Peotone Expenditure Study

Alderman James Radermacher

Alderman Mark Anderson
September 30, 2005

Introduction

At the May 2, 2005 City Council Meeting, Alderman James Radermacher asked for a
public accounting of the $650,000 Peotone expenditure. Mayor Frimark referred the
matter to the Finance and Budget Committee. On May 21st 2005, the chair of the Finance
and Budget Committee requested that Alderman Radermacher, with the assistance of
Alderman Mark Anderson, compile a report regarding the $650,000 expenditure for the
Peotone airport.

Alderman Radermacher and Alderman Anderson were asked to address three issues in
the report: (1) How did city officials come to approve the contract without a clear
understanding of its provisions? (2) Where did the $650,000 go? (3) Are there remedies
available that should be pursued?

In the course of preparing this report, an extensive document review was conducted. The
review consisted of examining city council minutes of both open and closed sessions,
contracts, memoranda, letters, newspaper clippings, invoices, and other relevant
documents. In addition, interviews were conducted with current and former elected
officials and members of city staff.

Following this introduction is a “Timeline” section detailing events from May 2002
through November 2004, the relevant timeframe of the Peotone decision-making process.
Thereafter is a “Discussion and Analysis” section. The report concludes with the three
questions noted, and answers thereto.

One final introductory note: O’Hare International Airport and the City of Park Ridge
have been neighbors for decades, and many issues and concerns have arisen as a result of
the city’s proximity to the airport. Among those are noise, safety, pollution, traffic and
quality of life in general. This report does not concern itself with those matters; its scope
is limited to the circumstances of the $650,000 Peotone expenditure.

Timeline

On April, 11, 2002, Joe Karaganis addressed the City Council to explain the need for the
Suburban O’Hare Commission (SOC) to battle O’Hare expansion. He focused on noise

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and air pollution with an emphasis on the incidents of cancer rates in the community. He
stated that SOC had hired the firm of Shaw Pitman of Washington D.C. to help fight the
issue. He stated that Shaw Pitman was a very good law firm but also very expensive. Mr.
Karaganis was asked to estimate costs relative to the issue. He explained that he could not
give hard and fast estimates, but guessed that it would cost $3-$4 million over the next
four years. Alderman MaRous indicated that he felt Elk Grove Village and Bensenville
has a larger stake and should pay more. Mr. Karaganis advised that Park Ridge had a
large stake as well. Alderman MaRous thought that SOC should be auditing the monies.1

At a May 6, 2002 closed session of the City Council it was announced that Mayor
Wietecha and finance director Diane Lembesis were going to Texas to meet with Ross
Perot about building a third airport.2 The Mayor wound up attending the meeting with
Alderman Bartolone.3 In a phone interview, former Alderman Bartolone stated that they
met with people who had experience in building airports. They did not meet with Ross
Perot himself.4

May 20, 2002 closed session of the City Council: After meeting in Texas the Mayor
stated that each of three towns (Park Ridge, Elk Grove Village, and Bensenville) would
be asked to contribute $1,000,000. He went on to say that we may need to put up money
ahead of time, which would total a return for the city in three years.5

On June 17, 2002, the city council approved a $500,000 payment to the Suburban O’Hare
Commission. Later that week, the city received a bill for the aviation integrity project for
$225,000. Mayor Wietecha suggested that the city take the $225,000 from the $500,000
allocated to the SOC.6

On July 9, 2002, the Finance and Budget Committee voted in favor of a motion
supporting the above proposal. At that meeting Alderman Tomassi said that at some point
all of us are concerned with where we draw the line regarding the extent of our financial
commitment. He suggested that it might be beneficial to have a public forum to explain
the city’s strategy. Alderman Benka agreed and added that citizens have feasibility
questions and added that the city should make a pamphlet for aldermen that answered
citizens’ critical questions.7

