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Engineer profits from city projects and sits on panel to vet them. Is that a problem?

Engineer's seat on committee poses ethical dilemma

Valerie McCaw says she's never used her spot on PIAC to benefit her engineering company. But a colleague on the committee calls it "a very unpleasant situation."
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Valerie McCaw says she's never used her spot on PIAC to benefit her engineering company. But a colleague on the committee calls it "a very unpleasant situation."

A civil engineer who sits on a committee that recommends capital improvements to the Kansas City Council supported two road projects in which she had a financial interest, records show.

Valerie McCaw is founder and owner of VSM Engineering, a small Northland engineering firm that has earned more than $1 million since 2011 as a subcontractor for companies doing business with the city.

She is also a member of the Public Improvements Advisory Committee (PIAC), a panel that holds public hearings and makes recommendations to the council on the citywide and neighborhood portions of the city's annual capital budget.

But the 13-member panel, comprising two members appointed from each of city's six districts and a chair named by the mayor, does much of its neighborhood-level work behind the scenes and without keeping a public record.

Every year committee members confer privately with their council members and staff to finalize lists of smaller neighborhood revitalization projects, funded by revenue from the city's 1-cent sales tax for capital improvements. Each council district receives about $4 million a year for these "in-district" efforts.

Sometimes these consultations are over the phone or by email. When such meetings are held, no minutes are taken.. meaning there is no established record of recusals for conflict of interest. During the course of the fiscal year, council members and PIAC appointees can sign memos transferring funds from project to to project, or drawing from money held in reserve.. The memos are also signed by City Manager Troy Schulte.

Last year, McCaw signed a memo supporting the transfer of $700,000 from two other PIAC-funded neighborhood projects in the 2nd District to purchase land for improvements to Old Tiffany Springs Road near the Zona Rosa shopping district.

Since 2011, VSM has received $34,460 in payments as a subcontractor from George Butler Associates (GBA), which is heading the Old Tiffany Springs Road project. VSM's work has mostly involved utility relocation.

In 2016 and 2017, she recommended allocations totaling $375,000 to Walter P. Moore, the firm selected by the city to design improvements to North Green Hills Road in the 2nd District. Records show that VSM is a subcontractor hired by Moore for culvert design and utility relocation. VSM has collected $47,830 in fees from Moore since 2014.

McCaw, who was appointed to PIAC in 2015 by 2nd District Councilman Dan Fowler, has disclosed her firm's work for the city on annual conflict of interest forms. She said she discussed the possibility of conflict with Fowler when he approached her about the unpaid position.

She said she takes ethical matters seriously and that any role she played in recommending the projects for funding was inadvertent.

"I work very hard to be completely above board so that there are no conflict of interest issues," McCaw said in an interview in her North Kansas City office. She declined to give her age, instead citing her 30 years experience in civil engineering.

McCaw said she supported the Old Tiffany Springs Road transfer because the $700,000 went not to GBA but to the city's public works department to buy the land. Still, she acknowledged that it was a misstep.

"In hindsight I maybe shouldn't have signed this," she said.

McCaw also said she inadvertently signed off on the 2017 allocation for the North Green Hills project ($250,000) but that she immediately asked for it to be redrafted without her signature.

City records contain both the signed and unsigned versions. Rose Rhodes, the finance department administrator who works with PIAC, said Friday she neglected to shred the signed version. There is no record of recusal for the 2016 PIAC allocation ($125,000).

The North Green Hills Road and Old Tiffany Springs Road projects were started by the city before McCaw joined the committee. Subsequent decisions by the city expanded the scope of the work after she was appointed, necessitating additional funding.

McCaw said any discussions about the expansion were strictly between the city and the prime contractors, Walter P. Moore and GBA.

Once the amended scope of work was settled, she said, she negotiated her fees with the companies. Spokespersons from GBA and Walter Moore did not return phone calls seeking comment.

Questions about McCaw's role on PIAC triggered an investigation earlier this year by the city's internal auditor, Gwen Stafne. She opened the inquiry in response to a call to the city's ethics hotline, which municipal employees and residents use to anonymously report suspected wrongdoing.

Stafne, who reports to City Manager Troy Schulte, closed the case on April 13 after a review of PIAC meetings and documents.

In a brief summary, Stafne recommended no action but cautioned McCaw "to take special care not to sign funding transfers that involved projects she was paid on."

According to the city code, appointees to boards and commissions are required to recuse themselves from any matter that has resulted, or might in the future result in economic gain. McCaw said she has recused herself whenever she becomes aware of a potential problem.

