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Dan Hoort

    MISMANAGEMENT

    Routine Financial Audits Don’t Tell the Whole Story

    ‘Unknown variance’ of $765,000 remains unresolved

    By

    WELLFLEET — A half-dozen town officials have said no evidence of wrongdoing has been detected in a municipal accounting mess that dates back to at least July 2018 and has been complicated by the abrupt departure on Dec. 1 of Town Treasurer Miriam Spencer.

    But the origins of the mess remain in dispute, raising questions about the town’s annual audits, which failed to reveal huge problems until a new employee blew the whistle. A forensic audit could uncover more details, but town officials see no reason to order one.

    Former Town Administrator Dan Hoort, who served from 2016 to 2020, the period during which accounting problems blossomed, sent an email to the select board on Dec. 6 stating that he wanted to “set the record straight.” He wrote that he and his partner, Rob Klytta, are selling their Provincetown bed and breakfast, the Somerset House Inn, and moving to a house “along Lake Michigan” in mid-January.

    Hoort’s email blamed the problems on a weak staff. “The financial troubles in Wellfleet are primarily because of two people I hired,” he wrote. Hoort did not identify them by name in his email, but the position titles and time frame make it clear he was referring to Spencer and former Town Accountant Gene Ferrari.

    Hoort disputed statements by former town employees and volunteers, reported in the Independent, that he had “checked out” and was “hands off” in his final year as town administrator. In fact, Hoort wrote, the town accountant and treasurer that he had hired were not capable of doing their jobs. Rather than fire them, he wrote, he did their jobs for them.

    “I was not ‘hands-off,’ ” Hoort wrote. “In fact I may have been too hands-on.” That, he continued, covered Ferrari’s shortcomings. “When I left things quickly fell apart. He was a bad hire and that was my fault.”

    About Spencer, Hoort wrote, “In fiscal year 2019 she had trouble reconciling her cash. I had her give me all the bank statements and financial records. I spent over 100 hours working on reconciling the cash for the 12 months of fiscal year 2019. I spent nights and weekends on it because I wanted to see her succeed. … I’m not sure what more support we could have given her. At some point she has to accept she wasn’t capable of doing the job.”

    Hoort’s Role

    Former and current staff have pointed to Hoort’s role in the crisis that has drawn state oversight. The Dept. of Revenue has refused to certify the town’s free cash account for two years. (Free cash is unspent money that, once certified by the state, can be used in the following fiscal year.) Also, the town’s auditor, Powers & Sullivan of Wakefield, found a $765,000 “unknown variance” (that is, unreconciled cash) in its review of fiscal 2020 accounts. Total expenditures in the current fiscal year are about $28.5 million.

    Fiscal 2020, the 12 months from July 1, 2019 to June 30, 2020, was the year during which Hoort now says he did the town accountant’s job for him.

    “Dan Hoort was the finance director in Provincetown before coming to Wellfleet,” said select board chair Ryan Curley. “It’s disappointing that he did not have a handle on this whatsoever, because you would figure somebody that was the finance director would have responded earlier and in a more effective fashion. I don’t think he responded at all.”

    Current and previous employees describe chaotic town bookkeeping going back years. Carrie Mazerolle, who was town accountant for six weeks in mid-2019, said the records made no sense when she arrived and that she got no support from Hoort or from Jane Tesson, the long-time assistant town accountant, who has recently returned to work after an extended sick leave. Mazerolle quickly left the job to become the town accountant in Duxbury.

    Ferrari was Wellfleet’s accountant from September 2019 to September 2020, when he was fired by the new town administrator, Maria Broadbent.

    Ferrari said that, when he was hired in July 2019, Hoort assured him that the fiscal 2019 books would be balanced by the time he started work.

    “But none of the books were balanced when I started in late September 2019,” said Ferrari, who is now finance director in Cumberland, R.I. “So the best I could possibly do was look at the year-end financials that were not reconciled or closed. I started with books from 2018, because the 2019 books were not balanced until June 2020 by Dan Hoort.”

    Ferrari said he had warned Hoort that both Spencer and Tax Collector Karen Murphy were not qualified to do their jobs. (Murphy is still the tax collector and, according to current interim Town Administrator Charlie Sumner, is doing great work.)

    Ferrari said Hoort replied, “ ‘You have to walk before you can run, and these people are town residents. Once you get a job in town you have it for life.’ ” Ferrari took that to mean Hoort would not fire town residents even if they could not do their jobs.

    Hoort refused to speak to the Independent this week, saying that the newspaper’s coverage has been biased against him.

    No Evidence of Wrongdoing

    Two temporary part-time accountants and Sumner have been working to balance the town’s books. After six months, they say they have found no malfeasance.

