October 29, 2009

Secret votes, altered records and a $650,000 claim
... just another day at City Hall

City government may have invented a mind-bending new way of conducting business: Time travel.

The city's Loan Board of Review - a committee of city staff that watches over city loans - managed the feat earlier this year when it voted in July, but took action a month earlier, according to city records.

The board's quantum leap involved a low-income apartment building and a controversial loan agreement between the city and Racine developer Jim Spodick.

Reviewing city minutes shows the Loan Board of Review voted unanimously June 18 to "accept a final payoff of the loan on 255 N. Memorial Drive in the amount of $635,000." Spodick owned the building in question - the Wilmanor Apartments - and asked the city to reduce the amount of the payoff loan on the low-income property by $200,000. (More on the significance and back story of the vote below.)

The vote appears to be straight forward until you look at minutes from the board's July 16 meeting. There you see three things:

1. The board took up Spodick's request again (even though it seemingly dealt with it in June).
2. The board voted on the item by email, which is illegal under state open meetings laws. (All government votes have to take place at a public meeting.)
On June 30, via an electronic poll, the Loan Board of Review recommended that no discount on the loan amount be given based on the relative value of the property to the loan, and that there be a $40,000 discount on the loan to $635,000, based on the early payoff.
3. The board actually voted to defer action on Spodick's request in June (meaning it didn't actually vote on the item, as the June minutes suggest.) From the minutes:
Recommendation of the Loan Board on 6-18-09: To defer this item to allow for additional analysis with the option of polling the board for a decision.
So what really happened? Here's the non-altered timeline of events:

June 18 - The Loan Board of Review votes to defer action on Spodick's request until it can get an accounting report on the proposal. It appears to be a procedural move. Board members who attended that meeting included: Finance Director Dave Braun, interim Public Health Administrator Marcia Fernholz, City Development Director Brian O'Connell and Chief Building Inspector Rick Heller. City Attorney Rob Weber, who also sits on the board, was excused from the June meeting.

June 30 - O'Connell secretly "polls" board members by email and they vote to deny Spodick's request to reduce the amount of the loan payoff. It's unclear if the board reviewed the accounting report on Spodick's request. This same day, Spodick is scheduled to close on the sale of the property. He has to put off the sale.

July 7 - The City Council votes unanimously to approve the board's action, even though the board never officially voted to send the item to the council.

July 16 - The Loan Board of Review takes up Spodick's request again, despite it already being approved by the City Council. This time the board votes to affirm its June 30 "electronic poll" and then votes to change history by altering the minutes of the June 18 meeting to suggest the board actually voted then to deny Spodick's request, instead of deferring the request. All five loan board members attended this meeting.

(Interestingly, one thing not reflected in the July 16 meeting is the board's decision to alter its June minutes to reflect a new reality. We only know that occurred because former Alderman Pete Karas attended the meeting and observed the changes to the minutes. Here's another mystery: The city's official online records have two separate sets of minutes for one meeting. One set mentions the "electronic poll". One does not.)

Confused? So are we, because the board's actions don't make sense. It's clearly illegal under state law to vote by email, and it's highly questionable to re-write minutes to reflect actions the board didn't take. The issue gets murkier when the reason for the vote is considered.

Back story

The vote itself centers around a deal Spodick made with the city in 2006 to take over the Wilmanor Apartments at 255 N. Memorial Drive.

The city got involved with the apartments in 1993 when it contributed $675,000 in community development block grant funds to a $3 million rehab project to create low-income apartments. City officials knew it was unlikely they would see the money paid back and gave the money as a one-time, balloon payment loan due 18 years later. (The city likely wouldn't be repaid because two companies that had put in about $2.3 million were ahead of the city to be paid first on any sale of the property, which is valued at less than $1 million.)

Spodick got involved in 2006 when the Wilmanor Apartments were close to becoming the first WHEDA property to get foreclosed on. The building had fallen into disrepair and had few tenants.

Former Mayor Becker called Spodick because Spodick had success in redeveloping homes on West Sixth Street. Spodick agreed to take over the property - and keep it out of foreclosure - if two banks that had lent money for the project agreed to dismiss $2 million in loans on the property. The banks agreed because Spodick would preserve their low-income housing credits, which would have to be paid back to the federal government if the building went into foreclosure.

Spodick and his wife took over the building and rejuvenated the apartments (taking a huge hit in assessed property value in the process. Property taxes on the building jumped from $3,500 a year in 2006 to $28,000 in 2008). After a couple of years, they decided to sell the building to a company that manages low-income properties. As part of the deal, Spodick said he reached an agreement with Becker and O'Connell to knock $200,000 off of the $675,000 balloon payment set in 1993. The deal seemed reasonable because if the building had gone into foreclosure the city would have received none of its money back, Spodick said.

