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Oversight or Overpaid? 

It's raked in millions of tax dollars. But is the watchdog actually watching?

The city has paid John Zayac (left) and Michael Tuan Bustamante's consulting firm close to $2.5 million.
  • The city has paid John Zayac (left) and Michael Tuan Bustamante's consulting firm close to $2.5 million.
In 1995, when then-Mayor Mike White wanted to build a football stadium on the Lake Erie shore, Cleveland City Council was skeptical. Squeezing the truth from the White administration was tougher than poaching salmon from the Cuyahoga. Council sensed it was about to get snowed.

So John Zayac, an engineer and developer who had served on the council in the 1980s, was brought in to bird-dog the administration and report back when the budget ballooned or a project fell behind -- both common occurrences under White.

A decade later, Zayac is still on the job, monitoring airport and utilities projects for council. To date, his consulting firm, the Project Group, has raked in close to $2.5 million in taxpayer money -- money well spent, if you ask most council members. They say Zayac keeps a well-trained eye on the city's biggest projects. "They've been thorns in the sides of the administration," Councilman Jay Westbrook says of the firm. "There's a healthy tension."

But tension boiled over last week, when Cleveland Finance Director Robert Baker sent a letter to Council President Frank Jackson, saying the city had cut off payments to the Project Group. Baker wants Jackson to justify the hundreds of thousands of dollars a year still being paid to the firm. The letter also criticizes two of the group's recent reports, which rely heavily on data already provided by city officials.

The implication: The city is paying top dollar for information that's freely available.

"I think that's horseshit," counters Zayac, a burly man with spiky hair and a sharp mustache. He doesn't talk like the holder of two master's degrees or the head of a consulting firm with clients ranging from the Cleveland Foodbank to a private school for the learning-impaired.

"We're a small business," he says. "They owe us $50,000. It's choking us. It's killing us." Zayac, along with some council members, says that Baker's letter amounts to no more than politics. After all, Jackson is running for mayor -- as is Baker's boss, Mayor Jane Campbell. "We're heading into a bare-knuckles, political couple of months," Zayac says. "And all of a sudden, this thing pops up about us?"

But after $2.5 million in payments, an examination of the Project Group might be warranted -- regardless of Baker's motives. Because the group usually meets only with council leaders, some members don't have a clue what they're paying for. "The only thing that I've heard . . . was that they had a contract," says Councilwoman Dona Brady. "I've never had a meeting with them. I've never been briefed."

There's also the question of whether the watchdog is actually watching. The Project Group got off to a good start with Browns Stadium, exposing huge cost overruns. In subsequent years, however, the firm's worth to taxpayers has been less obvious.

Though the firm has been monitoring airport and utilities projects for years, the FBI's investigation of White and his alleged bag man, Nate Gray, has revealed rampant corruption in both areas ("City for Sale," July 20). Zayac says that he privately shared rumors with both council and investigators. But rumors could be heard anywhere in the city -- at no cost. Zayac's reports never shed light on White's alleged pay-to-play system.

In recent years, the firm has focused on making sure the city uses enough minorities, women, and Cleveland residents on construction projects. It helped council adopt a law requiring that 20 percent of workers on large projects live in Cleveland. Since the law's passage in 2004, the Project Group has produced monthly reports analyzing its implementation by City Hall. And it recently published a report criticizing the city's Office of Equal Opportunity for not closely monitoring whom contractors are hiring.

But as the FBI's investigation has shown, the minority-hiring program has also been rife with corruption. Testimony revealed that white contractors commonly used minority front companies or simply paid minority companies to appear on the contract, but not do any work. Whatever monitoring the Project Group did, it apparently had no effect on the seemingly widespread fraud.

There's also the question of why consultants are needed in the first place. Analyzing the administration's numbers and providing oversight on major projects, are, after all, the council's job. Why spend up to $30,000 a month paying someone else to do it?

City officials also criticize the firm for depending on City Hall data in its reports. There's no reason, they say, to spend millions a year managing the projects, only to spend hundreds of thousands more to have an outside consultant do the same thing. Utilities Director Julius Ciaccia says it's especially alarming to cut checks for work he can't monitor and reports he never sees. "We had to pay them," he says, "but we didn't have any control."

The mayor's office contends that it is closely monitoring the contractors and says that the Project Group has offered no evidence to the contrary. Officials privately say that the firm's recent special reports -- one lauding the residency law, which was spearheaded by Jackson, and one sharply criticizing the Campbell administration -- are campaign literature disguised as research.

But council members say that the group's work is invaluable. The FBI's investigation of White, Councilman Mike Polensek argues, proves the need for oversight. "We all had suspicions, but we could never substantiate it . . . They were bold-faced lying with us. It was like Monty Hall's Let's Make a Deal."

The Project Group, Polensek says, "did as good a job as anyone could have . . . They're not the Justice Department."

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