The black
words are notes I made in advance of our second meeting (when I thought that we
would conform ourselves to our official purpose) and the blue words are my
reactions after the meeting when I realized that no one in the room (other than
me) took our official purpose seriously.
Indeed, three members indicated they had not even listened to the
recording of the Special Meeting.
Apparently, that was not relevant to their purpose in attending.
Lawyer
memo
#1 –
Noting that Mr. O’Connor is neither district resident nor district
voter nor district customer, I ask what standing he has to make any
pronouncement, especially since County Representatives Hart & Rummel were criticized for lack of standing, even though
they are the elected officials of the Rockland constituency and most especially
since they were only to appoint trustees and not weight-in on a specific issue?
#2 –
Noting that Mr. O’Connor’s sole connection to the District arises
from his status as an employee, shouldn’t he be disqualified as having a vested
interest – like firemen who want the district to continue only so that they can
be firemen?
#3 –
Noting further that his employment is as a lawyer and not as a
fire/rescue professional, how is his non-expert opinion superior to that of
anyone else?
#4 –
Noting that he listed many numerous pros & cons in
brainstorming fashion without weighting their relative importance and thereby
sidestepping any critical analysis, how can his conclusions be evaluated?
I chose not
to make the above comments.
During the
meeting, Attorney O’Connor explained that his primary evaluation criteria was
proximity of the firehouse to the residents and that consequence to response
time. Member Johnson established that
Attorney O’Connor’s law firm had been servicing fire districts for decades and
has 350-400 fire district clients.
I think Brian
O’Connor is a nice guy. I think he was
imprudent to publish his preference of proposals in his May 14, 2018 memo and
foolish to complain that he is personally victimized by people who object to
his choice. In fact, he distanced
himself from his own recommendation, noting in the meeting that he only
advises; the Rockland Board decides.
He is a hired
gun. He will do as directed. The Rogers Board directed him to write that
memo. The Malinowski may soon direct him
to write another.
If the CRC is
just window-dressing to give some new lawyer-memo extra authority in a
years-long process to defeat the orderly and legitimate outsourcing decision,
then our first elected board will be revealed to be, NOT a manifestation of
grassroots democracy, but rather a device to undermine it.
There are 40
fire districts in Lake County; only one is elected. The CRC is evidence that fire boards should
be appointed.
Missing
pages
The
Lake Bluff proposal motivates at least two independent questions. At the end of the proposal there is a
six-page memo with the bottoms of the pages numbered 1 of 6, 2 of 6, etc. It is apparent that page 3 and 5 have been
withheld.
Question
One: (The
“what” question.) What
was on those pages?
This
is, I imagine, the easier question and could be addressed by simply emailing
the two missing pages to every member of the CRC immediately.
Question
Two: (The “why”
question.) Why were those
pages withheld?
This
question is asked independently of the first – why is different from what. Simply supplying the missing pages does not
begin to explain why they were withheld in the first place.
Was
the omission malicious; an attempt to influence the CRC with either favorable
or unfavorable information, depending on the direction of the influence?
Or
was is not malicious, but rather another example of careless,
clueless, sloppy sloth?
Or
were the two pages withheld because someone judged that the CRC should consider
only four of the six pages, substituting his own judgment for that of the CRC?
That
last speculation is really the most troubling since the people in Lake Bluff
made a deliberate chose to include those two pages and the CRC is now charged
with the review of their proposal. CRC
members were asked by Secretary Bernstein at the end of our first meeting to
read the 3-ring notebook, which includes the Lake Bluff proposal, and develop
questions. Missing pages certainly
provokes questions. How can the current
board be relied on to manage Fire & Rescue service for hundred of
households if it cannot collate a 6-page memo?
More
profoundly: If the CRC produces a result
that leads to decisions about the disposition of the firehouse or the tax levy
or a lawsuit with our service providers, and if some future Fire Board then
looks back on the CRC to understand where we came off the tracks, how will that
future board view the two missing pages?
That
is no small matter. Especially in the context
of the 2020 CRC examining the events of 2018, in which we have been encouraged
to hold the Rogers Board to a very high standard. For example, when Board President Dan Rogers
anticipated a meeting about this very proposal with the Village of Lake Bluff
for March 19, 2018, he sent a polite email invitation on March 6, 2018 to the
two County Board representatives with jurisdiction for the Rockland
District. That email was entirely
correct in service of transparency. One
rep attended, the other didn’t.