    “I just want to say we have done a lot of work looking at these matters and we just haven’t seen anything that would suggest anything other than a lack of training, incompetence, and high turnover,” Sumner told the Independent.

    Spencer, the former treasurer, said, “I know that there’s no malfeasance. There’s nobody pocketing any money. I think it’s accounting and reporting errors. But nothing criminal. We’re not that clever.”

    Some officials acknowledged that the process of looking back to make sense of errors and omissions may at some point reveal evidence of wrongdoing. If it does, Sumner said, he will report it.

    “My first obligation is to the community and to the select board,” said Sumner. “I have no intention of protecting someone who might have done something possibly illegal.” When asked if it were possible that a former employee had embezzled funds, Sumner said, “I don’t know.”

    The state’s Office of the Inspector General often investigates allegations of fraud, waste, and abuse of public funds in conjunction with the attorney general. The office has a hotline that accepts tips, even anonymously.

    Audits Don’t Tell All

    How did the auditors from Powers & Sullivan miss all the chaos? Contacted by the Independent, audit manager Mike Nelligan refused to comment.

    Most Massachusetts towns get a yearly audit. Powers & Sullivan has audited Wellfleet’s books for at least 20 years. The inspector general’s office recommends changing auditors every five to eight years. But in any case, Sumner said, municipal audits have their limits.

    Annual audits are not exhaustive, said Barbara Costa, a former town accountant who now works for the Abrahams Group, an audit firm. If you want specifics, you must ask the firm to zero in on them, Costa said.

    Every audit, however, comes with a management letter, which spells out deficiencies to be corrected. The 2019 Wellfleet audit stood out because it did not include a management letter.

    Though the town accounts were in disarray, Powers & Sullivan, who are about to begin the last year of a three-year auditing contract, acknowledged nothing until the 2020 audit, in which they found a material weakness in cash management and the $765,000 variance.

    Sumner said that audit was detailed because Heather Michaud, who had just been hired as town accountant, notified the auditors of her grave concerns. Michaud resigned after only four months in April 2021.

    Spencer said Michaud had requested a management letter that would “spell out everything we needed to fix — that would call the board of selectmen to do something, to take action. The management letter was scathing. Heather asked for it. We needed it.”

    Finance committee member Fred Magee said there is plenty of blame to go around in this crisis. But one solution is for the finance committee to become more of a watchdog.

    “We will be asking for monthly reports from the department heads, so if we perceive things going off the rails, we can notify the select board or the town administrator,” said Magee.

    His committee will also be asking for more specifics in the town administrator’s reports. “We want less English and inspiration and more financials,” he said.

    LEADERSHIP

    Hoort’s ‘Hands-Off’ Management Led to Financial Crisis

    ‘You’re only as good as the employees you hire,’ says former administrator

    By

    WELLFLEET — The problems with the town’s financial management, which two temporary accountants are now trying to untangle, began years ago and mushroomed during former Town Administrator Dan Hoort’s tenure.

    Interviews with former staff and town volunteers described Hoort as “checked out,” “hands off,” and not helpful when it came to addressing critical issues in the town’s financial operations.

    Hoort, the town administrator from 2016 to 2020, lives in Provincetown. Reached this week, he acknowledged that “there were a couple of hires I wished I did not make.”

    But, Hoort added, the real problem is that the town has a bad reputation among the pool of potential municipal staff members. Wellfleet doesn’t attract qualified candidates, he said. He tried to manage the accounting department himself during his last year on the job, when the town accountant was Gene Ferrari. Ferrari was ultimately fired in September 2020 by Hoort’s successor, Maria Broadbent. Hoort said the last good hire he made was Town Accountant Connie Boulos, who stayed from 2017 to 2019.

    “The select board has to do some soul searching and decide why Wellfleet is not such a great place to work,” Hoort said.

    A staffing shortage, high turnover, and a leadership vacuum are all still in play today. The question is how all this started and how the pattern can be reversed.

    Wellfleet is operating with an interim town administrator and two interim accountants, after both Town Accountant Heather Michaud and Town Administrator Broadbent resigned on the same day, April 23, having not completed the town meeting warrant or the fiscal 2022 budget. Since then, the select board has been meeting several days a week to address the chaos. The warrant did go to the printer at the deadline on May 21, after town meeting was put off for weeks to gain time.

    The town’s operating budget has been set at $21 million for fiscal 2022. Important purchases, such as a wastewater treatment system for a future affordable housing project at 95 Lawrence Road, are on the warrant for the June 26 town meeting.

