Hawthorn Woods trustee questions mayor's credit card use in hard times

Outside Hawthorn Woods' village hall last October, leaves were changing colors and the air was getting chilly, all part of a seasonal transition.

But inside the barn on Lagoon Drive, village balance sheets were experiencing another kind of transformation, from black ink to red.

When budget shortfalls of $750,000 were first announced and the village laid off eight employees and cut expenses, most blamed the foul housing market.

At the time, officials said development money -- nearly the only source of village income -- was trickling in at 40 percent of expectations.

More Coverage Stories Other towns in county watch expenses closely

But at least one trustee thinks the village has a problem common to many Americans: Overspending its income.

The village just last week announced another deficit of $760,000, possibly leading to more cuts.

And with village credit card reports showing charges of thousands of dollars in dinners and travel, Trustee Steve Riess accuses Mayor Keith Hunt, in particular, of living above the village's means.

Several other trustees concede the village could look at tightening its credit card policy, which doesn't spell out what or how much can be charged, or require a receipt.

But the mayor and his defenders assert he's doing critical networking to attract developers and sales tax money to Hawthorn Woods, the community of mostly single-family homes and 8,500 people.

Hunt said the money he spends is dwarfed by what he brings in.

"The people that I meet with are people whom we are trying to court to generate their interest in our village," Hunt said. "We have to invest some money to make some money in terms of sales tax revenue."

The numbers

Hunt's travel expenses from May 2005 to the end of 2007 totaled $14,392.39, according to village credit card statements.

In addition, Hunt's local restaurant charges paid via village credit card for the same time period were $9,992.77, not including an almost $3,000 tab for a village official's retirement party at Biaggi's Ristorante in Deer Park.

Riess says lack of oversight in credit card expenditures has added to the village's financial problem.

"We laid people off in October," Riess said, noting Hunt at the time urged belt-tightening around village hall. "He made this big speech."

Yet, Riess pointed out, Hunt put a large meal at Gianni's Caf#233; in Kildeer on the village credit card on Dec. 14.

"He's out spending $300 at Gianni's," Riess said.

Hunt said he's shocked by that criticism, calling it "crass."

He said the board specifically directed him to conduct the dinner as part of its job search for a candidate to fill an open village administrator position.

"The $300 was for four people to go out to dinner as part of a candidate evaluation process," Hunt said. "Which was suggested and unanimously agreed to by the entire board, including Mr. Riess."

Riess said that's the first he heard of the board ordering Hunt to go out to dinner with candidates for the job.

He said the board did say "it would be nice to know" how one candidate's wife felt about relocating to Hawthorn Woods.

The reasons

Hunt said the village's return on its investment has been many times what was spent.

For example, the mayor said that during one dinner with a developer, he helped secure a contract to develop the vacant land at Route 12 and Old McHenry Road into a mixed-use development. Village officials confirm talk of a possible development, but no definitive estimates can be made concerning how much money the village would make from the project, which has not been finalized.

"When you're trying to court a developer, you are trying to do that in the right atmosphere," said Hunt, a lawyer who has been mayor since 2001. "For some kinds of meetings, the board room is a perfectly appropriate venue. For other kinds of meetings, it makes more sense to break bread."

Trustee Cliff Wright said the village got its money's worth from Hunt's expenses.

"From a cost/benefit perspective, (Hunt) has brought in a lot of money to the village from developer donations," Wright said, estimating Hunt brought in at least $7 million during his tenure as mayor.

Wright said the mayor should use his best judgment on expenses.

(The board hasn't) "established a policy on entertainment expenditures," Wright said. "(Hunt) has been given the latitude to use his discretion on these, so both he and the board bear responsibility on what is spent.''

Trustee Neil Morgan said he did not know enough about the situation to comment for this story and Greg Gehrke did not respond to a call seeking comment.

But Trustee Jim Silvers, a venture capitalist who buys and sells companies for a living, said Hunt was doing the kind of economic development work the village needs to expand.

"When I am cutting deals with potential buyers or sellers of businesses, if I took my counterparts to some second-rate eatery or some other second-rate facility I would never get the deal done," Silvers wrote in an e-mail, later adding, "If you look at the detail of his larger expenses as I have, the constant thread you will find is that those bills are associated with expenses related to bring development/developers to Hawthorn Woods."

Hunt specifically references two expensive dinners he remembers as taking place in summer 2006 or early 2007 that he said paid high dividends.

He said meetings on a Clinton Road water line proposal will bring in nearly $500,000 in developer donations "for less than a $1,000 investment on our part."

But Riess responded the water line proposal was going forward whether or not Hunt took anyone out to dinner.

"He didn't bring the business in as a result of that dinner," Riess said.

Hunt also said he took developer Cy Taxman to dinner several times, leading to the contract on the parcel at Route 12 and Old McHenry Road.

"We're in the preliminary phases of those discussions," Hunt said of the development, which he said would be a "mix of commercial and residential within the constraints of the North Barrington-Hawthorn Woods boundary agreement."

The travel

Hunt's travel expenses include three International Council of Shopping Centers conferences in Las Vegas and conferences in San Antonio, San Francisco and Washington, D.C.

A 2006 trip to Las Vegas included $1,236.25 spent in lodging at Caesars Hotel and Casino, $70 at Snakus Maximus in Caesars and $27 at Pure nightclub. In all, the trip cost $1,453.25.

In May 2007, another Las Vegas trip cost a total of $2,620.97 and included dinner at Smith Wollensky steakhouse and a stay at the Rio casino and hotel.