On July 15, 2002, the City Council granted authorization to sign a memorandum of
understanding in regard to the City’s intent to be a sponsor in building a new airport with
a contribution not to exceed $50,000. The council voted 13-0 with Alderman Fishman
absent. During that council meeting Alderman DiPietro questioned if any future money
was committed, and the Mayor Wietecha confirmed the 3 million dollars was being
shared among all the suburbs participating who share in the profits. He also said we
1
City Council minutes, April 11, 2002.
2
City Council minutes, May 6, 2002 (closed session).
3
Interview with City Manager Tim Schuenke, July 26, 2005.
4
Phone Interview with Former Alderman Frank Bartolone, September 12, 2005.
5
City Council minutes, May 20, 2002 (closed session).
6
City Council minutes, June 17, 2002.
7
Finance Committee minutes, July 9, 2002.

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expect all the money we allocated would be recovered plus dividends in the future.
During that same meeting the Mayor stated that the $3 million previously thought needed
had been negotiated down to $2 million and that there would be more than 80 other
communities participating in this. Alderman DiPietro asked the Mayor to confirm that the
city would anticipate no further contributions to this project. The Mayor answered
correct. A citizen asked the same question with the same response.1

On September 11, 2002, the City of Park Ridge entered into an Intergovernmental Pre-
Development Services agreement with Bensenville, Elk Grove Village and LCOR
Holdings LLC.2 This agreement was deemed effective as of July 7, 2002 and supplanted
the original Memorandum of Understanding.3 This agreement was entered into via Mayor
Wietecha’s signature before it was approved by either the Finance and Budget Committee
or the City Council. 4 Former Mayor Wietecha was asked in a phone interview if he
recalled signing the document before either the Finance and Budget Committee or the
Council as a whole approved the contract. He said that as Mayor so much was happening
and he did not recall the date. He commented that “You know how the Council was, and
probably is today. Sometimes necessity requires documents to be signed quicker than the
Council can act on them.” He went on to say that if City Attorney Hill recalls the contract
being signed on the eleventh, then it was. The contract did not contain any provision
stating that its effectiveness was contingent upon City Council approval. The former
Mayor said he did not recall what was in the contract.5

On September 13, 2002, Mayor Ronald Wietecha issued a memo to Council members
asking them to approve the Intergovernmental Agreement for the Development of the
Third South Suburban Airport. This was the agreement which had already been signed by
the Mayor. The memo contains the following paragraph:

Also remember, the Agreement provides that at the end of the agreement (or at such time
as we wish to exit the project) we can get back whatever we have invested with
reasonable interest or at least the balance on deposit less costs expended by the
developer. We can renegotiate the agreement or cancel it to minimize losses.6

On September 24, 2002, the Finance and Budget Committee approved entering into an
Intergovernmental Pre-Development Services agreement and approved an expenditure
not to exceed $167,000 pursuant to the agreement, subject to the city attorney obtaining a
final draft of the agreement. There is no further information regarding this matter in the
minutes.7

On September 27, 2002, city manager Schuenke distributed to the Finance and Budget
Committee members a revised copy of agreement. He noted that most significant change

1
City Council minutes, July 15, 2002.
2
See Intergovernmental Pre-Development Services Agreement (Attachment A).
3
Interview with City Attorney Everette M. Hill, Jr., June 6, 2005.
4
Interview with City Attorney Everette M. Hill, Jr., July 18, 2005.
5
Phone interview with Former Mayor Ronald Wietecha, August 25, 2005.
6
See memorandum to City Council Members, September 13, 2002. (Attachment B).
7
Finance Committee minutes, September 24, 2002.