And
yet this was decried as “potential inappropriate county interference” by the
author of the Background section of our 3-ring notebooks. Not that it is improper, nor unethical nor
illegal – just inappropriate in someone’s opinion. (That is, NOT an “objective fact.”) And it is not President Rogers who was
charged with the subjective offense of inappropriateness; it is the county
board members. And even they are not
accused of actual inappropriateness; but rather for
the mere potential of inappropriateness.
That is one high standard.
But
now the CRC is given a 6-page memo to critique with two non-consecutive pages
withheld and the incompetent collator should be granted the benefit of the
doubt?
The
next page in the Background section is titled “Sandy Hart Declines” explaining
that the Rockland board has exclusive authority to make its own decisions. President Rogers effort at transparency is
condemned by the author of the Background section with the rhetorical question,
“Does Dan Rogers have a clue…”
And
yet the very people who pervert the good-faith effort of the previous board
president’s transparency will cavalierly withhold two pages of the Lake Bluff
proposal? What else have they withheld? And how do we know what they have
withheld? And who could possibly
reconcile the withholding of materials from the CRC with the middle word of our
name – “Review?”
Remember
that we are not reviewing the decision to outsource; rather we are reviewing
the process that led to that decision.
Does the current board feel so morally superior to the previous board
that they further feel entitled to a double standard? And if that is an unfair question to ask,
then tell me: What is unfair about it?
I chose not
to make the above comments.
Secretary
Bernstein did not attend the second meeting.
Treasurer Snoblin confessed that “two August
proposals from Lake Bluff” (apparently this
and this)
had not been included in our 3-ring notebooks.
President Malinowski said they would be emailed to members.
I had planned
to make an issue of two missing pages – instead, two relevent Lake Bluff
documents were omitted. Careless,
clueless, sloppy sloth.
The format
established for the work of the CRC, established at the first meeting, is that
the members sit through a presentation of complaints and react to the materials
placed in front of us. That is a far cry
from the invitation on the yellow postcards: “If you are interested in facts…If
you’re willing to help with research….”
The omission
of the Lake Bluff proposals has caused me to believe that the true purpose of
the CRC, and the intention of most members, is just to bitch and whine like
snowflakes. No one is concerned with the
ostensible purpose of the CRC – to examine the process that led to our current
status – and instead each member seeks only to vent his own personal
complaints.
And yet in fact, when I followed-up on the
“Financial Presentation” (agenda item 7) noting the million-dollar flaw that
misled the Rogers Board, the Chair admonished me alone for going “far afield.” That is:
While I was the only member adhering to our mission, I was also the only
one the entire meeting who was disqualified from speaking.
This in spite
of Member Spath’s dismissive interjection of
“Politics,” the ridiculous discussion of breaking the contract “for cause,” and
a million-dollar flaw in the data that is branded “moot,” because nobody cares
about the stated mission of the CRC.
Not even the
Malinowski Board itself. Two Lake Bluff
proposals overlooked. Oh well. Nobody’s fault. Now, let us all return to our bitching and
whining.
Two
projections:
In
the Scope section of our 3-ring notebooks, there is a preamble that reads, “In
the July 2019 RFPD board meeting I [presumably Secretary Bernstein] asked the
question, where I could find copies of the studies or assessments of the
process leading up to closing the Knollwood Fire Department…Former Trustee Snoblin responded with, there are no studies, they do not
exist.”
We
are supplied with two projections that are untitled and undated but were
apparently created prior to July, 2019. If the pages of the Financial/Contracts
section of our 3-ring notebooks were numbered, the projection on pages 73 &
74 is described on page 72 as “Knollwood Fire Department” and comments that it
is “…expenditures if the Knollwood Fire Department remained open.” Text in the body of that projection describes
it as “continuation of operations.” The
projection on pages 76 & 77 is described on page 75 as “Lake Forest –
Libertyville” and “…expenditures under the current agreement.” This is therefore the status described by
then-Trustee Snoblin (now Secretary Snoblin) as the “paper district.” Comments:
#1 –
“continuation of operations” is unreliable:
The
two projections are of different reliability in their forecasts. Using the volatility of past “Total Expenses”
as a proxy for the volatility inherent in the “continuation of operations”
projection, it is evident that the “continuation of operations” projections
understates volatility. By contrast, the
new IGA service contract adjusts for the CPI-measured inflation only and is
highly predictable and very low volatility.
Consider: The first three years of actuals are:
626K,
615K & 581K
Seems
small, declining and predictable, right?
Now consider what five years, instead of just three, would look like:
766K,
847K, 626K, 615K & 581K
It
tells a different story. And we get a
sense of this volatility from the benefit of hindsight – The spreadsheet was
apparently made during FY19. The
Spreadsheet predicts FY19 to be 589K.