Schulte said in a recent email that he reiterated Stafne's warning.

"I have met with Ms. McCaw where she again pledged that she would not sign any memos where supplemental funding was needed and she was to be a part of the project," Schulte said.

Fowler, who appointed McCaw after meeting her through the Northland Chamber of Commerce, said he was not concerned about her actions. He said he considers her engineering background an asset to PIAC and likes her "level-headed" approach.

"I guess she signed some things she shouldn't have," Fowler said. But he added that because her role is strictly advisory, it wasn't an issue.

"There's only two signatures that make any difference," he said, referring to his and that Councilwoman Teresa Loar, the 2nd District at-large representative. "We've got the final say," Fowler said.

In a letter Friday, Fowler said: "Ms. McCaw has always conducted herself in the most ethical way possible. Because she is a very talented and skilled engineer, her participation in the PIAC process, both city wide and in‐ district, is invaluable."

Others expressed concern about McCaw's ties to the contracting world.

"It's a very unpleasant situation," said Nelsie Sweeney, PIAC's other District Two representative. "I've brought it to Dan Fowler's attention so many times, and he just did nothing. So, you know, you just drop the subject at some point."

Sweeney, a 19-year veteran of PIAC (most recently reappointed by Loar in 2015), said even when McCaw signs off on projects in which she is not involved, it leaves questions about whether her support might benefit her in future business dealings with city contractors. Subcontractors are usually not hired until after the city awards the job to the prime contractor.

"It's putting money into an industry she works directly for," Sweeney said. "If she was a caterer who had business with the city, it would be a lot different because it wouldn't be related to capital improvement funding."

Loar said she has no reason to doubt McCaw's integrity, but has also spoken to Fowler about McCaw's situation. She said McCaw's position on PIAC puts her in an awkward spot.

"I don't think she would mean to do something wrong, but it's a real tap dance," Loar said.

There is one other consulting engineer on PIAC. Fifth District representative Ruth Turner, a former Water Services official, owns 3T Design and Development.

Records show while her firm works on water main replacement jobs for the city, it is not involved with any PIAC-funded projects.

VSM is certified by the city as a "woman-owned enterprise," and has been hired by numerous engineering and design firms that are required to subcontract a certain percentage of their city work to women- or minority-owned firms.

The 2nd District projects are a small slice of McCaw's business with city contractors. Most of her city work is not funded with PIAC money.

Records show that since 2011, VSM has obtained more than 50 subcontracting jobs not funded by PIAC, worth slightly more than $1 million. It has placed her in partnership some of the city's biggest engineering firms, including Burns & McDonnell and Black & Veatch.

McCaw said she has never leveraged her position on PIAC to gain other work.

Created by the City Council in 1983, PIAC is widely regarded as an exemplar of grassroots planning and transparency, allowing citizens to request money for infrastructure improvements ranging from storm water drainage to sidewalks to community centers to park facilities.

The panel's work begins each summer, when citizens can submit proposals. The deadline for this year's submissions is Aug. 31.

Competition is heavy — in the 2nd District alone there are usually $60 million to $80 million more in proposals for spending than what's available. Priority is usually given to projects already receiving funds. Many applicants spend years trying to secure money.

PIAC members receive an annual briefing from the city law department on when and how to recuse themselves in matters where they have a conflict.

"The appropriate action would be to simply disclose and withdraw," assistant city attorney Dustin Johnson told PIAC members at their Sept. 8, 2017, meeting. If the session is in public, Johnson said, members need to leave the dais and "just stay out of the conversation."

"If it happens in a closed meeting, you just must simply leave the room," Johnson said.

McCaw said she's never left the room during in-distict meetings. When a proposal emerges in which she might be conflicted, she said, she remains in the meeting but is silent. Fowler supported her recollection.

Sweeney said she remembers it differently — McCaw was active in all discussions.

"She's never recused herself from discussions or deliberations," Sweeney said.

PIAC chair Deb Hermann, an appointee of Mayor Sly James, said she was not aware of the concerns about McCaw's failure to recuse.

"There are a lot of opinions on how it should be handled, even among attorneys," said Hermann, a former council member. She said she "wouldn't be opposed" to more transparency for the in-district selection process.

City Manager Schulte said he saw no compelling need for changes.

"The process of documenting the use of all in-District PIAC funds ... has worked well for 35 years. I don’t anticipate any changes to the process as a result of this issue and staff considers this ethics case closed."

Kansas City's ethics hotline: 1-800-340-3132. For more about PIAC: kcmo.gov/piac

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