The mayor of Ralston now works for the same real estate company to which he awarded a no-bid consulting contract five years ago. That contract shepherded the now-struggling Ralston Arena, at a cost to city taxpayers of more than $334,000 and counting.
Ralston Mayor Don Groesser chose P.J. Morgan Real Estate and its sales associate, Walt Peffer, to be a consultant on the arena project, which has lost money since opening in late 2012, forcing the city to raid other funds to make its debt payments. Peffer previously worked for four former Omaha mayors, including P.J. Morgan.
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PLAYERS: The players involved in the Ralston Arena project are intermingled.
Groesser awarded the consulting contract to P.J. Morgan without soliciting bids from other companies because professional services don’t have to be bid out, according to Ralston City Clerk/Treasurer Dolores Costanzo.
In its pitch to the city, P.J. Morgan proposed a $150 hourly fee, regardless of how many employees assisted Peffer on the project. Since then, the increasingly cash-strapped city has paid the company nearly $334,000, according to documents provided by Ralston through an open records request. Over the past five-and-a-half years, that works out to about $66,000 per year.
While P.J. Morgan was receiving monthly payments from the city ranging from $3,000 to over $10,000, Groesser went to work for the company. The mayor has long possessed his real estate license, and has had a license with P.J. Morgan for about two years, according to Peffer.
In fact, Groesser and Peffer have been co-listing brokers on several P.J. Morgan listings, including a $1.7 million parcel of land near 132nd and Fort streets in Omaha and a $3.8 million parcel in Elkhorn.
Peffer said that’s not a conflict of interest, and referred questions to City Attorney Mark Klinker, who said he sees no conflict because Groesser is an independent contractor for P.J. Morgan.
“Mostly the money flows from the salesman to P.J. Morgan,” he said. “There’s certainly no quid pro quo about it. I don’t consider it a conflict because there isn’t any financial benefit that flows in either direction from the independent contractor relationship.”
Asked whether Groesser doesn’t benefit when he makes a big sale, he said, “What does that have to do with the city of Ralston?”
Ralston Mayor Don Groesser
After P.J. Morgan was hired to solicit construction bids and provide construction oversight, in 2010 Peffer recommended the city award the arena construction manager at-risk contract to Boyd Jones. Normally under such a contract, Boyd Jones would be the builder and work with architects and engineers to design the project and deliver the project for a set price.
According to minutes of the council meeting where Boyd Jones was chosen as the builder, the company proposed a fee of 2.5 percent of the project cost. While Groesser bragged in 2012 that Peffer guarded against cost overruns and kept the project on budget, the cost of the arena ballooned from $25 million initially to over $40 million today.
But the intertwining interests don’t end there. In May, Boyd Jones was named as Peffer’s client on a $25 million plan to renovate the Burlington mail terminal in Omaha into the Rail and Commerce Building project, for which P.J. Morgan’s website lists both Peffer and Groesser as listing brokers.
Peffer said this isn’t a conflict of interest, because a five-member selection committee recommended Boyd Jones be hired by the city after reviewing responses to a request for proposals and conducting interviews.
“I did not even know of Boyd Jones prior to that selection process,” Peffer said via email.
As for he and Groesser’s job as brokers on the downtown Omaha project, Peffer said that’s not a conflict either.
“The Rail and Commerce project was originally listed by other agents at P.J. Morgan Real Estate long after completion of the arena project,” he said.
Peffer has fielded questions for the mayor since Groesser stunned many last week by saying in a budget meeting the city would cut programs, institute a 2.5 percent restaurant tax and increase property taxes 34 percent to help make the arena’s debt payments. Groesser has since backed away from the massive property tax hike, but hasn’t specified how the city will make a $3.5 million arena payment.
Klinker said he wasn’t consulted by Peffer or Groesser before the mayor began working for the company.
“I was kind of vaguely aware of it at the time but they didn’t ask me. Had they asked me I would’ve said there’s no financial benefit to doing that. If Don were to get a listing as a real estate salesman, he has to be with a broker. He sells real estate, he’s an auctioneer — he’s a lot of things other than mayor.”
Groesser did not return a call seeking comment.
Updated 10:35 a.m. Friday
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