Nearly a decade ago, when officials with Tempe Sister Cities wanted to stop paying rent for use of the Hackett House, they called then-Mayor Neil Giuliano.
The historic city-owned building needed repairs, and leaders of the international exchange program said rent relief would offset their maintenance costs. S o Giuliano directed his city manager to take care of it.
Without the needed approval of the City Council, Sister Cities was told they wouldn’t have to pay.
It stayed that way for the following nine years, until an internal investigation of city contracts was ordered.
Now the city wants its money — $20,000 in back rent for the years 1996 to 2004. It’s a relatively small amount for a city that recently recommended approval of a $500 million capitol improvements budget.
But the squabble ignited a strong response from traditional Tempe power brokers who claim the organization has been unfairly targeted by City Hall and the community’s new political leadership.
"Now that we have a new administration, we’re being asked to pay for this," said Richard Neuheisel, president of Tempe Sister Cities. "Someone at City Hall is clearly out to cause trouble."
Neuheisel, a councilman from 1968-72 and president of the Tempe Sports Authority, said the organization has offered to pay more than $11,000 to settle the issue. But city officials said they are still investigating the organization’s financial records.
When the program moved into the house in 1986, Sister Cities signed a contract obligating it to pay 20 percent of its annual profits to the city for use of the building. It won the contract for the Hackett House on a competitive basis against several other organizations.
The Sister Cities program has long been an organization for Tempe’s political and social elite. Its membership consists of former council members, board and commission members and other high-profile community residents.
Harry Mitchell, a former Tempe mayor and current state senator, serves as vice president of the program.
So, when Jane Neuheisel, wife of the organization’s president, contacted Giuliano in 1996, she was speaking with a friend.
It was a different time, Giuliano said. Back then, the city had a better relationship with the organization. Those times are gone now, he said.
"I think it’s a mistake of energy and resources to go after something that happened 10 years ago," he said. "You have to keep this in perspective."
Now, political enemies are out to tear down the program, he said, because there are those who are still upset with the amount of support for former mayoral candidate Dennis Cahill, a strong supporter of the program.
During last year’s mayoral contest between Cahill and Hugh Hallman, Cahill was accused of making two trips to China at taxpayers’ expense. In a piece of campaign literature last year, Hallman compared Cahill with former President Richard Nixon. The political piece stated Nixon only went to China once on taxpayers’ money while Cahill traveled there twice.
Cahill, who won the endorsement of Giuliano, many of the council members and every living former Tempe mayor, went on to lose the election.
City Manager Will Manley said the investigation into the program is not politically motivated. He said he ordered the city’s internal audit department to review the city’s contracts two years ago, before Hallman was elected.
Manley said auditors randomly selected 25 to 30 contracts and found that more than half were not in compliance, including the Sister Cities agreement with the Hackett House.
The lack of oversight cost the city about $100,000 in revenue over the past several years, Manley said.
The audit prompted the city to create a new staff position to review and enforce the city’s contracts. But, Manley said they discovered no other cases similar to Sister Cities.
According to current city officials, a former aide to Giuliano was responsible for oversight and enforcement of the Sister Cities’ Hackett contract.
But no one, including Giuliano, can remember what actions were taken to absolve the program from paying.
Although the organization’s officials said the former city manager told them not to pay, any change to the contract requires a vote by the council.
Change made without its authorization is a violation of the city charter.
Current Mayor Hugh Hallman would not comment on the issue, saying only that he supports the work Sister Cities has done over the years.
Despite their differences over how much money is owed in back rent, the city has continued allocating $20,000 a year to support the organization’s efforts, according to city records.
That money is used to help the organization with its printing, mailing and various administrative duties, said city communications director Jeff Kulaga.
Ken Jones, an auditor with the city, said Sister Cities has agreed to pay, but the two are continuing to negotiate the amount.
Because the financial records provided to the city by Sister Cities were so general and incomplete, Jones said he has asked for detailed financial statements.
If the organization refuses to pay by May 15, the city will turn the issue over to the city attorney’s office to pursue a breach of contract, Jones stated in a letter to Sister Cities.
In addition, he is asking the organization to provide an annual financial report to the city by June 15, the letter stated.