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Audit of $19 Million Courthouse Fire Exposes Flaws in County’s Response to Emergencies

Insurance premiums will likely spike an additional $1 million annually

Jan. 27, 2015
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Milwaukee County Courthouse - J Ferrer
An audit of the July 2013 electrical fire at the Milwaukee County Courthouse raises questions about the county’s preparedness for emergencies, its approach to maintaining its facilities and whether the contractor that took in $16 million for repair work was selected properly.

The former Abele aide who selected that contractor and managed the Courthouse fire restoration has been charged with six felonies for allegedly personally benefiting from vendor contracts for repairs of county facilities. The alleged crimes occurred before the Courthouse fire and Dietscher no longer works for the county.

The county received $19.1 million from its insurers to cover the damage, which began in the basement of the Courthouse and also affected the Safety Building and Criminal Justice Facility.

The precise cause of the fire still isn’t known, according to the report by Director of Audits Jerome Heer. The county no longer has a role in the investigation but the county’s insurers are still looking into its cause and disagree about it. The insurers may go to court to clarify which firms are responsible for the various expenses, Heer wrote.

Although the county paid a $500 deductible for the fire claim, incurred $324,000 in expenses related to the fire and likely won’t have additional expenses stemming from it, that doesn’t mean the fire won’t take a big bite out of the county’s budget.

Heer warned supervisors that the county’s main insurer, the state Local Government Property Insurance Fund, would hike its rates this year. The county’s insurance premiums will likely triple, from $571,202 to an estimated $1.6 million, and its deductibles will spike tenfold, from $500 to $5,000 per incident. The increased costs stem not only from the Courthouse fire, but from the fund’s tenuous financial state as well as the county’s apparent habit of using of insurance claims to maintain its facilities, the audit states.

“The party’s over,” Heer told the Transportation, Public Works and Transit Committee last Wednesday.

 

Walker’s Emergency Plan Was ‘Worthless’

 

The audit provides new details about what happened immediately after the fire broke out on Saturday, July 6, 2013, and how the county handled it.

Heer found that county’s response to the fire was hindered by its plan for dealing with emergencies, created in 2004 during the Scott Walker administration, which “lacked clear direction and was not widely known or disseminated, leaving county officials without a detailed roadmap for how to proceed through a large-scale recovery,” the audit notes.

Heer told the supervisors last Wednesday that the Walker-era plan was “essentially worthless.” The Chris Abele administration is updating that plan.

Another complication was the “complete blackout” of the Courthouse complex’s only 24/7 alarm notification center, which, on nights and weekends, is monitored by the Emergency Communications/Dispatch (E911). At 12:06 p.m. on the day of the fire, “power was lost, phone communication was also lost, and the E911 computer system shut down and did not reboot.” The system immediately shifted all 911 calls to Waukesha County. The jail also experienced power outages.

Heer noted that county officials pulled together to keep county operations going. But his audit highlighted new information that hasn’t been made publicly available, including:

   It was an accident: The MFD didn’t send an investigator to the scene and quickly ruled out arson. The fire was accidental “in part because it would be unlikely that anyone would be able to start a fire by going into an electrical cabinet, vaulted in the basement of the Courthouse, with so much power fed in, without killing himself.” One of the insurers’ technical consultants determined that the fire was a result of a failure of the capacitor, which exploded and caused smoke damage.

  The DA looked into the missing breakers. The Milwaukee County district attorney’s office investigated the disappearance of two breakers from the Courthouse but didn’t pursue charges. A county employee had disassembled the breakers, allegedly set aside by the insurance adjuster, and sold portions of them for scrap. “The employee’s comments [to the DA] that the breakers were placed in a pile of other debris by the contractors, and were tagged to be disposed of, were corroborated with photographs taken by the project’s contractor.”

  Short-staffed on a Saturday. Only one facilities worker was on duty that day. He was outside pulling weeds and initially couldn’t get back into the Courthouse because, thanks to the power outage, his keycard wouldn’t work.