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brings the total combined obligation of the three communities to $600,000. Also, this
memo has a reference to an inquiry made as to the city’s equity position in any work
product produced as a result of this agreement. He informed the committee that they
would have an answer to that by the time the matter is brought up on October 7th. There
is no mention of this inquiry in the minutes.1

On October 7, 2002, the City Council approved entering into an Intergovernmental Pre-
Development Services agreement regarding the South Suburban Airport, and approved an
amount not to exceed $200,000. The council voted 13-0 with Alderman Tinaglia absent.
The Mayor also addressed and stated his confidence and safety regarding this investment.
These funds were given to Elk Grove Village to join in an agreement with Park Ridge,
Elk Grove Village and Bensenville.2 The agreement held that the funding would be used
to determine the feasibility of a south suburban airport. The entity charged with
producing this document was LCOR Holdings.3 This contract arguably supersedes the
previous memorandum of understanding, thus creating a possible hindrance to our ability
to seek remedies thereunder.4 This joint agreement also fails to define any internal control
involving Park Ridge to approve any expenses or payments.5 The Village of Elk Grove
Village acts as the sole entity responsible for approving individual expenses. The City of
Park Ridge was to be given verbal reports on expenditures during closed door meetings
of officials from the three suburbs.6

On October 22, 2002, the Finance and Budget Committee was asked to approve an
additional $400,000. Mayor Weitecha and Mr. Joseph Karaganis were in attendance at
this meeting. It was brought to the attention of the committee that the city had budgeted
$250,000 for airport related expenses for the year. Approving the additional $400,000
would have the city spending $825,000 more than what was budgeted. Alderman Benka
expressed his displeasure that the committee originally approved an expenditure of up to
$167,000 for LCOR services, but that this amount was changed later to $200,000 based
on additional information but without committee discussion. Alderman Tomassi asked if
we could afford the additional contribution. Diane Lembesis indicated that the city had
come in with a $1,000,000 deficit the previous year and was expecting something similar
for the current year. She went on to state that we do not have enough money to do
everything we want to do.

Mayor Wietecha said this was the number one issue in the community. He asked the
rhetorical question “what good is it to make infrastructure improvements, if the airplanes
are flying over us?” He went on to say that our rainy day is here; we either have to fight
or let them do this to us. Also that since 1985 Park Ridge has fought airport expansion.
No one could guarantee successful litigation. If a third airport is built, there is no need to
expand O’Hare. We need to fight the north runway. Bensenville has been a good ally to
Park Ridge as they oppose the building of a north runway. We need to spend the funds in
1
See memorandum to Finance Committee, September 27, 2002. (Attachment C).
2
City Council Minutes, October 7, 2002.
3
See Intergovernmental Pre-Development Services Agreement (Attachment A).
4
Interview with City Attorney Everette M. Hill, Jr., June 6, 2005.
5
See Intergovernmental Pre-Development Services Agreement (Attachment A).
6
Phone interview with Former City Treasurer Carl Brauweiler, July 26, 2005.

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self defense. The Mayor also noted that both gubernatorial candidates (Blagojevich and
Ryan) say they support the building of a third airport.

Mr. Karaganis reminded the committee that Bensenville, Elk Grove Village and Park
Ridge each agreed to spend $1,000,000 apiece on this project. He went on to describe the
principal parties involved in the project. He then said that the $650,000 payment will get
us to the stage where we can determine if the project is viable or not. He estimated that
the feasibility study will be completed by June 2003. Mr. Karaganis went on to state that
we have two objectives: (1) Use the third airport to block the construction of a north
runway and (2) recoup our investment or make a profit. He also added that if Park Ridge
does not contribute its $650,000 share, the deal will fall apart. The committee
unanimously approved an additional $400,000 payment to determine the feasibility of a
south suburban airport.1

On November 4, 2002, the City Council approved another $400,000, expanding the total
funding to $650,000 to fund a south suburban airport feasibility study. The vote was 13-0
with Alderman Friel absent. In that meeting Mayor Wietecha stated that “the total
contribution to the fund will be returned to us with interest, or at least in the form of
another agreement where we can share in profits to be made on the third airport.”2

During subsequent closed door meetings, involving officials from the three communities,
Park Ridge Treasurer Brauweiler suggested drafting a note, convertible note or some
formal document reflecting the city’s equity interest. Recently former Treasurer
Brauweiler recalled that an informal agreement to reimburse the communities from cash
flow of airport operations was discussed. Nothing was ever put in writing.3

