OH FOR CHRIST’S SAKE, not another story about parking meters.
There — McPherson said it for you, so you wouldn’t have to.
But here we are, and you’re still reading. So there’s a good chance you’re one of those people wondering a) how St. Louis Treasurer Tishaura Jones came to award a $7 million outsourcing contract to her friend and campaign donor Shelia Hudson, b) why other city officials are questioning it, and c) where all of this could be headed.
Under the odd structure of St. Louis city government, Jones — who is running for mayor in next year’s election — acts as the city’s parking supervisor. She and Hudson signed a three-year contract in April. It calls for the Hudson & Associates firm to manage the city’s on-street parking operations, including 7,700 metered parking spaces. Hudson’s team collects the money, maintains the meters, issues parking tickets and handles customer relations.
Parking is big business in St. Louis. In a typical year the Parking Division writes almost 300,000 tickets (far more than in some peer cities) and collects over $11 million from meters and fines. Via outsourcing contracts, the city has privatized major components of its parking system for over a decade.
In September McPherson reported on the compensation structure for Hudson, which guarantees the company a flat fee of $195,600 per month regardless of how many tickets it writes. McPherson followed up in October with a look at the selection process that resulted in Hudson and a partner company winning the city’s business.
Hudson and her firm have donated more than $38,000 to Jones’s campaigns, according to the St. Louis Post-Dispatch. Some city aldermen have questioned the validity of the contract, as well as why Jones paid Hudson for several weeks in the spring, when meter enforcement was suspended due to the COVID-19 pandemic. In June the Board of Aldermen voted to give its streets committee subpoena power to investigate. So far, the committee has not exercised that power.
Under state statutes (more on those below), the treasurer can send a maximum 40% of yearly parking profits to the city’s general budget. The rest stays with the Parking Division, which Jones uses to fund pet projects in other areas of her office including a program called College Kids. This sets up college savings accounts for city schoolchildren with $50 in public seed money for each account, with promises of more if their parents meet certain requirements.
At some College Kids events, one of the program’s partners gives families fake $20 bills called “Tishaura Bucks.” One such “buck” featuring Jones’s image is pictured above.
“It’s the cutest thing!” Jones said in an article accompanying the photo. (Some might argue that an image of a parking meter would be more appropriate for the currency. But presumably Jones wants to remind voting-age parents who runs the program.)
The Hudson contract is likely to stay in the headlines. Demand for parking has collapsed because of the pandemic, and Jones is seeking approval from the Board of Aldermen for a $5 million credit line and a refinancing of some of the Parking Division’s debt. Her team has warned of layoffs if the streets committee doesn’t act soon.
But Alderman Jeffrey Boyd, chairman of the committee and one of Jones’s fiercest political rivals, is calling for more transparency. He has referred to the Hudson contract as a “sweetheart deal.”
Jones, meanwhile, has called McPherson’s reporting “conspiracy theories.” As for Shelia Hudson, she continues to decline comment.
(Editor’s note: I began looking into the Hudson contract in July. I filed a Sunshine Law request with Jones’s office on July 20 for e-mails related to the treasurer’s request for proposals (RFP) and selection process. Eventually I agreed to pay $325 for the time required to compile and redact e-mails sent and received by key members of Jones’s team. The treasurer’s office cashed my check in late September. I received the first batch of e-mails on Nov. 19 and plan to start reviewing them soon.)
In the meantime here are six questions about the contract, based on court filings, financial reports and other sources.
- Why did Jones ignore a court injunction when she approved the deal with Hudson, and is the contract valid or not?
It may be up to the Missouri Supreme Court to decide.
Jones is locked in a complicated legal dispute with Boyd, former City Counselor James Wilson and others over the supervision of the city’s Parking Commission and control of the money from parking operations. As recently as 2018 the Parking Division was sitting on $22 million in cash reserves; since then it has transferred $15 million to the city’s general reserves.
In April 2018 Boyd and the other plaintiffs scored a major victory when St. Louis Circuit Judge Michael Stelzer ruled that the state’s statutes were unconstitutional, and that city ordinances governing the Parking Commission should apply instead.