All was going well until Becker got arrested and resigned from office. Spodick said he still had a deal with O'Connell and proceeded with the sale as if he would only have to pay back the city $475,000. Things fell apart as he moved to close the sale.

On the scheduled closing date, June 30 of this year, Spodick learned from his title company that the city only agreed to a $40,000 reduction in the balloon payment. The decision left Spodick in a bind because he was under contract to sell the building. He proceeded with the sale at a personal loss.

Spodick is now trying to understand why the city reneged, and he's not getting much cooperation. Requests for emails and other documents have been delayed or stonewalled. He's now paying $735 to acquire emails - which are public records - to research why, in his opinion, there was an abrupt change in the city's stance on the balloon loan payment.

Spodick filed a $650,000 complaint against the city on Wednesday accusing officials of backing out of the agreement. Spodick said the complaint came from frustration over the city's reluctance to provide public documents.

"I really didn't want to do this, but they wouldn't provide the information," Spodick said.

The city has 120 days to respond to - and likely deny - Spodick's claim. Given the complexity and money involved, it's a safe bet this issue will end up in court.


  1. This is par for the course when dealing with City Development and Brian O'Connell. He is going to cost us, the taxpayers, a ton of money.

  2. Why does Brian O'Connell still work for the City of Racine?
    Why does Mayor Dicket put up with Brian O'Connell,why?

    I would like to say thank you very much to The Post for this type of Reporting. I guess I can deal with The Post being from time to time an editorial, because no way in Hell would the J-T ever do anything like this.

  3. Here is another perfect example of why city hall should not be involved in real estate development. It also another lesson in continuous saga of the city council screwing over the citizens of this community. When are people going to realize that the city council and mayor's office of this city DO NOT govern? They RULE! Are we going to be had again in the next aldermanic and mayoral elections?

  4. Boy, the response by the city officials when Duston contacted them for comment is sure interesting, isn't it?

  5. Wait, where is the comment from the city? I don't see it. Am I just missing it?

  6. Queue Greg Helding in 3....2....1

  7. I hope everyone involved in this goes to prison and rots in hell.

  8. Where are the Dickert Trolls? Has anyone lawyerd up yet?

  9. You say 'The city's official online records have two separate sets of minutes for one meeting. One set mentions the "electronic poll". One does not.' I see the link in your article to the one that 'does not,' however, I can't find it on the City's website. Where is it. Also, that one says it was "printed on 7/14/09," even though it was for a July 16 meeting. Is it possible that one, the one that 'does not' was a draft in anticipation and was not intended to be a final version?

  10. Concerned Citizen10/29/2009 5:12 PM

    "Racine, a seedy little crooked city on a beautiful lake, but hey, we got Kringle!!"

    That's a new slogan for you guys to use instead of the "Positively" BS.

    Fantastic work Dustin!!

  11. Really, where is a comment from the City? Did you even ask? I thought journalists were supposed to try to get all sides of the story. Is that not important. Teh Racine Post is losing credibility with this kind of thing. Clearly you are both buddies of Pete Karas. That is fine, but you can't expect to be taken seriously if you promote his new bar so loudly and then use him as your only non-party named source in an article. He has a history of having disagreements with the City. Maybe he has an agenda that is more about getting people than some honorable purpose. Did you consider that possibility? Does Pete Karas have such credibility that you don't even consider his motivation?

  12. Is anyone at all suprised? Becker or Dickert it does not matter this is Racine politics, nothing new!

  13. I see the Dickert Trolls are here, thought they were looking for a rock or a lawyer. My guess is this leads to the top.
    Maybe we find out who owns what long State St that be interesting too

  14. Pete Karas has a great reputation

  15. It is pretty clear that the city broke several laws here. It is really bad to vote via email and to retroactively change meeting minutes and agendas, regardless of whether the original source is Karas or not. When is the DA going to look into this and the other shenanigans in City Development.

    Who wants to bet that Brian O'Connell is deleting his email.

  16. Just wondering......how was it Spodick got to take possession of the building in the first place? Was anyone else given the opportunity or was it just handed over to Spodick on a silver platter? I don't remember reading about this anywhere back then, and I am always paying attention to local news.
    Did the aldermen know they were handing the property over to the likes of Jim Spodick or was his name somehow covered up?

