Date: To:

September 23, 2013 S. K. Borges, Acting Chief Operating Officer City of Hartford Keney and Goodwin Golf Courses Special Review

From: Craig Trujillo CPA, Deputy Chief Auditor

CST
Tele: 860.757.9952

I. Executive Summary The purpose of this special review is to address concerns expressed to the Internal Audit Commission, from various sources, that numerous trees were harvested from Keney and Goodwin Golf Courses by the City of Hartfords (City) contracted operator, MDM Golf Enterprises , LLC (MDM), with the proceeds from the trees harvested being retained by MDM. Our review was primarily concentrated on the removal of trees from the golf courses in 2009 and to determine what necessary City and Governmental approvals were obtained to the cut down and remove trees; and, if the trees generated any revenue that should have been remitted to the City. It should be noted that 93% of the Keney Golf Course and 100% or most of the trees are located in the Town of Windsor, Connecticut and subject to Windsors Tree Wardens approval for the removal of trees. Our review was concentrated on the Keney Golf Course. We physically toured the Goodwin golf course but did not see any evidence that trees were harvested Background In April 2009, the City entered into a five year Lease Agreement with MDM to operate and maintain the two City-owned golf courses: Goodwin and Keney. The lease stipulates that MDM was required to make and pay for over $2.4 million in capital improvements to both courses as set forth in MDMs 2009 bid which cited extensive tree removal at Keney Golf Course. MDM engaged the United States Golf Association (USGA) North East Region Green Section to perform a Turf Advisory Service for Keney Golf Course which was performed on July 2, 2009. The repo rt cited two primary concerns with the golf course: the adverse/negative impact of trees and a failed drainage system. The USGA report goes on to say that shade from the trees was weakening the turf and slowing the ability of surrounding soil to dry. Trees were also impacting the original design intent of a number of golf holes and the way which the holes are played. The report gives numerous tree removal recommendations targeted at trees on the south and southeast sides of greens and in dense areas to improve air circulation. Dense shade and poor air circulation were cited as impacting many green and tee sights and the failed drainage on a number of fairways and green sites made the course unplayable and severely disrupted maintenance. In 2012, the City determined that MDM violated several terms and conditions of the lease agreement and exercised the cancelation option. However, MDM was permitted by the City to continue to lease the properties for the final 2013 calendar year golf season. According to the lease agreement, at the end of the golf season in October 2013, MDM must surrender to the City the properties in as good condition as the same were provided to the tenant.

Scope

City of Hartford Keney and Goodwin Golf Courses Special Review

The scope of our review included interviews with some Hartford (City) residents and the Keney Golf Course attendant, the Goodwin Golf Professional, the Director of the Department of Public Works (DPW), the Town Clerk, City Forester/Tree Warden, Corporation Counsel, City Treasurer, City Council members, MDM owner, Windsor, Connecticut Town Tree Warden, Connecticut Department of Energy and Environmental Protection Forester, Health and Human Services Department (HHSD) Director, License and Inspections, MDM hired logger and others. We physically inspected the entire 18 holes at Keney and Goodwin golf courses including clubhouses and out buildings and took photographs. We reviewed the Hartford Municipal Tree Code and the Connecticut Tree Warden Statute. We reviewed all four bids from golf course management companies responding to the Citys RFP in 2009 and the USGA Turf Advisory Report for Keney Golf Course and other pertinent documents. General Based on our work as outlined in this report, there is evidence that several hundred trees were cut down in Keney Golf Course at the direction of MDM, the Citys contracted golf course operator, without the required written approval from the Wind sor, Connecticut Tree Warden as outlined in Chapter 451, Section 23-59 and 16-234 of the Connecticut General Statutes related to the Powers and Duties of town Tree Wardens. Trees removed from Keney Golf Course, as evidenced by about 75 tree stumps; do not appear to be cited in the USGA report for removal. MDM contends that those remaining tree stumps were the result of downed trees from the severe October 2011 snow storm. However, the City Tree Wardens reviews of aerial photographs before and after the October, 2011 storm, in the Wardens opinion, prove otherwise. On September 18, 2013 MDM provided us with evidence from their insurance agent, that MDM was paid a $50,000 claim under their insurance policy for the removal of about 25 t0 30 trees damaged during the October 2011 snow storm. City Golf Course management oversight was also found to be severely lacking and as a result the golf courses fell into severe disrepair. MDM reported to the City in late 2011 that over $1 million in capital improvements were made to both Keney and Goodwin golf courses, however, MDM could not provide us with documentation supporting the capital improvement values reported to the City and City management did not verify that the improvements were made as reported by MDM. Furthermore, our inspection of the Keney property revealed that the conditions of the Keney Golf Course turf, cart paths, bridges and club house are in severe disrepair and in our opinion pose a health and accident risk to the public utilizing the facility. Our observations of the Godwin golf course, although not as severe, were similar. The City Council has appointed an 11 person task force made up of City employees and Hartford residents to determine what work is needed to be done on the properties and how the Golf Courses will be operated going forward including related controls over the operation and maintenance of the properties. The City also budgeted $5 million this fiscal year for repairs and improvements to the golf courses. II. Results of Work Performed Tree Removal The lease agreement with MDM stipulates that MDM is required to make and pay for $1.1 million and $1.3 in capital improvements to Goodwin and Keney golf courses, respectively, as set forth in MDMs 2009 bid which cited extensive tree removal at Keney Golf Course. (See Capital Improvement section below). Based on the allegations mentioned above, we concentrated our review on Keney Golf course. MDM engaged the USGA North East Region Green Section to perform a Turf Advisory Service for Keney Golf Course which was performed on July 2, 2009. The report cited two primary
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City of Hartford Keney and Goodwin Golf Courses Special Review

