Last Wednesday night the Park Ridge City Council took its first stab at cleaning up a mess made in 2008 by previous mayor Howard Frimark and the two previous City Councils, which we first wrote about in our 05.30.08 post, “Going Into Hock For New City Manager.”

The mess?  A $350,000 interest-free loan to then-incoming city manager Jim Hock, on which Hock is now welshing. 

Back in 2008, some “genius” – we’re not quite sure who exactly, although a safe bet would be Frimark – apparently concluded that a $165,000 salary, health insurance, defined benefit pension, the use of a car, free gasoline and insurance, and a variety of other perks weren’t quite enough to lure Hock to our cozy bedroom community from his home in Michigan.  So the “genius” proposed a $350,000 interest-free loan with which Hock could buy a residence here.

We’ll call that “Mistake No. 1.”

That mistake was compounded when City Attorney Everett “Buzz” Hill drafted an “Employment Agreement” that provided for the interest-free loan but stated (on Page 3) only that the loan would be “secured by the home” – without specifying that the City’s security for the loan would be a “first mortgage” or “first position” security interest on that home.  Judging from excerpts of the May 5, 2008 Council meeting minutes, then-aldermen/now mayor Dave Schmidt and fellow Alds. Rich DiPietro, Don Bach, Jim Allegretti, Robert Ryan, Tom Carey and Frank Wsol unanimously rubber-stamped that agreement without discussion, even though there is nothing in those minutes or in the Council materials for that meeting to suggest they even saw or read the actual agreement.

We’ll call that “Mistake No. 2.”

When Hock decided to buy a $550,000 townhouse and wanted/needed additional financing from a private lender, however, that lender demanded a first mortgage – notwithstanding that it was financing less than half the amount of the City’s loan.  So the lender called City Attorney Hill with its demand that the City subordinate its security interest to the private lender’s. 

And guess what?

Instead of informing the City Council of that demand and seeking its input, Hill inexplicably went straight to Frimark, who – without advising the Council – told Hill to make it happen.  And Hill did so, with neither he nor Frimark giving the Council even the simple courtesy of an after-the-fact “here’s what we’ve done without consulting you” announcement.  

We’ll call that “Mistake No. 3,” even worse than the first two because of the disappointing way Frimark and Hill concealed this key information about Hock’s loan from the Council.

Under pointed questioning by Schmidt last Wednesday night, Hill explained his first-mortgage faux pas with an almost surreal matter-of-fact wrong-headedness: Hill believed Frimark had the authority to give away the City’s first-mortgage position because the Employment Agreement provision Hill drafted and the Council approved didn’t expressly require a first mortgage; so Frimark’s putting the City behind the private lender wasn’t technically a “change” in the terms of the Council-approved agreement that needed additional Council approval. 

None of this would have come to light but for the fact that Hock recently announced that he won’t be honoring his Employment Agreement commitment to repay the loan “within six (6) months of the date that [Hock] is no longer employed by the [City]” – because he hasn’t yet sold his townhouse.  Hock wants more time to sell before he has to repay the approximately $288,000 of remaining loan principal due the City.

And an inexplicably accommodating City Attorney Hill promptly drafted – on the City’s (a/k/a, the taxpayers’) dime, not on Hock’s – a “Forbearance Agreement” which could give Hock up to an extra year to sell his townhouse, presumably at a higher price that would let him recoup more of his heretofore unsuccessful townhouse “investment.”  But the terms of this new agreement are so squishy that even its arguably “toughest” provision (Paragraph 4, ostensibly giving the City the right to force Hock to accept or reject an offer) contains the squishy qualifier “reasonable,” thereby giving Hock plenty of legal wiggle room should push come to shove.

Call it Hock’s customized individual Troubled Asset Relief Program (“TARP”) bailout, compliments of City Attorney Hill and all us Park Ridge taxpayers whom Hock served with such distinction during his four year tenure that he was fired this past May by a unanimous vote of the Council.   

After almost 50 minutes of discussion (from 0:50:30 to 1:40:44 of the City’s meeting video) during which the Council couldn’t even get a straight answer about whether what’s left of Hock’s $100,000-plus severance is legally considered “wages” that can’t be forfeited to further reduce his outstanding loan principal – a question that should have been answered back in 2008, and/or again when his new contract was signed in 2010 – a decision on signing the Forbearance Agreement was properly deferred.

That’s a good thing, because although Hock reportedly owes the City $288,000 and his private lender $133,000, neither Hill nor Acting City Manager Shawn Hamilton were able to produce any authoritative documentation of those purported facts.  Meanwhile, Hock continues to live in his taxpayer-financed townhouse which is reportedly listed for $459,000 with no takers.   

So a bad idea from 4 years ago, kept secret from the Council by Frimark and Hill until now, continues to insult us taxpayers.

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