Nicklas Consulting, LLC

Bill Nicklas, city manager of DeKalb, owns Nicklas Consulting, LLC. I did not know this until I read a complaint in which he is named a defendant. At the time of the discovery, I was the city clerk so I hesitated to address it publicly, especially when thinking of him as an abuser guarantees bias on my part. But a transparently biased view is better than not discussing these ethical issues at all, and it’s important we chip away at the impunity afforded some of our local leaders if we want to build a better local government.

So let me count the ways Nicklas Consulting is ethically problematic.

  1. The employment contract with DeKalb doesn’t allow side gigs. The contract states in three places that Mr. Nicklas is to work exclusively for City of DeKalb, with termination for cause an option if he engages in competing or other outside employment “without the express prior written consent of the Employer.” Since the employer is the city council, the approval would be hashed out in an open meeting, but this conversation has never happened.
  2. City of DeKalb policy reinforces the contract language. A rule from the employees’ handbook states city employees must obtain approval from their superiors to commence outside employment and to seek reapproval annually. Mr. Nicklas signed a form saying he had no outside employment, and then approved it himself. Maybe he suspended consulting activities for the city manager’s job, but the failure to discuss continued ownership prevented an evaluation of the appropriateness and potential consequences of maintaining the active status of the corporation. This is the council’s responsibility and purview, not Nicklas’.
  3. ICMA takes ethics seriously. The premier professional organization for managers in government, the International City/County Management Association, not only has crafted a strict code of conduct and ethics but also a structure for providing training, advice, and enforcement that can include public censure of members who violate the code. DeKalb city management do not pay dues to ICMA, but they are members of the state-level version of the organization, ILCMA, whose membership has adopted the ICMA ethics code. ICMA looks at outside employment the same way Nicklas’ contract and DeKalb’s personnel policies do: that outside work should be employer-approved in advance. The code furthermore states that conflicts of interest should be avoided, as well as even the appearance of conflicts of interest.
  4. The existence of Nicklas Consulting helps to create the appearance of a conflict of interest and partiality. According to the aforementioned complaint (that I hope you’ll read if you haven’t already) a developer who’s been a client for Nicklas’ services became a major investor in the TIF redevelopment project that replaced another TIF redevelopment project called 145 Fisk after Bill Nicklas convinced the city council to revoke its preliminary approval of Fisk. If Mr. Nicklas had dissolved his corporation upon accepting the manager’s position, he’d have provided less fodder for the plaintiff.
Continue reading Nicklas Consulting, LLC

How to “lose” TIF documents

***UPDATE 4/8/2021: After writing the original post, I decided to phone the Public Access Counselor (PAC) of the Attorney General’s Office to discuss possible Open Meetings Act implications of the incident described in it. Following the discussion, I filed a Request for Review and today I was notified that the PAC has accepted the request. Below is a copy.


Original post:

The TIF forensic assessment revealed that City of DeKalb was unable to locate documents the auditors asked for, even basic records like invoices. We will never know whether the city lost invoices or just paid the developers without bothering with them. But here’s a clue: careless handling of contracts worth more than $180,000, to be paid out of TIF funds, occurred during a council meeting just last week. At minimum, the handling lowered their visibility.

Consideration versus Resolution

The March 22, 2021 DeKalb city council meeting agenda has separate sections for considerations and resolutions. Here’s the first consideration:

1. Consideration of a Contract with Gehrke Construction for the Repair and Remodeling of Fire Station One in the Amount of $139,205.00.

And here’s the first resolution on the same agenda.

1. Resolution 2021-023 Approving a Second Addendum to the Non-Exclusive License Agreement for the Installation of Underground Fiber Optic Facilities within the Public Right-of-Way (Dated June 15, 2010) for the Expansion of the Annie Glidden North Broadband Infrastructure Project.

Two things distinguish a resolution from a consideration: level of detail and a unique identifying number. A consideration is a discussion item only, meant as a way for city staff to take direction from the council on next steps, which might eventually include a resolution. A resolution, on the other hand, is an action item and is a detailed document by necessity. It must have a title detailed enough for a reasonable person to understand what council is voting on, and more details in its body, such as authorizations and other assignments for executing the action.