    The crisis in the accounting department, flagged by auditors (see separate story on page A11), will have both short- and long-term consequences. In the short term, about a million dollars in free cash cannot be used to pay any town expenses. Accounting errors in 2020 resulted in the state Dept. of Revenue refusing to certify the town’s free cash account.

    The account will be certified as soon as the errors are resolved; the money is there, it just cannot be touched, said Charlie Sumner, the interim town administrator. Another pool of available cash in the stabilization fund can serve in the interim. By the time a fall town meeting comes, the free cash may be available, Sumner added.

    In the long term, however, the problems run deep and will require competent and committed staff, something that Wellfleet has not had for a while.

    In 2018, Marianne Nickerson, the town tax collector, became the last of the longtime financial employees to retire. In 2016, Marilyn Crary, the town accountant for decades, retired at age 87, along with Dawn Rickman, the longtime clerk and treasurer.

    In a perfect world, all of them would have been replaced by new people in it for the long haul. But that did not happen. Instead, Rickman’s replacement, Town Clerk Joe Powers, left after three years in 2019, and accountant Connie Boulos lasted two. Treasurer and Tax Collector Rosemarie Moriarty stayed for one year, also departing in 2019.

    By the summer of 2019, when Carrie Mazerolle was hired as town accountant, the whole department was filled with rookies, she said. She had to transfer the accounting data from old software to a new accounting system called VADAR. She was overwhelmed, she said, and had little support.

    “It was a mess when I got there, and I said, I cannot do this,” Mazerolle said. “I didn’t have any transition team at all. Connie Boulos came in for one day and showed me how to use the system, but that was it. Dan Hoort, at the time, was not a big help. He had checked out.”

    When Mazerolle saw a job posting for an accountant in Duxbury, she jumped at it. She left after one month in Wellfleet and has been working in Duxbury ever since.

    Next, Hoort hired Ferrari, who was the only applicant. “By then, I had been running the accounting department for six months while also being the town administrator,” Hoort said. “It was impossible.”

    Hoort’s previous position was director of municipal finance for Provincetown for six years. He is also a certified public accountant.

    The buck stops here: Town Treasurer Miriam Spencer outside Wellfleet Town Hall. (Photo K.C. Myers)

    Hoort would not comment on Ferrari. But it’s clear that Ferrari was failing. Before Broadbent fired him, he was not able to set the tax rate in the fall and tax bills were late. “He was really struggling and [Eastham Assistant Town Administrator] Rich Bienvenue had to help us,” said Miriam Spencer, the town treasurer since 2019.

    Usually, free cash (surplus money left over from the year before) is certified within a few months after the end of the fiscal year, so it can be used to cover expenses in the following year. But preparing the accounting data for the Dept. of Revenue’s free cash review proved too difficult for Ferrari, Broadbent, and Michaud.

    Finance committee chair Fred Magee said he is not surprised the town is so off course, given the turnover in the accounting department, the town administrator’s revolving door, and the pandemic.

    But, Magee said, the finance committee doesn’t have oversight authority.

    “In Wellfleet, by charter, we are advisory,” said Magee, adding that his committee relies on town officials to tell them what is going on.

    Ira Wood, a member of the finance committee, said it met only once with Ferrari. Usually, the town administrator attends finance committee meetings. “But we didn’t see much of Dan Hoort at all that last year,” Wood said.

    “I want to acknowledge that I’ve made mistakes, but you’re only as good as the employees you hire,” Hoort said.

    Hoort said the select board needs to focus on improving working conditions and stop being intrusive and unsupportive of staff. Though Hoort refused to name names, he said that, more than once, department heads who were not happy with his attempts to discipline or correct them would go right to the select board, his bosses, and complain about him.

    “I feel for Maria Broadbent,” Hoort said. “I knew she was going into an untenable situation.”

    CIVICS

    Hold Town Meeting at the Drive-in? Not Likely.

    Tough logistics mean decisions will probably have to wait till fall

    By

    WELLFLEET — Town Moderator Dan Silverman was supposed to be calling the annual town meeting to order this coming Monday evening, April 27. Instead, Wellfleet’s town government is trying to find a way to move forward during a spring when the need to maintain a safe social distance to prevent community spread of a deadly virus has made the traditional gathering in the school gym unthinkable.

    A conference call with Wellfleet officials on how to have a town meeting during a pandemic hosted Friday by the Independent included some bold ideas, such as holding the meeting at the Wellfleet Drive-In or having citizens vote on warrant articles by mail.

    But the consensus, in the end, pointed to simply delaying it. The select board will vote April 28 on a new town meeting date. The meeting is now on the calendar for June 1, but Town Administrator Dan Hoort said he cannot imagine people feeling comfortable congregating that soon.

