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NCCo Council fails to override veto of investment board; Weiner voted to support override

NCCo Council fails to override veto of investment board

Xerxes Wilson, The News Journal 9:43 p.m. EST December 8, 2015

New Castle County Executive Tom Gordon(Photo: SUCHAT PEDERSON/THE NEWS JOURNAL)Buy Photo

New Castle County Council on Tuesday failed to override County Executive Tom Gordon's veto of legislation that would have created an advisory board to oversee county investments.

Gordon's veto and the subsequent council override attempt follows a year of conflict between the executive and legislative branches regarding authority over county investments. The legislation creating the board initially passed unanimously, and some council members said their vote to not override Gordon was an attempt to end conflict in government.

On Monday, Gordon vetoed two pieces of legislation that council passed two weeks ago creating an advisory board to monitor investment of county reserves, which currently total more than $110 million.

One piece of legislation would have created a seven-member panel that would make recommendations on how that money is invested. The board would have also evaluated the performance of investment managers. The legislation sought to give the board the authority to spend up to $220,000 on consulting fees each year. The county already has a board overseeing pension investments.

"Every other facet of county government has advisory boards. What are we afraid of with this?" said Councilwoman Janet Kilpatrick, who sponsored the legislation.

Another ordinance aimed to give County Council oversight of investment managers hired on a temporary basis. It also dictated that the county would seek bids from prospective investment managers before awarding a contract for those services. It also added language defining temporary investments. Kilpatrick said the legislation would not have given council the authority to pick investment managers, but would have put responsibility upon the county's executive branch to inform council of any change in that role.

Gordon’s veto notice states there is no need for an advisory board because the Chief Financial Officer has relevant expertise and the ability to hire outside financial advisers. The letter informing County Council of the veto also states Gordon has “no interest” in budgeting money that would have been made available by the legislation. Regarding temporary investments, Gordon's letter states Kilpatrick's legislation would run contrary to state law that sets the powers of the Chief Financial Officer and Executive regarding investments.

"The county executive is generally just asking that we honor the structure we have," deputy Chief Administrative Officer Sam Guy said during a council Finance Committee meeting the day the legislation was originally approved by council. "There have been no problems documented, just false alarms."

Kilpatrick said her legislation was motivated by the transfer of $92 million in county reserves from its longtime investment manager to UBS by the executive branch without what she considered proper notice. The investment authority was transferred to UBS without the county taking bids for the service. The executive office later solicited bids for the management job, which was again awarded to UBS.

The episode touched off a year-long audit of county investments. Gordon and former Chief Administrative Officer David Grimaldi, who orchestrated the controversial transfer, claimed the executive had the authority to move the money and it was a wise decision to protect the reserves. The two attacked the audit and auditor Bob Wasserbach as politically motivated. That acrimony served as the backdrop for various disagreements between members of council and Gordon in the past year.

Wasserbach said the advisory board is necessary to ensure county investments are performing competitively and to ensure safety of the money.

"The strongest argument is to prevent what happened in February 2013," Wasserbach told the council Finance Committee in November. "A single individual made the decision to transition $92 million in cash and securities to a new investment manager and that money has been sitting with that investment manager, not being managed against performance benchmarks."

Grimaldi was fired by Gordon last month. Some council members said their vote against the veto override was a vote for better relations with the executive branch following Grimaldi's dismissal.

"(Gordon) promised us he was turning over a new era in the administration," said David Tackett, who voted against the veto override. "The vote tonight was not about the ordinances."

Tackett said Gordon promised him full transparency and better communication when the two discussed the potential veto override recently.

"Since the changing of the guard in the administration, we have seen some positive changes," Councilman Bill Bell said explaining his vote not to override.

Councilman Penrose Hollins also said his vote not to override the veto was a statement about the futility of the effort. Council has failed to summon the 10 votes necessary to override Gordon vetoes three times in the past year.

"I just don't believe given my experience here with the override that council has the will to rise a super-majority required to override a veto. For that reason the exercise has become a useless exercise," Hollins said, later adding: "It shows the influence the executive branch has and speaks to the fabric of council."

Contact Xerxes Wilson at (302) 324-2787 or Follow @Ber_Xerxes on Twitter.

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