Continue reading How to “lose” TIF documents

‘There was no felonious activity’

The headline is a quote from City of DeKalb’s latest budget meeting, a joint meeting of city council with the Finance Advisory Committee held last week. Alderman Carolyn Morris asked about following up on findings from the TIF forensic assessment . The city manager and the FAC chair responded that no laws were broken, no “felonious activity” occurred, and that was pretty much that.

Let’s take a closer look at the statement that no laws were broken. If a city makes transfers from its TIF fund to its general operating fund to reimburse for staff time spent working on TIF projects, but then inflates the transfers beyond fair reimbursement to “bail out and make the General Fund look better,” as the city manager has aptly put it, these actions run counter to the TIF Act. Criminal penalties may not attach, but committing zero felonies doesn’t equal law-abiding. Taxpayers and taxing bodies got cheated out of returns on TIF projects so city government could enjoy a larger workforce than it could otherwise afford. The loss is real, large, and a result of ignoring rules to work a staff agenda. Don’t let anyone minimize it.

Continue reading ‘There was no felonious activity’

TIF forensic assessment tells us how DeKalb operates

The promised forensic audit report (now being called a forensic assessment for some reason) of City of DeKalb’s tax increment financing funds has been released by the DeKalb County State’s Attorney’s Office.

The report details miscalculations, missing documents, and other failures of due diligence occurring across the 10-year period examined.

Much of the fireworks over TIF began when members of the Joint Review Board that oversees it, particularly our school district, began questioning the size of transfers from TIF funds to the General Fund, the city’s chief operating fund, to cover administrative costs.

The report includes the document below, which accounts for 2018’s originally intended $791,744 transfer amount. You can decide for yourself whether all these people were “administering” TIF. DeKalb ultimately settled on $160,000 in transfers for 2018, and for this year has budgeted $15,000, so apparently even the city no longer thinks so.


The good news is the transfers began shrinking in the sunshine. The bad news is the assessment tells you just about everything you need to know about how DeKalb operates, always. If you look at the dates of missing invoices and proofs of service, for example, you see that it’s not just one or two years where missing documents are a problem; it’s spread across the entire 10-year scope of the assessment. It’s true today, too — I can confirm from my “look behind” information requests that documentation related to licensing comes up missing with some regularity.

What the TIF transfers did were to enable the city to retain more staff than it otherwise could have. In the fiscal 2008 budget the transfers came to $350,000 and the stated goal was to reduce them to zero by 2013. This didn’t happen because the Great Recession happened and they abandoned the plan. In 2010, the city was in a hole and the TIF transfers topped $1 million. In target year 2013, transfers helped fuel a nascent hiring spree that ended with another hole in 2018.

The transfers are virtually down to nothing now, but there’s still a chart similar to the TIF transfer chart and it’s also for deciding how much of employees’ wages should come from another city fund — the Water Fund. The assistant city manager recently confirmed for me that about $370,000 is charged to Water to pay employees who work in other city departments/divisions/offices.

More later.

Prevailing wage verification is up to us

Perhaps you’ve seen the big inflatable rat downtown, or read the article published by the Daily Chronicle that explained the current union protest of John Pappas’ hiring of nonunion painters to finish the Cornerstone development project.

The reporter didn’t say whether he confirmed nonunion hires, though the union seems sure. Legally there’s nothing wrong with hiring nonunion, as long as the developer pays prevailing wage since he is receiving public money for the project.

A rep for the union has told me they are looking into potential prevailing wage issues.

To be clear, if Mr. Pappas is using nonunion labor, it doesn’t automatically mean he is not paying the workers prevailing wage. However, since hiring nonunion is one way to save money, to me it’s a good enough reason to verify the payroll. In fact, as far as I’m concerned, we have three million reasons, the amount of the TIF development incentive, to verify that Mr. Pappas is satisfying the conditions of his contract with City of DeKalb.

Just don’t ask the city to check up on him. Continue reading Prevailing wage verification is up to us

DeKalb playing favorites with the bandit in the castle

Cohen Barnes owns a building in downtown DeKalb under the name “The Bandit’s Castle, LLC.”