In 2#189; years, Hunt visited Las Vegas three times, and San Antonio, Peoria, Washington, D.C., and San Francisco at the village's expense.

Riess criticizes the San Antonio trip, in particular, when more than $2,600 was spent on lodging alone. Both Hunt and former Village Administrator Jim Krischke attended. They each stayed in hotel rooms with rates of about $300 a night.

"What he's doing it for is his own personal vacation," Riess said.

Hunt disputed that, saying he picked a hotel close to the conference, which was held by the American Planning Association.

"It probably was not the cheapest (hotel)," Hunt said. "We tried to be budget-conscious."

Hunt said conferences not only can bring developments but also can be informative and helpful with municipal planning.

"The village got not only exposure and recognition from the conference, but also a great deal of information," Hunt said. "I think it was very beneficial."

Hunt's total travel charges did not include the hotel stay in San Antonio, which was on a village credit card in Krischke's name.

Hunt said just as some of the charges under other people's names are for him, some of the charges under his name were for trustees who attended the conference with him.

"When we've gone to the ICSC (International Council of Shopping Centers) conference, it's always been typically two of us that have gone," Hunt said of the conference held every year in Las Vegas.

Hunt pointed to an ICSC meeting with developer Opus North that he said had a direct benefit.

"They now have a contract on the Alberts parcel (at Gilmer and Midlothian roads)," he said. Development on that parcel has not been finalized, Hunt said.

The food

From mid-2005 to the end of 2007, Hunt visited the Rosebud restaurant -- either in Chicago or Highland Park -- seven times on the village tab. He also dined at other upscale restaurants, including Gibson's, Morton's and Smith Wollensky. He ate 11 times at Gianni's Caf#233; in Kildeer.

In six instances, Hunt charged to the village credit card meals at two different restaurants on the same day, such as Oct. 3, 2007, when he charged $11.63 at Panera Bread in Deer Park and $60.97 at Cucina Roma in Westmont.

The most expensive meals charged under Hunt's name include a $350 meal at Gianni's Caf#233;, a $413 meal at Tuscany in Oak Brook and a $331 meal at Trullo in Evanston.

Hunt said he was flabbergasted by Riess' accusations, calling them "ludicrous."

Hunt said he drove the budget cuts in late fall of 2007.

"I was the guy who reviewed the budget last fall," Hunt said. "I was the person who proposed -- in dollar amount(s) three times -- the cuts that staff had proposed."

Hunt added all meals were part of the delicate courting process and said there shouldn't be any restrictions about charging them, including alcohol.

"Alcohol is not illegal. There's nothing wrong with people having wine with dinner or having a cocktail to do business," Hunt said. "It is how a great deal of business gets done in this country and, in fact, throughout the world."

Hunt said he believes Riess has a political motive for his criticisms of his credit card expenses.

"It is very unfortunate," Hunt said. "Frankly, it's despicable."

Riess disputed Hunt's accusations that he's trying to make political hay from the issue. He said he has already confirmed he will not run for re-election as a trustee or for the mayor's office in 2009, as long as a candidate steps up to challenge Hunt.

"I'm finishing my remaining term and getting out," Riess said. "I've made it public knowledge."

The rules

Riess blames what he sees as excess spending on a lax village credit card policy.

In fact, he said, the village shouldn't have a credit card at all.

"The village has no need for credit cards," he said. "We should operate like most major corporations do: Submit an expense report, a detailed expense report and wait for reimbursement."

Sikich LLP, the Aurora firm that did the village's latest audit, recommended in a 2007 memo that the village tighten its credit card policy after finding instances of inadequate details, such as receipts, to back up expense reports.

In the memo, the auditor said the village doesn't have a written credit card policy and noted "in several instances, that proper supporting documentation (receipts) was not attached to the credit card bill."

The auditor also suggested the board discontinue approval of credit card bills without receipts.

In response to Freedom of Information Act requests, the village provided an undated credit card policy to the Daily Herald. Hunt said the policy is part of the village employee manual, which was approved before his tenure.

Hunt said the auditing firm was mistakenly told by a village employee that there was no credit card policy and said some kind of record -- a receipt, notation or written description -- of the charge must be submitted.

Hunt said either the village finance director, village administrator or the mayor must provide that documentation, but no one person is responsible.

The village policy does not lay out what can and cannot be charged to the village credit card. It doesn't address whether alcohol may be put on the card or who may be taken out to dinner or drinks on the village tab.

The policy does lay out who may use the card, forbids its use for personal expenses and says the credit card must be the most cost-effective method of payment.

Before former Finance Director Nancy Caine left office, she said the board was looking to revise its credit card policy, something Hunt said is happening as part of a larger overhaul of the entire village policy manual.

Wright did say that in light of the village's current budget problems, reassessing spending might be a good idea.

"I am sure the board and (Hunt) would be amenable to setting up a specific policy and parameters on these expenditures," he said.

Trustee Joanne Weick said the village doesn't have a strict expense policy and agreed that could be revisited.

"Should we tighten up those policies? Maybe we should," Weick said.

The end

Riess said the village doesn't have to spend like it does and has already begun to pay the price.

"We've overspent our income every year for the last three years in a row. We're in trouble," he said. "Based on the current financial situation from the village, none of these charges should be allowed at any time unless the board gets to see the direct results of the expense."

Hunt said the village doesn't need any more rules about credit card usage.

"I think the key is discretion and reasonableness, not a set of arbitrary rules which may not fit every situation," he said, adding he believes his strategy of wooing development has paid off.

"We've accomplished a great deal for the community," Hunt said. "I think Hawthorn Woods is a better place today than it was eight years ago and I think the residents have more to show for it."