  17. Is the 10 year plan coming into focus yet?

  18. Lets not change the subject, this is about City pulling BS.

  19. 5:13 5:35

    Your post show me that this will lead right to the Mayor since his trolls are out and about. If this is shown to be the case hope it was worth it

  20. Even if "Johnny Boy" is not involved hang him anyway!

  21. Dustin,
    Great article, and great job at exposing the secret soceity that exist within City Hall! I follow local politics very close and find it interesting that these issue come to life so regular in Racine. Why is that? Is it because public and elected officials in this city are being paid off? Why do developers with seemingly good ideas and intentions get put through the ringer,while others get their projects pushed through without us the tax payers even knowing about it? Maybe this is the start of a wake up call to all the elected officials out there you are being watched and we are not going to stand for it any longer. If you make promises to get elected you better damn well deliever on those promises!

  22. Racine Post reporting this story and digging is just what we need. Racine Journal won't ever spend time or money to dig for a story.

    If you haven't subscribed or donated to the Racine Post, do so. You have to give the guys credit for a job well done on providing REAL NEWS.

    Thanks Dustin and Pete.

  23. Spodick wants to increase his profit on this building by $200,000 on the backs of the taxpayers and you are worried about meeting minutes?

  24. Thank you for this investigative work on exposing the story of corruption. KEEP ON IT. Don't let the story get buried.

    Thanks again for being Racine Post.

    And, despite what's inside the building, appreciate the amazing photo of City Hall.

  25. Dustin, interesting article. It seems that any behind the scenes deal between Becker and O'Connell would be just a starting point insofar as the agreement would ultimately need to be approved by the city council. Is it possible that Jim Spodick counted his $200,000 chickens before they hatched? Of course none of this would negate the importance of investigating any hanky panky that may have occurred at the Loan Board. Thanks for looking in to this. Keep after it!

  26. Good luck to Jim. I hope he sticks it up their rears like they do to citizens everyday and please don't tell me that Dicker didn't have anything to do with it.

  27. Denis

    Thinking here that Becker did many things that where not quite right, then of course O'Connell can NOT use the excuse he was just following orders.

    Why does O'Connell still work for the City of Racine?
    Why does Mayor Dickert put up with Brian O'Connell?

    Is this the 10 year plan closed door deals?

  28. If you search back in the redevelopment history of Wilmanor you most likely will find the Dickert name. There is a connection!

  29. If you search back in the redevelopment history of Wilmanor you most likely will find the Dickert name. There is a connection!

  30. "2. The board voted on the item by email, which is illegal under state open meetings laws. (All government votes have to take place at a public meeting.)"
    You might be wrong here, I don't see any elected parties on this list. When the plow operators decide where to plow do they need to have hold a public meeting for that, too?

  31. anon 7:29, I am not able to determine whether any laws were broken much less who it was that broke them. As such, I am not interested in condemning Brian O'Connell. Rather, it would be my hope that the District Attorney take a look at this to detirmine if there was any wrongdoing.

  32. 7:54

    Get real. Why are the Dickert trolls so active thinking this doers lead to the Mayor.

  33. 7:54

    ANY city appointed committee is subject to open meetings laws under Wisconsin law.

  34. After the story came out, I learned the City Council does not have to approve Loan Board of Review actions.

    In this case, the council voted to "receive and file" the board's recommendation. They didn't affirm or deny the decision, like they would a normal committee.

    It raises an interesting question about why there are no elected officials on the Loan Board of Review. All five members are city staff.

  35. Tim the Shrubber10/30/2009 8:42 AM

    Anon 5:02 wrote: "I hope everyone involved in this goes to prison and rots in hell."

    That seems a bit extreme.


    Dustin - Who is on the Loan Board of Review? What exactly does the board do? Who does the board report to? Etc. For this story to make much sense I think most of us need more info about the board itself. Personally, I have never heard of it before.

  36. Tim the Shrubber10/30/2009 8:42 AM

    Looks like you were answering some of my questions as I was writing them.

  37. Who decides who is placed on the Loan Board of Review? Is it the Mayor?

  38. I suspect we will have an answer on this issue about the same time the 10 year plan is released.

  39. Why are you investigating this? Downtown is wonderful. The beautiful people are having a great time. Enough with the negativity. Soon the train will bring thousands of developers and artists to Racine. The gangs and poverty will dematerialize. Stop looking at the past. Look to the future, up there, in the sky, that big pie, keep your eye on that.

    Party on, lying John.

  40. Orbs - you finally got it right. I'm glad you have changed your position - could this be Sir?

  41. sir, how's your boyfriend, Becker? He looks a little ragged lately.

    Could this be Orbs?

  42. Anon 4:32 and 5:13- I am guessing not comment from the city because Brian O'Connell nor the Mayor returned phone calls. Neither of them ever return any calls, just the rude secretary who answers the phone.