FY19 proved to be 688K, a difference of $99,000 for “continuing operations.” That is a huge difference. The actual even exceeded the inflated
projection for the “paper district.” An
error that great for the then-current year suggests nearly meaningless
projections for the more distant years.
As
every MBA understands, volatility is the same thing
as risk. The “continuation of
operations” projection is far more risky than the IGA
projection.
#2 –
Authority is unjustified:
For
example, we are informed that District Administration Expense in FY25 will be
$35,833.63 in both projections, and so forecasts that expense to the penny five
years into the future. But precision is
not accuracy. These projections are not
very accurate because they cannot be.
Projections are guesses based on assumptions. Five years from now, depending on which
projection is considered, will District Total Expenses be $640,901.49 or will
they be $646,421.90? That question is
asked with an excess of precision that falsely implies a clear choice between
alternatives. Five years from now, total
expenses will be somewhere north of a half-million, but whether they will be
north by 10K or north by 100K is pure guesswork.
#3 –
Administrative Expense assumptions are illogical:
And
yet, guesses are made. The current year,
FY20, has “District Administration” expense in both projections, properly
expressed as round numbers to indicate their ambiguity. For the “continuation of operations”
projection it is only $20K but if we are a “paper district” it is projected to
be more, $35K. Why is it so much more
expensive to administer the “paper district” than the one that has employees,
equipment and toddler birthday parties?
Indeed,
“District Administration” expense for FY19 and FY20 combined are only $38K for
“continuation of operations” projection but nearly $88K for the “paper
district,” a $50K difference in the implausible direction.
District
Administrative expense is the same projected amount in both projections for
FY21 and beyond. That is wrong. Clearly it is more expensive to administer a
functioning firehouse with firetrucks and toddler’s birthday parties than is
required to administer a “paper district.”
#4 –
“continuation of operations” expense is understated:
The
first three columns are the same in the two projections. They purport to represent actual historical
experience. The transition year is the
fourth column labeled FY 2018-19 and ran from May 1, 2018 through April 30,
2019 which would be conventionally referred to as FY19. The two projections are not labeled but they
were apparently produced sometime during the transition year – probably the
second half of calendar year 2018.
In
the “continuation of operations” (without outsourcing)
projection, in the three years prior to transition year, the declining
“Fire & EMS” amounts are 480,733 and 460,991 and 428,376 which is an
average of 456,700. Presumably the
expense is declining in anticipation of outsourcing –
repair/maintenance/replacement of building & equipment reduced or
suspended. In other words, that low
level of expense is not sustainable.
A
footnote reads, “Typical expenses from FY15-16 though FY17-18 were used to
create a baseline for future operational expense.” That is simply not so. The projected Fire & EMS expenses are
understated relative to the three years of actual Fire & EMS expense in the
“continuation of operations” (without outsourcing) projection. Projections post-transition year are 439,970
and 446,715 and 453,662 each of which is lower than the 3-year average prior to
the transition year and far lower than the annual amount before the
anticipatory decline.
The
last year prior to the transition year is artificially depressed and not a
viable level for ongoing service but it is taken as the base for future
projections, as if it were a valid representation of past services. Fire & EMS was 480,733 in FY16 – a level
not exceeded in the continued operations projection until FY25. This is unrealistically optimistic about the
expense of continued operations.
#5 –
Apples and Oranges:
The Paper
District projection (the one “outsourced”) recognizes the sale of assets in
FY19 (the transition year) in the amount of $274,659 but that projection does
not recognize the sale of the building. So it assumes a firehouse without a firetruck. The Paper District is illogically burdened
with mortgage payments & operational expenses and deprived of a cash
realization of the equity in our building.
Further, since the building sits idle, neither the District nor a
subsequent owner may utilize the building in any useful, revenue-producing
way. And yet, the Paper District is
required to incur occupancy costs such as heating & cooling and repair
& maintenance.
In
spite of the claim that the actual costs in prior years were used as a baseline
for the projection the footnote reads, “Unanticipated large expenses such as building or vehicle repairs would be paid out of
reserves.” There is exactly no
difference at all in paying for a roof repair out of current expenses from
paying for that roof repair out of reserves.
Either way, the district writes a check.
The relevant and material distinction is whether it is the District that
writes the check or a subsequent owner who writes the check.