So he’s a bandit who bought a castle. Is this like the tv shows where the psychos leave little clues of their crimes? The imagination runs wild.

The thing with bandits is that, by definition, they belong to gangs. This is more or less what we saw last night, with City of DeKalb enabling Mr. Barnes to return to council to grab more TIF money since his rehab job on the Castle, for which he obtained a development incentive of $400,000 last spring, has hit a snag.

What’s the snag? Nobody anticipated that a 100-year-old building could have water damage and asbestos. No inspection was done, and no money for contingencies was set aside. It’s municipal malpractice, is what it is.

But due diligence doesn’t matter, because the city checkbook is simply always open for Mr. Barnes.

Many thanks go out to Aldermen David Jacobson and Mike Verbic, who voted against the double dipping. (Alderman Pat Fagan recused himself.)

Y’all folks in the Third, Fifth, and Seventh wards have a year to find replacements.

Going deeper on DeKalb Public Library’s expansion and promises

The main thing you need to know is that DeKalb Public Library made promises to DeKalb property taxpayers in 2015, and now is considering breaking its promises. But I couldn’t resist putting together some FAQs for anyone who might like more details.

How much did the expansion cost?
Total cost was $25.3 million. At center was an $11.6 million Illinois State Library construction grant, along with funding from a mix of public sources (e.g., TIF funds from City of DeKalb), loans, and private donations to DeKalb Public Library (DKPL). State grants involve a local match, so part of the non-grant funding covered the local share. Non-grant funding also paid for extras that were not eligible to be covered by the grant.

What was the delay of grant funding about?
The library construction grant is released in four stages based on percentage of construction completed. If a portion of a grant isn’t released during a given fiscal year, it must be re-appropriated the following year. The library received chunks of the grant at 30% and 60% project completion, but release of monies for 90% and 100% completion were delayed during Illinois’ budget impasse. The outstanding amounts, totaling $4.6 million, couldn’t be re-appropriated until passage of another state budget.

Was there a real danger that the grant money would never be released to the library?
Probably not. According to DKPL, the state had already issued bonds specific to the construction grants, so they couldn’t be used for anything else. It was just a matter of re-appropriation when Illinois started passing budgets again. The immediate threat was a shutdown if the library couldn’t find a way to keep construction going. A shutdown of any length would have been expensive in its own right.

Why has controversy cropped up now?
In January, the state released the rest of the grant except for a final installment of $1.1 million. With millions now in the bank, DKPL faces the decision to keep the money or to keep its promises of 2015. At issue is abatement/rebate of some $971,000 back to property taxpayers, and the removal of the emergency property tax levy of $500,000. People who attended library board’s recent special meeting saw the board “leaning” toward remitting only a partial rebate and keeping the levy for operations. Either action would break a promise.

Property tax scenarios the library is considering. Trustees appear to be leaning toward scenario 2 or 3, but only 4 fulfills the library’s promises to DeKalb residents.

Were there alternatives to a bank loan, and/or a property tax levy increase to cover it? Continue reading Going deeper on DeKalb Public Library’s expansion and promises

TIF spending for streets in FY16 did not come anywhere near what DeKalb is claiming

The setup: During the special Committee of the Whole meeting of Monday evening, DeKalb council members were discussing with staff a proposed budget reduction in 2018 for the street improvement program in our two TIF districts, specifically a staff recommendation to cut in half the usual $1 million budgeted for streets in the TIFs. During the course of this discussion, Alderman David Jacobson asked whether the money budgeted in the TIFs for previous years actually got spent. Here’s the actual transcripted exchange:

Jacobson: One other question, only because it was something that was brought up this afternoon to me. I know there was a question last year about– I think it was in the 16-and-a-half budget, if I’m correct, that the council asked for a million-dollar budget in the TIFs for road expenditures, and there was some question as to whether or not that was ever spent?

Public Works Director Tim Holdeman: Absolutely, that was spent. That was in our road program for this year; we have completed that street maintenance, both in TIF 1 and TIF 2 districts. I don’t have the final numbers, but it’s very close to a million dollars. It bid out at about $990,000. So with the engineering, we were right at– we were a little bit above a million, but we could supplement that with Fund 50, so…[crosstalk]

Jacobson: And was that the same in ’16 as well?