On July 21, 2003, the City of Park Ridge City Council voted against paying annual dues
to the Suburban O’Hare Commission.4 The vote was 7-6 with Alderman MaRous
recusing himself. Former Mayor Wietecha has since stated “I don’t believe Park Ridge is
entitled to its money back, they withdrew prematurely.” 5 The mayor of Elk Grove
Village, Craig Johnson, has stated that the funds in the joint venture have been spent and
do not have to be paid back to Park Ridge under the terms of the 2002 agreement.6
Former Treasurer Brauweiler observes that this event threw everything into an uproar.7

January 19, 2004 closed session of the City Council: After a period of attempting to open
discussions with the other parties regarding the city’s position, City Attorney Hill said it
was becoming clear to him that if we hope to see the money it will come through some
type of litigation. The city would need to be at the table when the matters are discussed.
Currently we are being ignored and put off. It was discussed that the city’s strategy in
looking at litigation is not to file suit for $650,000, but our demand would be that we be
1
Finance Committee minutes, October 22, 2002.
2
City Council Minutes, November 4, 2002.
3
Phone interview with Former City Treasurer Carl Brauweiler, July 26, 2005.
4
City Council minutes, July 21, 2003.
5
Schneider, Andrew. “Peotone Airport: Park Ridge’s $650K Question.” The Bugle; February 17, 2005.
6
Schneider, Andrew. “Peotone Airport: Park Ridge’s $650K Question.” The Bugle; February 17, 2005.
7
Phone interview with Former City Treasurer Carl Brauweiler, July 26, 2005.

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at the table when the South Suburban Airport Coalition meets and that we be the recipient
of any reports and information as to how they are planning to proceed.1

April 19, 2004 closed session of the City Council: The City Council grants consensus to
issue a letter of demand to Elk Grove Village, Bensenville, LCOR and Congressman
Jesse Jackson, with a copy to Joe Karaganis, to attempt to obtain our money.2

July 19, 2004 closed session of the City Council: City Attorney Hill reviews the city’s
options. 1: Do nothing, 2: Litigate to get the $650,000 with a potential cost of $75,000-
$250,000 with less than a 50% chance of victory, 3: Attempt to work out a deal.3

September 22, 2004 closed session of the City Council: The council discusses the
possibility of a press conference if the City continues to be ignored.4

October 4, 2004 closed session of the City Council: Mayor MaRous informs the Council
that he has met with Congressman Jesse Jackson. Jackson said he was not interested in
SOC problems. The mayor also met with Joe Karaganis and City Attorney Hill. There
was discussion about meeting with Bensenville and Elk Grove, but that the control was
now with the south suburbs.5

October 18, 2004 closed session of the City Council: Mayor MaRous informed the
Council that Joe Karaganis has conveyed that the money was overspent by Elk Grove
Village and Bensenville. Mr. Karaganis had suggested that the shortfall be split three
ways between the three suburbs; City Attorney Hill answered no and comments that there
is nothing in writing for agreement between the three communities.6

Former Treasurer Brauweiler recalls that Elk Grove Village and Bensenville claim that
they have since contributed additional funds and that they insist that Park Ridge equal
those amounts to participate on equal footing with them.7

November 1, 2004 closed session of the City Council: Mayor MaRous advises the
council that he plans on visiting Congressman Jesse Jackson to discuss a role for Park
Ridge; however, Bensenville and Elk Grove Village request that Park Ridge stay out of
the discussions.8

Discussion and Analysis

1
City Council minutes, January 19, 2004 (closed Session).
2
City Council minutes, April 19, 2004 (closed Session).
3
City Council minutes, July 19, 2004 (closed Session).
4
City Council minutes, September 22, 2004 (closed Session).
5
City Council minutes, October 4, 2004 (closed Session).
6
City Council minutes, October 18, 2004 (closed Session).
7
Phone interview with Former City Treasurer Carl Brauweiler, July 26, 2005.
8
City Council minutes, November 1, 2004 (closed Session).

