Audit panel reviewing state lease deal

By Michael Carroll & Greg Bishop 
Illinois News Network 

The Illinois Legislative Audit Commission is now reviewing a warehouse lease agreement that critics call an egregious example of government waste and insider dealings.

And one of those critics, Rep. David McSweeney, R-Barrington Hills, is looking at introducing legislation that would require members of the Illinois Policy Procurement Board to recuse themselves from approving leases when they have possible conflicts of interest.

McSweeney and state Sen. Tom Cullerton, D-Villa Park, signed a letter to Sen. Jason Barickman, R-Bloomington, and Rep. Robert Rita, D-Blue Island, who serve as co-chairs of the audit panel. The letter calls for an investigation of a $2.4 million lease negotiated with the Illinois Department of Human Services (DHS).

The five-year lease allows the department to store documents at the former Barney’s Warehouse store in Springfield. McSweeney and Cullerton say the building could have been purchased outright for $750,000.

“This has been a problem for years,” McSweeney told Illinois News Network.

McSweeney and others find the deal suspicious because the state negotiated it with a company called Climate Controlled Holdings, which has connections to the family of businessman Bill Cellini, who was convicted of a pay-to-play political scheme in 2011. Cellini’s son-in-law is part-owner of the leased building.

In addition, the chairman of the state’s Policy Procurement Board, Frank Vala, a Gov. Bruce Rauner appointee, is a longtime friend of Cellini’s. The board signed off on the document storage lease.

“We’re still trying to figure out the next step here,” Ryan Keith, spokesman for Rita, told Illinois News Network. “The [audit] commission staff is trying to figure out what the process would be moving forward. It might require a resolution from either the House or Senate to either ask the audit commission to look at it further or the auditor general to look at it further.”

But with less than a week left in the legislative session, many lawmakers are focused on the budget and other key state issues, Keith said.

“This is something we’ll look at as part of the normal and recurring DHS audit,” Barickman told Illinois News Network. It will be treated like anything else that comes before the audit commission, he said.

At a Senate Appropriations Committee meeting Thursday, Mike Hoffman, acting director of the Illinois Department of Central Management Services, said the state hasn’t purchased a new building since 2013. He also said it’s incorrect to say the state could have bought the former Barney’s Warehouse for $750,000, which the current owner bought it for. He said the building was appraised at $1.2 million, and the new owner invested about $1.5 million to upgrade it.

“It’s not as black and white as some people have tried to make it sound,” Hoffman said. “There’s a lot of nuance on what the best option was for taxpayers in this case … We followed the process and did the best job that we could.”

Hoffman also said CMS, which manages state-owned property as well as lease agreements, has saved taxpayers $55 million over the past six years by renegotiating state leases. Though he acknowledged that’s getting more difficult because the does not pay it’s bills in a timely manner.

“Seems like there’s this reputation that we’re paying too much money,” he said. “The fact is, we’re negotiating very hard.”

Earlier this month, McSweeney and Cullerton called on Comptroller Susana Mendoza’s office to block payments for the use of the warehouse until lawmakers can further investigate the contract.

“Once they submit a bill, we will put it on hold while this issue is under review,” Jamey Dunn, a spokeswoman for the Comptroller’s Office, told Illinois News Network in an email. “After Illinois has gone more than two years without a budget and the bill backlog has hit a record level of more than $14 billion, the comptroller’s oversight role as a fiscal watchdog is important now more than ever.”

Such questionable transactions will get greater exposure since the state is facing a huge backlog of payments as a result of the current budget impasse, Dunn said.

“This is an absolute travesty in these times when we don’t have a budget,” McSweeney said.

He questioned why there was no discussion of digitizing the DHS records and why the records could not have been stored in an existing state office building.

“It’s very clear that this is a sweetheart deal – an insider deal,” McSweeney said.

Cullerton previously told the State Journal-Register that he suspected insider trading in the lease deal.

“This is government insider trading,” he told the State Journal-Register. “Somebody found out about this, so they set up a shell company so they would be the only ones running the bill and they would get the deal. To me, it needs to be looked into.”

Cullerton also emphasized that the call for an investigation was bipartisan.

“This is a Republican and a Democrat, a Senate member and a House member requesting that this be looked into,” he told the Journal-Register.

The Illinois Department of Central Management Services has yet to send any bills for the lease deal to the Comptroller’s Office.

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