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Disagreements continue over downtown Waukesha Business Improvement District

Property owner questions how its 2012 BID funds were spent

April 1, 2014

A year-end expenditures assessment and audit of the since-disbanded downtown Business Improvement District has raised some eyebrows from property owners.

"It was very suspicious," said Jeff Barta, who owns the Nice Ash Cigar Bar with his wife, Joette, in downtown Waukesha. "We were shocked to see some of these payments. I'm familiar with what the budgets traditionally were and what the money was spent on, so certain items jumped out."

Specifically, Barta questions expenses that were made after the BID saw most of its members resign in September 2012. This came after the BID's executive director, who cited bullying and a "hostile work environment" by some of its leaders, resigned a few weeks earlier.

However, City Administrator Ed Henschel, who managed the BID funds from the time 11 of the 13 members stepped down until a new board met for the first time in January 2013, said nothing was done illegally.

Henschel said he authorized the expenditures because, at the time, there was not a new BID board in place.

"Jeff's looking for some smoke and that there was something done inappropriate, but, I'm sorry, that's not the case," Henschel said.

Procedural concerns

The expenditures Barta highlighted were two items relating to promoting the Christmas Parade that totaled more than $4,300; a line item labeled "DBA/Waukesha Art Fest" for $4,690.34; and one to "Hoof Beats Express" for $5,160.

Barta, a former BID Board member who paid the BID tax that funded the budget, said these funds should not have been spent because an expense of $500 or more must first get board approval.

BID money should not have gone to the Hoof Beats Express for carriage rides that are part of the Silver Bells events, put on by the Waukesha Downtown Business Association, a private organization, during the holiday season, he said.

"That's never been a BID event," said Barta, who added he had a suspicion that the money was being used for the Silver Bells event. "I see no reason why that's been paid by the BID."

After the resignations and with Mayor Jeff Scrima and the Common Council in a tug of war in finding new members, Norm Bruce, owner of Martha Merrell's Books in downtown and a former BID member, and the WDBA put on the Christmas Parade in 2012.

The promotional expenses that totaled more than $4,300 were related to the annual Christmas Parade in downtown Waukesha for which the BID had been previously responsible.

Defensible expenditures

Henschel explained that the expenditures were consistent with past BID decisions.

"I understand what he's questioning," Henschel said. "But let me be clear, the BID traditionally supported those events, so we gave money to those events. I had the authority to do that.

"There were a bunch of decisions related to ensuring that there was a Christmas Parade and many of these decisions were made for a lack of not having an executive director or BID Board. They were made by me to make sure we had a Christmas Parade and the others were consistent to holiday events from the past."

Henschel said he wasn't surprised by the reaction from the BID's expense report and that he wasn't the only one who had knowledge of these expenditures. The payments in question (relating to the Christmas Parade and the carriage rides) were paid off in early 2013.

"I didn't sign any checks; those were done by the BID treasurer," Henschel said. "There was always more than one person involved in these decisions."

Taking legal action?

Henschel said property owners can hire an attorney if they have issue with the expenditures.

Barta has since put in a Public Records Request to Henschel to get his hands on all the invoices and correspondences on the expenses.

Barta said Steve VanderBloemen, a forensic accountant in Waukesha, pointed out mistakes in the BID audit when it was presented at the Finance Committee earlier this year. The item was tabled and now Barta and some property owners will be contesting that the money should have went back to the property owners.

Barta said if the city doesn't address the property owners' concerns, they could take legal action. But he hopes it doesn't come to that.

However, he's more optimistic the issue would be discussed if a new mayor was chosen on Tuesday given what he says is a "discord between the property owners and the (current) mayor."

Recent BID history

There has been plenty of discord relating to the BID over the last couple of years.

Once a new BID Board was finally selected, Barta and many property owners, who were previously strong advocates of saving the BID, were displeased with the direction of the new BID Board.

The new BID Board, with Berg Management owner Bill Huelsman selected as its new president, looked at using the BID tax ($71,110 it received from property owners) to pay other organizations for downtown events. Huelsman told Barta last week that he was unaware that BID money had been used for the Silver Bells events the previous winter.

With Barta and company unhappy with how the new board would have proceeded with its money, they petitioned to have the longest-running BID in the state disbanded.

Two months later, the BID was no more, after more than 50 percent of the property base value that represents the downtown district remained on the petition calling for the taxing district to be disbanded.

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