  43. I have to correct an earlier comment. The Loan Board needs approval from the City Council. The board does not act on its own.

  44. 10:30

    Our job is to shut up and pay our taxes. Please do not think the city cares at all about what we think or looks like to me if it's legal

  45. Dustin's blog doesn't even say that he contacted anyone in the city for a comment. A journalist would at least say calls weren't returned. Anon 10:30, I am guessing no comment from the city because Dustin didn't ask. Well Dustin, did you ask for comment from the city before you posted your item?

  46. 11:28 = Dickert backer!

  47. Did anyone notice that there is nothing about Dickert in the article?

  48. Orbs - I sent him some soap on a rope - he's going to need it.

  49. Guess the JT jumped on board, here's what Brian O'Connell, the director of city development, said it's not the first time the loan board has conducted an e-mail vote. He said electronic votes are usually done when there is a time constraint and contractors need an answer fast.When asked if that was legal, O'Connell replied, "I'm not a lawyer."

    He said he is also reviewing what happened with the June and July minutes. O'Connell said Spodick's item was deferred at the June meeting and he does not know why the minutes reflect something different.

  50. Spodick is a crook - just ask Out of the Pan!

  51. Anon 5:13, why doesn't your commentary include the JT? They do exactly what you're talking about here.

    Anon 5:30, after this, we all know that Brian O'Connell should be fired. But, just like the DA, Dickert has them both in his back pocket and nothing will be done. It's good to be a friend of the king. Just ask Friedel.

    Anon 5:35, maybe you should read the entire article before posting. Here's you answer: "Former Mayor Becker called Spodick because Spodick had success in redeveloping homes on West Sixth Street."

    Anon 6:32: Right On!

    Anon 6:56, in a word "Yes." As a real estate investor Spodick is going to do whatever he can to minimize cost and make more profit. His lack of ethics and concern for the those he's costing money is not the issue. The issue, and article, is about City Hall putting it to the voters/taxpayers once again. Maybe you don't care about corruption in our government, but the rest of us do. Or, do you think it's OK for the city council to rewrite history and hide their actions?

    Anon 1:06, the notes reflect something different because they recorded what was actually happening during the meeting as the meeting unfolded. The recorder would have nothing to gain by altering the recording of events that did not take place. In fact, the recorder would be fired for doing that.

    Good job Pete and Dustin. Even though you are liberal and I am conservative, it is nice to know that there is at least some honesty in your reporting and that, unlike the Journal Times, you won't refuse to expose the corruption at City Hall just because the liberals are in charge. That tells us something about your character.

  52. It sounds like the corruption took place when Spodick made a deal with Becker to give himself a $200,000 taxpayer subsidized loan reduction.

    The city correcting this is a good thing.

  53. hay how about this.......



  54. Let me see if I have this straight - Spodick makes an under the table deal with the former disgraced mayor, despite the fact that both know this type of thing would have to go through the loan board and city council. The loan board does the right thing and votes on a much lesser reduction in Spodick's payment. This causes Spodick to lose money instead of gain it at the taxpayers expense. Angry, Spodick goes to the Racine Post and blathers on about mistakes in the minutes and "secret" email votes. But the bottom line is the loan board saved the community a bunch of money and did the right thing. So Spodick files suit. Do I have this correct

  55. Hey, yea let's vote for Jody - the one that ran her campaign on CNH company time - that didn't cost the taxpayers anything - just CNH. I wonder if she's going to be given one of those extended holiday packages from CNH, but then she'd have to run her campaign on her own time. That would be a 1st!

  56. How about a hard working blue collar worker that just has common sense and won't take any crap and doesn't schmooze. That's what we need

  57. 3:44 - Racine has lost all of their blue collar jobs - thank the unions.

  58. at this point I am beginning to think the kid working fast food as more common sense than our elected officials, well at least no other alter motive

  59. Dickert Trolls Your master is keeping you very busy. Wait until more comes out on this and the other strange noises in City Hall.
    You will have to do this full time.

    My thought is that Mr. S. has written information that The Mayor nor O'Connell wants the public to know about. Gee what would that be? Point Blue stuff, The Bankrupted Condo, does it go all the way back to Phoenix?

  60. 3:44 You can't be serious. Loss of blue collar jobs follows Corporate Greed. You have a short memory - even United Way was hit by greed not so many years ago. Paying their Exec huge wages while programs and people were suffering.
    Go on a fact finding mission because it will give you something to do and then report back to all of us why Racine is not a manufacturing metropolitan anymore.

    The real reason for my comment was to ask "Who's idea was it to light up City Hall like the White House?"