  Warned about IT vulnerability. In a March 2012 confidential memo, Heer had warned the county’s new CIO, Chris Lindberg, about the need for the county to set up an alternative site for the county’s extra computer network control center. That didn’t happen. The county’s IT systems “were subjected to high heat and were found to be in a very vulnerable position following the fire,” the audit states. The DA’s office also “mentioned their concern over the near loss of their server equipment” in the Safety Building. The day after the fire, the DA’s IT manager moved that office’s servers to another site. The Abele administration has suggested relocating some servers and hardware to a vendor’s facility.

  The county isn’t tracking its maintenance. It isn’t known if the county’s well-documented, multimillion-dollar deferred maintenance problem contributed to the fire. But Heer found that preventive maintenance and inspection services of electrical and mechanical systems weren’t regularly scheduled. Nor did Facilities Management keep service logs for those systems and therefore couldn’t produce the servicing history of the involved systems for the insurance adjustor. It had to rely on purchase orders instead.

In last week’s committee meeting, Supervisor Patricia Jursik said that Walker had routinely laid off professional electricians and plumbers in a bid to save money.

“There is a consequence for not having professional staff doing their jobs,” Jursik said. “I think ultimately we are going to pay more for having removed those professionals than the money we saved. Of course, none of that comes to light until well after the administration that caused those policies is gone.”

She noted that the county hasn’t had a permanent facilities manager, who is responsible for overseeing maintenance and repairs throughout county buildings, for about two years.

“It’s clear to me that we’re not doing the basic work, the basic procedures, the basic checklists that we need to get in place here,” Jursik said.

Teig Whaley-Smith, interim Department of Administrative Services director, told the committee that the administration was scheduling interviews for a new facilities manager.

 

Main Vendor Linked to Criminally Charged County Aide

 

The audit also includes vital information about the financial aspects of the fire. The county’s insurers have paid out $19.1 million for repairs, the vast majority of which—$16.3 million—was paid to Universal Restoration Services.

That has turned into a controversial choice.

The decision to go with Universal was made the day of the fire, when the county’s safety coordinator at the time, Dennis Dietscher, contacted the company. After county officials and Universal toured the facility that same day, a work authorization was signed.  

A Request for Proposal (RFP) was never issued. Nor could auditor Heer find a contract “which clearly laid out the details, rates and scope of the Courthouse fire job,” he wrote. Universal charged an additional 20% mark-up, 10% for profit and 10% for overhead, which the company claimed is the industry standard. The state Local Government Property Insurance Fund, the county’s main insurer, paid all invoices.

Then-Department of Administration Services Director Don Tyler asserted in numerous county board meetings that Universal was a preferred vendor of the Local Government Property Insurance Fund. But Heer found that the fund doesn’t have a list of preferred vendors. In his written response to the audit, Tyler clarified that Universal was on a list of vendors that had been vetted by the fund’s insurance adjustor. Tyler, who recently left the Abele administration, wrote that the county is in the process of creating a new way to bid out restoration services, since RFPs aren’t appropriate for emergency work.

Despite Tyler’s arguments in favor of using Universal, it perhaps was picked because of its link to longtime county employee Dennis Dietscher, who at the time of the fire was the county’s safety coordinator and, a month later, became the county’s interim director of risk management.

Heer’s audit and an August 2014 criminal complaint allege that prior to the Courthouse fire, Dietscher personally benefited from county contracts with two private vendors—Belfor USA, then Universal Restoration Services—that employed someone close to him. The criminal complaint alleges the vendors wined and dined him to keep him happy, paying for expensive dinners, vacations and repair work on his home and his father’s home. Dietscher didn’t report those perks to the county. He left county employment in 2014.

His trial is scheduled for May.

Although Dietscher isn’t being criminally charged for any violations related to the Courthouse fire, Heer’s audit noted that “in the end, the lack of procedures for the hiring of firms to perform property restoration work has left the county susceptible to potential misconduct, and has left the county’s insurer, primarily the [state] fund, susceptible to possible increased pricing.”

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