One year ago, Michael Voll, Cape May’s new city manager, became aware of a series of payments made to six city employees in September and December 2020 by outgoing City Manager Jerry Inderwies Jr. The payments totaled about $100,000, with all the monies coming from the Council on Affordable Housing (COAH) Trust Fund established to facilitate the creation of affordable housing in the municipality.
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Executive director of the nonprofit issued a statement that called the payments “illegally diverted funds.”
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According to the city’s own audited financial statements, the spending of $104,217 from the trust fund in 2020 was more than double the total disbursements made from that fund in the previous five years combined.
What started out as an investigation of a curious set of payments from a restricted fund was really the start of a journey in which the issue of those payments made its way to the state Department of Community Affairs (DCA), the Cape May County Prosecutor’s Office and, ultimately, back to the city. Litigation has been threatened more than once by various parties to the controversy.
As is typical in these types of matters, the shield of potential litigation and/or the privacy associated with personnel issues have become the barriers that deny the public any insight into the mess. One year later, the issue is not resolved. One year later, the public is still left in the dark.
What happened? It all began with the issuing of payments to six city employees by Inderwies. The six who received checks included Inderwies himself. All six individuals received the same amount regardless of their position, salary level, or hours presumably worked in the service of affordable housing goals.
A city spending plan for funds in the trust account called for council approval of any disbursements. There is no evidence that council ever approved the disbursements. The spending plan was part of a settlement between the city and the Fair Share Housing Center (FSHC), which, in turn, was part of a process to gain court approval of the city’s affordable housing efforts.
Following the initial disbursement of payments from the fund in September, another set of payments came in December to the same individuals, again in the same amounts and again authorized by Inderwies. The total of the two disbursements is the $100,000 spent from the fund.
When the new council was sworn in Jan. 1, 2021, an initial action was to appoint Voll as the new city manager. The city has shared very little in the way of specifics of what happened following the point where Voll became aware of the COAH fund disbursements.
Here is what we know. The issue was referred by the city to DCA. Months later, DCA responded by stating that the payments constituted a violation of the COAH spending plan, but the agency had no jurisdiction over the matter. The hot potato was passed back to the city.
Being told that the disbursements constituted a violation of the spending plan, the city then asked the County Prosecutor’s Office to look into the issue. The public has never seen the letter that came from the Prosecutor’s Office, again, months after the issue was referred. We do know that the prosecutor said no criminal charges would be forthcoming. The hot potato again sat with the city.
Six employees had received roughly $17,000 each from the fund, with no clear sense of what they had done to earn the stipend, how their actions could have resulted in equal payments to each, why the city council was not asked to approve the disbursements or how city financial controls would allow Inderwies to twice pay himself a stipend basically on his own authority.
Of those six individuals, some have since left city employment, some have been promoted and others continue in the roles they occupied in 2020.
To complicate matters further, the FSHC has demanded that the COAH fund be reimbursed for the $100,000. Adam Gordon, executive director of the nonprofit, issued a statement that called the payments “illegally diverted funds.” He called on the city to take action to recoup the monies and repay the trust fund. We know, as well, that FSHC has mentioned the possibility of legal action to force the city to repay the trust fund.
If the city were to repay the trust fund without recovering the payments to the individuals who received them, it would require the use of taxpayer monies, essentially putting the city taxpayer in the circumstance of paying for the stipends disbursed by Inderwies, which is not an attractive option for city council.
The latest turn of events involves a threat of potential legal action by Inderwies. In a letter dated Dec. 24, 2021, an attorney representing Inderwies spoke of pending litigation concerning attacks on Inderwies’ reputation and good name.
A year is long enough. It is time for the City of Cape May to explain to the public what has transpired and what actions the city is taking now with respect to the recovery of the funds, especially from employees still working for the city. If the city has determined that the stipends were a legitimate use of funds for administrative support of the affordable housing mission, it is time to say so. If not, the city needs to open the veil of secrecy that has surrounded this process.
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From the Bible:
We are taking pains to do what is right, not only in the eyes of the Lord but also in the eyes of man. 2 Corinthians 8:21