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As of the writing of this report the following facts appear to be true:

• Of the original funds contributed by Park Ridge, Elk Grove Village and
Bensenville only $813,525.60 of the $1,950,000 remained two years ago, when
Park Ridge last reviewed the records. It would appear that amount and more has
since been spent.
• No feasibility study has ever been provided to the City of Park Ridge.
• There is a disagreement between Park Ridge on the one hand, and Elk Grove
Village and Bensenville on the other, as to whether or not the City of Park Ridge
is entitled to a return of the feasibility study funds, or to be included in the third
airport planning process.

In the course of the interviews several other points were discussed. City Attorney Hill
recalls that he had questioned the appropriateness of Mayor Wietecha referring to the
expenditure as an “investment.” He is not clear as to the dates, but recalls advising City
Manager Schuenke and Mayor Wietecha that the intergovernmental agreement was
nothing more than a contract to produce a feasibility study. Notwithstanding the City
Attorney’s advice, the Mayor went on to call the expenditure an “investment” in open
council session.1 City Manager Schuenke confirmed this series of events.2

In a phone interview with former Mayor Wietecha, he was questioned about his intention
when using the word “investment.” He insisted that the words he used were “words of
art.” He had no specific recollection of using the term and therefore had no opinion. In
the same interview he concurred with City Attorney Hill’s view that the contract only
called for production of a feasibility study. He also maintained that the wording of the
contract was the responsibility of the City Attorney.3

City Treasurer Brauweiler and Finance Chair Bartolone also referred to the $650,000 as
an “investment.” In an interview Brauweiler explained his use of the term as a
generalized description. “This was an investment in our environment and quality of life.”
He did not use it as a definition of an “asset” in an accounting sense.4 Former Alderman
Bartolone stated that “Any investment holds an amount of risk. With an investment there
is hope for a return. You may lose all or some of your money. That is why investments
include disclosures.” He also added that he did what he believed was in the best interests
of Park Ridge. He believed that O’Hare expansion was unfeasible. “You can’t fit ten
pounds of potatoes in a five pound sack.” He added: “This was to maintain the
preservation of health, safety and welfare. It’s easy to Monday morning quarterback.” 5

Former Mayor Wietecha believes that the expectation under the agreement was never to
get our money back. The City of Park Ridge needed to stay in the Suburban O’Hare
Commission. He stated that there will be another airport and that for Park Ridge to
1
Interview with City Attorney Everette M. Hill, Jr., July 18, 2005.
2
Interview with City Manager Tim Schuenke, July 26, 2005.
3
Phone interview with Former Mayor Ronald Wietecha, August 25, 2005.
4
Phone interview with Former City Treasurer Carl Brauweiler, July 26, 2005.
5
Phone Interview with Former Alderman Frank Bartolone, September 12, 2005.

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participate we would need to make overtures to Bensenville and Elk Grove Village. He
believes that any monetary reimbursement will be at the discretion of those two suburbs.
Our withdrawal from SOC caused a huge rift between Park Ridge and the other
communities. The only option for an eventual monetary remedy is to reconcile with Elk
Grove Village and Bensenville. He went on to state “My sole intentions were to fulfill the
development of the third airport. I wanted to stop the development of a northern runway.
I felt so bad for the people living in the area of Belle Plaine and Talcott. They are right at
the landing pad.” 1

It appears that certain of Park Ridge’s elected leaders were intent on advocating the
Peotone expenditure as being in the best interest of Park Ridge. Apparently, such
advocacy crossed the line from setting forth the actual benefits of involvement in the
Peotone project (i.e. increasing the likelihood that a third airport would be built and
therefore relieve air traffic in the vicinity of O’Hare) to misleading members of the City
Council, and the public, as to the financial risks and rewards attendant to the venture. The
outlay was not an “investment” in the fiscal sense, even though it was repeatedly
described as such. Would the expenditure have been approved even without its
characterization as an “investment?” Perhaps it would have been. But, the fact that
characterization was made requires that the status of the “investment” be determined, and
that the City ultimately make a decision as to the disposition of such “investment.”