The
economic authority for consolidation of fire districts that compelled the
outsourcing of Fire & EMS services by Rockland to neighboring districts, is
to reduce redundancy. With Libertyville
and North Chicago stations to the north and two stations of Lake Forest to the
south, all staffed around the clock, having a fifth station in the middle is
the very redundancy that is at the heart of the consolidation initiative that
has been discussed in Springfield for five years. And yet the Paper District projection
contemplates an idle, 5-bay station with attendant capital and occupancy
expenses that would continue to be paid in addition to paying for a contract
that obviates any such need.
Specifically,
the sum of building expense post-transition for IGA projection in years
FY20-FY28 is 682,545.70 to which one must still add our equity in the
building. That is double counting. If the district has, say, $300K of equity in
the building, then $700K plus $300K is a million dollar
swing between the two projections. As presented they show the outsourcing to be a half-million
dollars more expensive that continued operations. In fact, Continued operations is a
half-million dollars more expensive than outsourcing – a million dollar swing
due to the incorrect treatment of the building.
If
you are a cord-cutter, you do not continue to pay Comcast.
To: Marcin
Malinowski
Cc:
dandersen@knollwoodfire.com, abernstein@knollwoodfire.com
Jan 20 at
11:17 PM
Marcin,
The mission
(according to our mission statement) of the CRC is to build a “factual account”
of the “process” (that resulted in the outsourcing) to be “presented to the
community for review.” I am beginning to
wonder if that is our genuine purpose.
In Treasurer Snoblin’s “Financial Presentation” (agenda item 7) he said
several times that the IGA was “pretty much a break-even deal.” He alluded to that idea at our first meeting
too. I attempted to dispute that
contention by noting that the paper district projection is wrongly burdened
with post-transition-year building expenses of $682,545.70 and further excludes
the building equity (which Treasurer Snoblin said was
significantly more than $300,000) for a combined benefit of more than a million
dollars.
I labored to
make the point that the Rogers Board was not going to break-even but rather
capture that million-plus benefit for the residents in our district of some 756
households by noting that “you don’t continue to pay Comcast if you cut the
cord.” Indeed, at the last meeting of
the Roger Board we opened multiple bids for the building.
At one point,
Member Spath commented that money is all that matters
to some people. Member Yakes scolded me, saying that my point was moot.
While I am no
longer convinced of any virtue in second-guessing the Rogers Board, “review” is
our middle name. 24 months ago the Rogers Board acted to capture more than a million
dollars for the benefit of district taxpayers.
24 months ago Libertyville ambulance service
was as close to the Rockland District residents as the Knollwood Fire
Station. 24 months ago
those two facts were worth caring about and they were not moot.
I commend
your efforts to keep the conversation on point and I heard several comments
that would have been helpful to a board truly seeking to improve on what we
have, short of reneging on our contract.
(I also heard nonsense about tax caps – as if that prevented the
district from returning the million dollars.)
But “review” is our middle name.
24 months ago, the Rogers Board acted wisely.
The more I
study this matter, the more it is apparent to me that the Rogers Board made the
correct choice. We are more fortunate
than we deserve to have IDOT force the issue after-the-fact. (Sure, its moot NOW.) Response times are acceptable
and the savings are huge. The folks in
the Sanctuary are already paying to support both our fire district and a municipal
fire department. How many families
should face foreclosure so that a non-transporting paramedic can beat the
ambulance by a minute or two? Tough
question.
But it is a
political question. And it has been
reasonably answered by a legitimate, duly-empowered
board. We have a 20-year contract. We are well past the point of cost-per-call
analysis. In the meeting it was
suggested that we should just stop paying the IGA fee to see it they would
simply drop us. That kind of sleazy
shirking, properly understood, would be rejected by every single honorable
person in the district.
As you know,
I am disgusted with the tone of the “background” section of our notebooks. It seems to have emboldened some members to become
hypercritical. If the true purpose of the
CRC is to create anger and frustration with our IGA then I will remain a member
only for the purpose of revealing the CRC to be devious and corrupt. If you expel me from the CRC I will attend as
a spectator.
When I was
gathering signatures for my nominating petitions 15 months ago, I heard that
people wanted adequate (there is nothing wrong with that word) service for the
minimal price, but also something more:
People were dismayed that there was controversy. District residents do not want controversy. Controversy suggests to people that the
important service of the district is a pawn in some larger argument.
Our paper
district should not have a firehouse or any other real estate. The Rogers Board understood that, and the
vision of the Rogers Board should be embraced by the Malinowski Board. We should hold up our end of the IGA and
should not contest it. The levy should
be reduced very significantly so that the million dollars is returned.
I will be
most interested to hear the reaction of others at our February 17 meeting to
the (by then) 25-month old recording.
What I heard was six sober, serious men working in concert to make the
district better. They succeeded.
No reply
expected.
Sincerely,