The ongoing dispute between the City of Cambridge and Cambridge Waterfront Development Incorporated (CWDI) took a significant turn recently. Yesterday, Richard Zeidman, a CWDI board member whom the city had insisted should resign, stepped down from his position.

Equally noteworthy is that both parties have agreed to submit their issues to arbitration. This decision was confirmed after a CWDI meeting, where Cambridge Mayor Stephen Rideout provided WHCP with an update on the situation.

“We are going to be going into mediation to address all of these issues,” Mayor Rideout stated. He emphasized the importance of including the change in the articles of incorporation in the mediation to resolve all matters of controversy simultaneously.

When asked about the sudden move towards mediation, Mayor Rideout mentioned that the lawyers suggested it, and he agreed, recognizing the necessity of mediation to resolve the ongoing issues.

Mayor Rideout, a retired judge, expressed cautious optimism about the mediation process. He believes that resolving these issues is crucial for the betterment of Cambridge, anticipating that the development will benefit the city and its citizens.

The mediator, a retired judge with expertise in real estate, has been identified and is trusted by both CWDI’s and the city’s legal counsel.

As a result of these developments, the city’s plans to modify the charter that established CWD I have been put on hold. Both parties will request the judge overseeing the lawsuits and counter-lawsuits to stay those proceedings as they move into arbitration.

This agreement marks a pivotal step towards resolving the long-standing dispute, with hopes that it will lead to a positive outcome for the future development of Cambridge’s waterfront.

As tensions over control of the Cambridge Harbor development have intensified in these last two weeks, state officials are pressing Cambridge city leaders and members of Cambridge Waterfront Development Incorporated to resolve their conflicts. 

State Representative Tom Hutchinson said he was on a cruise in the Caribbean when his phone heated up with text messages about the simmering dispute when he returned. He organized a meeting last week with Mayor Steve Rideout, Ward 1 Commissioner Laurel Atkiss and CWDI president Angie Hengst and board member Frank Narr.

“I asked if the city and CWDI, respectively, would mind getting together to talk, and both sides thought that would be a good thing,” Hutchison said. “And so we just scheduled an informal meeting and we sat down with the mayor and Laurel and Angie and Frank and myself, and it gave us a great opportunity to open up some dialogue and figure out how we’re going to move forward with this.”

Hutchinson said Jake Day, secretary of Maryland’s Department of Housing and Community Development, was particularly concerned about the growing conflict over Cambridge Harbor, which the state has invested with millions of dollars in grants. Hutchinson said Day was pleased the sides had at least come together.

“This is a big project for the state and I had talked to Secretary Day about all of this as well and he was concerned,” Hutchison said. “So it was a good start and probably within the next 30 days you’ll be hearing more great things coming out about the project.”

Hengst said she left the meeting with a positive feeling. She said details of the talks were confidential, but she did acknowledge that CWDI had agreed to put out a request for proposals to master site developers.

That was a requirement of the 2022 property transfer agreement with the city. That agreement also states that CWDI must publicly post for 30 days summaries of all developers’ proposals and must select a master site developer before any of the city’s donated land can be sold or transferred.

 CWDI has yet to comply with those covenants, but is preparing to sell city donated land to yacht maintenance company, and to a still unannounced hotel company.

Atkiss said it remains to be seen if CWDI will address those covenants. One thing the mayor agreed to, she said, was to wait before enacting his corporate amendments to CWDI. He originally allowed 10 days for public comment after his April 16th announcement, but Atkiss said he has agreed to allow CWDI to consider accepting them at their May 22nd meeting before he enacts them in his role as the corporate member of CWDI.

“There’s a real push by the state to make sure we come back into alignment and start working together to really make sure that everyone knows what’s going on,” Atkiss said. “The state and the city included just clear up a lot of the disagreements and lacks of clarity. So I can’t say a whole lot about what to expect next because there’s some kind of things that we both have to do moving forward, but it was a positive meeting.

