Cities demand changes at top of KLC

lblackford@herald-leader.comMarch 5, 2010 

Three more cities have joined a growing chorus demanding that the Kentucky League of Cities bring new blood to its top leadership — its executive director and two other positions — after a scathing state audit.

"We encourage you to seek an individual who is qualified ... but who also brings to the table a new set of fundamental beliefs about the ethics of engaging in business," says a Feb. 22 letter from the Taylor Mill City Commission, which is withholding its dues to the League for now.

The Flemingsburg City Council and Cold Spring City Council also have sent letters to the League and its executive board, saying they are unhappy with a move within the executive board to keep Deputy Director Neil Hackworth and Insurance Services Chief William Hamilton in the two top spots.

Cold Spring Mayor Mark Stoeber's letter was the most direct:

"Shame on you for the blatant, arrogant, self-effacing abuses," he wrote. "Equally shocking is for the board to allow executives involved in the oversight of such abuses to remain."

Late last month, an attempt was made by the executive board to make Hackworth's role as acting director permanent, despite an audit in December from State Auditor Crit Luallen that strongly criticized Hackworth and Hamilton for excessive spending and perks.

Former KLC executive director Sylvia Lovely resigned last summer after stories in the Herald-Leader detailed high salaries, excessive spending and conflicts of interest.

Luallen's audit singled out Hamilton in particular; the report said several members of Hamilton's family had worked for the League; he had received numerous gifts from League insurance vendors, including trips to the Caribbean; and he had almost $70,000 in expenses on his League credit card in three years that had "an unclear business purpose," "inadequate documentation" or were "excessive."

The Taylor Mill Commission's letter to the League questioned Hamilton's attitude in the wake of the audit.

"The corruption is something that started at the top and has filtered down through the agency," the letter says. It then references a mass e-mail from Hamilton responding to a Herald-Leader story about his use of his League credit card at a Las Vegas lounge that sometimes features burlesque shows. The League investigated and found there was no burlesque show that night.

"In our opinion, Mr. Hamilton doesn't understand the deeper issue at hand in regards to the allegations of the use of funds for entertainment purposes," the letter states. "He also appears to show no signs of remorse ... and instead attempts to slander the media for not reporting the 'truth' and taking no blame for the problems at hand.

"Corruption at the League is cultural, and the only way you can create a new culture is to introduce new members of management who can reshape these culture beliefs."

The letter from the Flemingsburg City Council was prompted by the hiring in January of Denny Nunnelley, deputy director of the Kentucky Association of Counties, as its executive director, even though KACo's search committee had recommended going outside the organization, said City Attorney Tom McDonald. KACo had been the recipient of a similarly critical audit.

"Given the recent negative publicity surrounding the immediate past and current acting executive director of the League, we are concerned that the public perception of the League is similar to that of several major national banks: BAD," the letter states. "... the perception by the public is that the operational status of the League will not change unless there is new blood in its high executive leadership."

Cold Spring's Stoeber recommended hiring external executives immediately, adding that Cold Spring would withhold its annual dues until changes are made and will seek competitive bids to the League's insurance services. "Such is owed to our residents, who give your organization approximately $120,000 per year," he wrote.

Cities pay membership dues and premiums to the League for lobbying, financing and insurance services.

Those three letters join entreaties from other member groups to look outside for new leadership.

The Morehead City Council has demanded a meeting with League officials to address the matter, and the Northern Kentucky City and County Management Association recently sent a letter to board chairman Mike Miller urging the hiring of an executive director and an insurance director from outside.

On Thursday, the executive board chose Mercer Group of Santa Fe, N.M., as the search firm to find an executive director during the next three to four months. The company will be paid $16,500 for the work, plus expenses not to exceed $8,000.

League officials have spent the last month on a "listening tour" of different regions of the state.

Executive board member Diane Whalen, the mayor of Florence, said she thinks there's new awareness of the need for change.

"There's a recognition across the board (that) there needs to be new direction from the top down," she said. "I do believe there are board members who are taking a look at the situation a little differently than they did in the beginning."

Miller, the mayor of Jackson, said he would not comment on future leadership. He said he attended six of the nine meetings on the listening tour, and about 75 percent of what people were saying was positive.

The League has changed many of its spending and ethics policies; in addition, legislation is moving through the General Assembly that requires the League and KACo to be more transparent.

The Taylor Mill letter also questioned the wisdom of having Lovely appear at official League functions, including City Night in Frankfort last month, at which League members meet with legislators.

"The issues involving the League have been nothing short of an embarrassment to many associated with the agency," the letter says, "and by allowing Ms. Lovely to continue to attend member functions such as this shows an inability of the League to truly separate from the past and move forward into the future."

Reach Linda B. Blackford at (859) 231-1359.

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