  61. "at this point I am beginning to think the kid working fast food as more common sense than our elected officials, well at least no other alter motive"

    Please try to use capitals and punctuation. It allows the educated among us to understand where your thoughts begin and end. Also, I think you mean "has", not "as". Further, do you really expect anyone to take you seriously when you don't know the word is "ulterior" and not "alter"?

    Please go back for your GED.

  62. I just love it when some pseudo-intellectual posts a correction of someone else's grammar.

    Anon 8:07 - You used the word "further" when you should have used "furthermore", and "really" is conversational but is not appropriate for the written word. Perhaps YOU should think about studying for a GED.

  63. 8:07 is just a Troll for Mr. I have a ten year plan.

  64. This comment has been removed by the author.

  65. Sorry, I had to make a grammar correction. I repost:

    Anon 3:21 said, “JODY HARDING FOR MAYOR." An excellent idea.

    Anon 3:26, I think you summed it up quite succinctly.

    Anon 3:32, (the Jody hater) do you like continually making an ass of yourself by spreading unsubstantiated rumors and lies? I hope Jody's husband finds out just who you are and makes you eat every word you posted along with each tooth he makes you swallow. Dustin, please delete this a-hole's remarks.

    Anon 3:44 said, “How about a hard working blue collar worker that just has common sense…” That sounds like Jody H. or Keith D.

    Anon 5:28, your stupidity is showing when you say, "Loss of blue collar jobs follows Corporate Greed." Who do you think employs blue collar workers? The low-income businesses in the low-income parts of town? Get a grip, dude.

    I think it's so interesting to read the comments made by the products of the RUSD. The grammar is atrocious, the punctuation either wrong or almost nonexistent and the spelling is to laugh at. All of us make the occasional type-o or grammar error, but you RUSD folks are off the chart. Can you say, “Spell checker?”

  66. any one may attend the board meetings, theye are open to all. Mr. Spodick sucking off the 6th st area and the taxpayers of Racine makes me ill. How does he justify forgiving the full amount of the loan? Inuendos to confuse people so he can rob us all. HIS INVOLVEMENT IN THE SIXTH sT IMPROVEMENTS STINKS, JUST ASK THE HOMEOWNERS WITH POOR HOME IMPROVEMENTS OVERLOOKED BY mr. SPODICK.

  67. Wasn't Dickert involved in the 6th St flipping of houses?

  68. Will The Post talk to Q.A and the great deal he got on his home? That be a story I like to read

  69. Spodick was involved on 6th street - BIG TIME. So were Jim and John Dickert - BIG TIME. The houses came cheap, Dickerts and Spodick got paid to fix them up with public money and Dickerts got real estate commissions to sell them when they were done. Q.A. has a very nice house that he got from this program designed to help the "poor". He is a Twin Disc exec for years now and a double government official - how the hell is he poor?

    You want a story Dustin, look into all of those shenanigans.

  70. Isnt it interesting that this man has filed a claim against the city?
    You can check out some of his other properties an find that he owes thousands and thousands of dollars in taxes from last year on just a couple of the properties owned by him. Sure hes make a $143 payment here and there but nothing close to the $25000 he owes on one building alone. check out the Racine County website and you'll see what i mean. I could start listing all the properties he owes taxes on here but ill let you check it out for yourself......

    And poor Mr. Spodick.... despite the fact that it says he has already lost close to 200,000 on this property already if the numbers were crunched and looked at you would find he actually MADE 150,000-200,000 on this property despite his claims of a loss.....

    I feel so bad for him..... NOT!

    Check the facts....


  71. I drive past QA's "house" on a daily basis, day and night.

    Could fool me that anyone lives there.
    The lights are never on, there's never anyone parked in front of the house, nor does it look like it's ever been lived in.

    I think it's a case of someone 'owning' a home to bypass residency requirements.

    Would almost be interesting to see if there's property elsewhere in the County under his wife's name.

  72. Q.A is divorced. I argee however Q.A. spends little time at "home"
    Quite the Story about how he got the house The Post should look into it.
    I think with the investigation into Mr. S claim going to be lots of interest paid to the fun and games going on with Government backed housing in Racine.

  73. Are all the funny dealings in city hall between Dickert, O'Connell, developers, and the Council finally going to come to light? Are the rats scurrying away?

  74. If there is an official action taken that spends money or addresses public funds it is an open meeting. Don't let these guys say this isn't subject to open meetings rules. This is a game to make the board look like it isn't official. It is just like any other committee that sends resolutions to the City Council. This is an old trick.

  75. Look at CCAPS you'll see what kind of guy Spodick is. He has screwed a lot of people including the Internal Revenue. This guy is not to be trusted.

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