“A lot of discussion was had about expectations and what’s considered reasonable moving forward, and I think we’ve started a dialogue that’s going to be very healthy and very productive, which is something I know we haven’t really seen before, Atkiss said. “There is a requirement from the state that a true RFP be issued for the second phase of this, where outside of yacht maintenance and the hotel, that’s the first phase that they’re still looking at. So for this second phase coming up there is going to have to be a specific RFP process and they are going to have to share that information going forward. So that’s something that I know everybody’s going to feel good about and we should have a sigh of relief that there’s been some clarification there of what is expected there and it’s very defined and that should give us all some insight that we haven’t had before.”

Participants in the meeting said they’re hopeful – but not certain – the ongoing meetings will prevent a court battle between Cambridge and CWDI. Cambridge has set aside $500,000 for the potential court case.

“I can’t predict anything in the future, but that is my objective that we can work together as partners as we all are,” Hutchison said. “It’s a four-way partnership between CWDI, the city, the county, and the state, and that I believe it’s best that the parties speak to each other and we don’t do it through an expensive legal process.”

In the most recent exchange, lawyers for CWDI threatened to take the city to court even before Mayor Steve Rideout announced on April 16th his proposed changes to CDIs charter. His changes would make CWDI give the city access to its documents, assert the city’s right to remove appointees to the board and make CWDI responsive to city leaders Directions. 

Responding to C WDI i’s attorneys the city’s special counsel stated that CWDI is already out of compliance with covenants of the city’s 2022 property transfer agreement when it created a holding company and transferred city property to it. 

Attorney Timothy Maloney gave CWDI until Friday to produce proof that it had put out a request for proposals, make their summaries public, and selected a developer.

Rideout said the city will not relent on the conditions of its transfer agreements but declined to comment further. Narr did not respond to requests for interviews.

By Jim Brady
WHCP Radio

Last week the news of Tom Carroll’s resignation spread throughout Cambridge quickly. The highly respected city manager made it official that he would step down as the city’s chief administrator in May after only serving 22 months in office. Added to this bit of disruptive news was that Carroll made no bones about that he was leaving due to the direct fact that he had lost confidence in the nonprofit Cambrige Waterfront Development Inc. leadership and its plans to develop the Cambridge Harbor project.

This was clearly on the minds of the Spy’s Dave Wheelan and WHCP Community Radio’s Jim Brady as they continued their series have frequent check-ins with Mayor Steve Rideout.

This video is approximately 15 minutes in length.

 

 

 

Maryland will not use sanctions against Dorchester County, following assurances from county finance officials that the pending financial audits for FY 21 and 22, which have been long-standing concerns, are nearing completion.

During Tuesday’s county council meeting, council president Lenny Pfeffer confirmed that a combination of an independent audit firm, consultants, and county staff are close to finalizing the oldest missing financial audits.

“We are informed that the financial audit for fiscal year 2021 is 99% complete, with just around two more weeks needed for the final submission,” Pfeffer commented. He expressed optimism that this progress would pave the way for timely completions of the audits for fiscal years 2022 and 2023.

Pfeffer went on to detail a series of challenges that stymied the county’s efforts in ensuring timely audit submissions. Key staff departures, coupled with Dorchester’s salary caps making replacements difficult, posed significant hurdles. The county’s transition to a new accounting system, which lacked adequate training, further compounded the problems. A particularly concerning event was a ransomware attack on the county’s computer system, forcing the destruction of 24 data servers to safeguard the personal information of Dorchester’s residents.

Acknowledging the oversight, Pfeffer stated, “The responsibility for not meeting audit submission deadlines rests with the county council, both past and present. However, our present council recognizes this and has prioritized rectifying the situation.”

Reassuring the community, Pfeffer emphasized, “No funds are missing, and there’s no sign of any criminal activity. Dorchester County continues to meet its financial obligations and maintains a good rapport with local banks. We’ve been transparent with state officials about our progress.”

