Salt Lake Mayor Palmer DePaulis and Councilman W.M. "Willie" Stoler are at odds over the mayor's choice of a new financial adviser - a company headed by a woman Stoler says contributed to the demise of the city's ailing housing program.
Stoler says "cronyism" led DePaulis to appoint Erlich Bober & Co., headed locally by former city Treasurer Cheryl D. Cook, as the city's financial adviser to oversee millions in future bond issues.But objections to the selection are "politically motivated" by Stoler, who is "on a rampage to discredit everything I do," DePaulis said, adding Stoler's allegations could severely damage Cook's reputation.
"I hope he has some facts," the mayor said during a council session Tuesday night.
Stoler and three other council members, Florence Bittner, Alan Hardman and Wayne Horrocks, form the majority "Gang of Four" and have led several recent charges to defeat initiatives backed by the mayor.
DePaulis chose Erlich Bober from a list of three investment firms after the city's former financial adviser, Prudential Bache, dropped out. Citing extensive experience and economical fees, DePaulis selected Erlich Bober.
The mayor submitted the selection to the council only minutes before their session started. Council members could question the mayor on the matter, but DePaulis has exclusive discretion over such appointments.
Stoler called Finance Director Lance Bateman to respond to several concerns he had with the selection.
"Even though I know it's the mayor's appointment, it being made this quickly spooks me," Stoler said.
The appointment of the New York-based company goes contrary to the current "buy Utah" philosophy, Stoler said. And Erlich Bober also threw a fund-raiser for Democratic gubernatorial candidate Ted Wilson in New York City, he said.
"It sounds like the good-old-boy syndrome to me," Stoler said.
State Democratic Party Chairman Randy Horiuchi said he knew of no such event for Wilson but acknowledged the firm has offered the campaign some support, as have other investment firms.
"I think the charge of cronyism is pretty humorous," he added. "While Mayor DePaulis supports us, there has been little or no contact between the mayor and Ted Wilson."
Stoler accused Cook of being "lax" in reviewing figures generated by a feasibility study conducted by another New York-based consultant, Enright & Co. The city contracted with the firm to determine if the city could pay off a $14.5 million bond issued to build a 330-unit low-income housing project.
The firm concluded the city could pay off the bond with rent revenue and a $6 million "cushion," Bateman said. But in 1987, Bateman discovered an accounting error that showed the city enjoyed only a $4 million cushion.
Council members, who oversee the housing program because the city loaned it its triple-A bond rating, at the time questioned whether they would have supported the project had they known the cushion was smaller.
Stoler said in the council session that Cook, as city treasurer, was the "point" for a group of city officials responsible for reviewing the study and overlooking a "serious financial error."
Cook, not present at the council session, said she is offended by Stoler's allegations and added he apparently doesn't understand the circumstances leading to the city's Housing Development Corp.'s $2.8 million debt.
She and other officials say the error did not lead to the housing corporation's $2.8 million shortfall. The deficit arose under mismanagement leading to budget overruns, all of which came about after Cook left the city, Bateman said.
Prudential Bache, the city's former adviser, supplied the city with "judicious" financial guidance Stoler said, questioning the need to change to a new adviser for the two-year stint.