Holdeman: For ’16?

Jacobson: The full million for ’16?

Holdeman: Yes, that was the same for fiscal year ’16, yes.

Holdeman’s comments make it sound like the city spent $1 million out of the TIF funds in FY16, another $1 million in FY17, and maybe something in between, during that six-month budget period they call FY16.5. But these claims are not demonstrably true at this point. The FY16 audited numbers are available, and as I reported earlier this year,* the TIF reports filed with the Illinois Comptroller show that not quite $115,000 was spent in the TIF districts on street improvements during FY16 — nowhere near the budgeted $1 million. Continue reading TIF spending for streets in FY16 did not come anywhere near what DeKalb is claiming

Where the city’s interest in Annie Glidden North comes from

***Update 8/12*** Added city manager Anne Marie Gaura and fixed clarity issues.

As our city council prepares to discuss a revitalization plan proposal for the Annie Glidden North (AGN) section of DeKalb, we should be aware of the possibility of a “done deal” already worked out by NIU and private interests, promoted by city staff who are ready to sell it hard. As I’ve already explained:

Emails obtained from NIU via Freedom of Information Act requests reveal that in spring of 2014, then-NIU vice president Bill Nicklas met at Campus Cinema with Chuck Hanlon, principal urban planner with Wills Burke Kelsey Associates, and arranged for Hanlon to create “a proposal for us that looks at the commercial strip along Hillcrest and Blackhawk, as well as a wider area in all directions to envision a different neighborhood.”

A hypothesis that the city has already secretly bought into a plan certainly fits with its top-down approach in the matter so far, and would help explain the exclusion of DeKalb Park District and other interested public bodies from discussions of the proposal.

Anyway, there are a lot more of these emails. Coming mostly from the account of then-NIU vice president Bill Nicklas, they trace growing involvement of Nicklas and other public officials in private redevelopment and city rezoning issues from late 2012 through much of 2014.

This business involved “Neighborhood 3” of the three neighborhoods identified collectively as Annie Glidden North (AGN), so our purpose is to look not only at how city players have operated generally, but also at how events in the past might be driving today’s behavior.

Heads up: This post is longer than most, and I’ve placed an album on Facebook containing about two dozen of the emails in a timeline that contains even more details. It’s kind of a project to read all of it, is what I’m saying. Continue reading Where the city’s interest in Annie Glidden North comes from

More Reasons to Put the Brakes on the STEAM Center Project

Several of DeKalb’s city council members balked at making financial or other commitments to the STEAM center project until they have in hand a thorough analysis of its most important source of funding, the soon-to-be-retired Tax Increment Financing (TIF) districts.

Even the most worthy projects are subject to resource limitations, so a peek into the municipal wallet and thoughtful prioritization make good sense, and are probably the most important reasons to apply the brakes.

But there are other reasons, too. Here are three of them.

1. It’s not our job. It’s not automatically the duty of the city to pick up the slack on an NIU project, especially one that NIU itself has decided it can’t spare a dime for. Public safety and infrastructure are supposed to be the names of our games, but now the consultant and administrators are broaching consideration of involvement in site selection, governance, even operations. Boundaries, people.

2. The push is premature. This is a top-down pet project headed by city administrators who have clearly done most of the work, and last week’s special meeting was clearly about hard-selling our new electeds into supporting it. But there is no sign of any corresponding surge in public support. No organization has stepped up to pledge financial support for its construction and operation. It’s an entirely backwards process, which bodes ill for fundraising efforts. If STEAM gets approved at this point, we will all get stuck with the bill.

3. The TIF goal is unclear. As proposed, the project tells us little about ROI, which in a TIF district means raising EAV in the district. In fact, at least initially it would do the opposite, by taking another large property off the tax rolls.

I want to note that counil members David Jacobson and Michael Verbic have asked for financial analyses before (Verbic as a Financial Advisory Committee member), and they’ve been completely ignored in the past. The unified insistence on the TIF analysis is a welcome move, and I hope it means this council aims to reclaim its full authority in stewardship. Fingers crossed.