concerns with the golf course: the impacts of trees and a failed drainage system. The USGA report goes on to say that shade from the trees was weakening the turf and slowing the ability of the soils to dry. Trees were also impacting the original design intent of a number of golf holes and the way which the greens are played. The report gives numerous tree removal recommendations targeted at trees on the south and southeast sides of greens and in dense areas to improve air circulation. Dense shade and poor air circulation were cited as impacting many green and tee sights and the failed drainage on a number of fairways and green sites made the course unplayable and severely disrupted maintenance. MDM reviewed the work to be performed on Keney Golf Course in 2009 with the DPW acting Director at that time, now former Director, and the former DPW Parks Director/Acting Tree Warden. The DPW Director informed us that the town of Windsor Parks division was notified of the planned tree work through a series of emails, which we examined, and the town had no objections. The DPW Director then informed MDM that they could proceed with the work as outlined in the USGA report. (See Capital Improvements section of this report below for work performed by MDM). There is no evidence that the required written approval from the Windsor Connecticut Tree Warden, as outlined in Chapter 451, Section 23-59 and 16-234 of the Connecticut General Statutes related to the Powers and Duties of town Tree Wardens, was obtained prior to tree removal. The Windsor Tree Warden informed us that he had no knowledge of the tree removal work at Keney Golf Course and that he did not give his required approval to remove any trees. We physically toured the Keney golf course with the City Tree Warden, hired in 201, the Windsor Tree Warden, who served in that capacity for over 30 years with the town and a state of Connecticut Forester from the Energy and Environmental Protection Agency. Prior to the tour, we compared current aerial views of the golf course to the tree removal sites noted in the USGA report and it appears that the trees were removed accordingly to the best of our knowledge. We confirmed with the logger hired by MDM that his company felled about 200 trees at the direction of MDM over a three week period. The cost to MDM for this work as per the logger was about $30,000. The logger informed us that MDM was not paid for the felled trees and the trees were not removed from the property. The logger also informed us that his company had the trees ground up on site using heavy shredding equipment at a cost to his company of about $8,000. The logger also informed us that there was an excavating company on site following up with stump removal. MDM informed us that the stumps were removed and the sites graded and hydro seeded, etc. leaving no traces of removed trees. During the tour we observed about 75 tree stumps throughout the Keney Golf Course which are the remnants of fallen trees. It appears that these fallen trees were not included in the USGA report. The State Forester and the Windsor Tree Warden, based on their observations, commented to us that amateurs cut the trees and the felling of them was dangerous and done in an unprofessional manner. MDM contends that those tree stumps were the remnants of trees that were fallen by the snow storm in October 2011, a storm that devastated the entire State of Connecticut. MDM informed us that MDM workers did the entire fallen tree cleanup work at their expense and that they would not incur the cost of removing the tree stumps nor did they have the remnants removed from the property. We found no evidence that the felled trees are still on the property. We had the City Tree Warden examine aerial photographs of Keney golf course before and after the storm and the City Tree Warden informed us that it appears that the majority of those fallen trees were not a result of the storm which is in conflict with MDM contentions. On September 12, 2013 MDM provided us with a letter from his insurance agent that there was a large claim involving trees down on 17 holes at Keney golf course as a result of the October 2011 storm. MDM, on September 18, 2013, provided us with evidence from their insurance agent, that MDM was paid a $50,000 claim under their insurance policy for the removal of about 25 t0 30 trees damaged during the October 2011 snow storm. Also, the value of the felled trees was never established by City DPW management therefore no efforts were ever taken to recover any residual values. The cost to replace unauthorized felled trees, if any, could be several thousands of dollars each.