As part of its ongoing efforts, the county has engaged a second audit firm to speed up the process for fiscal years 2022 and 2023. Furthermore, the National Government Finance Officers Association has been contracted to conduct a thorough review of the finance department, ensuring all best practices are in place.

Pfeffer concluded with a plea for understanding, “We urge our residents and stakeholders to be patient. We’re dedicating all necessary resources to address these issues and learn from past mistakes.”

By Jim Brady

 

Dorchester County’s government has failed to submit legally required annual financial reports and audits since 2020, and now the county is facing consequences. 

On August 4th, the ratings firm, Moody’s Investor Service, published a notice that it was placing Dorchester County on review citing a lack of financial information. Moodys said, if it does not see up-to-date financial information within 30 days, it may de-list Dorchester County from any credit rating.

And the Maryland Office of Legislative Audits, which oversees and collects these audits states and guidelines that failure to submit current audit reports on time can result in all state money, grants and aid to the county being discontinued. 

County officials now say they’re frantically scrambling to assemble years of financial statements and audits, and they say the problem was something they didn’t much discuss until recently.

“This is priority one. Since the start of this council, basically January 1st,” says Lenny Peffer, president of the new County Council. “We have thrown a fair amount of extra money into this trying to get every person and firm that we can to help us with this situation. This is not something that we’re taking lightly. This is not something that we’re just saying, ‘Hey, this is a rebellious action of Dorchester County not to do this.‘ It was just a whole cascading number of issues.”

County leaders have cited multiple problems that hit them in 2020. The county struggled with a new accounting software system, then Covid hit along with a sudden exodus of senior staff in the finance office. Then computer hackers locked the county out of its own records. 

Dorchester recently has gone through four or five finance directors depending on who you ask, and ever since 2020, Dorchester has not had a full-time dedicated county manager. 

Even so, Mike Spears, who retired last year as the county’s longtime finance director, said the situation is incredible.

“At one point I was told by the auditor, well, we’re two weeks away from a financial statement, so I can’t imagine that we are here in August of 23 and I left in November of 22 and we’re still not with a 21 audit.”

If you’re wondering how years of failure could take place without any notice to the public, consider the path one local resident took to discover some answers. 

Last year, Gene Lauer, a Cambridge resident, was working with a group called Dorchester Citizens for a Better Government on a charter petition. He heard mention there could be things to discover regarding the county’s finance department. 

Lauer, with 40 years experience himself as a county administrator in Prince George’s County and as county manager of Charles County, was intrigued. He contacted Dorchester County and filed a public information request. 

Among the documents he received was something that was not posted in the 2020 financial statements on the county’s website. It was a report to the commissioners from the auditors citing serious deficiencies in the county’s accounting and other departments leading to inaccuracies delays and faulty records.

“They also had 17 pages of correcting journal entries made worth about 27 million. I’ve never seen anything like that in my 40 years in government quite that bad. Checks not deposited for up to three years. I mean, this is mind boggling stuff. 

“So my review revealed was rather shocking when I looked at what the auditor’s comments were on FY 20, which plays into why they probably haven’t been able to have an audited financial report for 21 and ultimately, I guess beyond. 

“They cited in the auditor’s report material weaknesses. Now, auditors classify weaknesses by three categories. Material is the worst. They also identified, basically, its lack of internal checks and balances and controls that you got to have to make these financial statements accurate.”

“This is very fundamental stuff. Every government does this, and it was very shocking to see these kinds of comments. So this is all perplexing about what really who was advised of what actions were taken. The former finance director was very frustrated. He had staff turnover. He mentioned software. I said, well, has the council been directly advised about this? And I think the answer was, no.”

There were also records of the previous county council President, Jay Newcomb, explaining to state officials why the 2021 finance report would be even later. In his September 30th, 2022 letter to the office of Legislative audits, Newcomb stated that the county anticipated completing the fiscal year 2021 audit by December of 2022.