Under those ordinances the Parking Commission has three members: Jones, Boyd and the city’s streets director, Jamie Wilson, who reports up to outgoing Mayor Lyda Krewson. Boyd and Wilson have the power to outvote Jones if they choose.
Stelzer followed up with an injunction in October 2018 that required Jones to comply. But the treasurer ignored the injunction in September 2019, when she called a meeting of the statutory Parking Commission, which has two additional members. That commission approved the terms of a deal with Hudson. Neither Boyd nor Wilson was present for that meeting.
Jones scored her own victory on the two remaining counts in the case on Nov. 6, when Stelzer ruled that her office had followed proper procedures for increasing parking fines. He also agreed with Jones’s lawyers that her office is not bound by a city ordinance that governs the awarding of contracts for professional services.
Jones crowed about the ruling in a Nov. 10 press release. “MISSOURI STATE COURT RULES IN FAVOR OF TREASURER ON PARKING CONTRACTS” the headline read.
Yet much like Donald Trump’s tweeted claims last year of “EXONERATION” after special counsel Robert Mueller’s report, Jones’s headline leaves out much of the story.
The case involving the Parking Commission was filed more than three years before the Hudson contract was signed, and the contract itself was never the central issue, according to Elkin Kistner, an attorney for the plaintiffs. (Stelzer rejected the plaintiffs’ attempt to add Hudson to the case in June.)
In January the Missouri Supreme Court dismissed an appeal from Jones regarding supervision of the commission, saying Stelzer first needed to rule on the other counts in the case. That has now happened. Jones’s legal team indicated in January it would file a fresh appeal in an effort to restore the statutory commission.
Jared Boyd, Jones’s chief of staff, did not respond to an inquiry from McPherson about the case. (Jared Boyd and Jeffrey Boyd are not related.)
2. How much money is the city really saving with the Hudson contract?
On this question, Jones recently upped the stakes.
In September a spokeswoman for Jones, Felice McClendon, told McPherson the new parking contracts were projected to save the city between $500,000 and $1 million annually after the first full year of implementation.
But in her Nov. 10 press release Jones said the following: “Ultimately, the RFP process helped us select Hudson & Associates as the City is now positioned to realize a $5 million dollar savings over the next three years” [emphasis in original].
How did Jones’s team arrive at this figure?
The Hudson contract entitles the company to $7.04 million over three years. McClendon provided McPherson with figures showing that the Parking Division paid the previous vendor, a unit of New Jersey-based Conduent Inc., a total of $12.2 million from July 2017 through March 2020. This leads to a savings of about $5 million.
But this figure is misleading, as it leaves out several items. Among them:
- Hudson’s scope of work is more limited. Unlike Conduent, it is not providing an end-to-end solution that includes the software used for processing tickets and customer payments. To do that, Jones had to sign a second contract with EDC Corp. of Syracuse, N.Y., a Hudson partner company. The transition from Conduent carried up-front costs of $142,000; it also requires an annual software licensing fee of $128,000.
- The savings from Hudson are being offset by higher costs elsewhere in the Parking Division’s budget. For example, the expense category that includes spare meter parts more than tripled in fiscal year 2020 to over $700,000, according to the latest annual report. (Hudson’s contract specifically excludes any responsibility for spare parts.)
- The contract requires the Parking Division to stump up 25% of the costs for Hudson to acquire new vehicles in order to carry out its duties. These expenses are above and beyond the monthly payments to Hudson. (McClendon declined to answer a question from McPherson about how much this has cost so far.) And once the contract ends, the Parking Division must buy the vehicles back from Hudson at 75% of their blue book value. So public funds pay most of the costs.
3. How many tickets are Hudson’s enforcement officers actually writing, and how much revenue is the city collecting?
The Parking Division began paying Hudson in May. The company has been writing parking tickets since early June, when Jones resumed meter enforcement.
Specifics about the type and quantity of tickets being issued are not easy to come by. Hudson’s contract requires it to submit regular reports, but McClendon said in response to a Sunshine request from McPherson that written reports on ticket issuance do not exist. She said parking officials can simply extract the information they need from a database, and that Hudson briefs city officials regularly.
McPherson was able to obtain information on tickets from another source. This data, compiled by the treasurer’s staff, shows enforcement officers wrote about 70,000 tickets between June 1 and Sept. 30, generating projected revenue of $2.6 million.