City of Hartford Keney and Goodwin Golf Courses Special Review

City Golf Course Management Oversight When the lease with MDM was signed in April 2009, the management oversight of the lease was placed with the Recreation Division of the HHSD. In mid-2010, management oversight was moved to the Parks division of DPW where it still resides. Nowhere is there any evidence of what specific management oversight was to be performed. MDM and City Recreation informed us that during 2009 and 2010 the management relationship was good. Recreation management informed us that they basically oversaw the lease agreement in a landlord capacity but did not get involved with the operation and maintenance of the Golf courses. When the management oversight function was moved to DPW, MDM informed us that there was little if any contact with DPW from that point forward and that if there were any issues to be addressed, they felt they had no one to go to. We were informed by DPW never performed any onsite inspection nor did they verify that any work performed at the properties was in accordance with the lease agreement. (See Capital Improvements and Conditions of the Golf Courses sections of this report). The former DPW employee responsible for the oversight, we found, kept no documentation as to his oversight activities. In 2012, we were informed that the Mayors office was receiving complaints as to the deterioration of the golf courses and the former Chief of Staff to the Mayor stepped in. MDM informed us that the relationship with DPW was nonexistent and that it was difficult to work with the former Chief of Staff. The deterioration of the two golf courses to the point they are in today, may have been avoided if DPW management had exercised basic contract management oversight including periodic inspections of the physical conditions at the properties. The City Council has appointed an 11 person task force made up of City employees and Hartford residents to determine what work is needed to be done on the properties and how the Golf Courses will be operated going forward including related controls over the operation and maintenance of the properties. Golf Course and Club House Conditions We observed that the Keney and Goodwin golf courses fell into significant disrepair during the later years of the MDM lease and we believe it is because of a lack of management oversight as noted above. The Keney clubhouse has been closed by MDM because of health hazards cited in a Connecticut State Department of Health recent inspection report requested by City HHSD at our request. It is apparent that management oversight of the operation and conditions of the two facilities was severely lacking. Because of the poor upkeep and deterioration of the Keney and Goodwin golf course properties, $5 million was approved by City Council in the 2014 City budget and $5 million recommended in the 2015 budget for repairs and improvements. The City Council has appointed an 11 person task force made up of City employees and Hartford residents to determine what work is needed to be done on the properties and how the Golf Courses will be operated going forward including related controls over the operation and maintenance of the properties. The following are some specific observations of the deteriorated conditions at Keney golf course: 1. 2. 3. 4. 5. 6. 7. Overall property turf, clubhouse and out buildings in severe disrepair; Electrical system is old, appears it is from the 1930s, and could present a fire hazard and may not be up to building codes; Original slate roof leaking causing extensive water damage to the clubhouse including significant mold growth; Significant Connecticut State Health Code Violations as indicated in the State Health Inspection Report; Dangerous conditions for patrons using golf carts on significantly damaged and eroded cart paths; No caution signs relating to golf cart traffic; Bridges and steps throughout the course are in disrepair and dangerous;
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City of Hartford Keney and Goodwin Golf Courses Special Review

8. 9. 10. 11. 12. 13. 14. 15.

Several golf ball washers missing and old trash litter around tee boxes; Old downed trees and limbs were noted throughout the property; Restroom facilities in deplorable filthy condition and unbearable odors; Putting greens significantly damaged due to lack of irrigation, top dressing maintenance and periodic aerating; Fairways and tee boxes significantly damaged due to lack of irrigation, adequate drainage routine maintenance; Sand traps overrun with weeds and lack of adequate sand replacement; Huge tree limb observed hanging over the clubhouse entrance posing significant risk to injury; and Standing water near clubhouse poses mosquito and other health/accident risks.

The conditions of the Goodwin golf course turf, tees, fairways and putting greens, need significant repairs and continued maintenance. The clubhouse needs to be inspected and any necessary repairs preformed. The driving range is in disrepair and not currently functioning. The pro shops at both golf courses are empty and closed. The restaurant/bar in the Keney clubhouse is closed. Capital Improvements Reported by MDM The lease agreement with MDM stipulates that MDM is required to make and pay for $1.1 million and $1.3 in capital improvements to Goodwin and Keney golf courses, respectively, as set forth in MDMs 2009 bid for the lease. The Capital improvement plan sighted extensive tree removal at Keney Golf Course which we reported on above. In late 2011, MDM issued to the City a report covering the Capital Improvements made to the Keney and Goodwin golf courses during the period January 1, 2009 through December 1, 2011. In the report, it notes that $537,300 and $519,700 in capital improvements were completed for Goodwin and Keney golf courses, respectively. This includes $365,000 of tree work throughout Keney golf course. Other work performed included repairs to irrigation heads and drainage throughout the properties, updates to restaurant and maintenance facilities, repair and replace cart paths and extensive leveling and sod work on several tees at Goodwin golf course. All of the work performed with the exception of the USGA suggested tree work performed by a contracted logger at Keney golf course totaling $30,000 mentioned above in this report was performed by the company On Course Construction, LLC, which is wholly owned by the owner of MDM. The reported amounts related to the capital improvements are MDMs estimates of the value of the services provided by On Course Construction, LLC. MDM could not produce the supporting documentation to the calculations of the completed improvement values. This was also mentioned in our audit report #1313 issued earlier in the year. Recommendations We recommend the following: 1. 2. 3. 4. Establish strong management controls and written procedures to manage future golf course contracts; Establish an independent Authority/Commission, to administer and monitor the golf courses going forward; Prepare an exit plan with MDM to leave properties in same condition as acquired in 2009 per lease agreement; Consider legal action if there was unauthorized felling of trees outside of the USGA recommendations;
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City of Hartford Keney and Goodwin Golf Courses Special Review