 He wrote, “Dorchester County is committed to ensuring that all future audits are completed and submitted to your office by the due dates.”

However, that didn’t happen. The promised 2021 report remains outstanding to this day. Not only that, but Dorchester County has failed to submit any report for any year since 2020. 

Do you think this could have an effect on the bond rating?

“Yes, I do,” Again, Eugene Lauer. “I can tell you that first of all, if they downgrade whatever the bond rating is or just delist it, you’ve got bond holders holding these bonds. Now they’re going to be paid out their interest when the bonds become due and presumably the face value. But what it can do is devalue the bonds if they want to sell those bonds before they come due. So the implications of that, you would think there could be some very unhappy bond holders.

“And essentially the lower your credit rating, the more interest the issuer. In this case, the county would have to pay on its bonds or capital leases, and that is not a good thing.”

The current county council and management say they have been inherited a disaster and they’re working to fix it. Interim county manager Jeff Powell listed an array of efforts.

“We brought in a second CPA firm to help catch up. We’ve had consultants, additional consultants in besides the audit firm. We’re doing a GFO, a Government Finance Officers Association study, on the finance office and procedures and best practices that haven’t been being done. We’ve staffed up, we’ve got some new staff in there. We’re throwing every resource we can at it.”

The situation with the county’s finance department –  high staff turnover, lack of accountability, missing leadership, scant oversight –  raises questions about a continuing culture of half measures and temporary personnel substituting for thorough policies and experienced professionals in key positions in Dorchester County government. 

Spears, who served as finance director for 27 years, said attracting solid candidates for the finance department and making sure they stay is exceptionally tough for Dorchester, whose constrained tax base means salaries are among the lowest of any county in Maryland.

“A lot of it is tone at the top. You’ve got a really top-notch county manager and really top-notch HR person that can help with recruiting. I think you can overcome sometimes some of these lower pays.”

When asked if part of the drive for a charter amendment was to cure the problem with the county manager, Lauer said yes. 

“Yes. Several things. First of all, it’s clear that very short-lived county managers, interim county managers, potentially unqualified county managers for that kind of position. I’m not talking about anybody currently on the scene. 

“Council interference in the operations of government, firing people without reason, we believe has created a severe morale problem in the government that prompts this kind of turnover.” 

“So I’ll draw a contrast to the city of Cambridge,” Lauer said. “We’ve had three city managers now it’s moved the city along wonderfully. The city manager we have now who I have a lot of respect for, he came from Ohio. He’s amazing with the options alternatives. He provides very reasoned decisions. A county manager, let’s say, with those kinds of qualifications and credentials, would be on top of this thing. The minute something occurred.

“The laxness, the inability to follow through to have and follow rigorous accounting and financial management procedures is very concerning and something I’ve never seen anything like that in my time.”

When asked about the 2020 report and possible alarm bells, Lauer agreed. 

“Yes. That should have set off immediate alarm bells and somebody asking, what are we doing for fiscal year 2021? 

“This is a big thing, not being able to produce an annual financial report so that citizens are assured everything is on the up and up, that they’re getting accurate information, and that the council’s basing its decisions on accurate information. That’s a big deal.”

Council President Pfeffer said the county commissioners who were in the previous administration were unaware of the 2020 auditor’s critique. But nobody could explain why they didn’t notice for years that the county’s annual audits were either late or never showed up. 

Pfeffer said, none of that makes a difference now.

“Do I take responsibility? Absolutely, 100 percent, ” he said. “I was on the council then I’m the president of the council. Now, I’m not trying to shirk any of my responsibilities or fault with this, but we’re just hoping and asking for understanding from the state and the other stakeholders to work with us. Again, this is nothing we’re trying to hide from anybody. What’s current is available on the county website? Anything that’s not current, that’s not there, it’s not available yet, but we’re not trying to hide this at all, but it’s just a fact. That did happen and we apologize for it.”

By Jim Brady