    Often called the purest form of democracy, town meeting is the sine qua non of local government. Voters must approve a town budget for the coming fiscal year, authorize borrowing and spending for large projects, and ratify changes in zoning and other town bylaws.

    Moe Barocas, a former Wellfleet Board of Health member, suggested holding town meeting at the drive-in.

    “It would be great advertising for the town,” he said, adding that the national press might even cover that story.

    Barocas said voting could be done by sticking one’s hand out of the car window.

    Mia Baumgarten, the town’s media operations manager, said she could arrange a camera to project onto the giant outdoor screen, and Silverman, the moderator, could be positioned on stage. Figuring out the audio would be more tricky, though Wellfleet Cinemas President John Vincent said it may be possible.

    “The drive-in idea is gimmicky and cute,” said Silverman. “It would definitely put us on the map.”

    But, he added, “I’m not sure that’s the goal.”

    Other ideas included mail-in voting and a virtual town meeting with citizens watching on their home computers, but the main objection in both cases was the problem of providing for participation and debate. Baumgarten said Zoom and other platforms for remote meetings don’t work well with a large number of participants.

    An outdoor town meeting is possible, though it would need to be a pretty large space to allow the minimum of 175 voters needed for a quorum to stay six feet apart, Silverman said.

    On March 24, the town of Southwick drew 138 of its 6,000 registered voters to a special town meeting. In gloves, coats, and hats, people gathered at the Southwick Regional School parking lot to vote on three articles. Despite protests about health and safety, officials held the meeting to decide whether to spend $800,000 for aluminum sulfate treatment of the Congamond Lakes, which had to be done in early April because of water temperatures, according to the Westfield News. That article passed 135 to 3.

    In Wellfleet, there are two time-sensitive articles, Hoort said.

    One is a $3.8 million expenditure to expand the town water system to improve flow to the town’s secondary water source, the Gristmill Way wells. The expansion is needed to enable construction of the proposed affordable housing development at 95 Lawrence Road.

    The other pressing question is whether the town should take by eminent domain a portion of High Toss Road, between Pole Dike Road and Rainbow Lane, in order to clear the title. This would assist with permitting of the Herring River Restoration Project.

    Hoort said he thinks both of those decisions could be delayed until fall, but he would need to research it to be sure.

    The state currently is allowing towns to delay their town meetings past June 30, the end of the fiscal year. The emergency legislation states that towns may continue to operate at the same spending levels, but not more, from the previous year until a new budget is approved.

    “I hate to be the skunk at the garden party,” Silverman said. “But why contort ourselves when we can wait until fall?”

    Hoort said Wellfleet could make that work, but it would leave a lot unresolved for the incoming town administrator. Hoort has said he is retiring as soon as a new town administrator is hired. That search has also been delayed by the pandemic crisis.

     

     

    LETTERS TO THE EDITOR

    Letters, February 6, 2020

    From Laura Logue Rood, Tom Parker, and Mike Rice

    By

    Harbor Hill: A ‘Failed Project’

    To the editor:

    I read with interest Paul Benson’s article on Harbor Hill [Jan. 30, page 8], which was purchased with great fanfare in 2017. I’m not sure what the town was thinking in purchasing and then planning on subsidizing housing for the middle class. The cry that I’ve heard for years is the need for “affordable housing” and, more recently, low-income housing, given the median income for Provincetown residents is approximately $45,000.

    Last year the town, I thought, wisely approved an additional $492,000 to correct the multiple deficiencies found at Harbor Hill. Now we have to continue to subsidize a failed project. While there may be a Pigouvian tax in economics, there is also the law of misapplied repair: in fixing one problem, you create another. More simply: putting good money after bad.

    Here are some facts:

    $12.7 million in bonds to acquire and renovate Harbor Hill.

    $150,000 annual deficit forecast in February 2017 when they pitched this project. Didn’t happen.

    The Year-Round Market-Rate Rental Housing Trust claimed they could cover this deficit for five years, as they had $1.5 million in the trust. Didn’t happen.

    The town was forced to approve an additional $492,000 subsidy for FY 2020 to complete the renovations and prepare the complex for leasing.

    Rents were lowered significantly to entice people to lease, and the new annual subsidy is still unknown but expected to be at least three times the original $150,000 forecast. Probably $500,000 through FY21.

    As of today, more than $11.2 million has been invested in Harbor Hill. This works out to $400,000 per unit — so far. To me, that’s large. And it’s going to get larger with each passing year.

    Are Provincetown taxpayers OK with subsidizing apartments for people making up to twice the median income? For a single person, that could be up to $127,000 a year.