5. Establish procedures and controls including requiring written authority from the City to perform all capital improvements to the golf course properties in the future and require capital improvement inspections for compliance to all City policies and building codes; 6. Require frequent inspections of the courses to monitor course upkeep; 7. Include in future operator contract/lease language requiring written approval from the City and Windsor town Tree Wardens to remove trees and that the proceeds from the sale of the felled trees, if any, inure to the benefit of the City; 8. Consider the Mayor requesting additional funding for the golf courses from the City Park Trust Fund; and 9. Require City License and Inspections to do inspections in an owner capacity periodically. The above recommendations are referred to the Mayors and Chief Operating Officers Offices to take appropriate action where necessary. References Chapter 451, Section 23-58 of the Connecticut General Statutes requires the appointment of a town or borough tree warden. Within thirty days of their election, the chief elected official of each town and borough shall appoint a town or borough tree warden, except in cities that have an officer (i.e., city forester) with similar duties, to a one-year term and until their successors are appointed and have qualified. The tree warden may appoint any number of deputies as he deems expedient and, at any time, may remove them from office. Reasonable compensation for services rendered shall be provided to the tree warden and his deputies. Once appointed, the tree warden is guided, in part, by Connecticut General Statutes, Chapter 451, Sections 23-59 and 16234. The tree warden shall have the care and control of all trees and shrubs in whole or in part within the limits of any public road or grounds and within the limits of the tree warden's town, except those along highways or in public parks unless so requested by local park commissioners. Care and control parts of trees and shrubs that extend or overhang the limits of any public road or grounds. Expend all funds appropriate for the setting out, care and maintenance of such trees and shrubs. Enforce all provisions of law for the preservation of trees and shrubs and roadside beauty. Remove, or cause to be removed, all illegally erected signs or advertisements placed upon poles, trees or other objects within any public road or place under the tree warden's jurisdiction. Post a suitable notice on any tree or shrub scheduled to be removed or pruned at least five days prior to the removal or pruning unless the condition of the tree or shrub constitutes an immediate public hazard. Hold a public hearing at some suitable time and place after giving reasonable notice to all known interested parties, and post a notice if any person, firm or corporation appeals in writing objecting to the removal or pruning of any tree or shrub that the tree warden has posted. Render a decision granting or denying the application to stop the trees or shrubs removal or pruning and the other party aggrieved by the tree warden's decision may, within ten days, appeal to the superior court for the judicial district within which their town is located. Sec. 23-60. Appropriations. Public trees; removal. Each town, city or borough may appropriate annually a suitable sum to be expended by the town tree warden, borough tree warden, city forester or other similar officer, in the planting, trimming, spraying, care and preservation of shrubs or ornamental or shade trees within the limits of any public highway or grounds under his control and, at the discretion of the tree warden or other similar officer and with the written consent of the owner thereof, upon land adjoining such highway or grounds, if not more than ten feet therefrom, for the purpose of shading or ornamenting such highway or grounds. All

City of Hartford Keney and Goodwin Golf Courses Special Review

shrubs and trees planted under the provisions of this section shall be deemed public shrubs and trees and shall be under the care and control of the tree warden, city forester or other similar officer and may be removed only upon a written permit from him.

Distribution: Internal Audit Commission Members City Council Members J. Bazzano, City Town Clerk K. Burnham, Department of Public Works P. Campbell, Chief Auditor K. Chapman, Interim Director, Department of Public Works A. Cloud, City Treasurer J. Figueroa, Acting Chief of Staff, Mayors Office J. Mazzuoccolo, Manager, McGladrey and Pullen, LLP J. Molleda, Finance Department J. Ruffo, Interim Director, Finance Department P. Segarra, Mayor

Auditor C. Trujillo