Investigating how Herriman hands out city contracts

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*Debbie Dujanovic reporting*Produced by Kelly Just In May, the KSL I-Team exposed Herriman's questionable hiring practices and nepotism at City Hall. The phones lit up with callers asking KSL to dig deeper. The new question: Is there wrongdoing in the way Herriman awards contracts and to whom the contracts are going?

Investigating how Herriman hands out city contracts

When the city of Herriman went on a building spree a few years ago, it went straight to Halstead Construction and Ferrus Industries. Since 2003, the city has paid these two companies to run 18 different projects. Taxpayers footed the bill for hundreds of thousands of dollars. There's the new library, a park pavilion, an addition to City Hall, restrooms, a detention basin, a shed, a sheriff's substation and a lot more. Where did the city of Herriman find the man who ran both companies? Just down the hall. Val Steadman was also working for the city of Herriman as a planning commissioner. It's a job Steadman held for seven years.

Investigating how Herriman hands out city contracts

Herriman hiring an insider is not the only surprise. We also discovered the city didn't always seek bids from other contractors for these projects. Utah law requires additional bids when costs run above $40,000. We decided to tour two of the larger projects. One step inside the library and sheriff's substation, and we knew these projects with new lighting, new electrical, new carpet, walls, bathrooms and fire sprinklers had to have cost more than $40,000.

We went back to City Hall and demanded to see every receipt and payment for both projects. Then, we did the math ourselves. The real totals: more than double what state law allows. That sheriff's substation cost $95,000. The new library cost nearly $120,000. And, we uncovered the city's method of awarding these contracts.

Herriman divides up a project into lots of smaller payments; amounts that might not raise eyebrows. Take for example that new library. The city paid Steadman's company a $20,000 fee to manage the project. By phone, Steadman explained that the city took care of the other bills by paying each subcontractor directly.

Investigating how Herriman hands out city contracts

By letter, Mayor Lynn Crane said our investigation had positive consequences for the city. Now, the city can avoid future violations. The mayor conducted his own investigation, after we contacted the city. He said it showed the city didn't mean to break the law; this was all just an inadvertent oversight. An oversight? Maybe -- but guess what? Steadman wasn't the only case we discovered.

Until last election, Raquel Deluca served on the Herriman City Council. Now she's in charge of the planning commission. According to her own public disclosure statements on file at City Hall, she was also an officer of Deluca, Inc. Ms. Deluca's husband owned half of the company. That didn't seem to faze Herriman City. We found that over the last four years, the city has awarded the Deluca business nearly $5,000,000 in contracts for emergency and maintenance services. By phone, Ms. Deluca reminded me that when the city council voted on the contracts, she recused herself. That is true; except for the one year she didn't and voted in favor of the family business being awarded the contract.

According to the city, Deluca Inc. won its work fair and square. The city even sent us a document showing us which companies Deluca Inc. beat out and why. We called the other companies. One owner said he does not recall ever bidding for the job. Another insisted he did not make a bid. A third company was impossible to reach, it went bankrupt four years ago.

In his letter and during several phone conversations, Mayor Crane defended who's getting the contracts in Herriman. He called his city's process open and honest.


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