    Think about it.

    Laura Logue Rood
    Boston and Provincetown

    A Lost Art

    To the editor:

    In your Jan. 16 front-page report on the resignation of Wellfleet Town Administrator Dan Hoort, one sentence didn’t finish the way my mind assumed that it would.

    “He’s very hardworking and fair,” you quoted Justina Carlson saying, “and hasn’t forgotten the fine art of…” my mind assumed: “the handwritten note.” The actual sentence ended: “the beautifully written email.”

    Gentle reminders of aging seem to increase with the years.

    Tom Parker
    Gwynedd, Pa.

    Banning Hydration

    To the editor:

    Banning the sale of single-use plastic water bottles [Jan. 23, page 1] would be detrimental to Cape Cod’s vital tourism economy. After all, being unexpectedly inconvenienced isn’t included in anyone’s vacation plans.

    More important: neither is being dehydrated, which is a public health issue.

    Mike Rice
    South Wellfleet

    EXITS

    Wellfleet Town Administrator Gives Notice

    Dan Hoort, citing stress of the job, to leave June 30

    By

    WELLFLEET — Town Administrator Dan Hoort announced Friday that he is resigning from his job after four years, effective June 30.

    Hoort, a Provincetown innkeeper, holds a degree in accounting and was the head of the municipal finance department for the town of Provincetown before coming to Wellfleet in 2016.

    “It has been my pleasure to serve as town administrator and I appreciate the confidence you have shown in me,” Hoort, 65, wrote in a letter to the select board dated Jan. 10. “There are times when this position can be very demanding and negative. At this time in my life I need to reduce the stress in my daily life. I believe it is time for me to step down and let another individual assume the position.”

    Dan Hoort
    Wellfleet Town Administrator Dan Hoort. (Photo Ed Miller)

    His letter stated he would continue to work hard through June and offered to continue on the job three days a week or under another part-time arrangement if no one has been hired by July 1.

    He told the Independent he had no further comment.

    The move was not totally surprising, said Select Board Member Kathleen Bacon, who had announced just three days earlier that she would not run for re-election. He had been a finalist for the job of Brewster town administrator last year. The select board did give him a new contract in 2019 and a raise. It went into effect July 1.

    Hoort’s salary started at $115,000 in 2016 and went to $140,000 in 2019.

    Hoort and his partner have operated the Somerset House Inn in Provincetown since 2005. Before that he was the director of finance and administration for the American Massage Therapy Association for 10 years.

    The demands and stress that Hoort referred to in his resignation letter took a variety of sometimes intense forms. In August 2017, erosion and the loss of valuable ocean beach parking became impossible to ignore when a swath of the Cahoon Hollow Beach parking lot next to the Wellfleet Beachcomber collapsed during a torrential rainstorm, taking a parked car with it. The first fatal shark attack in recent Massachusetts history occurred at Newcomb Hollow Beach in September 2018.

    In 2019 Hoort became embroiled in controversy when an anonymous donor offered $1 million toward the town’s proposed purchase of commercial shellfish flats off Indian Neck. After a freedom of information request by Edward Miller, then associate editor of the Provincetown Banner, the state ordered Hoort to release the donor’s name: Select Board Member Helen Miranda Wilson.

    Wilson had been a prominent public proponent of the purchase. Hoort was one of the few people who knew Wilson was the donor, yet he allowed her to participate in deliberation and voting on the matter. Once her name became public, town counsel advised the select board and Hoort that the state’s conflict of interest law barred her from any participation in the purchase, now completed.

    Hoort’s greatest accomplishment has been helping to secure funding for the badly needed dredging of Wellfleet Harbor, said Select Board Member Justina Carlson.

    In March the town learned that $5 million was in the 2020 budget for the U.S. Army Corps of Engineers to dredge the federal channel in Wellfleet Harbor. The $20 million project that will ultimately be completed with state, local, and federal funds is long overdue.

    “I’m very sorry to see him go,” said Chair Janet Reinhart of the select board. “It’s a very tough position but he got a lot accomplished. Although he had a great dredge committee, he really helped push that forward.”

    “He was fantastic to serve with,” said Carlson. “He’s very hard working and fair and hasn’t forgotten the fine art of the beautifully written email. He handled many complicated issues and then took the time to explain them thoroughly. I think structurally we ask a lot of our select board and town administrators. It’s a hard job and it requires broad shoulders. I think Dan has done a tremendous job.”

    Hoort’s decision means that both Wellfleet and Truro will be looking for new administrators this spring. Truro Town Manager Rae Ann Palmer announced in October that she would be leaving at the end of her current contract on June 30.

     

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