Demand for parking has been hit hard by COVID and the resulting cancellation of sporting events, conventions, business meetings and concerts. In September officials projected that parking revenues would be 31% below budget, contributing to a projected net loss of $4.6 million in the current fiscal year that ends June 30.
4. Did Hudson actually meet the terms of the RFP in the first place, and was the company the most qualified bidder?
Jones’s staff sought bids for a new outsourcing contract in April 2019. McPherson reported in October that Hudson scored an impressive 97 points out of a possible 100 in the treasurer’s evaluation system. The office received 11 proposals overall.
Seven of the bidders scored at least 50 points. The chart below shows the results.
But despite Shelia Hudson’s years of experience with the city’s parking operations, and her firm’s prior work as a major subcontractor for Conduent, Hudson’s bid did not appear to demonstrate the broader experience and references necessary to meet the requirements in the treasurer’s request for proposals, McPherson previously reported.
McClendon told McPherson in October that Jones’s team stands by its decision: “Hudson & Associates met all the terms of the RFP and presented a competitive bid of the bids received.”
One unsuccessful bidder who spoke to McPherson on condition of anonymity came away unimpressed with Jones’s staff. The bidder’s company has won contracts from other cities around the country.
Recalling one conversation, the bidder said: “We were so enthusiastic about it, but the people that were vetting us, they didn’t understand the nature of the questions. If you’ve been in parking enough, anyone who runs any of these larger departments, they understand the questions that you ask, succinctly, to decide who would be best to fulfill your needs.”
The source added: “No one ever went over the numbers with us. We do this all the time, so I know when somebody’s asking me the right questions.”
McClendon told McPherson in September: “The entirety of the process was executed with transparency, fidelity, and integrity.”
5. What’s the precise nature of the relationship between Hudson and EDC, the company now providing parking management software?
In its bid, Hudson described EDC as a “strategic partner.” Despite being completely new to the St. Louis market, EDC scored a perfect 100 during the selection process.
EDC’s parking management software, called AIMS, links with the city’s existing meters. The software allows drivers to pay by credit card or online; it also allows Hudson to manage billing, payments and customer appeals against parking fines.
Privately-held EDC signed its own contract with Jones last December. Both the Hudson and EDC contracts have been processed by Comptroller Darlene Green’s staff and delivered to the city Register’s office, a spokesman for Green told McPherson.
EDC representatives have declined to answer McPherson’s questions, although the company said in a post on its website in September that AIMS is providing efficiency gains for the Parking Division. McClendon told McPherson in October that Jones’s office “is not aware of any business relationship between Hudson (nor any of its senior executives) and EDC/AIMS.”
6. What was the connection between Hudson and IFS Securities, a now-closed financial services firm that employed a banker with longstanding ties to the Jones family?
Jones brought IFS on board in 2014 during her first term as treasurer to help underwrite bond issues for the Parking Division. This was two years after Atlanta-based IFS had hired Craig Walker, an investment banker who was convicted and imprisoned in 1996 on federal charges including mail fraud and conspiracy to obstruct justice. Jones’s father, former Comptroller Virvus Jones, pleaded guilty to two counts of tax fraud as part of the same case. Virvus Jones served a year in prison.
In a prospectus for a 2015 bond issue to pay for new parking meters, the treasurer’s office disclosed a business relationship between IFS and Hudson. “An IFS Securities banker has a paid outside business relationship with the subcontractor Hudson and Associates for the purposes of consulting on business operations and new business opportunities,” the disclosure said.
The disclosure did not name the IFS banker.
Jones’s staff has emphasized that Walker did not handle the treasurer’s business with IFS. McClendon told McPherson that Walker has never worked for the treasurer or the Parking Division.
IFS shut down last December amid federal fraud investigations and losses linked to bond trades made by one of its senior executives, Keith Wakefield.
Records kept by brokerage-industry regulator Finra show that Walker left IFS in August 2019 for another Atlanta firm, Security Capital Brokerage, Inc. Walker left that position last month and is no longer licensed to act as a broker or investment advisor, according to Finra.
Walker did not respond to an inquiry from McPherson about the relationship between IFS and Hudson. –McP–
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