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Found invoices prompt calls for finance audit

DELAVAN — For once, Dave Kilkenny and Pete Zellmer are in agreement.

The Delavan City Council member and Lake Lawn Resort general manager want to see a third-party audit of the city’s finance department.

Last week, city staff discovered $97,500 in invoices that should have been billed to Lake Lawn in 2008 and 2009, Administrator Joe Salitros said.

And Monday night, the council approved a resolution to start a process to assess the resort and other businesses on Highway 50 for construction of a water main in 2009.

The fees come less than three weeks before Lake Lawn is scheduled to be sold at a sheriff’s sale as the end result of a March foreclosure on a $51.9 million loan by lender Anchor Bank of Madison.

The resort is scheduled for auction Tuesday, Sept. 7, which is the day after Labor Day.

Kilkenny has long been critical of Lake Lawn and the amount of tax money the city has used to support the resort. Kilkenny’s “due diligence and insistence” were the forces that uncovered the missing invoices, Salitros’ e-mail states.

Kilkenny has long doubted the strength of the developers agreement to protect taxpayers from expenses Lake Lawn should be paying. He has regularly been rebuffed when calling for an audit, he said.

“Taxpayers should be outraged,” Kilkenny said.

The discovery of the invoices comes at a bad time for Lake Lawn as owners try to find a new investor to secure financing and avoid losing the business, Zellmer said. The resort has asked the city for a third-party audit of all costs related to Lake Lawn, he said.

“I want to know what goes on in that city,” Zellmer said.

The two parties have argued for more than a year about thousands of dollars in cost-recovery bills.

According to a developers agreement, the city bills the resort for some charges incurred by the city related to the resort. In most cases, the charges are for engineering or attorney fees.

The discovery of the $97,500 was prompted by questions council member Dave Kilkenny asked about more than $140,000 in engineering costs identified in a 2009 water utility audit, Salitros’ e-mail states.

After several layers of review, Kilkenny and city staff members determined the city hadn’t billed Lake Lawn for about $28,000, the Kilkenny said.

That prompted city Treasurer Jennifer Wiese to dig through her files of Lake Lawn engineering invoices where she found several 2008 and 2009 invoices that were never billed to Lake Lawn.

The two largest invoices were filed when Wiese was on leave in 2008, Salitros’ e-mail states.

The city’s utility, treasurer and public works departments as well as Salitros’ office share the blame for the mix-up, Salitros wrote.

“The fact of the matter is we didn’t bill them anything,” Salitros said. “That’s not an easy pill to swallow.”

In 2009 and 2010, the city forced Lake Lawn to pay tens of thousands of dollars in overdue cost-recovery bills in order to keep its liquor license.

In June, the city agreed to reimburse the resort $13,000 in cost-recovery over billings if the resort agreed not to argue other payments. Zellmer said he has not seen such an agreement and has not seen the $13,000.