Why is the OCCOA so secretive about its recent actions?
As the polls open and voters seek information on issues, it’s become apparent that there is one group of people that continue to remain silent – those in our country seeking millages.
We all know the media has the power to shape a story in how they report it, but they also have the power to shape a story based on what they DON’T report. Nowhere is this more evident than in the lack of reporting about the spending of the Otsego County Commission on Aging (OCCOA).
We are local citizens that have been on a three year mission to understand how the lease agreement on the new Elkview Drive space came to pass. We are also intent on finding out why there is secrecy surrounding the OCCOA operations.
We are not at all critical of the mission of OCCOA. We believe that they do a good work. The question remains, whether the taxpayers should be funding this organization to the extent that we do, and whether the OCCOA board is being transparent and prudent.
This Elkview Drive lease doesn’t appear to make financial sense, unless you happen to be an investor in the property. Additionally, how did a “service organization” almost exclusively funded by tax dollars amass a $1.4 million dollar fund balance while seniors struggle with ever increasing costs for food, utilities, and medical care?
This story between the OCCOA and Otsego County began with a push for “consolidation of services” via a county board resolution on December 15, 2020. The resolution called for a central location “to better support the growth of its programs” as well as “streamline costs, improve efficiency and enhance the capability to provide high level services” for the citizens of Otsego County.1 Beneficial? To whom exactly? Certainly not the citizens of Johannesburg or Vanderbilt – two rural communities a considerable distance away from a centralized OCCOA.
The resolution also specifically mentions the desire to enter into an agreement with Signet Capital LLC (“Signet”) for the “acquisition, construction, development, financing, and lease of a facility”.2 This is almost a full year before these same developers purchased the new OCCOA building, but clearly the pieces were moving into place.
Who is Signet Capital LLC? Who makes up their local entity Signet Otsego? How did the county identify them prior to entering into this agreement? How did they seem to get the exclusive rights to purchase and develop a property for the OCCOA and who negotiated the deal for their participation?
Recently Otsego Country Administrator Matt Barressi stated he “like[s] to get answers for citizens that ask questions at county meetings”….except in this case. None of the commissioners (present and former) nor the Director of the OCCOA, Donna Wishart, will provide inquiring citizens with the identities of the Signet investors despite the question being asked in multiple public meetings.
Furthermore, on July 27, 2021 the county entered into a whopping 25 year operating agreement with the OCCOA.3 (*Note: The OCCOA isn’t a government agency, rather it is an entity the county contracts with to provide senior services).
The previous agreement between the county and the OCCOA was for 5 years, which appears to be a more standard operating agreement term. With a 25-year agreement in place with the OCCOA – they were cemented as the sole provider of senior services in this county. It appears the commissioners have signed away their rights to set conditions, review the agreement, and make changes to the way this entity conducts business on the county’s behalf for 25 YEARS!
On August 10, 2021 the county board entered into an illegal 25 year lease with Signet for the 1165 Elkview Drive property3. (Note: The county board later had to amend this agreement to a 20 year lease + a 5 year extension to be in compliance with state law).4 An examination of previously leased OCCOA spaces shows prior to July of 2021, the OCCOA operated in roughly 5,100 square feet (with several gym spaces rented for senior fitness programs). The lease of the Elkview Drive property increased their space to 18,500 square feet! The OCCOA claims they are attempting to rent out the excess space, but have had little success in doing that. The OCCOA has never been able to justify this massive expansion and it continues programs at local gyms to this day.
Why would the county pay Signet Otsego considerably more than the market rate on Main Street (the most desirable real estate in town) for a property off the beaten path with known senior accessibility issues (steeply sloped driveway, no elevator)?
While the developers spent a “mere” $1,153,000 purchasing this building – the county lease agreement guarantees them over $3,333,000 above the purchase price in lease payments alone.5 If our math is correct, this is a nearly 16% return on investment (at a time when mortgages were going for 2-3%). *This is assuming that there were minimal costs in the initial investment. If there were renovation costs, these have not been disclosed.
For the (still unknown, reportedly local) investors of Signet Otsego LLC, it appears to be a very comfortable retirement program, courtesy of current (and future) taxpayers.
Why didn’t the OCCOA purchase the building outright with its large fund balance? What’s more, in an unprecedented move, the county agreed to a lease that put taxpayers on the hook for huge costs well over those they previously incurred in their former building?
It’s shocking how much expenses have gone up since the move according to the yearly budget provided to the county by the OCCOA. For example, in 2020-2021 when the OCCOA operated mainly out of the Alten Zimmer building (which houses a large number of our low income seniors) the budget provided to the county showed annual rents of roughly $67,000. With the move to Elkview Drive, rents are now reported of over $179,000 (an increase of over 250%). What’s more – though it was never disclosed to taxpayers or shown on any budget, a current commissioner disclosed the OCCOA had to pay an additional $77,000 to terminate the existing lease with Alten Zimmer when they moved to Elkview Drive. Where did that money come from and how was it accounted for in the budget?
With the new Elkview location, the OCCOA must now cover additional expenses for property taxes ($38,000/year), as well as increased utilities (nearly $29,000 verses the typical $9000 at Alten Zimmer), indoor/outdoor maintenance (a new line item adding an additional $16,000 in expenses), and increased cleaning costs (up to $14,850 from the Alten Zimmer costs of $2000-$4000).
What puts an organization in a position to incur these types of significant increases in long-term expenses? Perhaps this millage should have been further scrutinized before the commissioners just ask voters to sign another check for 0.89 mill?
Despite assertations that the OCCOA is open and transparent, a freedom of information request (FOIA) in December of 2022 was denied due to the OCCOA’s assertation they were a “nonprofit”.6 It recently came to light that the county was advised by their legal counsel that the OCCOA WAS required to respond to Freedom of Information requests since most of their operation was funded by taxpayers. For whatever reason, the county and the OCCOA did nothing to correct the misinformation they had provided until our new commissioners investigated their claim this year. Did the previous county board, county administrator, and OCCOA board know they were supposed to answer FOIA requests back in 2022? We may never know, but in all likelihood, the answer is yes.
Several commissioners (Burroughs, Wingo, Yohe, Mason, Turnbull and Clement) have raised issues with this decision and tried to get answers, but the rest seem content to allow the OCCOA to operate without any real accountability. They don’t indicate there is any problem with an organization that hordes so much taxpayer cash and is able to enter into what would be a foolish deal for a private business.
Because this whole deal has been so shrouded in secrecy, we acknowledge that there could be good explanations to these questions. The problem is, we have received no answers at all, let alone any good answers.
As you go to the polls to approve yet another millage, we feel this is information that every voter should have in order to make an informed decision. We have spent our own money and our own time, researching these facts and hope you will agree that the OCCOA needs more scrutiny moving forward.
OCCOA questions yet unanswered:
Who are the local investors who are reaping huge profits from this lease agreement?
How did the Signet deal come about, and how were these investors identified and approached or was the county/OCCOA approached by Signet?
Do any of these “investors” have connections, personal or business, with the OCCOA Board or the County of Otsego?
Being a non-profit service organization, how did OCCOA end up with over $ 1.4 million in reserves?
We’re still waiting.
- https://www.otsegocountymi.gov/AgendaCenter/ViewFile/Agenda/_01122021 ↩︎
- https://www.otsegocountymi.gov/AgendaCenter/ViewFile/Agenda/_07272021-405 ↩︎
- https://www.otsegocountymi.gov/AgendaCenter/ViewFile/Agenda/_08102021-805 ↩︎
- https://www.otsegocountymi.gov/AgendaCenter/ViewFile/Agenda/_01252022-857 ↩︎
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