part of an employment contract??
PD, you and I are far enough apart on many issues that whe would probably have to use binoculars to even see each other, but come on!!!! We and I would have to agree that the answer to the above question is a flat out HELL NO!!!!!
I do not know the Mayor beyond a very few face to face short conversations so I am relying on the way he presents himself at council meetings and in his written word as well as interviews. Based on that, my impression of him and his philosophy of government is that he would not only ask many questions but do so loudly, perhaps while standing on a chair!!
EDITOR’S NOTE: Anon:
All due respect, but what exactly don’t you buy – that public officials can learn on the job?
If your model elected City official is Rich DiPietro – a truly wonderful gentlemen, by the way, who just never developed beyond go-along-to-get-along “Local Gov’t 101” in his almost 18 years on the Council – we might agree. Or like most of our other elected officials, especially in the days of the post-Marty Butler Homeowners Party, when folks came to the Council as blank slates and left with nary a chalk or eraser mark.
Back on 05.20.08 we questioned Hock’s deal. But there was no similar outcry from Schmidt or DiPietro. Or from Frimark alderpuppets Don Bach, Jim Allegretti, Robert Ryan or Tom Carey. Or from self-styled fiscal conservative ald. Frank Wsol. Or, for that matter, from you, Mr./Ms. Anonymous.
But Schmidt, who came to the Council as basically a Frimark guy, has consistently demonstrated the learning and evolution in the position one would hope for in a public official, including having the courage and the integrity to publicly admit his mistakes – as he did in his first couple of State of the City addresses. We haven’t seen that from anyone else at City Hall in the 20+ years we’ve been paying attention to what goes on there.
The real disappointment, however, is that our City Attorney – whose law firm has made well over $1 million in fees paid for by our tax dollars – would fail to disclose, if not effectively conceal, such significant information about Hock’s loan from the Council. And then, four years later, offer such a lame explanation for why he did what he did.
It is time to get a new city attorney.
EDITOR’S NOTE: Hard to say. But given this clear incident of what can only be described as concealment of material information from the Council, there’s probably a good reason to take a closer look at the true value of what the City is getting for its money; and to try to determine whether Atty. Hill may be too susceptible to “going native” with City officials – like he appears to have done with Frimark and Hock – and losing the objectivity and sense of duty to the City and its taxpayers that a city attorney should have.
The mistakes you document are pretty egregious, in my opinion. But, please note, the mistakes you document were not made by Mr. Hock. Mr. Hock’s mistake was to apply for and accept a job with a city whose leadership was incompetent, or stupid, or corrupt, or some combination of those traits.
As you probably know (but aren’t saying) it is relatively common for corporate entities to assist valuable executives in home acquisition when circumstances require them to move to a specific domicile address. I know of instances of corporations actually buying an executive’s previous home (with the intent, of course, of selling it, in time) to give an executive an easier transition in purchasing another residence.
When you consider the staggering cost of buying a home in PR (back before the collapse, especially so) this perk is not, to my knowledge and in my opinion, out of line.
But now, having suffered through working with our incompetent leadership, Mr. Hock finds himself out of work, publicly humiliated, vilified by all manner of persons and entities, and… due to our STUPID requirement that city executives MUST live in PR and, through no fault of his that our financial markets collapsed… Hock is underwater in no less than two loans, either of which could result in legal foreclosure, thus putting him and his family more-or-less on the street and facing years of legal and financial turmoil and potential ruin.
As much as you prate all sorts of regret about hiring him in the first place, I’m pretty sure he has a lot more regret than you do about leaving Michigan and trying to provide some measure of service here in PR. All I know about Mr. Hock comes from reading this blog… and rather than making me mad at him and his performance… I truly feel sorry for him and I hope he can hold out for a more promising future.
EDITOR’S NOTE: In our opinion, any Park Ridge taxpayer who “truly feel[s] sorry” for Hock has a faulty compass, or is a masochist.
Even though Hock got a sweetheart deal to come here, his buying a $550K townhouse with at least $480K of financing while the country already was in recession and he had only a one-year employment contract might not be so much a “mistake” as just plain bad judgment.
Hock did nothing to distinguish himself as city manager. He wasn’t even here 6 months before he started to shirk his duties and play political footsie with Frimark and his Alderpuppets, which helped produce million-dollar deficits and the kind of mismanagement that had him defying the Council’s budget cutting to keep the CP&D director on the payroll before cutting a sweetheart severence deal for her; or delaying his only outstanding hire, Alison Stutts, for almost a year – presumably while he continued to look for someone who wouldn’t make him look bad by comparison.
But Hock is a creature of government, where inept performance gets tolerated if not rewarded. And Hock’s reward from a Council still filled with Frimark’s alderpuppets in late 2010 was a contract extension and, worse yet, a nice fat severance benefit that would be the envy of almost everybody in Park Ridge – to go with his compensation that was double the median Park Ridge household income! Schmidt vetoed that extension but, not surprisingly, his veto was overridden by the Alderpuppets.
Do you also feel sorry for the City Attorney who basically lied – by omission – to the Council about Hock’s mortgage?
The city should buy it from him. We can store lost bikes there. Boom. Two birds. One stone.
EDITOR’S NOTE: Thinking outside the box is good. But Hock’s townhouse would be even more expensive than the cop shop project the City is committed to for next year.
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