The purpose of this document is to see what lessons can be gleaned from the events
surrounding the expenditure, to reveal the status of the “investment,” and to suggest the
appropriate disposition of the matter. This the authors have attempted to accomplish by
answering below the three questions first noted in this report.

Three questions and three answers

1. How did the City of Park Ridge come to approve a contract without a clear
understanding of its provisions?

It is clear that the proposed effects of the expansion of O’Hare Airport are of deep
interest to residents of Park Ridge. Increased air and noise pollution along with growth in
traffic congestion have led to strong and legitimate concerns. There is no evidence in any
of the documents reviewed or interviews conducted that any of the city staff or any
elected officials acted in a manner that would improperly benefit them at the expense of
the taxpayers. The concerns arising from being a neighbor to O’Hare Airport were acted
upon in the belief of what was best for the community.

That being said, the sincere concerns about the O’Hare expansion project did not justify
the tactics utilized to achieve the desired outcome. Even the most righteous cause must be
advocated, and allowed to rise or fall, on its own merits.

1
Phone interview with Former Mayor Ronald Wietecha, August 25, 2005.

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The Mayor of Park Ridge spent an overwhelming amount of his time on this issue. Every
council meeting had some discussion regarding the issue. In many meetings it took up the
majority of time. City commitments to spending on O’Hare were often unclear and at
times changed without Council approval. Objections over spending that were raised by
city officials were ignored or rebuffed. The contract in question was presented to City
Council without sufficient time for review. Indeed, it was signed by the Mayor before the
full Council saw it. The City Attorney’s advice in describing the points of the contract
was also ignored.

One might conclude that certain members of Park Ridge City government had become
emotionally immersed in the issue of O’Hare expansion. A sense of impending doom had
been blanketed over every attempt to have a logical discussion of facts. As a result, the
contract calling for the $650,000 expenditure was approved by Alderman who were not
well-informed of its provisions.

The leaders of the City of Park Ridge have an obligation to facilitate open, honest and
thorough discussion and debate of matters before the City Council. The Aldermen have
the right to trust and rely on the leaders’ judgment, but also an obligation to insure that
decisions being made are made only with the benefit of adequate information and
deliberation. We must not allow these tenets to be discarded in the name even of the most
honorable causes. Unfortunately, that is what happened in the case of the Peotone
“investment.”

2. Where has the money gone?

On November 10, 2003 City Attorney Everette M. Hill, Jr. issued a memorandum to City
Manager Schuenke regarding third airport expenditures.1 On October 24, 2003 the City
Attorney accompanied Alderman John Benka to the Elk Grove Finance Department to
examine their records with respect to the expenditure of $650,000. The accounting
documented expenditures of $1,136,474.40 of the original $1,950,000 (3 x $650,000).
This left a balance of $813,525.60 on that date. One third of that amount is $271,175.20.2
It has since been represented to the city that the balance has since been spent by Elk
Grove Village and Bensenville.3 Consultants, contractors and attorneys have received the
funds, presumably for services rendered.

3. Are there remedies available that should be pursued?

The city council must decide whether to pursue recovery through litigation. The authors
of this report have been charged with making a recommendation on that score. After

1
See memorandum to Tim Schuenke, November 10, 2003 (Attachment D).
2
See document titled “Third Airport SSA, Disbursements” (Attachment E).
3
See October 18, 2004 closed session minutes.

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reading the available documents, conducting interviews and receiving advice from our
City Attorney, the authors have come to the conclusion that it would not be fiscally wise
or prudent for the City of Park Ridge engage in litigation regarding this matter. The
remote chance of victory combined with the expense of litigation make for a compelling
case against pursing legal action. The matter should be closed and we should move on.

Assuming concurrence of the Council with the foregoing recommendation, the authors
believe that this report should be released to the public as quickly as possible. The
citizens of Park Ridge are entitled to closure on this issue.

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